Finance (No. 2) Bill (Third sitting)
Abena Oppong-Asare ExcerptsWednesday 5th January 2022
(2 years, 4 months ago)
Public Bill CommitteesRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 5 January 2022 - (5 Jan 2022)
Lucy Frazer
Clause 67 introduces a power enabling changes to be made by secondary legislation to stamp duty and stamp duty reserve tax in relation to securitisation and insurance-linked security arrangements. The Government are keen to ensure that the UK’s stamp duty and SDRT rules contribute to maintaining the UK’s position as a leading financial services sector.
On 30 November, the Government published a response document and a draft statutory instrument following consultation on reform of the tax rules for securitisation companies. The consultation explored issues including the application of the stamp duty loan capital exemption to securitisation and ILS arrangements. The consultation sought views on whether uncertainty as to how the existing stamp duty loan capital exemption applies increases the costs and complexity of UK securitisation and ILS arrangements, and whether that is a factor in arrangements being set up outside the UK.
Clause 67 will allow Her Majesty’s Treasury to make regulations to provide that no stamp duty or stamp duty reserve tax charge will arise in relation to the transfer of securities issued by a securitisation company or a qualifying transformer vehicle. A qualifying transformer vehicle is the note-issuing entity in an ILS arrangement. The power will also allow HMT to make regulations to provide that stamp duty or SDRT is not chargeable on transfers of securities to or by a securitisation company. The power allows the Government to make changes to allow UK securitisation and ILS arrangements to operate more effectively, and reduce cost and complexity. There is currently no power to make changes through secondary legislation to the stamp duty and SDRT rules in relation to securitisation and ILS arrangements.
In summary, clause 67 will support the Government to respond flexibly to the evolving commercial practices of the securitisation and ILS markets, and ensure that the UK’s securitisation and ILS regimes remain competitive. I therefore commend the clause to the Committee.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
I am delighted to serve under your chairship, Dame Angela. Happy new year, everyone.
As we heard from the Minister, clause 67 relates to stamp duty on securities and related instruments. We do not oppose efforts to increase the efficiency and flexibility of this sector, but we wish to see appropriate safeguards to ensure that these changes do not increase the risk of stamp duty evasion and, as the Minister mentioned, to make sure that they meet the UK’s position as a leading financial sector.
Securitisation can be a useful source of finance for UK businesses and can aid capital liquidity and risk management. I note that the Treasury has consulted on the impact of stamp duty on securitisation and insurance-linked securities. Clause 67 gives the Treasury powers to make changes through secondary legislation to stamp duty as it relates to securitisation. Can the Minister explain why the Government feel that it is necessary to make those changes through secondary legislation, rather than using the Finance Bill or other primary legislation?
Can the Minister also give us some detail on the exact changes that the Government intend to make through this secondary legislation? For example, in what circumstances will the trading of securities be exempt from stamp duty? How will she ensure that this does not increase the scope for tax avoidance? Can she also provide reassurance that Parliament will still be able to scrutinise these changes? The clause really needs to be scrutinised.
Lucy Frazer
I thank the hon. Lady very much for those points. I welcome the fact that she, too, thinks it important that this country remains competitive and flexible, and supports growth in this very important sector.
The hon. Lady asked why we need these changes to be made by secondary legislation. The answer is that technical changes of the type consulted on are more often and more appropriately made through secondary legislation than by primary legislation. Making the changes through secondary legislation gives Government flexibility to ensure that technical changes respond to the evolving nature of the securitisation and ILS markets.
However, it is of course important that we have scrutiny and review. We had a consultation on this issue, from which these provisions follow; of course, anything that comes through secondary legislation will be scrutinised. We will keep this under review, as we do all taxes.
Abena Oppong-Asare
I thank the Minister for taking the time to explain that. It would be helpful if she could also explain what measures were put in place to allow Parliament to scrutinise these changes. I am sure that she would agree that it is important that Parliament should be able to scrutinise these changes properly; if she could list what steps have been put in place, that would be extremely helpful.
On my other question, it is really important that there is no increase in tax avoidance. Can the Minister set out what the Government have put in place to ensure that it does not increase?
Lucy Frazer
Like me, the hon. Lady will be aware that when things go through the secondary legislation procedure they are subject to scrutiny by this House, through those Committees. She will also know that this Government are absolutely committed to ensuring that we tackle tax avoidance; there are a large number of measures in this Bill that tackle tax avoidance and evasion, through cracking down on promoters and other mechanisms. It is something that we are alive to and acting upon, and for those reasons I ask that clause 67 stand part of the Bill.
Question put and agreed to.
Clause 67 accordingly ordered to stand part of the Bill.
Clause 72
Identifying where the risk is situated
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
Clause 72 relocates into IPT legislation the criteria to determine the location of an insured risk for the purpose of insurance premium tax. IPT is charged on most general insurance, where it provides cover for risks located within the UK.
Insurance for risks located outside the UK is exempt from UK IPT. That exemption prevents double taxation across different tax jurisdictions and puts UK-based insurers on a level playing field with overseas insurers. Legislation sets out how to determine the location of a risk in order to establish whether the IPT exemption applies. Regulations previously used to determine the location of an insured risk were replaced in 2009, and the new regulations did not include an equivalent provision. Instead, reliance was placed on directly effective European Union legislation. To ensure clarity for the insurance industry, this measure relocates the criteria into primary legislation. This is a technical change and does not reflect a change in IPT policy.
The changes made by clause 72 will remove references to inoperative regulations in the Finance Act 1994, introducing criteria to the same effect directly into the IPT legislation. The measure ensures that insurance for risks located outside the UK remains exempt from IPT, providing clarity and continuity for the insurance industry and supporting the maintenance of an effective and fair tax system.
Abena Oppong-Asare
I thank the Minister for her explanation of clause 72; it does seem like a straightforward clause that simply moves the criteria for determining where the risk is located into primary legislation. The Chartered Institute of Taxation has stated that the legislation does meet its stated objectives. For that reason, we do not oppose the clause.
I note that there has been wider consultation on the insurance premium tax, including on how to address the avoidance of the tax and how to reduce the administrative burden on HMRC and the industry. That is particularly important as HMRC has been under a lot of pressure—particularly during the pandemic. In the Government’s response to the consultation on the issue of IPT avoidance, they said that, on reviewing the responses,
“neither of the proposed options provide a proportionate solution to the issue this chapter sought to address. As such, neither option will be taken forward at this time.”
That seems like the Government have given up at the first hurdle. Why, if the proposed measures are not appropriate, are the Government not considering other measures to prevent avoidance in this sector?
Alison Thewliss
I do not have any major objections to what is being proposed, but I would be doing the Association of British Insurers a disservice if I let the clause go through without mentioning its concern, which I share, that insurance premium tax is quite a regressive tax. We are about to discuss tobacco duty; the ABI points out, through some research by the Social Market Foundation, that insurance premium tax now raises more revenue than beer and cider duty, wine duty, spirits duty, or betting and gaming duties.
Since 1994, the standard rate of IPT has increased more rapidly than tobacco duty. Those are all things that we want people not to do; we would prefer it if people did not drink as much, smoke as much or gamble as much, so we tax those things. It seems ludicrous to tax people on insurance, which we would like people to have and which benefits them and society, so I ask the Minister to consider further whether insurance premium tax is something sensible that we want to keep doing.
Lucy Frazer
The clause gives the Secretary of State for International Trade the power to call in and take control of reviews of trade remedies measures transitioned from the EU. This ensures that the Government can effectively take steps to prevent harm to UK industry where there is evidence of unfair competition.
Trade remedies are additional tariffs or tariff-rate quotas temporarily imposed to protect domestic industries from dumped or subsidised imports or unforeseen surges in imports. At the end of the transition period, the Government transitioned 43 of the EU’s trade remedy measures. The Trade Remedies Authority is now reviewing the transitioned measures to assess whether their continuation is suitable for the UK economy. The TRA is responsible for collecting and analysing evidence relating to trade remedies cases, and it currently makes recommendations to the Secretary of State for International Trade on whether particular measures should be revoked or varied or, in certain cases, retained or replaced. The Secretary of State can only accept or reject a TRA recommendation in its entirety.
The current framework was introduced in 2018. Since then, it has become clear that in some circumstances, greater ministerial involvement in decision making is required. The call-in power is designed to address that. It will allow the Secretary of State to call in a case if she considers it necessary. For example, she will be able to take a closer look at an individual case if needed in the wider public interest. The intention is that the Secretary of State will continue to rely on the expertise of the TRA to collect and analyse evidence, but that it will do so under her direction.
Whether a case is called in or not, the process will continue to be robust, transparent and evidence based, but the power will allow the Secretary of State greater flexibility in decision making than our legislation currently allows. The call-in power will apply only to transition reviews, and where the TRA is reconsidering its previous conclusions from a transition review. In parallel, the Government are considering wider changes to the trade remedies framework to ensure that it can consistently defend UK industry. That is separate from the limited scope of this clause, and the International Trade Secretary will report on the findings of that review in due course.
The changes made by clause 73 will amend the trade remedies regime to allow the Secretary of State for International Trade to call in transition reviews and reconsiderations of transition reviews conducted by the TRA. After calling in a case, the Secretary of State will be responsible for determining the outcome of that review or reconsideration. That will ensure that the Secretary of State can have greater oversight and involvement in a particular transition review or reconsideration of a transition review as appropriate, and therefore the ability to decide on appropriate measures, such as varying the tariffs that apply to particular products under the UK’s trade remedies framework.
