Oral Answers to Questions

Bambos Charalambous Excerpts

Tuesday 9th April 2019 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

T3. My borough of Enfield has seven times more households living in temporary accommodation than the national average, with 18% of people in Enfield classed as being low paid. I have no doubt that the two figures are related so how can the Chancellor defend the Government’s record on in-work poverty, insecure work and zero-hours contracts, which have caused so much hardship for so many?

[Elizabeth Truss]

I think the hon. Gentleman should speak to his friend the Mayor of London about what he is doing to increase house building in London.

Oral Answers to Questions

Bambos Charalambous Excerpts

Tuesday 5th March 2019 Commons Chamber

[Mr Hammond]

As my hon. Friend is aware, because I have said it already this afternoon, the spring statement is not a fiscal event, but I will update the House on the Office for Budget Responsibility’s forecasts for the UK economy and for the public finances. I will follow the approach that I took at spring statement 2018 and also provide the House with an update on progress since the 2018 Budget and set out our intended direction for announcements later in the year. Although it is not a fiscal event, I already anticipate my hon. Friend beating a path to my door before the Budget in the autumn.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

T3. Schools in my constituency face severe budget pressures running into millions. By 2021, some schools will not be able to afford any teaching assistants, learning support assistants, office staff or site staff. Does the Chancellor realise the perilous state of schools’ finances, and will he announce adequate funding for schools in his spring statement next week?

[Elizabeth Truss]

As the Chancellor said, the spring statement is not a fiscal event. We are increasing school funding in real terms per pupil, but of course we need to ensure that we are investing properly in our education system. We are looking at human capital and what will be the most important investments, and we will report on that at the spending review.

Securitisation Regulations 2018

Bambos Charalambous Excerpts

Wednesday 13th February 2019 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

It is a pleasure to follow the hon. Member for Aberdeen North (Kirsty Blackman).

Not everyone appreciates the role that securitisation of loans and debts played in the financial crash of 2008, but it was a substantial role, with devastating consequences. To give some context, in the years prior to 2008, a calamitous decision was taken by executives in large US-based international banks to securitise sub-prime mortgages, which were mortgages given to people who had virtually no way of paying them back. Because of predatory lending, the number of these sub-prime mortgages continued to rise. They were then pooled together with other loans and debts and packaged as a financial product in the form of mortgage-backed securities that received triple A ratings from the credit rating companies.

[Mr Ranil Jayawardena (North East Hampshire) (Con)]

The hon. Gentleman is surely arguing that sub-prime lending was mismanaged rather than securitisation itself. Do I understand him correctly, or is he suggesting that securitisation was the problem?

[Bambos Charalambous]

It was both. It was the sub-prime lending and it was also the packaging of these products into securitisation with other, better products that were then triple A rated.

[Mr Jayawardena]

But is it not true that securitisation is really helpful in recycling capital, thereby providing investors with a stream of income that is useful to them and allowing responsible financial institutions to direct their capital at new people who want, for example, to borrow money to buy a home?

[Bambos Charalambous]

If done properly, there is benefit in securitisation, but it was not done properly in the United States, and therefore we need to take extra precautions now to ensure that it is done properly.

[Mr Jayawardena]

The hon. Gentleman is very kind to give way again. I want to unpick that a little further, because it is helpful. Can he confirm that securitisation is a good way of managing risk across a portfolio of loans, so that those with worse credit ratings can be properly and openly matched up with those with better credit ratings, to ensure that investors have a blend that they can draw an income on in the long run and allow institutions to use the capital they have secured from investors to offer new products to new people?

[Bambos Charalambous]

But if credit rating companies do not give the correct ratings, as happened in the United States, it all falls apart. I am happy to carry on the conversation with the hon. Gentleman in Strangers’ afterwards.

There was a big investment in mortgage-backed securities, with many financial institutions choosing to invest in them because of their promised high rate of return. When people started defaulting on sub-prime mortgages, the mortgage-backed securities lost their value, and the financial institutions that had invested heavily in them became exposed and suffered catastrophic losses. Since that time, steps have been taken to ensure that we never again experience the shockwaves of those failing giant financial institutions and the aftermath. We need a robust system of dealing with the risk of any such exposure due to securitisation, and that requires primary legislation.

As the hon. Member for Aberdeen North said, what we have before us are ill-conceived regulations that do not address the whole picture, and these changes are being made without the House having a chance to properly scrutinise them. Let us be clear: these regulations are not required due to the fear of a no-deal Brexit. They have conveniently been slipped in by the Government, under not the European Union (Withdrawal) Act 2018 but other legislation.

The regulations give responsibility to the Financial Conduct Authority to supervise the compliance of people involved in securitisation practices and allow it to impose certain penalties and take other steps to monitor securitisation. Such changes should not be made via secondary legislation. The complexity of these measures needs proper scrutiny. The very fact that the regulations change provisions in criminal law by preventing the FCA from instituting criminal proceedings for money laundering and insider dealing is a serious matter that is worthy of proper debate and scrutiny, which cannot be done via this debate. The regulations are wrong-headed, as schedule 1 amends primary legislation and transfers significant powers to the Treasury, the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England.

