Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government, further to the report HMRC responses to inaccurate claims, published on 12 January, what is the methodology for estimating the amount lost to fraud and error; what is the value of these claims; and what is the forecasted expenditure for such claims, for (1) the Coronavirus Job Retention Scheme (2) the Self-Employment Income Support Scheme phases 1 to 3, and (3) the Eat Out to Help Out scheme.
Answered by Viscount Younger of Leckie - Parliamentary Under-Secretary (Department for Work and Pensions)
The Government introduced unprecedented COVID support, helping millions of people across the UK. The schemes were designed to protect against Error and Fraud (E&F) by only making grants to individuals and businesses matched to information already on HMRC systems wherever possible, preventing ineligible claims, blocking suspicious claims up front, and investing in post-scheme compliance.
The latest E&F estimates and expenditure across the COVID-19 support schemes are included in HMRC’s 2021 Annual Report and Accounts, released on 4 November 2021, which can be found on the gov.uk website.
HMRC has published a technical document alongside the Annual Report and Accounts 2020 to 2021 detailing the methodology for measuring E&F in the Coronavirus Job Retention Scheme (CJRS), the Self-Employment Income Support Scheme (SEISS) phases 1 to 3, and the Eat Out to Help Out scheme (EOHO). This can be found on the gov.uk website.
HMRC aim to produce updated E&F estimates for CJRS and SEISS by Summer 2022.
HMRC are taking tough action to tackle fraudulent behaviour. Anyone who keeps money despite knowing they were not entitled to it, faces repaying up to double the amount, plus interest, and potentially criminal prosecution in serious cases.
HMRC established the Taxpayer Protection Taskforce and is estimated to recover approximately £800 million to £1 billion in the two years to 2022-23, on top of around £500 million recovered in the year 2020-21. HMRC will continue to address fraud and error in the schemes beyond the duration of the taskforce.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government further to the European Commission’s €344 million fine on UBS, Barclays, RBS, HSBC and Credit Suisse on 2 December for operating a foreign exchange cartel, what plans they have to appoint an independent inquiry into the operations of the UK arms of these banks.
Answered by Lord Agnew of Oulton
The UK’s independent financial services regulator, the FCA, investigated misconduct in the foreign exchange markets and fined six firms (Citibank, HSBC, JP Morgan, RBS, UBS, and Barclays) a total of £1.4 billion in 2014 and 2015 for failures of systems to control trading practices.
Alongside this, the European Commission opened a competition investigation in 2013, into the same issue, including covering any harm within the UK. In accordance with the EU-UK Withdrawal Agreement, the EU has continued to be responsible for the case, because it was initiated before the end of the transition period. The EU shall reimburse the UK for its share of the amount of the fine once the fine has become definitive.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what progress they have made in (1) investigating, and (2) prosecuting, allegations of banks forging customers’ signatures.
Answered by Lord Agnew of Oulton
The Government expects all companies to obey the law and relevant regulations. Anyone with evidence of such forgery taking place should report it to their bank in the first instance. If their concerns remain, or they do not have a direct relationship with the lender, they should report it to the relevant authorities.
Although the Treasury sets the legal framework for the regulation of financial services it does not have investigative or prosecuting powers of its own and is not able to intervene in individual cases. The Financial Conduct Authority (FCA) requires all authorised firms to have systems and controls in place to mitigate the risk that they be used to commit financial crime. Whilst the police have primary responsibility for investigating fraud the FCA also has powers to take a variety of enforcement action against firms that carry out fraudulent activity.
The National Crime Agency (NCA) is continuing to assess the material submitted by the Bank Signature Forgery Campaign and information obtained following preliminary enquiries to clarify matters with certain members of the public who had raised the issue. The NCA is making a thorough assessment to determine whether there are grounds for a criminal or regulatory investigation.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what powers they have to examine the operations of the Business Banking Resolution Service.
Answered by Lord Agnew of Oulton
The Business Banking Resolution Service (BBRS), which launched on 15 February 2021, offers a free, independent service designed to settle unresolved and new complaints that are not eligible for the FOS. The Government has always been clear that it welcomes the BBRS. However, it is an independent non-governmental body, and this independence is vital to its role. Its credibility, authority and value to SMEs would be undermined if it were possible for the Government to intervene in its decision-making or operational matters.Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what plans they have to exercise their statutory powers to examine the takeover of Liverpool Victoria insurance company.
