Businesses: Tax Liability

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Wednesday 13th June 2012 Lords Chamber

[Lord Sassoon]

My Lords, I think that we probably call it Her Majesty’s Revenue and Customs these days. That aside, I will of course pass on my noble friend’s representations on this important matter.

[Lord Foulkes of Cumnock]

My Lords, will the Minister tell the House whether the decision by Her Majesty’s Revenue and Customs to put Rangers Football Club into liquidation was made by officials or was referred to Ministers?

[Lord Sassoon]

My Lords, as previously in answer to any football club tax questions, I can say only that I cannot talk about individual taxpayer matters for reasons of confidentiality, which the noble Lord, Lord Foulkes of Cumnock, well knows.

Financial Services Bill

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Monday 11th June 2012 Lords Chamber

[Lord Foulkes of Cumnock]

The Minister has said that he personally does not mind whether the Bill is dealt with on the Floor of the House or in Grand Committee, which is very helpful. He founds his argument principally on an agreement through the usual channels—and I have great respect for the usual channels. However, I fear that, because of the recess, the usual channels may not have worked as efficiently and effectively as otherwise. If the Minister were to agree to withdraw the Motion, which would be preferable to a Division, we could have a few days to have further discussion and consultation. By that time, the groups will have met; the Cross-Benchers will have had an opportunity to meet; and we can consider this matter again. All we are doing is suggesting that this matter be postponed for three or four days.

[Lord Sassoon]

My Lords, I have every faith in the ability of the usual channels to work these things out very thoroughly, recess or no recess. We should do what is customary and stick with what the usual channels have agreed.

Scotland Bill

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Thursday 15th March 2012 Lords Chamber

[Lord Foulkes of Cumnock]

I was here for the paving debate and the Minister did not deal with the specific point that my noble friend Lord Myners has just raised.

[Lord Sassoon]

This is all very good theatre, but we discussed the basic question of UK residence earlier this afternoon. As I said, I am very sorry that the noble Lord, Lord Myners, was not able to be here to enrich that discussion, but that it not what we are talking about in this debate. We are talking about different matters, which are important and the ones that we should concentrate on.

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[Lord Sassoon]

Well, my Lords, let me give it a go. My noble friend is not easy to satisfy on these things, but I argue that it is entirely consistent with my arguments for the rest of this afternoon to say that this provision, as drafted, gives simple and clear guidance for a category of individuals, namely Members of any of the three parliaments, that they do, for the avoidance of doubt, have a close connection with Scotland and should therefore fall into the “Scottish taxpayer” definition. It is as simple as that. Once one accepts, which I am not sure that my noble friend does, that the close-connection test should be at the heart of this, I suggest that this is a simple follow-on from that, an avoidance-of-doubt provision which is entirely appropriate. We have spoken today about members of the Armed Forces who may not have a choice about where they serve, but it is right that a Member of any Parliament who has chosen to serve a Scottish constituency is for the avoidance of doubt treated as a Scottish taxpayer. They have a clear connection to Scotland which should be recognised and which is consistent with the basic provisions of the test that we are talking about.

[Lord Foulkes of Cumnock]

However, will the Minister confirm that not all Members of this Parliament are treated as British taxpayers and are not resident in Britain for the purposes of tax?

[Lord Sassoon]

My Lords, I would like to keep this debate to discussion about Scottish taxpayers. As my noble friend has already said, discussion about the status of Members of this House is something of a diversion whose relevance to this clause I do not see.

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[Lord Foulkes of Cumnock]

With respect, throughout the previous debate, the Minister said that the definition of Scottish residents and Scottish taxpayers was based on British residence. He had used the British example as the template in coming to a conclusion in relation to Scottish residents and Scottish taxpayers, so this matter must be relevant.

