Finance (No. 2) Bill

Nigel Mills Excerpts

2nd reading: House of Commons
Tuesday 18th April 2017 Commons Chamber

[Jane Ellison]

On the latter point, I looked at this matter in detail recently. On what would be required of people in terms of the digital uploading of data, the vast majority of people in the country—in percentage terms, in the high 90s—have access to the right broadband speed.

As for what the change will mean for the smallest businesses, we do not recognise some of the figures that have been put in the public domain by some representative bodies. The Treasury has conducted its own analysis and published it, including the methodology behind it. We acknowledge that this will be a big change for the smallest businesses, particularly for those below the VAT threshold, which is why the Chancellor announced plans to defer for an additional year those businesses coming into the system. Given that the pilot has now started, that means that the system will be piloted for two years before some of the smaller businesses enter it.

However, we cannot sustain the current level of error and the size of the SME tax gap in the long term; we must begin to tackle those problems. A number of developed countries are increasingly digitising their tax systems, and that will have long-term benefits for business. I accept that the transition may involve challenges, but we shall try to provide support during that period.

[Nigel Mills (Amber Valley) (Con)]

I fully accept the need to tackle the tax gap, but if the advantages for the very smallest businesses are as my hon. Friend has described them, would she be willing to consider allowing such businesses to opt into the system, rather than making it compulsory for those with very low levels of turnover? Might they be allowed to see how the system works over a period of, perhaps, five years?

[Jane Ellison]

My right hon. Friend the Chancellor has already announced that businesses with a turnover below the VAT registration threshold will have an additional year, until April 2019, before digital record-keeping quarterly updates are made mandatory. I am sure that we shall debate the issue in more detail later, so I will not be drawn into it too much now. Suffice it to say that some of the alternative proposals do not tackle the level of error and the tax gap. We need to address that, because it is part of the general challenge relating to the sustainability of the tax base.

We believe that this change will benefit more than 3 million small businesses in the United Kingdom, the vast majority of which are banking online. We are going with the flow and following the direction in which society is moving. As I have said, however, a package of support will be available to the smallest businesses. We may have a chance to explore that a little further, but it will depend on how much time we have to debate the Bill over the coming days. HMRC will ensure that the needs of businesses are best met by enabling them to learn from the ongoing pilot phase, which, as I said earlier, will now be longer for the smaller businesses. We want to make sure that these much needed reforms are implemented smoothly at the operational level.

I have talked about the way in which the Bill can support the health of the next generation and about how it can help us to adapt our tax system to the modern realities of working life, but I also want to talk about how we can create a fairer, more sustainable tax base and raise much-needed revenue in the process. As I have said, the Government remain committed to their fiscal mandate of reducing the deficit. That is why, for instance, they made the difficult decision to increase the standard rate of insurance premium tax from 10% to 12% in the autumn statement, thus raising vital revenues that were required to support public services. The Chancellor set out very directly the need to raise additional revenue.

As I have made clear, the Government recognise that taxes must be fair. They should also be competitive, which is particularly important as we enter the critical next phase of the negotiations on our exit from the European Union. We need to ensure that our economy retains its competitive edge, and remains an attractive place for both business start-ups and ongoing inward investment. Some excellent decisions in that regard have been made in recent months. However, taxes need to be paid. That should go without saying, but, although ours is one of the narrowest tax gaps in the developed world, and although we are, in my view, one of the most transparent countries when it comes to the way in which we measure and report on it, we need to tackle tax avoidance at all levels to ensure that everyone—big business, small business and individuals—pays the right amount at the right time.

The Bill provides for further action to ensure that we receive the tax revenues that are due by continuing our work to tackle tax avoidance and evasion. We already have a strong track record. Since 2010, HMRC has secured about £140 billion in additional tax revenue as a result of tackling avoidance, evasion and non-compliance. The UK has also shown international leadership: it is at the forefront of many of the international discussions about tackling those issues. Indeed, some of the thorniest avoidance and evasion issues that we face, particularly where they involve complex multinational structures and businesses, can be tackled only in international forums. We have worked closely through the OECD and other international bodies and we will continue to do so and to lead the discussions to tackle those issues. This Bill will build on that work by introducing more than 10 policies that are forecast to raise over £5.5 billion by 2021-22.

First, the Government will update the rules on how companies claim tax deductions for interest expenses and losses. From this month, large businesses will no longer be able to reduce their UK taxable profits by deducting a disproportionate amount of interest expense in the UK. Nor will they be able to offset all their tax liability with past losses in years when they make substantial profits. Taken together, those measures will raise nearly £7 billion from large companies over the next five years.

Secondly, the Bill will continue the Government’s crackdown on the use of artificial disguised remuneration schemes by putting beyond doubt the existing rules and by introducing a new charge on outstanding loans from 5 April 2019. Those changes will ensure that scheme users pay their fair share of tax and will bring in £2.5 billion by 2020-21.

Thirdly, to deter those who gain financially from enabling tax avoiders, the Government will introduce a new penalty for those who enable the use of tax avoidance schemes that are later defeated by HMRC. That is an area on which we have worked closely and where policy development has benefited from a focus on quality tax policy making. We have worked closely with representative bodies to ensure that all people working within the spirit of their professional guidelines have nothing to fear from the new rules. However, it is important that we tackle the enablers.

I think we have all as constituency Members of Parliament heard from people who feel that they were given advice that was later revealed to have been poor advice. However, we have not had a system whereby we were able to pursue in the way we wanted those people who enabled the tax avoidance. That cannot be right. Therefore, the Bill will mean that enablers of abusive arrangements can be held accountable for their activities, while ensuring, as I say, that the vast majority of professionals who provide advice on genuine commercial arrangements will not be impacted. The Bill will also bring an end to a long-standing imbalance in the tax system by abolishing permanent non-dom status. That will raise £400 million each year by the end of this Parliament.

As a package, those measures will ensure that our tax system remains fundamentally fair and that people and businesses pay the taxes they owe. We have introduced them not only because it is important to sustain the tax base—that is important for the revenue we need for vital public services—but because it is important that people feel that everyone is contributing as they should be and that we are asking everyone to work within the rules. The quid pro quo for having a competitive and fair tax system is that taxes should be paid.

The Bill will help to deliver a fairer and more sustainable tax system, one fit for the digital age and responsive to the different ways in which people choose to work. It will continue our work to tackle tax avoidance and evasion. It will help to deliver improvements to the nation’s finances, to pay for critical public services and, by taking a significant step to address the issue of child obesity, to deliver a better future for our younger generation. The Bill delivers on the Government’s plan for Britain, a stronger economy and a fairer society. I commend it to the House.

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[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak on this nice, brief and moderate Bill. I suspect the Bill that finally clears the House in the next couple of weeks will be a little thinner. I am not sure that I welcome the change to printing the Finance Bill in one block, rather than two; it feels worse.

My speech will focus on the content of the Bill rather than on trying to start the general election campaign, which does not technically begin until tomorrow, but I am sure I heard the hon. Member for Bootle (Peter Dowd) say that Labour wants tax to be a higher proportion of GDP than the Government currently have it. If that is a Labour manifesto pledge, I suspect it will appear on more leaflets for Conservative candidates than for Labour candidates. The only real way of achieving it is to raise income tax, national insurance or VAT, none of which will be popular with the electorate.

For coherence, I will address the Bill’s measures in order. First, there is a moderate measure that will allow employers to offer their employees up to £500 of pensions advice, and associated advice such as the impact on tax bills, tax-free. Where there are problems with people’s understanding of how the pensions system works, of how much they will have in their retirement and of how much they need to save and how they should save it, any effort we can make to encourage them to take more advice, and get good advice—the earlier, the better—has to be right. I welcome increasing the tax relief from £150 to £500.

Clause 31 addresses interest restrictions for corporates, which will be allowed to claim tax relief on interest only up to 30% of their earnings before interest, taxes, depreciation and amortisation. Before coming to this place, I spent many years advising large corporates on their corporation tax bills. I wrestled with the many efforts that have been taken to get the allowed interest deduction down to a sensible level. There are well over half a dozen different anti-avoidance measures, such as allowable purposes, thin capitalisation rules and the worldwide debt cap. We have had all manner of attempts to get to the right answer, but successive Governments—Conservative, Labour and coalition—saw it as a competitive advantage for the UK to try to attract inward investment from holding companies by having a generous interest deduction.

It is right to recognise that, in an era when large multinational corporations have been gaming the global tax system to a ridiculous degree, we cannot allow our system to be exploited by excessive interest deductions, especially where they are not real commercial interest costs to the worldwide group. It makes sense for us to get in line with the global consensus that the interest limit should be 30% of EBITDA. The House should approve the measure to provide some scrutiny of the downside impact of how we attract international investment.

How many businesses that employ large numbers of high-skilled people are here for the interest deduction that we effectively allow on profits earned across the world? What impact will that have on where those businesses choose to locate in future? I hope the impact is zero and that, because we are such a great place to do business and employ people, businesses do not come here to chase generous tax deductions, but it will be interesting to see the impact of this policy change.

The rules are complicated, and there are some sensible exemptions for infrastructure investment. We need to encourage private companies to invest in UK infrastructure, and our regime is not all that generous—we do not give tax relief for large amounts of industrial building, which can have a large infrastructure cost. We should reform those rules, too, to make sure that we have a competitive regime so that, if a multinational company is looking to invest in infrastructure, the UK is the place to do it, not somewhere else for tax purposes.

I welcome the deemed domicile rules that the Minister outlined. People out there who try to understand tax cannot understand why rich people can avoid tax because of where their father was born. We have had that strange historical system since the colonial days. It should be absolutely clear that people who are born here should pay all their taxes here, and people who have lived here for a long time should be paying the same taxes. The idea that a person can move and live here for 40 years, or even be born here, and avoid certain taxes is a ridiculous way of exploiting our tax regime, and I welcome the steps to change that.

Clause 71 introduces the soft drinks levy, about which I have raised concerns in previous debates. I welcome taxes on unhealthy activities, and we have lots of taxes on alcohol and tobacco for sensible reasons. We have an obesity crisis, and it is perfectly right to consider taxes on unhealthy foods and drinks. A sugar tax makes sense, but when a consumer sees a product they want to buy in a supermarket they should be able to see something that says, “This product is so unhealthy for you that it is taxed, so you will pay more for it.” That is how to get behavioural change. Someone walking down the aisles of a major supermarket should think, “A can of full-sugar cola is 10p dearer than Diet Coke because it is unhealthy, so I will buy the Diet Coke.” That should also apply to ridiculously sized portions of cake, to sweets that are very bad for you and to all those other unhealthy things that we eat. We should try to structure a sales tax on unhealthy products to get the behavioural change we want.

