Finance (No. 2) Bill

Siobhain McDonagh Excerpts

Committee stage & Committee of the Whole House (Day 2)
Tuesday 20th April 2021 Commons Chamber

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

I beg to move amendment 81, in page 49, leave out lines 14 to 27.

This amendment would mean that the Stamp Duty Land Tax (Temporary Relief) Act 2020 no longer applies to additional dwellings.

[The Temporary Chair (Siobhain McDonagh)]

With this it will be convenient to discuss the following:

Clauses 87 to 89 stand part.

That schedules 16 and 17 be the Sixteenth and Seventeenth schedules to the Bill.

Clauses 90 and 91 stand part.

New clause 26—Equality impact analysis (No. 2)—

“(1) The Chancellor of the Exchequer must review the equality impact of sections 87 to 89 and schedule 16 and 17 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the impact of those sections on—

(a) households at different levels of income,

(b) people with protected characteristics (within the meaning of the Equality Act 2010),

(c) the Treasury’s compliance with the public sector equality duty under section 149 of the Equality Act 2010, and

(d) equality in England, Northern Ireland and in different regions of England.

(3) A review under this section must provide a separate analysis in relation to each of the following matters—

(a) the temporary period for reduced rates on residential property,

(b) increased rates for non-resident transactions, and

(c) relief from higher rate charge for certain housing co-operatives etc.

(4) In this section “regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause requires the Chancellor of the Exchequer to carry out and publish a review of the effects of sections 87 to 89 and schedules 16 and 17 of the Bill on equality in relation to households with different levels of income, people with protected characteristics, the Treasury’s public sector equality duty and on a geographical basis.

New clause 27—Fiscal and economic impact of 2% non- resident surcharge—

“(1) The Chancellor of the Exchequer must review the impact of section 88 and schedule 16 and lay a report of that review before the House of Commons within six months of the passing of this Act and once a year thereafter.

(2) A review under this section must estimate the expected impact of section 88 and schedule 16 on—

(a) Stamp Duty Land Tax revenue at the increased rates of 2%, and what the revenue impact would have been if the rate had been 3%,

(b) residential property prices, and

(c) affordability of residential property.”

This new clause would require the Government to report on the effect of the 2% stamp duty land tax non-resident surcharge on tax revenues and on the price and affordability of property.

[Abena Oppong-Asare]

It is a pleasure to speak for the Opposition on this group of amendments and new clauses relating to stamp duty. I rise to speak on those in my name and those of my right hon. and hon. Friends.

Amendment 81 will prevent the extension of stamp duty holiday from being used for second homes, buy-to-lets and investment properties. New clause 26 would require the Government to review the equalities impact of this group of clauses, including their impact on households with different income levels and on people with protected characteristics, their compliance with the public sector equality duty and their impact on the different regions and nations of the United Kingdom. New clause 27 would require the Government to review the impact of a non-residential surcharge of 2%, which it is set at in the Bill, and 3%, which, as I shall come on to, the Conservative party previously committed to.

Before I come on to the amendments in more detail, let me say a little about the stamp duty holiday extension. Clause 87 extends the £500,000 nil rate band until 30 June. From July until the end of September, the nil rate band will be £250,000, double its normal level; it will return to the usual level of £125,000 from 1 October. It is estimated that the total cost of this extension will be £1.5 billion by the end of 2021-22. That is on top of the £3.2 billion cost of the initial stamp duty land tax holiday announced in July 2020.

The extension will of course be welcome news for those people in the process of buying a new home who face a cliff edge at the end of March. We know that many people have struggled to complete purchases in time due to the coronavirus restrictions and the significant backlog of pending transactions. In previous debates, Members raised issues of cyber-attacks on council services in Hackney that impacted the planning department and delayed people’s securing mortgages.

However, we have concerns about the broader effects of the policy. Our new clause 26 is intended to encourage the Government to be honest about the impact of the stamp duty holiday on the housing market. The Resolution Foundation says that the lower stamp duty liabilities have contributed to house price rises over the last eight months. House prices in England grew 7% between July and December 2020, which is highly unusual behaviour during a recession. In many cases, the rise in house prices over the period will have cancelled out the benefit of the stamp duty holiday. As the Institute for Fiscal Studies, the Resolution Foundation and others have pointed out, the stamp duty holiday has also had the perverse effect of temporarily removing the advantage that first-time buyers had in the market compared with existing homeowners. This, coupled with rapidly rising house prices, has meant that many first-time buyers continue to be priced out of the market. The Bill does nothing to address the housing crisis that affects millions of families across the country—yet again, a wasted opportunity from this Government.

I turn now to clause 88 and our amendment 81. It is unbelievable that, at the same time as the Chancellor is pressing ahead with a £2 billion council tax rise, he has given another tax break to second-home owners and buy-to-let landlords. This half a billion pound tax break for second-home owners and landlords is the wrong priority in the middle of an economic crisis that is hitting family incomes. Instead, this money could have been used to build nearly 3,000 socially rented homes, which is half the total built in England last year. In Wales, the equivalent tax relief has not been extended to property acquired as investment or as a second home. Labour’s amendment 81 would ensure that the extended stamp duty holiday in England and Northern Ireland followed that approach. I turn to the non-residential surcharge introduced under clause 88. During the 2019 general election campaign, the Chancellor, who was then Chief Secretary to the Treasury, said:

“Evidence shows that by adding significant amounts of demand to limited housing supply, purchases by non-residents inflate house prices.”

He went on to announce a Conservative manifesto commitment to introduce a non-resident stamp duty surcharge of 3%, which would have been spent on programmes aimed at tackling rough sleeping. But clause 88 introduces a non-resident surcharge of 2%, rather than 3%. As yet, we have had no explanation from the Government as to why they have watered down that commitment. We estimate that this means the Government could miss out on £52 million a year in revenue that should have been spent on tackling homelessness and rough sleeping.

Our new clause 27 would require the Government to review the difference between the 2% charge and the 3% charge and to reveal the lost income as a result of that decision. When the Minister stands up, perhaps he will tell us why the Government have moved from 3% to 2%.

