Banks: Payment Protection Insurance

Lord Campbell-Savours Excerpts

Monday 13th January 2014 Lords Chamber

[Lord Newby]

My Lords, I think that all Members of your Lordships’ House will have had such telephone calls. I can reassure the noble Lord that the Government have acted in this area. During last year’s passage of the banking reform Act, we gave the claims management regulator the power to impose penalties on claims management companies which make speculative claims. We are also giving the regulator more enforcement staff and requiring claims management companies to pay for this extra effort.

[Lord Campbell-Savours (Lab)]

But they are still doing it.

[Lord Newby]

My Lords, every call made in respect of PPI is not necessarily inappropriate. Some are. Many people have used claims management companies because they did not feel confident going through the process themselves. I accept that there has been abuse. The key thing we have done is to give the regulator power to crack down on firms which make speculative claims to the banks when there is no justification for it.

Taxation: Rental Income

Lord Campbell-Savours Excerpts

Tuesday 3rd December 2013 Lords Chamber

Asked by

[Lord Campbell-Savours]

To ask Her Majesty’s Government what plans they have to ensure that taxation is paid on rental income on property owned by persons from overseas.

[Lord Newby (LD)]

My Lords, the Government believe that non-resident landlords should pay tax as appropriate, and HMRC operates a withholding scheme to ensure compliance. Tenants and letting agents are required to withhold and pay HMRC basic rate tax. Landlords whose UK tax affairs are up to date may apply not to have tax withheld and be automatically entered into self-assessment. Non-resident landlords in self-assessment are subject to HMRC’s usual rigorous compliance checks.

[Lord Campbell-Savours (Lab)]

My Lords, that only applies where a landlord uses an agent—I listened very carefully to the Minister’s response. How is it possible to quantify the scale of evasion on rental income without a means of establishing who owns what, what rents are paid, and to whom those rents are paid? Is there not a real need to establish a local authority-based national register of all domestic and overseas-based landlord rented-out property—a register that is accessible by HMRC? Is it not true that there is vast evasion in this area?

Taxation: Tax Law Enforcement

Lord Campbell-Savours Excerpts

Wednesday 30th October 2013 Lords Chamber

[Lord Newby]

It was a very long time ago, my Lords. While there are many good theoretical principles on which taxes need to be based, the single most important is the ability to collect the tax in the way you want. That must be a guiding principle. I do not believe that there is an easy answer to generating higher levels of tax revenue just by having a straightforward tax system. If it were as simple as that, it would have been tried by now.

[Lord Campbell-Savours (Lab)]

My Lords, what additional mechanisms, procedures and arrangements are being put in place to maximise the potentially substantial income available from the letting of residential property, particularly in London, by people overseas? At the moment that revenue is often not collected.

[Lord Newby]

My Lords, as the noble Lord will know, in last year’s Budget and Finance Bill, the stamp duty payable on high-value properties in those circumstances was significantly increased. That has led to a substantial increase in the overall yield of stamp duty on property transactions.

Taxation: Evasion and Avoidance

Lord Campbell-Savours Excerpts

Thursday 6th June 2013 Lords Chamber

[Lord Foulkes of Cumnock]

My Lords, I am particularly pleased to have obtained this debate on this subject, which is not just tax evasion and tax avoidance but the social and economic consequences of that tax evasion and avoidance. I must say I am disappointed that no Conservative Members have sought to participate in the debate; it might have added an interesting angle—some spice—to it, although I understand that some of the things that they might try to defend are not easy to defend. Tax is a question of a real moral imperative as well as having profound practical consequences. Those who dodge their legitimate tax obligation commit a severe moral breach, but they also deprive our schools and hospitals of much needed investment and create problems for responsible businesses that pay their full share of taxation.

Tax evasion and avoidance is not new. Plato—I see that the Convenor of the Cross-Benches is looking astonished that I am quoting Plato—said that when there is income tax, the just man will pay more and the unjust less on the same amount of income. How true that is. However, what is new about the current crisis in tax is the scale of the issue and how far out of control we have let it go. The amount that we lose in the United Kingdom in uncollected taxes is a third of the deficit. It dwarfs the personal tax allowance, and it is more than twice the size of the bill for housing benefit—and how often do we hear about all those? That is nearly £40 billion. It is a cash sum the size of the budgets of some government departments, which are being asked to make cuts that are causing tremendous problems. We have heard of them recently in debates on legal aid and defence, and of all the difficulties that are being created for our departments. It is money that could be used to cut the deficit, to build 2,500 new schools or to employ more than 1 million new nurses, teachers and policemen. On its own, tax evasion is costing the average household £530 every year.