[Lord Sassoon]

Forgive me, my Lords, I thought that we were straying into questions about tax status and Members of this House. We are talking about Members of another place with a constituency in Parliament, Members of the European Parliament and Members of the Scottish Parliament. Most Scottish parliamentarians will already meet conditions A and B in new Section 80D, but there may be circumstances where this may not apply. For example, a Member may have gained or lost a seat at a recent election—it could have happened when an election was held early in the tax year—and decided to move elsewhere in the UK. The test here is that there should be clarity. If the person has been a Member of one of these Parliaments for a Scottish seat for some part of the year and has chosen to be so, they should be Scottish taxpayers for the year, but I appreciate that, depending on whether they come in or go out at different points of the year, the situation could be different. However, this is consistent with what I have been saying today: that the basic test is a close-connection test and that it should be simple and clear. Members of both Houses of the UK Parliament are deemed to be UK-resident for tax purposes if they are a Member for any part of the tax year. If the noble Lord, Lord Foulkes, wants to draw a parallel between the two Houses of this Parliament and what we are applying through the Bill as it stands, I say to him that the situation would be entirely lined up. If you are a Member of either House of the UK Parliament for any part of the year, you are deemed to be UK-resident for tax purposes. That is completely consistent with what is proposed in the Bill for Members who sit for Scottish constituencies. That is how the Bill should stand.

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[Lord Sassoon]

My Lords, it has been a fundamental principle of devolution from the start that if a decision of one Administration impacts on another, the other Administration should be compensated. We are not doing anything different from the principle under which devolution has existed from the start. Yes, the tax base is shared, so if the UK changes allowances and thresholds, it is quite right that the effect of that should not fall to the detriment of the Scottish Government. As I said, that follows the general principle that applies across devolution spending, as it has from the start.

[Lord Foulkes of Cumnock]

I am not sure exactly where we are, but as my noble friend Lord Maxton drew my attention to the fact that there is this very interesting dialogue taking place, I was listening carefully to it. I am grateful to the noble Lord, Lord Steel, for his immediate understanding.

I am slightly disturbed because all along we have been talking about giving the Scottish Parliament greater accountability. That is why I am in favour of full fiscal autonomy, as I shall be arguing later. However, even if Scotland has full fiscal autonomy, if at any point it then goes, Oliver Twist-like, back to the Treasury and says, “I want some more”, then that will not be full fiscal autonomy.

With these proposals in the Bill we are halfway towards full fiscal autonomy. I do not know whether the Treasury Minister, the noble Lord, Lord Sassoon, has seen that Alex Salmond has now come up with a list of what he calls shovel-ready projects—an awful-sounding term—that he wants the Treasury to provide huge amounts of money for. This is his technique. I am not sure whether I have got to the nub of the point that the noble Lord, Lord Forsyth, is making but at least it has given him an opportunity to sit down and think for a while. I was enjoying the Forsyth saga—that was inevitable—but I question whether it has revealed a flaw, in that we are not going to get the kind of autonomy that we want.

[Lord Sassoon]

No, my Lords, I do not believe that it has exposed a flaw. The decisions which under the Bill, if and when enacted, would be for the Scottish Government are quite clear and the Scottish Government will bear the fiscal consequences of those decisions. What I have described is made quite clear at greater length in the November 2010 Command Paper, Strengthening Scotland’s Future. If parts of the UK tax system are not devolved but remain the responsibility of the UK Administration, then, if something changes to the detriment of Scotland, the no-detriment principle will kick in, the block grant will be adjusted and, as set out in the Command Paper, the Office for Budget Responsibility will work out all the numbers and establish the fiscal impact. Of course, the adjustment would not necessarily go one way—it would depend on the nature of the change. We have talked this afternoon as though everything is always going to go in one direction. However, this could conceivably be a two-way detriment that had to be adjusted through the block grant.

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[Lord Sassoon]

My Lords, one example is personal allowances, which have a potential impact on tax receipts, and that example is highlighted in the command document.

[Lord Foulkes of Cumnock]

I want to test this with one other example. Does the Minister recall when, under a previous Labour Government, the Scottish Executive introduced free personal care for the elderly? As a result of that, the old people who had free personal care no longer got the benefits that they had previously received. Malcolm Chisholm, the then Minister, sought a grant of hundreds of millions of pounds, which he claimed the UK Government had saved because they were no longer paying benefits to the people who were now getting free personal care. Would not that kind of situation arise in a number of areas under the scenario that the Minister is describing?