We welcome clauses 89 to 91, which provide relief from the annual tax on enveloped dwellings and the 15% stamp duty charge for the ownership and transfer of property by housing co-operatives that do not have transferable share capital. The Treasury has listened to the co-operative housing sector on the issue and that is welcome.

To conclude, we do not believe that the Government’s clauses in this group would do anything to solve the housing crisis we face in this country. Year after year, Government have failed to build the homes we need, especially social and affordable homes. The Government are on track to miss their target of building 300,000 homes by almost a decade. The number of new social rented homes has fallen by over 80% since 2010 and home ownership is down sharply among young people, with 800,000 fewer households under 45 owning their home than in 2010. Without urgent action the housing crisis in the UK will deepen. Instead the Government have decided to give a tax break to landlords and failed to meet their own commitment on the non-residential surcharge. Our amendments will remedy these wrongs.

Finance (No. 2) Bill

Siobhain McDonagh Excerpts

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

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

[The Temporary Chair (Siobhain McDonagh)]

With this it will be convenient to discuss the following:

Clause 6 stand part.

Clause 7 stand part.

Clause 8 stand part.

Amendment 11, in clause 9, page 3, line 35, leave out “130%” and insert “18%”.

This amendment would reduce the level of the capital allowance super-deductions to the current rate of 18%.

Amendment 79, page 4, line 2, at end insert—

“provided that any such company which has more than £1 million in qualifying expenditure must also—

(i) adhere to International Labour Organisation convention 98 on the right to organise and collective bargaining,

(ii) be certified or be in the process of being certified by the Living Wage Foundation as a living wage employer, and

(iii) not be liable to the digital services tax”.

This amendment would, in respect of companies with qualifying expenditure of over £1 million, add conditions relating to ILO convention 98, the living wage and the digital services tax.

Amendment 80, page 4, line 2, at end insert—

“provided that any such company which has more than £1 million in qualifying expenditure must also make a climate-related financial disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures within the 2021/22 tax year”.

This amendment would, in respect of companies with qualifying expenditure of over £1 million, add a condition relating to climate-related financial disclosure to the conditions that must be met in order for expenditure to qualify for super-deductions.

Amendment 66, page 4, line 6, at end insert “, except general exclusion 6”.

This amendment would remove leased assets from the list of assets excluded from the super-deduction and special rate allowance introduced by Finance (No. 2 Bill).

Amendment 67, page 4, line 21, at end insert “, except general exclusion 6”.

See the explanatory statement for Amendment 66.

Amendment 53, page 5, line 15, at end insert—

“(11) The Chancellor of the Exchequer must, no later than 5 April 2022, lay before the House of Commons a report—

(a) analysing the fiscal and economic effects of Government relief under the capital allowances super-deduction scheme since the inception of the scheme, and the changes in those effects which it estimates will occur as a result of the provisions of this section, in respect of—

(i) each NUTS 1 statistical region of England and England as a whole,

(ii) Scotland,

(iii) Wales, and

(iv) Northern Ireland,

(b) assessing how the capital allowance super-deduction scheme is furthering efforts to mitigate climate change, and any differences in the benefit of this funding in respect of—

(i) each NUTS 1 statistical region of England and England as a whole,

(ii) Scotland,

(iii) Wales, and

(iv) Northern Ireland.”

This amendment would require the Chancellor of the Exchequer to analyse the impact of changes proposed in Clause 9 in terms of impact on the economy and geographical reach and to assess the impact of the capital allowances super-deduction scheme on efforts to mitigate climate change.

Amendment 78, page 5, line 15, at end insert—

“(11) Expenditure shall not be qualifying expenditure under this section if it is incurred by a member of a group which is required to publish a tax strategy in compliance with Schedule 19 of the Finance Act 2016, unless any tax strategy published in compliance with that Schedule after the coming into force of this Act includes any relevant country-by-country report.

(12) ‘Country-by-country report’ has the meaning given by the Taxes (Base Erosion and Profit Shifting) (Country-by-Country Reporting) Regulations 2016.

(13) A country-by-country report is relevant if it—

(a) was filed or required to be filed by the group in compliance with those Regulations on or before the date of publication of the tax strategy, or would have been so required if the head of the group were resident in the United Kingdom for tax purposes, and

(b) has not already been included in a tax strategy published by the group.”

This amendment would require large multinationals accessing super-deductions to make their country-by-country reporting public.

Clause 9 stand part.

Clause 10 stand part.

Clause 11 stand part.

Clause 12 stand part.

Clause 13 stand part.

Clause 14 stand part.

Amendment 55, page 85, line 10, in schedule 1, leave out from “period if it is” to the end of line 30 and insert—

“a related 51% group company of that company in the accounting period as defined by section 279F of CTA 2010.”

This amendment would prevent the introduction of a new definition of “associated companies” for the purposes of the small profits rate and uses an existing provision instead.

Amendment 56, page 93, line 29, leave out paragraph 11.

See the explanatory statement for amendment 55.

Amendment 57, page 94, line 5, leave out sub-sub-paragraph (a).

See the explanatory statement for amendment 55.

Amendment 58, page 94, line 14, leave out sub-paragraph (3).

See the explanatory statement for amendment 55.

Amendment 59, page 94, line 22, leave out paragraphs 15 to 17.

See the explanatory statement for amendment 55.

Amendment 60, page 95, line 5, leave out paragraphs 20 and 21.

See the explanatory statement for amendment 55.

Amendment 61, page 96, line 44, leave out paragraph 30.

See the explanatory statement for amendment 55.

Amendment 62, page 97, line 22, leave out sub-sub-paragraph (e).

See the explanatory statement for amendment 55.

New clause 1—Eligibility for super-deduction—

“(1) Only employers that meet the criteria in subsection (2) shall benefit from the provisions relating to capital allowance super-deductions in sections 9 to 14.

(2) The criteria are that the employer—

(a) recognises a trade union for the purposes of collective bargaining with its workforce, and

(b) is certified by the Living Wage Foundation as a living wage employer.”

This new clause would ensure that only employers that pay their staff the living wage and recognise trade union(s) would be eligible to receive the capital allowance super-deductions.