Where this power is exercised, the Secretary of State need not necessarily base their decision on a prior recommendation or decision of the TRA. The Secretary of State will be required to publish the notice of a decision made under this clause. The Government will make secondary legislation to set out in more detail how the call-in power is to be exercised.
In summary, clause 73 will help to prevent injury to UK industry by empowering the Secretary of State to call in transitional reviews where appropriate, and give her control to determine the outcome of a particular transition review or reconsideration of a transition review. Such a determination may include retaining, varying, revoking or replacing the trade remedies already in place on the goods subject to the review.
Abena Oppong-Asare
This important clause relates to trade remedies. As we have heard, it allows Ministers to override the powers of the Trade Remedies Authority in order to maintain safeguard tariffs on cheap imports that unfairly undermine UK industry.
The clause’s introduction was prompted by the row over the TRA’s proposals to get rid of tariffs on cheap steel imports. In June last year, the TRA recommended the removal of limits inherited from the EU on about half of the UK’s steel imports. Slashing those safeguards and opening the floodgates to cheap steel imports would have been devastating for steel plants across our country and damaging for our wider economy. At the time, the director general of UK Steel said:
“On their first major test in a post-Brexit trading environment, the UK’s new system has failed our domestic steel sector.”
The Government U-turned on that decision after pressure from Labour and the industry, and belatedly maintained protections for the steel industry. Obviously, however, there are concerns about future TRA decisions, so we support the clause. Indeed, Labour campaigned for the Government to take more action to support our vital steel industry.
I ask the Minister to expand on subsection (5), which allows the Secretary of State to make regulations regarding how to make decisions on transitioned trade remedies. Will she set out what sort of regulations she envisages that the Secretary of State will make and how those decisions will be made? It is important that there is a transparent process for making these important decisions on trade remedies.
Finally, although we welcome this measure and hope that it ensures that vital British industries are better protected in the future, we remain concerned about the Government’s wider failure to support British industry. Industries such as steel are of vital strategic importance for our economic prosperity and national security, but the Government’s lack of an industrial strategy means that the steel industry is lurching from crisis to crisis. We need a proper plan to decarbonise the sector, to boost business competitiveness and to use British steel in UK infrastructure projects, in order to safeguard the future of the steel industry, as Labour’s plans to buy, make and sell in Britain would do.
Labour would also invest up to £3 billion over the coming decade in greening the steel industry. We would work with steelmakers to secure a proud future for the industry to match the proud past and present of British steel communities. I urge the Government to do the same.
Lucy Frazer
I did not want to interrupt the hon. Lady, but I think she has gone outside the remit of the measures in the Bill. However, I would like to correct her on a point—[Interruption.] She was talking about the steel industry as a whole, when we are dealing with a provision that relates in particular to the power of the Secretary of State to call in trade remedies.
Lucy Frazer
The clause simplifies the way that technical updates are made to the UK’s tariff schedule. This measure inserts a new provision into the Taxation (Cross-border Trade) Act 2018 so that changes to the UK’s tariff schedule that do not alter the tariff duty rates applied to imported goods can be made by public notice rather than by secondary legislation, as is currently the case.
The clause will ensure that routine technical changes to tariff legislation, such as changing the codes used to classify goods or removing redundant codes, can be implemented more easily and quickly for those who refer to the legislation. Importantly, this measure also reduces the burden on parliamentary time in considering routine technical changes, while maintaining Parliament’s current levels of scrutiny of tariff duty rate changes.
In summary, the clause amends the Taxation (Cross-border Trade) Act 2018 so that technical changes can be made by public notice, thus ensuring simpler and quicker implementation of those changes to the UK’s tariff schedule.
Abena Oppong-Asare
This relatively minor change allows technical updates to the tariff schedule to be made by public notice rather than secondary legislation. Given that there are safeguards to ensure that substantive changes, such as varying the rate of import duty, continue to be made by regulation and are therefore subject to parliamentary oversight, we do not oppose the clause.
Question put and agreed to.
Clause 74 accordingly ordered to stand part of the Bill.
Clause 75
Restriction of use of rebated diesel and biofuels
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to consider that schedule 10 be the Tenth schedule to the Bill.
The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Dame Angela.
Clause 75 and schedule 10 make technical amendments to the existing legislation that restricts the entitlement to use rebated red diesel and biofuels from 1 April 2022, to adjust restrictions and ensure that the legislation operates as intended.
To help achieve net zero and improve UK air quality, the Government announced at Budget 2020 that they would reduce the entitlement to use rebated diesel and biofuels, which currently enjoy a duty discount, from this April. These tax changes will ensure that most current users of rebated diesel use fuel taxed at the standard rate for diesel from April 2022, like motorists, which more fairly reflects the harmful impact of the emissions they produce. The changes will also incentivise users of polluting fuels, such as diesel, to improve the energy efficiency of their vehicles and machinery, invest in cleaner alternatives or just use less fuel.
Following consultation in 2020, the sectors that will be allowed to continue to use rebated diesel and biofuels beyond April 2022 were confirmed at spring Budget 2021, with the changes legislated for in the Finance Act 2021. Clause 75 and schedule 10 will make technical amendments to the Hydrocarbon Oil Duties Act 1979 and the Finance Act 2021 to adjust restrictions on the entitlement to use rebated diesel and rebated biofuels, clarify how the changes to the new rules work, and allow the legislation to operate as intended.
In summary, the changes will alter the circumstances in which the use of rebated diesel and rebated biofuels will be permitted from 1 April 2022, including provisions aimed at transition to the new rules. They will also amend definitions relating to certain vehicles, machines and appliances. Some of these changes follow feedback received from stakeholders since the Finance Act 2021 received Royal Assent. Overall, the technical changes in this clause and schedule will ensure that the Government’s reforms to the tax treatment of rebated diesel and biofuels from April 2022 work as intended.
Abena Oppong-Asare
I thank the Minister for her explanation of the clause, which introduces technical amendments to the changes introduced to restrict the entitlement to use rebated fuel, more commonly known as red diesel. We discussed the substance of that change in Committee on the last Finance Bill. As I said then, we support the intention behind the Government’s measure. There is a clear need to ensure that fuel duty rebates are as limited as possible in order to meet our net zero commitment.
The amendments made by this Bill are technical in nature, and we do not oppose them. However, will the Minister set out which, if any, industries will be affected by the changes and what work is being done to ensure that they are prepared, given that we are now only a few months from the introduction of the changes? Will she also update us on preparations by Her Majesty’s Revenue and Customs and other agencies for the changes? Is she confident that the Government will be able to ensure compliance from April this year? The Minister’s colleague, the Financial Secretary to the Treasury, mentioned that there has been some restructuring around HMRC, but I echo the earlier comments by the hon. Member for Glasgow Central and my hon. Friend the Member for Ealing North, who explained that HMRC has been busy for a number of years. Will the Minister update us on what work has been done to ensure that we are prepared for this change?
Alison Thewliss
I am glad that the definitions are being amended to include fairs and circuses, of which there are many in my constituency, to allow them to continue to use rebated diesel and biofuels after 1 April 2022. In that industry it is quite difficult to adapt machines to use other sources. The showpeople I represent will be pleased that the Government have listened on this measure, and I thank the Minister for that.
Helen Whately
The clause implements changes announced in the autumn Budget 2021 on tobacco duty rates. The duty charged on all tobacco products will rise in line with the tobacco duty escalator, with additional increases made for hand rolling tobacco and to the minimum excise tax on cigarettes.
Smoking rates are falling in the UK, but smoking remains the biggest cause of preventable illness and premature deaths in the UK, killing around 100,000 people a year and about half of all long-term users. All those factors mean that we need to continue to encourage more people to kick the habit. We have already set out ambitious plans to reduce the number of smokers from 14% to 12% of the population by 2022, as set out by the Department of Health and Social Care in its tobacco control plan. We have announced that we aim to reduce smoking prevalence in England to 5% or less by 2030. That includes a commitment to continue the policy of maintaining high duty rates for tobacco products to improve public health.
According to Action on Smoking and Health, smoking costs society almost £14 billion per year, including a £2 billion cost to the NHS because of the disease caused by smoking. At autumn Budget, the Chancellor announced that the Government would increase tobacco duty in line with the escalator. The clause specifies that the duty charge on all tobacco products will rise by 2% above retail price index inflation. Duty on hand-rolling tobacco increases by a further 4%, to 6% above RPI inflation. The clause also increases the minimum excise tax—the minimum amount of duty to be paid on a pack of cigarettes—by an additional 1%, to 3% above RPI inflation.
The clause will continue our tried-and-tested policy of using high duty rates on tobacco products to make tobacco less affordable and to continue the reduction in smoking prevalence. That will reduce the burden placed on our public services by smoking. I commend the clause to the Committee.
Abena Oppong-Asare
As the Minister set out, the clause raises the duty on tobacco products, in line with the duty escalator, by RPI plus 2% for cigarettes and RPI plus 6% for hand-rolling tobacco. The minimum excise tax has been increased. We do not oppose those increases, but I will take this opportunity to make a couple of wider points about action to prevent smoking and the Treasury’s role in it.