[Lord Sassoon]

My Lords, that was not a tax issue, and I do not know the detail of that case, but we are talking about changes to the structure of the UK income tax system, which is something that is done by the UK Government. We are talking about circumstances that are rather far away from a Scottish spending matter that the noble Lord described.

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[Lord Foulkes of Cumnock]

While the noble Lord, Lord Forsyth, has been talking, and now that he is talking about aggregates tax, I have been aggregating the time that we have taken to deal with half a dozen or so groups of amendments. I see that we have about twice as many groups still to deal with before we reach the target that the Government have set themselves. We have taken six and three-quarter hours to deal with these half a dozen or so groups of amendments, and at the rate we are going it will take until about 7 o’clock tomorrow morning to deal with the rest.

Although I am prepared to stay here, I think that it really is unfair on all the staff—on Hansard, on the catering staff, the doorkeepers, the civil servants and the clerks of course—who do such a wonderful job on our behalf. It is incumbent on the Minister and the noble Baroness the Whip to start thinking about how the Government will deal with this. We lost one whole day of our Committee stage because the Welfare Reform Bill took it up. We all sat round for a whole day but eventually the Government said, “We are not having it today. You can all go home”. That was a wasted day for many people. We are having a detailed debate on this Bill. I have not participated in much of it but I have been listening to all of it—and yes, as a noble Baroness says, I nodded off on one occasion as well.

It is incumbent on the Government to give an indication to the staff—to everyone around the House—of what will happen. How late will we go tonight and what is the target? They should also give us more time to deal properly with this very important constitutional Bill. It was not dealt with properly in the other place, but it is our responsibility to deal with it properly. There is plenty of time after Easter for Report. We could continue the Committee stage in the two days that are allocated for Report and deal with it properly then. I hope that the Government will give that serious consideration. Otherwise, we will not be treating dedicated staff as we should if we are to be a good employer.

[Lord Sassoon]

First, on my count of the progress that we are making, I have ticked off 19 groups and we have 10 to go, given the breaking up of groups and regrouping. My understanding is that the usual channels agreed that we should target and complete Amendment 87A. It was made quite clear in everything that I have read that there was that expectation. I very much appreciate all those who support us in keeping the House going, but I know that their expectation and our expectation over the past few days is regrettably that we will rise considerably later than normal today. Rather than spending too much time confirming what the usual channels have agreed, I think we should press on.

[Lord Foulkes of Cumnock]

Perhaps the Minister’s count is more accurate than mine—I would split the difference—but it is still going to take a long time. We have important issues to deal with such as the Barnett formula, the referendum, the Scottish Consolidated Fund, the Civil Service in Scotland, surcharges, financial privileges, legislative consent Motions and the delay in legislation on a referendum. If we are going to deal with all these things properly, we cannot deal with them now. We have all been sitting here for six and a quarter hours already. It really is important that we consider the staff in this. I hope the usual channels will have another look at this.

[Lord Sassoon]

Right. I had quite forgotten that we are on the aggregates levy. Let me answer my noble friend’s points. Yes, the Calman commission recommended the devolution of the aggregates levy and, as my noble friend knows, the Government agree with that recommendation. We are committed to devolving the aggregates levy to the Scottish Parliament but, to confirm what he said, we believe that that can and should be done only once the complex legal challenges against it in the European and UK courts have been fully resolved. The Government were clear about their position in the Command Paper for the Scotland Bill, and we remain firmly committed to it.

The position is still moving on the court challenge. The European General Court delivered its judgment in the case of British Aggregates Association v the Commission on 7 March this year. The judgment does not conclusively resolve the legal challenges. Appeals can still be brought against the judgment to the European General Court. Once the action in the European General Court has concluded, action in the UK Court of Appeal will resume. As we have discussed at considerable length, the Bill enables the Government to devolve taxes in future, and it means that devolving the aggregates levy after full resolution of the legal challenges can be achieved quickly. I am happy to say that my noble friend’s very extensive amendment technically broadly works. He is too modest. There would be one or two things to look at, but that is not the issue.