New clause 2—Commencement of super-deduction provisions (report on the benefits)—

“(1) Sections 9 to 14 shall not come into force until—

(a) the Secretary of State has commissioned and published a report that sets out the expected benefits of the capital allowance super-deductions in this Act, and

(b) the report has been debated and approved by the House of Commons.

(2) The report in subsection (1) must consider what the economic and social benefits would be of making the capital allowance super-deductions contingent on employers meeting criteria relating to—

(a) reducing their carbon emissions,

(b) tackling the gender pay gap,

(c) paying the right amount of tax and not using avoidance schemes,

(d) paying the living wage to all directly employed staff, and

(e) recognising trade unions for the purposes of collective bargaining.”

This new clause would mean that sections 9 to 14 could not come into force until the Government had published a report examining the economic, social and environmental effect of the capital allowance super-deductions and that report had been agreed by the House of Commons.

New clause 6—Commencement of super-deduction provisions (report on existing capital allowances)—

“(1) Sections 9 to 14 shall not come into force until the conditions in subsection (2) are met.

(2) The conditions are—

(a) the Public Accounts Committee has reported on the effectiveness of the existing capital allowances listed in section 2(3) of the Capital Allowances Act 2001, and

(b) at least one week after the publication of the report in paragraph (a) both Houses of Parliament have agreed that sections 9 to 14 shall come into force.”

This new clause would set the following conditions before clauses 9 to 14 of the Bill come into force: that the Public Accounts Committee prepares a report on the effectiveness of existing capital allowances, and then that both Houses of Parliament approve the clauses coming into force.

New clause 9—Equalities impact assessment of capital allowance super-deductions—

“(none) The Chancellor of the Exchequer must, no later than 5 April 2022, lay before the House of Commons an equalities impact assessment of the provisions sections 9 to 14 of this Act, which must cover the impact of those provisions on—

(a) households at different levels of income,

(b) people with protected characteristics (within the meaning of the Equality Act 2010),

(c) the Treasury’s compliance with the public sector equality duty under section 149 of the Equality Act 2010,

(d) equality in different parts of the United Kingdom and different regions of England, and

(e) child poverty.”

New clause 13—Review of impact of sections 6 to 14—

“(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by sections 6 to 14 and schedule 1 and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) business investment,

(b) employment,

(c) productivity,

(d) GDP growth, and

(e) poverty.

(3) A review under this section must consider the following scenarios—

(a) the United Kingdom reaches an agreement with OECD countries on a minimum international level of corporation tax, and

(b) the United Kingdom does not reach an agreement with OECD countries on a minimum international level of corporation tax.

(4) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

and “regions of England” has the same meaning as that used by the Office for National Statistics.”

This new clause would require a report comparing scenarios in which (a) the United Kingdom reaches an agreement with OECD countries on a minimum international level of corporation tax, and (b) the United Kingdom does not reach an agreement with OECD countries on a minimum international level of corporation tax on various economic indicators.

New clause 17—Review of impact on corporation tax revenues of global minimum rate of corporation tax—

“The Chancellor of the Exchequer must within six months of Royal Assent lay before the House of Commons an assessment of the effect on corporation tax revenues in 2022 and 2023 of a global minimum corporation tax rate set at 21%.”

This new clause would require the Government to publish an assessment of the revenue effect of a global minimum corporation tax rate of 21%.

New clause 19—Review of impact of sections 6 to 14 (No. 2)—

“(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by sections 6 to 14 and schedule 1 and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) business investment,

(b) employment,

(c) productivity,

(d) GDP growth, and

(e) poverty.

(3) A review under this section must compare the estimated impact of corporation tax rate changes in this Act with the impact on investment from the changes to the corporation tax rate in each of the last 12 years.

(4) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

and “regions of England” has the same meaning as that used by the Office for National Statistics”

This new clause seeks a review of the estimated impact of corporation tax rate changes in this Act with the impact on investment from the changes to the corporation tax rate in each of the last 12 years on various economic indicators.

New clause 20—Review of impact of section 7—

“(1) The Chancellor of the Exchequer must review the impact of section 7 and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) the link between corporate profit rates and ownership, and

(b) the cost of re-introducing a small profits rate.”

This new clause seeks a review of corporation tax provisions on (a) the link between corporate profit rates and ownership, and (b) the cost of re-introducing a small profits rate.

New clause 21—Review of impact of sections 6 to 14 (No. 3)—

“(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by sections 6 to 14 and schedule 1 and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the provisions on—

(a) progress towards the Government’s climate emissions targets, and

(b) capital investment in each of the next five years.

(3) A review under this section must include—

(a) the distribution of super-deduction claims by company size, and

(b) estimated tax fraud.

(4) In this section—

‘parts of the United Kingdom’ means—

(a) England,

(b) Scotland,

(c) Scotland,

(d) Wales, and

(e) Northern Ireland;

and ‘regions of England’ has the same meaning as that used by the Office for National Statistics.”

This new clause seeks a report on the impact of the super deduction on (a) progress towards the Government’s climate emissions targets, and (b) capital investment in each of the next five years. A review under this section must include (a) the distribution of super-deduction claims by company size, and (b) estimated tax fraud.

New clause 24—Review of super-deductions—

“(1) The Chancellor of the Exchequer must review the impact of sections 9 to 14 and schedule 1 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act, and then annually for five further years.

(2) A review under this section must estimate the expected impact of sections 9 to 14 and schedule 1 on—

(a) levels of artificial tax avoidance,

(b) levels of tax evasion, reducing the tax gap in each tax year from 2021–22 to 2025–26, and

(c) levels of gross fixed capital formation by businesses in each tax year from 2021–22 to 2025–26.

(3) The first review under this section must also consider levels of usage of the recovery loan scheme in 2021.”

This new clause would require the Government to review the impact of the provisions relating to super-deductions and publish regular reports setting out their findings.

