Finance (No. 2) Bill

Ruth George Excerpts

Committee: 1st sitting: House of Commons
Monday 18th December 2017 Commons Chamber

[Lloyd Russell-Moyle]

I will try to be brief, because we all want to get to the vote and then move on, but I will say that the measures we are considering are far too little and far too late. Homelessness has doubled in Britain, and in Brighton it has tripled, with 10% of adults now on the housing register. How do these proposals help them? The measures will increase house prices for first-time buyers. I know the Minister says that he has better data than the OBR, but I tend to believe the OBR, which was set up by the Conservative Government to provide independent analysis, over the books that are cooked in the Treasury—[Interruption.] Yes, the books that are cooked in the Treasury. What we need are clear supply-side measures—[Interruption.] The evidence for cooked books is that the OBR does not believe the Government’s figures. The evidence comes from the independent regulator. Let me get back to what I want to say, otherwise I will be distracted and we will be here for longer.

We clearly have a problem with young people and first-time buyers getting into the property market. In my constituency today, only five studio flats are on the market for less than £200,000. With average earnings in Brighton lower than the average for the rest of Britain, the introduction of a stamp duty waiver will make not one jot of difference, because people cannot afford to raise money for a deposit and to go to banks to ask them to lend. What we really need is decent social and council housing so that people can move into secure tenancies. I asked the Prime Minister whether she would lift the housing revenue account cap. We see in the Bill that there will be a lift to the value of £1 billion, if councils apply, but of course £22 billion would be made available, at no direct cost to the Government, if they just lifted the cap completely. Why will they not? Because they are scared—they are chicken—to allow working people to have decent homes. Clearly they want to keep people subjugated and in poor-quality rented private property. That is the only conclusion I can draw from their miserable set of proposals.

Another thing we need is planning regulation that is stronger, not weaker. Until very recently, I sat on my local council’s planning committee. Time and again we were toothless in enforcing the social and affordable housing requirements. We do not need to give councils less power to enforce those requirements; we need to give them more powers to enforce them. The measures in the Bill to try to deregulate the planning sector go in completely the opposite direction.

I could make other points, but I am not going to talk anymore—let us go home. It is quite clear that I will be voting against the Government’s measures, because they are absolutely useless for dealing with homelessness and house building. In fact, they will make matters worse.

[Ruth George (High Peak) (Lab)]

I echo my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) in saying that I am proud of Labour’s record on housing. I am proud of how we invested in 2 million more new homes, increased home ownership by 1 million, and made sure that more than 1 million homes were brought up to a decent standard, fit for human habitation, which is what we need to see now.

Since 2010, we have seen home ownership fall by 200,000 as house prices have risen by an average of 32%. Of those homes that have been built, less than 20% have been affordable, as councils’ rights to impose affordable limits have, as my hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle) said, been taken away, with the rug pulled out from under their feet. What have we had instead? We have had £10 billion invested in the Help to Buy scheme, which even Morgan Stanley said has almost entirely gone towards raising house prices and increasing the share prices of the biggest house builders.

In my constituency, those house builders are not content with all the assistance from Help to Buy. Almost all their new homes are sold on leasehold—or fleecehold, as it has been called—so people do not feel that they actually own the home in which they live, despite having paid an inflated price for it. They still have to pay ground rent; they are still being fleeced with maintenance charges; and they still have to pay fees to a third party. It does not feel like home ownership any more. This is actually private rental as well as home ownership.

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[Stephen Pound (Ealing North) (Lab)]

I hope my hon. Friend will forgive me for interrupting her flow. She is making a precise and pertinent point. Would she not wish to encourage all people of good heart here present to support the Bill that has been presented by my hon. Friend the Member for Westminster North (Ms Buck) on this very subject?

[Ruth George]

Absolutely. I hope that Members on both sides of the House will give their encouragement to that Bill so that we can make homes fit for human habitation.

On the subject of universal credit, whether or not homes are fit for human habitation, unfortunately landlords are not prepared to rent. A representative of a lettings agency came to my surgery just last week and showed me the books for its tenants. At the moment, 20 tenants are on universal credit—we still have not seen it rolled out—of whom 18, or 90%, are in huge arrears. Nine of them—45%—have had to be evicted because landlords cannot get any redress for arrears. They cannot afford to see those arrears build up. Now that they no longer claim mortgage interest relief, they know that they will have to pay a big tax bill come the end of January, so they need to ensure that they can make their homes pay.

This Government’s housing policy is simply racking up disaster on disaster. Homelessness is doubling and home ownership is falling, and universal credit is yet to come. We needed big ideas from the Chancellor, as the Secretary of State for Communities and Local Government told him in no uncertain terms. We see nothing in this Bill but tinkering at the edges that will do nothing to help solve the enormous housing crisis in this country.

[Mel Stride]

We have been debating important measures. Clause 8 introduces an income tax allowance for members of the armed forces to help them to meet the cost of accommodation in the private market in the UK. Clause 40 makes sensible legislative adjustments to the additional rate of stamp duty land tax to ensure that people in some specific—often disadvantaged—circumstances are not unduly penalised. Clause 41 announces the Government’s abolition of stamp duty land tax for first-time buyers purchasing properties under £300,000. This key part of the Government’s drive to ease the burden on young first-time buyers will go a significant way towards levelling the playing field in those people’s favour. It is notable, and equally lamentable, that this particular policy, which predominantly assists the young, appears to be something that the Labour party rejects and indeed derides. I commend the clauses and schedule to the Committee.

Question put and agreed to.

Clause 40 accordingly ordered to stand part of the Bill.

Schedule 11 agreed to.

Clauses 41 and 8 ordered to stand part of the Bill.

New Clause 4

Review of relief for first-time buyers

“(1) The Commissioners of Her Majesty’s Revenue and Customs shall undertake a review of the impact of the relief for first-time buyers introduced in Schedule 6ZA to FA 2003.

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

(a) the public revenue,

(b) house prices, and

(c) the supply of housing.

(3) 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 one calendar week prior to the date which he has set for his Autumn 2018 Budget Statement.”—(Jonathan Reynolds.)

This new clause requires a review to be published prior to the Autumn 2018 Budget on the impact of the relief for first-time buyers, including its effects on house prices and on the supply of housing.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Finance (No. 2) Bill

Ruth George Excerpts

2nd reading: House of Commons
Monday 11th December 2017 Commons Chamber

[Peter Dowd]

My message to the great British public, who have showed their support for Labour on this, is to get out and vote Labour. That is the message. The other point is that the Minister’s hon. Friends have been waving an iPad around. I suggest they get on their parliamentary iPads and do their work.

[Ruth George (High Peak) (Lab)]

Does my hon. Friend agree that it is a bit ironic to be asked to take lessons in finances from a Government who have doubled the debt and doubled austerity at the same—[Interruption.]

[Peter Dowd]

My hon. Friend is right. Of course, as ever with the Tories, when we tell them the truth, we get shouted down, which is exactly what has just happened to her.

By refusing to base the Finance Bill on an amendment of the law resolution, the Minister has deliberately restricted the scope of amendments to this Bill, and the ability of the Opposition to scrutinise it properly and improve it. I know the Financial Secretary was president of the Oxford union and his debating skills were honed in its atmosphere, but I am sure he would never have dreamed of putting the same restrictions on the debates he chaired as his colleagues are putting on debates in this Chamber of the mother of Parliaments. What is good enough for the Oxford union should be good enough for this place. “No gagging” is the call from the Opposition; the Government instead want a muffled and restricted debate. That is why this measly Bill contains few policy and tax changes, and will have no positive or constructive impact on the majority of ordinary people’s lives.

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[Ruth George]

Does the hon. Gentleman agree that it is terrible that more than half of small businesses fail in the first five years, largely due to lack of capital investment, as he says? Does he agree that it is time for more radical ideas, as the hon. Member for North West Hampshire (Kit Malthouse) said, and that Labour’s proposal for a business investment bank would help those companies?

[Kevin Hollinrake]

Businesses fail for many reasons. Business is an extremely risky undertaking—I have been in business most of my life—which is why we should pay tribute to all people who take the step forward to create wealth and jobs. I accept that we need to find more different and innovative ways to get finance to business start-ups and scale-ups.

Business banking is unregulated. If a bank acts inappropriately, it is usually far too wealthy for an individual or business to sue. To rectify that problem, we need an independent redress scheme for businesses. I have a constituent who was mis-sold an interest rate hedging product that resulted in him paying £18,000 a month in interest payments from a relatively small business. It was put into receivership. The bank eventually compensated him for the mis-selling of the product, but did not compensate him for the business he lost. That cannot be right. The Government propose expanding the financial ombudsman scheme to deal with the problem, but that will not be enough.

We need an extension of the tribunal system, similar to the employment tribunals, so that small businesses can seek redress without going to the huge cost of suing a bank in the courts. Financial services tribunals already exist, but for the wholesale markets. We need to expand that system to bring in SMEs, so that judges preside over cases, instead of us having a cosy internal system involving ex-bankers who now work in a different part of the sector. Such a system would be low cost and funded by the banks. It would increase confidence in the banking system and, crucially, result in banks lending more money, because people would have confidence in the system. I hope the Minister will look at the financial services tribunals. I am meeting the Economic Secretary in January to discuss this in more detail, but I believe it is one of the missing pieces of the jigsaw when it comes to improving productivity. I welcome the many measures in the Budget and will support the Bill this evening.

[Ruth George (High Peak) (Lab)]

The Chancellor’s Budget speech set out the serious state of our economy, including on the key issue of productivity, as Members on both sides have agreed. Our productivity is now 29% lower than Germany’s. It grew by only 0.2% in 2016 and not at all in 2017. It is serious when the OBR is saying that there are few signs of recovery and that the recent weakness will prove more enduring. Surely this is the time when the Government need a big plan to improve our productivity.