[Mr Jayawardena]

I am enjoying the hon. Gentleman’s contribution, even if we come from different starting points. Does he support the FCA having such a role but object to the principle of how this is being arrived at, or does he object to the FCA having this role? If not the FCA, who should it be?

[Bambos Charalambous]

Those are exactly the sort of points that should be made via a debate on primary, not secondary, legislation.

[Mr Jayawardena]

Will the hon. Gentleman give way?

[Bambos Charalambous]

I will not give way again, as I am almost at the end of my contribution.

These are important changes that Parliament needs to get right, due to the dire consequences of what went wrong in the past. These measures are opaque, unconstitutional and lacking in proper scrutiny. I invite the Government to withdraw the regulations and introduce primary legislation, to allow thorough and proper scrutiny to take place. Without such assurances, I will vote for the motion in the name of my right hon. Friend the Member for Islington North (Jeremy Corbyn) and against the Government.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call Anneliese Dodds.

Finance (No. 3) Bill

Bambos Charalambous Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 8th January 2019 Commons Chamber

[Sir Edward Davey]

Having taken that wonderful intervention, I bring it to the House’s attention that the hon. Member for Wellingborough (Mr Bone) has signed my new clause. It is bringing the House together at a time when elsewhere it is divided.

I end on what this loan charge and its retrospective nature have meant for our constituents. It has caused misery. It has affected people’s lives, their health, their families. It has caused gross misery. Some people believe they will have to go bankrupt if they are forced to pay, or that they might lose their homes, and that is why the House is united against this retrospective action. I really hope that the Minister will get to his feet, accept the new clause, go ahead with the review and bring it back before the end of the tax year, so that the House can see it and vote on it.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

I rise to speak in support of new clause 2. I was staggered to learn that entrepreneurs’ relief costs the Treasury an estimated £2.7 billion, and this to allow people selling companies worth up to £10 million to keep half the money they would otherwise pay in capital gains tax.

I was even more surprised to learn that this tax relief was concentrated among a few very wealthy individuals, with 6,000 people making gains of over £1 million and averaging £450,000 in tax relief each. This relief is only benefiting the very wealthy and should be reviewed as to its effectiveness. If it is scrapped, the £2.7 billion could be used to fund schools buckling under the pressure of funding cuts and provide huge investment in special educational needs and children and adolescent mental health needs. It could also go some way to funding children’s services and social care in local authorities and policing.

This is not the only area where the Government are giving away money that could otherwise be put to better use. Under amendment 22, in the name of the hon. Member for Aberdeen North (Kirsty Blackman), the Government are being asked to review the expected effects on public health of the changes made to the Alcoholic Liquor Duties Act 1979. The Alcohol Health Alliance has stated that the Government’s own figures show that alcohol duty cuts from 2013-14 have cost the Treasury £4 billion, which is the equivalent yearly cost of employing over 100,000 teachers. The figure is expected to rise to £9.1 billion by 2024. Considering the pressures on budgets as a result of austerity, that is not an insignificant amount.

The freeze on duty on beer, spirits and cider for 12 months from February 2019 is in effect a cut, as it is not keeping in line with inflation. Indeed, it has not done so for six of the last seven years. Cheap alcohol has a tremendous effect in causing damage to people’s health, the economy and wider society. Alcohol is the leading risk factor in respect of the deaths of people aged 15 to 49. In England alone, there are more than 1 million hospital admissions and 24,000 deaths related to alcohol every year. That is a clearly an impact that the Government need to consider when they set duties on beer, spirits and cider. Cuts in alcohol duty have a double effect. They reduce revenue for the Treasury, which in turn reduces the amount of funding for the NHS, while simultaneously increasing demand and costs in the NHS by encouraging the consumption of cheap alcohol. I therefore ask the Government to review the impact of the alcohol duty freeze on public health.

--- Later in debate ---

[Liz Twist (Blaydon) (Lab)]

Does my hon. Friend agree that the stories we hear from our constituents suggest that some of them are not only afraid of losing their homes and livelihoods, but are actually having suicidal thoughts because of the pressure that is being put on them to pay the money?

[Bambos Charalambous]

That is an excellent point, which I was about to make myself. While the large accountancy firms have gone unpunished for creating tax avoidance schemes for big banks, those individual contractors are bearing the brunt of HMRC’s powers. I have been informed by the Loan Charge Action Group of suicides, bankruptcies and relationship breakdowns as a result of the stress involved in their dealings with HMRC. The group has said that many of the people being pursued by HMRC unwittingly signed up to loan-based schemes, but the promoters of the tax avoidance vehicles have not been targeted.

I ask the Minister to reconsider these measures and to ensure that people are not punished when they should not be.

Oral Answers to Questions

Bambos Charalambous Excerpts

Tuesday 11th December 2018 Commons Chamber

[Mr Speaker]

I say very gently to the Chancellor, to whom I have been listening with great care, that it is quite difficult to vote for something if there is not a vote. I am only trying to help him; it is a point that is so blindingly obvious that I am surprised that I have to state it, but manifestly I do.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

3. What discussions he has had with Cabinet colleagues on the adequacy of funding allocated to local authorities for children’s services.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

Spending on the most vulnerable children has increased by over £1.5 billion since 2010. Thanks to our increased investment in childcare, the overall early years and children’s services budget has increased to £12.7 billion this year.

