Finance (No. 2) Bill

Sammy Wilson Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move, That the Bill be now read a Second time.

As you will be aware, Mr Deputy Speaker, the scrutiny of Finance Bills has lain at the centre of our parliamentary process for many centuries, ever since its origins in the 13th century, and it is a rare honour for me to bring this Bill forward today.

At the beginning of last month, my right hon. Friend the Chancellor of the Exchequer outlined a Budget with three key objectives: first, to protect jobs and livelihoods and provide additional support to get the British people and British businesses through the pandemic; secondly, to be clear about the need to fix the public finances once we are on the way to recovery and to start that work; thirdly, as we emerge from the pandemic, to lay the groundwork for a robust and resilient future economy. This Finance Bill enacts changes to taxation that support all those objectives.

I will come to the Bill itself shortly, but before I do so I want to pay tribute again to the work of the Treasury and Her Majesty’s Revenue and Customs over the past year and more. I can testify from personal experience that officials have worked around the clock throughout that period to get the covid schemes up and running, to make sure that they are as effective as possible, to tweak and extend them where they can and, by those means, to support millions of people and hundreds of thousands of businesses up and down the United Kingdom in the face of the worst peacetime economic crisis in recorded history. I will not say that this was their finest hour; they will have had many of those, as these are institutions that are arguably nigh on 500 years old. None the less, this has certainly been a time to which future historians will look back when they seek examples of exemplary public service.

It has been a privilege to work alongside officials at both Her Majesty’s Treasury and Her Majesty’s Revenue and Customs, and to see the great machinery of government working so well. I will, if I may, add one other word of scene-setting about the wider approach that we have taken to tax. It is a measure of the approach taken by the Treasury and HMRC and of our own strategic approach as a Government that, alongside these pandemic measures, we have also accelerated work to create a more effective and resilient tax system. Our goal, in simple terms, is to enhance the stability and effectiveness of the UK tax system, using last year’s announcement of a new 10-year tax administration strategy as the springboard.

We want a tax system that enhances productivity, especially across the long tail of our small and medium-sized businesses. Digitisation of the tax system provides a useful nudge to these firms to upgrade their use of information technology and the skills that it demands. We want a tax system that is more flexible, so that it is better able to adapt quickly to changing circumstances and to provide targeted support for businesses and individuals when needed. We want a tax system that is more resilient—both resilient itself and better equipped to strengthen the core resilience of the UK economy in the face of a future crisis. That transformation of our tax system is already under way, but, as the House will know, we have also taken steps to improve the process of tax policy development, most recently with the tax policies and consultations day we held on 23 March. By giving this wide array of consultations more profile, we hope to make the tax policy process still more collaborative and transparent and improve the quality of tax policy making.

Let me turn to the Bill. The House is well aware of the massive public health and economic shock that this country has experienced. The damage done by coronavirus to our economy and our society has been severe. More than 700,000 people have lost their jobs since March last year. The economy has shrunk by 10%, the largest fall in more than 300 years, and this country’s borrowing is the highest it has ever been outside wartime.

The Government’s response has been comprehensive and sustained, with the total package of support to the economy this year and next now estimated at £407 billion. That response is already showing its value. Thanks to that and to the rapid roll-out of vaccination, the Office for Budget Responsibility and other independent authorities now expect a swifter recovery than previously anticipated, with faster growth, lower unemployment, more investment and higher household incomes. Indeed, the OBR expects the UK economy to recover to its pre-crisis levels six months earlier than it did—in the second rather than the fourth quarter of 2022. In the words of the Resolution Foundation, if realised, this projected rate of unemployment,

“would be by far the lowest unemployment peak in any recent recession, despite this being the deepest downturn for 300 years.”

At the heart of our covid response is precisely that support for jobs, delivered through Her Majesty’s Revenue and Customs as the tax authority, with more than 11 million jobs furloughed between the beginning of the pandemic in March last year and February of this year. As the OBR outlined last month, without the additional measures at Budget, which included the extension of the coronavirus job retention scheme, unemployment would have peaked two quarters earlier and at a higher level. Indeed, it estimates that there would have been an additional 300,000 unemployed people in the fourth quarter of this year without these latest interventions.

The tax measures outlined in the Bill go further now to protect jobs and support the economy. We are extending the 5% reduced VAT rate until 30 September in order to protect 150,000 hard-hit hospitality and tourism businesses, which employ almost 2.5 million people. To help those businesses manage the transition back to the standard rate, VAT will then increase to an interim rate of 12.5% from October until the end of March.

For similar reasons, the Bill puts into legislation the temporary cut in stamp duty land tax with a residential SDLT nil rate band remaining at £500,000 in England and Northern Ireland until the end of June. This, again, will be followed by a phased transition back to the normal rate. From 1 July 2021, it will fall to £250,000 until the end of September, before returning to £125,000 on 1 October.

For any business that took advantage of the original VAT deferral new payments scheme, the Bill ensures that they will be able to pay that deferred VAT in up to 11 equal payments from March 2021, rather than by one larger payment due by 31 March 2021. For those businesses that have been pushed into losses, the trading loss carry-back rule is being extended from the existing one year to three years for losses of up to £2 million, which will deliver a significant cash-flow benefit for businesses.

As well as protecting jobs and livelihoods, the Bill takes important steps to strengthen the public finances. The damage done by coronavirus and the urgent need to respond to the crisis have created huge challenges for the Exchequer. The OBR’s fiscal forecasts show that this year the UK is expected to borrow a record amount: £355 billion. That is 17% of our national income—the highest level of borrowing since world war two. Borrowing is forecast to be £234 billion next year, which is 10.3% of GDP—an amount so large that it has only one rival in recent history, which is the level of borrowing this year.

It is our responsibility as a Government to balance the extraordinary support we are providing to the economy now with the need to start to fix the public finances, and the Bill strikes that balance.

First, the income tax personal allowance rises with the consumer prices index as planned to £12,570 from this month and will then be maintained at this level until April 2026. The House will recall that the UK has the highest basic personal tax allowance of any G20 country. A typical basic rate taxpayer now pays over £1,200 less in tax than in 2010. The higher rate threshold also rises to £50,270 from this month and will then be maintained at this level until April 2026. These changes are fair and progressive. It is important to note that the 20% highest income households will contribute 15 times that of the 20% lowest income households. An average basic rate taxpayer will be less than a pound a week worse off in 2022-23.

Secondly, the inheritance tax thresholds, the pensions lifetime allowance and the annual exempt amount in capital gains tax will also be maintained at their 2020-21 levels until April 2026. Maintaining the pensions lifetime allowance at current levels affects only those with the largest pensions—those worth more than £1 million.

Thirdly, the Government are providing businesses with over £100 billion of support to get through this pandemic, so our judgment has been that it is only fair to ask them to contribute to this overall recovery. The Bill therefore legislates for the rate of corporation tax paid on company profits to increase to 25% from 2023. Since corporation tax is charged only on company profits, businesses that may be struggling will, by definition, be unaffected.

The Government are also protecting small businesses with profits of £50,000 or less by creating a small profits rate, maintained at the current rate of 19%. The effect of this is that 70% of companies, or 1.4 million businesses, will not see an increase in their tax rate. There is also a taper above £50,000 so that only businesses with profits of a quarter of a million pounds or greater will be taxed at the full 25% rate—and that is itself still the lowest corporation tax rate in the G7. The increase is two years away, well after the point when the OBR expects the economy to have recovered, but it is important to legislate for this now in order to give businesses clarity about our future plans.

The next goal of this Budget has been to lay the foundations of our future economy as we emerge from the pandemic. If that economy is to support the creation of new jobs, to spur growth and to drive productivity forward, we need to encourage business investment now, so this Bill contains a highly innovative new super deduction measure, which is expected to lift the net present value of the UK’s plant and machinery allowances from 30th among the countries of the OECD to first.