Action on Smoking and Health stated that last year’s Budget was
“a small step forward on tobacco, but on its own won’t deliver on the Government’s commitment to a Smokefree 2030.”
In fact, projections show that the Government will miss that target by seven years, and double that for the poorest in society. As the Minister knows, tobacco duty has a dual role: raising revenue for the Government and reducing smoking rates. The latter role is most effective when combined with a comprehensive funded strategy to reduce smoking. Unfortunately, the funding for such a strategy has been repeatedly cut in recent years as part of broader cuts to public health grants. The Minister mentioned that smoking has fallen, but recently published evidence shows a 25% increase in smoking among young adults since the first lockdown, so it is clear that there is a lot of work to be done.
In a debate on smoking last year, the Under-Secretary of State for Health and Social Care, the hon. Member for Erewash (Maggie Throup), said in response to a question on taxation:
“That is a matter for Her Majesty’s Treasury. However, the Department continues to work with HMT to assess the most effective regulatory means to support the Government’s smoke-free 2030 ambition, which includes exploring a potential future levy.”—[Official Report, 16 November 2021; Vol. 703, c. 181WH.]
Will the Minister tell us what work the Treasury is doing to design a levy on tobacco manufacturers, along the lines of the “polluter pays” principles, to pay for campaigns to stop smoking and other public health measures? Those large and profitable companies often pay relatively little tax in this country, while those who smoke rightly pay a large amount of tax every time they buy a pack of cigarettes. Many public health experts urge the Government to look at the idea of a levy, and I strongly hope that the Minister will say more on that.
Helen Whately
I am glad to hear that the Opposition will not oppose the clause. The hon. Lady has said that it is not enough on its own, and the Government agree. Our tax treatment of tobacco is just one of a set of policies in place to reduce smoking. I assure her that the UK is seen as a global leader on tobacco control. Over the last two decades, we have implemented regulatory measures to stop young people smoking and non-smokers from starting, and to support to help smokers quit.
The hon. Lady also asked about a tobacco levy. I can tell her that the Government consulted on proposals for a tobacco levy in 2015. That consultation concluded that a levy is not the most effective way to raise revenue or protect public health. It would add complexity and additional costs, while the amount of revenue it could raise is uncertain.
Abena Oppong-Asare
I appreciate the time the Minister has taken to answer this question. The Department of Health and Social Care is saying something completely different. Last year, the Health Minister, the hon. Member for Erewash, said that taxation was a matter for the Treasury and that the Department was working with the Treasury to look at an effective regulatory means to support the Government’s smoke-free 2030 ambition, which included exploring a potential future levy. Could I have clarification on that?
It seems that the Department is saying something different from what the Minister has just said—that the consultation was done in 2015 and it was decided that a levy was not appropriate? I am not trying to be difficult here, but I think the Government need to explore this idea. A number of health experts and even the Health Minister are saying that, so some work needs to be done on this in detail. The last review was done in 2015, and we have moved on a number of years.
Helen Whately
Clause 77 makes changes to uprate vehicle excise duty—or VED—for cars, vans and motorcycles in line with the retail prices index from 1 April 2022. VED is paid on vehicle ownership, and rates chargeable are dependent on various factors, including the vehicle type, date of first registration and carbon emissions. The Government has uprated VED for cars, vans and motorcycles in line with inflation every year since 2010, which means that rates have remained unchanged in real terms during this time. The changes made by clause 77 will uprate VED rates for cars, vans and motorcycles by RPI only for the 12th successive year, meaning that VED liabilities will not increase in real terms. The standard rate of VED for cars registered since 1 April 2017 will increase by only £10. The flat rate for vans will increase by £15 and motorcyclists will see an increase in rates of no more than £5.
New clause 5, tabled by the hon. Member for Glasgow Central, asks the Government to publish within 12 months of this Bill coming into effect an assessment of the impact of sections 77 to 79 on the goal of tackling climate change and on the UK’s plan to reach net zero by 2050. Similarly, new clauses 4 and 8 tabled by the hon. Lady ask the Government to publish, within 12 months of this Bill coming into effect, impact assessments on the goal of tackling climate change and on the UK’s plan to reach net zero by 2050, first on the Act as whole, and, secondly, on section 99 and schedule 16. These amendments are unnecessary and should not stand part of the Bill.
The Government are proud of our world-leading climate commitments, most recently set out in the net zero strategy. The latest Budget and spending review confirm that since March 2021, the Government will have committed a total of £30 billion of domestic investment for the green industrial revolution. That investment will keep the UK on track to meet its carbon budgets and nationally determined contribution, and to reach net zero by 2050. The net zero strategy sets out how the Government will monitor progress to ensure that we stay on track for our emissions targets. That includes commitments to require the Government
“to reflect environmental issues in national policy making”.
At fiscal events, including the spending review 2021, all Departments are required to prepare their spending proposals in line with the Green Book, which sets out the rules that we use in the Treasury to guide individual spending decisions. The Green Book already mandates consideration of climate and environmental impacts in spending, and it was updated in 2020 to emphasise that policies must be developed and assessed against how well they deliver on the Government’s long-term policy aims such as net zero.
Furthermore, the Treasury carefully considers the climate change and environmental implications of relevant tax measures. The Government incorporated a climate assessment in all relevant tax information and impact notes for measures at Budget—they are published online—and we will continue to do so in future TIINs. For example, the TIIN for the new plastic packaging tax incorporates an assessment of anticipated carbon savings—nearly 200,000 tonnes of carbon dioxide in 2022-23. In addition, HMRC is exploring options further to strengthen the analytical approach to monitoring, evaluating and quantifying the environmental impacts of tax measures.
Given the substantial work already under way on these issues, the proposed amendment would add unnecessary bureaucratic requirements and layers of complexity. I therefore urge the Committee to reject new clause 5 and, for the same reasons, I will urge the Committee to reject new clauses 4 and 8 when we turn to those.
New clause 15, tabled by the hon. Members for Ealing North, for Erith and Thamesmead and for Blaydon, asks the Government to publish, within 12 months of the Act coming into effect, a review of the impact on VED revenue of future demand for electric vehicles. This new clause is also unnecessary and should not stand part of the Bill. The Government are committed to achieving net zero carbon emissions by 2050, and the transition towards electric vehicles and the phase-out of new petrol and diesel cars and vans will make a vital contribution to that. The Government have committed to ensuring, as we move forward with this transition, that revenue from motoring taxes keeps pace with this change, to make sure that we can continue to fund the excellent public services and infrastructure that people and families across the UK expect.
Analysis that projects the possible impact on VED revenues of future demand for electric vehicles is already in the public domain. First, since 2016, the Government have asked the Office for Budget Responsibility to publish a fiscal risks statement to improve disclosure and management of fiscal risks. The OBR’s 2021 fiscal risks report makes an assessment of the fiscal impact of achieving net zero, including the impact on VED and fuel duty receipts, which it explores under different climate change modelling scenarios.
Secondly, the net zero review published by the Treasury in October of last year also examines the possible decline in tax revenues, including VED and fuel duty receipts, as part of the transition to net zero. It notes that, were the current tax system to remain unchanged across the transition period, tax receipts from most fossil fuel-related activity would decline towards zero across the first 20 years of the transition, leaving receipts lower in the 2040s by up to 1.5% of GDP in each year relative to a baseline where they stayed fixed as a share of GDP.
Given that analysis of future VED revenues has already been published by both the Government and the OBR, the review of this issue sought by this new clause is unnecessary. I therefore urge the Committee to reject new clause 15.
Overall, the changes outlined in clause 77 will maintain revenue sustainability by ensuring that motorists continue to make a fair contribution to the public finances. I therefore urge that this clause stand part of the Bill.
Abena Oppong-Asare
Clause 77 raises the rate of vehicle excise duty for various categories of vehicle by RPI. This is a regular update to VED to ensure that it remains the same in real terms, and we do not oppose it. I do wish to make broader points about taxes affecting drivers and, in particular, to speak to our new clause 15.
Electric vehicles are not liable for vehicle excise duty, and of course their owners do not pay fuel duty. New clause 15 calls on the Government to report on expected future levels of vehicle excise duty in the context of the increasing uptake of electrical vehicles. It is designed to encourage the Government to begin to think and talk publicly about that critical question.
The transition from petrol and diesel cars to electric vehicles is critical as part of our broader transition to net zero. The Opposition have constantly raised concerns about the fact that the Government are not doing enough to support the take-up of electric vehicles, whether through supporting consumers and producers or improving the critical charging infrastructure. We continue to believe that the Government must do more in that area, but we also believe that they must begin to set out how they will deal with the fiscal consequences of the transition.
Fuel duty and VED currently raise around £35 billion for the Treasury each year. They are by far the largest revenue-raising environmental taxes. It is a truly significant amount of Government revenue, equivalent to nearly half the Education budget, but as electric vehicles become an increasing share of vehicles on the roads, that revenue will decline rapidly. One estimate shows that tax revenues from car usage could fall by around £10 billion by 2030, £20 billion by 2035, and £30 billion by 2040. The Treasury’s own net zero review stated that much of the current revenue from taxing fossil fuels was likely to be eroded during the transition to a net zero economy.