[Bambos Charalambous]

Will the Minister please acknowledge that she is simply putting a sticking plaster on the crisis in children’s social care? It is essential that children’s social care gets an extra £3 billion by 2025, and the Chancellor’s Budget commitment is less than 3% of the way there. Will the Minister admit that we are not on track to meet this target?

[Elizabeth Truss]

It is certainly the case that we are seeing rising demand for children’s services, but the important thing is that we help children’s services departments intervene early. We are rolling out a pilot programme this year to adopt models like that used in North Yorkshire that has reduced the number of children going into care, the number being arrested and the number ending up in accident and emergency, so it is important that we spend the money in the right way.

Finance (No. 3) Bill (Seventh sitting)

Bambos Charalambous Excerpts

Committee Debate: 7th sitting: House of Commons
Thursday 6th December 2018 Public Bill Committees

[Clive Lewis]

Yes, I was aware of that. Labour local authorities in Oxford and across the country do fantastic work on the issue, but they often do so in isolation and with limited support from central Government. The Government should really be getting behind them, given the severe impact that poor air quality can have, not just on children, but on all of us—it is now believed to be connected to the onset of Alzheimer’s and other degenerative diseases.

The London Mayor has proposed a targeted scrappage scheme that uses camera data to ensure that only vehicles that are regularly in the ultra low emission zone receive scrappage funding. The proposal meets the criteria set out in the five-case model in the Treasury’s Green Book and has a positive business case ratio.

Will the Minister confirm that none of the general VED revenue will be spent in London, because the Treasury plans to give it to Highways England to maintain strategically important roads outside London? Strategically important roads in London are maintained by Transport for London without any Government support or a share of VED income. Frankly, I suspect that any assessment made under our amendments would reveal that money is available from the proceeds of VED, which of course will rise under the new rates proposed in clause 57. I am also confident that any assessment under amendment 111 would show that reducing harmful emissions in London is vital to our national effort on climate change and air quality, let alone the fact that it would address the suffering of ordinary people in our most congested city.

It is fair to say that there is a strong suspicion that the Government’s political refusal to support Londoners owes more to Londoners’ refusal to support them at the ballot box than to the best interests of the city or the country as a whole. If the Minister wants to dispel that impression, will he clarify what share of VED revenue comes from London now and what share he expects to come from London after the passage of the Bill?

[Bambos Charalambous (Enfield, Southgate) (Lab)]

I am a London MP and my constituency borders the North Circular road. The Mayor has introduced a low emission zone for part of the road, but more is needed to reduce emissions. Does my hon. Friend agree that funding from this measure should go towards introducing low emission zones in other parts of London as well?

[Clive Lewis]

Yes, I do. I do not think that there is a lack of ambition from the Mayor of London or from local authorities around the country; ultimately what holds them back is a lack of resources. Will the Minister commit to using the revenue to offer London the same air quality funding that is being made available to other parts of the country, to ensure that ultra low emission zones are a success?

--- Later in debate ---

[Clive Lewis]

Yes. An update of the DFT’s mode shift benefit values technical report in 2015 doubled previous estimates of the cost per HGV mile to road infrastructure. Campaign for Better Transport research suggests that HGVs are paying for only 11% of their UK road infrastructure costs, predicting a shortfall of about £6 billion.

Will the Minister tell us whether the Government have made their own such estimate during the development or passage of the Bill, or does our amendment give them the opportunity to assess it for the first time? Will he produce a fresh assessment of the cost shortfall that the new HGV road user levy rates will leave for other road users and taxpayers in general to pick up? In any case, will he give us the Government’s view of whether the total revenue raised will reflect a fair share of the total tax take from road users, as compared with that of those who drive smaller vehicles? In the Chamber, many MPs complain about potholes and funding for them. The statistics give a clue as to where in part the responsibility lies for so many potholes on our roads.

[Bambos Charalambous]

As the driver of a Ford Focus, I want to clarify something. Does my hon. Friend agree that yes, a greater proportion of the money ought to go towards repairing potholes, because that will leave more money available for schools and other resources?

[Clive Lewis]

My hon. Friend makes an interesting point from his Ford Focus. The issue is that there is a massive externality that those HGVs are causing on our roads. No one wants to see HGV businesses go out of business, but everyone in Committee would agree that it is right for people to pay the appropriate level of tax for the damage that they cause to our road infrastructure. If they are to be subsidised, that subsidy ought to be transparent, so that we can appreciate and make a proper assessment of the value that HGV companies contribute to our economy, while taking into account the externalities that they create as well, because there are impacts on other tax areas where the Government would need to spend—he mentioned schools, and there are hospitals and so on and so forth.

Amendment 116 would require the Chancellor to review the impact of the clause on CO₂ emissions and climate change targets. As I have described, the use of HGVs has increased hugely in recent years. Inevitably, that has had an adverse effect on the UK’s greenhouse gas emissions. Studies from the Government’s own 2017 freight carbon review proved that HGVs are also disproportionately responsible for pollution when compared with other road vehicles. In 2014, HGVs were estimated to account for about 17% of UK greenhouse gas emissions from road transport, and about 21% of road transport nitrogen oxide emissions, while making up only 5% of vehicle miles. Will the Minister confirm those figures?

