Finance (No. 3) Bill (Sixth sitting)

Robert Jenrick Excerpts

Tuesday 4th December 2018 Public Bill Committees

[The Chair]

I remind the Committee that with this we are discussing the following:

Amendment 84, in schedule 14, page 260, line 15, leave out sub-paragraph (d).

The provision as drafted allows companies to transfer TTH worth double the value of anticipated decommissioning costs. This reduces the incentive for companies towards efficiencies in decommissioning costs and paves the way for decommissioning-related tax repayments far bigger than the companies are currently acknowledging. This amendment removes that provision.

Amendment 81, in schedule 14, page 261, line 29, at end insert—

“(aa) assessing the impact on employment, skills and the Exchequer from the asset’s production life and planned decommissioning phase, and”

Amendment 89, in schedule 14, page 261, line 42, at end insert—

“(d) includes an assessment of the impact on the Exchequer from the amount spent on directly employed and contracted staff by the seller over the production life of the asset to date; and the impact on the Exchequer from the buyer’s plans for employed and contracted staff up to and including the decommissioning stage.”

This amendment requires a decommissioning security agreement to include an assessment of the impact on the Exchequer from the amount spent on staff, in order for that agreement to be qualifying for the purposes of this Schedule.

Amendment 85, in schedule 14, page 268, line 40, at end insert—

“(aa) the amount spent by the purchaser in post-acquisition periods on new capital investment, major maintenance work, retraining of redundant staff, initiatives to reduce methane emissions or initiatives to introduce carbon-capture techniques into the operations in relation to the relevant TTH assets (‘post-acquisition qualifying investment’)”.

This amendment, and amendments 86 and 87 incentivize capital investment by new purchasers in job creation and emissions reductions. Combined, the amendments limit the TTH which may be claimed to an amount equal to such investment.

Amendment 86, in schedule 14, page 269, line 3 at end insert—

“(c) the amount by which total post-acquisition qualifying investment exceeded the higher of excess decommissioning expenditure and the total TTH amount as calculated for the first activation period under paragraph 35.”

See explanatory statement for Amendment 85.

Amendment 87, in schedule 14, page 269, line 40, at end insert—

“(c) provided that the total activated TTH amount may never exceed the purchaser’s post-acquisition qualifying investment for the relevant TTH assets or TTH oil fields.”

See explanatory statement for Amendment 85.

That schedule 14 be the Fourteenth schedule to the Bill.

Clause 37 stand part.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

If I may, I will conclude the remarks I was making earlier—[Hon. Members: “Hear, hear!”]—to widespread acclamation. Clause 36 will establish transferable tax history, which is widely supported across the industry and will help to protect and increase the number of jobs in the oil and gas sector in the whole of the United Kingdom and, in particular, in north-east Scotland. We see this as a great step forward for this important national asset. We believe that it is fiscally responsible, as was certified by the Office for Budget Responsibility. It will bring in revenues to the Exchequer of £65 million, and reports to the contrary are misguided.

[Clive Lewis (Norwich South) (Lab)]

Given that we know that the decommissioning costs could come to around £24 billion and that there is provision in the Bill to double that to £48 billion—I asked this question in my opening remarks, but I will ask it again—what money has the Treasury put aside specifically to cover these costs for future Governments, a little bit further into the future?

[Robert Jenrick]

Decommissioning costs will be covered by future Governments over the course of decades to come. We estimate that the costs will run into something in the region of £24 billion, as the hon. Gentleman says, although, as I said in my remarks earlier, we are working closely with the industry to bring down those costs. We hope the UK will become a world-leading market for decommissioning and that we will see at least a 35% reduction in those costs over time. The measure before us will help the situation by increasing revenues to the Exchequer, which could be set against future decommissioning costs if required.

[Clive Lewis]

We have said that the costs could be up to £48 billion—no insignificant sum of money. If we do not ring-fence some of the petroleum revenues to pay for this, it will fall entirely on future Governments further down the line, and nothing is being done now to prepare for that. That is a lot of money that could hit a future Government and a future Exchequer in goodness knows what economic conditions.

[Robert Jenrick]

The hon. Gentleman is arguing that we should ring-fence revenues from the oil and gas sector, whether through petroleum revenue taxation, the supplementary charge or whatever it might be in the future. That is not what we have done in the past. It is a peculiar argument to make when opposing the transferable tax history measure, which will increase revenue to the Exchequer, extend the life of a number of fields and make decommissioning easier and more affordable in the future. With that, I commend clause 36 to the Committee and ask hon. Members to reject the amendments.

Question put and agreed to.

Clause 36 accordingly ordered to stand part of the Bill.

Schedule 14

Oil activities: transferable tax history

Amendment proposed: 84, in schedule 14, page 260, line 15, leave out sub-paragraph (d).—(Clive Lewis.)

The provision as drafted allows companies to transfer TTH worth double the value of anticipated decommissioning costs. This reduces the incentive for companies towards efficiencies in decommissioning costs and paves the way for decommissioning-related tax repayments far bigger than the companies are currently acknowledging. This amendment removes that provision.

Question put, That the amendment be made.

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[Sir Robert Syms]

I am sure it is, but I suspect the hospitality industry is 10 times that. The other factor about the drinks industry generally is that it is very regionally diverse, with the scotch industry in Scotland, and wine, cider and beer producers. We all have representations from the owners of breweries, which employ people and are sometimes very important parts of the local economy. We have all had representations from people who run public houses, which are also central to the community. One of the worst things that has happened over the past few decades is the number of public houses that have closed, which has had a material impact on many people and communities. This is a matter of balance, and the Government may be wrong or they may be right, but I think they are more likely to be right because their approach is more likely to secure jobs in the hospitality and brewing industries, and to achieve a proper balance so that people can enjoy a meal or a drink out.

There is a serious alcohol issue, but the producers of wine and beer label things very clearly to show the strength of alcohol. There is a strong “Drinkaware” campaign, so it is not difficult for people to find out the impact of alcohol, but we know there is a hard core of heavy drinkers, many of whom use A&Es and ambulances. It costs about half a million pounds a year to keep an ambulance on the road, and many of them are disproportionately used by people who abuse alcohol. The focus, if there is any focus, ought to be on addiction services and trying to intervene with those who abuse alcohol rather than on the vast majority of people who enjoy a drink.

The hon. Member for Bootle, in his amusing speech—we will miss him on Thursday when he is no doubt raising a cheer to Cicero in whatever he is doing—noted that the industry contributes substantially to the Treasury. Some of those billions of pounds have to go to the NHS because of drinking, but the industry also generates a lot of money for good causes and things that the Government need to provide.

This is a matter of balance, and I think the Government have it right. There may come a time when prices have to go up. If incomes start to rise more substantially—we hope that will be a factor in a few years and that there is evidence that pay is picking up a bit—it may be time to review the taxes, but I think the Government have got this one right.

[Robert Jenrick]

I gather there may be a vote in a few moments’ time, but I will begin by addressing, in no particular order some of the points that have been raised by the hon. Member for Aberdeen North. We are interested in the Scottish and indeed the Welsh Government’s actions on minimum unit pricing. It is fair to say that the jury is still out on whether that has been effective, but we will be watching with interest, as will the Department of Health and Social Care and Public Health England, and that will inform the decisions we take at future Budgets.

The hon. Lady asked about post duty point dilution. This is an issue that she has rightly highlighted, and a number of the producers who are likely to be affected by this and who are based in the UK will no doubt be asking the question she has asked. We intend to give this further consideration and lay draft legislation on L-day next year, in the early summer of 2019, with a view to legislating on it in the autumn Budget 2019 and its coming into force from April 2020. While I have spoken to some of the small number of British producers who will be affected and I note their concerns, this is a question of fundamental fairness in the duty system.

[Kirsty Blackman]

Perhaps I did not express myself very well. My constituents are lobbying for the change to be made; they are not lobbying against the change being made. I was asking when this would come in, because they are hoping for it to come in.

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[Robert Jenrick]

It is coming in as swiftly as possible, although because of the impact on the small number of British manufacturers, we have given them some time at least—until April 2020—to make any adjustments they might need to.

My hon. Friend the Member for Poole advanced what has been our approach to this issue—a nuanced one that helps those on low incomes to enjoy a drink, particularly at Christmas time. We are concerned, as he is, about supporting the British pub industry. As he says, the number of pubs has declined significantly. It is still declining, although it has stabilised somewhat in the last year or so. We are taking a number of actions, including freezing duties where appropriate, to help to support them.

My hon. Friend also made the point that the drink industry has a significant regional element to it, whether that is the Scottish whisky industry, which is very important to particular regions of Scotland where large numbers of distilleries are clustered in small areas, such as Moray or the areas around Aberdeen, or the cider industry in Herefordshire—where I grew up—and throughout the west country and Wales, which as we have heard has a particular resonance and supports local jobs. We have taken a nuanced approach, but where there are particular interventions that we feel we need to make, as with white cider, we have made them and will continue to make more in the future if that is required.

I now turn to the questions raised by the hon. Member for Bootle in his entertaining speech. I hope, Ms Dorries, that you did not have to reach for a stiff drink in the middle of it, although you might do by the time I have finished. [Laughter.] Well, we are about to talk about the retail prices index and the consumer prices index.

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[The Chair]

Mr Jenrick, did you want to finish your point?

[Robert Jenrick]

No, I am happy to proceed.

[Peter Dowd]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 103, in clause 53, page 34, line 14, at end insert—

“(5) The Chancellor of the Exchequer must review the expected effects on public health of the changes made to the Alcoholic Liquor Duties Act 1979 by this section and lay a report of that review before the House of Commons within one year of the passing of this Act.”—(Kirsty Blackman.)

This amendment would require the Chancellor of the Exchequer to review the impact of the revised rates on cider and wine on public health.

Question put, That the amendment be made.

Question negatived.

Clause 53 ordered to stand part of the Bill.

Clause 54 ordered to stand part of the Bill.

Clause 55

Rates

--- Later in debate ---

[Peter Dowd]

I accept the point that you are making, Ms Dorries. I have moved the amendment and laid out our overall position on tobacco revenues, and on that basis I shall not take up the Committee’s time further.

[Robert Jenrick]

Clause 55 implements changes announced in the Budget concerning tobacco duty rates. My right hon. Friend the Chancellor announced that the Government will increase tobacco duty in line with the escalator. The clause therefore specifies that the duty charged on all tobacco products will rise by 2% above RPI inflation. In addition, duty on hand-rolling tobacco will rise by an additional 1% to bring it to a total of 3% above RPI inflation this year.

The clause specifies with respect to the minimum excise tax—the minimum amount of duty to be paid on a pack of cigarettes—that the specific duty component will rise in line with cigarette duty. It also sets the rate for the new category of tobacco product, tobacco for heating, at the same rate applicable to hand-rolling tobacco. The new tobacco duty rates will be treated as taking effect from 6 pm on the day they were announced, 29 October, with the exception of the rate for tobacco for heating, which will take effect on 1 July 2019.

We recognise the potential interactions between duty rates and the illicit market. The Government have to be careful not to raise rates too far and fast, as that might exacerbate the illicit market. We included an important measure at the time of the Budget: the creation of a UK-wide anti-illicit trade group, bringing in law enforcement and representatives from the devolved Assemblies, and building on the good work done by the Scottish Government. We hope that that will mean we can take forward and intensify our efforts to tackle the illicit trade.

Amendment 100 would place a statutory requirement on the Chancellor to review the revenue effects of changes to tobacco duty, as we have just heard from the hon. Member for Bootle. The Chancellor assesses the impacts of all potential changes in the Budget considerations every year. The tax information and impact note published alongside the Budget announcement sets out the Government’s assessment of the expected impacts. Detail on the revenue impacts is set out in the policy costings document, which is also published alongside the Budget. Both include the expected revenue impact to 2023-24.

In addition, HMRC publishes a quarterly bulletin covering all excise duty receipts. The information that the amendment calls for will already be in the public domain for Members to scrutinise. It is not an area that requires further reviews and information, as there is no shortage of information in the public domain.