[Jesse Norman]

Clauses 6 to 14 and schedule 1 establish the charge and set the rate of corporation tax at 19% for the financial year beginning in April 2022, and establish the charge and increase the rate of corporation tax to 25% for the financial year beginning in April 2023. They also introduce a small profits rate at 19% for companies with profits of £50,000 or less, with marginal relief for companies with profits between £50,000 and £250,000; and they increase the diverted profits tax rate by 6 percentage points, in line with the increase in the main rate of corporation tax. Finally, they introduce a capital allowance super-deduction for investments in plant and machinery.

At 19%, the current rate of corporation tax is the lowest headline rate in the G20 and significantly lower than in the rest of the G7. However, given that the Government have used the full weight of the public finances to support businesses during the pandemic, protecting thousands of businesses with more than £100 billion-worth of support, it is right that, as the economy rebounds and businesses return to profit, they share in the burden of restoring the public finances to a sustainable footing. That is why the Chancellor announced at Budget that the rate of corporation tax will increase to 25% from April 2023, after the economy is forecast to recover to its pre-pandemic level.

While many businesses are struggling now and the Government are continuing to provide support for them, others are sitting on large cash reserves. To unlock those funds and support an investment-led economic recovery, from April 2021 until the end of March 2023 companies will be able to claim a 130% capital allowance super deduction on qualifying plant and machinery investments. This super-deduction makes the UK’s capital allowance regime truly world-leading, lifting the net present value of our plant and machinery allowances from 30th in the OECD to first.

Given the number of amendments and the number of speakers, I will try to keep my remarks relatively brief. Clause 6 sets the main rate of corporation tax at 25% from April 2023. The OBR forecasts that this will raise over £45 billion in the next five years. It should be noted that 25% is still the lowest headline rate in the G7—lower than in the United States, Canada, Italy, Japan, Germany and France. The clause also sets the main rate of corporation tax at 19% for the financial year beginning on 1 April 2022. That means the higher rate will not come into force until well after the point when the OBR expects the economy to have recovered to its pre-pandemic level.

To protect businesses with small profits from a rate increase, clause 7 and schedule 1 introduce a small profits rate for non-ring fence profits for the financial year beginning 1 April 2023. As a consequence, only around 10% of actively trading companies will pay the full main rate.

Clause 8 makes changes to increase the rate of diverted profits tax to 31% from 1 April 2023, along with apportionment provisions for accounting periods straddling the commencement date. This will maintain the current differential between the main rate and ensure the diverted profits tax remains an effective deterrent against profits being diverted out of the UK.

Clauses 9 to 14 make changes to encourage firms to invest in productivity-enhancing plant and machinery assets that will help them grow, and to make those investments now. Clause 9 introduces new capital allowances available for expenditure incurred by companies between 1 April 2021 and 31 March 2023. These include a 130% super deduction for new main rate plant and machinery and a 50% special rate first-year allowance for new special rate plant and machinery

Business investment fell by a record £12 billion between the first and second quarters of last year. Making capital allowances rates for plant and machinery investments more generous has the effect of stimulating business investment and enhancing productivity. As firms invest, they create new, or substitute better, assets for use in production. That increases labour productivity, as workers produce more output per hours worked through the use of new equipment that enables faster, higher-quality outputs.

The measure will greatly benefit British companies of all sizes, including those investing more than the £1 million annual investment allowance threshold, which are responsible for around 80% of total plant and machinery capital expenditure. The changes made by clauses 9 to 14 will allow all companies to reduce their taxable profits by 130%, or 50% up front, all in the first year—a cash-flow benefit powerful enough to encourage businesses to invest now. We expect the measure to cost around £25 billion over the scorecard period.

Opposition Members have tabled a number of amendments to clauses 6 to 14. Amendments 55 to 62 propose the removal of the associated companies rules that apply to the small profits rate. The rules will affect a small proportion of companies, but they are an essential feature of the regime to prevent profitable businesses from fragmenting in order to take advantage of a lower rate or creating unfair outcomes, and they were a feature of the previous regime on which these rules are based. In the absence of the rules, a consultant, for example, could provide his or her services through five companies with profits of £40,000 each and benefit from the small profits rate. I cannot believe that Opposition Members, or indeed any Member, would support that form of avoidance: restructuring in order not to pay the tax.

Several of the new clauses call on the Government to publish a review of the impact of these clauses and potential alternative policy approaches. The Office for Budget Responsibility considers the impact of policy changes in its fiscal forecasts and sets them out in its “Economic and fiscal outlook”, which is published alongside the Budget. Therefore, I can reassure Opposition Members that new clauses 17 and 20, which request reviews into the revenue impacts of a potential global minimum tax rate and the impact of the small profits rate, are not necessary.

New clauses 13, 19 and 21 request reviews into the investment and various economic impacts of clauses 6 to 14 across the UK. The economic impacts of the clauses have been reflected in the OBR’s forecasts published in its “Economic and fiscal outlook”, as were the impacts of reductions in the rate of corporation tax. The fiscal impact of any future agreement on international tax reform will be reflected in subsequent “Economic and fiscal outlook” documents.

Opposition Members have also tabled several amendments relating specifically to clauses 9 to 14. Amendment 11 would reduce the level of the super deduction to the current writing down allowance of 18% for main rate assets. That would have the effect of removing all the benefit conveyed by this groundbreaking new policy for shorter-life assets, while the benefit of a 50% first-year allowance for longer-life assets would remain. That would distort investment behaviour in favour of longer-life assets and reduce the positive benefits of the policy.

Various other amendments seek to restrict the relief only to certain companies, or require companies that claim the super deduction to meet more burdensome conditions than would be required for other first-year allowances. The super deduction is an intentionally broad-based tax relief, designed to ensure that as many companies as possible are able to benefit from this very generous policy, in order that they can invest in their own future to drive the economic recovery.

Regarding a new requirement for country-by-country reporting, I am pleased to say that this Government have championed tax transparency both at home and abroad. That is demonstrated by the requirement introduced in 2016 for large businesses to publish their annual tax strategy, containing detail on the business’s approach to tax and how it works with HMRC. However, the Government continue to believe that only a multilateral approach to public country-by-country reporting with wide international support would be effective in achieving transparency objectives and avoiding disproportionate impacts on the UK’s competitiveness, or distortions regarding group structures. The Government firmly believe that that should remain voluntary and that no further legislation is needed unless and until public country-by-country reporting is agreed on a multilateral basis.