There are many reasons why the Government have chosen to go down the route of targeting a particular product, but there is a real danger that the market for cola is so complicated that the consumer might not know that the charge even exists. I happened to be in a supermarket over the weekend looking at the varying prices of cola. I am quoting Tesco because it is my nearest supermarket—I should declare an interest because my wife works there—and I can buy a 2-litre bottle of Tesco own-brand cola for 55p, a 2-litre bottle of Pepsi for £1.25 or a 2-litre bottle of Coke for £1.66, or two for £2.50. We are adding 18p a litre, so how a consumer will know from the varying prices, never mind all the promotions, which of those colas is the bad one and which one they should be avoiding is not entirely clear. Looking at the prices for smaller quantities, a 600-mililitre bottle of Pepsi is 99p, which is about the same as a 2-litre bottle.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

My hon. Friend is making a cogent argument, but does he not welcome the targeted nature of the fund? The levy will go to the Department for Education to help all our children in all our constituencies to have healthier lifestyles. Does he welcome that, even if he has concerns about other aspects?

[Nigel Mills]

I welcome more funding to help children to be healthy and more funding for sports. I especially welcome the fact that the largest employer in my constituency, Thorntons, as part of the Ferrero group, gives big funding to school sports. More funding for healthy activities for children has to be a good thing. I am a little nervous about hypothecating taxes for individual spending, because there is a real risk that it would lead to a complicated tax system. It is a little like giving with one hand and taking away with the other. I welcome the fact that we are raising such spending, although I would not want to link it directly to a tax.

[Jane Ellison]

Just to clarify, one reason why the levy is on producers is that we want to drive the reformulation of products. Drawing on my previous role as public health Minister, every study that has ever been done across the world has shown that reformulating products at source is probably the most effective way of helping people to tackle obesity. I have spoken to supermarkets and producers for many months and, in their own research, they are getting the message back from consumers that tackling the problem at source through reformulation is what people want to see.

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[Nigel Mills]

I agree that changing what people consume without their knowing it, and without their having to change their own behaviour, will get the calorie reductions that we want. If that is the argument, I am intrigued about why we are going for the soft drinks industry, which has produced diet brands that use no sugar and contain no calories, and has innovated with things such as Coca-Cola Life that have reduced calories and reduced sugar content by using different sugars. There is a risk that industries that have spent lots of money developing popular products and marketing them will think, “We do all that investment and are still getting clobbered by a levy, whereas other industries that do not do that investment do not have a levy. Perhaps we should not invest and run the risk.”

We can debate this at length, but what we are trying to do is right. The childhood obesity crisis is such that we have to take some measures. I accept that this measure targets something that contributes to that crisis, but as we develop this policy I would like us to have a clear thing that consumers can see in the shop which says, “This is unhealthy, so it will cost you more.” That would be a better way of getting the behavioural change and the change in diets we need, and it is likely to be more effective in the long run.

[Kirsty Blackman]

I appreciate the point the hon. Gentleman is making and I have a lot of sympathy with his wider point about reducing the consumption of sugary food. His point about making it obvious to people what they are consuming is interesting, and that could be done more widely, in relation not just to soft drinks, but to things such as pasta sauces, which contain a huge amount of sugar but where there is a lack of awareness. One of the biggest things we can do to change behaviour is increase awareness, rather than increasing the cost on all these things.

[Nigel Mills]

I agree with the hon. Lady about that. The products we should probably be targeting are those people think might be healthy but are not. I may buy a smoothie thinking that it contains lots of fruit so it must be good for me, but it, too, is high in calories. It is not a bad thing to consume that fruit; I need to have it as part of a balanced diet. Certain milk drinks are incredibly bad for people and may be worse than many soft drinks, but I am not entirely clear that the levy applies to those. If we had structured a tax that went on something high in sugar or high in calories, that may have been a way of getting to the outcome we were after.

[Lucy Frazer]

Does my hon. Friend accept that the provisions will give rise to a public debate, and therefore to public awareness of sugar in drinks? Some people may not have been aware of that before, but they will know about it now.

[Nigel Mills]

Having a broader debate to raise people’s understanding that a diet cola is much healthier that a full-sugar cola for most people is helpful. I am not sure how much of an impact debates in this place or taxes on producers will have on people’s consumer decisions when they are in the supermarket, as those are probably based on price, promotion and their personal preferences or historical buying habits. However, the Government are right to tackle this issue.

Clause 108 seeks to tighten up the rules on VAT collection from fulfilment businesses. Globalisation has changed how businesses are structured so that people buy from them online. People then avoid paying VAT due in the UK, which is a big weakness. We have a generous turnover threshold. Most countries in Europe do not let people have their first £80,000 of turnover VAT-free—I believe the figure is now £83,000. It is right that we have that exemption, but we need to find ways of stopping people selling things on internet marketplaces and exploiting it, because there is a big revenue leak. This also makes it very hard for UK businesses resident here that are trying to comply with the rules to compete with those internet-based sales where people are not charging VAT on products on which they ought to be charging it. All the measures we can take to ensure that anyone trading here who turns over more than £80,000 has to charge VAT on the things they sell have to be right, and I look forward to seeing how those measures work and what more the Government can do on them.

Clause 120 deals with making tax digital, on which the Minister and I had an exchange earlier. I accept that we have to make tax more digital than it is and we have to get everybody filing returns online. I can see why the Government would want the information much earlier than they are getting it and would seek to remove the errors. Individuals and businesses do not want to make errors and they want to get their tax right. I am not sure how much we help them when we add 762 pages of Finance Bill every year and they have to try to work out how to comply with them. Making tax digital is the right thing to try to do, but I worry that if we rush the smallest businesses into it we will end up with the wrong outcome. I accept that businesses turning over more than £80,000 are probably already filing their VAT quarterly, doing monthly PAYE activities, presumably on a computer, and reporting those, and doing the same thing for auto-enrolment. Those businesses are probably already gathering, just about in the right format, all the information they need, and making these returns should not be unduly onerous for them. In that area, the advantages outweigh the downsides. However, I do worry about ending up with a perverse outcome.

[Mr Rees-Mogg]

My hon. Friend is slightly glossing over the problems for businesses. Many of them will be paying accountants to make the filings that they are already making and this will be a further cost to them, which will bear down particularly heavily on smaller businesses.

[Nigel Mills]

Yes, and I was coming to that point about the smaller businesses. I suspect that businesses that are submitting VAT returns have already gathered all their sales data and invoice data, and will have to gather all their payroll data for their PAYE reports, and so most of the stuff they need to do this reporting has already been gathered and looked at coherently. Small businesses may do that only once a year and employ an accountant to do it, so we run the real risk of going from having an annual return prepared by a qualified person who has looked through the information and made it coherent and accurate to having a quarterly statement that the individual tries to do themselves, ending up with much less accurate information being prepared than before. We need to be careful to avoid going from a relatively reliable annual return to an unreliable four-times-a-year situation and unintentionally increasing the errors that HMRC has to look at. Instead of doing this once a year and making sure they have got it right, the risk is that people may choose not to pay an accountant or be unable to afford an accountant to do this four times a year. So there is some merit in thinking about how we phase in this measure for the smallest businesses. We could make the compulsory date a few years further away and encourage people to choose to opt in if they feel they can comply. In that way they would gain advantages from knowing that their tax bill is right and will not be shocked when they get the statement back from HMRC. There are some advantages here, so if we sell this right, businesses will choose to sign up to it and the final compulsion after a few extra years will perhaps not be as big a shock.

[Sammy Wilson]

Does the hon. Gentleman acknowledge that this may be meant to do away with errors and give businesses an idea of what their tax payments are going to be, but there are end-of-year adjustments—those relating to stock, work in progress, depreciation and so on—which will have an impact on a firm’s tax business? If these things have to be done once a quarter, it adds significantly to the work businesses have to do and therefore to their costs.

[Nigel Mills]

I agree with the hon. Gentleman that we have to think about how to do the annual adjustments—they have to be made only once—if we move to a quarterly system. A lot of very small businesses are already on simplified accounting methods in any case, so perhaps those issues will not apply to that extent. The Minister reminded me that the Government have been trying to expand on those simplified accounting measures to make things easier for small businesses, and so I hope that some of those issues would not arise.

During the debate on my first Finance Bill as a Member of this House, one of my amendments sought to suggest that we move the corporation tax system much closer to the annual accounts that people submit, rather than having lots of different tax adjustments. Such an approach would be much clearer for business and would create big cost savings. With more of these things, perhaps I will eventually get to that dream I had nearly seven years ago, although I am not entirely optimistic about that. To be fair, we should welcome the fact that the Government have relaxed the timetable for businesses whose turnover is less than the VAT threshold. I welcome that and it has been largely welcomed by most small businesses in my constituency, which did have concerns about this.

As we are dealing with corporation tax and as I was talking about amendments I tabled to the first Finance Bill on which I served, let me say that one of my other amendments sought to allow groups to file one corporation tax return for their whole group, rather than having to file one for every individual entity and then making loads of complicated claims about how losses are moved around the group. This Bill contains restrictions on how many of the losses brought forward from previous years can be used, but we are allowing those losses now to be used right across the group, rather than just in the entity that originally made the loss. That is a welcome change.

As we leave the EU and can finally lay to bed all the worries we had about whether we would have to include all EU companies in a group tax return, if we had one, because it would be discriminatory under EU law to include only UK companies, perhaps now is the time to look, as many other countries have, into allowing groups of companies to file one tax return that shows the profit for the whole group and does not have to track every individual transaction between all the companies. That would help us to tackle some tax avoidance schemes that have played on the different treatment of transactions between companies. It would make it easier to comply and help to tackle avoidance so, as we move through the Brexit process, I hope we can look at those issues that we have previously found difficult.

[Suella Fernandes (Fareham) (Con)]

Does my hon. Friend agree that the cut in corporation tax from 19% to 17% in 2020 is only going to be good for the economy—the previous cut produced an increase in revenue from corporation tax—and will set Britain out as a favourable place for business and investment as we enter the next phase of our history through Brexit?

[Nigel Mills]

I absolutely agree: it is important that we continue to send the signal that Britain is a great place to do business and to invest. We want as much international investment here as we can get, so it is absolutely right to have a headline corporation tax rate that is as low as we can have it. I welcome the fact that we are going to get it down to 17%. The previous Chancellor hinted that he might have used 15% to give a sense of direction; perhaps the Government will look into using that in the manifesto we are about to produce.