Clearly, if we are to stay in line with EU emissions targets, which have themselves been agreed at the necessary level to ensure that we meet our Paris climate agreement targets, CO₂ emissions from HGVs must drop by at least 15% by 2025, and be at least 30% lower by 2030. Will the Minister agree to conduct an analysis of just how far the changes in the clause go towards the country’s ability to meet our climate targets? Will he also consider addressing the generality of the need to meet those targets with either taxation of the sector, or other measures that the Government might put in place to meet our obligations and to safeguard our shared environment?

Amendment 117 would introduce a similar requirement to review the impact of clause 59 on the overall volume of traffic on roads, which is fairly self-evidently a major contributory factor to road traffic congestion. The Centre for Economics and Business Research estimates that congestion will cost the economy as much as £307 billion by 2030. Similarly, the latest INRIX figures show that the UK currently ranks as the fourth most congested developed country, and the third most congested in Europe.

Will the Minister tell us what assessment the Government have made of the economic—not to mention environmental —impact of traffic congestion? I hope he will agree that it is undeniable that the increase in HGV traffic is contributing to the problem. Is he willing to undertake a formal assessment of the impact of HGVs on overall road congestion and traffic, which in turn clearly has a significant impact on the economy? If he intends to resist the amendment, perhaps he will tell us what assessment the Government have made to date and how it informed their choice of the relative levels of taxation that the clause sets for more or less polluting vehicles.

The amendment also addresses the important issue of road safety. The volume of traffic is clearly relevant to road safety outcomes. The Campaign for Better Transport’s analysis of Department for Transport road safety statistics shows that HGVs are twice as likely to be involved in a fatal collision on minor roads as they were 10 years ago. In 2016, HGVs were almost seven times more likely than cars to be involved in fatal collisions on minor roads, despite making up just 5% of overall traffic miles. There has been little or no improvement in recent years in the rates of fatal collisions involving HGVs either on motorways or on A-roads. In 2014, HGVs were involved in almost half of all fatal collisions on motorways, although they accounted for only 11.6% of the miles driven on them. Will the Minister tell us whether, in the course of considering the relative levels of taxation for different types of HGV, the Government have made any assessment of the impact on road safety of HGVs on motorways and A-roads across the UK? In developing the clause, did they consider whether the tax system for vehicles might in any way be used to improve the safety record of HGVs?

Amendment 118 would make equivalent provision in relation to air quality standards. In launching its call for evidence about the HGV road user levy, the DFT conceded the importance of working

“with industry to update the Levy so that it rewards hauliers that plan their routes efficiently, to incentivise the efficient use of roads and improve air quality.”

As the results of the consultation are yet to be published, I ask the Minister whether the Treasury is able to review whether the changes proposed in clause 59 will succeed in encouraging an improvement in air quality standards.

If the Minister does not intend to accept the amendment, perhaps he will tell the Committee whether, and when, the Government intend to publish the evidence they have gathered, and their formal response to it, for scrutiny by the House and the public. Perhaps he will also confirm that the evidence that they have gathered to date shows that, nationally, 20% of lorries are now driving around completely empty and only 36% are full by volume. Not only is that a highly inefficient use of scarce road space, but it exacerbates the existing problem that more than 40 towns and cities in the UK have already exceeded air pollution limits set by the World Health Organisation. Can he confirm that air quality standards will be assessed when looking at the important impacts of the HGV road user levy? Can he give us any timetable or detail?

The Committee will note that our amendments have a similar theme. Perhaps I can ask the Minister to outline in general terms what assessment or review of the success of these measures the Government have planned, what impacts they will consider, how they will measure them and how they will publish their results. I also reiterate my point about the Government’s various calls for evidence that relate to the measure in clause 59. Will he commit to publishing the evidence received and giving a formal response from the Government? We often hear about evidence-based policy making, but as legislators we, too, need to hear that evidence if we are to agree to the legislation that implements that policy.

I look forward to the Minister’s response to our amendments, but I want to make one final argument about the clause itself. While it is to be expected that the reforms in clause 59 will lead to improvements in fuel efficiency and reductions in pollution from HGVs on Britain’s roads, we believe that those reforms are incomplete and unsatisfactory because the HGV levy will continue to be charged according to time spent on UK road networks. It is widely acknowledged that the existing time-based charging system is inefficient and not cost-effective. As it stands, the current daily charge bears no direct relationship to the amount of use of the network and therefore the system does not incentivise efficient use of the network. To improve economic efficiencies, there should be a direct relationship between taxes per mile travelled and the marginal cost that a distance-based charging system can provide.

Finance (No. 3) Bill (Sixth sitting)

Bambos Charalambous Excerpts

Tuesday 4th December 2018 Public Bill Committees

[Mel Stride]

Clause 45 makes changes to improve the SDLT filing and payment process. In answer to the hon. Lady’s question about whether we will provide facilities on the site to pay simultaneously, we do not have plans to do so. That is because the online service cannot be combined with Bacs and CHAPS services at present.