I take the hon. Gentleman’s point that, with the use of cigarettes declining, this is an area where we would expect revenues to fall in the years ahead. That is, of course, something that we take into account as we review duty rates for each fiscal event, with our two objectives, which I hope hon. Members will support: the primary objective is to protect public health, but the secondary one is to raise revenue to support vital public services.

I hope that I have reassured the Committee, and I ask that amendment 100 be withdrawn.

[Peter Dowd]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 55 ordered to stand part of the Bill.

Clause 56 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Craig Whittaker.)

Finance (No. 3) Bill

Robert Jenrick Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 20th November 2018 Commons Chamber

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I beg to move amendment 16, page 44, line 23, leave out “1 October 2019” and insert “1 April 2019”.

This amendment provides for the increase in the rate of remote gaming duty to take effect from 1 April 2019 instead of 1 October 2019.

[The First Deputy Chairman of Ways and Means (Dame Eleanor Laing)]

With this it will be convenient to discuss the following:

Amendment 11, page 44, line 23, leave out “1 October 2019” and insert “the prescribed date”.

Government amendment 17.

Amendment 12, page 44, line 25, leave out “1 October 2019” and insert “the prescribed date”.

Amendment 13, page 44, line 32, at end insert—

“(4) In this section, ‘the prescribed date’ means the date prescribed in regulations made by statutory instrument by the Secretary of State

(5) The Secretary of State may not make regulations under subsection (4)—

(a) to prescribe a date before 1 October 2019, and

(b) unless regulations under section 236 of the Gambling Act 2005 have been made that amend the definition of sub-category B2 gaming machines so as to define such machines as having a maximum charge for use of no more than £2 with effect from a date no later than 1 April 2019.

(6) In this section, “sub-category B2 gaming machines” has the meaning given in regulation 5(5) of the Categories of Gaming Machine Regulations 2007/2158.”

Clause stand part.

Clause 62 stand part.

That schedule 18 be the Eighteenth schedule to the Bill.

New clause 12—Review of public health effects of gaming provisions—

“(1) The Chancellor of the Exchequer must review the public health effects of the provisions of section 61 of and Schedule 18 to this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider—

(a) the effects of those provisions in reducing the negative public health effects of gambling, and

(b) the implications for the public finances of the public health effects of—

(i) those provisions,

(ii) the operation of the law relating to remote gaming duty and gaming duty if those provisions were not given effect.”

This new clause would require a review of the public health effects of gaming provisions.

New clause 13—Report on consultation on certain provisions of this Act (No. 3)—

“(1) No later than two months after the passing of this Act, the Chancellor of the Exchequer must lay before the House of Commons a report on the consultation undertaken on the provisions in subsection (2).

(2) Those provisions are—

(a) section 61, and

(b) Schedule 18.

(3) A report under this section must specify in respect of each provision listed in subsection (2)—

(a) whether a version of the provision was published in draft,

(b) if so, whether changes were made as a result of consultation on the draft,

(c) if not, the reasons why the provision was not published in draft and any consultation which took place on the proposed provision in the absence of such a draft.”

This new clause would require a report on the consultation undertaken on certain provisions of this Act – alongside new clauses 9, 11 and 15.

New clause 16—Review of remote gambling duty—

“(1) The Treasury shall undertake a review of the increase in the rate of remote gambling duty introduced in section (Remote gambling duty (rate)) of this Act.

(2) The review shall consider, in particular, the effects of the rate increase on—

(a) the public revenue,

(b) betting shops, and

(c) gambling related harm.

(3) The Treasury review must include independent advice on the feasibility and impact of bringing forward the date of the increase in remote gaming duty to 1 April 2019.

(4) The Treasury review of the effects of the rate increase in remote gambling duty under subsections (2) and (3) must also take into account any effects of reducing to £2 the maximum stake on B2 machine games with effect from 1 April 2019.

(5) The Chancellor of the Exchequer must lay a copy of a report of the review under this section before the House of Commons no later than 28 days after this Act is passed.”

This new clause requires the Treasury to review the feasibility and impact of bringing forward from October 2019 the implementation of an increase in remote gambling duty, which is linked in paragraph 3.68 of the Budget 2018 Red Book to the implementation of a £2 maximum stake on B2 machine games (fixed-odds betting terminals).

[Robert Jenrick]

As you have just described, Dame Eleanor, we begin today’s consideration of the Finance Bill with clauses 61 and 62 and schedule 18. The parts of the Bill that we are about to discuss concern rates of remote gaming duty and other gaming duty measures. Gambling policy more generally and its related legislation, such as the Gambling Act, are matters for the Department for Digital, Culture, Media and Sport and lie outside the scope of a Finance Bill, but I want to explain both the fiscal measures in this Bill and how they interact with wider important matters, such as fixed-odds betting terminals.

Turning briefly to clause 62 and schedule 18, which deal with changes to gambling duty accounting periods, this Government are committed to reducing administrative burdens on businesses and to making the tax system more effective, efficient and simpler. The changes will bring gaming duty paid by land-based casinos in line with other gambling duties. They will allow casinos to roll forward losses and will remove the requirement to pay duty on account, reducing administration for businesses and for Her Majesty’s Revenue and Customs. The changes are expected to have a negligible impact on the tax take from casinos, which will continue to be subject to a tax structure that ensures that the most successful casinos pay up to 50% of their profit to support public services. That take will total £250 million to the Exchequer in the current financial year.

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[Sir Peter Bottomley (Worthing West) (Con)]

I hope to speak later if possible, but this is a rare example of when parliamentary arithmetic has got the Government to do something that will be good for them and good for the population. I pay tribute to the hon. Member for Swansea East (Carolyn Harris), the chair of the all-party parliamentary group on fixed odds betting terminals, who has led a cross-party group over the years—this is not just about those who have come in lately—to ensure that the arguments are right, as well as the parliamentary arithmetic.

[Robert Jenrick]

I praise my hon. Friend for his role in this matter, and I will come in due course to the hon. Member for Swansea East and other colleagues who have played a decisive role in these events.

In deciding on a date for implementation, the Government were obliged to consider not just those who would have been harmed by FOBTs, but the impact on wider society—the tens of thousands whose livelihoods would be at risk following the new stake. Stakeholder evidence varied considerably, but it was widely acknowledged that there would be a significant impact, whether as a result of the cap in itself or because the decision to change the cap would bring forward wider changes that were already likely to occur in a sector undergoing a great deal of change as a result of new technology. The Government have not wavered from their commitment to set a £2 stake and considered the best way to mitigate the negative impacts of the policy on the individuals and their employers, giving them time to prepare for the impact if possible. Accordingly, my right hon. Friend the Secretary of State for Digital, Culture, Media and Sport published a written statement confirming that a £2 maximum stake will be implemented from April 2019, and we have tabled Government amendment 16 to reflect that.

I will now briefly describe the events leading up to this point. When we announced the decision to reduce the stake, implementation in April 2020 was a date that I discussed with the hon. Member for Swansea East when she came to the Treasury in late spring to talk about the matter. A decision was then taken by the Department for Digital, Culture, Media and Sport to consult informally with stakeholders and it was then proposed in the Budget to bring forward the date to October 2019. The decision was, I believe, intended in good faith to represent a balance between expeditiously bringing an end to the harm caused by FOBTs and enabling those working in the sector to prepare for the implications for them. None the less, it became abundantly clear that a large number of colleagues disagreed and wished to see the stake change implemented sooner, which is exactly what we have done.

I am grateful for the counsel and the campaigning zeal of a number of Members on both sides of the Chamber, including my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), the hon. Member for Inverclyde (Ronnie Cowan) and, of course, the hon. Member for Swansea East, whom I respect and whom I have enjoyed working alongside throughout this process.

I admire my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), who was an outstanding Sports Minister and is a great Member of Parliament. She clearly played a decisive role in the Government’s decision to reduce the stake in the first place and, indeed, to do so expeditiously in April 2019. I have always believed that, in politics as in life, all we have is our reputation, and she chose her principled belief that this change must be implemented as soon as possible over her role in government. I respect that, and I am sure Members on both sides of the Committee do so, too.

[Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I fully accept what the Minister says about the reputation of my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), but does he agree that these things should not have necessitated her departure when she was doing such a good job? I do not expect the Minister to express an opinion, just that it would have been better otherwise.

[Robert Jenrick]

I clearly hear my right hon. Friend’s point, and I have fairly set out the chain of events that led to this moment. As I said, I enormously respect my hon. Friend the Member for Chatham and Aylesford and her decision. When I was first elected to Parliament, an elderly constituent sent me a quote by John Quincy Adams:

“Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.”

On this occasion, of course, my hon. Friend is not alone, and I am grateful for her work in this area.

Government amendment 17 complements Government amendment 16, both of which relate to amendments 12 and 13. As I have just set out, the Government recognise the strong will of the House that the implementation date for the new maximum stake for fixed odds betting terminals be brought forward to April 2019. The Treasury has been clear throughout the process that we do not seek to use the issue of FOBTs to increase Exchequer revenues, but we do have a responsibility, which I hope Members on both sides of the Committee will recognise, to protect the public finances and to ensure that we have the means to fund our public services. The cost of eliminating the damage caused by FOBTs must not be paid for by our having fewer doctors, fewer teachers and fewer people working in mental healthcare.

[Paul Masterton (East Renfrewshire) (Con)]

I welcome this change. In my constituency there are betting shops sandwiched between pubs and chemists giving out substitution treatments. Does the Minister not agree that the savings to the public purse from preventing people from falling into problematic debt, and preventing highly addicted people from falling into other troubles and needing to rely on the NHS and other services, will be far greater than the tax received from these gambling machines?

[Robert Jenrick]

My hon. Friend makes an important point that has been raised by many others and that I am sure was a significant contributor to the decision of the Department for Digital, Culture, Media and Sport to take this action.

The point I am making is a separate one; that in making the decision to reduce the cap on FOBTs, we want to ensure that the Exchequer can protect its revenues so it can continue to fund public services. To do so, clause 61 increases the rate of remote gaming duty to 21% from 15%, and amendment 17 complements amendment 16 by ensuring that both changes are implemented at the same time in April 2019.

Throughout this process the Treasury has been clear that we want to raise only a commensurate sum of money to protect public services, and that we want to ensure that both the stake change and the change in taxation occur at the same time. That is exactly what we intend to do. This increase applies to anyone who offers online games of chance to UK players, including online roulette, online poker and online slots. This change should ensure that we take decisive action on FOBTs without having to cut services or raise taxes on those outside the gambling sector. To recognise this, I ask the Committee not to press amendments 12 and 13 and to support Government amendment 17.

New clause 12 would require the Chancellor to prepare a report describing the public health effects of the gambling clauses in this Finance Bill, for publication before the House within six months of Royal Assent. The Government take the impact of gambling on individuals’ health seriously, which is why we have listened to Members on both sides of the House and taken the action we have on FOBTs. This summer the Gambling Commission published a well-received paper on how to measure gambling-related harms, setting out how it intends to move forward in such a large and vital area of analysis. I hope that colleagues on both sides of the Committee agree that the Gambling Commission should be left to carry out its important work in this area without the Treasury attempting to carry out its own competing analysis on the very limited effect on public health of a change in accounting periods, which is what the new clause would bring into effect.

[Graham P. Jones (Hyndburn) (Lab)]

I welcome that assessment, but does the Minister accept that the assessment needs to look at the various forms of gambling and that it also needs to consider the amount of gambling advertising presented to people on our television screens?

[Robert Jenrick]

As a parent and as a citizen I am concerned, like the hon. Gentleman is, about the amount of gambling advertising on television and elsewhere, but that is not a matter for the Finance Bill; it is a matter for the Department for Digital, Culture, Media and Sport and for the Gambling Commission.

As I have just described, new clause 12 would achieve only the Treasury producing a very limited analysis of the public health impact of the change in accounting period set out in the Finance Bill. I therefore urge the Committee not to press new clause 12.