We already have the lowest GDP growth of any OECD country except for Portugal and Greece. Household incomes have fallen 6% compared with inflation, and we are now predicted to have another decade of falling incomes. It is no wonder that household debt is rising and 8.3 million people are now in problem debt. Added to the lack of productivity, we now have the lowest Government investment of any OECD country except for Portugal and Greece. That leads to increased Government borrowing for which we see nothing in return. Last year £52 billion more was borrowed, and it is £60 billion more this year. The OBR’s prediction of lower productivity growth will add another £26 billion to borrowing. That is the cost of the Government’s policy of austerity that is hurting but not working.

Our national debt is now nearly £2 trillion, which is nearly 90% of GDP and higher than that in both Germany and France, although it was lower in 2010. In spite of biting austerity, we see lower growth, lower productivity and lower Government investment. It is no wonder our productivity is so low when we now have the longest commuting times in Europe and the most expensive privatised public transport. Some 3.7 million workers spend more than two hours a day travelling to work. The average travel time of almost an hour is the highest in Europe. That adds to our people’s misery and our lack of productivity, but still we see no investment for a Crossrail of the north. East midlands rail electrification has been cut. Even the small improvement of dualling the track on sidings in my constituency to speed up journey times between Manchester and Sheffield—fully funded by Network Rail—has been stuck with the Department for Transport for four years. We await a decision on half a kilometre of track to make small improvements to our productivity, and our freight and transport times.

The Bill does nothing to help public services that are crying out for proper support. It does nothing for our public servants who are suffering under an unfair pay cap. It does nothing for the people suffering £1,000 of cuts to tax credits since 2010, with another £4.6 billion due to be cut under universal credit, or the 1 million more children due to be in poverty by 2020. The Bill does nothing to reverse those trends, nothing to support public services and nothing for hard-working people. Yes, we have seen 3 million extra jobs, but we have also seen zero-hours contracts, short-hours contracts and 3.7 million working people in poverty. That does not help our economy.

The Bill is a wasted opportunity. It continues to reduce corporation tax—it is now down to 19%, which is less than the rate of income tax—and creates a false impetus for creative accounting. The reduction in corporation tax for the largest companies does not go to the workers, despite what the Government promised when they kept cutting it. From my time negotiating with the shopworkers’ union, the Union of Shop, Distributive and Allied Workers, I know that the reductions in company accounts for corporation tax are far greater than the amount that goes in extra pay for workers. Instead of the handouts to large companies with over £1.5 million a year of profit that we have seen over the past seven years, Members on both sides of the House agree that it is smaller companies that need investment. I refer to Labour’s proposals for a business investment bank to borrow to invest in the companies that drive our productivity and growth. Instead, only four in 10 small companies survive for five years. They have been hit by the rise in VAT and business rates, cuts to regional development funds, and the lack of investment in our infrastructure.

The Government introduced austerity in 2010 and immediately strangled Britain’s economy, which was starting to grow again. Since then, they have borrowed nearly £1 trillion more, cutting and cutting. As my hon. Friend the Member for Bootle (Peter Dowd) said, a nation’s economy is like a business: it needs investment to grow. Any respectable businessperson will tell you, “You can’t cut your way out of a recession.” The Government would do well to learn that lesson.

We needed a big plan for Britain. The Bill is like shuffling the deckchairs while our economy continues to sink. Those of us on the Opposition Benches have plenty of ideas, but it is typical of this Government’s attitude that they will not allow the Bill to be amended, they will not let the whole House vote on those ideas and they will not let Britain’s economy grow.

Finance Bill (Sixth sitting)

Ruth George Excerpts

Committee Debate: 6th sitting: House of Commons
Tuesday 24th October 2017 Public Bill Committees

If we assume average real estate growth of around 8% a year, we are potentially missing out on £8 billion of tax revenue. The Minister may tell me that number is over-inflated, and that the real number is closer to £1 billion. I would be happy for him to prove me wrong, but the only way he can do that is by publishing the data on that quarter of properties. Through that we can understand how many are sold and how much capital gains tax this country is missing out on because we do not give British businesses the fair treatment they deserve when they are competing against non-dom companies.

[Ruth George (High Peak) (Lab)]

Does my hon. Friend think that the definition of commercial properties would include properties that were previously residential, such as those in my constituency in the Peak district? They were residential homes, but they were sold to owners who live outside the area and are now used primarily as second homes, although they are rented for a very small number of weeks during the year. That has turned them into commercial properties, severely depleting the number of homes available to local people, particularly in rural areas of outstanding natural beauty.

[Stella Creasy]

My hon. Friend has shown how simple it is to evade the tax by avoiding the loophole—the previous Chancellor tried to close it by ensuring that non-doms paid capital gains tax on the sale of residential property—simply by repurposing a building as commercial property. Even given the rules on closed companies in existing legislation, people can get around the charge. I am suggesting that the figure could be as much as £8 billion. I certainly think that at least £1 billion of public revenue could come from closing the loophole and simplifying the way we treat non-doms with capital gains tax. The Minister may have a different number, but the point of the new clause is to get the number.

The Bill is about how we manage public finances. Giving this tax loophole to non-doms means that our British businesses are unfairly treated and our property market faces artificial pressure. We are missing out on vital funds that could go into our public services. The new clause is not a magic money tree; it is a concrete cash cow. If the Minister will not agree to publishing the data, will he commit to looking at how we can close the loophole?

[Mel Stride]

New clause 2—I think it is now known as the concrete cash cow clause—provides us with an opportunity to discuss the rules surrounding UK commercial property and those who are foreign-domiciled. As the hon. Member for Walthamstow explained, her new clause would require HMRC to review the taxation of capital gains on commercial property disposal by UK taxpayers with a foreign domicile.

There is no question but that all UK residents, whether UK-based or non-domiciled, are chargeable for tax on profits from selling UK land. That includes non-domiciles who are taxed on a remittance basis, where foreign income and gains are taxed only when they are brought into the UK. Our tax base is predominantly those who are resident in the United Kingdom. As the hon. Lady has drawn to our attention, recent changes removed non-residents into the UK tax base for the sale of UK residential property. The new clause raises the fact that that treatment does not extend to non-residents for the sale of commercial property in this country. While I understand why she suggests that extending the laws would raise revenue, I should point out that this is a very complex area, which needs to be carefully considered.

The 2015 rules were designed to catch individuals and ways in which a person may hold title over a dwelling such as via trusts and closely held companies. They do not apply to companies with lots of shareholders. The structures that are used to own commercial property are different from residential property, often more complex and involving corporates, joint ventures and specialist property vehicles. We would need rules that address such structures and get to the heart of the ultimate owner.

Will the hon. Lady consider this illustration? I might live in Canada and own 50% of a home in Walthamstow. I might easily conceive, if I did not know for sure, that selling my part of the house in the UK would mean paying some UK tax. However, imagine instead that I own a handful of shares in a fund of some kind, which in turn owns half an office block in Walthamstow. Being such a minor shareholder, I may not even know how my money is invested. To send the tax man chasing round overseas for the little shareholder in a commercial building would hardly be cost-effective. We would need to design balanced rules that look at how the market works and what would yield the Exchequer the best return.

Extending the current rules to include any UK property is not a simple matter of striking through “residential property” and inserting “all UK property” into the current provisions, as this would not take into account the intrinsic differences in the way that commercial properties are owned and dealt with.

[Ruth George]

Does the Minister agree that now that we are seeing residential property increasingly acquired by such complex structures, and that by eradicating the omission for commercial properties, it would simplify the legislation? HMRC would not have to establish whether a property was commercial or residential because there are so many grey areas, as my hon. Friend the Member for Walthamstow pointed out.

[Mel Stride]

The point I was trying to make was not so much whether one classified a property as residential or commercial. My point was that where it is commercial, the ownership arrangements can be so complicated that this kind of approach is far from simple.

Finance Bill (Fifth sitting)

Ruth George Excerpts

Committee Debate: 5th sitting: House of Commons
Tuesday 24th October 2017 Public Bill Committees

[Kirsty Blackman]

The Scottish National party has previously raised concerns about the moves to digital reporting. It is not that we do not support the principle of moving towards digital reporting. We have been clear that we think this could be a positive move. The concerns that we have raised previously have been about the timing of the moves and the way in which smaller companies were expected to move to digital reporting first. The Minister, to his credit, has changed the proposed plans and come up with a much more sensible direction and timeline for moving to digital reporting than the Government previously suggested.

Our amendment highlights specific concerns about the move to digital reporting, which, despite the Government’s changes and moves, we still feel have not been adequately answered. The amendment deals with the impact on specific groups that we feel might be negatively affected by the move to digital reporting.

The first group is small businesses that have limited technology for connectedness. There are small businesses that do not make that much use of the internet. There are some coming through that are wholly internet-based, and for which it is very important; but some are still starting that are not technologically advanced and do not use the internet much. We are concerned about the impact on them of having to report digitally online, in view of their access to technology. The businesses in question are not only in rural areas; they may just be run by someone who does not make huge use of the internet.

The second group is businesses in rural areas. In those areas in particular, even though commitments have been given by the Scottish and UK Governments about improving access to digital connectivity, at the moment not everyone has a fast enough internet connection to enable them to access the relevant services. If it is mandatory for businesses to use online digital reporting, that will be a problem for those without access to adequate technology—particularly in rural areas. Areas in England are affected, as well as those in more remote parts of Scotland. I understand that there have been Government commitments to get people on to digital systems, but we are not quite there yet.

[Ruth George (High Peak) (Lab)]

Does the hon. Lady agree that, in areas such as the remoter parts of Scotland, as in areas of my constituency, broadband access can be intermittent? The Government have excluded from the provision those who are completely digitally excluded. However, there are areas with patchy broadband—people have it on some days but not others—and there could be a problem for people who do not fall in the group that the Government have excluded.