The hon. Lady made a more general point about the mistakes that are made in filing. As she knows, we consulted on the information being sought as part of the process, and we will be applying various simplifications as a consequence, most notably around complex commercial lease arrangements. The information that we have hitherto sought in that respect will now no longer be sought. That simplification, and others, should be beneficial in cutting down the mistakes that the hon. Lady referred to.

Currently, the purchaser of land, or the purchaser’s agent, must make a stamp duty land tax return and pay tax due within 30 days of the effective date of the transaction—usually the completion date. The changes made by clause 45 will reduce the time allowed to make an SDLT return and pay the tax due from 30 days after the effective date of transaction to 14 days. That is in line with other initiatives in recent years that bring tax reporting and payment closer to the date of the transaction. The hon. Lady referred, I think, to clause 14 on capital gains tax, where a similar approach has been taken. This is in line with these other initiatives.

The measure will not change liabilities for the purchaser, but will lead to tax being paid earlier. The change applies to purchases of land situated in England and Northern Ireland where the effective date of the transaction is on or after 1 March 2019. This change will directly affect approximately 20,000 businesses, mainly agents, such as licensed conveyancers and solicitors. Each year, this will directly affect fewer than 500 individuals who file their own SDLT returns without using an agent. However, the impact on administrative burdens for businesses is expected to be negligible.

The Government announced the change at autumn statement 2015 and consulted on it, as the hon. Lady described, in 2016. The Government confirmed at autumn Budget 2017 that it would come into effect on 1 March. To help purchasers and agents to comply with the new time limit, HMRC has worked with key representative bodies to agree simplifications to the SDLT return, for example, by reducing the amount of information required. These improvements will be in place when the new time limit begins. The measure will result in a yield of £60 million in 2018-19—the year of implementation—and a small ongoing yield in future years.

Amendment 95 would require a report on any consultation undertaken on the provisions in this section.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

What steps has HMRC put in place to make sure that the 20,000 businesses that are going to be affected are properly informed of the change, and know that it is coming?

[Mel Stride]

HMRC will, as a matter of course, issue guidance on all major tax changes, and that will be available online. As part of the consultation, as I have outlined, a number of these organisations were consulted in detail, not just about the measures but to make sure that those businesses are ready and appropriately informed.

The amendment is not necessary. I can give the Committee the information it requires now, because it is already in the public domain. The Government published a document on 20 March 2017 in response to the consultation that we published in the autumn of 2016, and we published draft legislation in July 2018 for technical consultation. HMRC also held meetings with stakeholders, which included representative bodies from the property and conveyancing industries. Their views on the information required in the return are reflected in the changes being made to make compliance with the new time limit easier.

New clause 13 would require a review of the equality impact of clause 45. The new clause is not necessary either, because the Government set out in the tax information and impact note published on this change in July 2018. It is not anticipated that there will be any impact on groups with protected characteristics. Clause 45 does not change anyone’s SDLT liability; it just brings a requirement to file a return and pay the tax closer to the date of the transaction. For that reason, direct impacts on different types of households will be negligible, and the type of analysis required by the amendment would not be meaningful.

Regarding other regions of the UK, Land and Property Services in Northern Ireland—an agency of the Department of Finance of the Northern Ireland Executive—was consulted and is content with the measures. The changes will improve the SDLT filing and payment process, and I commend the clause to the Committee.

--- Later in debate ---

That evidence has to be considered in the context of the Government’s long-standing policy of alcohol duty cuts and freezes. The House of Commons Library describes that in some detail, which I will not go into, but it is well worth having a look at the report. Those cuts, it is worth noting, come at some expense during a time of austerity, and we cannot ignore the fact that they could further contribute to the concerning picture set out in the report by Public Health England. The Economic Secretary indicated that there was a requirement for evidence, but the evidence in this regard is resounding: a public health approach to alcohol duties will not only raise revenue for the Exchequer, but reduce the harm caused by alcohol in our society.

[Bambos Charalambous]

My hon. Friend is making an excellent and, shall I say, spirited speech. Does he agree that the Government have totally ignored the health effects of alcohol consumption in the way they have implemented alcohol duties?

[Peter Dowd]

It leads me to believe that the Government have not paid enough attention. That is why we want to have a look at it in the round and why we want a review. Let us see the evidence. If the evidence indicates my hon. Friend’s contention, as I think it will, we would need to do something.

Unfortunately, despite the move to begin to increase duties on wine and cider as set out in clauses 53 and 54, it seems that the Government’s policy on wider alcohol duties reflects continuation rather than a break with the last eight years. Will the Minister confirm that it remains the Government’s policy to increase only those alcohol duties included in the clause and to freeze all those not included? That being the case, does it not seem that the attempt in clause 54 to increase the price of mid-strength cider is a mere sticking plaster on the Government’s wider policy of ignoring the harm to the public’s health caused by cheap alcohol? In other words, when it comes to applying this approach across all duties, it seems that they bottled it. Could it be that they choose to grab a quick Budget headline once a year instead of taking an evidence-based approach to alcohol harm like that adopted by the last Labour Government?