These are the real and significant costs of tax evasion and tax avoidance. In responding to them, as well as in talking about the moral principles at stake, I will of course address some of the solutions to the problems, but first we must say that not paying your full and legitimate share of tax is immoral. By making use of our roads or our highly trained workforce, or by breathing our clean air, or even by casting a vote, you are bound by the obligations of society—and one of those key obligations, agreed through our democratic process, is to pay your legitimate share of taxation.

[Lord Campbell-Savours]

If my noble friend will allow me to intervene, I wonder whether he might be able to tempt the noble Lord, Lord Forsyth, out of his corner on the question of a flat tax in his whole argument.

[Lord Foulkes of Cumnock]

I have never been able to tempt the noble Lord, Lord Forsyth, on anything up till now, but I am sure that if he feels constrained, he will come in.

Banking: LIBOR and EURIBOR

Lord Campbell-Savours Excerpts

Tuesday 12th February 2013 Lords Chamber

[Lord Deighton]

My noble friend makes a good observation. Clearly, there were some gaps in the historical supervisory structure, which is why we have passed the Financial Services Act reforming entirely the regulatory apparatus around this business. Of course, the FSA is about to be replaced by a combination of the Financial Conduct Authority, the Financial Policy Committee and the Prudential Regulation Authority. We now have a new regime surrounding this arena. I share my noble friend’s concern that moving from gamekeeper to poacher needs to be managed closely.

[Lord Campbell-Savours]

Are the penalty levels to which the noble Lord referred set in legislation? If so, can we not change the legislation?

[Lord Deighton]

The penalty levels are a matter for the FSA. In 2010, it re-established the code under which it assesses the fines to make them more transparent. It is an area which has been recently reviewed.

Taxation: International Companies

Lord Campbell-Savours Excerpts

Tuesday 23rd October 2012 Lords Chamber

[Lord Sassoon]

The noble Lord, Lord Barnett, always wants me to be clear and simple, so the answer is no to his first two questions. On the third question, he has an underlying, quite proper, concern, which is why the work that Graham Aaronson has done for the Government on a general anti-avoidance rule, the so-called GAAR, is a very important part of ongoing work.

[Lord Campbell-Savours]

What are the Government going to do about Starbucks and its transfer pricing arrangements?

[Lord Sassoon]

My Lords, the noble Lord does not expect me for one moment to start commenting on the tax affairs of any individual taxpayer. As a general response, it may interest the House that the 800 or so largest companies that come under the large business service of HMRC to be assessed pay £136 billion in corporation tax, PAYE and VAT each year. Almost 50% of that tax comes from foreign-owned businesses, so I do not think we should have in mind that foreign-owned companies as a group are somehow doing something that we have to be vigilant about. We must keep this in proportion.

--- Later in debate ---

[Lord Sassoon]

I am very grateful, as I often am, for the question asked by the noble Lord, Lord Davies, because it enables me to tell the House, as I have done before, that £900 million has been reinvested in the compliance activities of HMRC precisely because we need to do more work to attack avoidance, evasion and criminal attacks on the tax system. Compliance revenue has more than doubled in six years so that by 2014-15 an additional £7 billion per annum will be coming in. The noble Lord’s concerns are quite right, and this Government are very actively on the case.

[Lord Campbell-Savours]

My Lords, the Minister did not answer my question on transfer pricing, which is the mechanism used to avoid paying corporation tax. Why will he not answer my question?

[Lord Sassoon]

Because, forgive me, there are other Peers wanting to get in. I completely agree with the noble Lord that transfer pricing is one of the most serious areas that need to be looked at, which is precisely why each one of those 800 large companies has a dedicated tax professional looking at this area. The focus on transfer pricing has meant that in the past four years £4 billion has been recovered precisely by going after transfer pricing schemes. On average, £1 billion a year is coming in through effective action.

