Finance (No. 2) Bill

Aaron Bell Excerpts

Committee of the whole House
Wednesday 19th April 2023 Commons Chamber

[Kirsty Blackman]

It is a delight to speak first in Committee of the whole House this afternoon. I had a few extra minutes to tweak my speech during the ten-minute rule Bill, as it is unusual for such a Bill to be opposed, and those extra few minutes will presumably have made my speech extra good. I am sure the whole Committee will listen very closely.

I rise to speak to amendment 21 in my name and in the name of my SNP and Plaid Cymru colleagues, but I will first talk about new clauses 4 and 5, which were tabled by the Opposition. The new clauses would require a review of the impact of the abolition of the lifetime allowance charge, with new clause 4 focusing on NHS doctors and new clause 5 looking more widely.

A significant number of questions have been raised in the House about the lifetime allowance and the problems it has caused, particularly for NHS doctors. I do not think any Opposition Member would consider that the solution to this problem is to abolish the lifetime allowance charge completely, which seems totally out of proportion. We have been raising this very serious issue for a number of years, but I never considered arguing against this solution because it never crossed my mind that the Government would do something quite so drastic or extreme.

New clauses 4 and 5 both ask for reviews, statements and information. Particularly pertinent is information on the number of NHS doctors who will benefit from the abolition of the lifetime allowance charge, as is a report containing recommendations in the light of a review of the effect of abolishing the lifetime allowance charge. The least the Government can do, if they are to make such a massive change to the lifetime allowance or the pension tax system, is provide us with as much information as possible so that we can consider all the potential and actual implications. We would then have all the information at our fingertips. The Government are able to access HMRC data in a way that the rest of us cannot, so we need details on the actual impact of these changes.

On the specific issue of NHS doctors, Torsten Bell of the Resolution Foundation has said that 20% of those who benefit from the change to the lifetime allowance work in the finance industry. He said that

“nearly as many bankers as doctors”

will benefit from this change. The Institute for Fiscal Studies has called it “bizarre”, stating:

“if this is aimed at doctors then it really is a huge sledgehammer to crack a tiny nut.”

That accords with our understanding.

Again, we agree that this significant issue for doctors needs to be fixed, but the Government are going about it in totally the wrong way. During the covid pandemic, we clapped NHS staff from our doorsteps. We recognise how difficult NHS staff had it working on the frontline during the pandemic, and how difficult they continue to have it. When other people were furloughed, they were working hard, day in and day out, to keep as many of us alive and healthy as possible, yet the Government are giving exactly the same break to bankers as they are giving to those who worked day in, day out to keep us all safe. That does not make sense. If we want to support our NHS, to ensure that we have the best possible public services and to give the NHS our vote of confidence, our backing and our support, we should recognise that those working in the NHS provide a vital public service and therefore deserve different treatment from those who work in the finance industry, for example, and who do not provide that level of public service.

I thank the Clerk of Bills, who was helpful in drafting these amendments. I knew what I wanted to do, but I was not quite sure how to do it, so I very much appreciated that assistance.

Amendment 21 would mean that the abolition of the lifetime allowance charge applies only to those employed by an NHS body for more than 15 hours a week, on average.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

We all respect the hard work of NHS staff, but why does that argument not equally apply to, say, senior police officers?

[Kirsty Blackman]

An awful lot of people work hard. The specific issue that many of our constituents have raised is in the NHS. I have not been approached with this concern by senior police officers, but I have been approached by NHS doctors. If the hon. Gentleman feels particularly strongly about senior police officers, he could table an amendment so that people employed in the wider public sector, or in the police service, can be included in this measure. I think both police officers and NHS staff could be included, but it would be ridiculous to include everyone, no matter how little they do for the public good.

--- Later in debate ---

[Aaron Bell]

It is a pleasure to follow my hon. Friend the Member for Poole (Sir Robert Syms). I rise to speak to clauses 18 to 25, which I support. I was unsurprised to hear that the Opposition do not support them. The shadow Health Secretary, the hon. Member for Ilford North (Wes Streeting), told The Daily Telegraph on 2 September that the cap was “crazy”. He did not say that specifically about the NHS—although, as shadow Health Secretary, he obviously spoke about the NHS—but he called the cap “crazy”. He then said:

“I’m not pretending that doing away with the cap is a particularly progressive move… I’m just being hard-headed and pragmatic about this.”