I question the logic of creating an additional rate of duty to ciders up to only 7.5% alcohol by volume. A cursory look at the white cider market suggests that many of the products that the Government seek to make more expensive are currently listed at exactly 7.5% ABV, which is the upper band of the new duty applied by the clause. Clearly, while those ciders would be covered by the new band of duty, it would take only an additional spoonfull of sugar, as the saying goes, to push them up to 7.6% ABV, which is currently covered by the higher rate of duty that is applied to so-called high-strength ciders. Would it not have been a better approach for the Government simply to reduce the lower band of excise applied to higher-strength ciders to ensure that that duty instead applied from 6.9% ABV all the way up to 8.8% ABV? Will the Minister expand on what logic has been pursued by the Government and whether it might incentivise the industry to take more decisive action to reduce the strength of their white ciders or begin to diversify their products?

Amendment 97 would require the Chancellor of the Exchequer to review the impact of clause 54 on the cider industry. The point is to see how far the Government have tried to work with industry to develop and implement a more public health-oriented approach to their products while minimising the impact such an approach has on the industry.

Finance (No. 3) Bill (Second sitting)

Bambos Charalambous Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 27th November 2018 Public Bill Committees

[Peter Dowd]

That is a nice start to the afternoon. I will turn to amendment 17 to 19 and 22 which, I must say at this stage, we will also push to a vote unless we have the acquiescence, capitulation or otherwise of the Minister after he has heard my words of wisdom. I hope he has even more divine intervention and inspiration this afternoon from his officials telling him to agree with me.

Clause 7 introduces further reforms to optional remuneration arrangements for cars and vans. The measure seeks to make two changes to the current regime, as outlined in the Treasury’s policy paper. First, it is designed to

“ensure that when a taxable car or van is provided through OpRA, the amount foregone, which is taken into account in working out the amount reportable for tax and National Insurance contributions purposes, includes costs connected with the car or van (such as insurance) which are regarded as part of the benefit in kind under normal rules”.

Secondly, this measure is also expected to

“adjust the value of any capital contribution towards a taxable car when the car is made available for only part of the tax year.”

I imagine that the Treasury’s line is that this seeks to ensure that the value of this benefit is connected only to cost, but we are concerned that these changes may further complicate pre-existing optional remuneration arrangements that are already in place for employers and employees to utilise company cars and vans. That in turn may be a deterrent, as some employers may consider that it is too much hassle or too bothersome, and that there is too much red tape, when it comes to offering such a scheme. Similarly, employees may decide that the risks and liabilities of taking up the offer of a company car or van scheme may be too high, and that under these circumstances both rentals and automotive sales may fall.

To put it as succinctly as I can—I accept that I am prone to being succinct, which is a fault of mine—the Opposition do not believe that it is in the interest of our economy, which is heavily reliant on the automotive sector for jobs, or that of workers, to make it harder for them to use a company car or van through an optional remuneration scheme. That is why we have tabled amendment 17, which would amend page 5, line 2 of the Bill and insert:

“The Chancellor of the Exchequer must review the effect of the provisions in this section on the motor vehicle industry in parts of the United Kingdom and regions of England and lay a report of that review before the House of Commons within six months of the passing of this Act”

as linked to the nations.

I accept that Government Members must recognise the clear link between automotive sales and their use as company cars or vans in optional remuneration arrangements. Work vehicles make a significant contribution to the automotive industry’s more than £82 billion annual turnover and £20.2 billion of value added.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

Does my hon. Friend agree that further complicating the optional remuneration arrangements for employees who wish to use a company car or van could have an effect on the automotive sector as a whole? That would be terrible.

[Peter Dowd]

It would be. That goes to the heart of the point. We want to tease this issue out and have a review. I know we have raised a million and one issues for review, but that is as much as we can do in the current climate. That is what we want to do: we want to tease all these matters out.

--- Later in debate ---

[Peter Dowd]

Yes, I agree to that point of clarification. That is the intention. The Charity Commission and the Scottish body would no doubt recognise the seriousness of this problem, and in their strategy for dealing with fraud, they make the following point:

“The commission continues to see, and has to act on, serious problems arising in charities in relation to poor financial management and inadequate financial controls, accounting and record keeping. In 2010-11, out of 1,912 completed compliance assessment cases, the proportion involving serious concerns about fraud, theft and other significant financial and fundraising issues increased from 16% the previous year to 26%.”

Figures for subsequent years can be found in the commission’s annual publication “Tackling abuse and mismanagement”. The commission goes on to say:

“The National Fraud Authority in its annual fraud indicator report of 2012 estimated annual losses of £1.1 billion, or 1.7% of annual charity income during 2010-11.”

There is therefore a problem, because that is cash not going where it was intended. The impact of fraud and financial crime on a charity, particularly smaller charities, can be significant, going beyond financial loss and the impact of the financing of a charity’s planned activity. These crimes cause distress to trustees, and so on, and have an adverse effect on the charity. It is important to deal with them, says the Charity Commission.

If the Treasury is going to offer tax incentives for charitable donations, it is vital that the proper safeguards are in place to ensure that tax forgone does not act as an incentive to other risks. For example, from my understanding, the Charity Commission holds the only centralised list of registered charities; therefore a clear procedure for HMRC and the Charity Commission to communicate would be necessary to guarantee tax exemption. That is important.