New clause 13 proposes a report on the consultation undertaken on the detail of clause 61 on remote gaming duty and of schedule 18 on gaming duty. Although we have had much debate on the content and implications of clause 61, it is in fact very simple: it is a rate change, and the Government would not normally consult on such a change. I reassure the Committee that we have gone over and above the usual convention in such cases. The increase was originally proposed in May 2018, and my officials, alongside the Department for Digital, Culture, Media and Sport, have since worked with interested parties on its detail. We believe we are in a good position.

I fully reassure the Committee that the change made by clause 61 was consulted on last year. In addition, schedule 18 was published as a clause in the draft Finance Bill in July 2018. It has therefore been subject to scrutiny and comment by stakeholders ever since. I hope my comments will reassure the Committee that there is no need for a further report into our consultation on these issues, and I therefore ask that new clause 13 not be pressed.

New clause 16 returns to an issue with which I began this debate. The new clause asks for a review of the feasibility of bringing forward the rise in remote gaming duty in clause 61 to April 2019. As I have tried to reassure right hon. and hon. Members, we have already covered these matters—they were considered before my right hon. Friend the Chancellor tabled amendments 16 and 17, which will bring forward the date to April 2019—and I therefore respectfully ask that new clause 16 not be pressed.

I look forward to listening to the contributions of right hon. and hon. Members to this debate. The Government amendments to these clauses represent the action on FOBTs that the country demanded and for which Members on both sides of the House have campaigned assiduously over many years. The changes will now be delivered as expeditiously as possible and in a fiscally responsible manner that protects public services. I commend these changes to the Committee.

[Clive Lewis (Norwich South) (Lab)]

Well, where to begin? I can sum up the Minister’s speech as, “Nothing to see here.”

Before I move on to the detail of this issue, I want to pay tribute to Members on both sides of the House who forced the Government to bring forward the FOBT stake reduction from October 2019 to April 2019, which will be implemented through the amendment before the Committee. Particular recognition goes to my hon. Friend the Member for Swansea East (Carolyn Harris), who is to be warmly congratulated on her tireless work for social justice, in all its incarnations, and to my hon. Friend the Member for West Bromwich East (Tom Watson), the shadow Secretary of State, who is not in the Chamber, but has spoken about this issue many times from the Dispatch Box.

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[Patricia Gibson]

Absolutely. There is a correlation between multiple social deprivation factors and problem gambling, which is why certain communities have a higher concentration of betting shops housing these machines—the crack cocaine machines of gambling—than there otherwise would be.

I say to the Minister, and I know he is listening, that we absolutely and urgently need a review of the public health effects of gaming provisions. On that basis, I urge the House to support new clause 12—

[Robert Jenrick]

Will the hon. Lady give way?

[Patricia Gibson]

I was about to finish, but obviously I will let the Minister speak.

[Robert Jenrick]

Before the hon. Lady concludes her remarks, may I draw her attention to two things? I am told that Public Health England has been asked by the Department of Health and Social Care to inform and support action on gambling and its related harms as part of its follow-up to the DCMS review of gaming machines and social responsibility. Public Health England is also being commissioned by the Gambling Commission to do an evidence review on problem gaming, which I hope will go some way to answering the questions that she and others have raised today.

On new clause 12, which the hon. Lady raised—other hon. Members have also done so, including my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch)—I am content for the Government to support it, but I would simply say that it is very limited in scope. I would not want to raise expectations that it will achieve all of the goals that the hon. Lady seeks. However, that, allied to Public Health England’s work, will perhaps help to continue the public debate on this matter.

[Patricia Gibson]

I am glad that the Minister has given us that clarification. As he says, I would be more comfortable with a broadbrush approach encompassing lots and lots of factors, such as I those I set out in my speech. However, I have listened to what the Minister has said, and I will certainly give it some thought.

Finance (No. 3) Bill

Robert Jenrick Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[The Temporary Chairman (Sir George Howarth)]

With this it will be convenient to discuss the following:

Clauses 69 to 77 stand part.

Amendment 10, in clause 78, page 51, line 32, after “may”, insert—

“(subject to section (Review of expenditure implications of Part 3))”.

Antecedent to new clause 10.

Clause 78 stand part.

Amendment 14, in clause 89, page 66, line 30, at end insert—

“(1A) The Chancellor of the Exchequer must, no later than the date provided for in subsection (1C), lay before the House of Commons a statement of the circumstances (in relation to the outcome of negotiations with the EU) that give rise to the exercise of the power.

(1B) The statement under subsection (1A) must be accompanied by—

(a) an assessment of the fiscal and economic effects of the exercise of those powers and the circumstances giving rise to them;

(b) a comparison of those fiscal and economic effects with the effects if—

(i) a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to, and

(ii) the United Kingdom had remained a member of the European Union;

(c) a statement by the Office for Budget Responsibility on the accuracy and comprehensiveness of the assessment under paragraph (a) and the comparison under paragraph (b).

(1C) The date provided for in this subsection is—

(a) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(1)(b) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(b) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(6)(a) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(c) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(8)(b)(i) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(d) the date on which this Act is passed,

whichever is the earliest.”

This amendment requires the first use of the powers intended to modify tax legislation in the event of a no deal Brexit to be accompanied by a statement of the circumstances and a comparative analysis of their impact, accompanied by an OBR assessment.

Amendment 15, page 66, line 30, at end insert—

“(1A) No regulations under this section may be made until the Chancellor of the Exchequer has laid a statement before the House of Commons setting out—

(a) a list of the powers in relevant tax legislation that the Treasury has acquired since June 2016 in connection with the United Kingdom’s withdrawal from the European Union,

(b) a list of the powers in relevant tax legislation the Treasury expects to acquire if—

(i) a withdrawal agreement and a framework for a future relationship with the European Union have been agreed to, or

(ii) the United Kingdom has left the European Union without a negotiated withdrawal agreement.

(c) a description of any powers conferred upon the House of Commons (whether by means of the approval or annulment of statutory instruments or otherwise) in connection with the exercise of the powers set out in subsection (b).”

Amendment 22, page 66, line 30, at end insert—

“(1A) The Chancellor of the Exchequer must, no later than a week after the passing of this Act and before exercising the power in subsection (1), lay before the House of Commons a review of the following matters—

(a) the fiscal and economic effects of the exercise of those powers and of the outcome of negotiations for the United Kingdom’s withdrawal from the European Union giving rise to their exercise;

(b) a comparison of those fiscal and economic effects with the effects if a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to;

(c) any differences in the exercise of those powers in respect of—

(i) Great Britain, and

(ii) Northern Ireland;

(d) any differential effects in relation to the matters specified in paragraphs (a) and (b) in relation between—

(i) Great Britain, and

(ii) Northern Ireland.”

Amendment 7, page 67, line 1, leave out subsection (5) and insert—

“(5) No statutory instrument containing regulations under this section may be made unless a draft has been laid before and approved by a resolution of the House of Commons.”

This amendment would make clause 89 (Minor amendments in consequence of EU withdrawal) subject to affirmative procedure.

Amendment 20, page 67, line 2, at end insert—

“(5A) No regulations may be made under this section unless the United Kingdom has left the European Union without a negotiated withdrawal agreement.”

Amendment 2, page 67, line 13, at end insert—

“(7) This section shall, subject to subsection (8), cease to have effect at the end of the period of two years beginning with the day on which this Act is passed.

(8) The Treasury may by regulations provide that this section shall continue in force for an additional period of up to three years from the end of the period specified in subsection (7).

(9) No regulations may be made under subsection (8) unless a draft has been laid before and approved by a resolution of the House of Commons.”

Clause 89 stand part.

Amendment 8, in clause 90, page 67, line 16, after “may”, insert—

“(subject to subsections (1A) and (1B))”

This amendment is antecedent to Amendment 9.

Amendment 9, page 67, line 18, at end insert—

“(1A) Before proposing to incur expenditure under subsection (1), the Secretary of State must lay before the House of Commons—

(a) a statement of the circumstances (in relation to negotiations relating to the United Kingdom’s withdrawal from the European Union) that give rise to the need for such preparatory expenditure, and

(b) an estimate of the expenditure to be incurred.

(1B) No expenditure may be incurred under subsection (1) unless the House of Commons comes to a resolution that it has considered the statement and estimate under subsection (1A) and approves the proposed expenditure.”

This amendment would require a statement on circumstances (in relation to negotiations) giving rise to the need for, as well as an estimate of the cost of, preparatory expenditure to introduce a charging scheme for greenhouse gas allowances. The amendment would require a Commons resolution before expenditure could be incurred.

Clause 90 stand part.

New clause 10—Review of expenditure implications of Part 3—

“(1) The Chancellor of the Exchequer must review the expenditure implications of commencing Part 3of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) No regulations may be made by the Commissioners under section 78(1) unless the review under subsection (1) has been laid before the House of Commons.”

This new clause would require a review within 6 months of the expenditure implications of introducing a carbon emissions tax. It would prevent Part 3 coming into effect until such a review had been laid before the House of Commons.

New clause 11—Report on consultation on certain provisions of this Act (No. 2)—

“(1) No later than two months after the passing of this Act, the Chancellor of the Exchequer must lay before the House of Commons a report on the consultation undertaken on the provisions in subsection (2).

(2) Those provisions are—

(a) sections 68 to 78,

(b) section 89, and

(c) section 90.

(3) A report under this section must specify in respect of each provision listed in subsection (2)—

(a) whether a version of the provision was published in draft,

(b) if so, whether changes were made as a result of consultation on the draft,

(c) if not, the reasons why the provision was not published in draft and any consultation which took place on the proposed provision in the absence of such a draft.”

This new clause would require a report on the consultation undertaken on certain provisions of this Act – alongside new clauses 9, 13 and 15.

New clause 17—Review of the carbon emissions tax (No. 2)—

“Within twelve months of the commencement of Part 3 of the Act, the Chancellor of the Exchequer must review the carbon emissions tax to determine—

(a) the effect of the carbon emissions tax on the United Kingdom’s carbon price in the context of non-participation in the European Union emissions trading scheme, and

(b) the effect of the carbon emissions tax on the United Kingdom’s ability to comply with its fourth and fifth carbon budgets.”

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

In these parts of the Bill, we make sensible preparations for our exit from the European Union. While right hon. and hon. Members across the House may well disagree on Brexit, I would hope that all would wish to see us prepare as carefully as possible so that we can maintain the stability of the tax system; provide as much certainty for the taxpayer as possible; in respect of carbon pricing, meet our commitments to the environment; and do all those things in all eventualities, including in the event of no deal, which is clearly not the Government’s preference but remains a possibility.

At Budget, the Government announced essential provisions to ensure that the tax system can continue to function in any outcome.

[Neil Gray (Airdrie and Shotts) (SNP)]

The Minister talks about preparations for no deal. In the OBR’s “Blue Book”, it quoted assessments made by economists who suggested that the economy had already shrunk by between 2% and 2.5% since the referendum, and the Library has suggested that that has cost the UK economy anywhere between £40 billion and £50 billion. Does he agree with that assessment, and what work has been going on in the Treasury to account for it?

--- Later in debate ---

[Robert Jenrick]

What I can tell the hon. Gentleman is that the economy has been growing for eight years—for five years, in every successive quarter. Unemployment is at its lowest rate in my lifetime and employment is at its highest. The British economy is sound and robust, and that is exactly why in the Budget the Chancellor was able to make the tax cuts for 32 million of our citizens and the increased spending on the NHS.

[Neil Gray]

rose—

[Robert Jenrick]

I will not give way again at this stage, but I could come back to the hon. Gentleman later.

The changes that we have outlined in these clauses will, I hope, signal that the UK is committed to maintaining stability and certainty for taxpayers and for businesses across the economy, especially in respect of the environmental tax provisions that I will talk about in a moment. Clauses 69 to 78 will allow the Government to introduce a carbon emissions tax to replace the EU emissions trading scheme—the ETS—in the event of no deal. Clause 90 will allow for essential preparatory expenditure to begin work on a domestic emissions trading scheme in the event that one is required. Clause 89 will introduce a power to make minor technical amendments to UK tax legislation—essential for maintaining the continued effect of the tax system.