In most cases, this measure will allow companies to reduce their taxable profits by 130% of the cost of investment they make, equivalent to a tax cut of up to 25p for every pound they invest. The super deduction is expected to be worth £25 billion during the two years it is in place, which would make it the biggest business tax cut in modern British history. The OBR has said that, at its peak in the financial year 2022-23, the super deduction is expected to bring forward an additional 10% of business investment, with a value of £20 billion.

Alongside a programme of national recovery, we also want to stimulate regional recovery. That is why this Bill also enables the Government to designate tax sites for freeports in Great Britain. Once approved, eligible businesses will be able to benefit from a number of tax reliefs, including an enhanced 10% rate of structures and buildings allowance, an enhanced capital allowance of 100% for companies investing in plant and machinery, and full relief from stamp duty land tax on the purchase of land or property—and to help them to invest and grow, the Bill maintains the annual investment allowance at the higher level of £1 million until the end of this year.

The House will also recall that these measures are supplemented by the Budget’s new Help to Grow: Digital scheme, which will assist smaller businesses in developing their digital skills by giving them free expert training and a 50% discount on new productivity-enhancing software. This is all part of a package that the Institute of Directors has called

“a big win for SMEs.”

[Sammy Wilson (East Antrim) (DUP)]

It is significant that no freeport sites have been allocated in Northern Ireland. Will the Minister clarify whether all the measures that will be included in freeport status will be exempt from the state aid rules, which will still apply in Northern Ireland because of our association with the EU single market rules?

[Jesse Norman]

I am grateful to the right hon. Gentleman for his question. He will know that it is absolutely the Government’s intention to have a freeport in Northern Ireland, and that they are in discussion with officials and members of the Northern Ireland Executive to discuss precisely how it will work. I am not in a position to comment on how it will work, but certainly the expectation is that this should be a functioning, highly successful and effective freeport. It should enjoy a very attractive set of benefits that will benefit the companies involved and be comparable to the ones we will see elsewhere, although it is important to note that freeports are themselves a mixed bag. We have had a variety of different bids of different kinds to the competition that has been run.

All the measures we have taken in relation to business growth and investment are part of a package, which the Institute of Directors has called

“a big win for SMEs.”

I was also pleased to see that the Resolution Foundation said that the Budget

“rightly sought to boost the recovery before turning to fixing the public finances”.

That is an important point.

I have discussed the work we are doing to create a more flexible and resilient tax system, but the Finance Bill also includes important measures to make it fairer and more sustainable. As part of the United Kingdom’s commitment to be a global leader on tax transparency, the Bill allows for the implementation of OECD reporting rules for digital platforms. The rules will help taxpayers in the sharing and gig economies to get their tax right. It will also help HMRC to detect and to tackle non-compliance.

To build on the successful introduction of Making Tax Digital for VAT, the Bill will enable the extension of MTD requirements for smaller VAT businesses from April next year. It also makes widely welcomed reforms to the penalty regime for VAT and income tax self-assessment, so that it is fairer and more consistent as a system, and harmonises interest for VAT and income tax.

The Bill tackles promoters of tax avoidance through strengthening existing anti-avoidance regimes and tightening rules. Importantly, it introduces an exemption from income tax for financial support payments for potential victims of modern slavery and human trafficking, made by the UK Government and devolved Administrations.

Finally, let me turn briefly to how the Bill helps us to deliver the important commitments the Government have made on the environment and on carbon reduction. The new plastic packaging tax, first announced at Budget 2018, will encourage the use of recycled plastic instead of new plastic in packaging. For plastic packaging that contains less than 30% recycled plastic content, the rate of the tax will be £200 per tonne. This will transform the economics of sustainable packaging.

The last 12 months have delivered a grave shock to this country and its economy, but the Government have met that shock with a determined and sustained response. That work is not done. With this Finance Bill, we are continuing to support the lives and livelihoods of families and businesses up and down the land, while simultaneously setting the terms for an investment-led recovery. The Bill puts in place the foundations for a fairer and more sustainable tax system. It further enshrines commitments on the environment and the work we are doing to tackle climate change, and it begins the work to rebuild the public finances. For those reasons and more, I commend it to the House.

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[Bim Afolami (Hitchin and Harpenden) (Con)]

I welcome the Bill. It is worth trying to get under the skin of Budgets, because it is so difficult. There are so many documents, there is a huge build-up, and large parts of it are incomprehensible to anybody other than the Financial Secretary. As Members of Parliament, we have to try to get under the skin of what, fundamentally, is going on here—what are the Government trying to do with the key measures?

In my view, the Chancellor is fundamentally trying to deal with one big thing that has not got enough attention in the House: our productivity problem. He is dealing with some of our deep-seated, deep-rooted economic productivity problems in two principal ways. The flashier one—and there has been some discussion of it today—is the super deduction, but I will not linger on that. In particular, I want to talk about the Help to Grow scheme, which is fundamental, transformative and can make a big difference to businesses across my constituency, Hertfordshire and, indeed, the whole United Kingdom.

On the super deduction, from listening to some of the criticism from Opposition Members, I do not think they really understand the nature of what is going on. One of the biggest economic problems that we have had for a very long time is a lack of private sector investment compared with our neighbours. That private sector investment has been further damaged by the covid pandemic for obvious reasons, as everybody appreciates. The super deduction is an inventive, creative, clever new way of turbocharging and increasing private sector investment and moving it forward so that we can help build back better during this very difficult phase that we are trying to come out of.

The hon. Member for Ealing North (James Murray) kept going on about tech companies. Well, I am afraid that he obviously has not read the detail. The super deduction is about plant and equipment. Plant and equipment tends to impact manufacturing businesses. I know that the Labour party is going through all sorts of internal difficulty and transformation at the moment, but it is a sad day when the Labour party cannot welcome measures that will benefit manufacturing businesses up and down this country.

[Sammy Wilson]

Furthermore, had the hon. Member for Ealing North read the detail of the Bill, he would know that the super deduction is on new capital equipment, not on second-hand capital equipment. So even the manufacturing of equipment, provided it is made here in the United Kingdom, will generate jobs and income for firms here in the United Kingdom, which will then, as the hon. Member for Hitchin and Harpenden (Bim Afolami) pointed out, increase productivity in the firms that invest in the machinery.

[Bim Afolami]

I welcome that intervention. Opposition Members have also been saying, “This is only going to benefit the big companies, and the poor small companies won’t benefit.” First, it does benefit all companies if they qualify. The smaller companies already have the annual investment allowance, which is continuing and has been welcomed by everybody, including by them. And—whisper it—big companies are important for our productivity too! Big companies employ lots of people, so it would be negligent of the Government to say, “We are not going to bring forward a measure that will help our economy because it might benefit big employers that employ thousands of our constituents.”

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[Sammy Wilson (East Antrim) (DUP)]

First, I think everyone recognises that the Chancellor had a very difficult job when bringing forward the Budget and the subsequent Finance Bill. There are many things pulling in different directions. On the one hand, as the Financial Secretary said at the very start, we have to make sure that we have dealt with the impact of the restrictions on the economy and the difficulties that was causing for businesses. Secondly, we have to look at the recovery: how to recover from GDP falling by 10% and unemployment going up by 700,000—indeed, there may be other factors to come—and then, of course, we must look at the long-term sustainability of the economy. At the same time, we did not want to be sending out the signal that we are careless about the debt we have incurred, otherwise the signals to the financial markets may cause us a bit of difficulty. So no one envies the Chancellor the job he had to do.

Before I say anything about the objectives the Chancellor has set out, I want to make some comments about specific Northern Ireland parts of the Finance Bill. As has been discussed time and again in this House, the Northern Ireland protocol has placed considerable burdens on the Northern Ireland economy already. One of the areas affected has been the steel industry, or industries that use steel in Northern Ireland. Because of the quota system and the taxes where steel is consumed out of quota, they faced 25% increases in the cost of steel. My party drew this to the Chancellor’s attention, when others were of course trying to pooh-pooh the impact of the protocol; they supported it, so they did not want to know its bad effects, although now they cannot ignore it.