Answered by Lord Agnew of Oulton
The assessment and approval of the proposed sale and demutualisation of LV= (previously Liverpool Victoria) is an ongoing and independent process, overseen and scrutinised by the financial services regulators, and subject to approval by the Courts. It would be inappropriate for the Government to intervene in this independent process.
The regulators’ supervision of the sale includes an assessment of the fairness of the transaction, the impact on policyholders and competition in the interests of consumers, and the quality of communications with members of LV=.
The Court processes involve a number of safeguards which are designed to ensure that policyholders are kept informed and their interests protected.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what additional revenues could be raised by aligning Dividend Tax rates with Income Tax rates applied to earned income.
Answered by Lord Agnew of Oulton
Increasing the current rates of dividend tax to the current headline rates of income tax could theoretically raise around £8 billion a year, based on the 2021-22 tax rates. In practice, significantly less would be raised due to behavioural responses to any increases.
The Government has committed to increase rates of dividend tax by 1.25 percentage points, which is expected to raise £900 million a year by the end of the scorecard, accounting for behavioural responses. The higher rates of dividend tax from 2022-23 would therefore reduce the additional revenue that would be raised from increasing dividend rates to the rates of income tax.
The Government will continue to keep the tax system under constant review to ensure it is simple and efficient.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what additional revenues could be raised by aligning Capital Gains Tax rates with Income Tax rates applied to earned income.
Answered by Lord Agnew of Oulton
Last year, the Chancellor commissioned the Office of Tax Simplification (OTS) to carry out a review of Capital Gains Tax (CGT). Their first report contains revenue estimates of the static impact of aligning CGT rates with those of Income Tax and can be found on the gov.uk website.
It was estimated that aligning CGT with Income Tax rates could have theoretically raised £14 billion in 2018-19 but, in practice, significantly less would be raised due to behavioural responses. The Government will respond to the OTS report in due course.
The Government will continue to keep the tax system under constant review to ensure it is simple and efficient.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what discussions they have had with the Bank of England about reversing quantitative easing; and what assessment have they made of its effects on public finances.
Answered by Lord Agnew of Oulton
Monetary policy is the responsibility of the independent Monetary Policy Committee of the Bank of England and this includes decisions on quantitative easing. The Government does not comment on the conduct or effectiveness of monetary policy.
As set out in the letter exchange between the Chancellor and Governor on 5 November 2020, the Government indemnifies the Bank of England’s Asset Purchase Facility, the vehicle that delivers quantitative easing. As part of this, there are oversight arrangements in place, including regular risk oversight meetings between Treasury and Bank senior officials which monitor the scheme’s implementation and risks to the Exchequer.
The Office of Budget Responsibility’s Economic and Fiscal Outlook, published on 27 October 2021, sets out the fiscal impacts of the Asset Purchase Facility including the effects of a potential unwind of quantitative easing over the forecast period.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government how much it would cost to raise the national insurance contributions threshold to an annual income of £12,570.
Answered by Lord Agnew of Oulton
Estimates of various policy changes can be approximated using the ‘Direct effects of illustrative tax changes’ publication which can be found on gov.uk.
This includes the costs of increasing National Insurance contributions (NIC) thresholds for the employee entry threshold by £2 per week and lower profit limits by £104 per year.
This can be used to scale the proportionate costs using the projected NIC threshold in 2022-23, which at the time of publication was £9,724, and increasing it by £2,846 to £12,570 in that year.
Published estimates are based on the 2017-18 Survey of Personal Incomes, which are projected using economic assumptions consistent with the Office for Budget Responsibility’s March 2021 economic and fiscal outlook.
Asked by: Lord Sikka (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the financial impact of the administration of (1) Greensill Capital (UK) Limited, and (2) Greensill Capital Management Company (UK) Limited, on entities regulated and authorised by the (a) Financial Conduct Authority, and (b) Prudential Regulation Authority.
Answered by Lord Agnew of Oulton
Since the financial crisis, we have implemented sweeping reforms to financial regulation. Through the Financial Services Act 2012, we dismantled the failed tripartite system, and replaced it with a set of regulators with clear objectives and responsibilities, with the Prudential Regulation Authority (PRA) responsible for the prudential supervision of the UK banking sector, and the Financial Conduct Authority (FCA) for ensuring proper conduct in line with UK financial regulations.
The impact of a specific business failure on authorised and regulated entities in the UK is a matter for our independent financial authorities, the PRA and the FCA. Although HM Treasury does not comment on supervisory matters, we continuously monitor risks across the financial sector and respond where appropriate in coordination with the independent financial authorities – the FCA, PRA and Bank of England – as well as relevant government departments.