Well, obviously that could not last. On the day of the Budget, the hard-headed and pragmatic approach from the shadow Health Secretary—the so-called “heir to Blair”—was handed over to the soft-headed and opportunistic approach that we saw in the response from the Leader of the Opposition. Actually, it was not in his response, because he had to go away and first check with some other people what the Labour policy was going to be, but Labour later came out against the policy, and has tabled amendments to strike the clauses entirely and replace them with new clauses, which I am sure the Government will oppose.

To address the point about progressiveness, it is absolutely asinine to assume that the only test of any fiscal measure is whether it is progressive. We seek to do lots of things with our tax system: incentivise people, grow our economy, grow our productivity. The measures proposed by the Financial Secretary to the Treasury today, and by the Chancellor in the Budget, will do that. We want to incentivise people to stay in work and return to work.

Like my hon. Friend the Member for Poole, I am not even sure that there will be a cost in the long run, because those who do not retire early will pay tax while they are earning their salaries. One big problem in our society is people retiring early with all the wisdom, experience and skills that they have at that stage of their careers. People are so productive in their 50s and 60s because they have accumulated so much knowledge, so to have people retiring early is a crying shame, not only for the country as a whole but for them, their patients and the people whom they serve in other ways. Also, those people will ultimately pay more tax when they claim their pensions; it is not a tax-free system. People might be exempt on entry into their pension scheme and exempt on returns, but they pay taxes when they draw their pensions, so taxes will be paid in the long run.

The hon. Member for Aberdeen North (Kirsty Blackman) made a point about bankers, which was ably answered by the Minister. We still have a tapering of the annual allowance for people who earn incredibly large salaries, of which there are a number in this country, although not many in my constituency. As many on the Conservative Benches have said, we do not seek to divide people based on where they work or the nature of their jobs. Our tax system works for everybody.

Our public sector has incredibly generous pension provision, as we have seen in recent discussions about strikes. That is why some people in the national health service, for example, have accumulated notionally very large pension pots. They are highly skilled, long-serving public servants who earn substantial salaries, particularly towards the latter end of their careers. If they have been on the scheme for a long time, they could be entitled to a pretty large pension, and we multiply it only by 20 to find out their defined benefit. So people in the public sector in defined benefit schemes are already better treated than people in the private sector, in which the same level of salary could not be purchased for £1.07 million.

I heard that argument from doctors, I put it to the Minister, and I am glad that the Chancellor listened in the Budget. I have heard the argument from others in Newcastle-under-Lyme that the system disincentivises people to continue working. We should be against that. Clause 18 abolishes the lifetime allowance, as we have heard. In clause 19, we quite rightly limit the tax-free lump sum. I do not think that it would be conscionable to have an unlimited lump sum, which could be abused. We also have a limit on the annual allowance and its tapering, so it would not be plausible for people with defined contributions on a normal career trajectory to challenge the sort of high numbers—£2 million or £3 million—that people are talking about. It is not just feasible for most people—unless they have exceptionally good returns from their pension investments—to achieve those sums in their lifetime.

Another iniquity of the current system is that people can stop paying into their defined contribution scheme and—if in a bull market, for example—have no idea how much their scheme might increase by. Obviously, that is down to investment returns, for people who do not know where they stand with their pensions right up until the moment of crystallisation.

As I said in my intervention earlier, and as my hon. Friend the Member for South Cambridgeshire (Anthony Browne) expanded on, there are all sorts of people who welcome this. They include people in both the private and the public sector, senior armed forces personnel, senior police chiefs, headteachers, people in the NHS and GPs.

Dr Richard Fieldhouse, chair of the National Association of Sessional GPs, said of the shadow Health Secretary’s comments:

“Each person’s pension fund is their embodiment of a lifetime’s worth of delayed gratification. So any measures to motivate people towards this is to be welcomed, particularly when applied to us as GPs”.

That is what pensions are—pay deferred. From the Government’s point of view, they are tax deferred as well. They are not tax waived or tax given away; they are tax deferred until the point at which the person, whether they work in the private or the public sector, gets the rewards for their labour.

That is why I support what we have done in the Budget. The measure will simplify things for people, save lives in the NHS and, more than anything, encourage people, whatever their job is, to stay in work for longer, and that is all to the good of the British economy.