As the Chairman of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride), has said, when the issue was drawn to the Government’s attention, it was dealt with, and I welcome clause 97, which tackles it. It ensures that engineering firms in Northern Ireland, which do have considerable global markets, but would have found those global markets affected by the 25% tariff, are now exempted from that. I would just point out to Members that one of the major landmarks in London is the Shard, and the steel for the Shard was cut, packaged and sent in sections from Fermanagh in Northern Ireland and is now part of one of the iconic buildings here in GB. Many engineering firms of course export heavy machinery, and the steel tariff would have been extremely onerous on them.

I am disappointed, however, about other issues that we were told would be dealt with in the Finance Bill, such as the customs regime that has caused huge costs in Northern Ireland. Customs declarations for even the simplest thing now have to be made for goods coming from this part of the United Kingdom to Northern Ireland, which has added considerably to costs. I was speaking to a firm today, and on average—and it does not even matter what the size of the order is—the cost of customs declarations, supplementary declarations, frontier declarations and the guarantee management system arrangements adds £20 to an order. When the firm ordered a specialist screw that cost 35p, there was a £20 surcharge on it because of the arrangements under the protocol. I was hoping the Finance Bill would deal with some of those issues, but it has not, and I think the Government will have to come back to them.

Let me come to the issues the Chancellor had to deal with. I do not think anyone can deny that the Government took the right course of action. They had no option in my view. When they decided that they were going to close down the economy, they could not abandon workers, firms, businesses and so on, so huge amounts of money—over £400 billion—have been spent on support. As a Unionist, I keep on reminding people in Northern Ireland that the support that businesses have had, as well as furlough payments that workers are still getting, self-employed payments and so on, are owed to the fact that we are part of the fifth biggest nation in the world and, without the support of the Exchequer in the United Kingdom, we would not have been able to find a way through. Of course, the health service has also benefited from the vaccine programme. On that aspect, the Government have made the right choices and those clamouring for independence, even if they have no emotional ties to the United Kingdom, ought to remember the economic benefits of being part of the United Kingdom.

At the other end of the scale, looking to the future and having a sustainable economy, the Finance Bill deals with many of those issues. We have already had a discussion today on the tax allowances, which have been maligned by the Labour party, but they are designed to ensure that businesses across the United Kingdom have an incentive to use their profits to invest to increase productivity and competitiveness and to benefit from the opportunities that Brexit will bring us in doing deals across the world. Spending on apprenticeships and training will increase the skills of our workforce and prepare those who need to move into new industries with the skills they will need, again increasing productivity and competitiveness.

There has been some debate about the value of freeports, but they, too, will help to deal with the long-term sustainability of the economy. My main concerns are on the aspect that concerns most people in the immediate period: does the Finance Bill deal with the issues that must be addressed to get us back from where we are at present and help us to start growing the economy? I will look at the figures given in four areas. Let us take the income tax proposals and the freezing of allowances. I understand that the Government have not increased tax rates, but the freezing of allowances will increase the tax burden. If we are relying on consumer spending to aid our recovery—do not forget that 80% of our GDP is consumer spending—even though there may be some pent-up unspent money and demand, when we nevertheless consider that as a result of the proposals over the next five years we will take 25% more in income tax from people in the economy, and 10% more in the next year, we must ask: will that dampen the immediate increase in GDP and the immediate demand we require to get businesses going again?

Let us look at VAT. Yes, I welcome the rate for the hospitality industry being held until September, and then there will be a reduced rate until March 2022, but I speak to businesses in the hospitality industry who have already expended considerable amounts of money converting their premises to make them safe and, even though they have had support over the last year, many have still had to dip into their reserves because not all their costs were covered. One hotelier in my area told me that in the last year he has spent £3 million of his own money paying those bills that still come in and for which he was not given any support, and no support was available. Businesses will therefore find themselves in a perilous position and we do not know how quickly they will be able to operate fully. When will restaurants be able to have people sitting inside? When will pubs have people sitting inside? While still social distancing many will be operating with lessened capacity, and if they cannot do that, their profitability will be affected. Yet even before all the restrictions are lifted—they will be lifted at different rates in different parts of the country, and in Northern Ireland we do not even have a date for restaurants and pubs being allowed to open—we find that some of that support will be removed.

My third point is about business rates. Again, if we look at the impact of business rates over the next five years, the impact of the Budget means that in money terms, the business rates take across the economy will go up by 50%. In the next year it will go up by 20%. That is a considerable burden on businesses that are coming out of a difficult period, that have not built up cash reserves, and that still do not know exactly how the economy and the demand for their services will increase.

Corporation tax has been mentioned, and on one hand—I have some sympathy for this—those companies that invest will get the super allowances. However, because of the increase in corporation tax and so on, over the next five years covered by this Budget, corporation tax take will go up by 112%, or 20% over the next year. If we are looking at how to stimulate recovery, we must ask whether taking that amount of money from consumers, businesses, and the hospitality industry will reduce the impact of the Budget and make it more difficult for the economy to recover.

My final point is about air passenger duty. Air passenger duty is going up, and over the next year, the take from that duty will increase by 50%. According to Red Book figures, over the five years of this Budget it will go up by 300%. This industry is currently in the doldrums. It has no prospects, because we do not know when international travel will be allowed again. It has already had a considerable drain on it, and there has been no specific strategy for it as there was for the hospitality industry. In many areas of the United Kingdom, especially areas such as Northern Ireland where we rely almost totally on air connectivity, there has been an impact from the reduction in flights. I came here yesterday. There was one flight from Belfast City airport. That is putting airports under severe strain, yet when we consider the proposals in the Finance Bill, we find that rather than there being any help for this industry, which has been particularly badly hit, the proposals in the Bill represent a huge cash take from that industry in the next year and over the next five years.

For those reasons, although I commend what the Government have done regarding the particular problems caused by the economic decisions made to deal with covid, and I commend their long-term strategy in considering how to make the economy more sustainable in future, there is a big gap regarding what impact the Bill will have on the immediate recovery. We are going to have a difficult period. Once furlough finishes, we do not know what the impact on the economy will be, what the redundancies will be like, and what that does. The proposals in this Finance Bill, I am afraid, do not give me any optimism that the right decisions are being made. Some support did need to continue to be given. In their desire to reduce the debt and bring in more revenue, the Government may well have made the wrong decisions that will stymie our recovery and have impacts on many areas, especially those that are most vulnerable to downturns in the economy, including regions such as Northern Ireland.

Exiting the European Union (Value Added Tax)

Sammy Wilson Excerpts

Wednesday 3rd February 2021 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

May I first echo the point made by the right hon. Member for Wokingham (John Redwood) that, as the implications of the protocol become ever more apparent, it becomes ever clearer that the promises made to the people in Northern Ireland that they can trade as freely with GB as they did before 1 January and that they will be regarded as fully part of the UK internal market, are not true? There is a border on the Irish sea. There is disruption of trade between Northern Ireland and GB, and vice versa. While the Prime Minister and the Government will maintain that the Union between Northern Ireland and the rest of the United Kingdom has not been affected, the truth of the matter is that the people of Northern Ireland are not experiencing the full benefits of being United Kingdom citizens that they had before 31 January.

Indeed, the regulations illustrate some of the issues that are still going to be faced by people and businesses in Northern Ireland. I welcome the fact that the Government have tried, at least, to overcome some of the implications of the protocol, but I say to the Minister that this kind of tinkering through VAT regulations will not answer the issues that people in Northern Ireland face.

Let me go through some of the issues that the regulations deal with. First, if DIY builders bring in materials—probably most commonly, in Northern Ireland, from the Irish Republic—that are subject to VAT, they will be able to claim back that VAT. What assessment has been made of the additional work that anyone will have to undertake in order to show the VAT that was payable in the Irish Republic or, indeed, in some other EU member state so that it can be claimed back under these regulations?

Do not forget that we are talking about DIY builders. I think of a constituent who came to me just this week because of a delay in the payment of the VAT refund that he was owed on a house that he had built over a period of years. As money became available to him, he built more and more of the house, and the VAT was outstanding. Even with the current regime, the paperwork involved was quite substantial, but he was doing it by himself; he was not a professional. Now we have this added complication. Other Members have talked about the need for clarification. What clarification will there be for people in such situations about what information they need to gather and the way in which it should be gathered?

