Data Protection and Digital Information Bill

Debate between Viscount Younger of Leckie and Lord Sikka

Committee stage
Monday 22nd April 2024 Grand Committee

[Lord Sikka (Lab)]

I would be convinced about the Government’s intentions, and would not press this amendment at the next stage, if the Minister can name just one big accounting firm which since 2010, as a result of a court judgment that said it was selling unlawful tax avoidance schemes, has been investigated, fined or prosecuted. If he can give me such an example then I will be convinced that the Government are seriously tackling tax fraud and its enablers.

[Viscount Younger of Leckie (Con)]

The noble Lord has set me quite a challenge at the Dispatch Box. It is out of scope of today’s session but, having said that, I will reflect on his question afterwards.

I am aware that time is marching on. My noble friend Lord Kamall asked about burdens on banks. We believe that the burdens on banks will be relatively low.

The noble Baroness, Lady Sherlock, made a number of points; I may have to write to her to expand on what I am about to say. Removing the requirement for third parties to provide legible copies of information means that DWP could receive the information but there is a risk that the information is not usable; that is my answer to her points. This could limit the data that DWP receives and prevent us utilising the power in full, which could in turn impact the savings due to be realised from this important measure.

I turn to the final amendments in this group, which were raised by the noble Baroness. They would place requirements on the Secretary of State to issue statements in the House and consult on the code of practice. We will talk more about the code of practice later on in this debate, and I have already made clear my firm opinions on it: we will take it forward and are already working on it. There will be a consultation that will, of course, allow anybody with an interest in this to give their views.

I turn to the number of statements that must be made in the House regarding the practical use of the measures before powers can commence, such as the role that artificial intelligence will play or assurances on any outsourcing of subsequent investigations. This is an important point to make and was raised by other Peers. I want to make it clear that this measure will be rolled out carefully and slowly through a “test and learn” approach from 2025, in conjunction with key third parties. To make these statements in the House would pre-empt the crucial “test and learn” period. I say again that discussions with the third parties are deep and detailed and we are already making progress; this point was made by the noble Lord, Lord Clement-Jones, on the link with banks and third parties.

Importantly, I assure the noble Baroness, Lady Sherlock, that we will not make any automated decisions off the back of this power; this was also raised by the noble Baroness, Lady Kidron. The final decision must and will always involve a human being—a human agent in these cases—and any signals of potential fraud or error will be looked at comprehensively. I am grateful for the remarks of my noble friend Lady Buscombe on this matter.

I know that I have not answered a number of questions. Perhaps I can do so in our debate on another group; otherwise, I certainly wish to answer them fully in a letter. I hope that I have explained clearly, from our perspective, why this power is so important; why it is the right power to take; and how we have carefully designed it, and continue to design it, with the key safeguards in mind. I strongly value the input from all those who have contributed today but I remain unconvinced that the proposed amendments are necessary and strengthen the power beyond the clear safeguards I have set out. With that, I hope that the noble Baroness will not press her opposition to Clause 128.

[Viscount Younger of Leckie (Con)]

Absolutely; I am keen to make sure that I answer on that. It may be possible to do so in the next group but, if not, I will certainly do so in the form of a precise letter—added to the larger letter that I suspect is coming the noble Lord’s way.

[Lord Sikka (Lab)]

A number of pensioner groups are watching these proceedings. I have received some messages. They are asking, “When is the Minister going to answer the questions asked about the operation of the surveillance of recipients of the state pension, especially those who have foreign accounts?” I assume that the Minister will clarify that in any subsequent letter to me.

[Viscount Younger of Leckie (Con)]

Absolutely; the noble Lord will know that I have not managed to answer all the questions. I have tried to bring in everybody on this important and serious debate. The answers will be forthcoming.

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[Viscount Younger of Leckie (Con)]

I know that I said earlier that child benefit was not included. I will clarify that child benefit is not a benefit for which the DWP is responsible or has any functionality for. This measure will be exercised by the DWP Secretary of State, and we cannot use this power for that benefit.

I was in the middle of answering a question from the noble Baroness, Lady Sherlock.

[Lord Sikka (Lab)]

My Lords—

[Viscount Younger of Leckie (Con)]

I will finish this answer, if I may. The DWP personal information charter lists banks and financial institutions, and other parties, among the parties with which DWP may share data and from which we may receive data. It also lists checking accuracy and preventing and detecting fraud among the purposes for which we may share or receive information.

A claimant will not be notified if their account details have been returned to DWP by a third party as that could alert fraudsters to the criteria, enabling them to evade detection—I think that is a valid point—but they will be notified if a DWP agent determines that a review is required as a result of the information provided by the third party. That notification will be done through the business-as-usual processes.

Moving on to defining working-age payments in legislation, which relates to the final amendment in this group, Amendment 235, which was tabled by the noble Baroness, Lady Sherlock, it would require the Government to specify in regulations the working-age benefits with which this power could be used. As she demonstrated, there is a wide range of benefits and therefore potential avenues for fraudsters to seek or exploit or for error to creep in. That is why it is important that the power enables the department to respond proactively as new fraud risks emerge.

That said, as the noble Baroness knows, the power will not be exercisable in all the benefits she listed—I took note of her long list—such as child benefit, which we have just mentioned, because the legislation is drafted in such a way that it could reasonably be exercised in relation to benefits for which the Secretary of State is responsible. I reassure the noble Baroness, Lady Sherlock, and the Committee that in the first instance, we plan to use this with universal credit, employment and support allowance—ESA, pension credit and housing benefit. That is the way forward.

There may be a number of questions that I have not addressed, but I hope that I have continued to make the case for why this measure is so important and our aim to tackle fraud and error. I continue to make the case that it is proportionate and that proportionate safeguards are in place. With that, I hope the noble Baroness will agree to withdraw her amendment.

Women’s State Pension Age

Debate between Viscount Younger of Leckie and Lord Sikka

Tuesday 26th March 2024 Lords Chamber

[Viscount Younger of Leckie (Con)]

I thank the noble Lord, Lord Dodds, for his support and endorsement of our stance on the triple lock and our decision to include it in our manifesto. On the points on WASPI that he has mentioned, absolutely—I think I have said this before—I recognise the strength of feeling and I am aware of the urgency in dealing with many of these matters. I probably will not repeat it again, but just to say it briefly, I have highlighted very clearly the complexity of the issues. The noble Lord would not expect me to be in a position to set out a timetable, even if I could. So I am afraid that I will disappoint him by sticking to the line, which is that we will be coming back to Parliament without undue delay.