Let me turn first to clauses 68 to 78 with respect to the carbon emissions tax. These clauses will take effect only if the UK leaves the European Union in 2019 without a deal. The clauses will give the Government the power to introduce a no-deal carbon emissions tax. The rate for 2019 would be set at £16 per tonne of carbon dioxide equivalent, and the tax would cover the same electricity generators and industrial businesses that currently participate in the EU ETS. The tax would provide the same protections against carbon leakage as the EU ETS. Operators would pay the tax only on emissions of carbon dioxide and other greenhouse gases emitted above an allowance set for each installation in advance of the tax year. This is in line with the EU ETS system of free emissions allowances.

In effect, the carbon emissions tax would seek initially to replicate the effects of the EU ETS as closely as possible, in the event of no agreement. This is important, as I hope hon. Members in all parts of the House will agree, for two reasons: first, because we want to provide certainty for businesses and for the energy industry to enable them to make investment and business decisions with confidence, as the industry has asked us to do; and secondly, because maintaining a carbon price is a key component of meeting our legally binding climate change commitments.

[Dr David Drew (Stroud) (Lab/Co-op)]

Does the Minister accept that now that the Government have greater freedom of operation, this is fairly timid? We have an emissions crisis in this country, as we do across the rest of the world. Why are the Government not being more ambitious in trying to bear down on emissions, as seen in the Intergovernmental Panel on Climate Change report?

[Robert Jenrick]

I appreciate the point the hon. Gentleman makes, but perhaps he has missed the argument I have tried to make, which is that this is not prejudging the later outcome of how we should handle our carbon pricing as we leave the EU; it is trying to ensure that in the unlikely event, which the Government wish to avoid, of a no-deal Brexit we can maintain the system as close as possible to the present one. We chose the price of £16 because that is broadly the same as where the EU’s floating price has been in recent months. Of course the price has floated very widely from as low as £6 to as high as over £20, so making that assessment is not a precise exercise, but we believe that £16 is a reasonable figure to maintain stability, and that seems to have been well received by the industry and environmental groups.

Clause 90 is about preparatory expenditure. Alongside preparing for no deal, the Government are developing long-term alternatives to the EU emissions trading scheme. As set out already in the outline political declaration on the future relationship between the EU and the UK, we are considering options for co-operation on carbon pricing, including, if possible, linking a UK national greenhouse gas emissions trading system with the EU ETS. Clause 90 will allow Departments to begin preparatory expenditure on a UK ETS, which is included in the Bill, to prepare for a linked or unlinked domestic trading scheme. It does not mean, as I said earlier, that a final decision has been made as to which option to implement, but it does ensure that all the options are kept open and we can proceed with the kind of planning that one would expect.

I shall now turn briefly to amendments 8, 9 and 10 and new clause 10 tabled by the SNP. Amendments 8 and 9 propose that the Government must table a statement on the circumstances that require expenditure in the case of clause 90 and an estimate of the expenditure to be incurred and that the House would come to a resolution to approve that expenditure. New clause 10 and amendment 10 would require the Chancellor to review the expenditure implications of the carbon emissions tax and lay a report of that review before the House within six months of the passing of the Bill, and no regulations could be made by the commissioners unless that had taken place.

A statement of circumstances, as required by amendments 8 and 9, is in our opinion unnecessary. We are legislating because the UK is leaving the EU, and as part of that we have to prepare a domestic ETS, as mentioned in the outline political declaration, and for a carbon emissions tax only in the event of no deal.

More importantly, with all these amendments, the Finance Bill is not and has never been the place for detailed questions of expenditure. The Finance Bill is primarily a Bill about tax. Parliament gets other opportunities to review and vote on departmental expenditure, and if that is important to the hon. Member for Aberdeen North (Kirsty Blackman), I suggest that she direct her scrutiny to the estimates process when it arises in due course.

New clause 17 would require the Chancellor to review the carbon emissions tax to determine its effect on the UK carbon price and the UK’s ability to comply with its fourth and fifth carbon budgets. We are confident that the carbon emissions tax would be similarly effective to the EU ETS, and I can assure Members that there are already robust requirements to report on progress towards the UK’s emissions reductions targets. For example, the Climate Change Act 2008 provides a world-leading governance framework that we certainly support. First, it ensures that the Government are required to prepare and lay before Parliament an annual statement of emissions, setting out the total amount of greenhouse gases emitted to, and removed from, the atmosphere across the UK and the steps taken to calculate the net UK carbon accounts. Secondly, the independent Committee on Climate Change is required to prepare and lay before Parliament an annual report on the Government’s progress towards meeting the UK’s carbon budgets, which the Government are required to respond to. Thirdly, the Government are required to prepare and lay before Parliament a statement setting out performance against each carbon budget period and the 2050 target. We believe that, taken together, these are strong existing mechanisms, which are respected and understood, to ensure that we monitor and report to Parliament on greenhouse gas emissions. I therefore urge hon. Members to reject new clause 17.

Let me turn to amendments 2, 7 and 21 to clause 89, which deals with minor amendments in consequence of our EU withdrawal. We need to ensure that the tax system continues to work effectively and that we maintain stability and certainty, including in the event that the UK leaves without a deal. To allow us to do that, clause 89 will allow minor technical amendments to be made to UK tax law to keep it working as it does now and to update it to continue to work with changes made to other areas of law on account of EU exit. Clause 89 will provide the Government with the power to make such minor amendments.

These are, I stress again, minor and technical changes that are absolutely necessary to maintain the continued effect of tax legislation in the unlikely event of no deal. I can reassure the Committee that the power is not being taken to make changes to do anything other than ensure that existing tax legislation continues to have effect in the event of no deal. It will not be used to change tax policy or the tax paid by taxpayers. To reassure the Committee of that, I have placed a list of changes that the Government intend to make under the power in the Library and sent a copy to the shadow Chief Secretary to the Treasury.

[Vicky Ford]

I thank the Minister for reaffirming that it is not the Government’s intention to leave with no deal. It is the intention to leave with a deal. On tax, there seemed to be some confusion over the weekend about the draft withdrawal agreement. Some people seemed to suggest that the UK would be bound into the EU tampon tax for a further five years. Can he confirm that under the withdrawal agreement, VAT on goods sold after the transition period will be subject to rates set by the British Government, not EU law?

[Robert Jenrick]

My hon. Friend, who is always well informed, is correct on both counts.

[Vicky Ford]

I thank my hon. Friend for confirming that from the Dispatch Box. Does he therefore agree that, before jumping to conclusions about what the draft withdrawal agreement says, colleagues should instead look at No. 10’s response to Steerpike’s 40 so-called horrors and at the true facts and answers from the lawyers who negotiated it before coming up with their own concerns?

[Robert Jenrick]

I would obviously advise all right hon. and hon. Members to read the withdrawal agreement, unlike the Leader of the Opposition, and not to rush to conclusions. The document produced by No. 10 to which my hon. Friend refers, which rebuts over 40 suggested flaws in the agreement, was very instructive, and I certainly found it helpful.

To finish on this point, I re-emphasise that I have laid before the House a comprehensive list of the changes that will need to be made to tax legislation. I advise right hon. and hon. Members who are interested to take a look at it. They will see that the changes are indeed minor and technical items that are not, I hope, controversial.

Amendments 14 and 22 would require the Government to publish an economic and fiscal analysis of the effects of our exit from the European Union before using the powers in clause 89. I can reassure the Committee that the Government have already confirmed that before we bring forward the vote on the final deal, we will ensure that Parliament is presented with the appropriate analysis in good time to make an informed decision. The Chancellor set that out in his letter of 23 August to the Chair of the Treasury Committee, a copy of which is in the public domain. He said that that analysis would look at the economic and fiscal effects of leaving the EU.

To provide Members with further detail today, I can confirm that that analysis will bring together evidence from across the Government, insight from external stakeholders and a range of data and analytical tools. The analysis will consider the long-term costs and benefits of moving to new trading relationships with the EU and the rest of the world. Having considered the amendment and spoken to several right hon. and hon. Members, I am happy to confirm that the baseline for this comparison will be the status quo—that is, today’s institutional arrangements with the EU. The analysis will consider a modelled no-deal scenario, or World Trade Organisation terms; a modelled analysis of an FTA scenario; and a modelled analysis of the Government’s proposed deal. Each will be compared against the status quo of the current institutional arrangements within the EU.

Amendment 14 would not require the analysis to be published until after the Bill receives Royal Assent. As a result, the Bill would not be binding on the Government until after the meaningful vote had taken place. I hope that the commitment that the Government have made today and the conversations that I have had with Members from across the House will provide reassurance that we will publish an appropriate analysis—the analysis that right hon. and hon. Members seek—in good time before the meaningful vote.

I turn briefly to the OBR’s role, which is mentioned in amendment 14. The House will know that the OBR’s remit is clearly defined in the Budget Responsibility and National Audit Act 2011, and that the amendment, which asks the OBR to assess our analysis of the effects of a deal, goes beyond its statutory responsibilities. That would set an undesirable precedent, with Parliament being able to commission specific pieces of work from the OBR on an ad hoc basis outside the clear and bounded remit set in the OBR’s charter. That would effectively transform the OBR into a parliamentary budget office, fundamentally changing its purpose and potentially damaging its credibility. Such a decision should be taken only after a full and frank debate on its own merits.

The House will be aware that the Treasury Committee, which is headed by my right hon. Friend the Member for Loughborough (Nicky Morgan), has appointed Sir Stephen Nickell, formerly of the OBR, to provide an independent view of the Government’s analysis. My officials have already had initial conversations with Sir Stephen about the scope and scale of his review, to ensure that we can provide him and his team with the necessary information in due course. I hope that that gives further reassurance to Members that scrutiny, of the nature that they seek, of the Government’s work will be undertaken by the Treasury Committee.

Furthermore, the OBR has already published a detailed review of the approach taken in the analysis provided across Whitehall, comparing it with other academic publications since the referendum. We believe that extending the OBR’s remit, as proposed by amendment 14, would require the OBR to analyse alternatives to Government policy. That would draw the OBR into political debate and expose it to a significant risk to its credibility and that of the UK’s fiscal framework. It remains highly unlikely that the OBR could, in the time available, go beyond the points it has already made in its discussion paper in any assessment of the Government’s analysis, bearing in mind its capacity and modelling today.

As for the effects of the power mentioned in amendment 20, I hope that my previous assurances will reassure right hon. and hon. Members that the Government intend to use the power not to introduce tax policy changes, but merely to secure the continued effective operation of the tax system. I hope that my right hon. and hon. Friends who sought this amendment will see that we have listened and engaged and that the reassurances that I have provided today achieve the amendment’s purpose. I therefore urge them not to proceed with their amendments.

I turn to amendment 15, which calls for the Government to provide a list of powers in relevant tax legislation that the Treasury has acquired since June 2016, or that it expects to acquire, relating to any EU exit scenario. All such powers have been passed as primary legislation. They have been scrutinised by this House and were voted through accordingly. As with all legislation, that which relates to these powers is in the public domain, should anyone wish to examine it. I do not think that it is necessary to reprise this list. I hope that hon. Members will see that amendment 15 is therefore entirely unnecessary, and I encourage them not to proceed with it.

--- Later in debate ---

[Kirsty Blackman]

I rise to speak in favour of SNP amendments 7 to 10 and new clauses 10 and 11. I would also like to mention amendments 14, 15, 22, 20 and 2 and new clause 17, all of which we would be comfortable supporting, if any of them are pushed to the vote.

There has been a lengthy discussion across the Committee on trade deals. People are confusing free trade agreements and trade deals. It is perfectly possible to make arrangements that improve the flow of trade without signing an FTA; they are two very separate things. It is not understood widely enough that any trade agreement between countries involves compromise. Whatever is signed up to between, let’s say, the UK and the USA will involve the UK having to give some things away as well as gaining something.