To make sure that things continue and we do not lose momentum on this, as a practical and necessary step to prepare for devolving the levy the independent Office for Budget Responsibility will start to provide forecasts of Scottish aggregates levy receipts from April 2012. The Treasury will also notionally assign these forecast receipts to the Scottish budget. Together with the tax powers in the Scotland Bill, this will allow for the speedy devolution of the levy when the legal challenges have been fully concluded. At that time, the order can be drawn up to reflect the position post the completion of the challenges.

I hope I have made it clear that the Government’s desire to devolve the levy as soon as is feasible continues. It is not feasible to do it while the legal challenges are ongoing. The Bill gives adequate powers for that devolution in future. I thank my noble friend for putting forward a carefully thought through amendment, but I ask him to withdraw it.

Scotland Bill

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Tuesday 28th February 2012 Lords Chamber

[Lord Sassoon]

My Lords, my noble friend’s examples concern changing the rates of existing taxes rather than new taxes. However, I think that it will work fine. With the process that has led up to these clauses in the Bill, Calman has looked at potential taxes for devolution. There has already been considerable discussion in Scotland and between Scotland and the UK Government. When it comes to the potential for new taxes to be added, I have explained the criteria which the UK Government have set down. On procedure, we are working closely with the Scottish Government to clarify the process that requests for new taxes will go through before they are brought before both Houses of Parliament. We have an administrative process to be agreed by the Joint Exchequer Committee, which brings together Ministers from both Governments. Therefore, I see a process here—

[Lord Foulkes of Cumnock]

With all these discussions that have taken place, can the Minister tell the Committee whether the Scottish Government have accepted these provisions in the Bill?

[Lord Sassoon]

Of course we await legislative consent, but there have been many detailed discussions; there have been the reports of committees in both Parliaments and the noble Lord knows perfectly well—better than I—where things stand. As to the question of what fits the criteria, I am not going to speculate about what future taxes might come forward, but one has the useful case study about the Scottish land transaction tax which fits the criteria very well. That points out precisely how other measures could come forward in future.

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[Lord Foulkes of Cumnock]

I have a summary of the majority and the minority reports of the Scotland Bill Committee of the Scottish Parliament. The Minister will know that the majority report recommended that,

“the Scotland Bill be amended to devolve the full range of financial powers to the Scottish Parliament”.

I spoke with Linda Fabiani MSP just a couple of weeks ago and asked when this report was going to the Scottish Parliament, and she said not until after we have made a decision down here.

We have got deadlock on this. The Scottish Parliament will not consider this report until we have dealt with this, and we know that it is going to recommend something different. Surely, in view of all the criticism that we have had from both sides, and now from the opposition Front Bench, the Government would be well advised at this very minute to take this whole Bill away—we are going to look at it again next month—and reconsider this whole matter, after discussions with the Scottish Executive about how it will be dealt with in Scotland. Otherwise we will be in a stalemate.

[Lord Sassoon]

I thought that my agreement with the noble Lord, Lord Foulkes of Cumnock, would not last terribly long. This is a general point, which he could raise on every clause of this Bill. With all due respect, I really do not know what it has to do with this clause in particular.

[Lord Foulkes of Cumnock]

Why—

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[Lord Sassoon]

I listen to all the guffawing going on, but many noble Lords have been in government here and there and will know that there is much good and important work that can and must be done to make such meetings effective. That is what is going on, and good progress is being made, including on the process for introducing a new tax under this Bill.

[Lord Foulkes of Cumnock]

The question I asked is so important on this issue because the Minister himself said this issue is the central part of the Bill. I thought of this months ago when I asked, in a Question to the noble and learned Lord, Lord Wallace of Tankerness, why we were going ahead with the Bill. It has become obvious that a huge coach and horses has been driven through a central plank of the Bill by the noble Lord, Lord Forsyth, and my noble friend Lord Sewel.