[Lord Sikka (Lab)]

My Lords, I congratulate the WASPI and Back to 60 campaigners on their quest for justice. The ombudsman’s reports have said that:

“Our investigation found maladministration … thousands of women may have been affected by DWP’s failure to adequately inform them that the state pension age had changed”.


This has led to anguish, hardship and many other problems. I have met many of these women and listened to their arguments and to their case. This problem of not telling them about the hike in pension age is part of a bigger problem about how women have been treated by successive Governments. Despite the Equal Pay Act 1970 and the illusions of equality, women continue to be treated as second-class citizens. The gender pay gap persists, which then leads to the gender pension gap. Despite hiking the state pension age for women, women continue to receive a lower state pension. No attempt whatever has been made to equalise the two, although the equality horse was ridden to raise their state pension age. Unfortunately, many of the wronged women have died. I am sure that the House would agree that justice delayed was justice denied.

I do not understand what, in the light of this report, the Government need to consider. It is very clear that women have been wronged. I press the Minister to give a commitment that women will be compensated for the anguish and hardship that they have suffered and that this compensation will be paid, I hope after the Easter break.

[Viscount Younger of Leckie (Con)]

I will disappoint the noble Lord by saying that I am not able to give any such commitment, apart from those that I have given. I am beginning to sound like a long-playing record but, despite what he said, these are complex matters, and he will have to respect that. I want to pick up on one thing that he mentioned—the role of DWP. Yes, the report’s words, not mine, were that the PHSO found maladministration in the steps that the department took between 2005 and 2007 in relation to notifying the women affected. I gently point out that this was when the Labour Party was in power. The point has been made before, but it is worth making. However, this is one of the many complexities. I am unable to answer the precise questions. I hope that the noble Lord respects this.

Employment and Support Allowance

Debate between Viscount Younger of Leckie and Lord Sikka

Wednesday 18th October 2023 Lords Chamber

[Viscount Younger of Leckie (Con)]

Although I do not have information on that specific programme here, I will certainly write to the right reverend Prelate. It no doubt fits in well with and complements many of the other initiatives we are taking, including, as I mentioned earlier, the work coach support, the disability employment advisers, the Access to Work grants and the Disability Confident scheme—I could go on.

[Lord Sikka (Lab)]

My Lords, in May 2010, 527,000 people were claiming the employment and support allowance. At that time, the NHS England waiting list was 2.5 million; now, it is 7.8 million and 1.63 million people are claiming the allowance. Clearly, there is a correlation between the two statistics. Can the Minister explain why the Government have failed to address the main cause—the degradation of the NHS?

State Pension Underpayment Errors

Debate between Viscount Younger of Leckie and Lord Sikka

Tuesday 16th May 2023 Lords Chamber

[Viscount Younger of Leckie (Con)]

Very much so; it is being done. I think I alluded to this earlier. Any systemic problem has to be looked at as a matter of urgency. On the other question the noble Baroness raised, I mentioned the number of extra people we have put on to this particular case. I reassure her and the House that the data shows that we have reviewed an average of more than 15,000 cases per month between November 2022 and February 2023, compared with an average of only 5,000 per month over the first 22 months of the exercise.

[Lord Sikka (Lab)]

My lords, it is estimated that between 20,000 and 25,000 pensioners die each year because of low income and the hard choices they have to make between heating and eating. Can the Minister explain whether any assessment has been made of the deaths and hardship caused by underpayment of state pension over the last 13 years?

[Viscount Younger of Leckie (Con)]

No, I do not have any figures to support the argument that the noble Lord is proffering. What I can say is that we very much take note of wanting to support the most vulnerable. We have increased benefits in line with the September 2022 consumer prices index of 10.1%, including around 12 million pensions.

Pensions Tax Relief: Employment and Retention

Debate between Viscount Younger of Leckie and Lord Sikka

Tuesday 1st November 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

Indeed, it is very important that we look after those at the senior end of the NHS; much has been made of that in the previous Question and this one. As the noble Lord has alluded to, tax relief offered on pension contributions is expensive, costing the Exchequer £67.3 billion in 2020-21, with around 58% relieved at the higher and additional rates. As I mentioned earlier, there are a number of other aspects on which we have taken action, and perhaps there is more to do to be sure that we can retain our very best doctors and senior clinicians.

[Lord Sikka (Lab)]

My Lords, as the Minister just said, the pension tax relief is about £67.3 billion, the majority of which goes to higher and additional rate taxpayers. Could he explain the steps that the Government have taken to eliminate the regressive effects of the tax breaks for the richest?

[Viscount Younger of Leckie (Con)]

This is a familiar angle from the noble Lord, and I have already mentioned a number of the steps we have taken. He will know that individuals can be subject to different tax treatments depending on the type of income they are receiving and whether they are employed, self-employed or working through a company structure. I reassure him that it is very important that we find the best way to reward those at the very top, particularly our senior clinicians, otherwise they might move abroad. We must also look at those at the other end of the scale, particularly at this very difficult time.

Incomes and Prices

Debate between Viscount Younger of Leckie and Lord Sikka

Monday 31st October 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

I have said already that the unions play an important part through their role in representing workforces, and I stick by that, but it is not just that. There is the amount of support that we are giving over and above it. The noble Lord mentioned the energy price guarantee, but millions of the most vulnerable households will receive £1,200 of support this year through the £400 energy bills support scheme, the £150 council tax rebate and the one-off £650 cost of living payment. It is to do with how much they earn, but also how much we can stretch their pockets.

[Lord Sikka (Lab)]

Earlier, the Minister referred to the inflationary pressures from wage rises. Why is he silent on the inflationary pressures caused by corporate profiteering, especially from energy companies, escalating executive pay and the billions being spent on share buybacks and dividends? Could he explain why he is being inconsistent?

[Viscount Younger of Leckie (Con)]

The noble Lord will be aware that there is already a levy on energy companies. In terms of those earning at the higher level, I said in response to a question last week that I thought that raising the cap on bankers’ bonuses, for example, was a very good thing. It is very important that we attract the very best people from around the world as our investment bankers, who might bring in about £30 million just on one deal. It is better that it comes into the UK than to Frankfurt, Paris or New York.

Direct Tax and National Insurance Contributions

Debate between Viscount Younger of Leckie and Lord Sikka

Tuesday 25th October 2022 Lords Chamber

[Lord Sikka]

To ask His Majesty’s Government what plans they have, if any, to ensure that an individual with an annual earned income of £30,000 will not pay more in direct tax and national insurance contributions than an individual with an annual unearned income of £30,000.

[Viscount Younger of Leckie (Con)]

My Lords, different forms of income are subject to different tax treatments. For example, national insurance contributions are charged only on earned income, reflecting their historic basis as a social security contribution. The Government have acted to reduce the generous tax treatment of unearned income, including reducing the generosity of the dividends tax allowance in 2018. However, the Government keep all taxes under review.