The second issue is the supply of goods into Northern Ireland—the VAT that is required to be paid on them if they are moving on into the EU, and the fact that VAT can be refunded where the goods are staying in Northern Ireland although they might have been VAT-able.

I think of another example that was brought to me this week, by people involved in the aerospace industry in Northern Ireland. When they bring in aluminium from GB, they have to pay the VAT on it because, under the protocol, it is now coming into a part of the United Kingdom that is deemed to be subject to the EU VAT regime. When that aluminium goes into aircraft parts, the parts do not have any VAT on them, but until it goes into the parts and the parts are sold, those people are obliged to pay out the VAT on it.

That, of course, can be quite a substantial amount of money. It causes cash flow problems and leads to additional administration. I am not so sure that what is provided for in this legislation deals with that problem, because until those people can show either that the aluminium has been incorporated into the parts or that those parts are not going somewhere where they are eligible for European taxes, they have to make the payments.



The Minister is right that we have to close the loophole between Northern Ireland and GB for those who would seek to use Northern Ireland as a back door to escape paying VAT on goods that may be zero-rated in the United Kingdom. Again, what will that mean in terms of checks on goods coming through Northern Ireland ports to GB? How will it be determined that those goods have not originated in the Republic, as opposed to Northern Ireland? Will all Northern Ireland suppliers of goods into GB have to go through a process to show that the goods were made in Northern Ireland and are therefore exempt from VAT, or had had UK VAT rates applied to them? What additional checks and administrative burdens will that cause for businesses?

In relation to how HMRC has handled this issue, all the information I have from the Department for the Economy in Northern Ireland is that businesses are still confused. They do not know what is required of them. They do not know what paperwork will be required, how they claim exemptions and so on. There is a huge piece of work to be done. I come to the point that, despite what the Scottish National party spokesperson has said, we cannot hang on to this protocol. It is damaging relations within Northern Ireland, damaging the Northern Ireland economy and adding substantially to the requirements for businesses. This legislation shows that there will be additional requirements on businesses in Northern Ireland, which make trading more expensive.

The protocol is not some advantage or gift, as the Scottish National party would seek to try to present it to the people of Northern Ireland; it is poison to the people of Northern Ireland. It has poisoned relationships. In my constituency, we are finding that workers are under threat at the ports, such is the frustration and anger. That was never taken into consideration when the Unionist population of Northern Ireland was cynically set aside to get a quick deal with the EU on the basis that the important border was the border between Northern Ireland and the Republic, rather than the relationship that Northern Ireland has with its own country.

What are the implications for people who build their own houses in claiming VAT? They are bringing supplies in from, presumably, mostly the Irish Republic. What are the administrative implications for them? What are the implications for those businesses bringing in supplies from GB, for which VAT will have to be paid and then reclaimed at some later date? What exemptions can be made where it is quite clear that the goods are not going into the EU or that the materials are going into something that will never be VAT-able anyhow? How can we overcome that issue?

If the Government are going to close Northern Ireland as a back door into GB for those products from the European Union that are being routed through Northern Ireland to avoid UK taxes, what implications, if any, does that have for suppliers in Northern Ireland? If it has no implications, how do the Government intend to differentiate goods that are coming through the Republic into Northern Ireland from goods that are going purely from Northern Ireland to GB?

I implore the Minister to take this message back: as far as the protocol is concerned, we can have this continual tinkering, but it will not deal with its underlying, systemic and fundamental problems—that Northern Ireland is still subject to a large amount of law that originates outside its own country, which eats into the very heart of economic activity and undermines its constitutional position within the United Kingdom.

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[Jesse Norman]

I am grateful to all right hon. and hon. Members who contributed to the debate, which has been constructive and useful. I am also grateful to the Opposition for their support for this measure, and to the Scottish National party.

The hon. Member for Ealing North (James Murray) asked about the assessment of the impact of these measures on the income tax—I think he means VAT—base. Of course, being a diligent soul, he will undoubtedly have carefully cosseted the tax impact and information note and seen that no significant impact is expected from this, because the VAT will have been recovered in any case by a VAT-registered business, or would have been recovered otherwise. This set of measures in many ways merely restores the status quo. He asked a question that was indirectly raised by the hon. Member for Strangford (Jim Shannon), about, as it were, potential confusion in Northern Ireland. The trader support service is functioning, in relation to advising on imports, extremely well overall. It has been heavily supported by the UK Government, as the hon. Member for Ealing North will know, and offers what is in effect a globally unique facilitation and intervention.

The hon. Member for Glenrothes (Peter Grant) was very free in accusing the Government of incompetence, as is the way with his party. Knowing that he would wish to be competent himself, I encourage him to read the tax impact and information note. He will know that these measures are already in the protocol and are therefore already, as it were, incorporated via the protocol in UK law. No new impacts are expected from the legislation, as those tax impact and information notes set out.

My right hon. Friend the Member for Wokingham (John Redwood) asked whether VAT rules will be administered and enforced by the UK Government. They will, through Her Majesty’s Revenue and Customs. He rightly raised wider concerns about Northern Ireland and some of the events we have seen in the last few days. I would refer him and all Members to the comprehensive remarks made by the Chancellor of the Duchy of Lancaster yesterday in response to the urgent question on the topic. He also asked whether there would be easy movement. He will know that we have put in place unfettered access for Northern Irish exports into Great Britain and a very comprehensive set of measures to support and facilitate imports into Northern Ireland and to reduce any possible administrative burden.

[Sammy Wilson]

rose—

[Jesse Norman]

The right hon. Member for East Antrim (Sammy Wilson) wishes to intervene, so I invite him to do so before I come to his remarks.

[Sammy Wilson]

I thank the Minister for giving way, and I hope he will address some of the points I raised. It is right that HMRC will be in charge of the collection of VAT, but one of the problems appears to be that, while we have the trader support service in Northern Ireland—which in most cases, but not always, has been helpful in giving advice to businesses there—many businesses in GB have not had the same level of information. One of the reasons why some of those businesses are saying that they are not going to sell to Northern Ireland is simply that they believe that the processes are so complicated, and they have no support by either having that clarified or being assured that the customs declarations and all the other paperwork will not be as complicated as they think it will be.

[Jesse Norman]

It is very easy to overstate the complexity of the issues involved. In the cases that the right hon. Gentleman mentions, the Northern Irish partner has full access to the trader support service, and the Great British partner has a comprehensive amount of guidance online, so the two come together. Inevitably, people will take some time to get used to what is, after all, a change in the arrangements. He is right to pick up the point about the effectiveness of the TSS. I do not think there is a suggestion that the support that businesses have been given in terms of information is anything less than comprehensive.

The right hon. Member for East Antrim asked about do-it-yourself builders. I can confirm that no further information will be required from do-it-yourself house builders, who will file a single VAT return. Obviously, they will be subject to the same proof of payment as they would have been before. In general, the point of this scheme is that without it, they would not be able to deduct acquisition VAT as they could prior to the end of transition period. Through this scheme, they can continue to recover the same VAT as they could before, therefore it is thoroughly to be welcomed.

The right hon. Member for Orkney and Shetland (Mr Carmichael) asked about VAT RES. I am very sorry, but that was in the wrong debate. If he had held his horses, he could have raised that in the next debate, or he could have raised it—equally inappropriately—in the previous debate, which I see he was down to speak in. The good news is that my hon. Friend the Exchequer Secretary will address these issues comprehensively in the debate to follow.

On the issue of small exporters, exports are zero-rated in relation to the UK, and they are not the principal topic of the legislation that we are discussing. The right hon. Member for Orkney and Shetland will be aware that there are measures coming from the EU in July, as I understand it, in relation to these matters that will to some extent—we wait to see the detail—mirror the facilitations that have been put in place, and they will hopefully support exporters from his constituency into the EU.