The consultation on trade deals looked at trade deals with New Zealand and Australia, with the comprehensive and progressive agreement for trans-pacific partnership, and with the US. However, despite the fact that UK Government Members have talked about how important our trade is with countries such as South Korea and how fast it has grown, the Government have not consulted on that and they did not do so because we have those trade deals already, as a member of the EU. That is why our trade has grown so quickly with South Korea.

Thank you for your indulgence, Dame Rosie. I will move now to the actual subject of the debate. Our amendment 7 asks that clause 89 be subject to the affirmative resolution procedure. I appreciate that the Minister has put a list in the Library, and I will take a look at the list of tax changes he proposes to make under the clause, but I am on the Committee that is sifting the statutory instruments the Government are bringing forward, and some of those SIs that the Government think should be taken under the negative procedure should never have been so proposed. Some are fairly dramatic changes to the law—to powers or new institutions, for example—and yet are being put to the statutory instrument sifting Committee as negative instruments.

I hope that the Minister will forgive me, but I do not trust the Government to introduce only measures in the category that we believe should be subject to the negative procedure. I will look carefully at that list, but I will still press amendment 7, because, given my experience of Ministers, I do not yet have the level of comfort that I need.

[Robert Jenrick]

I hope that in due course the hon. Lady will have an opportunity to read the letter that is in the Library and see that these are truly minor technical amendments, changing, for example, a reference to the EU to a reference to the EU and the UK, and a reference to euros to a reference to pounds sterling. I hope that, in due course, she will be comfortable with those minor technical changes.

Finance (No. 3) Bill

Robert Jenrick Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I thank all right hon. and hon. Members across the House who have contributed to this wide-ranging debate. The shadow Chief Secretary to the Treasury managed the unusual feat of opening the debate without mentioning a single measure in the Finance Bill, although he did brandish a very thin pamphlet, which we were told contained all the answers to the Labour party’s spending commitments. A number of important issues have been raised across the House tonight, and I will do my best in the time available—and as swiftly as possible—to respond to as many as I can.

Two weeks ago, the Chancellor was able to present a Budget that followed five years of economic growth, with the deficit cut by four fifths, the lowest levels of unemployment, the highest levels of employment in my lifetime, real wages rising and real wages rising fastest among the lowest paid. It was a Budget in which, as a result of responsible management of the public finances—meeting the serious challenges we inherited in 2010 in a serious way—we were able to invest the highest levels in our economic infrastructure for more than 40 years, including £460 million more a week than the last Labour Government for our roads, railways and broadband. The Budget increased funding to the NHS by £20.5 billion a year in real terms; froze fuel, beer and spirits duty once again as a result of sustained lobbying and support from Members on the Government Benches, including my friends from Scotland; and—above all—provided a tax cut for 32 million people.

My hon. Friends the Members for Croydon South (Chris Philp) and for Cheltenham (Alex Chalk) and many other Government Members welcomed our action to support the high street and to enable town centres to adapt and evolve to new circumstances and continue to be the cornerstones of thriving communities. That action includes a reduction in business rates for 30% of smaller retailers, investment in transformation and infrastructure through the £675 million future high streets fund, and planning reforms to make it easier, cheaper and quicker to create businesses and work places in town centres and to create homes—planning reforms that are now, it seems, opposed by the Labour party.

My hon. Friend the Member for Croydon South made an interesting suggestion about the seed enterprise investment scheme. In the Budget, we reaffirmed our commitment to the world-class incentives we have as a country to encourage investment, promote wealth creation and make this country the best place in the world to be an entrepreneur, such as continuing entrepreneurs’ relief and continuing EIS and SEIS, as my hon. Friend suggested.

My hon. Friend the Member for Dover (Charlie Elphicke) and many other Government Members welcomed our sustained commitment to reducing corporation tax again—now to 17%—and noted that our decision to reduce it from 28% had not, as was suggested, reduced receipts to the Treasury, but had in fact increased them by 55%. My hon. Friend the Member for Gordon (Colin Clark) made the case, as he regularly does, that we want to grow the economy and support the people out there who are creating small businesses. This Budget and this Finance Bill are for them.

[Alan Brown]

I thank the Minister for giving way. If reducing corporation tax brings in more money, why has the Red Book never shown that, and why is the Treasury not able to provide any modelling that shows an increase in revenues from that reduction?

[Robert Jenrick]

I think I have already explained that the facts speak for themselves. Receipts from the reduction in corporation tax have increased by over 50%. That measure was opposed by the SNP and the Labour party.

My hon. Friend the Member for Solihull (Julian Knight) represents many people who work in the automotive sector, which we want to support. He asked about vehicle excise duty. In this Bill, as he knows, we are legislating to increase support for low-emission taxis and have brought that measure forward by a year. We have also increased support for electric charge points, to help the further roll-out of electric vehicles, as other hon. Members across the House have suggested. As I discussed last week with the chief executive of Jaguar Land Rover, who supported this strongly, we intend to review the consequences of the new worldwide harmonised light vehicle test procedure on vehicle excise duty and report back in the spring.

The right hon. Member for Twickenham (Sir Vince Cable) spoke of the need to incentivise further business investment, particularly at this important moment in the Brexit negotiations. I am sure he will welcome the increase in the annual investment allowance from £200,000 to £1 million, which will encourage businesses across the country, including manufacturers, to invest in new plant, new machinery and digital technology and raise their productivity, as well as the new structures and buildings allowance, which started on Budget day.

The Budget laid out a whole range of measures—exactly the ways forward that the right hon. Gentleman suggested—to increase productivity, which is the only sustainable way to improve living standards in this country, including the largest ever investment in our strategic road network and investment in our skills base, including the introduction of T-levels, encouraging apprenticeships and the national retraining partnership.

[Theresa Villiers (Chipping Barnet) (Con)]

I very much welcome the money in the Budget for repairing potholes. Does the Minister agree that it is vital that our great capital city gets its fair share of that funding?

[Robert Jenrick]

I certainly do. Some Opposition Members were snobby about potholes, but those of us in the real world know that potholes matter. They affect people’s working lives, and we want to fix that problem. In answer to my right hon. Friend, Barnet will shortly be receiving £690,0000 for potholes.

The hon. Member for Aberdeen North (Kirsty Blackman) and many others welcomed the transferable tax history, which we announced in the Budget and which she advocated. She was strongly supported by our Scottish Conservative colleagues. The oil and gas industry is a national economic asset and one that we want to support. It supports 280,000 jobs across the Union, but particularly in north-east Scotland. In the Budget, the Chancellor reaffirmed our commitment to strong, competitive and predictable taxation, so that the industry—which is, as the hon. Lady said, still fragile—can continue to strengthen in the years ahead.

Many of my hon. Friends, including my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), welcomed the introduction of the increase in the personal allowance and the increase in the higher-rate threshold—a tax cut for 32 million people, more than 1.5 million more working people taken out of tax altogether and achieving an increase in the personal allowance by more than 90% since 2010, which is a promise made in our manifesto and a promise delivered in the Budget.

My hon. Friend the Member for Walsall North (Eddie Hughes), as well as quoting Tiberius—I am yet to know whether Tiberius is quoted in No. 11; perhaps the Chancellor will invite my hon. Friend round for a cup of tea—was absolutely right to say that the Bill takes forward the measures in the last Budget to create a stamp duty relief for first-time buyers in other properties and extend it to those in shared ownership. That encourages and increases the dream of home ownership to a new generation.

As the Financial Secretary said at the beginning of the debate, the Bill also makes a number of changes to make our tax system fairer, and many Members across the House welcomed the new digital services tax. Some asked why we do not go further and faster, but let us remember that we will be the first major economy to create a tax of this nature. We are genuinely leading the international community and we hope to lead a multinational agreement, but the UK, under the leadership of the Chancellor, will lead the way. With those measures and others in the Bill, we will continue to close the tax gap, which is at its lowest ever and lower than in any year of the last Labour Government.

The hon. Member for Wakefield (Mary Creagh), at the beginning of the debate, and other hon. Members later, asked what action we are taking to support the environment and on climate change. One such measure, of course, is our proposed plastics packaging tax—again, leading the world by creating an innovative tax that encourages the producers of plastic packaging to take responsibility and change their packaging, and building on great Conservative environmental taxes of the past, such as the landfill tax created by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke).

My hon. Friends the Members for West Aberdeenshire and Kincardine (Andrew Bowie) and for Moray (Douglas Ross), among others, said very clearly—this is an important dividing line in British politics—that we are excited about the future of this country, and want to support and invest in science and technology and in research and development to drive the economy forward. From the Labour party, we heard no ideas as to how to grow the economy. We heard about more spending and higher taxes, but nothing about how to create wealth and make our country more prosperous. We heard only ideas that we know have failed in the past.

Let us be clear: a vote against the Bill tonight would be a vote against enabling investment and new jobs in the north-east of Scotland and a vote against the transferable tax history, which the hon. Member for Aberdeen North says she has campaigned for and advocated over many years. It would be a vote against further investment in manufacturing to raise productivity, which Opposition Members have said should be a national priority, and a vote against the increase in the annual investment allowance. It would be a vote against extending the stamp duty land tax relief for first-time buyers to those who want to live in shared-ownership properties, something advocated by my hon. Friend the Member for Walsall North. A year ago, the Opposition voted against our first policy in this area. Today, we know that more than 120,000 people across the country have benefited from that stamp duty relief. Surely the Labour party will not make the same mistake again.

Anyone who votes against the Finance Bill tonight will be voting against further actions to close the tax gap and to make it harder to evade and avoid taxation, and against making our tax system fairer. It would be a vote against a tax cut for 32 million people, and a vote against taking more than 1.5 million of our fellow citizens out of income tax altogether.

The Bill will make the UK more competitive, more innovative and more entrepreneurial. It will deliver lower taxes and put more money into the pockets of our British working public. It will make our economy and our country stronger, and I commend it to the House.

Question put, That the amendment be made.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 6th November 2018 Commons Chamber

[Lee Rowley (North East Derbyshire) (Con)]

5. What steps he is taking to increase productivity in the economy.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The Budget set out the next steps in our plan to raise productivity and to grow the economy. That included increasing the national productivity investment fund to more than £37 billion to fund the largest sustained investment in our national infrastructure since the 1970s.

[Lee Rowley]

With that very increase in infrastructure funding to £37 billion, what opportunities are there in places such as North East Derbyshire to invest in regeneration and communities?

[Robert Jenrick]

The plans set out in the Budget were designed exactly for parts of the country such as my hon. Friend’s constituency. The £28.8 billion national roads fund will provide the largest ever investment in our strategic roads, and more money for potholes and pinch points. The future high streets fund will enable small towns across the country, including in the midlands, to be transformed and become thriving communities once more.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

How does the announcement in the Budget that non-NHS capital funding will actually fall in the coming years help the country’s productivity?

[Robert Jenrick]

The Budget announced the largest increase in capital spend in our economic infrastructure since the 1970s. Under this Government, investment in our economic infrastructure will be £460 million a week higher than under the last Labour Government.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

The Chancellor has announced that he will be improving productivity by stopping inefficient public sector contracting—basically, abolishing the use of the private finance initiative and private finance 2. Can more be done to reduce the £240 billion bill to our country left by the Labour party?

[Robert Jenrick]

Yes. We are ending the scandal of PFI that was created by the last Labour Government. Eighty-six per cent. of PFI contracts were signed by the last Labour Government—91% by value. In addition to retiring PFI we are creating a crack team, beginning in the Department of Health and Social Care, to look back at some of those old contracts and to clean out the stable left by the last Labour Government.

[John Cryer (Leyton and Wanstead) (Lab)]

This Government and their coalition predecessors have overseen the longest slump in wages in living memory. What effect has that had on productivity?

[Robert Jenrick]

The hon. Gentleman may not be aware of this, but real wages are rising. The Government believe that the best way to support working people across the country is to get them into work. Employment is now at its highest level in my lifetime, with 3 million more jobs created and 1 million fewer people on the dole.