[Bambos Charalambous]

My hon. Friend is making an excellent speech and raising some excellent points. Does he agree that there is a need for further transparency on how these proposals were put together by the Treasury? Does he agree that there is a case for a public register of charities that benefit from this tax exemption?

Finance (No. 3) Bill (First sitting)

Bambos Charalambous Excerpts

Tuesday 27th November 2018 Public Bill Committees

[Bambos Charalambous (Enfield, Southgate) (Lab)]

I have served on one other Public Bill Committee, which was on the energy price cap. We heard lots of evidence from many companies about the benefits or disbenefits of having an energy price cap. I see no difference between that Bill Committee and this one. I do not see why we should not hear evidence from experts who can advise us on what happens, as we do in other Bill Committees. It does not make sense to have one rule for one situation and a different rule for another.

[Sir Robert Syms]

We could have a general rule that every single Committee of the House should take evidence on every single mater, but the problem is that Committee sittings would then last considerably longer. They would need to be staffed up and we would have difficulty getting Members to serve on the Committees and listen to all that evidence. Ultimately, governing is about taking decisions. There has to be a balance in understanding what points of view people take. We can sit here endlessly listening to advice, but we have to make choices.

--- Later in debate ---

[Peter Dowd]

People will thank me for it—I am sure that is the case—but I exhort people to read that detail, which will give them an insight into a way forward.

The question that a review would fundamentally seek to ask is whether the section of the GAAR that I referred to but will not quote from is strong enough in providing HMRC tax officials with the basis for pursuing corporation tax avoidance. The review would also look at its relationship to the other sections of the guidance in meeting that aim.

A related matter is whether the hollowing out of HMRC has had an impact on its effectiveness in preventing avoidance and evasion, and we cannot ignore that. My constituency, as you are well aware, Ms Dorries, is home to a significant number of HMRC staff, and they have been impacted, as everywhere has, by the Government’s hollowing out of HMRC. This matter should be considered as part of the review proposed by our amendment. The effective resourcing of HMRC needs to be reviewed as well.

[Bambos Charalambous]

Does my hon. Friend agree that we need more senior HMRC inspectors to go after the corporations that are avoiding tax and that without investment in HMRC we will not be able to recoup the taxes that are necessary to fund this country’s economy?

[Peter Dowd]

My hon. Friend makes a fair point. This is not about the production of civil servants for the sake of it, just having them in a job where they do very little and are not particularly productive. Those civil servants are incredibly productive. There are various figures on the amount spent on chasing tax avoidance: if we put in £1, we might get £9 or £10 back—more according to certain studies. We need investment in the system, so my hon. Friend’s assertion is absolutely spot on. Resourcing should be considered as part of the review of corporation tax proposed in the amendment.

For too long, the Government have asked HMRC to pay the cost of a financial crisis that it had no part in, by implementing cuts in the very Department we need to support if we are to put an end to some of these avoidance gains. The impact of the Government’s austerity agenda was recognised by the National Audit Office, which published a report suggesting that the quality of services provided by HMRC to personal taxpayers collapsed in 2014-15 and in the first seven months of 2015-16. Between 2010 and 2014-15, HMRC cut personal tax staff from 28,000 to 15,000, which has almost certainly had an impact on the functioning of HMRC. The NAO analysis indicates that the quality of services deteriorated, which I do not think is a surprise to anyone. That gives a sense of the impossible pressure that HMRC is being put under and the difficulty of delivering on tax avoidance under the Government’s agenda.

Finally, amendment 11 requires

“a review of the effects of the current UK tax gap in respect of corporation tax applying globally agreed avoidance measures to multinationals with UK-domiciled subsidiaries.”

In respect of corporation tax, there has been some debate about what the tax gap in question is. I start by referring Members to HMRC’s own analysis of the tax gap, published this year. That analysis says:

“The estimated total tax gap for Corporation Tax was £3.5 billion in 2016-17 (£3.4 billion in 2015-16). This equates to 10.6% of the overall tax gap in 2016-17…The Corporation Tax gap for large businesses in 2016-17 is estimated at £1.1 billion. This represents 5.3% of total theoretical liabilities, the same as in 2015-16. There has been an upward revision to the 2015-16 estimate since the 2017 edition of ‘Measuring tax gaps’ by around £0.1 billion due to more recent data becoming available”.

There are around 170,000 mid-sized businesses in the UK, defined as the smallest businesses previously managed by the Large Business Service and the largest small and medium-sized enterprises that were reorganised into the mid-sized business directorate. Corporation tax on mid-sized businesses is about £0.1 billion higher than in 2015-16, and the corporation tax gap for small businesses is estimated at £1.6 billion for 2016-17, which is equivalent to 8.8% of total theoretical corporation tax liabilities. Those figures demonstrate the Government’s failure to apply proper enforcement measures against corporation tax avoidance: even on their own Department’s analysis, billions are slipping through the net every year. A review would be a first step towards ensuring that we applied the proper rules against multinationals with UK-domiciled subsidiaries, for example, and that those multinationals were paying their fair share.

A recent survey by ActionAid showed that eight out of 10 of British citizens want the Government to get on and deal with this issue. The Government are, in effect, upsetting 80% of the country with their inaction on this matter. Quite a significant number of people believe action has to be taken. I therefore call on the Minister to get on with it, accept our amendments and follow our proposal in dealing with tax dodgers at the corporate level once and for all.