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[Lord Sikka (Lab)]

My Lords, I thank the Minister for his reply. A worker on £30,000 a year currently pays £3,486 in income tax and £2,092 in national insurance—a total of £5,578. A speculator with £30,000 of capital gains pays no national insurance, even though he uses the NHS and social care, and pays only £1,770 in capital gains tax. This means that the worker pays £4,000 a year more in taxes than a speculator. Can the Minister explain why the tax system hits the workers the hardest?

[Viscount Younger of Leckie (Con)]

The noble Lord gives one example. As he knows, individuals can be subject to different tax treatments depending on the type of income they receive and whether they are employed or self-employed or working through a company structure. I reassure him that the Government have taken action to reduce this disparity in tax treatment, for example by reforming the taxation of dividend income, reforming the main rates of dividend tax in 2016 and reducing the tax-free dividend allowance from £5,000 to £2,000 from 2018.

Health and Social Care Levy (Repeal) Bill

Debate between Viscount Younger of Leckie and Lord Sikka

2nd reading & Committee negatived & 3rd reading
Monday 17th October 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, despite the challenging environment I said I was pleased to open the debate and I am very pleased to close it. I thank all noble Lords who have contributed this afternoon, and I will do my best to respond. As noble Lords might imagine, I may not be able to answer all questions, some of which will be due to what is happening or has happened over the past few days, but I shall have a go.

First, I noted the strong remarks of the noble Lords, Lord Macpherson and Lord Lipsey, on keeping the levy. I make no bones about it; the decision has been made to reverse the levy and make it up through general Treasury funds. A number of noble Lords, including the noble Lord, Lord Lipsey, the noble Baronesses, Lady Bennett, Lady Brinton and Lady Kramer, and the right reverend Prelate the Bishop of London asked about the amount that the Treasury has set aside in place of the levy and—the real question—whether it is based on real terms. It will be in cash or nominal terms. This is because the budgets were announced last year at the spending review and are now fixed on that basis until 2024-25. I hope that helps to answer that question. The bottom line is that reversing the levy delivers a tax cut for 28 million people worth, on average, as I said at the beginning, £330 every year.

I will respond to a number of questions raised by noble Lords, including the noble Baroness, Lady Kramer, who is absolutely right that we have to continue to bear in mind—as I do—that very many people are suffering at the moment, not just with their bills but mentally, which puts a huge strain on the National Health Service. I will make a few remarks about the NHS, which remains a vital sector in our country.

The noble Lord, Lord Macpherson, said that we should keep the levy; the general thrust of his remarks was that there should perhaps be, alternatively, a rise in income tax. The tax cut is designed to support people and businesses, with an average saving of £330 for people next year. As I said at the beginning, 920,000 businesses will save an average of about £9,600 in 2023-24. To reiterate, I say that the Chancellor has acted to demonstrate fiscal credibility. Further detail may come out on 31 October.

As I said, it remains incredibly important to support the NHS. However, as the new Chancellor said very frankly this morning, an ongoing efficiency and reprioritisation review has started, covering all departments. Although I have not heard what he said in the Chamber, I suspect it was with the same frankness. He also said that there could be cuts. However—I do not know whether he said this, but I will—the NHS is incredibly important, so we have to bear in mind that juxtaposition. There may or may not be further announcements on 31 October; I really have no idea about that.

The noble Baroness, Lady Brinton, and the noble Lord, Lord Sikka, asked further questions about the NHS. To paraphrase, they stated that it is at crisis point and it is not even winter. The levy has been reversed, but the overall level of funding for health and social care services will be maintained, as I said earlier, at the same level as if it was in place. The Deputy Prime Minister and Secretary of State for Health and Social Care has set out more detail on her priorities for health and social care in Our Plan for Patients. The money will go to the NHS, as I think noble Lords asked.

[Lord Sikka (Lab)]

Will that be in real terms?

[Viscount Younger of Leckie (Con)]

As I made clear at the beginning, it will be in nominal or cash terms.

Further to the theme of health, picking up a very fair question from the noble Baroness, Lady Brinton, on why we are not increasing spending on health and social care, I say that the Government are committed to taking a responsible and disciplined approach to spending. The Government will continue to ensure that we deliver social care reforms and that the NHS gets the resources to tackle the elective backlog, reduce A&E waiting times and support its workforce. I very much listened with care to the important points she raised, particularly about ambulance waiting times. I know there is more.

The noble Baroness and the right reverend Prelate the Bishop of London also raised workforce issues. We absolutely recognise the challenges faced by the sector and are responding to them. As part of Our Plan for Patients, the Government announced a £500 million adult social care discharge fund to help people out of hospitals and into social care support. The fund will bolster the social care workforce and target the areas facing the greatest challenges, freeing up beds for patients who need them.

There is more. We are all aware of the shortage of nurses and other NHS staff, and there needs to be a sustainable workforce, as the right reverend Prelate picked up on. Although I do not have all the answers today, I reassure the House and those Peers who have raised it that this is a very important matter. As we are on the subject, I think the right reverend Prelate has raised the health disparities White Paper twice today, as I think it was also in a Question earlier. I do not have an answer to that, but her question was very clear: where are we on this? I need to write to her to give her chapter and verse on that.

I want to say a little more about ambulance waiting times, because I do not think I answered the noble Baroness, Lady Brinton, fully. Again, as set out by the Secretary of State for Health and Social Care in the plan for patients, the Government are improving ambulance response times by taking steps to reduce the time lost to ambulance handover delays, facilitating ambulance trusts to support each other during the busiest periods, and exploring a new ambulance auxiliary service. This is supported by other measures in the plan, such as recruiting more 111 and 999 call handlers to answer patient calls more quickly and opening up 7,000 extra beds this winter. I hope that goes a little way to answering that; the noble Baroness has probably heard these answers before, but they are what they are.

The noble Lord, Lord Sikka, asked why the additional rate of NICs is so low and why it is not a progressive tax, and I will do my best to answer that. The personal allowance, as he will know, is set at £12,570 this year, with income tax rates increasing from 20% to 40% for earnings above £50,270 per year—which is the higher rate threshold, as he will know—and to 45% for earnings above £150,000 per year. After the levy is reversed, employee NICs rates will decrease to 12%, and to 2% for earnings above £50,270 per year. Taking NICs and income tax together, this means an overall progressive rate structure of 32%, and then 42%. I will have a bit more to say about this in a moment, but on the question about the rich paying more, or too much, the top 10% of earners are estimated to pay over 60% of all income tax in 2022-23, so I really do not believe that his remarks are quite as they seem.