Finance (No. 2) Bill (Second sitting)

Aaron Bell Excerpts

Committee stage
Tuesday 16th May 2023 Public Bill Committees

[Victoria Atkins]

They are taxed, as UK taxpayers are taxed, on their UK income—that is the point. The hon. Lady will know that the threshold for the additional rate was lowered from £150,000 to just over £125,000 at the autumn statement. That will apply to the UK income tax of those who are earning here in the UK. That is precisely the point; the difference relates to their foreign income. We want to help these very mobile and very successful people who work for banks or in the movie and sporting worlds, and we want to help those who work for the various businesses to which the hon. Member for Ilford South referred to help us to build the best tech industry that we can possibly have. We want them to help us to build incredible life sciences solutions.

If the hon. Member for City of Chester took a bit of time to talk to some of the individuals involved in the life sciences industry—that golden triangle between Cambridge, Oxford and London—she would know that what they do is genuinely inspiring. Why on earth would we not welcome people from overseas to help us in that? That little golden triangle has more tech companies in it than any place on the planet other than New York and Silicon Valley. If those places are our competitors in the tech industry, we are doing very well indeed. We want to encourage more of them to come to our country to help us to build that.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

It is a pleasure to serve under your chairmanship, Ms McVey. The Opposition already seem to have spent the money from this claimed non-dom bonus a dozen times over, by my count. The Minister referred to the University of Warwick research, which I have referred to during various debates in the main Chamber. If the Treasury analysis is that that research—that 0.3% figure—is misguided, is it not the case that the magic pot of money that the Opposition keep spending does not actually exist?

[Victoria Atkins]

My hon. Friend brings a particular fervour to his intervention, if I may say so. I absolutely want very high-earning people to pay their proper taxes here in the United Kingdom, but we need to stay competitive, which is why we look at other countries around the world. Our competitors have regimes that give tax advantages, or they are more careful with the tax that they apply, to people who are so highly mobile. I want to bring those people to the UK and get them to pay UK taxes on their UK earnings.

Finance (No. 2) Bill (Fourth sitting)

Aaron Bell Excerpts

Committee stage
Thursday 18th May 2023 Public Bill Committees

[James Murray]

As we have heard, clause 326 increases both rates of the landfill tax in line with inflation, rounded to the nearest 5p. The increased rates apply to any disposal of relevant materials made, or treated as being made, at a landfill site in England or Northern Ireland on or after 1 April.

The landfill tax was introduced in 1996. It increased the cost of waste disposal at landfill to encourage waste producers and the waste management industry to switch to a more sustainable way of disposing of waste material. The tax was originally UK-wide, but it was devolved in Scotland from April 2015 and in Wales from April 2018. We will not oppose the clause, but I ask the Minister to fill us in on the wider context of the landfill tax, and specifically landfill tax fraud. In a Backbench Business Committee debate on landfill tax fraud in January, my hon. Friend the Member for Cambridge (Daniel Zeichner) said:

“Landfill tax fraud is a blight on communities across the country. It causes lasting damage to the environment and, of course, deprives the Exchequer of revenue.”—[Official Report, 12 January 2023; Vol. 725, c. 793.]

As Members discussed during that debate, according to His Majesty’s Revenue and Customs’ most recent annual estimate of the tax gap, the gap between landfill tax due and revenue collected in 2021 is £125 million. That is a gap of 17.1%—much higher than the overall tax gap for that year. According to HMRC’s report, the uncertainty rating for the landfill tax gap estimate is high. The then Exchequer Secretary, the hon. Member for South Suffolk (James Cartlidge), conceded in the debate that “non-compliance is high.” In responding to the debate, he set out some details of the operational resource dedicated to landfill tax non-compliance; however, I do not think that he directly answered a question that the shadow Minister, my hon. Friend the Member for Cambridge, put to him: how much of the £125 million tax gap identified in 2021 has been recovered by HMRC? I would be grateful if the current Exchequer Secretary could address that point.

Clause 327 amends the main rates of the climate change levy on gas and other taxable commodities, and the reduced rate percentages on those commodities paid by participants in the climate change agreement scheme from 1 April next year. The climate change levy is a tax on the non-domestic use of gas, electricity, liquefied petroleum gas and solid fuels. Energy-intensive businesses that participate in the climate change agreement scheme run by the Department for Energy Security and Net Zero pay reduced rates expressed as a percentage of the four main rates of the climate change levy on the taxable commodities supplied to them.