[George Kerevan]

Can the hon. Gentleman explain why Germany, which has a much higher headline rate of corporation tax, does so much better industrially?

[Nigel Mills]

I think I would have had to attend several of the hon. Gentleman’s lectures to understand better how the German economy works, but that is not something I have ever studied. We could probably talk about euro rates and the history of investment in skills and so on, but I suspect it is not all down to corporation tax.

[Kevin Foster (Torbay) (Con)]

In his consideration, will my hon. Friend, like me, bear in mind the fact that the closest and most comparable jurisdiction in the European Union is Ireland, where the headline rate is around 12.5%?

[Nigel Mills]

Yes, and Ireland has found that that corporation tax rate has been successful in helping to attract investment. I noticed that throughout all Ireland’s financial crises and its desperate need for tax revenue, that rate was one thing on which it was not prepared to move, which is a sign of how successful it thinks it has been.

[Mr Alan Mak (Havant) (Con)]

I hope my hon. Friend will join me in sharing the sentiments of our hon. Friend the Member for Fareham (Suella Fernandes) and celebrate the fact that Britain will have the lowest rate of corporation tax in the G20. To come back to the point made by the hon. Member for East Lothian (George Kerevan) comparing Britain to the German economy, does my hon. Friend agree that although the British and German Governments spend a similar amount on research and development—around 28%—the big deficit is actually in private sector investment? If we are going to lead the fourth industrial revolution, which will be important to ensuring that our economy is strong, we need to get the private sector to invest. That is what the Bill will do.

[Nigel Mills]

I agree with those sentiments. If we are going to get into a debate about the German economic model, though, I should probably step out of the middle of it because it is not an area I have ever looked at.

There is a clause in the Bill on the Northern Ireland corporation tax and how we will make the lower rate there work. This is probably my chance to sneak in a remark, Mr Deputy Speaker: I hope we can get an Executive formed in Northern Ireland so that they can take the decision to have a lower rate of corporation tax. I suspect we probably do not need to rush that clause through the wrap-up, given the current situation, although I guess it is not controversial in Northern Ireland.

[Sammy Wilson]

Does the hon. Gentleman accept that there will be great disappointment in Northern Ireland that because of Sinn Féin’s insistence on unrealistic demands, there will not be an Executive in the near future, meaning that Northern Ireland’s ability to reduce corporation tax, which was a key part of the economic strategy, will be removed from the Executive?

[Nigel Mills]

I do agree: it is regrettable that the inability to form an Executive means that it looks like a power that was long campaigned for will not be used on the timetable it should be. We have seen how important it is for the Northern Ireland economy to have a rate that matches that of the Republic of Ireland so that it can compete on attracting investment. Many issues will get lost in the upcoming general election, but I hope that the need for Northern Ireland to find a way forward is not one that we take our attention off for the next six or seven weeks.

I think it was to last year’s Finance Bill that the Government accepted an amendment to introduce territory-by-territory reporting for all large corporates as part of their annual tax strategy. When the Minister sums up, will she update the House on the timetable? When might that power be turned on so that we can start to see those reports?

I welcome the measures in the Bill to encourage social investment by increasing tax relief but making sure that it is focused on the right things and is not subject to avoidance. I recently heard that a group of residents in Holbrook had managed to raise the funds to buy a local pub that faced being knocked down and turned into housing, by getting 250 or so people to buy shares in the new business. That is a real example of what a community can do to save a valued asset and I pay tribute to their success.

I wish to touch briefly on air passenger duty. I do not want to revisit the whole debate—I accept that we need it to raise revenue—but I just wonder whether, as we leave the European Union and some of the restrictions on how we can regionalise taxes drop away, the Government will be prepared to look at measures to encourage new routes into regional airports. That would help to tackle the congestion and air quality in London, and it would help the economy outside London by providing direct routes to the high-growth parts of the world. I wonder whether it is possible to produce a scheme in which we have either lower rates of APD on routes into regional airports, including East Midlands airport near my constituency, or lower APD for a new route for a certain time period—perhaps three or five years—to enable such a route to become viable. Such measures would not have the big revenue hit that they would have on all the London airports, and would target the money that we can spend on getting the vital regional growth that would help the regions of England outside London. As APD is a devolved tax, if Scotland chooses to have a lower APD rate in future, we may see some interesting tax competition if airports in the north of England feel the need to respond.

Overall, I welcome the Bill. It contains many important measures that will help to protect our tax base and tackle avoidance—which we all want—and help the economy to grow. It is an important Bill and I hope its provisions will survive the discussions over the next few days.

[Sammy Wilson]

The hon. Gentleman quite rightly mentions tax avoidance. Does he accept that although there are measures in the Bill on tax avoidance, given that the tax gap is nearly £40 billion but the Government’s target is to collect £5 billion more between now and 2020, the issue is not being taken seriously? There will be frustration that rich companies will still be able to walk away with very low tax bills.

[Nigel Mills]

I was nearly finished, but the hon. Gentleman invites me into a debate on the tax gap. I do not have the numbers to hand, but it is important to understand what makes up the tax gap. Tax avoidance by large corporates is actually a relatively small part of it. From memory, the largest part is due to people who operate in the black market and do not pay VAT or declare their tax. Another large part is down to errors or mistakes by small businesses or individuals. It is right that the Government should bear down on all those aspects, but I do not think it is possible to get the tax gap down to zero—it would involve some kind of ridiculously heavy compliance burden. We could probably get there only by having zero tax rates or zero economic activity, so there will always be some level of tax that we cannot collect, but the measures that the Government have taken progressively over the past seven years to tackle aggressive tax avoidance have been the right ones. We have the general anti-abuse rule, which we are trying to tighten up in the Bill. When that gets to its five-year anniversary, I look forward to seeing whether we can change our strategy on targeted abuse rules, whether we might not need to have quite so many individual anti-avoidance rules, and whether we can rely on the general one.

Although we have discussed Making Tax Digital, a key part of reducing the tax gap is making businesses report and be more compliant on a more regular basis. We must press on with that and make it work, but we do not want to risk going too far. There are more measures that we could try to take to encourage people not to pay cash in hand to avoid paying VAT. It is very hard for an individual to know whether the person cutting their hedge or driving their taxi is tax registered. Perhaps we should have some kind of registration process so that a person can say, “I want to engage people who are fully tax compliant. If you can show me that you are, I will happily hire you. If you can’t, perhaps I will hire someone else.”

[Mr Mak]

My hon. Friend is making a very good speech about the changing nature of the economy, particularly in relation to the rise of the gig economy. Will he join me in welcoming the review by Matthew Taylor about how we can tax both the individuals and the companies operating in the gig economy to make sure that we strike that fair balance between taxation and innovation in our economy and our employment market?

[Nigel Mills]

Yes, I happily welcome that review. That has become an emerging issue that we need to tackle. It will probably blow up in the national insurance debate. I welcome the measures in this Bill, which propose that where the public sector engages with individuals who try to incorporate themselves, those individuals will not get the tax advantages. That has to be right. We need to find a way of doing that for very high paid individuals outside the public sector who try to do that. We need to ensure that they are taxed on that income in a way that the tax system intends, and not allow them to get an advantage through the corporation tax system. I accept that the reduction in the dividend relief that was announced in the Budget was the right thing to do. As we see our employment market changing, we need to ensure that the tax system is not encouraging unscrupulous employers to try to pretend that their employees are self-employed in order to get a tax advantage for themselves, leaving those individuals in a far worse situation without the security of being employed and without the rights to welfare, holiday, sick and maternity pay to which they are entitled. That review will be very important in enabling us to strike the right balance and to encourage people who are genuinely self-employed and taking risks. I accept that we should have a lower tax rate for people who do that. How we get our tax rules to match the changing way that people work will be extremely important, and that review will have an essential role to play.

I will wrap up my contribution by saying that I welcome this Bill and that, whatever passage it has, I wish it well.

Class 4 National Insurance Contributions

Nigel Mills Excerpts

Wednesday 15th March 2017 Commons Chamber

[Mr Hammond]

I have explained to the House what happened and what the view is inside Government about the tax locks that we put in place. The hon. Gentleman is entitled to his opinion and he has expressed it.

[Nigel Mills (Amber Valley) (Con)]

I thank the Chancellor for his change of mind today. I urge him to carry on with some parts of the proposal, namely considering how we can ensure that the very highest earners, who tend to be self-employed, pay the right amount of tax, including partners in limited liability partnerships, who have the advantages of limited liability and of not paying national insurance.

[Mr Hammond]

My hon. Friend is right. It is a relatively small group, but about 90,000 self-employed people, many of them on very high earnings, benefit enormously from the way the system operates, particularly those who use limited liability partnerships. That is an essential part of the review of this issue in the round that we have to do.

HMRC Estate

Nigel Mills Excerpts

Tuesday 10th January 2017 Commons Chamber

[Jane Ellison]

I cannot agree with the hon. Gentleman’s comments about the motivation. As I said, there is a balance to be struck between the service to customers, how we support staff and how we serve the wider taxpayer interest. Yes, across Government there has been a move towards more modern and—in some cases, perhaps—more centralised services. There is a balance to be struck, but there is a robust programme of support in place for staff who cannot move, and to help them extra money has been put into the transitional costs associated with transport, for example. HMRC is working with other Government Departments to make sure that where we can, we take advantage of the high skills people have, to move them to other Departments where their skills can be used.

[Nigel Mills (Amber Valley) (Con)]

The Minister noted that there were some compliments in the NAO report on how HMRC has moved to a more realistic plan for this project, and is now managing the existing estate better than before. Will she set out how HMRC will build on this progress to make sure that the skills are enhanced as this complicated project goes forward?

[Jane Ellison]

Of course. My hon. Friend is right to say that. As I have said, HMRC will respond in detail to the NAO report, and I will be pleased to discuss that with him. One of the NAO’s recommendations is precisely what he has drawn our attention to—that there should be an iterative process of learning from every part of the move, ensuring for example that experience from the first regional centre to be opened is reviewed and lessons learned from it. This is a long programme of change; it is not an overnight transformation. It is absolutely right to review it at every stage so that we learn as we go along.

Draft Bank Levy (Double Taxation Relief) (SIngle Resolution Fund Levy) Regulations 2016

Nigel Mills Excerpts

Thursday 8th December 2016 General Committees

[The Financial Secretary to the Treasury (Jane Ellison)]

I beg to move,

That the Committee has considered the draft Bank Levy (Double Taxation Relief) (Single Resolution Fund Levy) Regulations 2016.