[Lord Sikka (Lab)]

I am grateful to the Minister for giving way. Of course, the rich will pay more in tax, because of the maldistribution of income. They are sitting on a bigger share of income, which is why they pay more. According to the figures produced by the TaxPayers’ Alliance—the head of which is now an adviser to the Prime Minister—the bottom 10% of earners are paying over 47% of their income in direct and indirect taxes, and the top 10% are paying only 33.5%. You cannot just say that the rich are paying more. Of course, they will pay more, because of the maldistribution of income—will the Minister address that?

[Viscount Younger of Leckie (Con)]

I do not believe the noble Lord and I will agree on this. It could be that we write a letter to spell out exactly what we mean by this, because I have spelled out the facts. To say a little more on this, cutting NICs from November will provide an average tax cut of around £135 for workers this year, and £330 next year. Taking into account the increase to NICs thresholds in July and the levy reversal, almost 30 million people will be better off by an average of over £500 in 2023-24. So, this directly affects lower economic groups rather than the higher ones. I think there is a lot more I could say in a letter because, as I say, I do not think that the noble Lord and I will end up agreeing on this particular matter.

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[Baroness Kramer (LD)]

This is an interesting question. I do not want to take up the time of the House but I think the two noble Lords are talking right past each other. One is basically saying that the rich pay 60% of all income tax, but they receive far more than 60% of all income, so I think that is the issue that links the comments between them. Perhaps the letter might deal with that.

[Lord Sikka (Lab)]

My Lords—

[Viscount Younger of Leckie (Con)]

If I may answer that first, that would be sensible. The noble Baroness makes a helpful point and it would be helpful to give detail in a letter; it is more appropriate to give that sort of detail in a letter where we have the technical detail involved. I hope that will be helpful all round.

I will pick up another point from the noble Lord, Lord Sikka, about the so-called regressive theme: why do NICs not apply to unearned income—why can people with unearned income pay less tax than those with earned income? I will try to answer that, although it may have to be included in the letter. National insurance contributions are part of the UK’s social security system, as the noble Lord will know. The system, based around the long-standing contributory principle, is centred around paid employment and self-employment, with employers, employees and the self-employed paying towards the protection of those who have been in the labour market. Payment of NICs builds an individual’s entitlement to claim contributory benefits, which then replace earnings in certain circumstances—for example, if someone is unable to work or is retired; that is the theme behind it. Unearned income is generally excluded from liability for NICs as it is not derived from paid employment.

[Lord Sikka (Lab)]

At least 20% of the national insurance contributions go to fund the NHS. People who are enjoying unearned income in the form of capital gains and dividends use the National Health Service too but they are paying zero. Why is that?

[Viscount Younger of Leckie (Con)]

That is another question which I shall add to the letter that I intend to write.

Public Spending: Borrowing Increase

Debate between Viscount Younger of Leckie and Lord Sikka

Thursday 13th October 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

I am well aware of what the Prime Minister said yesterday. I reiterate that the 2021 spending review set out the departmental budgets for three years and overall departmental spending is still growing in real terms. It also cited that 5% efficiency savings against day-to-day budgets would be looked at for 2024-25. Having said all that, a reprioritisation, efficiency and productivity review has been announced and will be undertaken.

[Lord Sikka (Lab)]

My Lords, according to the ONS, since 2010 this Government have borrowed more in real terms than all Labour Administrations combined—and Labour created the National Health Service, the welfare state and many new industries. In contrast, the Government, despite borrowing an extra £1.5 trillion, have created poverty and homelessness and destroyed public figures. Can the Minister publish a paper explaining how this £1.5 trillion has been wasted?

[Viscount Younger of Leckie (Con)]

I have spoken about an efficiency review and a reprioritisation, and that is under way. I say that it is not all as the noble Lord paints; for example, we have got unemployment down to its lowest level for about 40 years, at 3.5%, which is excellent, and there is much more we can do to that extent. The economy is actually in a pretty robust state, despite what the noble Lord might be indicating.

Economy Update

Debate between Viscount Younger of Leckie and Lord Sikka

Thursday 26th May 2022 Lords Chamber

[Lord Sikka (Lab)]

My Lords, the Chancellor has not really done anything to control inflation. None of the measures will reduce it in any way whatever. Even on the windfall tax, and on tax, it is a sleight of hand. Let me explain how this works.

First, people are taxed to the hilt. The Chancellor then comes along and increases income tax by stealth and national insurance, then gives some of this money back to the people. They then give it to the energy companies, so that they can continue to profiteer and increase their profits, the same as before.

The windfall tax is for only one year; that will not reduce energy costs or the rate of inflation. If the Government were to cap energy prices, as the French Government have, that would definitely reduce the rate of inflation—but that is not what the Government have done. At the same time, they are handing all kinds of tax reliefs to corporations, which means that the tax base of oil and gas companies will also shrink in future—they will pay less tax. It is a very odd kind of strategy.

If a windfall tax on oil and gas companies is good enough—at last the Government have done a U-turn—why is there no windfall tax on supermarkets, banks, railway companies and water companies? They have been profiteering too. That contributes to the rate of inflation, which is damaging to the people, but none of that is being considered by the Government in any way whatever.

I have just spoken to a firm of accountants after the Chancellor’s Statement, and it is rubbing its hands and saying—

[Viscount Younger of Leckie (Con)]

My Lords, I am sorry to interrupt the noble Lord, but I ask him and all noble Lords to keep their questions succinct, so that we can get the maximum number of Back-Benchers in.

Financial Exclusion (Liaison Committee Report)

Debate between Viscount Younger of Leckie and Lord Sikka

Wednesday 25th May 2022 Grand Committee

[Viscount Younger of Leckie (Con)]

My Lords, I too thank the noble Baroness, Lady Tyler, for initiating this important debate, as well as other noble Lords for their helpful and thoughtful contributions. There is much to cover; I will do my best. Tackling financial exclusion to ensure that everyone in all corners of the UK, regardless of their background or income, has access to fair and affordable financial products and services remains a key priority for the Government—more so in the context of the cost of living challenge, to which I will turn soon, which is already impacting the most vulnerable.

The Liaison Committee’s initial report on financial exclusion, and its follow-up report to which the Government responded a year ago, made some important suggestions. To reassure the noble Lord, Lord Bilimoria, we really are taking those suggestions seriously. Some progress has already been made; I listened carefully to the remarks by the noble Baroness, Lady Tyler, and I think she acknowledged that, but I say at the outset that much more needs to be done. I very much relish the opportunity to discuss these issues again today. I wish to address the themes raised, and I will start by focusing right away on banking and cash.