Finance (No. 3) Bill

Bambos Charalambous Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

It is a pleasure to follow the hon. Member for Stoke-on-Trent South (Jack Brereton). This Finance Bill does not address the fundamental funding problems in our communities and public services. During the Chancellor’s Budget speech, he told us that the era of austerity was nearly over. He told us about the money for the “little extras” for our schools and that all would be rosy as he increased tax thresholds. Perhaps he was too distracted thinking up bad jokes to fully appreciate the effect of his Budget and policies, which mean that for many people the era of austerity is far from over. The Budget did not provide the substantial funding our public services need to be reliable and decent, and failed to invest properly in our public services. This is quite clearly a continuation of austerity.

My borough of Enfield has seen its funding cut by £161 million since 2010, which is well over 50% of its government funding, with other cuts still to come, and it is not alone. Like Enfield, most councils have been cut to the bone. Demand-led pressures on areas such as children’s services and adult social care will mean the council having to cut already-reduced services. Enfield has been affected by damping. The Government, having worked out what it needed, decided to take money away and move it elsewhere. I ask the Minister: when can we have that money back to fund the services that Enfield needs, and which the Government agree it needs? For such councils, austerity is not over, but will carry on for years to come. Is he pleased to see councils failing—councils such as Northampton—and going bust on the Government’s watch? The Government can fix this but choose not to.

Policing remains under-resourced. Last week, a 98-year-old man was seriously assaulted in his home in my constituency and now lies seriously ill in hospital, and today I learned there had been a stabbing near Arnos Grove station. What does the Minister have to say about the increase in crime and the cuts to policing in my constituency and across the country? Is austerity over for them? Yesterday, I spoke to the two police officers and one police community support officer charged with policing one ward of 10,000 people in my constituency. Does the Chancellor think that is sufficient? I invite him to come and listen to the concerns of local residents, victims of crime and those who live in fear. Why isn’t anything being done to reverse these cuts? Is the Minister happy with the level of police funding?

Education is another area of failure for the Government. The idea that £400 million for so-called “little extras” goes anywhere near addressing the funding crisis in schools is insulting. I am a school governor at Eversley Primary School in my constituency, and I am missing a governors meeting tonight to take part in this debate to let the Government know how schools are suffering with their budget cuts. In my conversation with the headteacher earlier today, she told me that the school was facing a £500,000 budget deficit next year and was now relying on the donations of parents and staff to pay for resources. Eversley is an outstanding primary school and is not alone in my constituency in facing a funding crisis that is a direct result of the Government’s policies. If the Minister does not believe me, he is welcome to meet me and headteachers in my constituency to look at their budgets for next year. He suggests there is more money for schools, but does he realise there are more children in our schools than ever before?

Even for school meals, the Government have taken no account of the increase in food prices or inflation since 2010, meaning that the budget for producing free school meals for all pupils from reception to year 2 has remained the same for more than eight years at £2.30 per meal. That makes it harder to provide a nutritious meal for children in their early school years. How is that joined up with the Government’s strategy on tackling childhood obesity? If the Chancellor wants to know where to find additional funding for education, he could look at the Education and Skills Funding Agency, which last year spent £17 million re-brokering failing academies to other academy chains. Why is there no scrutiny of this shocking waste of taxpayers’ money?

As my hon. Friend the Member for Swansea East (Carolyn Harris) mentioned so eloquently, in an attempt to shore up and support bookmakers, the Chancellor decided to give them more time to make more profits from fixed odds betting terminals—and thus more revenue for the Treasury—thereby condemning hundreds of people to the abject misery brought on by gambling addiction, with many suffering great personal harm and some committing suicide. What a shocking state of affairs.

There was no help in the Budget either for people on universal credit. The £1.7 billion put back in by the Government is less than a third of the £7 billion taken out. That is no help to a local resident losing £58 per week as she migrates from family tax credits to universal credit. The amount she is losing is going towards funding the tax cuts in the Budget. The Minister spoke of fairness in his opening speech. Where is the fairness for her?

The Chancellor issued a caveat in his statement, saying that the Budget would be all off if there were a no-deal Brexit. What the Bill aims to do is give the Government sweeping powers to amend tax legislation in such an event. It is another attempt at a power grab, which is something that we have become used to with this Government. Once again, Parliament is being sidelined.

The Government’s economic failure will continue with this Finance Bill. The Bill and the Budget are not fair. They are failing our communities by not replacing the police officers whose numbers have been cut since 2010, by not giving local authorities the funds that they need, by not providing what is needed for our schools, and by not helping the most vulnerable in our society.

A fair taxation system is for the common good, and should underpin shared prosperity through universal services. The Bill does not offer a progressive and fair tax system, and it means more austerity for the vast majority of the people. The Minister forgets at his peril that the people who benefit from tax cuts are also the people who are asked to make donations to cover the funding cuts in their children’s schools, who experience the burglaries that police no longer attend, who have seen a deterioration in public services, and who are worse off under universal credit. Austerity is not over for them either.

The Bill is not fair. It does not help our communities, including the most vulnerable, and it is not fit for purpose.