The regulations are made under powers available in schedule 19 to the Finance Act 2011 to provide double taxation relief in respect of contributions to the UK bank levy. In particular, the regulations allow double taxation relief when there is a charge under both the UK levy and a new eurozone levy called the single resolution fund.

Since 1 January 2015, all EU member states have been bound by the bank recovery and resolution directive, which requires that member states have a resolution financing mechanism and raise a certain amount of funding on an ex-ante basis from banks authorised in their territory. In the eurozone, banks pay a contribution to the single resolution fund; the UK is satisfying its obligations under the bank recovery and resolution directive by raising contributions through our existing bank levy. In some circumstances, payments made to the single resolution fund overlap with the UK bank levy, giving rise to instances of double taxation.

For other bank levies, such as those of France, Germany and the Netherlands, we have introduced provisions that allow for double taxation relief, but currently no mechanism is in place to give relief for payments made into the single resolution fund. In line with the Government’s general policy of avoiding double taxation, it was announced at summer Budget 2015 that relief would be provided against the UK bank levy for payments made to the single resolution fund from 1 January 2015.

I shall explain how the double taxation arises. The UK bank levy is levied on a group basis, whereas the single resolution fund levy is levied on an entity basis, which means that there could be double taxation if there is either an EU subsidiary of a UK-resident entity or a UK permanent establishment of an EU entity. As both bank levies are charged on balance-sheet liability, the regulations will give relief if there is a charge under both the bank levy and the single resolution fund levy in respect of liabilities on the same balance sheet. The regulations set out clear rules for calculating the amount of double tax relief due in the different circumstances in which it could arise. The rules ensure that the regulations provide a clear, consistent and fair outcome for all affected parties.

The Government are continuing their policy of avoiding the double imposition of taxation. Not to do so would risk unfairly burdening certain banks and damaging UK financial sector competitiveness.

[Nigel Mills (Amber Valley) (Con)]

Will the Minister confirm that we will get the first taxing right on UK assets? For a UK permanent establishment of an overseas bank, we should not be crediting overseas tax against our tax so that we end up with no levy on UK assets that we are effectively guaranteeing. Will we credit overseas tax only if that territory is, for example, first in line to be paid any claims if there was a default on the assets?

[Jane Ellison]

That is a typically erudite question from my hon. Friend, to which I shall attempt to respond during my remarks following the comments of the Opposition Front-Bench spokesman.

I was saying that were the Government not to proceed with this measure, that would risk unfairly burdening certain banks and damaging UK financial sector competitiveness. The regulations address such a risk by supporting UK business and creating a level playing field, so I hope they are approved. I am happy to respond to further questions.

Small Charitable Donations and Childcare Payments Bill

Nigel Mills Excerpts

Committee Debate: House of Commons
Tuesday 18th October 2016 Public Bill Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

We support the amendments. As has been stated, a number of charitable organisations have got together and have come back with a really comprehensive survey that says that charities are hugely in favour of such an approach.

The gift aid small donations scheme is a really good Government initiative that has done part of the job it was set up for, but we can see from the number of people making a claim that it has probably not done as well as was intended—it has not quite reached the number of claims that were expected. That is partly because the way the world works has changed: people are giving through other methods. I rarely put money in a bucket, but I quite regularly make text donations or online donations, and I am as guilty as anyone of not following up with that second text with my name and address for the gift aid. In a world that is moving forward, we need to consider that.

I understand the Government’s reluctance to take on cheques, but it has been really clear from the groups that have come forward, particularly church groups, that they receive an awful lot of their funding from small cheques. It would be much better for them if they were able to claim for cheques under the gift aid small donations scheme. Although that may seem almost a backward step, we need to ensure that the gift aid small donations scheme works as best it can, particularly for small charities that do not have the staff—the people power—to fill in all the forms, which is still a requirement. Widening the gift aid small donations scheme would make it better, particularly for small charities.

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak in this debate. I spoke on a similar clause four years ago when this Bill first went through Committee; I think that the hon. Member for Clwyd South was here as well. Looking back, many of the Members who served back then appear to have moved on to far greater things than I have, so they will not be repeating this debate.

It is worth looking back at the debate four years ago, when the topic was whether restricting the measures to cash was appropriate and whether we should include different technologies or different means of giving impulse donations for which getting a gift aid declaration is hard, in order to achieve the objectives of the scheme. The current scheme is worthy. It is meant to give a level of support equivalent to gift aid to small donations, in order to give hard-pressed charities extra money. It is regrettable that four years into the scheme, the amounts claimed are much lower than we thought. Ideas to help charities claim and achieve the £100 million that Government thought this would originally cost are to be welcomed.

Four years ago, I was perhaps a bit prescient on this point; I even referred to contactless payments in that debate. I thought that the world might move on, that cash would become less common and that we would all find different ways of donating, whether by making contactless payments on terminals or by clicking buttons in an app. The Bill risked becoming out of date quickly if we were not careful. I suggested at that point that perhaps the Government should take the power in the Bill to amend by statutory instrument the definition of “cash or cash equivalent” in that situation, so we could keep up to speed with technology and not have to keep coming back every few years to primary legislation to fix it.

Here we are four years on, trying to fix contactless payments. That is quite right, and I will happily support it. We have even included Android Pay and Apple Pay, again quite sensibly, but we cannot predict where we will be in four years’ time. How will impulse donations be made? Will it still be by text message, by app, by cash in a bucket or contactless payments, or will we have found some new technology, perhaps fingerprint swipe? It is hard to imagine where we will be in four years’ time. If we are to keep the Bill as effective as we want it to be, why not have that power available so that the Government can say quickly, “Let’s make a tweak here, and allow this to fall within the scheme”?

[James Duddridge (Rochford and Southend East) (Con)]

My hon. Friend is making lucid points with which I agree fully, but he recommends that Ministers could make a change through statutory instrument. Would he perhaps consider allowing them to make the change without a statutory instrument, maybe by short consultation or even ministerial decision? That would be liberalisation.

[Nigel Mills]

My hon. Friend is being quite generous as a Back Bencher, offering the Government more power than they want to take. I suppose that there would be spending issues if the Government generously expanded some new and risky technology and that Parliament might want to scrutinise that. I would prefer, in my perfectionist world, some order that undergoes parliamentary scrutiny, but I concede the argument he is putting forward.

The then Minister four years ago, who is now the Secretary of State for Communities and Local Government, the right hon. Member for Bromsgrove (Sajid Javid), was called a “dinosaur” for rejecting the Labour amendments. I am hoping that this Minister will not be called something like that today, given the liberalising approach that she is taking. The then Minister was not keen to accept the amendments, which were meant to apply to cash in order to help people who do bucket collections and so on, where one cannot get a gift aid declaration, as it is an impulse donation and people are not inclined to stop and give those details.

My argument for amendments 2 and 3 is that an SMS message is also an impulse donation. We see adverts on the TV where it says to text a number with “YES” or “FIVE”. If I do that, I do not provide them with any more information. It is a small, impulse donation. The evidence that we have from the various charity groups is that people do not make a gift aid declaration after doing that.

If we cannot tempt the Minister to accept amendments 1, 2 or 3, perhaps she will think on Report whether she can take the power to allow new ways of donating to be included in future, so that she can gradually evolve the scheme and put the extra money into achieving the objectives that we all share. Especially at this time of year, when British Legion volunteers will all be out doing great work shaking their buckets to collect cash, we want the scheme to be as effective as possible. I fear that, by being too restrictive on how donations qualify, we will not give more money to charities, as we all really want to.

--- Later in debate ---

[Jane Ellison]

Of course. If my hon. Friend will let me, I will go through the process for claiming gift aid. I have talked about how that can be done via SMS, but let me talk about how it is done online and how it can be made even easier. Online donations require donors to take the time to enter their name and payment details. The only additional information needed for a gift aid declaration is an address. Donors are then encouraged to tick a simple box to add gift aid at the point of donation. Most of us would agree that in those circumstances it is entirely practical for a charity to ask a donor to complete a gift aid declaration. Many fundraising websites have invested substantial effort in making the process for adding gift aid as simple and straightforward as possible. I am sure it will continue to get even more simple and straightforward; we have all seen the astonishing simplification of the online charitable giving world over the past few years, and we have every reason to think that it will continue to progress.

The Government want to make it even easier for donors to add gift aid to donations made through digital channels; indeed, we recently published consultation draft regulations intended to achieve that. Work is already taking place on gift aid and to make it simpler to make an online donation.

[Nigel Mills]

Has the Minister had a chance to look at the consultation issued by the Treasury in 2013 on ways of improving gift aid donation? At paragraph 1.8 it set out all the reasons why there was such difficulty in getting a gift aid donation on an SMS donation, and it was looking to consult on ways to improve the situation. The Treasury view seems to have hardened since that consultation, which recognised the difficulties, but the fundamental issues that it raised—getting someone to pay to send a second text message and to type in details on their screen while they are out and about—have proven very hard to tackle, and the take-up has been nothing like as high as for other methods of donation.

[Jane Ellison]

I understand my hon. Friend’s point, but I think it relates to how we can make giving under the gift aid scheme even easier; I do not think it is as germane to the issue of how to improve the small charitable donations complement to gift aid. However, I hope what I have to say about contactless will be closer to what he wants to hear. I confess that my familiarity with paragraph 1.8 of the document he mentions is not as great as his own, but I will familiarise myself with it when I get back to the Treasury.

As I said, draft regulations about making gift aid donations through digital channels easier are out for consultation; I am sure Members will have a look at them. As for contactless donations, Members may ask how they differ from other forms of electronic donation. The difference is, quite simply, speed. On Second Reading, the Minister for Civil Society used the example of commuters passing through the ticket barriers of a tube station to demonstrate just how quick contactless technology is—we are all familiar with the Oyster scheme, for example. That speed of transaction means that donations collected using dedicated contactless collection terminals have a lot of the same practical issues as bucket collections. Individuals can donate as they pass by a fundraiser without having to stop and talk—it is almost instantaneous. Fundraisers therefore do not have the opportunity to engage donors and solicit gift aid declarations. That is not the case with other methods of electronic donation, as I have explained. A lot of work is going on, as the Minister for Civil Society said in the debate. Big charities are already showing significant advances in technology: their terminals replicate the simple cash payment as nearly as we can imagine, and we expect to see them in use pretty quickly—they are already being trialled.