My hon. Friend the Member for North West Durham (Mr Holden) again raised the question about jobs and revenue. He will see that the tax information impact note does not expect there to be a significant material difference with regard to these issues, but there might, of course, have been some impact had we not put the facilitations in place and therefore these preserve the status quo, and rightly so.

I have already touched on some of the issues relating to the confusion over VAT that was raised by the hon. Member for Strangford). As he knows, in relation to imports, we have the Trader Support Service and, in relation to exports, there is comprehensive guidance available for anyone seeking to export.

Question put and agreed to.

Resolved,

That the Value Added Tax (Miscellaneous Amendments to Acts of Parliament) (EU Exit) Regulations 2020 (S.I., 2020, No. 1312), dated 18 November 2020, a copy of which was laid before this House on 19 November, be approved.

Resolved,

That the Value Added Tax (Miscellaneous Amendments to the Value Added Tax Act 1994 and Revocation) (EU Exit) Regulations 2020 (S.I., 2020, No. 1544), dated 18 December 2020, a copy of which was laid before this House on 21 December, be approved.—(Jesse Norman.)

Economic Update

Sammy Wilson Excerpts

Monday 11th January 2021 Commons Chamber

[Rishi Sunak]

I can confirm that the £9,000 is in addition to the monthly grants of up to £3,000, which means that over the next three months, businesses could receive up to £18,000 of total cash support. I will bear in mind other avenues for future support. As we come out of this, it will be important that the hospitality industry is given every possible chance to succeed and flourish.

[Sammy Wilson (East Antrim) (DUP) [V]]

The Chancellor has said that we are now seeing signs of hope, especially because a deal has been struck with the European Union. It does not look like that in Northern Ireland, where supermarket shelves are empty and thousands of people are being sent letters from suppliers in England saying that neither they personally nor their businesses will any longer be supplied with goods. The steel industry today has received a letter from Her Majesty’s Revenue and Customs saying that engineering firms will have a 25% tariff imposed on steel that they bring here, and companies that sell goods to GB have been told that they will not get a refund on the taxes they have to pay, even though their goods are not going into the EU. All this has been brought about as a result of either a lack of knowledge by officials in HMRC or a reneging on the promises the Government made that there would be unfettered trade and access for UK firms selling in Northern Ireland and vice versa. What is the Chancellor doing about the impact that his Department is having on businesses in Northern Ireland?

[Rishi Sunak]

I am sorry to hear about some of the examples that the right hon. Gentleman raised. I know that goods in aggregate continue to move smoothly between Great Britain and Northern Ireland, and I am not aware of any significant queuing. Individual issues are being addressed by UK authorities. My right hon. Friend the Chancellor of the Duchy of Lancaster is talking with colleagues across the House to make sure that we are kept abreast of any particular issues, so that we can look to resolve them as we can.

Taxation (Post-transition Period) (Ways and Means)

Sammy Wilson Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 8th December 2020 Commons Chamber

[Jesse Norman]

My right hon. Friend will be aware that under the terms of the Northern Ireland protocol, we have agreed arrangements for Northern Ireland with the European Union. The goal of the legislation is to make sure that, as far as possible, it is a completely seamless and straightforward process for those who are trading and that it is unfettered in regards to trade from Northern Ireland into Great Britain. That seems to me to be a very important technical fact.

[Sammy Wilson (East Antrim) (DUP)]

On the VAT issue, which comes to the sovereignty issue once again, under article 8 of the Northern Ireland protocol, Northern Ireland traders will be subject to not just UK VAT rules, but EU VAT rules. Do the provisions that the Minister is now putting forward exempt Northern Ireland traders from being subject to dual VAT rules, given the costs that that would present and the huge administrative issues which would arise from it?

[Jesse Norman]

We do not expect the vast majority of any trade into Northern Ireland to be subject to any dual VAT arrangements. The whole purpose of these rules is to put in place the simplest and most straightforward arrangements that can be put in place and that replicate in so far as possible the current experience that people will have when they trade with the EU.

[Sammy Wilson]

Will the Minister give way?

[Jesse Norman]

I will give way once more, and then I will make some progress.

[Sammy Wilson]

The Minister has said that he would not expect that Northern Ireland traders will be subject to VAT rules of another jurisdiction, but article 8 of the protocol makes it clear that they will be subject to a dual VAT regime. Do these provisions remove that requirement from all traders in Northern Ireland, or are we giving away some of our sovereignty by accepting that some parts of the United Kingdom and some sectors in that part of the United Kingdom will be subject to VAT rules from another jurisdiction?

[Jesse Norman]

I am afraid that inadvertently the right hon. Gentleman has misrepresented my position, or misdescribed my position. I am saying that we are following the Northern Ireland protocol and, therefore, following any provisions that he refers to, but what we are doing is putting in place mechanisms that make them as easy and as facilitated as possible, so that the experience of someone trading in Northern Ireland should be as close as possible to that which they would have today.

The Bill will allow us to amend or modify certain provisions in relation to VAT and excise, including mechanisms to ensure that, in so far as possible, VAT will be accounted for in the same way as it is today, as I have said. In addition, it will make provision for amending current legislation for excise duty. Most of these changes are necessary to ensure that there is comprehensive VAT and excise legislation in place in relation to Northern Ireland at the end of the transition period.

In addition to those steps, there is also a small number of other taxation measures that need to be in place before the end of the transition period. They include provision for an increase in the rate of duty on aviation gasoline, which will apply across the UK. Otherwise known as avgas, the fuel is a form of leaded petrol predominantly used in private aviation.

--- Later in debate ---

[Bridget Phillipson]

In fact, I had just indicated that very point. Everyone on the Opposition Benches is delighted that the Government have in recent days managed to conclude a trade deal with North Macedonia, but what message does it send to our friends in the USA, who have made their position on this point very clear, that the Government no longer regard it as at all times non-negotiable that they will uphold the rule of law? It is because of our concerns on that point that we have tabled the selected amendment to the first resolution. We wish to append the text of the first resolution, at the end, with a clear limitation that provisions under that resolution may not place this country in breach of its obligations under law. The amendment would insert new text at the end of the current text of the first resolution to ensure that

“any such provision must not place the United Kingdom in breach of its obligations under the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community…and specifically its obligations under the Protocol on Ireland/Northern Ireland of that Agreement.”

Obviously, in the last two hours the Government have announced that they have reached an agreement in principle with the European Union on that protocol and will therefore resile from their expressed intention to enact legislation that would have breached those agreements. Of course, Opposition Members welcome that news, even as we find it astonishing that it should ever have been delivered and shambolic that it arrives so late. We would not, until this autumn, have ever imagined it necessary to make it clear in a resolution of the House that the Government, in exercising their powers, must obey international agreements into which they freely entered. Yet, as a result of the deep irresponsibility of the Government, that is precisely where we find ourselves today. We will not oppose the substantive resolutions, and we shall wait to see what further reassurances the Minister can provide before deciding whether to press our amendment to a vote.

We recognise that there needs to be a lawful basis for the collection of VAT, customs duties, aviation fuel duty and insurance premium tax, even while we do not yet know what the Government propose to table by way of a Bill. Let me repeat that: we do not yet know what the Government propose to table by way of a Bill—less than 24 hours before its Second Reading and Committee of the Whole House. Less than a month before we leave the European Union, we simply do not know with any certainty what measures the Government intend to set out. This extraordinary state of affairs undermines the ability of Members to give such important legislation the scrutiny it rightly deserves, not to mention the ability of businesses to plan. Is the Minister really telling us that it was not possible before today to set out the Government’s proposals on aviation fuel duty or insurance premium tax? Of course it was. These clauses were held back—they still are—so that the Government could, until a few hours ago, continue to brandish the threat of breaking international law as part of their negotiating tactics with the European Union, believing they have an ace up their sleeves, when in fact the whole world sees the Government as a pack of jokers.