In the space of just a few years, technology has transformed the way that we access and make use of financial services. Until only a few years ago, I went into my local bank branch for any financial transaction; now I happily conduct pretty well everything online and have found it relatively straightforward. New opportunities and flexibility are of course welcome but, importantly, we also have an obligation to make sure that no one is excluded, which is of course the subject of today’s debate.

While eight out of 10 consumers use contactless payments and seven out of 10 use online banking, which are significant figures, the Government understand that physical cash—old-fashioned notes and coins that may still be kept under people’s mattresses—as well as access to a physical bank branch are still an important part of millions of people’s lives. The noble Baroness, Lady Tyler, eloquently gave her own statistics in this respect and it was alluded to strongly by my noble friend Lord Holmes.

I take note of my noble friend Lord Balfe’s point about educating people, especially the elderly, to become more digitally aware. He is right but he should recognise, as I think we all do, that there are some who simply will not pick up the bat. That is why, for example, the Government have made legislative changes to support the widespread offering of cashback without a purchase by shops and other businesses, and why we will be legislating to protect access to cash in the upcoming financial services and markets Bill as soon as parliamentary time allows.

My noble friend Lord Holmes and the noble Baroness, Lady Kramer, asked about helping those who wish only to use cash, which is a fair point. The Government’s plan for legislation will ensure that people can continue to take out or pay in cash in order to support the use of cash in daily life and its continued acceptance by business. Following the Government’s commitment to legislate, firms are working together through the Access to Cash Action Group to develop new initiatives to provide shared services.

As mentioned by the noble Lord, Lord Sikka, the Government understand people’s concern when their bank takes the commercial decision to close a local bank branch, and I have seen this locally where I live. Firms themselves are best placed to make the commercial decision required to operate their businesses for their customers but we believe that the impact of branch closures should also be understood, considered and, where possible, mitigated so that all customers, wherever they live, continue to have access to face-to-face banking services.

This matter was a strong theme in this debate. It was raised by the noble Lords, Lord Tunnicliffe and Lord Sikka, and the noble Baroness, Lady Tyler, herself. Let me expand on this and take account of the comments by Martin Lewis which were alluded to. In September 2020, the FCA published guidance for regulated firms setting out its expectations for banks, building societies and credit unions when they are considering closing branches or ATMs. It requires them to notify customers and the FCA of upcoming branch closures and to consider the provision of alternatives for customers. Alternative options for access can be via telephone banking, digital means such as mobile online banking, and the Post Office. The Post Office banking framework allows 99% of personal banking customers and 95% of business banking customers to deposit cheques, check their balance and withdraw and deposit cash at 11,500 Post Office branches in the UK.

The noble Lord, Lord Sikka, expanded on this theme and asked about banks consulting customers when closing. Although I have alluded to that, I shall add to what I said because in September 2020, the FCA published guidance for regulated firms setting out its expectations for banks, building societies and credit unions when they are considering closing branches or ATMs.

Noble Lords should also be aware of the introduction of shared bank hubs, an important industry initiative which was launched last year. This was alluded to by the noble Baroness, Lady Kramer. I took note of her scepticism about this initiative but also very much took note of her ideas, particularly those that have come from the US. I will certainly take them back. We believe that these hubs provide cash and basic banking services, including counter services run by the Post Office, as well as a dedicated space where community bankers from major banks can meet their customers, and that this is a viable alternative solution to offering bank services. That will help to answer questions asked by the noble Lord, Lord Sikka, and the noble Lord, Lord Bilimoria, who made the point that it is important to have an individual—a person—with whom you can have a face-to-face meeting, and I agree with him.

Eight additional bank hubs have been announced following independent assessments by LINK of the access-to-cash needs of local communities after the closure of a core cash service, in areas such as Brixham in Devon, Carnoustie, which I happen to know is near Dundee, Knaresborough and Syston. The industry has committed that from summer 2022 communities can also request a review. The Government very much look forward to seeing the results and their impact on communities.

The noble Baroness, Lady Kramer, asked about whether there is a condition for high street banks to provide services for the unbanked or to invest in an organisation. The Government believe that it is vital that everyone is able to open a bank account if they wish to do so. That is why the nine largest personal current account providers in the UK are legally required to offer fee-free basic bank accounts to customers who are unbanked, so that people can manage their money on a day-to-day basis effectively, securely and confidently.

Linked to this is the important issue of digital inclusion, which was raised by the noble Baroness, Lady Tyler. Banking hubs are potentially vital for those who might be vulnerable, digitally excluded with no access to a computer or the internet or, indeed, simply do not wish to access financial services digitally. We have to recognise that. The Government recognise that digital inclusion needs to be promoted alongside financial inclusion, and we are committed to ensuring that everyone has access to the digital infrastructure and skills necessary to participate fully in society, including in rural areas where staying connected can, as we know, be more challenging.

The noble Lord, Lord Sikka, asked about access to broadband; I think this was also raised by the noble Lord, Lord Bilimoria. To help those in financial difficulty to stay connected, social tariffs are available which offer low-cost landline and broadband services. The Government and Ofcom also agreed a set of commitments with the UK’s major broadband and mobile operators to support vulnerable customers.

A question was raised by the noble Lord, Lord Bilimoria, about broadband, and I want to expand on this a bit further. In 2021, the Government launched Project Gigabit, which committed a landmark £5 billion to support the rollout of gigabit connectivity in the hardest to reach areas. I am pleased to say that more than 67% of UK premises can now access—

[Lord Sikka (Lab)]

My Lords, I am grateful to the Minister. On that £5 billion, it seems that it is given to Openreach and others, and they keep the resulting assets as well as the income stream. What do we get, as members of the public, in return? It seems it is a win-win situation for the providers. They should be providing public access through their normal service, but they do not want to do that. They seem to be winning on every count and the public are left with empty pockets.

[Viscount Younger of Leckie (Con)]

That is a very specific question from the noble Lord. I will write to him about those services, particularly how the £5 billion is used, which is a very fair question. What I can say, which the noble Lord, Lord Bilimoria, will not like, is that it is not 100% coverage, but we have, I have to say, made a great leap forward since 2019, when coverage was a mere 8%. From his particular position at the CBI, he will acknowledge that—I hope that he will.

Of course, all these issues are relevant to help people manage their personal finances, particularly when things turn tight. That was another theme that I expected to be raised today, as indeed it was, particularly by the noble Lord, Lord Tunnicliffe, with his question about an emergency Budget, and by the noble Baroness, Lady Tyler, on affordability matters. Let me just say a little bit about that. The Government really appreciate that families up and down the country are facing an unprecedented cost of living challenge, with the rising price of food, fuel and goods hitting people’s pockets. I listened very carefully to the speech from my noble friend Lord Shinkwin on how the disabled in our society are particularly negatively affected. Of course he is right, and he will know about that.