As for cheques, I understand that they remain a popular method of payment, particularly among older people, but writing a cheque is not an instant process. The payer needs to write the date, the payee’s name and the payment value, both in words and numerals, and then sign it. Our contention is that, if a donor has the time to stop and write a cheque, it is not unreasonable to suggest that he or she also complete a gift aid declaration. We are all familiar with those small envelopes with the simple form on them; they have only a fraction of the number of items to fill in that a cheque has. Moreover, by writing a cheque the donor is already providing some of their details to the charity, so the additional information needed for a declaration is relatively small. We believe that it is entirely feasible to obtain a gift aid declaration in those circumstances.

--- Later in debate ---

[Jane Ellison]

We want the charities to use both methods, and there is evidence that many do. The scheme was always envisaged as a complement to gift aid, so it is not an either/or.

I totally accept that there is always more to be done in getting charities to claim gift aid. In the Second Reading debate, the Minister for Civil Society talked about the charities day that is coming up and I mentioned that HMRC has an outreach team, which has already delivered more than 600 sessions with charities, talking about how they can make the most of what is on offer. Of course we want to see donations maximised. It is true, as my hon. Friend the Member for Amber Valley said, that we have not yet reached the point we wanted to, but the Bill takes us a good way in the right direction.

We do not want to incentivise a switch to this scheme from gift aid. In any case, there is a matching requirement, so any charity would have to do gift aid to access this scheme. We will perhaps debate that matching requirement later. It is important. We mentioned it briefly in terms of the assurance process.

The Government’s position has always been clear. The scheme was introduced to provide a payment similar to gift aid when charities cannot obtain a gift aid declaration. If a charity can claim gift aid, it should do so, because that is more beneficial to them in the long term, for the reasons I have touched on. Robust processes exist to allow charities to claim gift aid on electronic donations and the Government will shortly introduce legislation to make doing that even easier. I hope, therefore, that Members will not press their amendments to a vote.

[Nigel Mills]

This is just a technical question. Does the definition of contactless include Oyster cards? Donations can be made using an Oyster card, by registering to pay a penny a journey, and unused funds can be donated to various charities around London. Would that fall within the definition of contactless or has it accidently been excluded?

[Jane Ellison]

We believe that the definition of contactless payment is wide enough to cover most likely developments but I am more than happy to look into that further before the next stage of the Bill.

Clause 2 amends, as we have discussed, the meaning of “small charitable donation”, enabling charities to claim top-up payments on donations received using contactless technology. Confirmation comes, as if by magic, for my hon. Friend: can the definition include Oyster cards? Yes it can.

As my hon. Friend knows, because he was one of the people discussing it, the matter was raised during the passage of the 2012 Bill. The gift aid small donations scheme was devised only four years ago, when contactless payment technology was in its relative infancy. At the time, the Government promised to look at the issue again during our three-year review of the scheme, and that is what we have done. I hope that the answer I have just given about Oyster cards shows that we are trying to future proof that aspect of it, as my hon. Friend predicted we would need to do.

The changes made by the clause reflect the fact that there is a clear trend away from cash transactions generally in society. They are declining, while contactless payments are increasing. We accept that, unlike other methods, such as cheques, text messages and online giving, which require donors to stop and actively engage with their chosen charity, contactless donations share many of the same limitations. People can just tap to donate and walk away without stopping to fill in a gift aid declaration. Indeed, in some of the situations in which we find bucket collections, it is almost impossible to stop and give a gift aid declaration. Contactless technology could be extended to augment bucket collections in busy tube stations—I imagine we would be less than popular if charities cause great queues to form in busy tube stations—so it is easy to envisage situations in which this measure would be useful. Accordingly, clause 2 amends the scheme, allowing charities to claim top-up payments on contactless donations of £20 or less.

Although the take-up of contactless technology among charities is relatively low, we have had feedback from the sector and have seen demonstrations suggesting that the cost of the technology is likely to decrease. Therefore, we anticipate that the take-up will increase. It is important, as the new technology develops—it is developing at a fast rate—and as the charity sector innovates, that the legislation continues to reflect the realities of the way charities are fundraising.

Clause 2 will allow charities to claim top-up payments on donations made using credit and debit cards, as well as services such as Apple Pay and Android Pay. The scheme will therefore become more flexible, and the charity sector will have more opportunities to claim top-ups on small donations of £20 or less. Including that measure in the scheme will not impose any significant extra burdens on charities that choose to use the technology. Charities will not be compelled to use contactless payments if they do not wish to do so.

Clause 2 will without doubt future proof the gift aid small donations scheme, as was discussed in 2012. It will ensure that charities continue to benefit in years to come as contactless technology expands. I commend the clause to the Committee.

Small Charitable Donations and Childcare Payments Bill

Nigel Mills Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 11th October 2016 Commons Chamber

[Jane Ellison]

Clearly, all the points that colleagues make on Second Reading will be carefully considered and debated again in Committee. I understand my hon. Friend’s direction of thinking, but perhaps that will be discussed further in Committee.

The second important change enabled by the Bill is the future proofing of the small donations scheme to ensure that charities that use modern, innovative ways to collect money such as contactless donations will still be able to benefit. The small donations scheme was never intended to cover other methods of donation such as direct debit, online and text messaging, for which well-established and well-used processes for claiming gift aid exist. That remains the case, but we recognise that cash transactions have declined as new, innovative payment technologies have become more prevalent. We believe that the gift aid small donations scheme should keep pace with these amazing modern techniques.

Contactless donations collected using dedicated charity collection terminals share many of the same practical problems as bucket collections. Transactions are instant, and there is little opportunity for fundraisers to engage with donors to solicit a gift aid declaration. The Bill will therefore extend the scheme so that donations made using contactless technology will be eligible for top-up payments.

[Nigel Mills (Amber Valley) (Con)]

I welcome that decision by the Government. I should say, as I tabled an amendment to the original Bill to suggest exactly that future proofing, that I am glad that the Government have got there, perhaps a few years later than they might have done. However, is it really fair to end up with a different treatment if I swipe my phone cleverly at some terminal rather than if I happen to text the number that comes up on my screen? My sense is that I would not be willing to give details of my address through my mobile phone provider, so can we not be a little more generous and allow text donations in that situation?

[Jane Ellison]

Text messages can, as my hon. Friend knows, be gift aided, so we do not expect problems in that regard, but the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Reading East (Mr Wilson), will seek to respond more fully on those points at the end of the debate.

The final change proposed in the Bill is simplifying the rules on the top-ups that charities can receive on donations that they receive in their community buildings. Those rules were designed to ensure fairness and parity of treatment for charities structured in different ways. Without those rules, some charities are entitled to hundreds of thousands of pounds more than others simply because of differences in their historical structures. The gift aid small donations scheme is particularly well used by local churches. That was made clear by the Archbishops Council, which recently noted that in 2014 parishes could claim record levels of gift aid, with a significant part of the increase arising from the use of the gift aid small donations scheme. We want churches to continue to benefit from the valuable extra income provided by the small donations scheme, but it is important that the scheme continues to deliver the policy intention of providing fair and equal outcomes regardless of structure. The Bill will therefore address an anomaly in the original legislation.

Surplus Target and Corporation Tax

Nigel Mills Excerpts

Monday 4th July 2016 Commons Chamber

[Madam Deputy Speaker (Mrs Eleanor Laing)]

The prize for patience goes to Nigel Mills.

[Nigel Mills (Amber Valley) (Con)]

That is not a prize I get often. I welcome the Chancellor’s decision to further reduce the rate of corporation tax—I called for it in the Budget debate last week, so I ought to welcome it. To get the most benefit out of that, we need to simplify our business tax system further to make it more attractive. Will he therefore agree to hold a review to try to make our system as simple as it can be?

[Mr Osborne]

We are seeking to make our business tax system simpler, and our Office of Tax Simplification will be on a statutory footing and will help us. Let me be a bit discursive at the end here. In this job, I get many requests for tax reliefs and tax breaks for particular things, all of which are very worthy and sensible. They do, however, complicate the tax system. Sometimes the more difficult path is to say that welcome though lots of different reliefs would be, the simpler thing would be to reduce the rate. Broadly speaking—there are exceptions to this—that is the approach that I have followed and intend to follow in the future.

Bills Presented

Vehicle Noise Limits (Enforcement) Bill

Presentation and First Reading (Standing Order No. 57)

Kevin Foster, supported by Wendy Morton, Kit Malthouse, Mark Field and Michael Tomlinson, presented a Bill to make provision for the enforcement of noise limits for vehicles via automatic monitoring equipment; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 2 December, and to be printed (Bill 27).

Broadcasting (Radio Multiplex Services) Bill

Presentation and First Reading (Standing Order No. 57)

Kevin Foster, supported by Wendy Morton, Michael Tomlinson, Maggie Throup, Valerie Vaz, Peter Heaton-Jones, David Warburton, Kit Malthouse, Danny Kinahan and Mike Wood, presented a Bill to make provision about the regulation of small-scale radio multiplex services; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 13 January 2017, and to be printed (Bill 28).

Wild Animals in Circuses (Prohibition) Bill

Presentation and First Reading (Standing Order No. 57)

Kevin Foster, supported by James Heappey, Nusrat Ghani, Wendy Morton, Michael Tomlinson, Louise Haigh, Will Quince, Anna Turley, Simon Hoare, Mr Philip Hollobone, Bob Blackman and Jim Dowd, presented a Bill to prohibit the use of wild animals in circuses; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 24 February 2017, and to be printed (Bill 29).

Animal Fighting (Sentencing) Bill

Presentation and First Reading (Standing Order No. 57)

Kevin Foster, supported by Nusrat Ghani, Wendy Morton, Michael Tomlinson, Jim Dowd, Anna Turley, Mr Philip Hollobone, Louise Haigh, Simon Hoare, Philip Boswell, Rebecca Pow and Dr Lisa Cameron, presented a Bill to amend the Animal Welfare Act 2006 to increase the sentence available to the court for those convicted of a criminal offence related to animal fighting; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 24 February 2017, and to be printed (Bill 30).

Local Audit (Public Access to Documents) Bill

Presentation and First Reading (Standing Order No. 57)

Wendy Morton, supported by Kevin Foster, Michael Tomlinson, Sir David Amess, Mary Robinson and Ben Howlett, presented a Bill to extend public access to certain local audit documents under section 26 of the Local Audit and Accountability Act 2014.

Bill read the First time; to be read a Second time on Friday 25 November, and to be printed (Bill 31).

Crown Tenancies Bill

Presentation and First Reading (Standing Order No. 57)

Wendy Morton, supported by Kevin Foster, Michael Tomlinson, Sir David Amess, Ben Howlett, Mark Pawsey and Jeremy Lefroy, presented a Bill to provide that Crown tenancies may be assured tenancies for the purposes of the Housing Act 1988, subject to certain exceptions; to modify the assured tenancies regime in relation to certain Crown tenancies; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 16 December, and to be printed (Bill 32) .