We understand that the changes introduced by the clause were announced in the 2022 autumn statement, which froze the electricity rate, and in which it was confirmed that the climate change levy rate for LPG will continue to be frozen until 31 March 2025. It was further announced that the reduced rates of the levy for 2024-25 on gas and other taxable commodities paid by qualifying businesses in the climate change agreement scheme would be amended, so that participants will not pay more under the levy than they would have if the rates had increased in line with the retail price index.

Clause 328 increases the plastic packaging tax in line with the CPI. The plastic packaging tax was introduced in April 2022 to provide an economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging. That was expected to create greater demand for the material, which would in turn stimulate increased recycling and collection of plastic waste, diverting it from landfill or incineration. I understand that the new rate maintains the real-terms value of the incentive to include 30% or more recycled plastic and plastic packaging components in a product by increasing the rate of tax in line with the CPI. As that tax has now been in place for a year, what evaluation have the Government made of it? In particular, can the Minister tell us what impact the tax had in 2022-23, in terms of fulfilling its stated aim of stimulating increased recycling and collection of plastic waste?

Clause 329 makes changes to the aggregates levy exemptions for some types of aggregate from construction sites. We understand that it replaces four exemptions for by-product aggregate arising from certain types of construction with a broader and more general one. The explanatory notes state:

“Following a review of the levy in 2019, some concerns about the operation of the levy were raised by different stakeholder groups.”

I understand that the changes were consulted on in 2021. Draft legislation was published in July 2022 for technical consultation, which has now concluded. On that basis, we will not oppose the clause.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

It is a pleasure to serve under your chairmanship, Sir Gary. I will confine my remarks to clause 326. I am grateful to the hon. Member for Ealing North for raising landfill tax fraud and the debate on 12 January, which I contributed to at some length. As Members may know, I have the worst landfill in the country in Walleys Quarry in my constituency of Newcastle-under-Lyme. The Opposition Whip, the hon. Member for Blaydon, also has some experience in this area, because her constituents have suffered at Blaydon Quarry. She contributed to that debate, too.

The hon. Member for Ealing North mentioned that the tax was introduced in 1996. The differential between the rates for regular waste and inert waste has grown immensely. Now, they are £3.25 and £102.10 respectively; back in 1996, they were £2 and £7. Just as the hon. Member for Wallasey said earlier in relation to tobacco, that has increased the incentive for people to break the rules, and unfortunately, many people in the waste industry are breaking the rules. What goes on at Walleys Quarry causes misery for my constituents, as fly-tipping and everything else that goes on in the waste industry does for people around the country.

The responsibility falls primarily on the Environment Agency, which I continue to press to do more about Walleys Quarry, as well as about Staffordshire Waste Recycling Centre, which is just over the border in the constituency of my hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis), who mentioned it just yesterday at Prime Minister’s questions. Will the Minister focus on the role of HMRC in helping the EA to do its work, because prosecutions for fraud may ultimately have more effect than prosecutions under environmental regulations?

[Liz Twist (Blaydon) (Lab)]

It is a pleasure to speak with you in the Chair, Mr Stringer. As the Opposition Treasury Whip, talking about landfill tax is becoming an annual ritual for me.

Landfills are a blight on our society. It is not pleasant to live near one—even a well-regulated one—and it is good that we are considering how to pursue landfill taxes. My particular concern is, as it was previously, about the effectiveness and enforcement of the rates and the recovery of the taxes. As we heard from my hon. Friend the Member for Ealing North, there is still a considerable gap in collection rates, and that must be addressed if we are to treat people properly and minimise the impact of landfill sites.

The Minister may know about Operation Nosedive, which HMRC pursued with great fanfare in my constituency only to drop it quietly six years later. Earlier this year, on 12 January, we had a debate to consider that operation and the wider implications of landfill tax fraud. The joint unit for waste crime was established following the failure of Operation Nosedive, which, incidentally, cost HMRC £3.5 million in public money. There are huge tax implications here. Will the Minister comment on what is being done to close that tax gap?

As I said, landfill sites are not good, and it is good that we do all we can to reduce their environmental impact, but there is also the matter of reducing the gap between what is collected and the expectation, by ensuring that those moneys are recovered. Will the Minister comment on that and on how many enforcement actions and prosecutions have resulted from the work of the joint unit for waste crime on landfill tax?