The next few months will be difficult, and we know that people are concerned. These are partly, indeed mainly, global trends driven by global challenges, and Russia’s invasion of Ukraine has deepened a severe shock in energy prices. While the Government cannot eradicate these global pressures, we are helping where we can and are providing more than £22 billion of support to families this financial year. We are providing direct support for energy bills, with a £9 billion energy package announced in February. This will provide 80% of households with at least £200, with the vast majority receiving £350. We are also making sure that work pays. We have increased the national insurance threshold to £12,570 from July, saving the typical employee £330 a year. We are supporting the most vulnerable in society with the cost of essentials such as food, clothing and utilities by providing an additional £500 million for the household support fund.

The noble Baroness, Lady Tyler, asked what the Government are doing to alleviate the poverty premium, and I hope that I can give her an answer to that. On universal credit, we are increasing work allowances and reducing the taper rate, which means that the lowest-earning 1.7 million people in society receive an extra £1,000 per year. An analysis shows that fiscal decisions made by the Government are progressive and place the highest burden on the highest earners.

Along the same theme, the noble Lord, Lord Sikka, raised a question about the Government’s tax policy. I think he stated that he thought it was regressive. I just come back to him on that to say that Treasury analysis published as part of the Spring Statement shows that fiscal decisions made since the 2019 spending round are progressive, placing the largest burden on the highest-income households as a proportion of income. The poorest 60% of households receive more in public spending than they pay in tax, and households in the lowest income decile will, on average, receive more than £4 for every £1 that they pay in tax.

My noble friend Lord Shinkwin raised a point about disability and fuel poverty. In answer to that, 2.2 million low-income households will receive a £140 rebate through the warm homes discount. The Government are increasing the WHD by one-third, with 3 million households now receiving £150. I hope that that provides small examples of what the Government are doing. As I say, we recognise that this is a challenging and uncertain time for people. Just as we stood by people throughout the pandemic, the Government stand ready to do more to support people across the UK with their costs of living. However, I am afraid that is all that I can say on that subject at the moment.

I turn to the important area of access to fair and affordable credit, which can be life-changing for people, helping them to meet a sudden expenditure or to take steps to build a better life. The Government recognise the important role that credit can play in helping people to manage their finances, but also crucially understand the need for it to be handled carefully so that it does not turn into unsustainable debt. We are committed to supporting initiatives that expand the provision of fair and affordable credit.

The noble Lord, Lord Tunnicliffe, asked about the assessment that the Government have made about people’s increased reliance on personal credit, which is a fair question. The Treasury regularly monitors changes in the consumer credit market, including the impact of economic developments, as part of its normal process of policy development.

The Government have allocated £100 million of dormant assets to Fair4All Finance, whose work has focused on supporting affordable credit. This includes £3.8 million funding for that initiative to pilot a no-interest loan scheme, which is specifically designed for consumers in vulnerable circumstances and is already, we believe, improving lives. The NILS pilot is novel and unlike anything that the Government have done previously in this space, so it is right that the pilot is allowed to be tested for optimal methods for delivering these loans. The pilot aims to test the benefits to consumers, society and the economy and to show whether a permanent, nationwide NILS can be delivered in a sustainable way. It will test several variables, including loan amounts, repayment periods and terms, eligibility and payment rates. My noble friend Lord Balfe is right that it needs to operate with care so that debt is managed prudently, a point that I made earlier. We are pleased that industry also recognises the value of expanding provision, with JP Morgan’s corporate social responsibility fund planning to contribute £1.2 million to expand this pilot.

I move on to buy now, pay later, expanding further on the theme of credit. I note some noble Lords’ concerns about this area, as raised by the noble Baroness, Lady Tyler. We recognise that it can give rise to consumer detriment, which is why the Government announced their intention to regulate these products and published the consultation last October. It closed on 6 January, and we are now reviewing responses and considering next steps, including timings. We will take this work forward as quickly as possible. I am afraid that that is the best that I can do to answer the question from my noble friend Lord Balfe.

Along the same theme, we are taking further measures to help people who are experiencing financial difficulties and will require additional support. That is why, among other things, the Government continue to provide record levels of funding for debt advice via the Money and Pensions Service, which noble Lords will recognise used to be the old MAS. We know that debt can feel overwhelming; often what people most need is the time and space to find a sustainable way out of it.

My noble friend Lord Holmes asked whether the Government agree that debt advice should be regulated. Yes, debt advice is a regulated financial activity, which means that most firms that provide debt advice must be authorised and regulated by the FCA. When a person gets debt advice, they can check that a firm is regulated on the FCA register. That is also why the Government launched the Breathing Space scheme, which gives those in problem debt legal protection against creditor action, enabling them to seek professional advice and rebuild their finances.

Given the clear connections between people’s mental and financial health—another theme that has been alluded to today—the scheme also ensures that those who are undergoing mental health crisis treatment can access even stronger protections. I am pleased that over 60,000 people have already taken advantage of Breathing Space in its first year, including almost 1,000 people who have entered a mental health “breathing space”.

However, that is just the first part of the scheme and we are now working on the second element: the statutory dept repayment plan. This will enable people struggling with problem debt to enter formal agreements with creditors so they are able to repay what they owe over a more manageable timeframe. On 13 May, the Government launched a public consultation on draft SDRP regulations with the aim of laying those by the end of the year. We intend for the scheme to start in 2024.

I hope I can cover everything. I have a little more to say, particularly on financial education, which was raised by my noble friend Lord Holmes, the noble Lord, Lord Bilimoria, and the noble Baroness, Lady Kramer. This is a very important area that is rather close to my heart; I personally firmly believe in it. It is important that people grow up to make sound decisions about how to run their financial lives, whether that is to secure a mortgage, take out credit, save up for a holiday or plan their retirement, an issue that was also raised. Financial education in England is covered within both the citizenship and the mathematics curricula. Primary schools, for their part, are strongly encouraged to teach citizenship, including financial education. I recognise, as the noble Lord, Lord Bilimoria, said, that it is not just the young who need educating; it is the less young too, particularly those who are looking to plan for retirement, as he mentioned.

I want to say something about saving. I recognise that this is a difficult subject because we know that many people are not able to save and are struggling simply with the business of managing the costs of living. So in fear of being frowned upon by the grandmother, I think it is, of my noble friend Lord Balfe, I draw noble Lords’ attention to the Government’s Help to Save scheme, which offers a 50% bonus on up to £50 of monthly savings for a maximum possible bonus of £1,200 over four years to help people to build a savings buffer for a rainy day. I just wanted to touch on that.