Highway Works (Weekend Working and Traffic Management Measures) Bill

Presentation and First Reading (Standing Order No. 57)

Wendy Morton, supported by Kevin Foster, Michael Tomlinson, Sir David Amess, Mary Robinson, Maggie Throup, Ben Howlett, Amanda Solloway, Jeremy Lefroy and Victoria Prentis, presented a Bill to regulate works on certain highways in England by making provision about weekend and bank holiday working and provision about removal of traffic lights and other traffic management measures after the completion of works.

Bill read the First time; to be read a Second time on Friday 20 January 2017, and to be printed (Bill 33).

Local Authority Roads (Wildlife Protection) Bill

Presentation and First Reading (Standing Order No. 57)

Wendy Morton, supported by Kevin Foster, Michael Tomlinson, Sir David Amess and Anna Turley, presented a Bill to place a duty on local highways agencies and local transport authorities to make provisions safeguarding wildlife on roads passing through, or adjacent to, specified protected areas; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 3 February 2017, and to be printed (Bill 34).

Use of Property (Protection) Bill

Presentation and First Reading (Standing Order No. 57)

Michael Tomlinson presented a Bill to make provision about protecting existing and established use of property; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 21 October, and to be printed (Bill 35).

Road Traffic Offenders (Surrender of Driving Licences Etc) Bill

Presentation and First Reading (Standing Order No. 57)

Michael Tomlinson presented a Bill to make provision about the surrender, production or other delivery up of driving licences, or test certificates, in relation to certain offences; to make provision in relation to identifying persons in connection with fixed penalty notices, conditional offers and the payment of fixed penalties under the Road Traffic Offenders Act 1988; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 27 January 2017, and to be printed (Bill 36).

Providers of Health and Social Care (Schemes under Section 71 of the National Health Service Act 2006) Bill

Presentation and First Reading (Standing Order No. 57)

Michael Tomlinson presented a Bill to amend section 71 of the National Health Service Act 2006 to enable schemes under that section to make provision to meet liabilities of health and social care providers in respect of integrated health and social care services.

Bill read the First time; to be read a Second time on Friday 24 March 2017, and to be printed (Bill 37).

Carbon Monoxide Poisoning (Safety Abroad) Bill

Presentation and First Reading (Standing Order No. 57)

Michael Tomlinson presented a Bill to require companies offering or marketing holiday accommodation in other countries to British citizens to undertake specified health and safety measures in relation to carbon monoxide emissions; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 24 March 2017, and to be printed (Bill 38).

Protection of Family Homes (Enforcement and Permitted Development) Bill

Presentation and First Reading (Standing Order No. 57)

Steve McCabe presented a Bill to make provision about guidance to local authorities on when to take enforcement action for breaches of planning law; to clarify guidance on the scope of permitted development rights; to make provision about rights and entitlements, including of appeal, for people whose homes are affected by such breaches; to make provision for the inspection and regulation of building under the permitted development regime; to establish financial penalties for developers who breach planning law in certain circumstances; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 28 October and to be printed (Bill 39).

Personal, Social, Health and Economic Education (Statutory Requirement) Bill

Presentation and First Reading (Standing Order No. 57)

Caroline Lucas, supported by Mrs Maria Miller, Kate Green, Teresa Pearce, Liz Saville Roberts, Barbara Keeley, Valerie Vaz, Thangam Debbonaire, Jess Phillips, Sarah Champion and Diana Johnson, presented a Bill to require the Secretary of State to provide that Personal, Social, Health and Economic education (PSHE) be a statutory requirement for all state-funded schools; for PSHE to include Sex and Relationships Education (SRE) and education on ending violence against women and girls; to provide for initial and continuing teacher education and guidance on best practice for delivering and inspecting PSHE and SRE education; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 20 January 2017, and to be printed (Bill 40).

Housing (Tenants’ Rights) Bill

Presentation and First Reading (Standing Order No. 57)

Caroline Lucas, supported by Mr David Lammy, Mary Glindon and Jonathan Edwards, presented a Bill to establish a Living Rent Commission to conduct research into, and provide proposals for, reducing rent levels in the private rented sector and improving terms and conditions for tenants; to require the Secretary of State to report the recommendations of the Commission to Parliament; to introduce measures to promote long-term tenancies; to establish a mandatory national register of landlords and lettings agents; to prohibit the charging of letting or management agent fees to tenants; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 20 January 2017, and to be printed (Bill 41).

Railways Bill

Presentation and First Reading (Standing Order No. 57)

Caroline Lucas, supported by Ian Mearns, Ian Lavery, John Cryer, Steve McCabe, Jonathan Edwards and Hywel Williams, presented a Bill to require the Secretary of State to assume control of passenger rail franchises when they come up for renewal; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 20 January 2017, and to be printed (Bill 42).

Animal Cruelty (Sentencing) Bill

Presentation and First Reading (Standing Order No. 57)

Anna Turley, supported by Kevin Foster, Alex Cunningham, Kerry McCarthy, Liz McInnes, Wendy Morton, Mr Philip Hollobone, Sarah Champion, Jim Dowd and Margaret Ferrier, presented a Bill to increase the maximum sentences available to the court for specified offences related to animal cruelty; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 24 February 2017, and to be printed (Bill 43).

Malicious Communications (Social Media) Bill

Presentation and First Reading (Standing Order No. 57)

Anna Turley, supported by Ruth Smeeth, Paula Sherriff, Chris Matheson, Angela Rayner, Louise Haigh, Melanie Onn, Jess Phillips, Justin Madders, Chris Elmore, Carolyn Harris and Helen Hayes, presented a Bill to make provision about offences, penalties and sentences in relation to communications containing threats transmitted or broadcast using online social media; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 24 March 2017, and to be printed (Bill 44).

Finance Bill

Nigel Mills Excerpts

Tuesday 28th June 2016 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

I hope that the Minister will be willing to channel the leadership and enthusiasm that the UK showed in relation to the diverted profits tax, when we chose to go out alone and not wait for international agreements on base erosion and profit shifting. We introduced a whole new tax, with compliance burdens and penalties, and I suspect that that was a far bigger deal than requiring companies simply to disclose what they are already disclosing but in a slightly different format. I think that that was the right way to go.

[Mr Gauke]

My hon. Friend is right to mention the fact that we went ahead with the diverted profits tax, although doing so was clearly consistent with the direction of the base erosion and profit shifting process. That tax also brought in significant revenue to the UK, which has been very helpful.

If we want to achieve greater transparency, as I believe we all do, it is right that we focus on driving forward international efforts on public country-by-country reporting. In order to get full information on foreign multinational entities’ global activities, multilateral agreement will be required to enable countries to introduce comprehensive rules with the widest possible scope. This will allow for a comprehensive multilateral approach that applies consistently across UK and foreign multinational entities. We must get this right so that, when it is introduced into UK law, it is effective and enforceable. We will continue to support and drive this multilateral change forward following the result of the referendum, and I share the determination of the Members supporting this amendment not to move at the pace of the slowest.

--- Later in debate ---

[Caroline Flint]

I hope that the companies that we are talking about would be big enough to have a website; if not, we might get an opportunity to discuss that later. My goodness, in terms of their reputation, if they do not have a website, they are on a hiding to nothing.

The Minister tried to suggest that the amendment would relate only to UK companies, but it is in line with HMRC guidance that already affects the reporting strategies that the whole House has supported and includes multinational enterprises over a certain turnover. In that sense, we are working with the grain of how the Government have proceeded in these important areas.

There is widespread concern in the House, across all parties, that multinationals operate by different rules from the majority of hard-working, tax-paying businesses, large and small, in the UK. The greatest weapon of multinational enterprises is that their tax arrangements are shrouded in secrecy. The problem is that, in today’s world, as leaks emerge and information comes out, it is death by 1,000 cuts, whereas the amendment is about getting businesses and their reputations back on track. Not only would this be good for business, but it would ensure that those businesses that are playing fair have a chance to set out their claim and what they are doing in a very public way.

Governments across the world face a particular problem with multinationals. The common factor is that revenues are shifted to countries with poor governance, poor monitoring and low or no corporate tax rates. Why in 2010 did Bermuda have total reported corporate profits that were the equivalent of 1,643% of its actual GDP? Could that be because that country has a zero rate of corporation tax? Is there not something odd about a company—let us say, Google—that has huge numbers of sale staff in one country, but all the revenues reportedly received in another? It would surprise no one to find that the revenues are recorded in a country that has a corporate tax rate of 12.5%, as opposed to the UK’s 20%.

The House can take a stand against this entirely lawful but—I think we would all agree—unethical manipulation of different countries’ tax rules. As the OECD has rightly pointed out in its work on base erosion and profit shifting, the impact is to create unfair competition. Multinational enterprises that transfer profits to low-tax dominions gain a competitive advantage over, say, a UK rival, which pays 20% tax on its profits. We can seek to level that playing field today.

The whole House supported the Chancellor’s legislation to require financial reporting to HMRC from UK-based multinationals with revenues in excess of approximately £600 million and UK units of such companies where the parent company is based in a country that does not yet agree to country-by-country reporting. That reporting, in accordance with the guidelines that I have mentioned, would include showing for each tax jurisdiction in which they do business the amount of revenue, profit before income tax and income tax paid and accrued, and their total employment, capital, retained earnings and tangible assets. They would be required to identify each entity within the group doing business in a tax jurisdiction and to provide an indication of business activities within a selection of broad areas in which each entity engages. That information must already be provided to HMRC. We are saying, “Let’s go public.” I want the HMRC to be armed with all the necessary information to secure fair tax contributions from these companies, based on their UK activity, but we need more than the HMRC to have a confidential look; we all deserve to see the bigger picture, and by publishing, we will see that.

Publishing is one way to persuade some of these companies to restore their corporate reputations. Was it because of the extraordinary focus on Google that Facebook announced a welcome change to the recording of its profits in the UK? I believe so. If a company is reporting profits in tax havens where they have only a PO box and a name plate but no apparent staff or activity, do we not want to know that? Let us follow our convictions; let us do what we know to be right. Let us shine a light on the activities of these large multinationals which—let us be honest—run rings around revenue and customs authorities around the world. Let us not flinch, play for time, and hope that some international agreement will eventually be reached by the EU or the OECD.