New clauses 2 and 6 would have the effect of delaying the super deduction, but to delay the policy now would be highly irresponsible and would risk holding up the economic recovery that the policy will help to stimulate. The likely real-world effect of delaying the implementation of the super deduction would be that businesses would delay investment until they had certainty on whether the super deduction would be available. At a time when investment is most needed, delaying the implementation of the super deduction would thus have negative impacts on employment, growth and wages. Various other amendments would delay the measure, narrow its scope or replicate existing analysis and safeguards, and I urge the Committee to reject them.

Covid-19 Economic Support Package

Siobhain McDonagh Excerpts

Wednesday 14th October 2020 Commons Chamber

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

This debate is about fairness, because the costs and sacrifice faced by businesses in certain sectors are clearly not equal. That is often just down to definition and description contained in regulations. The word “unprecedented” has been used an unprecedented number of times in this House throughout 2020, but asking businesses in sectors that have remained closed since March to keep their doors closed for the winter months ahead really is unprecedented. Their simple guilt is that they supply the events and hospitality sector. They supply the flowers, the laundry and the lighting for events. I do not challenge the science. These businesses understand their responsibility, and the extraordinary circumstances that we are in, but their sacrifice cannot continue to go on unsupported.

Although the businesses that I am referring to today are from my constituency in south London, where additional restrictions are not yet faced, they are reflective of businesses and industries right across the country. I quote directly from an incredibly sad letter from Mary Cole, managing director and founder of Skyline Whitespace, a very successful modular reusable exhibition production company in my constituency. Mary, a single parent, has built the business up over 20 years while having leukaemia and a bone marrow transplant. She employs 52 people and had a substantial turnover and profit in 2019, but the closure of her industry means that sales have plummeted and, with winter events now ruled out, her company is in freefall. Put simply, it is on the brink of collapse. Government-backed adverts crassly suggest that she should rethink, reskill and reboot, but that is hardly welcome news for her staff, who may face imminent redundancy. The Chancellor promised to do everything that he could, so can the Minister make it clear to me how the business is expected to survive? I quote directly:

“We do not expect special treatment as a sector. We simply want to be treated like all others that have been allowed to reopen under Government-approved guidance. We currently do not feel like our industry is being treated fairly.”

That is no isolated case. I have been contacted by actors, musicians, dancers and organisations that support the events industry—floristry, lighting and linen businesses: Larry Walshe Studios, Just 4 Linen, Dash Linen, Crystal Everest Linen, Tuxedo Express, Lightwave Productions, White Light Ltd, Focus Lighting, Oxygen Event Services, La Credenza, and so many more. They are all unable to open, yet they are receiving little or no support.

This is about fairness. How are they supposed to survive? Stipulations and support must come hand in hand, so what message does the Minister have for those businesses today? A harsh winter appears on the horizon and must not be made even harsher. The entire sector is on the brink of collapse.

Stamp Duty Land Tax (Temporary Relief) Bill

Siobhain McDonagh Excerpts

2nd reading & 2nd reading: House of Commons
Monday 13th July 2020 Commons Chamber

[John Glen]

I am grateful, as ever, for my hon. Friend’s intervention. Of course, he has enormous expertise in this sector. He is right to say that there is a threat given the changes in the profile of LTV mortgages that are being offered. We hope that that will return to more of the normal schedule that we would have seen pre-pandemic. We will be actively looking at this, and I am in conversations with the banks and building societies about it.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Does the Minister agree that this is actually more than a threat for first-time buyers at the moment—it is a reality? First-time buyers are queuing online for websites of lenders in an effort to get the small number of 5% deposit mortgages. Providing more incentive to people who already own their own home or are part of the buy-to-let market effectively crowds out first-time buyers.

[John Glen]

I thank the hon. Lady for her point. I would look at it in terms of opening up the market, creating more churn and momentum that allows all participants to be able to get on the housing ladder.

The Government’s cutting stamp duty land tax in this way will mean that nine out of 10 people buying their main home will pay no stamp duty at all, and buyers can save up to £15,000. In my own constituency, the average family looking to buy a home worth £349,000 will go from paying £7,450 in stamp duty to absolutely nothing. Indeed, this Bill will take most properties outside of London and the south-east out of stamp duty entirely.

The Bill is the latest in a long line of measures from this Government designed to support current and prospective homeowners in this country. Historically, stamp duty has been charged at a single rate on the whole purchase price of a property, with different rates for different value bands. The same rate of tax was charged irrespective of the number of properties owned by the buyers. In 2014, the Government reformed stamp duty land tax on residential properties, cutting the tax for 98% of buyers who pay it, unless they are purchasing additional property. In 2015, the Government introduced the higher rates of SDLT, which apply on purchases of additional residential properties such as second homes and buy-to-let properties. Finally, in 2017, the Government introduced first-time buyers relief. This increased the price at which a property becomes liable to pay stamp duty, for first-time buyers, from £125,000 to £300,000, with a reduced rate between £300,000 and £500,000.

Together, these reforms have made the tax system fairer and more efficient. They have cut the cost of home ownership for first-time buyers, helping more than 500,000 families to secure a foot on the housing ladder. This Bill will cut the cost of home ownership further, at a time when personal finances are under considerable pressure. In doing so, it will inject new momentum into the property market, protecting thousands of jobs in both the construction industry and the wider economy.

This stamp duty cut is one of several measures in the Government’s plan for jobs that will benefit families and businesses across the country. From September, homeowners and landlords will be able to apply for a green homes grant of up to £5,000 to make their homes more energy efficient. For low-income households, we will go even further, with vouchers covering the full cost up to £10,000. This, too, will support local jobs, as well as reducing carbon emissions and cutting energy bills for hard-pressed families.

--- Later in debate ---

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I rise to speak not as somebody who opposes owner occupation but as somebody who celebrates it. I am new Labour to my core. I want choice and opportunity for all, and this stamp duty measure does not do that. Members would have to believe that we have a perfect housing market in which supply matches demand, but we do not have enough properties of any tenure—whether to rent, buy or socially rent. This measure will squeeze out the people we all want to benefit.