Although we will not oppose these resolutions, we cannot and will not vote for any measures that the Government introduce that would breach agreements into which this country has entered with her friends and allies, because the consequences of such unlawful acts have been made clear to us. The Speaker of the United States House of Representatives said:

“The U.K. must respect the Northern Ireland Protocol as signed with the EU to ensure the free flow of goods across the border. If the U.K. violates that international treaty and Brexit undermines the Good Friday accord, there will be absolutely no chance of a U.S.-U.K. trade agreement passing the Congress.”

[Sammy Wilson]

I note the hon. Lady’s concern for Northern Ireland, the Good Friday agreement and the people of Northern Ireland, but does she not recognise that if the protocol goes through in its present form, the EU has made it clear that it will require measures to be implemented that have already led to supermarkets saying that they will no longer operate in Northern Ireland—that they will withdraw from Northern Ireland? The goods that would be supplied from here to Northern Ireland will no longer be supplied. I am only talking about one limited area. How can she defend that protocol, which would so adversely affect people in Northern Ireland?

[Bridget Phillipson]

I am grateful to the right hon. Gentleman. I understand the point he raises, but I am afraid I do not share his assessment of the situation. I say to him sincerely that I think it is important that we have certainty around this area. The Government’s approach on this has been misguided and has caused real damage. However, while understanding his concerns, I am afraid I do not recognise his assessment of the situation.

We hope the commitments announced earlier today by Ministers will be further repeated in this place, and that the assurances regarding the withdrawal of the offending clauses of the United Kingdom Internal Market Bill will be honoured. Ensuring that the UK’s forthcoming tax legislation does not breach our international treaty commitments, and in so doing put the Good Friday agreement at risk, is the sole purpose of our amendment. I do not doubt that there will be those on the Government Benches who regard such an amendment as weakening their hand, even as they too welcome the Government’s recent announcement. To them, seeking to legislate to break international law may have seemed a way of showing that they mean business. The delusion would be comic were the consequences not so grave. A negotiation in which one party makes it clear that it cannot be trusted—not inadvertently, but by what passes for strategy—is not one on which strong future relationships will be built, nor one that will commend us to other nations as a reliable partner for trade or security. What the Government have tossed away this autumn in the search for a fleeting advantage is a reputation that will take our country many years to regain.

Ways and Means resolutions enable the House to give effect to the taxation decisions of the Government for the year ahead. Some of those taxes and duties will fall more heavily on some of us than others. But for the Government’s extraordinary irresponsibility, which today’s events illustrate so powerfully, I fear the price will be paid by all of us, not just next month or next year but for many years to come.

--- Later in debate ---

[Sammy Wilson (East Antrim) (DUP)]

I note that the hon. Member for South Cambridgeshire (Anthony Browne) talked of being part French, part Norwegian and part Irish—he had other bits as well that I did not quite pick up. Can I assure him that I am 100% British and want to remain 100% British? I have taken the stance I have against the withdrawal agreement, and the approach that people have taken to it, because it diminishes my Britishness.

I am not quite clear what is in the legislation that the Minister is introducing today, and I am even less clear now, because, according to the statement issued by the Chancellor of the Duchy of Lancaster at lunch time, whatever is in the Bill today, some of it will not be in it tomorrow. As far as I am concerned, the parts that are important seek to manage the parts of the withdrawal agreement that are damaging to the Northern Ireland economy and to the internal market of the United Kingdom, which are underpinned by the Act of Union. Those are the important parts for me. It seems that they might well be removed from the Bill before it even gets to the Floor, or certainly they will not be exercised.

Why do I believe that protections are needed? The withdrawal agreement intervenes and undermines many parts of the Northern Ireland economy. It also damages the Northern Ireland economy’s relationship with the biggest market for Northern Ireland businesses, which is the market in Great Britain. It interrupts the supply of goods from the main source of the supplies that we receive in Northern Ireland, right down to basic foodstuffs, the equipment required by manufacturers and the parts required by producers in Northern Ireland who then export their goods across the world. The withdrawal agreement seriously undermines that and the interpretation of the withdrawal agreement by the EU even goes beyond what the agreement said and what the Government expected from the agreement.

Let me give just one example: goods at risk. According to article 5 of the protocol, exemptions could be made, determined on the basis of

“the final destination and use of the good; the nature and the value of the good; the nature of the movement; and the incentive for undeclared onward-movement into the Union, in particular incentives resulting from duties payable pursuant to paragraph 1.”

Yet despite the fact that some goods clearly do not present a risk under any of those criteria, the EU was insisting up until this week—I do not know what has happened at the Joint Committee; we will hear from the Minister tomorrow—that even supermarket goods brought from GB to Northern Ireland for shops that did not even have outlets in the Republic would be regarded as goods at risk. Goods that had been freely consumed across the EU for the last 40 years, made in GB, from which nobody died of poisoning or had their health affected, were no longer acceptable.

[Kevin Hollinrake]

The right hon. Gentleman is making some very good points. He is clearly saying that the European Union is being difficult in these negotiations. Is he therefore surprised that there was not one word of criticism for the EU’s role in the negotiations from the SNP or the official Opposition?

[Sammy Wilson]

No, I am not, and the reason for that is that from the day that the people of the United Kingdom voted to leave the EU, the cheerleaders for the EU have been those sitting on the Opposition Benches—apart from the Members from my own party. At every stage, it has almost been as if the EU had its representatives sitting in this Parliament. The Labour party in particular suffered from that, because many of its patriotic supporters asked, “What kind of representation are we getting, where these people are seeking to undermine our country, rather than uphold our sovereignty and the result of the free vote that the people of the United Kingdom undertook in the referendum?”

[John Redwood]

Did the right hon. Gentleman note that when I intervened on Labour and SNP Members to invite them to support just something in the current UK negotiating position, they could not bring themselves to support a single thing that this country wants from the negotiations?

[Sammy Wilson]

Again, that does not surprise me, because most Members on the Opposition Benches wish, first, that the referendum had never happened; secondly, that the result had not been as it was; and thirdly, that they could find some Machiavellian way to undermine it, as they have been doing for the last number of years. It is unfortunate that we are in the position that we are partly because the EU knows that there are people in this Parliament who will undermine the Government’s negotiating position. That, of course, makes it more difficult for the Government to negotiate. I do not give that as a justification for some of the things that the Government have agreed to in the withdrawal agreement, whether they relate to Northern Ireland or to the impact on the rest of the United Kingdom; to me, the withdrawal agreement is poison that will infect any future trade arrangements that we might get with the EU.

The point that I am making is that protections are needed because the EU has taken the withdrawal agreement. Even where the agreement does give some latitude to allow the internal market of the United Kingdom not to be disrupted and the economy of Northern Ireland not to be undermined, the EU has refused to give that interpretation. In fact, it has done the exact opposite and looked for the most draconian interpretation of the agreement. Only last Friday, the EU insisted that anyone travelling from GB to Northern Ireland would have to have their personal baggage searched to ensure that they were not taking any contraband into Northern Ireland, despite the fact that article 5 of the Northern Ireland protocol states that the “nature and value” of the goods should be considered.

I hope that the hon. Member for Houghton and Sunderland South (Bridget Phillipson) can understand that when she and the Labour party table amendments such as the one she moved today, saying that the withdrawal agreement must be guarded and protected at all costs, she is in effect saying, “We put the value of this piece of paper above the interests of the people of Northern Ireland.” This is putting that piece of paper above the interests of the people of Northern Ireland to have the range of goods that they want and at the best prices, and above the interests of businesses that export from Northern Ireland to GB. In effect, that is what her amendment says.

I am even more amazed that any representative from Northern Ireland dares to put their name to that amendment. I wonder what the consumers and businesses in their constituency think about somebody who values protection of the EU, and an agreement that the EU has with the UK, above the interests of their constituents.

[Ian Paisley (North Antrim) (DUP)]

Does my right hon. Friend accept that the Republic of Ireland’s interests with regards to Northern Ireland are many times predatory in terms of our businesses? They wish to stifle the competition that exists on the island and to stifle the thrifty economy of Northern Ireland. They have done so in many ways and the withdrawal agreement gives them further opportunity to do that.