[Kirsty Blackman]

I agree. In Kingswells in my constituency, which is a large suburb of Scotland’s third city, there are significant issues about access to fast broadband. There is access to slow broadband, and it is sometimes intermittent, for reasons to do with historical infrastructure. Broadband companies were put on the grid to begin with and they now find it more difficult to upgrade the historical technology. I appreciate the point that the hon. Lady has made; it is important to note that for some people intermittent access can be as difficult as no access.

The third category of businesses we have chosen is those likely to be affected by the closure of HMRC offices. I have needed to do tax returns online only since I became an MP. The problem with some of the questions is that yes or no are the options but my answer has been “maybe” or “kind of”. Despite the fact that the online form was fairly clear, I needed to phone someone to get some advice on whether to tick yes or no. If businesses lack advice and information from HMRC about the correct option to choose in some cases, it will be more difficult for them to fill out the forms.

It is important that businesses should be given the advice, information and support they need to fill in the forms correctly online. I am sure that no businesses will be trying to make errors; they will be looking for advice. My concern, particularly regarding HMRC offices, is the lack of access to advice that people might have.

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[Mel Stride]

I thank the hon. Lady for what is a slightly loaded question, if I may say so. I am certainly not prepared to wait for abuses of any kind, but I am prepared to wait, and it is right to wait, for a deep and considered consultation, as opposed to a short debate in the context of the Finance Bill. That is the critical point to bear in mind on this matter.

The clauses before us provide for making tax digital for business. That concerns the way in which businesses record and report their tax liabilities. The hon. Lady made some powerful points about the treatment of service charges, but I believe that they would be better pursued through the Department for Business, Energy and Industrial Strategy. It has responsibility for this area and is best placed to ensure that tips, gratuities and service charges are treated in line with the principles of clarity and transparency set out in its recent consultation. Dealing with the matter through legislation on digital taxation would risk missing crucial elements for employees or businesses that have been captured in the submissions to the consultation.

[Ruth George]

Bearing in mind that national minimum wage legislation can be implemented by BEIS only on an individual basis, when an individual complains, and such cases can be settled only on an individual basis, does the Minister not agree that a wider remit than that of BEIS will be required to tackle substantive abuses that go across whole workforces, as described by my hon. Friend the Member for Walthamstow?

[Mel Stride]

The hon. Lady raises an extremely important matter, which is those employers who do not adhere to the requirements of the national minimum wage. HMRC and the Treasury take that extremely seriously, and we have mechanisms in place, as she may know, for reporting instances of that where they occur. I can assure her that the Treasury is the Ministry directly responsible for strategic oversight of HMRC and that HMRC takes any abuse of the national minimum wage requirements and regulations in this country extremely seriously, and pursues and brings to book those who commit abuses.

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[Mel Stride]

As I just said to the hon. Lady, we can say in relation to any aspect of HMRC’s operation or any of the rules that it is there to clamp down on that we want regular reporting and all the rest of it. The point is that as a Ministry, the Treasury is there to have strategic oversight of HMRC and to ensure that it is behaving in an appropriate way and chasing down tax avoidance, evasion and non-compliance in whatever form they may appear, including the forms that she has raised. We will continue to do just that.

[Ruth George]

Bearing in mind that individuals have to raise a complaint in order to secure an investigation by HMRC compliance, and that the workers we are talking about are some of the most vulnerable and most susceptible to exploitation, immediate dismissal or changes to their terms and conditions because they are often not in the workplace for a substantial length of time, does the Minister agree that it would be helpful if HMRC were able proactively to investigate these schemes, rather than having to wait for individual vulnerable employees to put themselves at risk by raising a complaint?

[Mel Stride]

The hon. Lady overlooks the fact that it is often possible for those who wish to complain to do so anonymously through their trade union or other representatives. That is what happens in many cases. HMRC does not have to rely on a specific complaint to conduct an investigation. It may have suspicions of its own for a variety of reasons. I do not think that we are in a position where people are unable to come forward, as she suggests.

The hon. Member for Aberdeen North has tabled two amendments that seek to review the impact of MTD on specific groups. I recognise her concerns, but the Government have been clear from the outset that businesses that are unable to go digital will not be required to do so.

If you will indulge me, Mr Howarth, it is worth looking at some of the detail of the Bill at this point. The hon. Lady has raised a very important point about potential digital exclusion. Clause 60 covers exemptions, as I am sure she is aware. New sub-paragraph (4) of paragraph 14 of schedule A1 states:

“The digital exclusion condition is met”—

for those who would not be required to put in their returns digitally—

“in relation to a person or partner if…for any reason (including age, disability or location)”—

the hon. Lady rightly raised rural localities—

“it is not reasonably practicable”—

that is not the same as completely impossible—

“for the person or partner to use electronic communications or to keep electronic records”.

I think that is a well-crafted clause to catch the kind of circumstances about which the hon. Lady and I are concerned.

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[Anneliese Dodds]

As the Minister has helpfully set out, the measures will introduce new penalties for tax avoidance enablers. Specifically, penalties charged will be equal to the amount of consideration received or receivable by the enabler for their role in enabling the tax avoidance arrangements that were defeated.

Our amendments 41 and 42 would require the publication of information about how the new scheme will operate. Specifically, we think it is necessary for lawmakers, the public and others to be aware of who is being penalised through these new tax measures; the nature of the abusive tax arrangements that have been uncovered and dealt with; the extent to which they apply to offshore income, assets and activities; and the extent to which successful criminal prosecution is used rather than this penalty.

We think that that information is necessary because we are concerned that, although it is a welcome step, this measure is potentially insufficient. We are concerned that the Minister’s aspirations for this measure to have a behavioural impact might not be realised, and that concern relates specifically to the extent of the penalty.

As I have said, the penalties charged will be equal to the amount of consideration received or receivable by the enabler for their role in enabling the tax avoidance. Therefore, in effect, they will be required to pay back merely the payment they received for the inappropriate arrangement in the first place. That payment might not even cover HMRC’s costs of investigation and recovery.

As I understand it, penalties have been reduced after consultation, which is regrettable. Given that this is the Finance Bill, we cannot suggest that those penalties should be restored to a level that would cover HMRC’s costs—that would be inadmissible. None the less, we can ask for the information that we will require to assess whether this regime is watertight and driving the behavioural change suggested by the Minister.

[Ruth George]

Does my hon. Friend think that the clause provides HMRC with any impetus to investigate such schemes at an early stage? At that point, very little tax may be recoverable, resulting in a smaller penalty. That would create a perverse incentive to delay investigations until greater charges can be levied in order to cover HMRC’s costs. I would hope that the Minister would want to incentivise the early investigation of such schemes.

[Anneliese Dodds]

My hon. Friend makes a good point about the potential perverse incentives created by focusing uniquely on HMRC receiving payment from the client for the creation of such schemes and the enrolling of individuals and firms on to them, rather than on the activity of creating those schemes in the first place and, above all, on HMRC’s costs as a result of investigating them.

All of us, as Members of Parliament, are well aware of the kinds of schemes under discussion. It was interesting to hear the Minister mention the principle of eliminating those schemes that no reasonable person would think should be followed by taxpayers. We have voluminous evidence that that is not currently the case. We need only look at some of the flow charts produced and revealed during the Lux and Panama leaks to be aware that there clearly is an industry in creating such tax avoidance schemes.

We need very tough measures against those schemes. Given that they could be costing the Exchequer dearly, we feel it is appropriate to have a greater amount of information about the measures and, in particular, to compel HMRC and the Government to publish that information in full so that we can assess their efficacy.

Finance Bill (Fourth sitting)

Ruth George Excerpts

Committee Debate: 4th sitting: House of Commons
Thursday 19th October 2017 Public Bill Committees

[Peter Dowd]

I actually was going to bring that, but the Chair has difficulty enough pronouncing English to check me on my Latin.

Added to that, we had a zombie Parliament throughout the summer, with the Minister announcing that the measures would not be brought back until September. In total, that means that the best-advised non-doms will have had two years’ advance notice, while even those with little to no advice would have had seven months to prepare, even without the Government’s grace period. That is why the Opposition are proposing that, at the very least, the Government conduct—the Minister will not be surprised to hear this—a review to assess the impact of leaving in the exemption for offshore trusts on the effectiveness of the measures.

Our opposition to these measures is well noted. I raised concerns over them on Second Reading of the Finance Act 2017. We raised them further in private discussions with the Government, to no avail, as well as during the Ways and Means resolutions debate and on Second Reading of the Bill, so our view is fairly well laid out. What we want is genuinely not unrealistic or far removed from the observations of most members of the public, which is, in short, the removal of the exemption for offshore trusts from these clauses and schedules. It is simply lubricious—I was thinking of another word—to introduce measures abolishing non-dom status while at the same time creating further loopholes. I would have used “disingenuous”, but no doubt you would have ruled me out of order, Mr Walker.

I ask the Minister once more, as I have at every stage of the Bill, to remove the exemption for offshore trusts. If the Government are truly committed to abolishing non-dom status and not just paying lip service to it, the Minister should have no problem doing so.

[Ruth George (High Peak) (Lab)]

Does my hon. Friend agree that creating this loophole, which enables non-domiciled individuals who are coming back into UK domicile to simply send funds to offshore trusts, creates work for accountants and tax specialists without actually assisting the Treasury or the Government?

[Peter Dowd]

That is a very good point. It is also actually creating an awful lot of work for us, given the amount of times we have asked for this to be dealt with. It is getting pretty repetitive. I do not know how many times we have to ask for this to be dealt with once and for all; no doubt we will come back to it time and again until something is sorted out.