We might have expected the review to set out what the Treasury planned to do about that, but it was notably silent on that matter. When the Minister responds, can she tell us what work the Treasury is carrying out on that important issue and when it will set out its plans? Can she tell us what alternatives to VED the Treasury is considering—for example, road pricing or other taxes? Crucially, how will the Treasury balance the need to maintain income from driving with the need to incentivise the switch to electric vehicles? Those are critical questions, which cannot and must not be left to the last minute. We deserve to have an open debate about the best way forward. Motorists and taxpayers deserve clarity about how they will be taxed in the future. I hope that the Minister can begin to give us some insight into the Treasury’s thinking on this issue.
Finance (No. 2) Bill (Second sitting)
Abena Oppong-Asare ExcerptsTuesday 14th December 2021
(2 years, 5 months ago)
Public Bill CommitteesRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 December 2021 - (14 Dec 2021)
The Financial Secretary to the Treasury (Lucy Frazer)
Clause 23 extends the time for payment of capital gains tax on property disposals from 30 days to 60 days, as well as clarifying the rules for mixed-use properties. It will affect disposals that have a completion date on or after 27 October 2021. Since April 2020, UK resident persons disposing of UK residential property where capital gains tax is due have been required to notify and pay the tax within 30 days of their sale completing.
Most people are not affected by the requirement because the sale of main homes is exempt from capital gains tax through private residence relief. Non-UK resident persons have paid within 30 days since April 2015 for residential property and from April 2019 for disposals of both UK residential and non-residential property, even if they have no tax to pay. However, the Government recognise that having 30 days has not always allowed taxpayers enough time to settle their affairs. In recognition of that, the Government are extending the 30-day time limit to 60 days. The change was informed by taxpayer representations and comes in response to the Office of Tax Simplification report in May 2021, where increasing the time limit to 60 days was a key recommendation.
The measure allows taxpayers more time to produce and provide accurate figures, particularly in more complex cases, as well as sufficient time to engage with advisers. It also clarifies the rules for a UK resident person calculating the capital gains tax notionally chargeable for mixed-use properties. The changes made by clause 23 will, first, extend the time limit for capital gains tax payment on property disposals to 60 days following completion of the relevant disposal. Secondly, for UK residents, the changes clarify that when a gain arises in relation to a mixed-use property, only the portion of the gain that is the residential property gain is to be reported and paid within 60 days.
Increasing the time limit to 60 days will delay some revenue until later in the scorecard. That is because some capital gains tax payments will now be paid in a different tax year. The Office for Budget Responsibility expects the measure to move £80 million out of the scorecard to later years, with the majority incurred in 2021-22. The measure is expected to impact an estimated 75,000 individuals, trustees and personal representatives of deceased persons who sell or otherwise dispose of UK land and property each year.
In summary, those liable to pay capital gains tax will now have 60 days instead of 30 days to report and pay the tax due on UK land and property disposals. I commend the clause to the Committee.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairship, Sir Christopher. I want to say for the record that I believe Erith and Thamesmead is the best constituency. As the Minister has described, clause 23 relates to returns for the disposal of UK land. It extends the time limit for payment on property disposal from 30 days to 60 days, as well as clarifying the rules for mixed-use properties. As the Minister has rightly pointed out, that will affect disposals with completion dates on or after 27 October 2021.
A reporting and payment period for selling or otherwise disposing of an interest in UK land was initially introduced to help reduce errors and increase compliance. The measure increased the time available for taxpayers to report their disposals. The increase intends to allow more time for taxpayers to produce and provide accurate figures, which will be particularly helpful in more complex cases, as well as assuring sufficient time to engage with advisers. The change also clarifies the calculation for the capital gains tax notionally chargeable for mixed-use properties.
We do not oppose the doubling of the time period for reporting and paying capital gains tax on UK property. However, we remain concerned about the lack of awareness surrounding the reporting and paying process. I would be grateful if the Minister could outline the measures the Government will take to help individuals selling properties to be aware of their obligations and what support the Government will offer individuals struggling to access the stand-alone digital system for reporting those transactions.
Lucy Frazer
I am grateful to the Labour Front-Bench team for not opposing the measure, which is indeed very sensible. Her Majesty’s Revenue and Customs regularly engages with all stakeholders and agents, who will therefore know about the change, but the hon. Lady makes an important point about communication, which we touched on this morning. I commend the clause to the Committee.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Clause 24
Cross-border group relief
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
Clause 24 makes changes to abolish cross-border group relief to ensure that loss relief is limited to UK losses, thereby providing relief only for companies that the UK can tax. It also amends the rules restricting the amount of losses foreign companies with a UK branch can surrender to UK companies, bringing companies resident in the European economic area in line with companies resident in the rest of the world.
Cross-border group relief provides UK companies with the ability to claim relief for the losses of their EEA resident group companies, even though the UK is unable to tax any profit made by those companies. The UK cross-border relief rules were introduced in 2006, owing to a 2005 decision by the Court of Justice of the European Union that found the previous rules to be incompatible with the EU freedom of establishment principle.
Under the current system, the UK Exchequer bears the cost of giving relief to UK companies for losses of EEA companies, as the latter pay no tax to the UK Government. The rules for restricting surrender of losses of a UK branch of a foreign company were also amended to be more favourable to EEA companies as a result of CJEU judgments. Favourable treatment for losses of EEA companies or UK branches of EEA companies is not right, and is inconsistent with our approach to the rest of the world, especially now that the UK has left the EU and is no longer bound by EU law.
Clause 24 will principally affect large, widely-held corporate groups, and will ensure both equal treatment of losses of companies in EEA and non-EEA countries and protection for the UK Exchequer against unfair outcomes. Historically, group relief was available only for losses of UK companies or UK branches, so the abolition of cross-border group relief and the alignment of branch rules is a reversion to a previously accepted position. Other countries generally do not give cross-border loss relief, so abolishing it would be very much in line with the international mainstream.
In summary, the change will allow the UK to depart from this historic position and more effectively pursue its fiscal policy objectives. I therefore commend the clause to the Committee.
Abena Oppong-Asare
As we have heard, clause 24 concerns cross-border group relief and is accompanied by schedule 4. The clause and schedule repeal legislation that provides for group relief for losses incurred outside the UK and amend legislation that provides for group relief for losses incurred in the UK permanent establishment of an EEA resident company.
Following the UK’s exit from the EU, the Government are bringing group relief relating to EEA resident companies into line with relief for non-UK companies resident elsewhere in the world. Claims involving companies established in the EEA are currently subject to more favourable rules in the UK relating to relief for non-UK losses and losses incurred by the UK permanent establishment of a foreign company.
These rules were introduced to give effect to the UK’s obligations as a member state of the EU. Having left the EU, the UK is no longer required to maintain those rules, and it is inconsistent to treat groups with EEA resident companies more favourably than those with companies resident elsewhere in the world. The clause therefore removes that inequality by aligning group relief rules for all non-UK companies.
The changes to legislation made by the clause broadly restore the group relief rules to what they were before separate rules were introduced for EEA resident companies in line with EU law. We do not oppose this measure, as it rightly removes an inequality between companies and contributes towards a level playing field.
The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Sir Christopher.
Clause 25 reforms the UK’s tonnage tax regime from April 2022, with the aim that more firms will base their headquarters in the UK, using the UK’s world-leading maritime services industry and flying the UK flag. The UK tonnage tax regime was introduced in 2000 to improve the competitiveness of the UK shipping industry. It is a special elective corporation tax regime for operators of qualifying ships. Now that the UK has left the European Union, the Government will make substantive reforms to the regime for the first time since it was introduced, to help the UK shipping industry grow and compete in the global market. The reforms will make it easier for shipping companies to move to the UK, make sure that they are not disadvantaged compared to firms operating in other countries and reduce administrative burdens.
Clause 25 will make changes to the tonnage tax legislation contained in schedule 22 to the Finance Act 2000 to reform the regime from April 2022. Specifically, it will give effect to the following measures announced at the autumn Budget in 2021. The Government will give HMRC more discretion to admit companies to the regime outside the initial window of opportunity, where there is a good reason. The Government will reduce the lock-in period for companies participating in the tonnage tax regime from 10 to eight years, aligning the regime more closely with shipping cycles.
Now that the UK has left the EU, the Government will remove the consideration of flags from EU and EEA countries. Following this legislative change, HMRC will update its guidance to encourage the use of the UK flag by making it an important factor in assessing the value that companies who want to participate in tonnage tax will bring to the UK in the strategic and commercial management test. Finally, following the UK’s departure from the EU, the Bill will simplify a rule that may include distributions of related overseas shipping companies in relevant shipping profits.
These changes to modernise the tonnage tax regime will make sure that the UK’s maritime and shipping industries can compete in the global shipping market, bringing jobs and investment to nations and regions across the UK. I commend the clause to the Committee.
Abena Oppong-Asare
I thank the Minister for her explanation of clause 25, which makes amendments to the tonnage tax regime. Tonnage tax is a special elective corporation tax regime open to operators of qualifying ships that fulfil certain conditions. The amendments will have effect from 1 April next year. At the autumn Budget in 2021, the Government announced that they would introduce a package of measures to reform the UK’s tonnage tax regime from April 2022, which they say aims to ensure that the British shipping industry remains highly competitive in the global market. As part of the package, the Government say these amendments support their aim of simplifying the operation of tonnage tax legislation and making it more flexible following the UK’s departure from the European Union. Clause 25 gives effect to some of these measures by amending the tonnage tax legislation contained in schedule 22 to the Finance Act 2000, as the Minister said.