Finally, and importantly, the theme was raised of the FCA and the matter of “having regard to”. The Government take a comprehensive and strategic approach to tackling financial exclusion, including working closely with the regulator, industry and the third sector. This was touched on by the noble Lord, Lord Bilimoria. A key mechanism to foster that collaboration is the Financial Inclusion Policy Forum, co-chaired by Treasury and DWP Ministers, launched in 2018 to provide leadership and develop solutions, including some that I have already highlighted. I know that some noble Lords are slightly sceptical about that; I have read the report and the comments made by the Liaison Committee, and I have read our own response. I know that the noble Baroness, Lady Tyler, and my noble friend Lord Holmes have called upon the Government to formalise collaboration on financial inclusion further by asking the Financial Conduct Authority to have regard to financial inclusion in the context of the future regulatory framework review. I want to give some reassurance that I know senior officials and Ministers in the Treasury are considering these suggestions carefully and will respond as soon as possible.

To conclude, clearly there is more to be done but, as today’s debate has demonstrated, a good of deal of work is already in train to tackle financial exclusion and to help those who are vulnerable or who face financial difficulties. I thank everyone who has contributed today. It has been a very informative and useful debate, and I have certainly learned a lot myself.

Coronavirus Grants: Fraud

Debate between Viscount Younger of Leckie and Lord Sikka

Tuesday 25th January 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

I do not accept the premise that lenders are failing on fraud, and, of course, the noble Lord, Lord Patel, will know that I am not in a position to name individual lenders. However, lenders continue to work closely with the Government on counterfraud, including recovering £1.2 million on facilities identified as fraudulent so far. It is important that lenders are held accountable for taxpayers’ money, and all lenders continue to be subject to a robust audit process by the British Business Bank.

[Lord Sikka (Lab)]

My Lords, two 30-second checks would have saved the Government billions of pounds. First, no one can open an ISA account without providing a national insurance number, but the Government did not require that information from anyone seeking furlough support. Secondly, all applicants for Covid loans should have been required to provide an HMRC reference number. That would have killed off all dormant companies and offshore tax haven companies. Will the Minister please explain why these two 30-second checks were not applied?

[Viscount Younger of Leckie (Con)]

That is a very fair question and of course the sort of detailed question that I cannot answer. In terms of the fraud that we are looking to identify as part of the loan book, as of 17 December 2021 some £67 million worth of claims had been settled for the loan scheme. Of those, £13 million for 337 facilities had been flagged by lenders as suspected fraud. That is the sort of detail that we want to get into.

National Insurance Contributions Bill

Debate between Viscount Younger of Leckie and Lord Sikka

2nd reading
Wednesday 1st December 2021 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, this debate was initially down to have at least a dozen speakers. I am sorry to say that, as the day has worn on—for a very good reason, I am sure—the number of speakers has somewhat diminished. I am sure that they will reappear in Committee and we will have a greater number of Peers interested in this important Bill.

I will start by addressing some of the remarks of the noble Lord, Lord Davies. He gave me due warning of his remarks at the beginning of his speech but, as he will expect, I do take issue with quite a lot of the overly pessimistic comments he made. He said that this was not to do with national insurance and indicated that it was very much a PR exercise and simply a presentation. He is nodding at that. I am afraid that I do take issue with that, but of course it is up to me to prove today and particularly in Committee that this is not the case and that the matters we are bringing forward on this Bill are serious and have serious points and facts behind them.

I gently point out to the noble Lord that the Bill passed through the Commons with just one minor government amendment, which corrected a reference to another Act. On his point about the evidence of free-port clauses working, he will know that Labour tabled some amendments but ultimately withdrew them. That was on the basis that the Government argued they were unnecessary, as we have already indicated that we will review the effectiveness of the NICs relief before deciding whether to extend it.

On that, to answer the point made by the noble Lord and the noble Baroness, Lady Kramer, on whether the NICs relief will be an effective use of taxpayers’ money—which frankly is a fair question—the relief will significantly reduce the cost of taking on new employees and doing business in a free port. This, along with other reliefs being offered as part of the wider package that I mentioned in opening, will support businesses setting up and expanding in free-port tax sites.

The take-up and use of NICs relief in free ports will be monitored to ensure that it is having its intended effect. The Government have written a sunset clause into legislation that will allow us to review the relief’s effectiveness after four years and make a decision on its continuation accordingly. The noble Lord, Lord Sikka, asked about an impact assessment. I steer him towards the fact that a tax impact and information note—a TIIN—has been published alongside this Bill. If he has not seen it, I am more than happy to make him aware of it.

A number of questions, some quite technical, were raised in the debate and I will do my best to answer them. First, on free-port costing, which was very reasonably raised by the noble Lord, Lord Sikka, the OBR approved costings, including estimates, for all the tax and customs reliefs within the wider free-port offer. The programme is at an early stage of delivery, with the first sites beginning operations last month, but we have already seen significant investment. So there is more to come, but the noble Lord’s question is a fair one.

The noble Lord, Lord Davies, asked specifically about the link between NICs and benefits. The National Insurance Act and the National Assistance Act established the modern welfare state that continues today, as he may know. National insurance continues to fund contributory benefits, including the state pension. NICs receipts are paid directly into the National Insurance Fund and are kept completely separate from all other tax receipts.

The noble Lord, Lord Sikka, asked why NICs are not on unearned income. NICs is part of an earnings replacement scheme to provide help to workers when they are unable to work or retired. Unearned income is excluded as it does not rely on a person’s labour.

The noble Lord, Lord Davies, asked about the design of free ports and whether they will displace economic activity from other local areas. Our focus is on encouraging new investment from around the world and within the UK to create new businesses and new economic activity in free ports. This will create jobs in deprived communities across the country rather than harmful displacement. Employer NICs relief can be claimed only for new employees, encouraging employers and businesses to grow and create new jobs rather than relocate existing ones.

Finally, when designating free ports, the Government require bidders to explain how their choice of tax site location minimises displacement of economic activity from wider local areas, especially other economically disadvantaged areas. Displacement will be assessed in greater detail as part of the formal tax site approval process. Tax sites will be designated only once mitigation of displacement and other factors has been demonstrated by the successful bidder.

[Lord Sikka (Lab)]

The Minister just said that we do not charge national insurance because unearned income is not the result of labour. Many a person, instead of taking wages, draws dividends, which are inevitably the outcome of the investment of human capital—labour—yet there is no national insurance on dividends either, which is another example. Could it be that there are other ideological reasons why the Government do not levy this, rather than simply the investment of human capital? I agree that from 1911 onwards, when national insurance appeared on the scene, the focus initially was on employment, but we have moved a long way away from that. I wonder whether we can have this debate another day, if not today.