Who benefits from this measure? People in London. Who does not benefit? People in the north-east and the north-west, who already do not pay those levels of stamp duty.

[Miriam Cates (Penistone and Stocksbridge) (Con)]

Will the hon. Lady give way?

[Siobhain McDonagh]

No.

The measure allows us to believe that we can change the housing market by tinkering at the edges, but we know that tax forgone is money that cannot be spent on something else.

Owner occupation has reduced since 2000 from a height of more than 70% to 62%, while private renting has gone up by 20%. People aged between 35 and 44 have seen a three times increase in their private rents. I say to hon. Members, from a south London perspective, that no good comes from that. The families I see in private rentals will never escape into owner occupation, as I and my parents had the opportunity to do.

The only way to solve the housing market is by building more homes of all tenures—renting and buying. It is not just me, a Labour MP, who believes that. Sir John Armitt, the chair of the National Infrastructure Commission said only last week that the planning system was not the main obstacle to affordable homes and that there was no point hoping

“somebody’s going to decide that they’re going to build lots of homes, even though there isn’t a market for the homes or they’re not going to make a profit…The last time we built 300,000 homes plus was in the 1960s and 1970s, 50 per cent of those were private sector homes, 50 per cent delivered by local authorities…To get to 300,000 personally, I don’t see how we get there in a meaningful way without some sort of government intervention with local authorities, or with the housing associations, to deliver more affordable homes on a large scale.”



When first-time buyers come to us as Members, they will talk to us not about the fact that stamp duty is going up, but about the fact that they cannot get a mortgage: that the banks and building societies are requiring deposits not of 5% or 10%, but of 15% — increasing deposits, and at increasingly high percentages to get those mortgages. Let us contrast that with the situation for private landlords: a bank is more happy to lend, as they have more equity and more money, so they are a safer bet.

With an employment market that is going to be so difficult in the autumn, and with young people being disproportionately impacted by losing their jobs, there is a real problem. I say this not to score political points, but because I am personally worried that the divisions in our society will undermine our society. If we make it harder for people to own, they will resent those who do so. If young people cannot get on to the property ladder because they cannot save or keep enough to pay their rent and also save for a deposit, they will resent their grandmother or grandfather for their ability to live in their house, and that does not help anybody.

I would like to end by talking about the people who cannot even be part of this debate, who come to my advice surgery, as they probably go to other Members’ advice surgeries: people who are living in one room in a shared house with their children. I do not know whether it is a London or south-east phenomenon, but I wish others could join me on a Friday to talk to people who work as carers, in shops and in the hospitality trade, and who are disproportionately from black and ethnic minority communities, who have their family in one room and share that house with perhaps four or five other families. Not for them the ability to protect themselves from coronavirus by using their own bathroom and having access to their own kitchen; they are never, ever going to have a bathroom and kitchen of their own, in the 21st century.

These are people who strive and work, who get up early in the morning, who come home late at night to earn what none of us would go out to work to earn, and who live in conditions that are truly appalling. These people will never get access to housing because their landlords are not going to evict them. Their landlords are making loads of money from them, so why would they evict them? Nevertheless, if we want these people to believe that there is hope—that there is a better future, that there is a reward for work—we must give them some opportunity to buy their home or rent a decent place at a price they can afford.

We talk about mortgages that are two and a half or three times people’s salaries. I see people who are paying 70% or 80% of their take-home pay to keep their accommodation. Their hopes for their kids and their hopes for their futures are dampened. We can all pretend that this does not matter, that we live in a stable society and that it will be okay, but it will not be okay, because coronavirus has shed so much light on how unfair and unequal our society is, and those of us who have are threatened as much by that as those who do not have, because we cannot sustain a democracy in that environment.

So this stamp duty measure is, in the overall picture, a small issue, but if it goes to those who already own their home or want to buy a bigger and better home at the expense of the young people trying to make out in life, we will all suffer. We need to look at this situation and be broad-minded and ask how we solve this problem forever.

I want to leave Members with a statistic. One in 10 adults in this country owns a second home while four in 10 adults own no home. That is not a sustainable future for our country, for our democracy or for the families in that position.

--- Later in debate ---

[Sarah Olney]

No, I would not concede that, and I will tell the hon. Member why: it is because we are talking about sectors that are not going to be improved or helped by a revival of the housing market. A lot of people in my constituency are working in the creative industries, for example.

[Siobhain McDonagh]

I am not sure whether the hon. Lady saw the article in The Sunday Times yesterday identifying not only first-time buyers as people having problems in securing mortgages, but self-employed people, because of banks and building societies being concerned about their future incomes.

Financial and Social Emergency Support Package

Siobhain McDonagh Excerpts

Wednesday 25th March 2020 Commons Chamber

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I would like to concentrate on a few of the enormous number of issues that this crisis is throwing up, and which our constituents are contacting us about and expecting us to have the answers to. I appreciate the difficulties for the Government, but here are just a few of the most pressing issues.

The first issue is children’s hospices. In the best of times, children’s hospices provide invaluable comfort and support to some of the most vulnerable children and families in our society, but these are not the best of times. Despite the range of measures announced by the Government to support the NHS, businesses and individuals, many children’s hospices rely on charitable donations and already receive very little Government funding.

The urgency of the situation is illustrated by Shooting Star Children’s Hospices, which cares for babies, children and young people with life-limiting conditions and their families throughout all 11 districts of Surrey and across 15 boroughs of London. Just 10% of its funding is from the NHS, with the rest through charitable donation. On Monday, Shooting Star had to close Shooting Star House in Hampton, owing to the immediate financial implications of coronavirus. That could get worse. If Government support does not come urgently, the charity might be faced with closing its doors permanently in all its hospices.

Many children’s hospices across the country will be in the same situation, but without hospice services, families will be forced to rely on the NHS or council social care at a time when both are under extreme pressure. The need does not disappear. My question to the Minister and the Government is, will they provide urgent help? I ask that not only on an emotional and a moral basis, but on a financial basis.

