Finance (No. 2) Bill

Debate between Harriett Baldwin and Victoria Atkins

Report stage
Tuesday 20th June 2023 Commons Chamber

[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.

Non-Domestic Rating Bill

Debate between Harriett Baldwin and Victoria Atkins

2nd reading
Monday 24th April 2023 Commons Chamber

[The Financial Secretary to the Treasury (Victoria Atkins)]

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

The House may have spotted that I am not in as full voice as I normally like to be. I promise that is not because I have been participating in the activities that I understand are going on outside in Parliament Square. I hope the House will understand if I do not take quite the number of interventions that I generally like to when opening a debate.

I believe that all of us across the House recognise how important business rates are to council budgets and the funding of core services. This year alone, business rates are set to raise more than £20 billion to fund vital services, from adult and children’s social care to refuse collection. However, business owners have raised concerns about the impact of this tax on their ability to stay competitive. That is why the Government have delivered and will continue to deliver on our commitment to reform business rates.

In the autumn statement, we announced substantial immediate support to help businesses adapt to the 2023 business rates revaluation. Today, we take another major step forward, turning our attention towards longer-term reform with the Non-Domestic Rating Bill. It will ensure a business rates system that is more flexible, transparent and fair.

Before I set out what the Bill delivers, I remind the House of the steps we have already taken to improve the business rates system. From April 2023, we have updated all rateable values for non-domestic properties, reflecting changes in the property market. The revaluation ensured a fairer distribution of bills between online and physical retail. On average, bricks-and-mortar retailers saw decreases of around 20%, but we did not stop there.

In the autumn statement, we announced a support package worth almost £14 billion over the next five years to support businesses. We have frozen the business rates multiplier this year—a £9.3 billion tax cut over the next five years—we have increased the retail, hospitality and leisure relief scheme from 50% to 75%, supporting around 230,000 properties, and we have removed unpopular downwards caps from the transitional relief scheme, ensuring that businesses immediately see the benefit of falling bills.

Turning to the Bill, business owners have been clear that a more frequent revaluation cycle would be extremely helpful. In place of the current five-yearly cycle, the Bill will implement a three-yearly cycle. The most recent revaluation took effect from this April, so the next will take place in 2026 and it will happen every three years thereafter. I understand that colleagues will ask, “Hang on a minute. Why every three years, rather than annually or every two years?”. The reason is that this single measure is a significant shake-up of the business rates system. An initial three-yearly cycle ensures that the Valuation Office Agency has the capacity to deliver these important reforms. I reassure the House that we will of course keep the system under review, with the aim of going even further if we can.

We are implementing a new duty for ratepayers to provide the VOA with information that supports valuation. That will be submitted through a new, simple online service. It brings business rates in line with wider tax practice, and it is a crucial first step towards going further on the frequency of revaluations in the future. We will make the valuation process clearer by increasing the transparency of the VOA’s work. The VOA has already delivered some improvements, but the Bill will allow it to go even further and provide more accessible information to ratepayers on how individual valuations have been reached.

[Harriett Baldwin (West Worcestershire) (Con)]

The Minister is speaking about the Valuation Office Agency, which gave evidence to the Treasury Committee last week. It reassured us that it was ready for these changes and on track for its computer system changes. Is that consistent with what she has been told?

[Victoria Atkins]

Yes, it is. Indeed, the VOA is very keen to get moving with this because, while it does a good job under the current system, it understands the difficulties that less frequent revaluations have posed for businesses, particularly given recent history with the pandemic. This is very much part of trying to sew the system together even more tightly, so that the VOA is able to fulfil its obligations to ratepayers.

We are going to clarify what sort of changes or events should lead to changes in rateable values between revaluations, with reforms to material changes of circumstances. Another key reform involves rethinking the way that the two multipliers or tax rates are calculated. We are making the recent practice of uprating the multipliers by the consumer prices index a permanent feature. Defaulting to this lower measure of inflation will help businesses struggling with rising costs. The Bill will also allow the Government to adjust either multiplier to a rate lower than inflation, and to prescribe which properties pay the lower or smaller multiplier, keeping business support adaptable to the fast-moving fiscal environment.

The key driver for all of these changes is to help businesses grow, and in so doing we want to remove barriers to investment and to incentivise growth. We are therefore creating an entirely new 100% relief for ratepayers making eligible improvements to their property. They will not face higher bills as a result of those investments for 12 months. I know that that is something for which businesses, and indeed colleagues, have been asking for some time. We will also enshrine in law the 100% relief for low-carbon heat networks that have their own rates bill. That is something we recently brought in with the support of local authorities, and it has been warmly welcomed by the business community.

The Bill shows that the Government are honouring our promise to British businesses that we will be there for them no matter what, so that they can continue to innovate, expand and thrive in a globally competitive economy. In the last six months, my right hon. Friend the Chancellor has announced almost £14 billion of support to the business rates system, and now through the Bill we are going even further. The Bill creates a modern system that can adapt to the ebb and flow of market tides. It delivers a fairer system that provides greater transparency for ratepayers and a business-friendly system that helps, not hinders, growth and rewards companies that invest. I commend it to the House.

Finance (No. 2) Bill

Debate between Harriett Baldwin and Victoria Atkins

2nd reading
Wednesday 29th March 2023 Commons Chamber

[Victoria Atkins]

I encourage the right hon. Gentleman to look carefully at the small profits rate clauses in the Bill. We clearly do not want smaller businesses, such as those on our high streets that we care for so deeply as constituency MPs, to be subject to the regimes for the largest multinational companies. If he looks at those clauses, he will see that we keep the rate at 19% for companies with profits of £50,000 or less. For companies with profits between £50,000 and £250,000, there is a tapered rate of increase. That means that 70% of companies will not see an increase in their corporation tax rate. Only the top 10% of companies will be eligible for the full main rate, but we hope that many will take advantage of the full expensing policy that we have announced.