The best information we have is that the Scottish Parliament is going to reject the Bill. It is, you can shake your head as long as you like, Jim—sorry, Lord Wallace. Perhaps the noble and learned Lord can tell us what indications he has that the Scottish Government are going to accept this Bill as it is currently framed, if we agree it.

[Lord Sassoon]

My Lords, forgive me if I stick to the clause as we have it. It is a separate matter, which relates to the whole Bill. I agree on the importance of this clause. Of course there needs to be agreement to the whole Bill in due course but what we are doing today—we are not making a great deal of progress but it is important and we should deal with these important points—is trying to make sure that some of these central clauses are got right. I do not know where the noble Lord, Lord Foulkes, sees a coach and horses, because I have not seen one coming from my noble friend or anywhere else in this Chamber.

I would suggest that not all the speakers in this debate have talked about all the elements of the process by which a new tax would be introduced. I suggest that Members of this Committee might like to reflect on what the total package looks like. I believe that it is proportionate, including the criticality of those criteria which are appropriately laid out in the Command Paper. Incidentally, when it comes to the ultimate agreement to any proposals that come forward for new taxes, I remind the Committee that when the variable Scottish rate of tax was introduced in 1998, it was of course passed by this House, so we have precedent in relation to tax matters and Scotland on that variable rate, and on this House having competence.

Scotland Bill

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Tuesday 28th February 2012 Lords Chamber

[Lord Sassoon]

I think that probably deals with all the football questions, and with probably just about everything else that was directly relevant to this clause. I will try to deal with some of the other things.

We came back to the big picture question of the legislative consent Motion. It is of course for the Scottish Parliament to choose to bring forward the Motion at any time; it is in its discretion. It must be in the Scottish Parliament’s interest to bring forward an LCM before the last amending stage in this House to allow the House and the Government to reflect on the LCM, and if it wanted to it could choose to pass the legislative consent Motion tomorrow.

[Lord Foulkes of Cumnock]

Would the Minister like to speculate on why it is not doing that? Why is it deliberately delaying it? My speculation would be that it is playing a cat and mouse game with us, and that it wants to see us move ahead without having to reveal its hand fully. Maybe a better analogy would be a game of poker. This is not something that should be the subject of a gamble. It is a very serious matter. Would he not join me in encouraging the Scottish Parliament to consider the legislative consent Motion at a very early opportunity?

[Lord Sassoon]

My Lords, I will certainly not be drawn into speculation. I have already said that it must be in the Scottish Parliament’s interest to pass the legislative consent Motion in time for the Government and this House to consider possible amendments in response to anything it comes forward with, and, as I said, it could pass the Motion any day. However, beyond that there is nothing more useful that I can add.

EU: Credit Rating Agencies

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Monday 3rd October 2011 Lords Chamber

[Lord Foulkes of Cumnock]

To ask Her Majesty’s Government what discussions they have had with other European Union Governments about the role of private credit rating agencies.

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

My Lords, the Government have discussed the role of private credit rating agencies with other European Union Governments in numerous meetings. These include the Financial Services Committee, the Economic and Financial Committee and ECOFIN, attended by Economics and Finance Ministers. The Government have also discussed this issue in depth with your Lordships’ EU Sub-Committee on Economic and Financial Affairs, and International Trade during its recent inquiry on sovereign ratings.

[Lord Foulkes of Cumnock]

My Lords, I am grateful to the Minister for a full reply, but does he recall that these credit rating agencies actually promoted the sub-prime mortgages which precipitated the crisis? They have been accused of a conflict of interest as they vary the ratings of both banks and countries, which exacerbates the crisis and can advantage the owners of these agencies? I asked in a previous Question whether the Minister would consider promoting an intergovernmental agency to take on this role. If he is not prepared to do that for ideological reasons, will he, with his EU colleagues, at least ask the competition authorities within the European Union to see what they can do to curb the excesses of this cartel and break up what has become an insidious oligopoly?