If anybody compares the cost of a bed in a children’s ward in an acute hospital with the cost of a bed in a children’s hospice, far more taxpayers’ money goes into the hospital, and the care cannot be as great, because the hospices are the specialists in that regard. For relatively little amounts of public money, the Government can save more money and provide much better care to those children and those families.

Secondly, my hon. Friend the Member for Croydon Central (Sarah Jones) has already raised the issue of evictions, but the question needs to be clarified. Section 21 no-fault evictions are the biggest single cause of homelessness in this country. Last week, I called on the Prime Minister to ask the courts to stop all section 21 evictions, to take pressure off hard-pressed councils and worried families. The Prime Minister reassured me and this House that legislation would be brought in. The Housing Secretary assured me, face to face, directly after PMQs, that there would be no evictions for three months. Contrary to that, however, the Government proposals instead appear simply to extend the notice period for section 21 notices by four weeks.

What then happens to all those tenants who already have an expired section 21, or who already have an unexpired possession order, let alone those people with expired possession orders who are waiting for the bailiffs to call at any moment? How can they stay at home to save lives if they are going to be evicted? We have even heard unbelievable reports of landlords threatening to evict health workers, because of their risk of exposure to coronavirus. That is completely unacceptable. Will the Government urgently clarify their position, and legislate so that no one is kicked out of their home in the heart of a global pandemic?

A further, smaller but nevertheless important, issue to those going through the process is for those who will be completing on the sale of their homes over the coming week. Miss O from Morden emailed me a number of times over recent days, as she is due to complete her sale on Friday. She has been told by her solicitor:

“If you are unable to complete on time, whatever the reason, including coronavirus, you will be in breach of contract”.

She has been told that if she cannot complete on Friday, she will be fined or liable to costs of £33,000. Miss O is entirely dependent on the banks and building societies working, and on the home removal company still being able to move her goods out of her home, for her chain of four sales actually to go ahead. She is a woman who has worked hard to own her home, and she has been through a difficult process of selling her home. What advice can we give her?

Thirdly, I would like to discuss charities. I am sure all colleagues from across the House share my admiration and gratitude for the selfless work that is done by the voluntary and charitable sector at this extraordinarily challenging time. Charities in my constituency are calling for urgent support. Their questions are clear: how will the job retention scheme affect staff who are furloughed—I did not know what that word meant until today—but want to remain working as volunteers to keep these essential services going? The current guidance for employees states that to qualify for the scheme, they should not undertake work for their employer while furloughed. Will charities receive emergency grants to survive at the time when they are needed most? Donations and fundraising have plummeted. Will small business rate relief be extended to smaller community organisations, too? The Prime Minister indicated this morning that he would look at a package of measures for community organisations, but organisations such as the Commonside Community Development Trust in my constituency simply do not have the time to wait. Will these measures come in, and what will they entail?

Finally, I want to mention gas and electricity prepayment meters. Have the Government considered calling on companies to override gas and electricity key meters so that no one needs to leave their house to recharge a key and, importantly, no voluntary organisation needs to spend its time working out how they can do that? Current policies across the industry differ greatly. SSE can send pre-loaded credit to people’s homes, whereas E.ON’s emergency credit scheme requires customers to visit their local top-up stores three times in advance to get their key activated. Similarly, EDF is helping vulnerable customers by offering them pre-loaded keys, to a total value of about £3 million, and even offering to collect deliveries from chemists and shops. British Gas, meanwhile, is offering next to nothing, other than that customers can phone the company if they get into difficulties. We know that some of our most vulnerable constituents have prepayment meters. They are precisely the people who we do not want to have to go out to charge their keys, even if they are in a financial position to do so.

I have outlined four urgent measures on hospices, evictions, charities and utilities that could make a key difference to so many families at this time. I appreciate that the situation is coming at the Government from all sides, but we need answers to these very basic questions.

As many have said, although we are in a terrible time, we are seeing the greatest sacrifice and kindness from so many of our constituents. Merton Voluntary Service Council has set up a scheme to help people and get volunteers. Only yesterday, Mrs B from Mitcham rang me to say that she could not get out to shop because she was caring for her disabled husband. Within an hour, the voluntary service council had the shopping on her doorstep. Today, my great friends Jenny and Mark Allison, together with a team of volunteers, have run a food bank from Commonside trust, which they have trialled to make sure that it poses no medical threat to the volunteers or to the families who need its help. Without these people, we will not get by. They are silent, and they do not look for glory, but I just want to say thank you to each and every one of them.

Self-employed Persons: Financial Support

Siobhain McDonagh Excerpts

Tuesday 24th March 2020 Commons Chamber

[Steve Barclay]

My hon. Friend is right to draw attention to the pressure

and decisions that Anna and so many self-employed people are facing at this time. I draw attention to the fact that the loans are interest-free for 12 months. One of the key themes we are very conscious of is that it is a health emergency that is impacting on our economy. These were viable businesses before that health emergency arose, and they will be viable businesses after we have overcome it. The question is, how do we bridge the gap? How do we support Anna and others through this period? The interest-free loans are not the only measure; I have just drawn the House’s attention to other measures that are available, and I urge Anna and others to take advantage of them.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I appreciate the difficulties in coming up with these arrangements, but I draw the Minister’s attention to the fact that small traders are simply applying for universal credit, blocking up the universal credit system, because they are desperate for money from somewhere. That is causing a problem for the Department for Work and Pensions, so delay does not get the problem to go away. People do not wait; they just try to find something else, which causes a knock-on problem.

[Steve Barclay]

I accept the concern the hon. Lady raises, but I think she would equally accept that this is an unprecedented challenge and that staff in the DWP and elsewhere are working heroically to address the increased volumes. The best way for all of us to address this issue is through wider support for the economy as a whole. That is what was behind, first, the £30 billion of fiscal measures announced by the Chancellor at the Budget; the further announcement of the £350 billion, including £330 billion of loans, and the wider package last Tuesday; and the further measures announced by the Chancellor on Friday. That is on top of the measures the Bank of England has taken—for example, reducing base rates, and the £200 billion of bonds. A range of measures have been taken to support the economy and to reduce that blockage, but I absolutely accept that the numbers have increased, and we are reprioritising work in the DWP to assist with that.