[Sammy Wilson]

Yes, the worrying thing is that, with the withdrawal agreement in place, Northern Ireland is subject to laws made in Europe—laws into which the Irish Republic will have an input; laws into which, because we have left, the UK will have no input; laws into which Ministers in the Northern Ireland Assembly will have no input. We are at the mercy of those who wish to engage in this predatory behaviour and use EU legislation to damage Northern Ireland.

That is why the protections are needed. The protections that I would like to see in the Bill—unfortunately, it appears the Government are prepared to withdraw the protections before they have even introduced the Bill—would apply where the EU insists that goods that come into Northern Ireland have tariffs and would have tariffs imposed on them if they were going into the EU. That barrier should not be in place. Northern Irish consumers and businesses which bring in goods that will clearly be sold and consumed in Northern Ireland should not have to pay those taxes. I heard what the Minister said. It appears that, even with the Bill, he is not ruling that out. If I noted him correctly, he said that there would be a waiver where tariffs are incurred that should not have been incurred. He is almost admitting that, in the Bill that he has introduced, there will be provision to repay those tariffs. However, producers in Northern Ireland will find themselves in a situation where they have to pay EU tariffs, prove that the goods on which they paid the tariffs did not go into the EU, and then get the money back.

That presents a number of problems. First, the trade itself is not free. Secondly, the business that has to pay the tax has a cash-flow issue. Thirdly, there are additional administrative costs involved in proving that some of the goods on which it paid tax did not leave Northern Ireland. If there is anything that will put a chill on trade between GB and Northern Ireland, it is that. I am concerned—perhaps the Minister in his response will be able to give me some comfort—that the Bill, even though it will carry some protections, still does not give that absolute protection for businesses in Northern Ireland because of the terms of the protocol. I could provide many other examples of the EU’s draconian interpretation of the Bill. Someone who takes their pets from GB to Northern Ireland would be affected, or someone going on holiday there. Someone taking their pet from Northern Ireland to a dog show in Scotland will now have to have a pet passport, a rabies vaccination, and all the documentation surrounding that—probably about £400 a trip, yet we are part of the United Kingdom.

That is why protections are needed. I implore the Minister—I know what has been said in the statement today—not to remove the notwithstanding clauses in the Bill until it is sure that the issues that are likely to arise have been dealt with properly, because we have not even seen the detail of the particular things that have been agreed.

In conclusion, it is a pity that we do not have the detail of this Bill today. It is a pity that we do not have the assurances. I note what the Minister said about the VAT regime, which is that Northern Ireland businesses will remain under the UK VAT regime. That is true, but what he failed to say was that, as a result of the Bill, they will not also remain under the EU VAT regime. Article 8 of the Northern Ireland protocol makes it clear that we will and that has all kinds of implications. We have to have two different VAT systems. We have to have different means of VAT recording. Will we be subject to the EU conditions when it comes to VAT exemptions, or the various tiers of VAT rates? Will the EU exemptions for small businesses apply to Northern Ireland—the €85,000 or whatever it is—so that small businesses find themselves caught in a net that they would not have found themselves caught in had we been truly under the UK VAT system? It is not enough to say that we will remain under the UK VAT system. The important thing is: will we be exempt from article 8 of the protocol as a result of the measures in the Bill?

Those are the kind of issues that people in Northern Ireland are looking for. Traders in Northern Ireland—people who sell used cars, for example—will now be subject to EU rules. It used to be that they incurred only the marginal VAT rate, on the profit made on the car. Now the VAT rate will apply to the whole price of the car, putting up the price of second-hand cars for people in Northern Ireland. They will be paying above what they would pay if they lived in the rest of the United Kingdom.

Perhaps in his summing up, the Minister can let us know whether the Government are addressing any of those issues, because those are the issues that concern my constituents and those are the issues that stem from this protocol. That is why this protocol is poisonous to the internal market of the United Kingdom.

UK-EU Future Relationship Negotiations and Transition Period

Sammy Wilson Excerpts

Monday 7th December 2020 Commons Chamber

[Penny Mordaunt]

I supported Brexit—I voted for it—and I think there are many positives and opportunities that will come from it, not least being able to increase our collaboration and co-operation with many countries around the world. Unless we eradicate covid, and unless we ensure that every nation has access to vaccines and can benefit from the science, whatever its provenance, we will not defeat this pandemic. We are an incredibly connected nation, and we need to do that. With the future that we have, we will be able to be a major player in ensuring that that happens.

[Sammy Wilson (East Antrim) (DUP)]

The Government are doing the right thing in resisting any demand from the EU to take the power to impose penalties on the UK at some time in the future if Brussels deems that we have not kept pace with laws made outside the United Kingdom. Taking back control is the whole point of Brexit. In resisting the level playing field demands of the EU, the Government must also ensure that the EU’s demand for Northern Ireland to be included in its level playing field is resisted. If the Government do not do that, we have not taken back control—we have surrendered part of the United Kingdom to EU demands.

[Penny Mordaunt]

The right hon. Gentleman makes very good points that he has made many times over. The level playing field is the most difficult issue facing the negotiating teams at the moment, and I thank him for his comments, which will have been heard by the team today.

Oral Answers to Questions

Sammy Wilson Excerpts

Tuesday 1st December 2020 Commons Chamber

[Kemi Badenoch]

My hon. Friend is, as ever, a great champion for his local area. I understand that Transport for West Midlands, in partnership with Staffordshire Council and the local rail executive, has already engaged with the Restoring Your Railway fund. Regarding the specific proposal he is referencing, the Department for Transport has announced that there will be a further round of bidding for the fund. Other aspects of the proposal might be eligible for support from the £4 billion levelling- up fund; the Government will set out more details on eligibility in due course.

[Sammy Wilson (East Antrim) (DUP)]

How many contractors have worked for HMRC while using disguised remuneration schemes.

[The Financial Secretary to the Treasury (Jesse Norman)]

Her Majesty’s Revenue and Customs are aware of 15 contractors who have used disguised remuneration schemes while engaged either by the department or by Revenue and Customs Digital Technology Services. In each of the cases, the contractors were engaged via an agency or a company providing this service. It is important to be clear that Revenue and Customs does not engage in or enter into disguised remuneration schemes. It is possible for a contractor providing services to HMRC to use a disguised scheme without the department’s knowledge or by participation through a third party.

[Sammy Wilson]

I am amazed at the Minister’s answer—that firms can use methods of payment that HMRC then declares to be illegal and that no checks have been done by HMRC on those contractors. Does he not accept that it is unfair to put the burden on taxpayers who first of all entered into payments through disguised remuneration because we were forced to do so, and who declared that on tax returns which HMRC did not challenge, yet HMRC is now telling us that it did not even check that contractors it employed were paying in that way? How many of these contractors have HMRC actually pursued for forcing employees to use schemes that have been deemed illegal?

[Jesse Norman]

I think the right hon. Gentleman is slightly unclear on this. HMRC takes careful steps to ensure that the people whom it deals with as agencies employ on a proper and appropriate basis. When, in very rare cases among hundreds and hundreds of contractors in a fast-moving market, it may become clear that someone has in fact been hired under such a scheme, it takes immediate steps to end that relationship and then to follow up, of course, and to pursue as may be required under law. If he is concerned about the interests of taxpayers, may I remind him that many of the people who benefit from disguised remuneration have not been paying tax, from which our public services benefit, and it is those taxpayers whose interests we are also seeking to protect.

Spending Review 2020 and OBR Forecast

Sammy Wilson Excerpts

Wednesday 25th November 2020 Commons Chamber

[Rishi Sunak]

As ever, my right hon. Friend speaks fantastically good sense. He is right; we will need to return to a sustainable fiscal position, not least to build resilience for the next crisis or shock that comes along. We want to be able to react in the same comprehensive and generous way that we did this time, and that requires us to have a strong set of public finances going into it.

My right hon. Friend is right about the Restart programme, which will help, we hope, around 1 million of those who are long-term unemployed; it will be an exciting and ambitious programme. The Institute for Employment Studies has spoken very well about the evidence in favour of that type of high-quality, individual work-focused approach making an enormous difference in getting people back into work. If we can do that, we can reduce some of the long-term scarring that they will face. So I have high hopes for what that programme can achieve.