This is not only about non-doms using offshore trusts to hide their money and essentially subvert the measures in the clause; it is about the source of the money and its value, particularly when we are discussing how to clamp down on tax avoidance. The Government should consider a register of offshore trusts, ensuring that non-doms have to register the sources of their property and income. Again, that request is not unreasonable to the public or to our constituents who elect and send us to this place, all of whom have to register the sources of their income with HMRC. In fact, a number of the measures in the Bill will require even more financial information to be passed on to HMRC through the bulk collection of financial data by third parties. It seems to many people that there is one law for one group and another for the rest of us. That cannot be right.

--- Later in debate ---

[Peter Dowd]

It is a moving feast. Dealing with tax avoidance is—to use the old hackneyed phrase—a process, not an event. That process, at different times over the decades, moves along at different paces and with varying levels of enthusiasm. We have to set the tone and send the message from this place that we will tackle tax avoidance wherever we see it occurring. We should all do that as robustly as we can. It is not a beauty contest between which party has done the most. The reality is that we all have to stick together in tackling tax avoidance. That is the reason for our proposal, which would move this process further on, regardless of what may or may not have happened in the past.

The contention between the Opposition and the Government on this part of the Bill highlights a fundamental problem with parliamentary procedure around financial legislation. Some argue—I do not necessarily agree—that it is ludicrous that the Government can introduce a measure that claims to abolish non-dom status with an exemption for offshore trusts, and that the Opposition are unable to push through an amendment that would remove it. That goes back to the point I made earlier when the Minister referred to a review-fest. That is one of the only tools the Opposition have in this situation, given the nature of proceedings.

I do not criticise that at all. We are where we are. It would be better if we were not here, in some regards, but we are. We are trying, with the tools available to us, to move the debate on. I understand the limited scope that the Opposition have to amend financial legislation, particularly on bringing more people into tax or raising revenue. That may have to be looked at, especially in the light of the Minister’s concern that we are partying too much on this issue.

[Ruth George]

Given that the only reason for a trust going offshore seems to be to engage a lower rate of taxation, will my hon. Friend join me in asking the Minister what the reasons are for the exemption for offshore trusts and for opposing listing those offshore trusts to ensure we have greater transparency in our tax system?

[Peter Dowd]

That is a fair point. I will hang on every word the Minister says when he explains that today; he will have my full attention and concentration.

The convention of the limit on parliamentary scrutiny, particularly at a time when the Government do not have a parliamentary majority, risks enfeebling the Opposition by denying us the ability to properly scrutinise the Government and their financial legislation—essentially, the ability to do our job. Here we are, with a limited armoury, and that is why we are asking for a review. It is important that this is as transparent and open as possible. This is the line I bring to the Committee and have put to the House a number of times: it is not a question of us, the Opposition, guarding the guards; it is a question of the public guarding the guards. That is why we have tabled this measure.

[Mel Stride]

Again, it is a pleasure to serve under your chairmanship, Mr Walker.

Members of the Committee are now turning their attention to clauses 29 to 32, which with schedules 8 and 9 bring an end to permanent non-dom status in the United Kingdom. This historic change was announced by the Government at the 2015 summer Budget. The provisions were then introduced in the Finance Bill in the last Parliament, but were removed at the Opposition’s request following the calling of the general election. At the time, the Government announced they would return to legislate these proposals at the earliest opportunity, and I am pleased to be able to deliver on that promise and introduce the changes from April 2017, as originally intended. I should perhaps pick up the comments by the hon. Member for Bootle, who suggested that the delays, such as they are, may in some way have favoured non-doms by delaying the introduction of these measures. These measures will be introduced, as we have always indicated, in April this year. In that sense, they are retrospective in a way in which I am sure he will approve.

As the Committee will be aware, individuals who are non-domiciled in the UK for tax purposes enjoy two significant advantages. The first is that where such individuals are resident in the UK, they have access to the remittance basis of taxation. That allows them to defer tax on any of their income and gains arising overseas until they are brought into the United Kingdom. The second big advantage is an inheritance tax rule, whereby those who are domiciled overseas need pay tax on only their assets that are situated in the UK, rather than on their assets worldwide. Those advantages have been a feature of the UK tax system for many years. As successive Governments have recognised, the advantages have played a big role in ensuring that the UK is an attractive place to live and work for people from around the world, and it should not be forgotten that non-doms have actually brought in around £9 billion each year in much-needed revenue for the Exchequer.

None the less, the Government recognise that there are some unfairnesses in the current rules for non-doms that need to be addressed. For example, the Government believe that it is unfair that someone can live in the UK for lengthy periods of time—in some cases, virtually their entire life—and continue to enjoy tax advantages that are not available to the vast majority of people who live and work in the UK. These provisions seek to address that unfairness, and I am sure that will enjoy cross-party support.

The changes being made by clause 29 will bring an end to the permanent non-dom status for the purposes of both income tax and capital gains tax. That means that from April 2017 anyone who has been resident in the UK for 15 or more of the previous 20 years can no longer be treated as a non-dom for tax purposes. They will instead be taxed in the same way as everybody else and pay tax on their worldwide income and gains. Likewise, anyone who was born here with a UK domicile of origin will also become deemed domiciled whenever they are resident in the UK. The clause fundamentally changes the way that non-doms pay tax in the UK, raising a further £1.6 billion over the next five years to fund our vital public services.

Clause 30 sets out how the deeming rules apply for the purposes of inheritance tax, ensuring that all those who become deemed domiciled under the new provisions are liable for UK inheritance tax in the same way as UK residents. Clause 31 ensures that individuals who become deemed domiciled under the new provisions pay the right amount of tax on any benefits they receive from overseas trusts that they set up while they were domiciled outside the UK. Finally, clause 32 ensures that a double charge is prevented by excluding gains that represent carried interest from the trust charging provisions.

The hon. Member for Bootle wants the removal of what he terms “the exemptions” from off-shore trusts for those who have become deemed domiciled under these new proposals. I assure him, and he should reflect on the fact, that any moneys coming out of those trusts for whatever purpose will be taxed once an individual becomes deemed domiciled.

There is also an important matter of proportionality here. As I have already indicated, the Exchequer raises around £9 billion per year from those who are non-domiciled in the United Kingdom. That is a huge amount of money, which goes some way to paying for our doctors and nurses, our armed forces and so on. These measures will raise a further £1.6 billion over the scorecard period, as I have indicated.

[Ruth George]

How can the Treasury be so sure of the projected future income of £1.6 billion when there is a loophole for transferring money to offshore trusts that could be used to avoid the taxation? How can those future projections possibly be calculated?

[Mel Stride]

I am clearly not in a position to share with the hon. Lady the entire ins and outs of all the intricacies of calculating such figures, but I can assure her that the numbers are looked at in great detail and are scored by the independent Office for Budget Responsibility. They are robust figures, albeit that no figures are entirely, absolutely guaranteed in cast iron ahead of time—but they are robust.

During the debate, the hon. Lady raised an important issue about transparency of trust arrangements. The UK is right at the forefront of greater transparency. We spearheaded an initiative to systematically share information on beneficial ownership arrangements with more than 50 countries. That will help law enforcement to unravel complex, cross-border changes in companies and trusts. Following our work with international partners, by September 2018 more than 100 jurisdictions will be sharing information with the UK under the common reporting standard, which will provide HMRC with taxpayer information from tax authorities around the world, enabling it to better target tax evaders.

That brings me to my next point. The hon. Member for Bootle would have us believe two things: that we are only on the side of the wealthy and that we are not actually that interested in clamping down on tax avoidance. On the first point, I remind the Committee that the top 1% of earners in this country pay 27% of all taxes. That is virtually at an historic high, and is certainly higher than was the case under the previous Labour Government.

--- Later in debate ---

[The Chair]

Just a tad.

[Ruth George]

rose—

[Mel Stride]

I think I might make a little progress.

[Ruth George]

I was going to return to the matter in hand.

[Mel Stride]

If the hon. Lady will let me make a little progress, perhaps we will have time later.

Another point the hon. Member for Bootle raised was the suggestion that we are somehow slack or not concerned about tax avoidance. This Government have clamped down on avoidance to the extent that we have brought in £160 billion in revenue by clamping down on tax avoidance, evasion and non-compliance. We have done that despite his constant assertions that HMRC is under-resourced and incapable of acting. We are bringing in record levels of compliance income at the moment.

--- Later in debate ---

[Anneliese Dodds]

We support measures to increase the uptake in electric vehicles, and we recognise that creating more electric vehicle charge points is a part of that. However, I would be grateful if the Minister addressed two questions.

First, as I understand it—he will correct me if I have the wrong end of the stick—the clause focuses on firms that invest at least £200,000 a year in plants and machines. Small business will not be able to take advantage of the same tax breaks, and I am concerned that that could create an imbalance. In town centres with a zero-carbon target—the first was in my home city of Oxford—businesses are required to use only electric vehicles or other zero-carbon modes of transport, so it is important that they are on a level playing field. Is there an imbalance? I may have misunderstood the legislation, but I would appreciate the Minister’s thoughts.

Secondly, how does the policy relate to other measures within the fiscal system that aim to promote low-carbon technologies? The founder and CEO of the renewable energy investor Rockfire Capital states:

“Increasing availability of charging for electric cars is all very good but the biggest challenge is making sure the energy used is as green as the cars. These measures are a drop in the ocean compared with what is actually required.”

Removing the renewable energy exemption from the climate change levy has reduced the tax incentives for business to invest in large-scale renewable energy schemes. Green cars are only green if green energy is going into them.

[Ruth George]

Like my hon. Friend, I am pleased to see decent allowance made for expenditure on electric vehicle charge points. It is much needed, particularly in my rural constituency, where it will be difficult to install the infrastructure in a way that business can comply with. I echo her point about small businesses. I understand that the Automated and Electric Vehicles Bill may introduce a requirement for service stations to install electric vehicle charge points. Many service stations are independently owned; it seems particularly hard on them that they will not receive tax incentives for installing charge points, but larger companies will.

