Code of Practice on Fair and Transparent Distribution of Tips

Lord Boateng Excerpts

Friday 24th May 2024 Lords Chamber

I give my thanks and appreciation to all noble Lords who have ensured that this legislation, which will mean a great deal to very many of the lowest-paid, hard-working people in the country, will become law. I thank the Minister for the courtesy and good humour he has shown me in my brief period as Opposition spokesman, as well as the noble Earl, Lord Minto, and the noble Lord, Lord Offord, who have shown me the same courtesy. I look forward to returning and seeing many noble Lords in this Chamber again in a few weeks’ time, perhaps from a very different vantage point.

[Lord Boateng (Lab)]

My Lords, I will raise one matter arising from when I was working as a community lawyer in the Queensway area, in W2, where there are many workers in the hospitality industry. It relates to the impact of tips on tax and benefits. I commend the work of the Low Incomes Tax Reform Group in this often neglected area.

This legislation and the code of practice are entirely welcome, as my noble friend Lord Leong has indicated, but the reality is that, as a result of this, some employers will be paying service charges over to workers for the first time, as opposed to keeping them, and will adopt different practices, such as removing service charges, so that they do not have to handle tips. It is therefore likely that more workers will receive tips and in larger amounts. That is wholly desirable and to be welcomed, but it will have implications for tax and welfare benefits.

We have seen the consequences when sufficient attention is not paid to the impact of additional payments on people’s entitlement to welfare benefits—it can have extremely adverse implications for the individuals concerned. The Low Incomes Tax Reform Group made representations to the department during the welcome consultation that there should be clearer signposting to HMRC and the benefits department to make sure that there will not be adverse unintended consequences for employers and employees.

I can find only one reference to tax implications, which is a sort of signpost, in paragraph 2(a) of the code of practice. I urge the Minister to go back to the department and make sure that, when this is promulgated, there will be clearer signposting on the tax and benefit implications of this welcome code.

[Lord Johnson of Lainston (Con)]

I thank noble Lords for their interventions. If I may turn to the specific points raised by the noble Lord, Lord Boateng, I completely agree with his comments. I will certainly take them back to the department. As with all things, there are often unintended consequences. As Minister for better regulation, I am very aware that we do not want to drive restaurants and so on to stop giving tips to staff. If Hanson’s Café was allowing people to keep tips, and then decides that the new legislation means it wants to remove the principle, we should be aware of that and monitor it closely.

As the noble Lord, Lord Addington, raised, it is important that people know that their tips are now going to go to the waiting staff. I regret that we have to bring this type of legislation forward. It is a surprise to many of us that this is necessary, but I think it is necessary. This code of practice will give a great deal of transparency and clarity.

As the noble Lord, Lord Leong, said, it is vital that we have an effective tipping policy. It is not simply a gratuity or a nice to have. We need to have a functioning hospitality industry. Tips play an important part in compensating and incentivising the service industry, so it is really important that the Government and all of us in this House see the importance of legislation such as this to ensure that the system runs properly, people are treated fairly and the economy can function as a result.

I will take all points back to the department. I assure the noble Lord, Lord Boateng, that his point is fed in directly. I reassure the House that there are no changes to the tax processes on account of this legislation. Clearly, there are different tax treatments for various types of tip, in terms of cash, whether is it paid through a tronc or directly from the venue under the new principles. It is right to make sure that they are clearly signposted.

In response to the kind comments from the noble Lord, Lord Leong, it has been an enormous pleasure to work with him over the last year or so. I think we have achieved a great deal together for this country and I am very proud of the collaboration that we have managed to achieve in so many different areas. I extend these comments to his colleague, the noble Lord, Lord McNicol, who has been extremely collaborative and very supportive. I know they are not in their usual place, but the noble Lords, Lord Fox and Lord Purvis, have also been highly collaborative, although they like to ask me as difficult questions as possible. I am not sure how much that will be missed in the future, depending on various different outcomes. I am extremely proud of the work that we have done on our free trade, business and regulatory agenda. We can all feel that this last piece of important legislation is a job well done. I beg to move.

British Steel

Lord Boateng Excerpts

Wednesday 8th November 2023 Lords Chamber

[The Earl of Minto (Con)]

Since 2018, the Government have provided about £200 million-worth of investment into the north and north-east Lincolnshire, across a range of different categories. As far as this specific transition is concerned, I ask the House to consider the level of support that has been agreed by the Government —new government money managed by both the Welsh and Westminster Governments—which is providing some transition from the historic steel jobs of Port Talbot to the future.

[Lord Boateng (Lab)]

My Lords—

[Lord Forsyth of Drumlean (Con)]

My Lords, it is this side. Does my noble friend recall that the second crossing of the Forth Road Bridge was made of steel, most of which came from China, where they are opening one coal-fired power station a week? Is it not insane to pursue a green agenda which will destroy jobs on this scale and at the same time cost many millions of what my noble friend describes as “government money” but which is taxpayers’ money or borrowed money that taxpayers will have to pay for?

[The Earl of Minto (Con)]

I completely understand the point about it being taxpayers’ money. There is no such thing as free money and it is very important that we do not lose sight of that. The issue of dealing with China has been well rehearsed, and the Chinese ownership of British Steel is widely known. We are supportive of that relationship.

[Lord Boateng (Lab)]

My Lords, it is our turn now, I think. The Minister says that we should leave the fate of these workers and our strategic interests as a nation to the market. Will he reflect on the ownership of the company in question? It is a Chinese company; every Chinese company is controlled by the Chinese Communist Party. Would he apply the same strictures to the Chinese and, if not, why should we subordinate our national interest to the market, when the Chinese—our competitors —do not?

[The Earl of Minto (Con)]

My Lords, I do not think I said that we are throwing employees into a wide market. In fact, I think I said that we would provide support to see them through the transition. We have a fair and open market for Chinese investment in this country. It is a major world trading relationship and, while I understand some of the political issues behind it, just to avoid a country of that weight is slightly isolationist.