[Harriett Baldwin (West Worcestershire) (Con)]

Many measures in the Bill will be warmly welcomed by businesses and households in West Worcestershire. However, clause 346 abolishes the Office for Tax Simplification. I do not think that anyone would say that the tax system is simpler than it was when the OTS was established. Could the Minister outline how we on the Treasury Committee can hold her accountable for continuing to simplify our tax system?

[Victoria Atkins]

I thank my hon. Friend the work that she and her Committee have done on the issue of simplification. The Committee had a very productive session with the soon to be former members of the office. What we want to do, which I will expand on a little later, is to put simplification at the heart of policymaking. So I have set my officials three objectives: making tax fairer, simpler and supportive of growth; and, for every single decision that we make, having explanations of how we will meet those three objectives. But we must acknowledge that, sometimes, there is a tension between the wish to make tax fairer and the wish to make tax simpler. The taper rate that I just described is an example of that. I appreciate that, for businesses with profits between £50,000 and £250,000 profits, their accountants will have to work out which tapering rate is available to them. But we do that precisely because we want to be fair to those businesses. I will expand on the important point that she raised later in my speech.

The Government have committed not only to supporting the growth of established businesses but to providing a boost to start-ups and young companies. That is why the Bill increases the amount of seed enterprise investment scheme funding that companies can raise over their lifetime from £150,000 to £250,000. It simplifies the process to grant options under the enterprise management incentive scheme, and it doubles the amount of share options that qualifying companies can issue to employees under the company share option plan to £60,000. Those changes intend to provide a boost to young companies by widening access to the schemes and increasing the funding limits, encouraging additional investment and further supporting growth of those companies.

We recognise how important research and development is to drive innovation and economic growth, including in our thriving life sciences sector, which employs more than a quarter of a million people and had a combined turnover of more than £90 billion in 2021. To encourage research and development, the Bill legislates for reforms to the R&D tax reliefs system previously announced by the Prime Minister when he was Chancellor. They include changes to support modern research methods by expanding the scope of qualifying expenditure for R&D reliefs to include data and cloud computing costs, and a range of measures to reduce error and fraud to ensure that our tax reliefs are well targeted and offer value for money.

By encouraging more businesses to invest in R&D, this Government are helping them to create the technologies, products and services that will advance living standards. I am pleased that, when they were announced, the chief executive of the Bioindustry Association Steve Bates OBE said of the measures:

“Modernising R&D tax reliefs to include data and cloud computing is essential for life science firms discovering and developing life-changing therapies for patients”.

We recognise the enormous contribution to our culture and economy made by theatres, orchestras and museums, as well as our vibrant film, gaming and media businesses. The Bill will extend for another two years the current 45% and 50% rates of tax relief for theatres, orchestras and museums, which will continue to offset ongoing pressures and boost investment in our cultural sectors.

The Bill will support the Chancellor’s ambitious plans relating to employment. To achieve the dynamic economy we all want, we cannot afford to waste anyone’s potential. We need to remove the barriers that stop people from working. No one should be pushed out of the workforce for tax reasons.

The British Medical Association, the Royal College of Surgeons and others have told us about the disincentive to continue working in healthcare because of tax charges on their pensions, and the NHS is our biggest employer, so to make sure that they and other professions are not deterred from working, the Bill will increase the pensions annual allowance to £60,000. The Bill will also remove the lifetime allowance charge to incentivise our most experienced and productive workers across our economy to stay in work for longer. As Dr Vishal Sharma, chair of the British Medical Association pensions committee, said:

“The scrapping of the lifetime allowance will be potentially transformative for the NHS as senior doctors will no longer be forced to retire early and can continue to work within the NHS, providing vital patient care.”

These changes will help to incentivise highly skilled and experienced individuals to remain in the labour market, which will help to grow the economy while increasing the knowledge and experience of the UK’s labour force.

Oral Answers to Questions

Debate between Harriett Baldwin and Victoria Atkins

Monday 9th November 2020 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

What steps her Department is taking to protect victims of domestic abuse.

[The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)]

This year, in response to the pandemic, our work to tackle domestic abuse has included additional significant investment of £27 million across Government to domestic abuse charities and service providers to bolster the support they give to victims and survivors. We have also run a public information campaign, #YouAreNotAlone, which we continue to build on, and the police have been proactively targeting perpetrators. We also continue to work on the Domestic Abuse Bill, which will help to support victims in the longer term.

[Harriett Baldwin]

I thank the Minister for listing that extensive programme of work. One of the reasons why I backed last week’s national restrictions with such a heavy heart was their impact on domestic abuse. Will the Minister say loud and clear from the Dispatch Box that one of the reasons that someone can leave their home is to flee abuse?

[Victoria Atkins]

I thank my hon. Friend for raising that really important point. I know that hon. Members across the House will very much have borne in mind the impact that further restrictions may have on victims and survivors of domestic abuse. I am more than happy to reiterate loud and clear that victims of domestic abuse can and must leave their home address to seek help, if they are able to. What is more, the Prime Minister made that very clear in his public statement to the nation at little over a week ago. I ask all hon. Members please to send that message loud and clear to their own constituents—that is, if someone is facing harm or injury at home, they can leave their home to seek help.