Will the Minister explain why the cut-off date is 31 March 2019 for corporation tax and 5 April 2019 for income tax? The technology is already being produced but will change constantly over the next few years. It is important to ensure that companies can consider the full range of technology coming on the market and adapt their charging points to the most successful and future-proofed. For that reason, it seems odd to include an arbitrary time limit. Can the Minister explain that?

[Mel Stride]

I have a direct answer for the hon. Members for High Peak and for Oxford East: the relief will be available to businesses of all sizes. I take on board the point made by the hon. Member for High Peak about her own constituents in that context.

The hon. Member for Oxford East raised the general issue of whether the electricity going through the charging points would be green enough. It is probably not the purpose of the Committee to determine that, but I certainly share her aspiration that we should encourage as much green energy as possible, which is why we are investing so much in the shift from traditional power generation to greener alternatives. She also quoted the suggestion that the number of charging points was a drop in the ocean, which is why we hope that such tax reliefs will help set up charging points as quickly as possible.

The hon. Member for High Peak also asked about the March and April dates for tax year ends for the different categories.

[Ruth George]

It was simply why the cut-off is there.

[Mel Stride]

I thought the question was about March and April. The reason for March and April was that individuals and companies have different tax year ends in that respect.

[Ruth George]

May I clarify? I was simply asking why there was a 2019 cut-off, not why there were two dates of 31 March and 5 April, which I think is fairly widely understood.

[Mel Stride]

I believe that is the review date—the point at which we would naturally want to look again at the issue and see how the roll-out has occurred.

Question put and agreed to.

Clause 38 accordingly ordered to stand part of the Bill.

Clause 39 ordered to stand part of the Bill.



Clause 40

Co-ownership authorised contractual schemes: capital allowances

Finance Bill (Second sitting)

Ruth George Excerpts

Committee Debate: 2nd Sitting: House of Commons
Tuesday 17th October 2017 Public Bill Committees

[Peter Dowd]

We will not press the amendment to a vote but the Minister acknowledges, de facto, that the economy and the world of work is changing fast. There are so many developments out there—apps, online, the whole kit and caboodle—which is all the more reason for the Government to keep on top of this issue. That is why we want the review, because the world changes so quickly.

[Ruth George (High Peak) (Lab)]

Obviously, universal credit is being rolled out. That will be a particular detriment to people on very low incomes who are self-employed, because they will be deemed to earn the minimum wage on 35 hours a week throughout the year: around £13,600. If their actual income is below that at the moment, they can receive tax credits and are eligible to apply if they have children and a family. Under universal credit, they will not be able to receive such payments, though they may be liable for tax. That is another reason why a review after the roll-out of universal credit would be particularly useful, to see the impact on the self-employed and people with micro- businesses.

[Peter Dowd]

My hon. Friend makes a valid point. This is not quite as simple as the Minister would like us to believe, although I am not suggesting that he is trying to cajole us into it. The bottom line is that we will not push this to a vote today but we hope that the Minister takes into account the views we have expressed. If he does not wish to take account of our views, I exhort him to consider those of at least the two organisations that sent us documentation on the matter.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Schedule 3 agreed to.

Clause 18

Carried-forward Losses

Question proposed, That the clause stand part of the Bill.

Finance Bill (First sitting)

Ruth George Excerpts

Committee Debate: 1st Sitting: House of Commons
Tuesday 17th October 2017 Public Bill Committees

[Ruth George (High Peak) (Lab)]

The hon. Lady makes some valid points, as did my hon. Friend the Member for Bootle. My question is: given that Which? uncovered back in 2015, the fact that the average cost of independent retirement advice on a £100,000 pension pot was £1,863, does she feel that £500 is an appropriate limit for tax relief?

[Kirsty Blackman]

I thank the hon. Lady for her intervention, which highlights the issue. It would be useful to hear from the Minister about why £500 has been chosen, given that a £100,000 pension pot is not the biggest of pension pots and some people will have more in their pension pot than that. We need to hear from the Minister the reasons behind choosing that figure. It would also be useful to hear about how this might affect those women caught up in and disadvantaged by the Government’s changes to the state pension age, particularly those who have not been told about these changes.

Finance Bill

Ruth George Excerpts

Tuesday 12th September 2017 Commons Chamber

[Mel Stride]

Thank you for that ruling, Madam Deputy Speaker; I am pleased that you will be able to hear me from now on. I entirely accept the point made by my hon. Friend the Member for Shipley (Philip Davies); if there is to be an insurrection, there must at least be some people present with whom to insurrect.

[Ruth George (High Peak) (Lab)]

Rather than proving that Conservative Members are able to count people on Benches—which at times is beneficial to them, but at many other times is not—perhaps the right hon. Gentleman could listen to all the small businesses who are squealing about the massive increases they have seen in business rates and the impact on business start-ups of the changes to universal credit that are going to prevent a lot of people from starting up as self-employed, hitting those in constituencies like mine where there is no support for them.

[Mel Stride]

I think the hon. Lady will have heard my—[Interruption.] The shadow Chancellor has arrived: the troops are in place, so let the insurrection commence.

The Bill will make our tax system fairer in a number of ways, but I want to focus now on how it strengthens our position in tackling tax avoidance and evasion. This is a Government who have already announced more than 75 measures to tackle evasion and avoidance since 2010, and we have secured almost £160 billion in additional tax revenue over this period. We have driven forward international action and will continue to do so. We have published one of the first public registers of beneficial ownership. We have reduced the tax gap to one of the lowest in the world. This Finance Bill introduces new policies to tackle aggressive tax planning, avoidance and evasion. It continues to crack down on disguised remuneration schemes, it introduces a new penalty for those who enable tax avoidance, and it clamps down further on online VAT fraud.

--- Later in debate ---

[Mel Stride]

My hon. Friend is entirely right. We do put small businesses first, which is precisely why we listened so carefully to the feedback we received on our proposals and have made changes that will allow breathing space for businesses to prepare and for us to pilot further the plans we will introduce in due course.

As the vast majority of businesses already submit VAT returns on a quarterly basis, the transition to quarterly updates through Making Tax Digital should not be unduly onerous.

[Ruth George]

Although the delay in Making Tax Digital gives breathing space for very small firms, those firms will now face additional administrative requirements, possibly alongside Brexit and a dip in the economy. Is that not an added concern for businesses now that they have seen how onerous the proposals actually are?

[Mel Stride]

The hon. Lady may be aware that in the consultation we received the message from businesses that they broadly welcome these changes as we move into the digital age and do things more efficiently and effectively. However, businesses did have concerns, to which we have listened, about the timing and pace of the changes we originally proposed. The policy is robust, but the Government and I are determined to get the changes right and to make them at the right pace that suits those companies.

--- Later in debate ---

[Ruth George]

Had the Treasury team shown the House some respect by publishing the Bill and the explanatory notes in time for us to read them and properly give the matter some scrutiny, Members from all parties, but particularly Conservative Members, might not have had to concentrate on old arguments about Labour from the election that have since been cleared up, and might instead have been able to look at the matter we are meant to be debating.

[John Redwood]

We think that this is a debate about the Finance Bill, and about how much money we raise and how we raise it. A very important question to consider when deciding how much money we raise is how much we need to spend. We are debating, in part, a very important promise that was made by the Opposition party. My electors—and many other Members’ electors—thought that that party would want to sustain it and come up with ideas about how to raise the odd £100 billion, but we now discover that that promise was not meant to be for any time other than the election and that it has now reneged on it. That is exactly what the people outside this House want to hear about. They want us to be topical and relevant to their lives. Very technical matters that deal with certain kinds of tax abuse are all very important to a limited number of people and in the interests of fairness, but what matters out there, and what should go back from this debate today, is this: does the principal party of opposition have any principles, or did it merely offer to cancel student debt before an election knowing full well that we cannot raise in this Finance Bill, or any other, £100 billion to deal with it?

--- Later in debate ---

[Mr Harper]

I am very pleased that the measures in this Bill, which Opposition Front Benchers seem so unwilling to support, raise something like £1.6 billion—I am sure that the Financial Secretary will correct me if I am wrong—on top of the £1 billion we have raised from non-doms. Put together, that is £2.6 billion, which is more than the Labour party raised in all the time it was in government. If the hon. Lady compares Labour’s record in government with ours, she will see that we have been much more effective in raising taxes from non-doms to spend on our public services than her Government ever was.

[Ruth George]

How does the right hon. Gentleman think that the estimate of £1.6 billion to be raised by increased taxes on non-doms will be affected by the increase to two years in the time they have to transfer their funds into offshore trusts, thereby avoiding that increase in taxation? How will that impact on the figures?

--- Later in debate ---

[Ruth George (High Peak) (Lab)]

It is a great pleasure to follow the two excellent maiden speeches of the hon. Member for Moray (Douglas Ross) and my hon. Friend the Member for Liverpool, Walton (Dan Carden). I will not try to expand on the points made so well by my hon. Friend the Member for Walthamstow (Stella Creasy). She gave us a masterclass in why Labour Members have no cause for shame on our economic record, whereas Government Members have many questions to answer. I look forward to hearing the replies to those questions in the Minister’s response.

As a relatively new Member of the House, I must echo the concern I expressed earlier today about how a Bill is not only of such weight and length, but has been published, together with the explanatory notes, only today. The right hon. Member for Wokingham (John Redwood) said that the Bill had been written at the time of the Budget back in March, but in that case why could it not have been published sooner? Anyone would think that the Government were keen to avoid scrutiny and to prevent Members from being able properly to debate what is in the Bill. That may be why so many speeches have been not about the Bill, but about the economic record of the Labour party.

