Economic Update

Caroline Nokes Excerpts

Tuesday 17th March 2020 Commons Chamber

[Rishi Sunak]

For those people, the measures that we took last week will already start to help from day one. The Work and Pensions Secretary has already put in place support to make sure that access to the security that they need is both faster and more generous than it was.

[Caroline Nokes (Romsey and Southampton North) (Con)]

The events industry is not only highly seasonal but full of people working on a self-employed basis. Given that this season has pretty much been wiped out, what reassurance can my right hon. Friend give the industry that he is looking to its needs?

[Rishi Sunak]

I am happy to look specifically at the issue that my right hon. Friend has raised, but the measures that we took last week will provide immediate support to many of her constituents in that situation.

Apprenticeship Levy

Caroline Nokes Excerpts

Tuesday 11th February 2020 Westminster Hall

[Several hon. Members rose—]

[Caroline Nokes (in the Chair)]

Order. I have five Members indicating that they wish to speak and we have about 35 or 40 minutes, so there need not be a time limit.

--- Later in debate ---

[Damian Hinds (East Hampshire) (Con)]

It is a great pleasure to speak in this debate. I congratulate my hon. Friend the Member for Gloucester (Richard Graham), who, along with my right hon. Friend the Member for Harlow (Robert Halfon), has done so much to promote apprenticeships and to ensure they are a regular subject of debate here in Parliament. There have always been very high quality apprenticeships in this country. Multinational companies in engineering and automotive have long offered apprenticeships that compete and are comparable with the very best in the world, but not all apprenticeships have been very high quality. Within sectors there have always been companies that have seen it as part of their duty, responsibility or mission to invest in the next generation coming through, but there have also always been companies that have not seen that imperative and benefit instead from the training provided by competitors.

The levy must be seen in the context of a package of measures introduced in the 2015 summer Budget and autumn statement, which included the reductions in corporation tax and included the national living wage and this third arm, the apprenticeship levy. With that package, the Government effectively said to companies, “We will give you a very competitive corporation tax regime, which will lower the hurdle for investment. It will mean that businesses can grow, but we need to make sure that people are paid properly and fairly, and we need to ensure that everybody invests in the next generation of talent coming through.”

There have been some difficulties with the levy, some of which have been referred to. One is the speed of approval of certain standards, which has got better over time but needs to carry on getting better. Fundamentally, there has been a great quality uplift in apprenticeships. Thanks to the levy, the amount of cash in apprenticeships has doubled over the decade in cash terms. We have seen a move to longer, higher level apprenticeships, and the move from so-called frameworks to standards. That is all a bit jargonistic, but it basically means that there is a more exacting standard for the apprenticeship, with a greater degree of employer approval. Effectively, business has voted for a higher standard of apprenticeship, which creates some tension against a numerical target.

I want to talk briefly about each of the three main objections to the apprenticeship levy: first, it is just a tax; secondly, it is too inflexible; and thirdly, “I can’t manage to use the whole amount.” On the first point, the apprenticeship levy is a non-optional deduction levied by Government, so it does bear some tax-like features, but it is not exactly the same as a tax. Of course, money is extracted from business as part of the overall Exchequer requirement.

Something that I discovered when I worked at the Treasury was that for every tax, there is a really good argument against it. Corporation tax? Too many companies avoid it. Business rates are a fixed cost, as we all know, and that can be difficult for certain companies. National insurance is a tax on employment. Sales tax, or VAT, may apply at an early stage of development. Even excise duty, which is based on volume, inevitably involves problems with whatever system is set up and whatever threshold is set.

It is right that we rebalance the approach over time and right that we look again at business rates and introducing a digital sales tax, because there are concerns about some companies being able to avoid corporation tax, and, conversely, there is the strain on some of our shops on the high street and elsewhere,. Fundamentally, in that suite of taxes and ways of getting money out of business, the levy solves the free rider problem when it comes to investment in skills and, relatively speaking, rewards the companies that make a greater investment. I suggest that, as part of a suite of approaches, it has an important role to play.

The second big argument is that the levy is too inflexible. As my right hon. Friend the Member for Harlow mentioned, there is always a question of re-tagging: of training that would happen anyway, or re-accrediting skills that exist already, and it is always a strain. The apprenticeship levy already covers quite a lot. Let us compare what the apprenticeship levy in the UK covers compared with the German apprenticeship system, which is commonly regarded as the gold standard in apprenticeships. The minimum specification for our apprenticeships is lower in terms of duration; the age range that it covers is considerably wider than is common practice in Germany and some other countries; and, as has been alluded to, it covers apprenticeships at numerous different levels.

We can argue legitimately that there are more things that it should be possible to use levy money for, such as pre-apprenticeship programmes, and so on, but the mathematical reality is that if we were to do that, other things being equal, we would need a higher levy or we would need to take something else out of eligibility for levy spend.

Finally, there is the objection, “I cannot spend it all.” It is worth bearing in mind, of course, that some companies do spend it all, or almost all of it. It is also true, and relevant, that sectors vary. In the engineering sector, for example, there is typically a very high apprenticeship spend. In retail and hospitality, it is typically lower. Again, we need to recognise the mathematical reality, which is that the levy is designed so that levy payers cover the apprenticeships in their own companies but also cover the cost of apprenticeships for non-levy payers. To change the system, it would be necessary to extend the scope of the levy or raise its level.

I think it is right at this point to review and reform the levy. It is legitimate to look at such things as coverage of MBAs, although it turns out that it is hard to define where the line should be drawn on post-level 6 qualifications. I think we could look more at tailoring the specifications of difference to different age groups and sectors, and I think there is an argument around pre-apprenticeships and that particular social justice agenda. The overall principle, however, is good. It has increased the amount of money and investment available for apprenticeships and skills and protected it, and it solves the free rider problem. I would say that, along with T-levels, higher level technical qualifications and our school reforms, apprenticeships are key to reforming productivity, and they deserve our support.

[Caroline Nokes (in the Chair)]

I now call John Howell. Please can comments be kept to four minutes, so that the Minister and Front-Bench spokesmen have time?

Beer and Pub Taxation

Caroline Nokes Excerpts

Wednesday 5th February 2020 Westminster Hall

[Caroline Nokes (Romsey and Southampton North) (Con)]

I congratulate my hon. Friend the Member for Dudley South (Mike Wood) on securing this debate. My brief speech will not be a tale of gloom and doom, but will be about success and Bar SO16, a new pub set up by the community—I went to its opening on Friday night. It was incredibly badly timed because it was still dry January. The community found an investor and premises and really pulled behind a new venture in an area that has lost both the Stile and the Stoneham Arms in the past few years. So that is a success story.

In Nether Wallop, the community has come together with a neighbourhood plan and the Five Bells is going through the process to be registered as an asset of community value. People are optimistic that they will get a pub that has been closed for seven years back up and running again. Likewise, people in Longparish are pursuing the same objective for the Plough Inn.

The challenge is not finding the community that wishes to pull behind its local. It is finding the economic environment in which it can thrive. I respectfully point out to my hon. Friend the Minister that that is about the taxation of beer, as we have heard this afternoon—I will not bore anybody with stats again—and it is about business rates. It is about making sure that we have an environment in which the pubs we are hearing about this afternoon from all corners of the Chamber have the circumstances in which they can not only set up, but go on to thrive.