I remind Members that so often during the referendum on the UK’s EU membership, we heard a lot from both sides about our Parliament’s sovereignty and our power to make laws and to tackle issues big and small. Well, this is the test. Is Britain still a leader or are we followers? This amendment is a pro-business measure. If we adopted it, Parliament would be saying that every business big and small must play by the same set of rules. The tide of opinion is changing in the business world. I am delighted that this week I have received support from SSE for the principle of public country-by-country reporting. I am delighted when major firms such as the cosmetics company Lush, which operates in 49 countries, sign up to the Fair Tax Mark and pledge never to use tax havens. I welcome the fact that since 2014, a quarter of the FTSE 100 companies have published information about their tax arrangements, with long-standing British firms such as Barclays foremost among them.

I commend the Minister for the steps that have been taken in the past six years to improve the level of transparency and for the clampdown on the secretive tax deals that have thwarted fair taxation for so long. In our hearts, do we not all know what the Googles of this world will be hoping? They will hope that we sidestep this issue and duck the opportunity for Britain to set a standard, to lead and to demand more openness. This House knows what those who want fair taxes from large and small businesses alike will want. Every right hon. and hon. Member knows what their constituents would say about these firms shifting their profits to low-tax and no-tax dominions. Let us spare a thought, importantly, for the developing countries, which reportedly lose as much in lost tax revenues as they receive in aid each year. That cannot be right.

Finally, in February, the Chancellor told an international meeting of Finance Ministers:

“I think we should be moving to more public country-by-country reporting. This is something which the UK will seek to promote internationally.”

I hear what the Minister says, but there comes a point when we have to show leadership. Much of our tax rules and other rules affecting companies are not applied worldwide. They are British home-grown rules that seek to provide fairness as well as competition.

I welcome the EU’s activities in this area, although I am not sure where we will fit in. We might have to accept whatever the EU says if we are part of the single market. That is a debate for another day. Unfortunately, the present state of the EU’s negotiations does not tackle the problems of those developing countries that lose out. As I understand it, some of the European discussions have not included the publishing of information on the activities of EU-based companies in developing countries. That does not go as far as what we require from companies reporting to our own tax authority, which we are asking to be put in the public domain.

The change that I am calling for would be part of the Minister’s and the Chancellor’s legacy—a chance to lead where other countries are sure to follow. Let us ensure that the age of secrecy is gone. Let us force the multinationals into the light. I humbly request a Division on this amendment, and I urge the Minister and Conservative Members to join right hon. and hon. Members from nine parties in the Lobby with me today to make a historic change. In years to come, we will ask ourselves why we did not do this earlier. Today is the day. Let us stand up for fairness. Today is a day for lions, not lambs. Let us see the British Parliament roar. I urge the Committee to support this amendment.

[Nigel Mills]

It is a pleasure to follow the right hon. Member for Don Valley (Caroline Flint) and to support her amendment. I shall not repeat the arguments that she made so eloquently, but I shall make a few separate points.

Those of us who regard the UK as a great place to do business, and who want to attract international investment here and encourage our businesses to expand overseas and to export, recognise that we need a business climate that inspires confidence, where firms feel that they can compete fairly and that we have a respected financial system, tax system and market in which those operating here are seen to be behaving properly. Over the past few years we have found out from a series of leaks that large multinational companies have been misbehaving. Those companies are hauled through the press and parliamentary Committees, such as the Public Accounts Committee, on which I serve. That is not the right way to boost our business climate.

We need to move on from that and show the people of the UK and people around the world that companies that are based here and operate here follow the rules, and those that do not follow the rules will be caught and dealt with, and will be strongly encouraged, if not forced, to change their behaviour. That is the way to move the debate forward. Running and hiding and waiting for others to do that will not help. It is we who have taken the lead, taken action publicly against those companies and made them change their behaviour. For us to resile from that and say, “We’ve done our bit. Let someone else go first” will not work.

We are one of the main global financial centres. Companies come here to list on our stock market that were not founded here and are not headquartered or based here. We need to set an example and say, “If you want to come and be based here, you need to follow the highest standards. We want you to behave ethically.” I have no problem with UK-based companies trading in low-tax jurisdictions. If they are trading there commercially, if they have assets there, if they have employees there, that is their right, but they should publish a report so we can see that what they are reporting is commensurate with their activities there, and that they are not simply hiding profit there that was not earned there. I welcome the increased transparency that the amendment would provide.

I do not believe the bleak competition warnings. It is not as though every small company would be required to provide such a report. The requirement would apply only to companies with turnover of more than €750 million. I would not like to guess what that is in sterling. I am sure it will gradually go up as the economy strengthens, now that we have left the EU. I would be surprised if many companies of that size have major trading activities in developed countries without having a subsidiary there that is making the sales. If those companies do have such a subsidiary, they will have to file statutory accounts in those territories. I suspect that in most regimes those will be public, so people will know the turnover of those big corporations in those regimes, and they will know what tax is due. Companies filing for UK tax have to provide a segmental analysis that shows where they are operating in the world and breaks down turnover and profit. We are not creating a new set of disclosures that do not already exist; we are trying to enhance the ones that we have and make them work.

I checked some major multinational accounts this morning and found one segment that said, “UK, US and international”. That is of no use to us. The idea of segmental reporting in financial accounts was to provide some disclosure so that we knew who was operating where, how much they were making and what they were doing. I do not believe that for the vast majority of very large companies that are trading ethically and not trying to avoid tax the requirement will be a great hardship. Yes, it may put a little more in the public domain, but it will put that into one document where people can read and understand it, see it transparently and clearly, and get a full picture of what the company is doing.

Everyone will understand that there is no reason why a company based in the UK that happens to make a few sales in France but has no people or assets there should pay French corporation tax. Similarly, there is no reason why a French company selling into the UK would pay UK corporation tax. We can make that clear. What we want to know about is those companies that have a large turnover and very few assets and employees in a very low-tax jurisdiction, so that we can work out whether they are acting legally.

Perhaps they are—perhaps some guy sitting in Guernsey on his own happened to invent a great product and has been receiving royalties. That is fair enough. He is entitled to do that. If he is based in Guernsey, that is rightly his income. I suspect that there are not many such cases, compared with the scale of business activity in those overseas jurisdictions. At least when such activity is transparent the businesses concerned will be able to explain it and defend themselves, or we will all know that those companies are misbehaving and we will be able to choose whether to buy from them or not. The amendment would help us to achieve that. As with all Back-Bench amendments, it is not perfect. The report should be provided in a company’s financial statement so that there is some assurance from the audit process that the data provided are accurate. I urge the Government to bring forward a Bill which would do that, so that the information would be provided in the right place.

It is not perfect for the reporting requirement to be in a tax policy statement that applies only to the UK and without any audit requirement. It may not provide assurance that all the disclosures are absolutely right and that no territories have been omitted or data combined in a way that we cannot understand. I suspect that there will be penalties for failing to publish the whole statement, but no scrutiny of what is published. Perhaps if the same information is provided to HMRC, there will be greater transparency. HMRC may notice that what is in the public domain is not quite the same as the information submitted to it. We could therefore make the proposal better.

It would probably be better if we tackled this issue EU-wide. I am perhaps the only person in the Chamber who welcomes the fact that we shall be making these laws ourselves, rather than having the EU make them for us—tax was always meant to be a member state competency—but if we want to wait a short period to have these things done in a consistent format across the whole of Europe, I would not mind if publication were in 2018 rather than 2017. However, we could at least have a clause that says that we will do these things from 2018 unless the EU has done something that applies here before then, in which case we could repeal that clause.

--- Later in debate ---

[Rob Marris]

I will not go too far down that route, but this Chancellor—in this sense and this sense only—has been saved by the Brexit vote. He was never going to meet his forecasts for getting the deficit down in the lifetime of this Parliament. He also completely failed when he forecast in the previous Parliament that the deficit would be down to zero by 2015. He then forecast that it would be down to zero by 2020. That was never going to happen. We predicted that and I am sad that it was the case.

Now, with the Brexit vote, as my hon. Friend the Member for Coventry South (Mr Cunningham) says, the forecast will be nowhere near right, but no doubt the Chancellor will then use the vote as an excuse. The Brexit vote has revealed some of the underlying problems in the British economy that just about every serious economist has been pointing out for the last five years. Cutting corporation tax in this circumstance is a bad idea, and I urge all hon. and right hon. Members to vote against clause 42.

[Nigel Mills]

It is a pleasure to follow the hon. Member for Wolverhampton South West (Rob Marris). I want to say a few words about clause 42, because although I clearly welcome the planned reduction in corporation tax by 2020, following the welcome vote last week, it may now need to be part of the picture of how we change our business tax regime over that period. Unlike earlier, there are now a few more of us present who thought the vote was welcome.

For us to capitalise on the opportunities of leaving the European Union, we will have to make our country even more attractive to outside investment to stimulate growth, a key part of which is our corporation tax system. As the Minister is planning ahead that far and as we now have the special group in the Cabinet Office under the Chancellor of the Duchy of Lancaster, I urge careful thought about what our tax system should look like by the time we leave the European Union, what signals we are giving and how we can further improve it and make it more attractive. Perhaps we could look at an even lower rate to send out a signal that we are positive about business activity and that we want more investment and will reward it further.

Perhaps we could look again at how we do capital allowances, especially for infrastructure investment and manufacturing items, for example. Perhaps we could re-examine how we give tax relief for the building of new factories. This country is not actually that generous and does not give tax relief for any industrial building, which is not a clever way of encouraging manufacturing. In fact, we are one of the least attractive tax regimes for various infrastructure investment activity because of our lack of relief for structures. Perhaps now that we have the need and the time to review that, we should ask whether it is clever to structure our tax system in a way that is not as attractive as possible for industrial building and infrastructure activity, especially as we will need a lot of investment as we go forward.

Oral Answers to Questions

Nigel Mills Excerpts

Tuesday 7th June 2016 Commons Chamber

[Mr Gauke]

I commend the hon. Gentleman’s ingenious ability to raise this issue. It is important that HMRC’s funds are spent efficiently, to ensure that they are spent on delivering the tax being collected that we want, rather than on buildings. The savings from buildings are being spent on collecting more tax.

[Nigel Mills (Amber Valley) (Con)]

The Minister will have seen the different approaches that the French and UK authorities have taken towards cases such as Google’s. What more can he do to ensure that Parliament and the public have faith that HMRC is getting good deals in such situations? For example, will the National Audit Office be allowed to review those most high-profile cases and give some assurance that a good deal was achieved?

[Mr Gauke]

rose—

Anti-corruption Summit

Nigel Mills Excerpts

Tuesday 3rd May 2016 Westminster Hall

[Nigel Mills (Amber Valley) (Con)]

I beg to move,

That this House has considered the Anti-Corruption Summit.