In his Budget speech on 27 October, the Chancellor of the Exchequer said:
“When we were in the old EU system, ships in the tonnage tax regime were required to fly the flag of an EU state, but that does not make sense for an independent nation. So I can announce today that our tonnage tax will, for the first time ever, reward companies for adopting the UK’s merchant shipping flag, the red ensign. That is entirely fitting for a country with such a proud maritime history as ours.”—[Official Report, 27 October 2021; Vol. 702, c. 282.]
Helen Whately
As I set out, the clause reforms the UK’s current tax regime to help the UK shipping industry grow and compete in a competitive global market. Overall, this will be to the benefit of our maritime industry and, therefore, to the UK as a whole, supporting GDP, tax revenues and jobs in the UK.
I will pick up on a couple of comments made by the Opposition Front-Bench spokespeople. On the points made by the hon. Member for Erith and Thamesmead, the clause is all about helping our shipping industry compete in a global market and making sure firms are not disadvantaged compared to those operating in other countries. It comes at a minimal cost to the Exchequer and we expect to see tax revenues in the sector increase as a result, because it will mean that more shipping groups are likely to headquarter in the UK. That will bring tax advantages and benefits to the UK, as well as tens of thousands of jobs that relate to that.
On the second point that the hon. Member made, I emphasise that the Treasury takes the recommendations of the Macpherson review very seriously and follows them in full. The reforms to our tax regime were rightly announced some months before they will come into force, in April next year.
The hon. Member for Glasgow Central talked about environmental factors. As part of the reforms, HMRC expects to update the guidance on assessing eligibility for the tonnage tax regime, and environmental factors will be considered as part of that, so it can help us on decarbonisation actions and ambitions.
Abena Oppong-Asare
I thank the Minister for her explanations. Has an assessment been made of whether anyone profited as a result of the Chancellor’s premature announcement to the press? Has any assessment been carried out?
Helen Whately
I emphasise what I said a moment ago: the Treasury followed in full the approach that should be taken, as set out in the Macpherson review in 2013. The Government’s tonnage tax reforms will ensure that the UK’s maritime and shipping industries remain highly competitive and bolster our reputation as a great maritime nation.
Question put and agreed to.
Clause 25 accordingly ordered to stand part of the Bill.
Clause 26
Amendments of section 259GB of TIOPA 2010
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
Clause 26 makes a change to ensure that corporation tax rules for hybrids and other mismatches operate proportionately in relation to certain types of transparent entity. Following recommendations by the OECD, the UK was the first country to implement anti-hybrid rules in 2017. These rules tackle aggressive tax planning by multinational companies that seek to take advantage of differences in how jurisdictions view financial instruments and entities.
With the benefit of three years’ experience of operating the rules, and with other countries following suit and introducing their own version of the rules, the Government launched a wide-ranging consultation on this area of legislation at Budget 2020. Following that consultation, several amendments were made to the rules in the Finance Act 2021, but the change that we are now considering, relating to transparent entities, was withdrawn from that Bill to allow the Government additional time to consult stakeholders, so that they could ensure that the amendment had no unintended conse-quences.
We have had further engagement with stakeholders, and the amendment now provides for the specific change for transparent entities that the Government committed to making following last year’s consultation. The change made by the clause is technical and will impact multinational groups with a UK presence that are involved in transactions with certain types of entity that are seen as transparent, for tax purposes, in their home jurisdictions. Following the changes, this type of entity will be treated in the same way as partnerships in the relevant parts of the rules for hybrids and other mismatches. It is important that these rules are robust in tackling international tax planning, but also that they are not disproportionately harsh in their application.
Abena Oppong-Asare
The Minister clarified what the clause does. We do not oppose the clause.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Clause 29
Insurance contracts: change in accounting standards
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss that schedule 5 be the Fifth schedule to the Bill.
Lucy Frazer
Clause 29 introduces a power to lay regulations before Parliament in connection with the new international accountancy standard for insurance contracts, known as IFRS 17, introduced by the International Financing Reporting Standard Foundation. These regulations will allow the Government to spread the transitional impact of IFRS 17 for tax purposes, and to revoke the requirement for life insurers writing basic life assurance and general annuity business to spread their acquisition expenses over seven years for tax purposes. The corporation tax liabilities of insurers are based on their accounting profit. IFRS 17 will apply to companies that prepare their accounts under international accounting standards and is expected to become mandatory for accounting periods beginning on or after 1 January 2023, subject to its endorsement by the UK Endorsement Board.
Depending on the types of insurance business written, adoption of IFRS 17 will create a large, one-off transitional accounting profit or loss for many insurers. The Government expect that spreading these one-off transitional profits and losses for tax purposes will greatly reduce volatility in Exchequer receipts and should also help to mitigate the cash flow and regulatory impacts of the accounting change. This will support the long-term stability of the insurance sector in the UK and contribute to the UK maintaining its position as a leading financial services centre.
The adoption of IFRS 17 will also make it more complex for life insurers writing basic life assurance and general annuity business to undertake the necessary calculations to spread their acquisition expenses over seven years for tax purposes, as currently required. Additionally, commercial changes in the life insurance market mean that the need for this requirement has reduced in recent years. Removing it for all life insurers writing basic life assurance and general annuity business, and instead following accounting treatment for tax purposes, will be a welcome simplification. The details of the final legislation will be informed by a consultation that was published alongside the “Tax Administration and Maintenance” Command Paper on 30 November.
The clause will allow the Government to respond to the potentially large and one-off tax implications caused by the adoption of the new international standard for insurance contracts, IFRS 17. I therefore recommend that the clause and schedule 5 stand part of the Bill.
Abena Oppong-Asare
As we have heard, clause 29 sits alongside schedule 5 and refers to insurance contracts and changes in accounting standards. As the Minister has mentioned, the clause has an enabling power that will allow the Government to make provisions in secondary legislation in connection with international financial reporting standard 17, and to revoke the requirement for all life insurance companies to spread acquisition costs over seven years for tax purposes.
The corporation tax liabilities of insurers are based on their accounting profit, and many insurers prepare their accounts under international accounting standards. The new international accounting standard for insurance contracts, IFRS 17, is expected to become mandatory for periods of account beginning on or after 1 January 2023, subject to its endorsement by the UK Endorsement Board. IFRS 17 will affect the timing of recognition of insurers’ profits and losses, and its adoption will create transitional accounting profits or losses, which we understand may have significant regulatory consequences. We recognise that the Government will need powers to be able to deal with the tax implications of IFRS 17.
The removal of the requirement for all life insurance companies to spread their acquisition costs over seven years for tax purposes is a simplification that has been allowed by IFRS 17. We welcome the simplification of tax arrangements and do not oppose the clause, but can the Minister tell us what provision will be put in place for insurers, for whom the change in accounting standards could cause a transitional administrative burden?
Lucy Frazer
I thank the hon. Member for her question, but the whole purpose of the clause, which will allow costs to be spread over a number of years, is to make things easier for insurers. I am glad that she is satisfied that the clause is sensible, and I am very grateful for her support for this provision. I ask that the clause stand part of the Bill.
Question put and agreed to.
Clause 29 accordingly ordered to stand part of the Bill.
Schedule 5 agreed to.
Clause 30
Deductions allowance in connection with onerous or impaired leases
Question proposed, That the clause stand part of the Bill.
Abena Oppong-Asare
Clause 30 concerns deductions allowance in connection with onerous or impaired leases. The clause amends sections of the Corporation Tax Act 2010 to ensure that the legislation continues to work as intended. It does so by continuing to provide an exemption from the loss reform rules for companies in connection with onerous or impaired leases in specific circumstances. As the Minister said, the measure enables such companies to obtain full relief for carried-forward losses that offset profits arising from lease renegotiations where they adopt international financial reporting standard 16.
Loss reform was introduced in section 18 of schedule 4 to the Finance Act 2017, and had effect from 1 April 2017. The reform made two main changes. It increased a company’s flexibility to offset carried-forward losses either against the company’s own total profits in latter periods or in form of a group relief in a later period. Additionally, it limited the amount of profit against which carried-forward losses can be set. Each group or a company that is not part of a group has an annual deductions allowance of £5 million in profit. Carried-forward losses can be set against that amount, which is restricted to a maximum of 50% of a company’s total profits for the period. The restriction to carried-forward losses was extended to include corporate capital losses with effect from 1 April 2020. Having reviewed the clause, the Opposition do not oppose it.
Lucy Frazer
I am grateful for the fact that the Opposition do not intend to oppose the clause.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 31
Provision in connection with the Dormant Assets Act 2022
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
The Committee will be disappointed to learn that this is probably the last clause that we will deal with today. It introduces schedule 6, which supports the expansion of the dormant assets scheme to a wider range of assets. The clause ensures that where an asset is transferred into the dormant asset scheme and an individual later makes a successful claim to the ownership of that asset, they are in the same position for capital gains tax purposes that they would have been in without the scheme.
The dormant asset scheme enables funds from dormant bank and building society accounts to be channelled towards social and environmental initiatives. The scheme allows dormant funds to be unlocked for good causes, while protecting the original asset owner’s legal right to reclaim the amount that would have been paid to them had a transfer into the scheme not occurred.