Global Economy

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Thursday 11th August 2011 Lords Chamber

[Lord Sassoon]

I will take away the noble Lord’s question. Forgive me, but I cannot now remember when we are committed to making regular updates, and it may be that we should wait until the next regular update. I will see whether any more can be said, but maybe we should be patient. I understand that he would like a quiet bilateral discussion, but I cannot promise him early information. The important point that he and other noble Lords make is that we have to work very hard to ensure a suitable range of channels for access to both debt and equity finance.

Incidentally, on the other point made by the noble Lord, Lord Harrison, I was taken away from some European-related reading yesterday. I had just got to the chapter in Edward Heath’s biography on the first negotiations for our European entry, so I have a few years to go before I get to the latest report from your Lordships’ committee. If I am allowed to go back on holiday, I will get there as quickly as I can.

The most reverend Primate the Archbishop of York raised another critically important point, which was about inflation. Clearly, inflation makes an enormous difference to the spending ability of individuals and has a significant effect on the costs for businesses. As we have discussed in this House on many occasions recently, it is critical that the Monetary Policy Committee continues to have free rein and is not constrained by the Government in any way in meeting its mandate. I commend to the most reverend Primate the words of the Governor of the Bank of England in his latest report, issued this week, in which he acknowledges that inflation may go over 5 per cent in the short term but says that he expects inflation to moderate in the medium term and to come down to slightly below the target that the Chancellor has set of 2 per cent. As my noble friend Lord Oakeshott will know, in the context of that discussion the governor made some interesting remarks about the possibility of quantitative easing. No doubt when the MPC’s minutes next come out we will look to see what was discussed at its last meeting, but clearly this is a live topic.

My noble friend Lord Flight gave a perceptive analysis of the markets. I do not think that he asked me a question in that, but I agree with a lot of his analysis.

The noble Lord, Lord Lea of Crondall, raised questions about the UK and Germany and made reference to BMW. All that I would ask him is why BMW has announced in recent months a further massive investment, of hundreds of millions of pounds, in its car manufacturing in this country. I suggest that that is because the best of our manufacturing is at least as good as and in some cases significantly better than the best of manufacturing in Germany, fine manufacturing economy though it is. We have in this country—Mini exemplifies this absolutely—design skills that are second to none. If the noble Lord would like to fire off at me another Written Question or three, I will be happy to try to answer better next time his points on relative added value, but I do not think that we have anything to be ashamed of—far from it—in a comparison between the best of our industry and the best of German industry.

[Lord Foulkes of Cumnock]

My Lords, will the Minister try to answer the question—I know that it is a difficult one—that I asked about credit rating agencies, which was also raised by the noble Lord, Lord Oakeshott, and by my noble friend Lord Harrison? I know that the Minister has travelled a long way to answer the debate, but I have travelled a long way to ask just the one question, so I would appreciate an answer.

[Lord Sassoon]

I am happy to answer the question that the noble Lord, Lord Foulkes, asks. I do not believe that nationalised institutions of any kind, including nationalised credit rating agencies, are the best way to go. Europe and the international organisations are looking at the appropriate form of regulation for credit rating agencies. That is ongoing business and it is quite proper that it should be done. Others question whether the whole rating system should be completely liberalised and say that one should not have a small number of institutions running the show. I recognise that that is an important debate and both Europe and the G20 continue to look at the issue.

I am conscious that I should wind up. I just go back to some of the fundamental points that underlie the interesting debate that we have had this afternoon. Noble Lords are well aware that when the coalition Government came into office we inherited the UK’s largest ever peacetime deficit. Tackling that deficit has been and continues to be our number one priority. The recent events that we have been discussing this afternoon vindicate that approach. It is by securing Britain’s AAA rating and the very low bond yields that we now have that we underpin the prospects of recovery. As the Governor of the Bank of England highlighted yesterday, 500,000 UK jobs have been created by the private sector over the last year. We should not forget that.

We have always said that recovery will be choppy but both the bank and the Office for Budget Responsibility forecast growth to continue through this year and the next. The decisive action taken by the Government to deal with the nation’s debts and restore private sector growth has meant that the UK has been in a better position to withstand the very considerable global uncertainties. Abandoning our plans would be disastrous, resulting in rising interest rates, falling international confidence and undermining the recovery.