Hon. Members, members of the public and people watching this debate will not be surprised to learn that tackling corruption is one of the biggest items on the agenda this year. Barely a day goes by without it hitting the news. As co-chair of the all-party group on anti-corruption, I was keen to hold this debate so we can air the issues that the Government hope to tackle in the important summit next week and subject the summit to parliamentary scrutiny.

I thank the Backbench Business Committee for awarding me this debate. Unusually for a Back-Bench debate, we are not here to criticise the Government. We may have some suggestions about how they can be a bit stronger, but we are here to congratulate the Prime Minister and the Government for holding the summit, for placing this issue at the top of the agenda and for consistently championing transparency and accountability as enablers of good governance. We want real actions and agreements from the summit next week, so that those important things can be taken forward and enforced. I will set the scene and explain how I see the agenda, and then I will ask the Minister some questions about how the summit will work, who will be there, what the key Government aims are and how we can enforce the actions that are agreed.

In next Thursday’s summit, international partners will, we hope, agree a package of practical steps to expose corruption, punish the perpetrators, support the victims and drive out the culture of corruption. That is clearly timely, given what we have seen in recent weeks and months. It is difficult to measure the impact of corruption, but the scale has never been more obvious: the FIFA scandal, the Unaoil leaks and the recent Panama papers gave us a glimpse of the far-reaching and egregious damage that bribery, fraud, grand corruption and tax evasion can cause. As the Prime Minister said last July,

“Corruption is one of the greatest enemies of progress in our time.”

Bribes, tax evasion and grand corruption destabilise development, keep the vulnerable in poverty, add significantly to the cost of doing business and fund terrorism. We all agree that we need to find a way of fixing those things.

Next week’s extraordinary summit is outside the usual gamut of United Nations, G20, G7 or even OECD processes. It is a one-off, stand-alone, unique summit, and we are all keen to understand how any actions that are agreed can be enforced. We do not want just warm words next week; real action must result from them.

It is right that the UK takes the lead on this issue, because we are uniquely exposed to corruption. Our status as a pre-eminent global financial centre and the unfortunate financial secrecy touted by our overseas territories and Crown dependencies make the UK seem a safe haven for the proceeds of corruption and the individuals and organisations that facilitate and benefit from financial crime and tax evasion. We ought to recognise that.

When MPs go around the world and look at the issues that developing countries face, we often think, “Isn’t it great that we’re not suffering from that level of day-to-day corruption? We don’t have to bribe public officials to get the service we want. We are not at risk of being stopped by the police and being asked for a charge to keep driving.” But the UK is not completely corruption-free. As a big financial centre, we are very exposed to corruption, and we are used as a way to launder money and hide the proceeds of corruption and crime elsewhere in the world.

It is right that we praise what the Government have done in that regard. We will soon be one of the first countries in the world, and the first in the European Union, to have a public register of beneficial ownership. That is a real step forward, which will allow us all to see who owns the companies that operate in the UK. I am sure that it will give us some extremely useful and interesting information. We all welcome the recent consultation on extending that transparency to property ownership. We also welcome the new anti-money laundering action plan, which, if fully implemented, will bolster the regulators’ enforcement powers and their ability to identify and freeze suspicious transactions.

Of course, we have issues with our overseas territories, and if we cannot convince them to get on board with this agenda, our reputation for being a truly anti-corruption jurisdiction will not be intact. As the Panama papers show, secret company ownership makes most cases of large-scale corruption, money laundering and terrorist financing possible. Without secrecy, much of that could not be done.

A World Bank review of more than 200 of the biggest corruption cases between 1980 and 2010 found that more than 70% relied on shadow entities that hide ownership. Sadly, company service providers in the UK and the Crown dependencies are second on the list of providing the shell entities that facilitate those awful crimes. This summit and our international reputation will prevail only if we secure commitments from all our overseas territories and dependencies to introduce public registers of beneficial ownership and strip companies of the secrecy that allows them to hide the proceeds of crime, corruption and tax evasion.

Success will depend on whether we tackle the risks that are somewhat closer to home. Trillions of pounds flow through the UK’s financial system every year, and sadly some of those transactions are less than clean. The National Crime Agency recently estimated that tens to hundreds of billions of pounds-worth of corrupt and illicit funds are laundered through the UK each year. Last week, the acting chief executive of the Financial Conduct Authority appeared before the Treasury Committee, and when asked whether the UK system is suitably hostile to money launderers, she could only reply, “We could do better.” Clearly, we could and must do better. The laundered funds that are used to buy property here get into the system through the secrecy that our overseas territories allow. It is harder to spot and stop such funds once they are in the system, so we need to prevent them from getting there in the first place.

We must tackle money laundering in the UK. We welcome the action plan, but having 27 different institutions to supervise the anti-money laundering rules in the bodies that they regulate is far too many. They cannot have a real picture of what is going on, what action is needed, the trends and who is not complying. Will the Minister say whether the Government plan to find a way to reduce the number of supervisors, so that we can be confident that the new rules and those that are already in place will be enforced?

Law enforcement authorities identify three sectors that do not adequately report suspicious activity: the legal sector, accountancy and estate agency. Property ownership is a topical issue, and the fact that only 0.05% of all suspicious activity reports came from estate agents in 2013-14 suggests that action is needed to make that sector transparent. Recent research from Transparency International and investigations from Global Witness show how London’s property market is used for corrupt ends. More than 36,000 properties in London are owned by companies registered in offshore jurisdictions, and almost 10% of the properties in Westminster are owned by anonymous companies. We clearly cannot allow that situation to continue.

Anonymity has a clear link to corruption. More than 75% of corruption cases involving property investigated by the Metropolitan police’s proceeds of corruption unit involved anonymous companies registered in secrecy jurisdictions, 78% of which were registered in the UK’s overseas territories or Crown dependencies. This huge problem is sadly centred in territories over which we have some influence, so it is imperative that we produce some action from them.

Senior figures at the National Crime Agency have reported that corrupt investment in London’s most expensive properties is driving up house prices across the board. So money laundering not only is a problem for the rich and powerful, but has an impact on everyday life here in London. The longer we allow London to be a kleptocrats’ playground, the worse off we are making ordinary people.

We have all those statistics to recount, and an APG inquiry is ongoing at which we have heard many anecdotes about how British firms working overseas are losing out on contracts to unscrupulous firms based in countries that do not have the same regulations and rules, and do not play fair, as we do. We are losing jobs and income here, because other countries around the world are not following the rules that they ought to be. It is right for us to make a stand. We do not want businesses bribing their way into contracts around the world. Where we find that happening, businesses and their executives will be punished, and serious action will be taken. We will not turn a blind eye to it. Recently, Ernst and Young’s 2016 global fraud survey of senior executives found that 98% of UK respondents believed that it was important to know who ultimately owns and controls the entities with which they do business. So this is not a minority interest; the business world agrees that we should all know about such things.

Turning to the summit next week, will the Minister confirm exactly which countries are attending and the level of their representation? How many of the overseas territories and Crown dependencies will be present? Perhaps he will list which ones will not be. According to the recent statement, the two territories that had not agreed to have even a closed register of official ownership were Guernsey, which had some excuse to do with having elections and so could not agree—has any progress been made?—and Anguilla. Has some sense prevailed in that small part of the world? Has it seen the light?

[The Parliamentary Secretary, Cabinet Office (John Penrose)]

I will try to answer the broader questions at the end, but I can confirm that Anguilla has signed up. Guernsey’s election was last week, so we expect discussions to begin in earnest very promptly.

[Nigel Mills]

At least we have all the territories over that first hurdle.

Next week, the important thing will be to get real commitments on beneficial ownership and a timeframe for the register to be transparent and public, so everyone can see who owns every company established in a jurisdiction. For law-enforcement providers to be able to find such information in a timely way may be of some use, but we also want everyone to be able to search the register—for example, campaign groups could trace right through the system and see who owns properties. I suspect that law enforcement does not have the resources, sadly, to do that proactively, whereas sunlight and transparency will give us far more progress than a closed register ever could.

Will the Minister confirm whether the summit agenda includes discussion of a certain time by which all those territories will have a publicly accessible register of who owns companies and, preferably, of trusts in the jurisdiction? I accept that trusts are more complicated, but we need to see some progress on them as well.

Last autumn, I attended a meeting at which the Government’s anti-corruption champion, my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles)—sadly, he cannot be present today—confirmed that the Prime Minister was pretty determined to get overseas territories on board with a public register. The words the anti-corruption champion used were

“through legislation, guidance or naked pressure”.

I am not sure whether the summit counts as guidance or naked pressure, but if those do not work, what other options do the Government have? My right hon. Friend said “legislation”—his word—so will the Government put that on the table? At some point, will they take action if the territories will not go as far as we want them to, or is that completely off the table?

What other major countries are turning up? Are the Americans sending anyone next week, because they clearly have an important role to play in sorting out the world financial system? Those of us who would like to see greater action on global tax avoidance realise that the Americans have a real and vital role in that situation, so are they turning up next week?

If some actions are agreed next week and, as we hope, they are specific and have a real timeframe, how will they be enforced? Presumably, there will be no binding global agreement, but are the Government conscious of that? We do not want to hear warm words and promises that have been made before, followed by years of drift; we want real, concrete actions that are reviewed, with a timescale and ways to enforce progress.

If there is an agreement next week and some territories subsequently resile from it, what actions will the Government propose taking to convince the territories otherwise? It is not encouraging to see the Government announce that everyone has agreed to a closed register, and then senior people from some of our overseas territories glory in being able to say, “We’ve won. We’ve got everything we wanted out of this,” implying that it will be business as usual—presumably, not what we were aiming for. We want any agreement next week to be meaningful and strong, not just hot air.

With those thoughts, I wish the Government and the Minister well at the summit next week. We hope that they will come out with a strong and binding agreement, which can take the agenda forward towards finding ways of materially reducing the amount of corrupt money that flows around the world, especially into the UK. Nations around the world should, rightly, keep the money that they earn and have the tax revenues necessary to grow their economies. Everyone throughout the world should be able to see our financial system moving in the direction of being open, transparent and honest, rather than corrupt.

--- Later in debate ---

[Nigel Mills]

I thank everyone who has taken part in this debate for their excellent speeches. I think it is clear to anyone watching that there is a strong consensus among all the parties here that we want the summit next week to be a success. We want strong action to be taken. We want real agreements to take the issue forward, and we want to ensure that things happen on a timely basis, so that we do not just drift along and forget about the issue in a few years. I wish the Minister and the Government well with the summit, and we look forward to seeing what actions are taken next week.

Motion lapsed (Standing Order No. 10(6)).