In 2021, following a consultation, the Government announced their intention to expand the scheme to include assets from the pensions, insurance, investments and securities sectors. The process of transferring the assets into the scheme could, in certain cases, qualify as a disposal for CGT purposes, resulting in neither a gain nor a loss. As the asset owner cannot be located and does not know that the transfer has occurred, it is not appropriate or feasible for the tax to be paid by the individual at the point of transfer to the scheme, or for a notice of a loss to be made. The change made by the scheme addresses that by ensuring that a CGT charge arises only where a person comes forward to claim the asset. That ensures that the individual remains in the same position for tax purposes that they would have been in had the asset not been transferred into the dormant asset scheme.
Where the asset had previously been held in an individual savings account, changes made by the schedule ensure that no income or CGT arises when the asset is reclaimed. That ensures that savers in ISAs are not disadvantaged by their accounts being transferred into the scheme. The scheme also updates references in the existing legislation to ensure that it reflects the widest scheme created by the Dormant Assets Bill.
The schedule will commence only on the making of a Treasury order, because the Dormant Assets Bill is not yet law. The intention is to lay the necessary commencement order before Parliament when that Bill becomes law. For that reason, the schedule contains time-limited powers that allow the Treasury to make changes by secondary legislation if changes to the Dormant Assets Bill result in additional tax issues. The Government believe that the provisions strike the right balance between supporting good causes and taxpayer fairness.
Abena Oppong-Asare
As we have heard, clause 31 and schedule 6 concern the Dormant Assets Bill. The changes broadly ensure that individuals remain in the same position for tax purposes as they would have done had the assets not been transferred into the dormant assets scheme. Overall, we do not oppose the measure, but we are aware that the Chartered Institute of Taxation has concerns about the availability of accessible guidance to those making a claim under the dormant assets scheme who may be unaware of the tax consequences of their actions. Will the Minister clarify when guidance will be issued?
Lucy Frazer
I am grateful for the hon. Member’s indication that the Opposition will not oppose this measure. HMRC does generally provide guidance, and I am very happy to update the hon. Member on any guidance on this issue.
Question put and agreed to.
Clause 31 accordingly ordered to stand part of the Bill.
Schedule 6 agreed to.
Finance (No. 2) Bill (Second sitting)
Abena Oppong-Asare ExcerptsTuesday 14th December 2021
(2 years, 5 months ago)
Public Bill CommitteesRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 14 December 2021 - (14 Dec 2021)
The Financial Secretary to the Treasury (Lucy Frazer)
Clause 23 extends the time for payment of capital gains tax on property disposals from 30 days to 60 days, as well as clarifying the rules for mixed-use properties. It will affect disposals that have a completion date on or after 27 October 2021. Since April 2020, UK resident persons disposing of UK residential property where capital gains tax is due have been required to notify and pay the tax within 30 days of their sale completing.
Most people are not affected by the requirement because the sale of main homes is exempt from capital gains tax through private residence relief. Non-UK resident persons have paid within 30 days since April 2015 for residential property and from April 2019 for disposals of both UK residential and non-residential property, even if they have no tax to pay. However, the Government recognise that having 30 days has not always allowed taxpayers enough time to settle their affairs. In recognition of that, the Government are extending the 30-day time limit to 60 days. The change was informed by taxpayer representations and comes in response to the Office of Tax Simplification report in May 2021, where increasing the time limit to 60 days was a key recommendation.
The measure allows taxpayers more time to produce and provide accurate figures, particularly in more complex cases, as well as sufficient time to engage with advisers. It also clarifies the rules for a UK resident person calculating the capital gains tax notionally chargeable for mixed-use properties. The changes made by clause 23 will, first, extend the time limit for capital gains tax payment on property disposals to 60 days following completion of the relevant disposal. Secondly, for UK residents, the changes clarify that when a gain arises in relation to a mixed-use property, only the portion of the gain that is the residential property gain is to be reported and paid within 60 days.
Increasing the time limit to 60 days will delay some revenue until later in the scorecard. That is because some capital gains tax payments will now be paid in a different tax year. The Office for Budget Responsibility expects the measure to move £80 million out of the scorecard to later years, with the majority incurred in 2021-22. The measure is expected to impact an estimated 75,000 individuals, trustees and personal representatives of deceased persons who sell or otherwise dispose of UK land and property each year.
In summary, those liable to pay capital gains tax will now have 60 days instead of 30 days to report and pay the tax due on UK land and property disposals. I commend the clause to the Committee.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairship, Sir Christopher. I want to say for the record that I believe Erith and Thamesmead is the best constituency. As the Minister has described, clause 23 relates to returns for the disposal of UK land. It extends the time limit for payment on property disposal from 30 days to 60 days, as well as clarifying the rules for mixed-use properties. As the Minister has rightly pointed out, that will affect disposals with completion dates on or after 27 October 2021.
A reporting and payment period for selling or otherwise disposing of an interest in UK land was initially introduced to help reduce errors and increase compliance. The measure increased the time available for taxpayers to report their disposals. The increase intends to allow more time for taxpayers to produce and provide accurate figures, which will be particularly helpful in more complex cases, as well as assuring sufficient time to engage with advisers. The change also clarifies the calculation for the capital gains tax notionally chargeable for mixed-use properties.
We do not oppose the doubling of the time period for reporting and paying capital gains tax on UK property. However, we remain concerned about the lack of awareness surrounding the reporting and paying process. I would be grateful if the Minister could outline the measures the Government will take to help individuals selling properties to be aware of their obligations and what support the Government will offer individuals struggling to access the stand-alone digital system for reporting those transactions.
Lucy Frazer
I am grateful to the Labour Front-Bench team for not opposing the measure, which is indeed very sensible. Her Majesty’s Revenue and Customs regularly engages with all stakeholders and agents, who will therefore know about the change, but the hon. Lady makes an important point about communication, which we touched on this morning. I commend the clause to the Committee.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Clause 24
Cross-border group relief
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
Clause 24 makes changes to abolish cross-border group relief to ensure that loss relief is limited to UK losses, thereby providing relief only for companies that the UK can tax. It also amends the rules restricting the amount of losses foreign companies with a UK branch can surrender to UK companies, bringing companies resident in the European economic area in line with companies resident in the rest of the world.
Cross-border group relief provides UK companies with the ability to claim relief for the losses of their EEA resident group companies, even though the UK is unable to tax any profit made by those companies. The UK cross-border relief rules were introduced in 2006, owing to a 2005 decision by the Court of Justice of the European Union that found the previous rules to be incompatible with the EU freedom of establishment principle.
Under the current system, the UK Exchequer bears the cost of giving relief to UK companies for losses of EEA companies, as the latter pay no tax to the UK Government. The rules for restricting surrender of losses of a UK branch of a foreign company were also amended to be more favourable to EEA companies as a result of CJEU judgments. Favourable treatment for losses of EEA companies or UK branches of EEA companies is not right, and is inconsistent with our approach to the rest of the world, especially now that the UK has left the EU and is no longer bound by EU law.
Clause 24 will principally affect large, widely-held corporate groups, and will ensure both equal treatment of losses of companies in EEA and non-EEA countries and protection for the UK Exchequer against unfair outcomes. Historically, group relief was available only for losses of UK companies or UK branches, so the abolition of cross-border group relief and the alignment of branch rules is a reversion to a previously accepted position. Other countries generally do not give cross-border loss relief, so abolishing it would be very much in line with the international mainstream.
In summary, the change will allow the UK to depart from this historic position and more effectively pursue its fiscal policy objectives. I therefore commend the clause to the Committee.
Abena Oppong-Asare
As we have heard, clause 24 concerns cross-border group relief and is accompanied by schedule 4. The clause and schedule repeal legislation that provides for group relief for losses incurred outside the UK and amend legislation that provides for group relief for losses incurred in the UK permanent establishment of an EEA resident company.
Following the UK’s exit from the EU, the Government are bringing group relief relating to EEA resident companies into line with relief for non-UK companies resident elsewhere in the world. Claims involving companies established in the EEA are currently subject to more favourable rules in the UK relating to relief for non-UK losses and losses incurred by the UK permanent establishment of a foreign company.
These rules were introduced to give effect to the UK’s obligations as a member state of the EU. Having left the EU, the UK is no longer required to maintain those rules, and it is inconsistent to treat groups with EEA resident companies more favourably than those with companies resident elsewhere in the world. The clause therefore removes that inequality by aligning group relief rules for all non-UK companies.
The changes to legislation made by the clause broadly restore the group relief rules to what they were before separate rules were introduced for EEA resident companies in line with EU law. We do not oppose this measure, as it rightly removes an inequality between companies and contributes towards a level playing field.
Lucy Frazer
I thank the hon. Lady for indicating her support for clause 24, and I commend it to the Committee.
Question put and agreed to.
Clause 24 accordingly ordered to stand part of the Bill.
Schedule 4 agreed to.
Clause 25
Tonnage tax
Question proposed, That the clause stand part of the Bill.
The Exchequer Secretary to the Treasury (Helen Whately)
It is a pleasure to serve under your chairmanship, Sir Christopher.