[Sammy Wilson (East Antrim) (DUP)]

I first welcome the £900 million that will be available to the Northern Ireland Executive, which is a reminder to the people of Northern Ireland of the economic security that we have as a result of being part of the United Kingdom. The Barnett consequentials for Wales and Scotland should also be a reminder to the people there of the benefits of the Union.

May I ask the Chancellor one thing about the levelling up fund, the infrastructure bank and the shared prosperity fund? When will he have the details of access to those, and can he assure us that the access to all those funds will be equally available to different parts of the United Kingdom?

[Rishi Sunak]

I can give the right hon. Gentleman that assurance. Those are UK-wide programmes and we hope to have more details about the infrastructure bank in the spring, so that we can get it up and running, at least in shadow form, as quickly as possible and make a difference to communities all around the United Kingdom.

Lockdown: Economic Support

Sammy Wilson Excerpts

Tuesday 3rd November 2020 Commons Chamber

[Steve Barclay]

I agree with my right hon. Friend that we need to ensure that the economy is able to bounce back quickly. That is why we have provided over £13 billion of support to the self-employed, which by international comparisons—I know my right hon. Friend looks at international comparisons—he will see is extremely generous. I have set out previously in the House part of the operational difficulties, for example with owner-directors in terms of what is dividend income and what is not. The point is that we have set out a generous self-employment income support scheme, but we need to deliver that operationally in a way that meets the tests set by, for example, the Public Accounts Committee, which has asked whether we have the right level of controls in place, given the speed at which these schemes were deployed.

[Sammy Wilson (East Antrim) (DUP)]

The latest ill-advised lockdown is going to present an enormous burden for the economy in terms of lost tax revenue, additional Government spending and reduced GDP. It is right that since the economic pain is being imposed by the Government, those affected should be compensated for the pain that they will suffer. I welcome the Chief Secretary’s assurance that the furlough scheme will apply across the whole United Kingdom, but can he tell us what Barnett consequentials will be received by Northern Ireland, Scotland and Wales for the business support grant that he announced in this package?

[Steve Barclay]

The right hon. Gentleman raises a valid and fair point. As I said on my call with the First Minister yesterday, I hope to be in a position to update her this week about the additional Barnett guarantee that we can give. The right hon. Gentleman is right to point to the consequentials that flow from the £1.1 billion of additional local authority funding that the Chancellor set out. He will also have seen, for example, the additional support that the UK Government gave to Transport for London, the rail support measures that we have provided, and so on. Those are the issues on which the Barnett consequentials will be shaped. He is right that it is important for them to have sight of that. That is why we have taken the unprecedented decision to give that up-front guarantee, and I hope to be able to give an update on that later this week.

Public Health Restrictions: Government Economic Support

Sammy Wilson Excerpts

Tuesday 13th October 2020 Commons Chamber

[Steve Barclay]

In some ways, that is slightly more of a Health question than a Treasury question, but I recognise that there is read-across from those businesses into the economy. In short, the opinion of the chief medical officer and the chief scientific officer is that those businesses do carry significantly more risk, which is why they have been harder hit in the guidance that has been issued. The package of support that the Chancellor set out recognises that businesses that are closed need additional support, which is why the measures announced by the Prime Minister and the Chancellor yesterday spoke exactly to the issue of businesses that have been closed due to the guidelines.

[Sammy Wilson (East Antrim) (DUP)]

The wisdom and necessity of some of the restrictions introduced yesterday have been questioned by leaders of cities in the north of England, by businesses and by the workers who are going to be affected, so it is right that the Government should introduce a package of support for businesses that are forced to close. However, there are many businesses that have not been instructed to close, but which will be forced to because of the restrictions placed on them. For example, the hospitality industry faces curfews, restrictions on table numbers and on who can sit at tables, and so on. How does this package of support assure those businesses that they are not going to be killed off by the restrictions that have been placed on them? They have been put in the firing line, yet seem to have been left without any level of support at all, given the conditions attached to this economic package.

[Steve Barclay]

The right hon. Gentleman speaks to an important issue, which was at the heart of the job support scheme’s design: recognising businesses that are not in closure, but which have difficulty bringing people back full time. The scheme provides support. The employer pays the first third, and the remaining amount is split three ways, with the Government supporting. Additionally, there is the wider package of measures, including support to local authorities to get better compliance, which is in the interests of businesses. The £1 billion to local authorities, the £500 million for local test and trace services, the business loans and the tax deferrals are all targeted at the sector that the right hon. Gentleman is talking about: businesses that can still trade and are not closed, but which do face further pressure. The winter plan sets out that support.

Oral Answers to Questions

Sammy Wilson Excerpts

Tuesday 15th September 2020 Commons Chamber

[Jesse Norman]

I am very grateful for the suggestion. Now that the right hon. Gentleman has placed it on the public record, I will ask my officials to look more closely at it and to engage with him on it. He will know that we have already introduced, in a quite different context, a digital services tax. We are open to these potential ideas. We will be looking very carefully at this area. Intelligent and well thought through feedback is always of great interest to us.

[Sammy Wilson (East Antrim) (DUP)]

What discussions officials from (a) his Department and (b) HMRC have had with businesses in Northern Ireland on potential additional costs for exporting goods to Great Britain from Northern Ireland under the withdrawal agreement.

[The Financial Secretary to the Treasury (Jesse Norman)]

The Government have been actively engaging with businesses and fully committed to providing them with the information and support needed to prepare for the end of the transition period in Northern Ireland. As was set out in the Command Paper, the Government’s position is that there should be no additional process, paperwork or restrictions on Northern Ireland goods arriving in the rest of the UK.

[Sammy Wilson]

While I welcome the provisions of the United Kingdom Internal Market Bill debated yesterday, they do not cover the issue that the EU is demanding that goods coming into Northern Ireland have tariffs imposed on them until it is proven that they have not left Northern Ireland and gone into the EU. This is damaging to business, because it requires additional paperwork, will affect cash flow, and will put up costs. Given that the Government are committed to keeping Northern Ireland in the UK customs union, that the Act of Union says that there should be no tariffs on trade between countries within the United Kingdom, and that 75% of goods do not leave Northern Ireland once they enter anyhow, will the Minister give a commitment to ensuring in the Finance Bill that the EU demand for those tariffs to be collected will be removed so that Northern Ireland businesses are not disadvantaged?

[Jesse Norman]

As the right hon. Gentleman will know, these topics are currently very live matters of discussion between this country and the EU, and I am not going to comment on that. However, we are, as a Government, very engaged with this issue across a number of different Departments, and we will be looking to support the principles and positions set out in the protocol as we go forward.

--- Later in debate ---

[Rishi Sunak]

My hon. Friend makes an excellent point and I thank her for it. She will know that some of the interventions we have already put in place last through into next year, for example the removal of the need to pay business rates for businesses in hospitality, which has been particularly affected. She may be reassured to know that we recently introduced the new business support grant for businesses forced to close as a result of local lockdown, where the Joint Biosecurity Centre gold command has instituted that measure, and those grant payments will be available up to £1,500 per few weekly cycles.

[Sammy Wilson (East Antrim) (DUP)]

  The aviation industry is on its knees: airports are deserted, planes are grounded and travellers are frustrated. In large part, the plight of the industry is due to the inconsistent, illogical and contradictory policies being followed by the Government to attack coronavirus. Will the Chancellor consider what actions he can take to support this vital industry, which we depend on for our connectivity, by either reducing or suspending air passenger duty, or through targeted job support?

[Rishi Sunak]

The right hon. Gentleman is absolutely right to highlight the importance of the aerospace industry to our economy. It is, in common with aerospace industries across the globe, suffering a deep depression in demand for all the obvious reasons. He can rest assured that we engage regularly with the companies in that sector. In particular, to support their future success, we are investing heavily in R&D alongside those companies to make sure we remain on the cutting edge of advanced manufacturing capability.