I echo the points made by Members from both sides of the House who have set out the economic challenges of productivity that are so important to making sure we have an economy that is sustainable for the long term and works in the interests of all our people. The lack of certainty that certainly exists among businesses in my constituency and across the country is leading to a downturn in the level of investment that they are able to make. As my hon. Friend the Member for Walthamstow said, household incomes are dropping, and the higher taxes on lower-income households—VAT has an impact on households with very low incomes—means that they are now paying far more tax than they did in 2010. That has an impact on the incomes that, in lower-income households, are primarily spent in the UK, not overseas. Those are the people who support our economy and our local businesses on a day-to-day basis.

The same is true of public sector workers. We heard earlier about the way in which our public sector workers have been treated, and how the Government feel that they have not managed the economy well enough to be able to give our public sector workers the pay rise they deserve. That is a shame for millions of public sector workers, who work hard—day in, day out—to help all the people of this country.

[Louise Haigh (Sheffield, Heeley) (Lab)]

Does my hon. Friend share my concern that in today’s announcement by the Home Office of a 1% rise for the police with a 1% conciliatory bonus, it recommends that police forces pay for that out of their reserves, which are dwindling in the extreme, and does she agree that that would be fiscal irresponsibility in the extreme?

[Ruth George]

I absolutely agree. That is not the way to treat the public finances, and it is not the way to treat police forces, which have already had a 20% drop in their budgets since 2010. In my own area of Derbyshire, there are 341 fewer police officers, and the blue line is very thin indeed. The measures announced earlier today will do nothing to incentivise our hard-working police officers.

I was pleased to receive the assurances from the Financial Secretary earlier, with the guarantee that the £30,000 of tax-free money on termination of employment would continue and that there would be no taxation of discrimination compensation payments following a tribunal. However, Ministers need to recognise the ill feeling and hurt feelings that are often caused when an employee is made redundant. Those payments can be genuine and Ministers need to look again at that matter.

We should contrast the treatment of people on low incomes and public sector workers with the treatment of non-domiciles. The Government claim to be acting on non-doms, but the limit is only 15 out of the last 20 years for someone to be deemed a domicile. Even then, as I mentioned earlier, the Government have given them a loophole of two years to transfer their money to an offshore trust. That shows the attitude the Government take towards non-domiciles and tax avoidance by people who can afford to pay it. The Government claim that they will raise £1.6 billion from that measure, but they have no idea how much will be raised because they have created a loophole that I am sure non-doms and their advisers will be all too keen to take advantage of.

The Bill increases the scope of business investment relief

“to make it easier and more attractive to potential investors to bring their money in from overseas.”

That includes investments in commercial property. Although there has been a dip in commercial property prices in the City, that reflects market forces. That dip is important to encourage new firms to come into the City. We do not want those properties to be snapped up for tax relief purposes by non-doms who are simply seeking to make a quick buck. That will push up prices, making it harder and more expensive for companies seeking to trade in the UK to create real jobs and wealth in our country. Again, there is an extension of the time limit for those non-doms to avoid any clawback of their business investment relief when a company comes to the end of its profitability or to the end of an investment.

That is not a plan for investment in viable UK businesses; it is yet another loophole for the super-wealthy. It contrasts with the Government’s response to public sector workers and their entirely legitimate demands. I am afraid that that really shows whose side the Government are on.

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[Charlie Elphicke (Dover) (Con)]

I was fascinated by the discussion of student loans in the opening speeches, and it is pertinent that I return to that discussion in my opening remarks. Notwithstanding the Labour party’s desire to cover and obfuscate this matter in a haze of chaos and confusion, not to mention the odd car-crash interview by the shadow Secretary of State for Education, the hon. Member for Ashton-under-Lyne (Angela Rayner), from time to time—she is no longer in the Chamber, but she enjoys giving car-crash interviews, as does the shadow Secretary of State for Justice, the hon. Member for Leeds East (Richard Burgon)—the Labour party made a very clear pledge to write off £100 billion, and that sum is entirely unfunded.

[Ruth George]

On the question of car-crash interviews, the Prime Minister has no room for comment following the general election performance. The hon. Gentleman talks about trying to create confusion and obfuscation in manifestos, but why did the Conservative manifesto have no costings, unlike Labour’s manifesto, which was clearly costed and had no promise of a £100 billion debt write-off?

[Charlie Elphicke]

The hon. Lady makes a valiant attempt to gloss over a £100 billion black hole in her party’s costings, which would obviously have a massive impact on the public finances. That is a key concern, and it is central to what the Finance Bill is about.

[Charlie Elphicke]

My right hon. Friend makes a powerful point—she is completely correct. It is exactly my recollection that the people of Britain were sold a false prospectus by the Labour party.

[Ruth George]

rose—

[Charlie Elphicke]

I will let the hon. Lady have another go.

[Ruth George]

I will make it as clear as our manifesto made it during the election campaign. We said that there would be no university tuition fees from September 2017. We made no mention in the manifesto of students who have already gone to university or of writing off their debt. In fact my own children, who are in such a position, asked me about it, because it was not in the manifesto. Our manifesto was very clear, but there were absolutely no costings in the Conservative manifesto to give any clarity.

[Charlie Elphicke]

I hope the hon. Lady’s valiance and valour will be justly rewarded by the Leader of the Opposition in the coming days and weeks, because she makes great efforts on his behalf. Conservative Members recall the Leader of the Opposition’s words in the election campaign. It was very clear that he would write off that amount and that that would cost £100 billion, which would have caused massive problems. A Finance Bill would have been needed to raise massive amounts of tax had, heaven forfend, the Labour party prospered better in the election campaign than thankfully it did. Nevertheless, despite its claims to the contrary, Labour still lost the general election.

--- Later in debate ---

[Charlie Elphicke]

My hon. Friend is absolutely right. The Leader of the Opposition’s words were, “I will sort it.” I will give way to the hon. Member for High Peak (Ruth George) for a third time, if she wants to make yet another valiant intervention, to explain what “I will sort it” means. I am sure she is able to explain that away, too. I think it is very clear.

[Ruth George]

rose—

[Mr Speaker]

Order. Before we proceed, I suggest that a little focus on the contents of the Finance Bill might be in order.

[Ruth George]

If the hon. Gentleman wants to decide that election pledges were made from any sort of wording that came from any politician or any party leader, I hope he will also be looking over pledges made by those on his side, which came with absolutely no costings whatsoever.

[Charlie Elphicke]

At least the third go was the best of the three, but we have covered that matter and, as you rightly and gently chide me, Mr Speaker, we need to move on to the contents of the Bill.

I will therefore move on to discuss non-doms and the background to the relevant clause. Some years ago, a pledge was made by a former Prime Minister, Tony Blair, to take action on the issue of non-doms, but it was one of these things that ended up in constant reviews. Every year there was going to be review and action was going to be taken, but every year no action whatsoever was taken against this ancient, 200-year-old tax loophole. That was because of the prawn cocktail circuit and the Labour Government wanting to snuggle up to their friends in the City and in big business, rather than securing the tax system for ordinary folk. We ended up with a situation in which the person cleaning an office could be paying more in tax than their boss. That was how it was under the last Labour Government.

As colleagues will recall, in 2007 we had a change of Prime Minister—Gordon Brown took over—and proposals were made by our former Chancellor, George Osborne, to end the non-domiciled tax loophole. The Labour party wants to tell us, and wants the House to believe, that this was all Labour’s idea, but it was not. We all remember that it was George Osborne who proposed ending the non-domiciled tax loophole. I remember that, because I was advising him when he was our shadow Chancellor, and I recall the Labour Government saying that this could not be done because of the US-UK tax treaty. They came up with all sorts of reasons why it could not be done. They said it could not be done because it would mean that nurses would not come to the UK, as they depended on their non-dom tax status. Labour came up with every “dog ate my homework” excuse as to why non-domiciled tax status should stay as it was. Colleagues will recall that after our party conference the opinion polls changed sharply because people loved the idea of the inheritance tax break that was to be funded by the excellent Conservative policy of ending this shameful loophole.

After that, partial action was taken on non-domicile tax. It is welcome that further action is being taken today, but we must bear in mind that Labour has never made the running on this issue. It has always been the Conservative party—the workers’ party that we are—on the side of hard-working people and the hard-working classes that has made the running, and forced action and reform, on this 200-year-old abuse of our tax system. Labour Members, now trying to make up ground, should hang their heads in shame at the fact that for so many years they took so little action on this matter.

Some other abuses of the tax system are touched on by this Bill, although not sufficiently and they ought to be touched on more. One of those relates to image rights. For too long, footballers have been able to say that money that they earn is not taxable income but is due to their image rights, and they are able to keep that money offshore. We should look at that, and I hope that the Government will consider introducing changes in Committee or on Report to make sure that image rights are properly captured as the disguised remuneration that they are. The Government are to be commended for taking a lot of action on disguised remuneration, but further action is needed on image rights to make sure that footballers and other sports stars have proper payments and that proper dues are paid to our tax system.

Finally, let me talk about the clauses in part 3 dealing with fulfilment houses. This sounds innocuous, but it is about overseas sellers who are failing to charge VAT on online sales. Let me explain briefly what happens. Say, for example, a small businessperson in a regular county such as Northamptonshire sells sunglasses and is doing really well. They are sourcing them from the far east and importing them to the UK, doing really great trade selling them on the internet through Amazon and eBay. They are registered as a trader and paying VAT—they are paying their dues. Suddenly, they find that those sunglasses are being sold on online platforms such as Amazon, eBay and Alibaba—these platforms are all the same—for 20% less. They think, “How can that be?”, because that is less than the price at which they are able to buy them and then do business. The answer is that the person they have been purchasing from has realised that they, too, can sell sunglasses on these online platforms and, because they are overseas, they can play a game and not account for VAT at all.