[Neil O’Brien (Harborough) (Con)]

6. What plans he has to raise additional tax revenues from multinational digital businesses.

--- Later in debate ---

[Steve Double (St Austell and Newquay) (Con)]

12. What steps he is taking to provide funding for infrastructure in the South West.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Plymouth and the West of England Combined Authority will benefit from the £2.5 billion transforming cities fund extended in the Budget. Cornwall will receive £79 million towards the A30 St Austell link road, which my hon. Friend campaigned for.

[Steve Double]

I thank the Minister for that answer, but Cornwall relies on its only mainline rail link through south Devon, and it is well documented that it is very vulnerable to adverse weather. The Budget Red Book contained a reference to improving that rail link, but some in the south-west have doubted the Government’s commitment to it. Can the Minister confirm that the Government are committed to improving that railway, and that we now need Network Rail to get on with it?

[Robert Jenrick]

Protecting the line at Dawlish is a national priority. South-west Conservative MPs, including my hon. Friend, pressed that upon the Chancellor and me, and we restated our commitment in the Budget to finding a permanent solution that delivers super-resilience at Dawlish.

[John Grogan (Keighley) (Lab)]

13. What recent discussions he has had with the Secretary of State for Housing, Communities and Local Government on the proposed One Yorkshire devolution deal.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I have regular conversations with my counterparts in the Ministry of Housing, Communities and Local Government, including on the One Yorkshire proposals. We have said that we will respond to any proposals that we receive in good faith, assuming that they are able to provide for economic growth in a clearly defined economic geography.

[John Grogan]

Does the Minister agree that the detailed economic case for One Yorkshire devolution, presented to the Treasury and to other Ministries by no fewer than 18 Yorkshire councils, many of them Conservative, is worthy of detailed discussion between the Government and local authorities, as specified in the legislation?

[Robert Jenrick]

The hon. Gentleman and I have discussed this matter. I have met stakeholders from the region on a number of occasions, including Councillor Judith Blake from Leeds. We have said that to progress this matter we want to see the Sheffield city region become fully functioning and the Mayor, who is now elected, able to conduct his duties. We think that is a reasonable way forward, so that local people in that area are not let down.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

15. What recent assessment he has made of trends in the level of public funding for renewable energy since 2010.

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[Alex Norris (Nottingham North) (Lab/Co-op)]

T3. There were over 9,000 words in the Chancellor’s Budget speech, but not one mention of Nottingham or the east midlands. In the east midlands, we have multiple investable schemes that will drive growth in our region. When will the Treasury back the east midlands?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The hon. Gentleman obviously missed the Chancellor’s speech at the Conservative party conference, in which he announced the creation of a special area of economic activity at Toton, just south of Nottingham, which we expect to become one of the UK’s leading areas of economic growth. We also announced in the Budget an increase in the transforming cities fund, which will directly benefit Nottingham.

[Craig Tracey (North Warwickshire) (Con)]

T5. I welcome the announcement in last week’s Budget of investment in our high streets, which will be particularly welcome in Bedworth in my constituency. I had meetings with local businesses recently on this very issue, and particularly on their frustrations at the lack of ambition of the local borough council. Can the Minister advise how local councils such as Nuneaton and Bedworth can best take advantage of this excellent opportunity?

--- Later in debate ---

[Alex Chalk (Cheltenham) (Con)]

Motorists want to see the earliest possible end to the traffic misery on the A417 caused by the air balloon pinch point. Does my hon. Friend recognise that the Budget, through its extra firepower for roads, provides the best possible platform for such a vital scheme?

[Robert Jenrick]

I have met my hon. Friend and his Gloucestershire colleagues to discuss this matter. It was with strategic roads and roundabouts, such as the air balloon roundabout, in mind that we made the largest ever investment in our strategic road network. Decisions on specific roads will be made next year.

[Neil Gray (Airdrie and Shotts) (SNP)]

I welcome HMRC’s rather belated decision to return tax wrongly paid by the Roadchef employee benefit trust. It is clearly now necessary to honour previously made commitments in respect of tax implications for beneficiaries. Did HMRC use its discretion to make that payout, and, if so, on what basis?

--- Later in debate ---

[Julian Knight (Solihull) (Con)]

Thank you, Mr Speaker.

This morning, the European Automobile Manufacturers Association released research demonstrating that all 270 new-generation diesel vehicles tested to date are below the emissions threshold on the road. In the light of this, will the Treasury team meet me and other colleagues to discuss how we can construct a road tax system that promotes clean diesel over old diesel and protects 9,000 jobs in my constituency?

[Robert Jenrick]

I would be very happy to meet my hon. Friend, who I know is a champion for Jaguar Land Rover. I hope it will reassure him to know that I will discuss these issues with the chief executive of that company later today.

[Chris Bryant (Rhondda) (Lab)]

If we took every single person who has suffered a major traumatic brain injury—for instance, from a car crash—from needing four people in order to be able to wash, clothe and look after themselves to needing just one, and thereby leading a more independent life, we could save the taxpayers £5 billion a year. May I meet with the Chancellor to explain all this?

Freeports

Robert Jenrick Excerpts

Thursday 11th October 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is a pleasure to respond to the debate. Like my hon. Friend the Member for North East Derbyshire (Lee Rowley), I represent one of the most landlocked constituencies in the country, although the River Trent is still tidal when it reaches Newark, so perhaps there is potential for a freeport in Newark one day.

I thank my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) and the right hon. Member for Birkenhead (Frank Field), who sadly could not be with us, for raising an important issue. This issue interests me a great deal. I engaged with it before I became a Minister, when I was involved in a proposal for a freeport around East Midlands airport, and in my business career before being elected to Parliament, when I visited and engaged with freeports in Geneva and Shanghai. I have seen both the advantages and the disadvantages of some of the freeports around the world.

I support the goals that underpin many of the arguments we have heard: increasing global trade at a pivotal moment for our country’s future; increasing economic development in all parts of the United Kingdom and inward investment in those parts that have seen less of it in recent years; supporting manufacturing and particularly advanced manufacturing that takes advantage of the new technologies that are transforming the way we produce products—we want to ensure the UK is at the heart of those new processes; and seeking new free market approaches to growing our economy. Those are a good thing in themselves and send positive signals about our country, our openness and our willingness to create a business-friendly environment for investment. We have had a positive debate along all those lines.

I reassure Members that the Treasury has engaged actively with stakeholders on this topic. We have already heard that my right hon. Friend the Chief Secretary to the Treasury visited my hon. Friend the Member for Cleethorpes (Martin Vickers) in Immingham. She and I also visited the Tees Valley Mayor in the constituency of the hon. Member for Redcar (Anna Turley) to hear the proposals there, and we later met my hon. Friend the Member for Middlesbrough South and East Cleveland.

I held a roundtable at the Treasury earlier this year with the ports sector and the Minister with responsibility for ports. I listened to people’s ideas and enthusiasm about freeports and invited them to gather their thoughts and come back to us with substantive proposals, and I committed to giving those proposals the consideration they deserve. I remain keen to receive such proposals and to see what we might be able to achieve together.

Let me begin along the same lines as my hon. Friend the Member for Middlesbrough South and East Cleveland. There seem to be two principal advantages to a freeport—the first on the customs side, and the second around the regulatory changes and supply-side reforms that could flow alongside that. Let me dwell for a moment on the customs aspect, which is perhaps the most important from the Treasury’s perspective and in the current debates about Brexit.

As we heard, it is already possible for a private operator to apply to become a free zone. We have ensured that that will still be possible after we leave the European Union, under any scenario. The hon. Member for Redcar asked whether, under the current legislation, she would be able to apply for one with respect to Teesside and the South Tees Development Corporation. Yes, that is possible under the law as it is today, and as it will be in any scenario after we leave the European Union, but she or other stakeholders would need to come to us with substantive proposals. That is how people would expect the Treasury to behave when making important long-term decisions about the tax system—they would not expect us simply to act on a whim.

The Treasury will continue to have the power to designate free zones under the Customs and Excise Management Act 1979 and the Taxation (Cross-border Trade) Act 2018, which I appreciate everyone is familiar with and which will enable HMRC to set requirements for goods within free zones. Whether to apply for designation as a free zone will continue to be a commercial decision for the private operators of a port—in discussion with HMRC and the Treasury, clearly—and we are open to applications.

I want to be very clear as we discuss the customs benefits that most, if not all, of the customs benefits of a free zone are available today. We heard about the two most significant facilitations that we as a country provide for business in this respect—customs warehousing and inward processing relief. Those allow imported goods to be stored and to undergo value-adding processes, with duty being paid only when the goods are released into free circulation, or never if they are re-exported elsewhere in the world. I will explain that in more detail in a moment.

Those benefits are not limited to particular locations, so they do not provide the region-specific targeted boost that certain hon. Members present would like. However, they are available to any business anywhere in the country, which is an important freedom in itself. More than 8,500 companies across the United Kingdom benefit from customs facilitations every year and are able to pass those benefits down through their supply chain, potentially to smaller businesses. Those benefits will continue regardless of the outcome of our negotiations with the EU and our exit from the EU next year.

Let me use Liverpool as an example—I hope the right hon. Member for Birkenhead reads the report of the debate when he emerges in the coming days. Liverpool was one of the five areas of the UK with a free zone under the EU scheme, which we heard about from my hon. Friend the Member for Middlesbrough South and East Cleveland. As we heard, those zones were not redesignated in 2012, partly due to concerns about customs assurance around the type of free zone. Much though many of us would like to support free zones, it must be said that there was very little negative reaction to that. We understand that many of the companies that operated in those free zones now benefit in almost exactly the same way as they did before from customs facilitations the UK already offers. We have not received substantive proposals to revisit that.

Let me return to the example of Liverpool. Today, a manufacturer in Liverpool is able to gain all the benefits of a free zone without being constrained to locating within the free zone site. Setting aside large sites such as the south Tees site, some sites, including the one in Liverpool, are quite constrained and do not have the ability to become vast sites such as the one in Dubai we heard about.

If there was a ship manufacturer, for instance, in Liverpool or Birkenhead, materials for its vessels could be imported and stored in a customs warehouse somewhere in the Liverpool area, or anywhere else in the country, without duties being paid on them. The manufacturer or its supply chain could then use those materials in the manufacturing process under inward processing relief, and the finished ships could be exported without any UK customs duty ever having to be paid. That avoids the distortions and perverse geographical outcomes that would undoubtedly arise with free zones, where a manufacturer or its supply chain would feel the need to locate on the same site, although I appreciate that would be beneficial to those locations, some of which require urgent inward investment.

The UK’s current customs facilitations offer broadly the same benefits that attract businesses to free zones in other developed countries, such as the United States. For example, two thirds of goods imported to US foreign trade zones are brought in to enjoy the same tariff-free manufacturing benefits offered by inward processing relief. The other third are stored in those zones, gaining the same cash-flow benefits offered by customs warehousing. From a customs perspective, the UK model compares favourably with the model in the United States—arguably more so because it does not force or encourage a company to locate in a particular place, but gives it the freedom to operate and trade wherever it wishes throughout the United Kingdom.

However, as Members would expect, we want to ensure we have an even more business-friendly environment, particularly as we leave the European Union. I am sure there are ways we can improve those customs arrangements, and we are actively engaged in identifying how we might do that now or post Brexit. We are open to suggestions from hon. Members, such as my hon. Friend the Member for Middlesbrough South and East Cleveland, who is very engaged with this issue. We are also actively engaged with people in some communities, including the Tees Valley Mayor and the hon. Member for Redcar, about how we might make those arrangements place-specific. That certainly could be taken forward.

As my hon. Friend said, if one agrees that the customs benefits are more limited because we have a fairly favourable customs arrangement—I have already described that—the wider question is how we can improve supply-side reforms and the business-friendly environment in the whole country or in particular places. In that regard, I draw Members’ attention to a couple of things on which we are focusing heavily.

Like many of those who have contributed to the debate, I want to see supply-side reforms to boost growth and support business. With the Chancellor and Chief Secretary, I have been highly engaged in efforts to increase productivity and regional growth in that way.