Egypt: Mubarak Family Assets

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Wednesday 16th February 2011 Lords Chamber

[Lord Foulkes of Cumnock]

My Lords, will the welcome action that the Minister describes be extended to cover our home and overseas dependent territories?

[Lord Sassoon]

It is important that the overseas territories recognise, as they do, and have a desire to be fully compliant with, international best practice in these areas. We encourage them to take any action in parallel with that taken domestically.

Banking: Royal Bank of Scotland

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Tuesday 1st February 2011 Lords Chamber

[Lord Sassoon]

My Lords, the tax rules around deferred compensation are complex and depend on the sort of instrument being paid. Some tax on certain instruments is levied up front and some is levied later, so it depends very much on the circumstances of the individual instrument and the taxpayer. But, of course, some tax might indeed be levied later on.

[Lord Foulkes of Cumnock]

My Lords, will the Minister confirm that some of these millionaire and billionaire bankers, and indeed other millionaires and billionaires, use tax havens to salt away their money so that they do not actually have to pay tax to the United Kingdom Treasury? What are the Government doing to clamp down on these tax havens?

[Lord Sassoon]

My Lords, we are doing a lot more than the previous Government ever did. We have set aside an additional £900 million of expenditure for HMRC over the next spending round—the noble Lord may shake his head but that is a fact—and that will result in millions-worth of additional revenue each year being collected compared with what the previous Government did.

Comprehensive Spending Review

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Monday 1st November 2010 Lords Chamber

[Lord Foulkes of Cumnock]

We have sat through nearly eight hours of debate to which a large number of Members have contributed. Would it not be courteous to this House if the Minister actually replied to the debate instead of repeating the speech he gave earlier?

[Lord Sassoon]

I am struck by the contrast of the optimism that we have heard today from businessmen in this House and those who are not businessmen but have clearly been talking to business people on the one hand, and the pessimism on the other hand of the academic economists and others who, even though we have had three quarters of strong growth, want to see disaster coming round every corner. I do not make any judgment about who is responsible for the growth, but I think we can agree that we have had three quarters of strong growth. Yes, the recovery will be choppy, but we have heard from my noble friend Lord Bates just how business in the north-east of England is looking forward and generating jobs for the future. We have heard similarly from my noble friend Lord Plumb about how agriculture will play its part. My noble friend Lord Allan of Hallam has explained how the use of data and technology will assist the recovery. These are the pointers that show us how the economy is going to generate sustained growth. The noble Lord, Lord Eatwell, keeps saying that nobody knows. It is the businessmen of this country who write letters to the papers, urging us on with the deficit reduction we are set on, who know how the recovery is going to be sustained for the future.

While I do not agree with the doubts of noble Lords opposite about the overall judgments made by the Government, I do agree with some of the noble Lords opposite in a lot of what they said—the noble Lords, Lord Myners and Lord Haskel, for example, on the need for better infrastructure. That is precisely why we added nearly £9 billion of expenditure on infrastructure in this spending review. I agree with them on the need for investment in innovation, which is why we are investing £220 million in innovation centres and why we are investing £1 billion in the critical new technology of carbon capture and storage. Similarly, my noble friend Lord Newby identified science and apprenticeships as critical to growth. That is why we are protecting science spending in cash terms and why we are significantly gearing up on the number of apprenticeships compared with the plans of the previous Government.

Overall on growth, I was particularly struck by the contributions of my noble friends Lord Lamont of Lerwick and Lord Stewartby. They remind us that Conservative Governments have been here before, that Conservative Governments have taken us out of recession and rebalanced the economy, and we will do it again. For example, in the early 1990s, the public sector was reduced not by 490,000 but by 690,000 employees. At the same time, in the 1992 to 1996-7 period, the private sector generated 1.7 million jobs. I have every expectation—Members opposite may not—that the private sector again will rise to the challenge.