The measures in the Bill to try to stamp out such abuse, which costs the Exchequer between £1.5 billion and £2 billion a year—perhaps more; no one is quite certain—are welcome, but they do not go far enough. I would like Ministers to consider going further and, rather than a registration-type scheme, having a simple rule that says there is joint and several liability on the part of the online platform—let us say eBay—such that the platform itself has to account for VAT if it is not paid by the seller. As sure as eggs is eggs, the online platform will pretty soon ensure that VAT is paid and accounted for if it is on the hook itself if the VAT is not paid. I hope Ministers will consider that, be firm, and ensure that we are not lobbied by large multinationals such as eBay, which do not exactly pay a lot of tax in this country themselves because they claim to be elsewhere.

The Government should ensure that there is joint and several liability to make sure that the money is collected, because £2 billion of tax revenue per year is at stake. Goodness knows, we always hear Treasury Ministers, Government officials and the Treasury as a whole complaining that they find it so hard to come up with ideas as to how to raise taxes; well, here is one right before us. I urge Ministers to give full consideration to the possibility of going that bit further, tightening up the legislation and making sure that the tax is paid. It is important not only from the point of view of revenue, but from the point of view of ensuring there is a level, competitive playing field, so that small businesses in this country can compete fairly with overseas enterprises and the tax system is not tilted against the person who is working hard to make a living in this country.

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[Jack Brereton]

This is about keeping more of the money that people earn in their pockets, rather than it going into taxes.

It is a huge success that there are now more families in which parents are working, ensuring that our children and future generations have examples to look up to. It is a shocking indictment of Labour’s failures in government that so many children were living in households where no one went to work. We are doing more to support working families. We are increasing the amount of free childcare to 30 hours per week for three and four-year-olds, as well as introducing 15 hours per week for disadvantaged two-year-olds. The success we have seen is due to Conservative Governments’ financial policies. That is no more evident than from the enormous reductions in unemployment in my constituency.

[Ruth George]

As the hon. Gentleman is so concerned about working poverty and children in working households in poverty, what does he think of the Government’s proposals for universal credit, which will cut over £1,500 a year from 2.1 million working households?

Ways and Means

Ruth George Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Wes Streeting]

I strongly agree with my hon. Friend. This idea of trickle-down economics must surely be discredited now: it does not work. People are rather ill aware of the extent to which the benefits of economic growth have been unevenly distributed and disproportionately enjoyed by those at the very top. I do not have a great deal of time for special pleading by wealthy individuals and corporations about being asked to pay their fair share of tax, because not everyone is feeling the pinch, and it is entirely reasonable to look at what we can do to tighten loopholes in terms of tax avoidance.

That brings me to the specifics of Government policy. We have had some remarkable rhetoric from those on the Treasury Bench, even over the two years I have been a Member of Parliament. The former Prime Minister, David Cameron, lauded his global leadership on tax avoidance, but the rhetoric is rather divorced from the reality. Even with the measures set out today, there are still means available to non-doms that enable them to enjoy tax exemptions and concessions for many years that are not available to the average UK citizen. Let me give one example: non-doms are able to keep their assets out of the scope of tax if they are held in an overseas trust that was created before they were deemed as domicile. That strikes me as rather unfair and as fairly easy to solve. That is just one example, but there are lots on which Government could clamp down further. The political rhetoric is there, but I do not think the political will is being delivered by policy.

[Ruth George (High Peak) (Lab)]

Will my hon. Friend contrast that clamp-down on non-doms and the tax reduction policies with the clamp-down on people with disabilities? Work capability assessments of their employment and support allowance and personal independence payments are reducing their benefits from day one.

[Wes Streeting]

My hon. Friend makes a powerful point. She will already have seen in her casework as a new Member the impact of changes to Government welfare policy on some of the most disadvantaged people in our society.

If politics in this country and across the western world tells us anything at the moment, it is that large numbers of people feel completely left behind by the economic order and are expressing their frustration through the ballot box in a variety of ways, whether that be by voting to leave the European Union because they see it as central to a global economic order that has left them behind, or by electing Donald Trump because of his promises to the central rust belt of America, which I think he will struggle to deliver. I will talk in my concluding remarks about what the current economic order means for politics and why Government really do need to listen to the voice of the people.

It is interesting to note the enormous complacency among Government Members. Sure, they occupy the Treasury Bench and Downing Street, and Government Departments are staffed by Conservative Ministers enacting, by and large, Government policies, with the very expensive assistance of the Democratic Unionist party. However, the Conservatives lost their majority at the election, and the tragedy for Conservative colleagues who lost their seats is that the Government have not actually listened to the message of the people.

Of course, our side has some humility about the fact that we did not win the election either. Lots of new hon. Members who have been elected to this House rightly celebrate their achievements and those of their party activists, but we know that we have further to go to earn the trust of the British people. Looking at the Government’s policies, we know that we have a responsibility to earn that trust to deal with the economic malaise and entrenched economic inequality that is affecting our citizens and those in many other economies. I welcome the Government’s rhetoric on tax avoidance and taking on non-doms, but I just do not see it reflected substantially enough in Government policy. I strongly support the criticism set out by the shadow Chief Secretary, my hon. Friend the Member for Bootle.

There is a sad irony in the point that a number of right hon. and hon. Members have made about the provisions for retrospective changes to tax arrangements. It seems that the provisions for non-dom arrangements in particular rule out retrospective changes. The Government are saying clearly, “If you have a trust overseas before the rules kick in, don’t worry: we’re not going to touch that money.” Of course, the nature of so many of those trusts is that they are family trusts that are passed down and inherited. In effect, the Government are acknowledging that those trusts exist and that there is an unfairness, and they are setting out to do something about it hereafter, but they are not applying retrospective changes to non-doms in the same way that other measures will affect many others retrospectively.

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[Ruth George]

rose—

[Wes Streeting]

I give way to my hon. Friend.

[Wes Streeting]

Of course, Madam Deputy Speaker, my entire speech relates directly to the Ways and Means motions, but what I will do with the time that I have left is be careful to ensure that my critique is centrally about the extent to which the motions fail to address the structural challenges facing our economy. I will now give way to my hon. Friend the Member for High Peak (Ruth George).

[Ruth George]

The Finance Bill proposes to extend the reliefs available to people with non-domiciled tax status, who are some of the wealthiest people in the country. [Interruption.] Motion 13 does that. It contrasts with the actions taken in 2012, when the then Chancellor set up the business investment relief scheme, which itself contrasted with a VAT increase that not only dampened down the economy but caused the tax burden to fall disproportionately on the shoulders of those with lower incomes while reliefs were given to the very wealthy.

[Wes Streeting]

I wholeheartedly agree with my hon. Friend. Let me make two points about what she has said. In the Budget and the Ways and Means motions, and in previous Budgets and resolutions, the Government have chosen to pursue particular regressive forms of taxation. There is no doubt that VAT is a regressive form of taxation, in that it is paid by everyone, both individuals and businesses, regardless of income. If I went into a shop and bought an item that was subject to VAT, I would pay the same rate as someone with a much lower income buying the same item.

If a Government’s objective is to increase their tax revenues—and, of course, we understand why that would be an objective, given the context of the Budget and the revenue-generation measures in the Ways and Means motions—they should pursue revenue generators that are based on progressive taxation, and ensure that those with the broadest shoulders bear the greatest burden. We have heard those words, or a variation of those words, many times from the Treasury Bench, from successive Chancellors and in successive Budgets, but, as I have said previously, the rhetoric fails to match the reality.

As my hon. Friend has referred again to the issue of non-doms, let me again highlight the extent to which the motions fall short of what is required. Of course we welcome the Government’s measures on non-doms, but I have already criticised them for not addressing, in the Ways and Means motions, the ability of non-doms to keep their assets out of scope if they are held in an overseas trust that was created before they were deemed to be domiciled. We may also want to consider the issue of definition, because the definition of who can be deemed to be in that category seems misleading. It does give the impression that a UK-born non-dom will be deemed if they are now UK-resident, but, inexplicably, it only covers those whose parents were not non-doms, letting non-doms off the hook if their parents were also non-doms. That is very common.

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[Wes Streeting]

Absolutely. I welcome my hon. Friend to the Chamber. I am unsure whether it is a return to the nasty party or more of a doubling down on being the nasty party. Indeed, I am unsure for how many more debates we can see the nastiness of the Conservative party reflected in public policy. On this or any other measure, if the Government’s intention is to clamp down on the abuse of a particular tax measure, provision, break or exemption, we will welcome that where the problem is genuine, but the Opposition believe that this measure targets termination payments more widely. It therefore follows that there is an obvious concern that workers who are losing their jobs are seen by the Government as a source of increased revenue.

What an outrage it is if the Government are seeking a power to reduce the £30,000 tax-free amount for termination payments without the requirement for primary legislation. That runs contrary to assurances that the Government had abandoned their plans to reduce that exemption, which was consulted on in 2015. Those of us who were in the 2015 Parliament will remember that one of the first measures with which we were confronted was the Bill that became the Trade Union Act 2016, which was an appalling attack on the rights of people at work. The Government consulted on this proposal then, but dropped their plans because they were strongly resisted both by the people and by the organisations that champion the rights of and protections for ordinary working people. Now, early on in the 2017 Parliament, the plans are back, but buried in these motions, with the Government presumably hoping that we would not notice. I bet the Government did not count on such scrutiny of their Ways and Means measures.

[Ruth George]

Many workers are obviously losing their jobs as a result of the continued austerity programme. Does my hon. Friend agree that it is ironic that those who are losing their jobs at HMRC due to the rationalisation may well be hit by this increase in taxation on their compensation when they could be helping us to increase our tax revenue from those who should be taxed?

[Wes Streeting]

I am grateful to my hon. Friend, who brings to the House enormous expertise and experience from her work championing the rights of working people at the Union of Shop, Distributive and Allied Workers, as part of the trade union movement. We should listen carefully to what she has to say.