Clause 25 reforms the UK’s tonnage tax regime from April 2022, with the aim that more firms will base their headquarters in the UK, using the UK’s world-leading maritime services industry and flying the UK flag. The UK tonnage tax regime was introduced in 2000 to improve the competitiveness of the UK shipping industry. It is a special elective corporation tax regime for operators of qualifying ships. Now that the UK has left the European Union, the Government will make substantive reforms to the regime for the first time since it was introduced, to help the UK shipping industry grow and compete in the global market. The reforms will make it easier for shipping companies to move to the UK, make sure that they are not disadvantaged compared to firms operating in other countries and reduce administrative burdens.
Clause 25 will make changes to the tonnage tax legislation contained in schedule 22 to the Finance Act 2000 to reform the regime from April 2022. Specifically, it will give effect to the following measures announced at the autumn Budget in 2021. The Government will give HMRC more discretion to admit companies to the regime outside the initial window of opportunity, where there is a good reason. The Government will reduce the lock-in period for companies participating in the tonnage tax regime from 10 to eight years, aligning the regime more closely with shipping cycles.
Now that the UK has left the EU, the Government will remove the consideration of flags from EU and EEA countries. Following this legislative change, HMRC will update its guidance to encourage the use of the UK flag by making it an important factor in assessing the value that companies who want to participate in tonnage tax will bring to the UK in the strategic and commercial management test. Finally, following the UK’s departure from the EU, the Bill will simplify a rule that may include distributions of related overseas shipping companies in relevant shipping profits.
These changes to modernise the tonnage tax regime will make sure that the UK’s maritime and shipping industries can compete in the global shipping market, bringing jobs and investment to nations and regions across the UK. I commend the clause to the Committee.
Abena Oppong-Asare
I thank the Minister for her explanation of clause 25, which makes amendments to the tonnage tax regime. Tonnage tax is a special elective corporation tax regime open to operators of qualifying ships that fulfil certain conditions. The amendments will have effect from 1 April next year. At the autumn Budget in 2021, the Government announced that they would introduce a package of measures to reform the UK’s tonnage tax regime from April 2022, which they say aims to ensure that the British shipping industry remains highly competitive in the global market. As part of the package, the Government say these amendments support their aim of simplifying the operation of tonnage tax legislation and making it more flexible following the UK’s departure from the European Union. Clause 25 gives effect to some of these measures by amending the tonnage tax legislation contained in schedule 22 to the Finance Act 2000, as the Minister said.
In his Budget speech on 27 October, the Chancellor of the Exchequer said:
“When we were in the old EU system, ships in the tonnage tax regime were required to fly the flag of an EU state, but that does not make sense for an independent nation. So I can announce today that our tonnage tax will, for the first time ever, reward companies for adopting the UK’s merchant shipping flag, the red ensign. That is entirely fitting for a country with such a proud maritime history as ours.”—[Official Report, 27 October 2021; Vol. 702, c. 282.]
Unfortunately, TaxWatch has pointed out that the proposed reforms will do no such thing. In fact, TaxWatch has described them as a retrograde step. As the Minister mentioned, the clause will remove the flagging requirement that requires ships to be registered in EU registers, but it does not replace it with anything. Companies will qualify for the tonnage tax regime regardless of where they register their ships, whether it be in Panama, Libya, Bermuda or any other flag of convenience. Can the Minister explain why that is the case? Moreover, we find it deeply regrettable that the Chancellor of the Exchequer, as Mr Speaker put it, ran “roughshod” over Parliament in briefing the press on the tonnage tax before informing Parliament.
Helen Whately
As I set out, the clause reforms the UK’s current tax regime to help the UK shipping industry grow and compete in a competitive global market. Overall, this will be to the benefit of our maritime industry and, therefore, to the UK as a whole, supporting GDP, tax revenues and jobs in the UK.
I will pick up on a couple of comments made by the Opposition Front-Bench spokespeople. On the points made by the hon. Member for Erith and Thamesmead, the clause is all about helping our shipping industry compete in a global market and making sure firms are not disadvantaged compared to those operating in other countries. It comes at a minimal cost to the Exchequer and we expect to see tax revenues in the sector increase as a result, because it will mean that more shipping groups are likely to headquarter in the UK. That will bring tax advantages and benefits to the UK, as well as tens of thousands of jobs that relate to that.
On the second point that the hon. Member made, I emphasise that the Treasury takes the recommendations of the Macpherson review very seriously and follows them in full. The reforms to our tax regime were rightly announced some months before they will come into force, in April next year.
The hon. Member for Glasgow Central talked about environmental factors. As part of the reforms, HMRC expects to update the guidance on assessing eligibility for the tonnage tax regime, and environmental factors will be considered as part of that, so it can help us on decarbonisation actions and ambitions.
Abena Oppong-Asare
I thank the Minister for her explanations. Has an assessment been made of whether anyone profited as a result of the Chancellor’s premature announcement to the press? Has any assessment been carried out?
Helen Whately
I emphasise what I said a moment ago: the Treasury followed in full the approach that should be taken, as set out in the Macpherson review in 2013. The Government’s tonnage tax reforms will ensure that the UK’s maritime and shipping industries remain highly competitive and bolster our reputation as a great maritime nation.
Question put and agreed to.
Clause 25 accordingly ordered to stand part of the Bill.
Clause 26
Amendments of section 259GB of TIOPA 2010
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
Clause 26 makes a change to ensure that corporation tax rules for hybrids and other mismatches operate proportionately in relation to certain types of transparent entity. Following recommendations by the OECD, the UK was the first country to implement anti-hybrid rules in 2017. These rules tackle aggressive tax planning by multinational companies that seek to take advantage of differences in how jurisdictions view financial instruments and entities.
With the benefit of three years’ experience of operating the rules, and with other countries following suit and introducing their own version of the rules, the Government launched a wide-ranging consultation on this area of legislation at Budget 2020. Following that consultation, several amendments were made to the rules in the Finance Act 2021, but the change that we are now considering, relating to transparent entities, was withdrawn from that Act to allow the Government additional time to consult stakeholders, so that they could ensure that the amendment had no unintended conse-quences.
We have had further engagement with stakeholders, and the amendment now provides for the specific change for transparent entities that the Government committed to making following last year’s consultation. The change made by the clause is technical and will impact multinational groups with a UK presence that are involved in transactions with certain types of entity that are seen as transparent, for tax purposes, in their home jurisdictions. Following the changes, this type of entity will be treated in the same way as partnerships in the relevant parts of the rules for hybrids and other mismatches. It is important that these rules are robust in tackling international tax planning, but also that they are not disproportionately harsh in their application.
Abena Oppong-Asare
The Minister clarified what the clause does. We do not oppose the clause.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Clause 29
Insurance contracts: change in accounting standards
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss that schedule 5 be the Fifth schedule to the Bill.
Lucy Frazer
Clause 29 introduces a power to lay regulations before Parliament in connection with the new international accountancy standard for insurance contracts, known as IFRS 17, introduced by the International Financing Reporting Standard Foundation. These regulations will allow the Government to spread the transitional impact of IFRS 17 for tax purposes, and to revoke the requirement for life insurers writing basic life assurance and general annuity business to spread their acquisition expenses over seven years for tax purposes. The corporation tax liabilities of insurers are based on their accounting profit. IFRS 17 will apply to companies that prepare their accounts under international accounting standards and is expected to become mandatory for accounting periods beginning on or after 1 January 2023, subject to its endorsement by the UK Endorsement Board.
Depending on the types of insurance business written, adoption of IFRS 17 will create a large, one-off transitional accounting profit or loss for many insurers. The Government expect that spreading these one-off transitional profits and losses for tax purposes will greatly reduce volatility in Exchequer receipts and should also help to mitigate the cash flow and regulatory impacts of the accounting change. This will support the long-term stability of the insurance sector in the UK and contribute to the UK maintaining its position as a leading financial services centre.
The adoption of IFRS 17 will also make it more complex for life insurers writing basic life assurance and general annuity business to undertake the necessary calculations to spread their acquisition expenses over seven years for tax purposes, as currently required. Additionally, commercial changes in the life insurance market mean that the need for this requirement has reduced in recent years. Removing it for all life insurers writing basic life assurance and general annuity business, and instead following accounting treatment for tax purposes, will be a welcome simplification. The details of the final legislation will be informed by a consultation that was published alongside the “Tax Administration and Maintenance” Command Paper on 30 November.
The clause will allow the Government to respond to the potentially large and one-off tax implications caused by the adoption of the new international standard for insurance contracts, IFRS 17. I therefore recommend that the clause and schedule 5 stand part of the Bill.
Abena Oppong-Asare
As we have heard, clause 29 sits alongside schedule 5 and refers to insurance contracts and changes in accounting standards. As the Minister has mentioned, the clause has an enabling power that will allow the Government to make provisions in secondary legislation in connection with international financial reporting standard 17, and to revoke the requirement for all life insurance companies to spread acquisition costs over seven years for tax purposes.
The corporation tax liabilities of insurers are based on their accounting profit, and many insurers prepare their accounts under international accounting standards. The new international accounting standard for insurance contracts, IFRS 17, is expected to become mandatory for periods of account beginning on or after 1 January 2023, subject to its endorsement by the UK Endorsement Board. IFRS 17 will affect the timing of recognition of insurers’ profits and losses, and its adoption will create transitional accounting profits or losses, which we understand may have significant regulatory consequences. We recognise that the Government will need powers to be able to deal with the tax implications of IFRS 17.