The second principle that I set out at the beginning is that our choices should be fair. We have heard some powerful speeches today, particularly from the noble Baronesses, Lady Hollis of Heigham and Lady Campbell of Surbiton, reminding us just how difficult it is to reshape the welfare system in the radical way that we intend at a time of considerable retrenchment in the public finances. I shall take away the points that they and others have made. In particular, I note carefully the concerns of the noble Baroness, Lady Campbell, about the mobility component of disability living allowance.

The spending review focuses support on those who need it most. It shifts the focus from welfare payments to services that improve social mobility in the longer term and to work incentives. The Government have sought to protect the most vulnerable. Working-age women, for example, tend to benefit disproportionately from health spending, which we have protected, and older women also benefit from additional resources for social care.

The universal credit will clarify and increase work incentives. Work will pay and will be seen to pay, but we must not rush the universal credit. As the noble Baroness said, it will take us two Parliaments to do that, because it is a difficult project and we must get it right.

We have also heard a lot on how young people will progress from care to university—points were made in different ways by the noble Earl, Lord Listowel, and the noble Baroness, Lady Nye. The Government are concerned to make sure that young people from the most disadvantaged homes get every opportunity. We are encouraging social mobility through maintaining Sure Start and extending early-years care. From 2012-13, we will introduce for all disadvantaged two year-olds substantial school premiums. The Government are also protecting the ability of those on lower incomes to go into higher education, including through a scholarship fund of £150 million by 2014-15.

Taxation: Avoidance

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Wednesday 20th October 2010 Lords Chamber

[Lord Foulkes of Cumnock]

To ask Her Majesty’s Government what specific proposals they have to reduce tax avoidance.

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

The Government announced at the June Budget that they are strengthening the legislative framework to reduce the opportunities for tax avoidance. They are doing this through policy reform, by targeting areas of the tax system that present the highest avoidance risks and examining the case for a general anti-avoidance rule.

[Lord Foulkes of Cumnock]

But did the Minister hear the Chancellor say in his Statement, which the Minister is going to repeat, that,

“those with the broadest shoulders should bear the greatest burden”?

The Deputy Prime Minister, Nick Clegg, said that tax avoidance, as opposed to evasion, is legal but morally unacceptable, so is it not the case that if the multimillionaires, including those in the Cabinet and the Prime Minister’s business advisory committee, had paid their fair share, some of the cuts and some of the job losses that have been announced today could have been avoided?

[Lord Sassoon]

My Lords, I could trade names of Members all round the House but I am not going to stoop to that. The critical issue is indeed, as the noble Lord says, that tax avoidance as opposed to tax evasion is legal, but we want to make sure that taxpayers pay what is due. In that connection, we will take a broad, strategic approach to reduce the complexity of the tax system, to make sure that the tax code is legally robust and to make sure that we attack and challenge unreasonable avoidance in a focused and expert way.

Housing: Lettings

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Monday 26th July 2010 Lords Chamber

[Lord Sassoon]

My Lords, we never rule out any suggestions for changes and developments of the tax system, but we have no plans to review taxation in the way that my noble friend has suggested.

[Lord Foulkes of Cumnock]

My Lords, in the light of the last question, will the Minister clarify whether all the words that he has said today represent the views of both parts of the coalition?

[Lord Sassoon]

My Lords, what I have said today represents the views of the coalition Government.

Wealth

Debate between Lord Foulkes of Cumnock and Lord Sassoon

Monday 5th July 2010 Lords Chamber

[Lord Sassoon]

My Lords, the coalition agreement indeed commits the Government to make every effort to tackle tax avoidance. There was a Budget press notice on eight initiatives that we are taking. One is to examine whether the option of a general anti-avoidance rule should form one element of strengthened defences against avoidance. I assure my noble friend that there will be informal consultations on this possible anti-avoidance rule over the summer.

[Lord Foulkes of Cumnock]

My Lords, may I ask the Minister a very simple question? What proportion of wealth is held by members of the Cabinet?

[Lord Sassoon]

I suspect that it would not register significantly on the data.