Budget Resolutions

Siobhain McDonagh Excerpts

Monday 16th March 2020 Commons Chamber

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

These are turbulent and worrying times. I know that all Members of the House share my gratitude and admiration for the dedication of the doctors, nurses, carers, paramedics, police, teachers, shop workers, cleaners, delivery drivers, travel staff, charities, journalists and all those up and down our country who are keeping everyone as safe and informed as possible in the most testing circumstances.

This is no time for political point scoring, but the Budget is not just for the present; it is for the future, and it is imperative that it is analysed thoroughly. Some £500 million has been pledged to Epsom and St Helier University Hospitals NHS Trust, but my local NHS proposes to use those vital funds to downgrade both Epsom and St Helier hospitals, reducing two A&Es to one and moving services away from the most deprived area and the people who need them most. St Helier hospital stands to lose an extraordinary 62% of beds and to become nothing more than a glorified walk-in centre. Under the spotlight of a pandemic, Members in every corner of the House can see clearly that we are in no position to be shrinking our acute health services. I welcome every penny committed to our NHS, but now more than ever we see the importance of the health service’s operating at full capacity when it is needed the most at St Helier hospital on its current site.

In unprecedented times, we operate day to day, but this Budget will outlive the coronavirus crisis. On Friday, as always, over half the constituents I met at my weekly advice surgery came to see me about a housing issue. I met Mrs L, who has been trapped in so-called temporary accommodation for two years, living in just one room and sharing a bed with her eight-year-old son, who suffers from epilepsy and autism, and her four-year-old daughter. I met a hard-working couple, Mr and Mrs N, who share a one-bedroom starter home with their two children, and their two friends and the friends’ two children. That is four adults and four children crammed into a one-bedroom starter home. I met Mrs B, who is facing eviction from her privately rented home, where her family have lived for the past 20 years. She cares for her disabled daughter and relies on universal credit, but an extraordinary £1,000 hike in the monthly rent is forcing the family out and into temporary accommodation. There should have been a Budget for these families.

I am used to reading warm promises but the Budget lacked even enough of those. According to the Budget papers, the Government have made good progress on boosting the housing supply. I must have been on a different planet for the past 10 years. There are 1.2 million families on social housing waiting lists across our country, but just 6,464 social homes were built in 2017-18, the second lowest number on record. At that rate, it would take 172 years to give everyone on the current waiting list a social rented home. Of course extra funds in the affordable homes programme are welcome, but only if affordable homes are truly affordable, which is not 80% of market value. What is more, it remains unclear exactly how much of the new settlement will be made available for social rented homes. In the light of that, I extend an invitation to any Minister, on any Friday, to attend my weekly advice surgery to see what hope they can offer to the increasing number of my constituents waiting for a place to call home.

[Several hon. Members rose—]

Beer and Pub Taxation

Siobhain McDonagh Excerpts

Wednesday 5th February 2020 Westminster Hall

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Thank you, Mr Gray. I am delighted to be called to speak so early. My only problem is trying to rule out a lot of my speech, and the important pub puns I had included in it—there was to be a gift of a pint for those who identified all of them.

My contribution will focus on small breweries and small breweries relief, particularly in relation to the Wimbledon Brewery in my constituency—I cannot imagine why they wanted to call it the Wimbledon Brewery, rather than the Mitcham and Morden Brewery, but I will leave that to Members’ imaginations. Although the relief is vital, the current system stifles growth and profitability for small brewers, discouraging exports and mergers. For the benefit of Members without small breweries in their constituencies, let me explain that if a brewery produces less than 5,000 hectolitres per year, it pays 50% of the full excise duty of the big breweries. That is to help balance the economies of scale from which the biggest breweries benefit, ensuring that the consumer has a greater choice and that smaller breweries can stay in business.

However, the 5,000 hectolitres point is a cliff edge. If production goes above that level, the brewer pays excise duty not just on the additional amount produced over the threshold, but on the whole production. A brewer would need to reach levels of around 20,000 hectolitres to offset the additional tax by the economies of scale. Wimbledon Brewery was in no man’s land, producing around 8,000 hectolitres per year—above the threshold but far below the 20,000 summit. It was therefore burdened with the extra tax, but without the economies of scale. For a business of that size, no man’s land is simply not an option, and it was forced to fall back below the threshold, limiting production and reducing the staff count from 15 to 10.

In its current form, the small breweries relief has punished Wimbledon Brewery’s good business practice and disincentivised its growth. The relief has acted as a barrier to mergers and acquisitions for everyone other than the biggest breweries in the industry. Surely a more progressive scale of relief is necessary, aligned with the industry’s economy of scale, to ensure that all brewers are incentivised to grow. Take the Irish relief for small brewers—the Irish are always good people to look to when talking about alcohol. A proportion of their export volume is excluded, yet such brewers can still obtain the maximum relief.

Urgency is paramount, with small brewers warning me in advance of the debate that a further period of consultation would simply lead to even more unintended consequences. For those brewers, this hangover really has gone on for too long. The upcoming Budget is the Government’s opportunity to support this much-loved sector, to make the system fairer and to support business growth. Long live the local.

Special Educational Needs and Disability Funding

Siobhain McDonagh Excerpts

Wednesday 29th January 2020 Westminster Hall

[Michelle Donelan]

The hon. Lady will note that that was a key part of the Conservative party manifesto, which allowed us to gain our majority Government.

In conclusion, I am enormously grateful for the contributions that have been made today, and am more than happy to answer separately any questions about particular local issues. Regarding the hon. Member for Croydon North’s comment about the supply, I want to reassure him that we are taking that very seriously as part of the review. I am also grateful for the support that the hon. Member for Twickenham has given to the important topic that is on today’s agenda, raising its profile and showing the level of interest in it across the whole country. The review of SEND is crucial for making sure that we deliver the outcomes that these children deserve, and demonstrates how seriously this issue is being taken across the Government, not just in the Department for Education. I want to reassure all hon. Members that, despite the claims made today, no children shall be abandoned on this Government’s watch.

[Siobhain McDonagh (in the Chair)]

I call Munira Wilson to sum up.