On behalf of their members—ordinary working people—trade unions made it clear when the Government consulted that the measure should not be pursued. I think everyone in the Opposition thought that the Government had listened and dropped the provision, but we now see motion 4 on the Order Paper, and it is not fair to workers. We might have thought that the Government would learn from the embarrassing debacle over the summer about what happens when they try to clamp down on people’s access to justice and fair treatment. The Government have form here, and I am disappointed and only too sorry that they do not seem to have learned their lesson or listened to people.

I want to begin to draw my remarks to a close by—

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[Ruth George (High Peak) (Lab)]

I pay tribute to the remarks made by the two preceding speakers, my hon. Friends the Members for North Durham (Mr Jones) and for Ilford North (Wes Streeting). I promise that having been in this House for only a short time, I cannot yet seek to match them for speaking stamina. I am sure that the rest of the House will not be too disappointed by that.

I would like to address how the Bill fits with the Government’s stated priorities. Earlier this year, the Prime Minister, writing in The Sun, promised

“to build a stronger, fairer Britain that works for everyone, not just the privileged few. A Britain…that works for ordinary working people.”

If those words are not mere rhetoric, they need to be backed up by legislation, and where better to put that legislation than in a Finance Bill? It is an opportunity for the Government to make our tax system and our society fairer. I am concerned, though, that the Bill will not only not make Britain fairer, but make our society more unequal.

I wish to concentrate on the effect of motion 4, which is on termination payments, and of motion 13, which is on business investment relief. Business investment relief applies only to non-domiciled UK taxpayers—120,000 people who are some of the wealthiest in our society. They are already able to choose whether their income is only taxed when it is brought into the UK. That gives a huge advantage to those who spend most of their lives outside our country, and whose income can be held in offshore accounts, trusts and shares.

Although, as my hon. Friend the Member for Ilford North said, I worked for the past 20 years or so for a trade union for working people, prior to that I worked as a tax accountant. On leaving school, I went to work in London for an international tax accountancy firm that specialised in advising non-domiciled individuals. These people were enormously wealthy, and included some well-known names. Even if their income was earned in the UK, if their earnings went directly into a non-UK account, they were not subject to UK taxation. In recent years, we have seen how that sort of manipulation of high incomes still goes on. It enables the very wealthiest people to pay a minimal contribution to the UK, even if they are deemed resident here. It is not the fault of this Government, but non-domiciled status was essentially created to avoid UK taxation.

For many people who travel globally, the system is not actually adaptable. For all their enormous wealth and jet-set lifestyles, I used to feel sorry for our non-domiciled clients when I was a teenager in a junior tax accountancy position. They were able to spend only a set number of days in the UK, and the enormous tax consequences of their overstaying that time limit meant that they felt they needed to adhere to it strictly, regardless of their own personal needs or wishes. Our accountancy firm used to keep a schedule in the front of each client’s file, setting out the number of days that they had set foot in the UK that tax year. The clients used to have to plan their personal and business engagements around the limits. When they got close to the limit, it was my job to write to inform them to be careful with their travel arrangements until 5 April, when the tax year came to an end and a new limit began. That is no way for people to have to live their lives or for a country to run its tax system.

The Government say they are cracking down on non-domiciled status, but, as I said to my hon. Friend the Member for Ilford North, it seems to be different from their crackdown on benefits for disabled people living on the breadline. Will the Minister confirm that non-domiciled individuals will see their status change only if they have not complied in 15 out of 20 years? Disabled people would love to have 15 years to show how their disability affects their lives and how it changes over time, but they are assessed on one day, at one particular time when they have managed to attend an assessment centre, and they are penalised immediately if they cannot do so. If there is a change in circumstance for non-domiciled residents, instead of their hugely beneficial tax status being changed immediately, the Government have given them two years in which to transfer their money to an offshore trust to again avoid paying any tax on it.

As if the tax benefits of non-domiciled status were not already generous enough, in 2012 the then Chancellor introduced business investment relief. I am sure that had nothing to do with the number of people of non-domiciled status with whom he spent his holidays on yachts, but it was certainly welcomed by their investment advisers. Firms such as Sapphire were pleased to advertise the benefits of business investment relief to their clients. The article on its website says:

“Unfortunately for the vast majority of us, when we earn money we have to pay tax…However, for those individuals who are resident in the UK but are considered non-domiciled this basic rule does not have to apply…From 6 April 2012, the government introduced the very attractive Business Investment Relief…Put simply, if you are resident in the UK but are…a “non-dom”…and you want to bring your overseas money into the UK to make an investment and NOT pay tax in the process—then Business Investment Relief is your answer…the UK Government is effectively giving non-doms a subsidy…on their investments”—

then it was 50%, now it is 45%. The company says:

“But wait—it gets better—you can also use the other reliefs when making an investment using offshore monies remitted to the UK”—

such as the enterprise investment scheme or the seed enterprise investment scheme, which will also potentially save 40% on an income tax bill. The advice that is given sets out how great the tax advantages are. An investment of £500,000 by someone with non-domiciled status would attract tax relief of £400,000.

Sapphire advertises how wide the opportunities are under business investment relief, saying:

“the rules for what makes up a qualifying company…are very wide. Quoted companies are excluded, but virtually any other company…carrying out a business may qualify…investment into property development or property with a rent is allowable.”

Do we really need more overseas investors increasing our property prices? It does not even have to be an arm’s length or transparent investment, as money

“can be invested in a company in which the investor is or associates are involved in”.

If someone wants to dispose of that investment and is worried about capital gains tax, they are advised:

“When the investment is sold, if there is a gain it will be subject to UK Capital Gains Tax—but the original funds can be taken back offshore again (within a 45 day or 90 day time period) in order to avoid being taxed”.

It is no wonder that despite all the rhetoric about cracking down on non-doms, their number has increased since 2010. The Government now want to make business investment relief even more generous through this Bill. This time, I quote the reputable KPMG, which sets out the benefits of the Government’s proposals, which have

“the objective of making the BIR scheme more attractive to non-UK domiciled investors…BIR will be extended to include investments made in a new qualifying entity, a ‘hybrid company’…not exclusively a trading company or a stakeholder company…but…a hybrid of the two”—

just in case someone could not fit their investment into one or other of them. It goes on:

“At the same time…the period during which an eligible trading company must start to trade,”

or

“an eligible stakeholder company must start to hold investments…will be increased to five years…Where a company becomes non-operational and a BIR investment ceases to qualify, the grace period during which action must be taken…will be increased to two years”

to manage the risk of a tax change more effectively. It also states:

“Another extension to BIR sees acquisitions of existing shares already in issue potentially qualifying for BIR… there will be no requirement for shares to have been newly issued…Rules which withdraw BIR will be narrowed”.

An already exceedingly generous scheme will be widened and extended in scope to enable more companies to be invested in and to enable more people to make those investments, be it in a trading company or a property. May I ask the Minister how that squares with the Prime Minister’s promise that we will create a fairer society by breaking down the barriers of privilege and making Britain a great meritocracy?

The treatment of non-domiciled taxpayers in the Bill contrasts with the treatment of ordinary working people. The Government’s huge cuts to public services have largely been on the back of those ordinary working people, none more so than the hundreds of thousands in the public sector who have lost their jobs.

Under the Government’s continued austerity programme, thousands more hard-working public servants will lose their employment. In many cases, they have given the majority of their working life to their job and will find it extremely hard to get another. As the state pension age increases, people made redundant later in their working life have to try to get by on their payment for termination of their employment for as long as possible. It is an extremely worrying time for them.

Two hospitals in my constituency are earmarked for ward closures, with dozens of experienced NHS staff worried about whether they will still have a job. To those hard-working hospital staff, who continue to give excellent care to their patients for which they are renowned, the Bill brings added uncertainty. The Government want Parliament to give them the power to vary the £30,000 tax-free limit for payments on termination of employment, but people will see less of that payment if that tax limit is reduced. The long-standing limit, which gives ordinary hard-working people the ability to make the most of the final payment from their job at a time when they need it most, is under threat. I hope the Minister can assure me that the Government will at no point seek to reduce the £30,000 tax-free limit on termination payments.

In another example of hitting hard-working people when they are down, the Bill seeks to tax the compensation for injury to feelings caused by a proven case of discrimination at work. Does the Minister realise what an employee has to go through to receive a compensation award for discrimination? Not only do they originally suffer that serious and long-lasting discrimination at work, but they also have to have made a complaint unsuccessfully through their employer’s procedures, having their claims refuted and exacerbating the hurt and distress. They then have to go through the whole process and complaint yet again, this time through an employment tribunal procedure. The process takes years of emotional distress and it is not surprising that only a handful of cases get through this arduous process.

Only 144 individuals were awarded compensation for discrimination in the past year, including 72 cases of disability discrimination, 33 cases of sex discrimination and nine cases of sexual orientation discrimination. Bearing in mind the small number of cases, this is not an effective revenue-raising measure. Until now, claimants have had to pay an employment tribunal fee of £1,250 to take a case of discrimination to an employment tribunal. Now that those fees have been ruled unlawful, does the Minister agree that victims of sustained and damaging discrimination will feel that taxation of their compensation payment will simply add financial insult to their injury? It is a worrying principle for the Government to commence taxing compensation—a measure to give redress from unfairness—which inflicts further unfairness on those who have already suffered enough.

I am relatively new to the House, but the Bill shows me and our wider electorate that, in spite of changing Ministers, the Government have not changed their spots. They are seeking to rush through these important measures with very little parliamentary scrutiny. These measures give even more to the wealthiest and take even more from hard-working people at the times they need it most. The Prime Minister has been long on rhetoric for tackling privilege and helping ordinary working people, but the Government speak a very different story in their actions in this Bill. Before the final Bill comes to the House, I urge the Minister to address the imbalance between rhetoric and action. He can either ensure that the Bill addresses the issues that his leader claims to seek to address or the Government can be straight with voters and say that their actions actually encourage privilege and knock working people when they are down.