As the hon. Member for Redcar said, we should exercise caution because we do not want to propose ideas, whether in a freeport or another setting, that would lower environmental standards or indeed workers’ rights. We have been clear that we see leaving the European Union as an opportunity to not only protect those rights but enhance them. No proposals should be at the expense of the environment, workers’ rights or other things in our regulatory framework that we are proud of as a country and want to see continued or enhanced.

We are, however, highly engaged in how we can increase economic growth in particular places, either because they require it more than others, having received less investment in recent years, or because there is a significant national economic opportunity for growth that requires Government support. In that regard, we have made a number of interventions that build on a long history, to which my hon. Friend the Member for Middlesbrough South and East Cleveland referred, going back to the 1980s and the Thatcher revolution. They include locally led or mayoral development corporations—that power is available to the Mayor of Tees Valley. They also include enterprise zones, which the Government have expanded since 2010, creating many more in different combinations, including those linked to universities, which provide particular opportunities to help universities orientate themselves towards the local and regional economy, commercialise research and development, and help start-ups to scale up and achieve their potential. In some cases, those approaches have had the benefits that my hon. Friend described. Again, we are open to further conversations on how we might deliver them.

Development corporations empower places to overcome local barriers to growth and have provided a sharper commercial focus to large-scale Government investments to help develop local areas. In the Tees Valley, the first mayoral development corporation outside of London has been set up by the excellent local Mayor, Ben Houchen, whom I met only yesterday to discuss his future proposals.

At the Conservative party conference, we announced funding to boost growth and development in the east midlands between Nottingham and Leicester, creating a new locally led delivery model—potentially a development corporation—around Toton. Again, that is an area of significant economic potential, and we want to use the levers available to us in central Government, working closely with local leadership and the business community, to take that forward at pace. The funding will support the area to move on with those announced proposals.

We are supporting local businesses particularly through enterprise zones—since 2012, we have established a further 48 of them—in all regions of the United Kingdom, including most of those represented here today, and certainly in the Tees Valley. In those zones, businesses benefit from tax and regulatory incentives. We have piloted other models, including, at the Budget last year, an east midlands-focused manufacturing zone to provide a more business-friendly environment for manufacturing businesses.

We are open to further conversations in that regard. We want to see more locally led models and development corporations and, as my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) said, more Canary Wharf-style opportunities to transform local areas and drive the economy forward at pace, with a particular focus on planning, where there is growing consensus for further liberalisation. There may be great opportunities to do so in these places if there is strong support from the local community, Mayors and the locally elected democratic leadership of councils.

As I told the ports when I met them earlier in the year, and as was said in the conversations the Chief Secretary has had with others, we believe there may be opportunities for some levers to be pulled with respect to ports. If they wish to take advantage of opportunities for locally led development corporations or those with a central Government component, we are happy to discuss that and see that moved forward as fast as possible.

We want to see further business-friendly customs arrangements put in place. Proposals for freeports would need to prove that they will genuinely attract inward investment into the United Kingdom and not simply displace growth that might have happened in other parts of the country. It must be an additive policy that makes the country more prosperous and does not simply move jobs and investment from other parts of the United Kingdom.

We are aware of the risks of free zones we see around the world relating to money laundering and other illicit activities—I saw that when I visited freeports, particularly with respect to the art market, which I worked in before being elected. We take note of the G7’s Financial Action Task Force. There are important questions that need to be explored and understood, and we must be sure that we overcome those risks before going further.

I thank my hon. Friend the Member for Middlesbrough South and East Cleveland for raising an important issue. Personally, I am highly engaged in it, along with the Chief Secretary. We want to see substantive proposals brought forward for us to consider, which can inform the debate and answer some of the questions that I and other Members have raised. How would free zones genuinely be additive and drive forward the prosperity of the whole United Kingdom? How can we overcome some of the disadvantages in terms of criminality and illicit trade that we have seen around the world? From a customs perspective, how would a freeport add something to our business-friendly customs environment that we do not have already, bearing in mind the analysis and comments I have laid out? How can that play a part in our wider strategy to use devices such as development corporations or enterprise zones to help areas seize economic opportunities, liberalise planning, build a business-friendly vision and attract business leadership to take forward their communities and economies?

This is an interesting and exciting opportunity worthy of further thought and consideration. I look forward to working with colleagues on both sides of the Chamber on it in the future.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 11th September 2018 Commons Chamber

[Ben Bradley (Mansfield) (Con)]

5. What steps he is taking to invest in infrastructure in the east midlands.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Over the course of this Parliament, long-term investment in our infrastructure will reach levels not sustained since the 1970s. In the east midlands, for example, we are investing from the national productivity investment fund to reduce congestion. We are investing £125 million this year on local road maintenance, and we announced this summer £780 million for a series of works to upgrade the east coast main line.

[Ben Bradley]

As my near neighbour in Nottinghamshire, the Minister will be aware of the Robin Hood line that runs through my constituency from Nottingham. Proposals to extend the line across Warsop in the north of my constituency have now appeared in various Budgets. The Transport Secretary has ensured that the new franchisee will have to consider the business case for that extension. Can the Minister confirm that the Treasury will support it financially if that business case comes forward?

[Robert Jenrick]

My hon. Friend and my hon. Friend the Member for Sherwood (Mark Spencer) have been campaigning on this for several years, and we recognise its potential to unlock economic opportunities in Mansfield and Ollerton. Within the east midlands franchise, we have included a requirement that the operator should come to the Secretary of State for Transport within a year with a business case for extending passenger services to my hon. Friend’s communities. The Department for Transport and the Treasury will consider that business case very carefully.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

Does the Minister accept that crucial investment from the European Investment Bank and the European regional development fund recently underpinned the midlands engine investment fund and that a hard Brexit risks pulling the rug from underneath many critical investment projects? He knows in his heart that a “cake and eat it” Brexit is a pure delusion and that his European Research Group colleagues still cannot explain how it would work. Would it not be better if we just let the public sort this out and have a say with a people’s vote?

[Robert Jenrick]

The public have already had a say, and in the east midlands, which we are discussing, the public were very clear that they want to leave the European Union. Infrastructure investment will be substantially higher over the course of this Parliament than it was under the last Labour Government—25% higher in the east midlands and 40% higher in Yorkshire and the Humber. The primary reason for that is this Government’s responsible management of the public finances.

[Sir Patrick McLoughlin (Derbyshire Dales) (Con)]

Will my hon. Friend take the time to point out where some of this infrastructure spend is going? At the moment, Derby station is being remodelled—£200 million —and the M1 is being upgraded to a smart motorway. This is massive investment for the long-term future of the east midlands.

[Robert Jenrick]

My right hon. Friend is absolutely right. Of course he was the Secretary of State for Transport who led many of these important investments. In the east midlands, we are investing in the smart motorway, in the upgrade to the east coast main line, in Derby bus station and in new green buses in Nottingham. The list continues, and only because of this Government’s management of the public finances, which is keeping the economy growing.

[Helen Goodman (Bishop Auckland) (Lab)]

rose—

--- Later in debate ---

[Mr Gary Streeter (South West Devon) (Con)]

6. If he will provide additional resources to the Department for Digital, Culture, Media and Sport to support the Mayflower 400-year anniversary celebrations.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

We recognise that the Mayflower commemorations are an important moment for this country to celebrate our tied history with the United States and the unending quest for religious freedom and toleration. The Government gave £0.5 million to the Mayflower 400 project in the 2015 spending review, and we will continue to support it in the years to come.

[Mr Streeter]

Given the significance of the voyage of the Mayflower—in historical terms, it was one of the planet’s most influential journeys and it helped to found our democracy and freedom—will the Minister respond positively to the letter he has received from the all-party parliamentary group on the Mayflower pilgrims requesting that we have sufficient resources to celebrate this amazing event in a spectacular fashion?

[Robert Jenrick]

At the suggestion of my hon. Friend and of my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), I met Charles Hackett, the chief executive of the Mayflower 400 project. We had a productive meeting, and we are considering the materials that the project left with us. I advise my hon. Friend the Member for South West Devon (Mr Streeter) and the organisers of Mayflower 400 to continue working with the Department for Digital, Culture, Media and Sport and the Treasury as they continue to formulate their plans, which will benefit not just Plymouth but Boston, Bassetlaw and communities across the country.

[Mr Speaker]

For the edification of those observing our proceedings, I can advise that the hon. Member for Huddersfield (Mr Sheerman) has just been chuntering at me that his grandmother had a link with the Mayflower, about which I think we are to be enlightened.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Some Members may think that I was on the Mayflower, although as a young man I did emigrate to the United States. Some of my ancestors, the Sheermans, could have been on the Mayflower—[Interruption.] Just hold it for a moment. This is the 400-year anniversary. Is it not time that we celebrated migration and the talent, the genius, the innovation and the ideas that we in this country and America get from migration? Should we not use this quadricentenary to celebrate migration across the world?

[Robert Jenrick]

The hon. Gentleman is testing my knowledge of the pilgrim fathers, but of course they were inspired by William Bradford, who came from Yorkshire, I believe. He was the one who said that from small things great things can emerge, and that it takes just one small candle to light a thousand, which was the way that the whole pilgrim fathers’ enterprise was summed up. So I want to see the commemorations take place in Yorkshire, as well as in Plymouth and the rest of the country.

[Martin Vickers (Cleethorpes) (Con)]

I urge the Minister not to forget Immingham in my constituency, which also played a major part in where the pilgrim fathers sailed from. Will he ensure that Immingham is a major player in any celebrations?

[Robert Jenrick]

I have tried to list all the places where the pilgrim fathers came from. I was not aware that some came from Immingham as well, but I am sure that that will be included in the celebrations.

[Helen Goodman (Bishop Auckland) (Lab)]

Discussion of DDCMS support for the Mayflower celebrations raises the problem that DDCMS regional funding is deeply unfair, with far more in London. Indeed, that is the pattern on infrastructure, which the Minister was talking about before. So to what extent does the Minister believe that unfair patterns of Government spending are the cause of the fact that household income in the north-east is only £15,000 per year, whereas in London it is £27,000?

[Robert Jenrick]

As the hon. Lady will be aware, the Arts Council has a formula to distribute funding across the country. We believe, like she does, that it is important that all communities in this country can have access to culture and heritage. It is for that reason and others that we funded the Great Exhibition of the North, which has been a huge success; and of course the Chancellor, in his Budget two years ago, supported the huge economic and cultural opportunity of restoring Wentworth Woodhouse, near to the hon. Lady’s constituency.

[Vicky Foxcroft (Lewisham, Deptford) (Lab)]

8. Whether he has made an assessment of the adequacy of his Department's cross-departmental guidance on the contracting out of public services as a result of recent disturbances in prisons.

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[Vicky Ford (Chelmsford) (Con)]

This summer, we saw the devastation of the collapse of an elevated roadway in Italy. In Chelmsford, the main route into the city is over the Army and Navy flyover, which is now 40 years old. I am not suggesting that it is on the brink of an Italian disaster, but it will need replacing. What funds might be available to assist?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

My hon. Friend and I met earlier in the summer to discuss the flyover, and she raised concerns then. I appreciate that it has been closed, owing to safety concerns, over the summer. Funding is available through Essex County Council, and of course through her local enterprise partnership, which has received almost £600 million over the spending period.

[Tonia Antoniazzi (Gower) (Lab)]

T6. The Chancellor will be aware of Macmillan Cancer Support’s long campaign to introduce a duty of care on financial services providers to ensure that vulnerable customers get the support they need to stop financial problems escalating. The Financial Conduct Authority has now published a discussion paper on the introduction of a duty of care. Will the Chancellor commit to meeting Macmillan to discuss the consultation after it closes on 2 November?

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The Chancellor has been an outspoken advocate of a fairer distribution of regional spending. Has he read the letter that we sent him in late July? Will he commit to the Transport for the North strategic investment priorities in his forthcoming Budget?