[Viscount Younger of Leckie (Con)]

I would be more than happy to do that. The noble Lord takes a slightly cynical view of this. We need to go back to the basics of what the Government are trying to do with this, which is to encourage more jobs and investment into these free-port areas. It is really as simple as that. I am more than happy to debate the rationale behind the detail in Committee, but I hope the noble Lord takes me at face value on that point.

The noble Lords, Lord Davies and Lord Bilimoria, asked whether the policy will be effective in encouraging the employment of veterans and whether it is appropriate to target this type of support to veterans. The House will know that some veterans will face particular difficulties in accessing the job market due to injury or trauma suffered in the course of duty; the noble Lord, Lord Bilimoria, alluded to that. These veterans will benefit most from the measure. Given that securing stable and meaningful employment is a key aspect of a veteran’s transition into civilian life, the Government wish to reward employers who facilitate this.

The noble Lord, Lord Tunnicliffe, asked about the status of free-port sites in England. I hope I can address this with some detail. At the Spring Budget, the Chancellor announced eight free ports from eight regions of England following a fair, open and transparent assessment process outlined in the bidding perspective. That included East Midlands Airport; Felixstowe and Harwich, the so-called Freeport East; the Humber; Liverpool City Region; Plymouth and south Devon; Solent; Teesside; and Thames. The first free-port tax sites in Humber, Tees and Thames went live on 19 November. This ensured that those free ports were able to begin initial operations last month, meeting our commitment to get free ports operational in England this year. The Government will continue to work with the remaining free ports and expect the next set of free ports to begin operations in early 2022.

The noble Lord, Lord Sikka, asked how free ports differ from previous free ports. Prior to 2012, the UK had five free ports offering only customs and tariffs benefits, similar to the duty referral on customs warehousing schemes subsequently introduced by the EU. This did not offer any direct tax incentives, so stakeholders indicated that this policy offer was not a substantial enough incentive to invest in these free ports, given its widespread availability outside these free ports. The new free-ports offer provides a more attractive overall package of incentives for businesses. Businesses will be able to take advantage of five tax reliefs and a range of customs incentives, as well as to benefit from a package of other measures that support the development of free ports and make them attractive places to do business, including infrastructure funding and planning measures.

The noble Lord, Lord Sikka, asked why public bodies are excluded from the free-ports relief. I probably alluded to this earlier. The aim of the policy is to boost growth in undeveloped areas, not to subsidise public bodies.

The noble Lord, Lord Tunnicliffe, asked how the ongoing balance of opportunity and risk can be reviewed and reported, and whether Parliament would be given the information on the frequency of this. He essentially asked: if not, why not? This relief will significantly reduce the cost of taking on new employees and doing business in the free port, along with other tax reliefs, which I mentioned earlier, being offered. The take-up and use of NICs relief in free ports will be monitored to ensure that it is having its intended effect. I mentioned earlier that we have the sunset clause, which I have covered. More information on assessments will be available in the free ports monitoring and evaluation—M&E—strategy, which, to reassure the noble Lord, will be published in spring 2022. The Department for Levelling Up, Housing and Communities, as the department responsible for the delivery of free ports, is leading the monitoring and evaluation but working closely and collaboratively across government to ensure robust and rigorous evaluation.

The noble Lord, Lord Tunnicliffe, also asked about any delay in implementing the free ports recruitment. Our focus is on encouraging new investment from around the world and within the UK to create new businesses and new employment. The Government have been clear that this relief is available only on new hires from April 2022 and have set this out in the Freeports Bidding Prospectus published in the autumn of 2020. Having a clear start date is, I think, the answer to his question, as it is a simple approach that will support the free-port businesses. There are complexities with HMRC, I understand, so this cannot be set up earlier than the date the noble Lord mentioned.

I go back to veterans relief—I am chopping and changing slightly here. The noble Lords, Lord Tunnicliffe and Lord Bilimoria, and the noble Baroness, Lady Kramer, asked about veterans relief and why it was for only one year compared with that for free ports, which is, as we know, for three years. I think I can answer this by saying that the policy intent for the two reliefs is different, so the structures of those reliefs are also different. The aim of the free-port relief is to support new businesses in the free-port tax site with the cost of employment to boost growth in and around the free port. Therefore, the free-port relief provides more sustained support for the lower upper threshold. The aim of the veterans relief is to support veterans’ transition into civilian life through employment. The veterans relief therefore provides a greater immediate incentive for employers to hire a veteran

The noble Lord, Lord Bilimoria, asked why the free-port relief was only £25,000 but the veterans relief is up to £50,270. The veterans relief has been kept in line with similar reliefs that aim to boost employment of a particular group of people—for example, those aged under 21 or apprentices aged under 25. The free-port relief has been designed to support new businesses during their infancy. A policy decision was made to make the relief available for a prolonged period and therefore, in fairness to other taxpayers, the threshold of this relief is lower.

I move on to the DOTAS regime, raised by the noble Lords, Lord Davies and Lord Sikka, in terms of additional powers. DOTAS has been in play for several years, which has led to many promoters leaving the avoidance market. However, a small number of determined promoters continue to sell tax avoidance schemes and use delay and obstruction to frustrate HMRC action against them. The new powers modernise DOTAS and allow HMRC to tackle these promoters at an earlier stage. They also allow HMRC to better inform taxpayers of potential schemes through earlier publishing of scheme and promoter details. This will better inform taxpayers of the potential risks that they face and help them to steer clear of these schemes.

The noble Lord, Lord Tunnicliffe, linked with the noble Lord, Lord Sikka, asked about the gains expected from the change in each tax year. The aim of DOTAS is to ensure that HMRC gets the information about the schemes, so that it can take appropriate action. Those who devise and sell avoidance are always looking for new ways to sidestep the rules, so legislation needs to be refreshed to stay ahead of them.

The noble Baroness, Lady Kramer, asked about the NICs relief attracting low-value-added, labour-intensive jobs. I can give a fairly full answer to that, which is that the free ports policy, taken overall, aims—as I said earlier—at regenerating deprived areas through investment and job creation; that means quality jobs in high-value-added industries.

Free ports will offer a number of benefits for firms, including specific issues such as: simpler import procedures and suspended duties in customs sites to help businesses trade; planning changes to green-light much-needed development; spending to invest in infrastructure; and a free port regulatory engagement network to help regulators and firms work together to test new technologies safely and effectively. As well as enjoying enhanced structures and buildings allowance, and generous stamp duty and business rates relief, employers in capital-intensive sectors will benefit in particular from enhanced capital allowances that relieve 100% of qualifying expenditure in the first year on plant and machinery for use within free port tax sites.