Taxation: Avoidance

Lord Campbell-Savours Excerpts

Wednesday 25th July 2012 Lords Chamber

Asked By

[Lord Campbell-Savours]

To ask Her Majesty’s Government on how many occasions since 2010 officials of HM Treasury received reports and recommended action on the operation of the K2 offshore loan tax avoidance scheme, and on tax avoidance generally.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, HM Revenue and Customs was investigating the K2 scheme prior to recent press articles. HMRC does not report operational details on the specific schemes to HM Treasury but advises if a change in the law is needed. Since 2010, action has been taken on 26 occasions to close down avoidance schemes by legislation. The Government are consulting on a general anti-abuse rule and on extending the disclosure of tax avoidance schemes rules.

--- Later in debate ---

[Lord Campbell-Savours]

I thank the noble Lord for that Answer, and I am sure that we will be returning to this issue later in the Session. On the second part of my Question, is it not true that tax evasion through the failure of United Kingdom citizens and foreign nationals to pay tax on rental income from private residential property held within the United Kingdom is costing the country millions if not billions of pounds annually? Is there not an argument for local authorities to be required to register all private rented property in their area, with declarations of ownership accessible by HMRC?

[Lord Sassoon]

My Lords, the important broad picture here is that on the latest annual figures, those for 2010-11, HMRC collects approximately £469 billion a year. The estimated tax gap is 7.9%, a percentage that compares favourably with, for example, the USA at 14% and Sweden at 10%. Nevertheless, there is a gap of £35 billion and it is very important that HMRC does all that it can to close it, which is why it is prioritising this area in many respects. I hear what the noble Lord says about a specific issue and I will take his suggestion away, but I can assure the House that HMRC is prioritising it right across the board.

EU: Euro Area Crisis

Lord Campbell-Savours Excerpts

Thursday 24th May 2012 Lords Chamber

Asked by

[Lord Campbell-Savours]

To ask Her Majesty’s Government what assessment they have made of the effect on the European economy and financial institutions of the crisis in the euro area.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Government make regular assessments of the economic situation as part of the normal process of policy development. The OBR, the OECD, the European Commission, the IMF, and many others expect a euro area recession this year. As we have said, if the euro area does not definitively sort out its ongoing problems, the uncertainty that that will create and its impact on confidence across Europe will continue to have a chilling effect on Britain and the global economy.

[Lord Campbell-Savours]

My Lords, does not Germany bear some responsibility for problems in the eurozone in that it was Germany that turned a blind eye when Goldman Sachs fixed Greece’s books to secure its entry into the euro; it was Germany that turned a blind eye to breaches of GDP limits in the European stability and growth pact; and it was Germany that promoted the euro currency to prevent regional devaluations in neighbouring nation states, thereby protecting its own export markets within Europe? Surely Germany should show a little more flexibility in these matters.

[Lord Sassoon]

My Lords, the key issue about Germany in relation to this Question is that we should be grateful that the German economy continues to grow. About 9% of the UK’s exports go to Germany. It is a very important market for us and it is critical both for us and for the eurozone that Germany and its economy continue to perform relatively strongly.

Eurozone

Lord Campbell-Savours Excerpts

Thursday 17th May 2012 Lords Chamber

[Lord Pearson of Rannoch]

My Lords—

[Lord Campbell-Savours]

My Lords, are Ministers saying that, if the European Union were collapsing all around us, we would stand aside and do nothing at all?

[Lord Sassoon]

No, my Lords, that is not what I have said or am saying.

Individual Savings Accounts: AIM Shares

Lord Campbell-Savours Excerpts

Tuesday 31st January 2012 Lords Chamber

[Lord Campbell-Savours]

My Lords, would the Minister care to remind the House of the scale of the collapse of companies on the AIM market? Perhaps I may say that I support the Government’s position.

[Lord Sassoon]

My Lords, the AIM market has been very successful, and I do not want to say anything to suggest that it is not. However, it is true that the number of shares on that market has come down from a peak of about 1,700 to the current figure of about 1,140, and of course there has been a similar decline in the value of the market. Therefore, it is a successful market but one that has a range of much smaller shares within it.