[Robert Jenrick]

I know that my right hon. Friend the Chancellor has my hon. Friend’s letter. Over this Parliament, we will spend more central Government funding per capita on transport in the north than in, for example, London or the south-east. We will consider carefully the business case for Northern Powerhouse Rail when we receive it from Transport for the North later in the year.

[Laura Smith (Crewe and Nantwich) (Lab)]

This is further to the points raised by my hon. Friends the Members for Ilford North (Wes Streeting) and for Weaver Vale (Mike Amesbury). In the light of the National Audit Office’s recent comments that there are signs that police forces are struggling to deliver effective services and that the Government do not know whether the police system is financially sustainable, what real reassurance can the Chancellor give me that police forces will be given a real increase in funding, so that they can cope with growing demand?

National Insurance Contributions

Robert Jenrick Excerpts

Thursday 6th September 2018 Written Statements

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The Government are announcing today that they will not proceed with the abolition of class 2 national insurance contributions (NICs) during this Parliament.

This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue, and further options for addressing any unintended consequences.

A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the state pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this Parliament, given the negative impacts it could have on some of the lowest earning in our society.

Furthermore, it has become clear that, to the extent that the Government could address these concerns, the options identified introduce greater complexity to the tax system, undermining the original objective of the policy.

The Government remain committed to simplifying the tax system for the self-employed, and will keep this issue under review in the context of the wider tax system and the sustainability of the public finances.

The Government still intend to legislate for reforms to the NICs treatment of termination payments and income from sporting testimonials, which were set out in the draft NICs Bill published on 5 December 2016. These are important changes to ensure the NICs treatment is consistent with the treatment of income tax in previous Finance Acts. We will set out further details in due course.

[HCWS944]

Office for Budget Responsibility

Robert Jenrick Excerpts

Tuesday 24th July 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is a pleasure to serve under your chairmanship, Mr Gray, and I thank my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) for securing the debate. There are few issues on which I would like to end the parliamentary term more than the remit of the Office for Budget Responsibility. As we have heard from Members on both sides of the House, there is widespread agreement that the credibility of our fiscal framework matters and that the quality of our national debate on economics is extremely important—not just to the economy and the country, but to the sustainability of our democracy.

The Government are proud to have established the Office for Budget Responsibility in 2010. On behalf of the Treasury, I thank—as my hon. Friend did—its staff, its first chairman, Sir Alan Budd, and of course Robert Chote, who has taken the organisation forward since. Were he listening to the debate, as I am sure he is, he would take heart from the fact that hon. Members on both sides of the House have praised the organisation that he leads and agreed that it has managed, in a relatively short time, to establish itself as a credible and independent organisation. I hope that that continues in the years ahead under his leadership and that of whoever succeeds him.

We created the OBR in the context of the fiscal disaster that was the last Labour Government, as part of our mission to restore credibility to the public finances. Since 2010, we have gone a long way to turn things around, reducing the deficit by three quarters and reaching the point where our debt will begin to fall this year, but I do not begin to claim that we have reached the end of the story.

There is a great deal more to do, and, as we heard eloquently from my hon. Friend the Member for North East Derbyshire (Lee Rowley), we are still paying, as a country, £50 billion a year in interest payments. That fact alone demonstrates the importance of the OBR and of improving the quality of economic debate in this country. As my hon. Friend rightly pointed out, all democracies in the west have suffered in recent years from politicians over-promising at election times and at other moments. We need to ensure that we have fiscal credibility as a country to sustain our democracy.

We created the OBR specifically as an independent institution responsible for examining the sustainability of the public finances and ensuring that the UK maintain its credibility—something that was clearly in doubt back in 2010.

[Anneliese Dodds]

May I briefly ask whether the British economy was growing when Labour left office?

[Robert Jenrick]

The British economy had just suffered a severe recession, and we inherited the largest peacetime deficit since the end of the second world war. Nothing exemplifies the situation with the public finances more than the note that was left on the desk in the Treasury office down the road saying that there was no money left.

The OBR produces the official economic and fiscal forecasts for the UK. It does not cost Government policies, but scrutinises and certifies costings initially prepared by the Treasury and other Departments to estimate their impact. That is an important point, to which I will return in a few moments. The OBR also provides detailed public reports, including the fiscal risk report every two years, which we have heard about, and the fiscal sustainability report, which was published last week and which keeps us at the frontier of fiscal management internationally and demonstrates our commitment to fiscal transparency and accountability. I am pleased that, as we heard in the debate, Scotland has followed suit and, since 2014, the role of the Scottish Fiscal Commission has been strengthening. That institution is in its relative infancy, but it appears to be building credibility and working to help keep Scottish finances in check.

The OBR has won international acclaim. Earlier this year, Kevin Page, in a paper for the Centre for Economic Policy Research, said:

“The OBR’s commitment to transparency is likely the gold standard in the IFI community.”

He added:

“The OBR deserves to be considered a leader among”

independent fiscal institutions

“for the transparency of its work and the credibility it derives”,

as we have heard from hon. Members. Protecting that credibility should be as much a priority for Parliament as it is for Government.

Since 2010, there have been a number of calls to expand the OBR’s remit, including proposals, as we have heard today, to report on distributional analysis, performance against child poverty targets, environmental matters and living standards. Each has merits, and deserves discussion and further thought. The OBR was deliberately set up to report on the sustainability of the public finances, and to date that is where we have let the matter settle. Asking the OBR to expand into areas beyond its core expertise and experience carries with it risks to its credibility. We need to consider that carefully before taking any such steps.

The OBR has also been called on to produce costings of policy proposals for Opposition parties. Again, we have heard about that today, and it has been raised by successive shadow Chancellors, including Ed Balls before the 2015 general election. Respected institutions such as the Institute for Fiscal Studies already perform that function well, and we should bear that in mind as we consider such proposals. As we heard from my hon. Friend the Member for Ochil and South Perthshire, the IFS recently exposed the folly of some of Labour’s proposed tax increases.

[Anneliese Dodds]

indicated dissent.

--- Later in debate ---

[Robert Jenrick]

The hon. Lady shakes her head, but the IFS said that those would lead to taxes being raised to their highest in peacetime history. The IFS also questioned whether they would raise as much as the shadow Chancellor claimed, and said that they would hit working families hardest. We do not always need to rely on the OBR to twist the knife, as the IFS has certainly done so repeatedly.

[Anneliese Dodds]

May I respectfully ask how exactly the IFS was able to analyse the Conservative party’s policies, when there was no indication in its manifesto of how any of them would be funded? It appears slightly peculiar to pick on the small number of criticisms made by the IFS of some elements of Labour’s assumptions when no information whatever was provided by the Minister’s party.

[Robert Jenrick]

I would not characterise the IFS’s criticisms of the Labour party’s manifesto as “small”. They were pretty fundamental; the remarks I have just described speak for themselves. The IFS did analyse the policies of the Conservative party in the lead-up to the last manifesto, but let us stick to the question before us today, and apologies to you, Mr Gray, for deviating from it.

A number of arguments have been made today for widening the remit of the OBR. Over previous years, such arguments have been looked at in some detail. Back in 2014, Robert Chote wrote in response to Andrew Tyrie, now Lord Tyrie, who at the time was Chair of the Treasury Committee, setting out his views on the matter. He said that, while some of those arguments undoubtedly had merit and deserved proper consideration by the Government and by Parliament, it was important that we consider

“the significant practical issues that would need to be addressed”.

Let me briefly set out some of those, which we would all need to consider.

My hon. Friend the Member for Ochil and South Perthshire referred to the US Congressional Budget Office. That is a good comparison, although the US system varies from our ours in a number of ways—in particular, Congressmen, Congresswomen and Senators have a much greater ability than Members of the House to initiate legislation that carries with it significant financial implications. However, it is worth considering the remit of the CBO, and its capacity.

The CBO undertakes analytical work in-house and has around 235 members of staff, with an annual budget of around $50 million. In comparison, the Office for Budget Responsibility has just 27 members of staff and costs us around £2.5 million. The OBR is clearly dwarfed in comparison. Although that is not in itself a reason not to proceed, we would have to consider the financial consequences of doing so.

The CBO is required by law to produce cost estimates for nearly every Bill approved by a full budget committee of either the House or the Senate, and produced 740 such formal costings last year, so a significant amount of work would be required. It is worth pointing out that the CBO does not—this is perhaps a more relevant comparison for some of the issues we have discussed this morning—evaluate the costings of candidates for Congress, or indeed of presidential candidates. Clearly, to increase the remit of the OBR would require it to have a significantly larger operation.

Undertaking Opposition costings as part of the parliamentary process would have important implications for the OBR and departmental resources in all Departments, including the Treasury, but the greatest impact would be felt were it to be involved in manifesto costings. The time that the OBR and Departments needed to produce costings would pose very particular difficulties during general elections, some of which are unplanned. It is difficult to see how parties could be afforded the customary flexibility in developing their manifestos until a relatively late stage in the election process, to reflect the public debate in the run-up to the election. Instead, they might have to submit detailed proposals two or three months ahead of a general election. Of course, we could consider that, but we would have to consider carefully the implications for the general election process and the way we have traditionally approached that.

The policies in scope for OBR costings also differ in type from the policies that have dominated the political debate. The detailed costing process at fiscal events covers only tax and welfare policies, which are clearly very important and a significant element of general elections, but are not all the issues reflected in a general election or all the policies in manifestos.

The other point to note is that the OBR does not produce the work in-house. It relies on detailed data produced for it by Departments, including the Treasury, which are then submitted to the OBR for scrutiny and analysis. As the hon. Member for Aberdeen North (Kirsty Blackman) said, the quality of the information is extremely important. Civil servants in Departments would be required to work through political parties’ manifestos and then provide high-quality approved data to the OBR, with which it could do its usual costings.

[Kirsty Blackman]

I do not think that the problems the Minister raises are insurmountable; they could be overcome. A concern that I perhaps should have mentioned in my speech is how the OBR decides which policies it will look at, and which it will not. It could be accused of bias if it looked only at Labour party policies, for example, and not very many Conservative party polices. If the OBR were to be expanded, I would like to see a public consultation on what its expanded remit should be and which policies it should therefore look at.

[Robert Jenrick]

Were the OBR to see its remit extended, that would be a matter for Parliament. It would be debated extensively within Parliament.

To finish my point on civil servants, there is an important matter of principle here. Civil servants would have to undertake detailed costings and provide data on Opposition policies—we should all acknowledge that that would represent a significant constitutional development for the UK. We would have to be willing to do that in the knowledge of its consequences.

To answer other points raised in the debate, the OBR does, to some extent, look at the effectiveness of policies. For example, it re-costs policies at each fiscal event, and it looks again at tax policies that arose in previous fiscal events at each subsequent Budget. It does not evaluate the individual effectiveness of the policy, but evaluates only its fiscal consequences, although the National Audit Office and the Public Accounts Committee, as well as Select Committees, have the ability to do that—and do so, very well.

The hon. Member for Oxford East (Anneliese Dodds) raised a point about the OBR’s remit with regard to the environment. The Government are interested in how we can ensure that the Treasury takes account of climate change and other important factors. One example of our action is commissioning Professor Dieter Helm to carry out an important review for us and to take forward the idea, still in its infancy, of how we as a country could create natural capital accounts. We are very keen to work that through in the coming years.

This has been a helpful debate. It is important for Parliament to review the OBR at this moment. We have conducted two internal reviews in the Treasury, both of which concluded that the remit is sufficient. We do not intend to change it at present, but it has been helpful to hear views from a number of Members and we will of course give careful consideration to those views in the future.

Infrastructure (Financial Assistance) Act 2012: Annual Report

Robert Jenrick Excerpts

Thursday 19th July 2018 Written Statements

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The annual report to Parliament under the Infrastructure (Financial Assistance) Act 2012 for the period 1 April 2017 to 31 March 2018 has today been laid before Parliament.

The report is prepared in line with the requirements set out in the Infrastructure (Financial Assistance) Act 2012 that the Government report annually to Parliament on the financial assistance given under the Act.

Copies are available in the Vote Office and the Printed Paper Office.

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