The removal of the requirement for all life insurance companies to spread their acquisition costs over seven years for tax purposes is a simplification that has been allowed by IFRS 17. We welcome the simplification of tax arrangements and do not oppose the clause, but can the Minister tell us what provision will be put in place for insurers, for whom the change in accounting standards could cause a transitional administrative burden?
Lucy Frazer
I thank the hon. Member for her question, but the whole purpose of the clause, which will allow costs to be spread over a number of years, is to make things easier for insurers. I am glad that she is satisfied that the clause is sensible, and I am very grateful for her support for this provision. I ask that the clause stand part of the Bill.
Question put and agreed to.
Clause 29 accordingly ordered to stand part of the Bill.
Schedule 5 agreed to.
Clause 30
Deductions allowance in connection with onerous or impaired leases
Question proposed, That the clause stand part of the Bill.
The changes made by clause 30 will ensure that companies in financial distress continue to benefit from full relief for carried-forward losses that offset accounting profits arising from lease negotiations, regardless of the accounting standard they adopt. The clause introduces a technical amendment to ensure that corporation tax loss relief rules work as intended, ensuring that companies in financial distress can access relief for their carried-forward losses.
Abena Oppong-Asare
Clause 30 concerns deductions allowance in connection with onerous or impaired leases. The clause amends sections of the Corporation Tax Act 2010 to ensure that the legislation continues to work as intended. It does so by continuing to provide an exemption from the loss reform rules for companies in connection with onerous or impaired leases in specific circumstances. As the Minister said, the measure enables such companies to obtain full relief for carried-forward losses that offset profits arising from lease renegotiations where they adopt international financial reporting standard 16.
Loss reform was introduced in section 18 of schedule 4 to the Finance Act 2017, and had effect from 1 April 2017. The reform made two main changes. It increased a company’s flexibility to offset carried-forward losses either against the company’s own total profits in latter periods or in form of a group relief in a later period. Additionally, it limited the amount of profit against which carried-forward losses can be set. Each group or a company that is not part of a group has an annual deductions allowance of £5 million in profit. Carried-forward losses can be set against that amount, which is restricted to a maximum of 50% of a company’s total profits for the period. The restriction to carried-forward losses was extended to include corporate capital losses with effect from 1 April 2020. Having reviewed the clause, the Opposition do not oppose it.
Lucy Frazer
I am grateful for the fact that the Opposition do not intend to oppose the clause.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 31
Provision in connection with the Dormant Assets Act 2022
Question proposed, That the clause stand part of the Bill.
Lucy Frazer
The Committee will be disappointed to learn that this is probably the last clause that we will deal with today. It introduces schedule 6, which supports the expansion of the dormant assets scheme to a wider range of assets. The clause ensures that where an asset is transferred into the dormant asset scheme and an individual later makes a successful claim to the ownership of that asset, they are in the same position for capital gains tax purposes that they would have been in without the scheme.
The dormant asset scheme enables funds from dormant bank and building society accounts to be channelled towards social and environmental initiatives. The scheme allows dormant funds to be unlocked for good causes, while protecting the original asset owner’s legal right to reclaim the amount that would have been paid to them had a transfer into the scheme not occurred.
In 2021, following a consultation, the Government announced their intention to expand the scheme to include assets from the pensions, insurance, investments and securities sectors. The process of transferring the assets into the scheme could, in certain cases, qualify as a disposal for CGT purposes, resulting in neither a gain nor a loss. As the asset owner cannot be located and does not know that the transfer has occurred, it is not appropriate or feasible for the tax to be paid by the individual at the point of transfer to the scheme, or for a notice of a loss to be made. The change made by the scheme addresses that by ensuring that a CGT charge arises only where a person comes forward to claim the asset. That ensures that the individual remains in the same position for tax purposes that they would have been in had the asset not been transferred into the dormant asset scheme.
Where the asset had previously been held in an individual savings account, changes made by the schedule ensure that no income or CGT arises when the asset is reclaimed. That ensures that savers in ISAs are not disadvantaged by their accounts being transferred into the scheme. The scheme also updates references in the existing legislation to ensure that it reflects the widest scheme created by the Dormant Assets Bill.
The schedule will commence only on the making of a Treasury order, because the Dormant Assets Bill is not yet law. The intention is to lay the necessary commencement order before Parliament when that Bill becomes law. For that reason, the schedule contains time-limited powers that allow the Treasury to make changes by secondary legislation if changes to the Dormant Assets Bill result in additional tax issues. The Government believe that the provisions strike the right balance between supporting good causes and taxpayer fairness.
Abena Oppong-Asare
As we have heard, clause 31 and schedule 6 concern the Dormant Assets Bill. The changes broadly ensure that individuals remain in the same position for tax purposes as they would have done had the assets not been transferred into the dormant assets scheme. Overall, we do not oppose the measure, but we are aware that the Chartered Institute of Taxation has concerns about the availability of accessible guidance to those making a claim under the dormant assets scheme who may be unaware of the tax consequences of their actions. Will the Minister clarify when guidance will be issued?
Lucy Frazer
I am grateful for the hon. Member’s indication that the Opposition will not oppose this measure. HMRC does generally provide guidance, and I am very happy to update the hon. Member on any guidance on this issue.
Question put and agreed to.
Clause 31 accordingly ordered to stand part of the Bill.
Schedule 6 agreed to.
Draft Solvency 2 (Group Supervision) (Amendment) Regulations 2021
Abena Oppong-Asare Excerpts(2 years, 5 months ago)
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Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairship, Ms Rees.
Following the Opposition reshuffle, my right hon. Friend the Member for Wolverhampton South East was due to be here; I hope that the Minister is not disappointed by my presence.
I thank the Minister for providing an overview of these technical regulations. I have a couple of general remarks to make before asking the Minister a couple of questions. As we have heard, the regulations relate to the solvency 2 directive that the EU passed in 2009 and implemented in 2016. The directive was set up to harmonise prudential rules for insurers across the EU. The UK implemented the solvency 2 directive through various pieces of legislation, including the Solvency 2 Regulations 2015. Obviously, when we left the EU single market, we left the EU solvency 2 regime, which onshored the rules.
According to the explanatory notes, the regulations we are considering today
“address failures of the retained EU law to operate effectively, and other deficiencies arising from the withdrawal of the United Kingdom from the European Union.”
As we have heard from the Minister, the regulations essentially allow the PRA to defer the decisions of overseas insurance regulators where we have agreed equivalence with them. As the Minister said, before the UK left the EU, the EU regulator issued guidelines to allow regulators at EEA level to rely on the supervision of another regulator in partially overlapping areas.
After we left the single market, the PRA adopted those same guidelines, but they are due to expire on 31 March 2022, as the Minister highlighted. He also said that if nothing is done, from 1 April 2022, the PRA would need to begin imposing certain extra group supervision requirements, even if the UK insurer it is regulating has a parent that is already subject to group supervision in another country deemed equivalent.
The regulations we are considering therefore allow the PRA to continue to disapply, in certain circumstances, insurance requirements relating to the UK’s insurance groups whose parent companies are supervised in “equivalent” countries. The PRA would only be able to do that if it were satisfied that compliance with the requirements by the insurance group in the UK would be unduly burdensome, and that the disapplication would not adversely affect the advancement of any of the PRA’s objectives. Under what circumstances would that happen? Can the Minister outline how “unduly burdensome” will be judged? Will the PRA have discretion in that respect?
On the PRA’s objectives, can the Minister say what steps will be taken to ensure that insurance policyholders in the UK will be protected and that their interests will remain central? How will the quality of overseas supervision be monitored, now and in the future, to ensure that those objectives continue to be met?
The explanatory notes say that allowing the PRA to rely on an overseas regulator’s supervision should mean reduced compliance costs for the insurance company, reduced costs for the PRA and a reduced need for co-ordination between the PRA and the regulator in that country to ensure consistency. We broadly welcome that and we recognise that these measures seek to avoid duplicating the work of the PRA. However, the Minister will know that the Lords Secondary Legislation Scrutiny Committee denoted the SI an instrument of interest on 30 November because of
“the absence of a level playing field: while the UK has granted equivalence to the EU in relation to the supervision of insurance groups, the EU has not reciprocated.”
The Minister has mentioned that the Treasury has worked very closely with the PRA, but can he tell us what impact that has on UK-based insurance firms and whether they are at a disadvantage compared with EU-based ones? Will he set out the work that the Treasury has undertaken to achieve reciprocal equivalence with the EU for insurance regulation, and why it has so far failed to achieve that?
Finally, will the Minister comment on the broader solvency 2 reform, which the Treasury is consulting on, and in particular on the balance between increasing competitiveness and safeguarding policyholders? I know that many in the industry believe that reforms could lead to increased investment and support infrastructure across the country, but I would be interested to hear the Minister’s views on that. I am sure he is relieved to hear that we will not oppose this SI, but I hope that he can address the points that I have raised, because I think they are important.
Finance (No. 2) Bill
Abena Oppong-Asare ExcerptsTuesday 16th November 2021
(2 years, 5 months ago)
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Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to respond to this debate for the official Opposition. It is noticeable that the Government could convince only one of their Back Benchers to turn up to defend their Finance Bill. This has been a short but good debate, with many thoughtful speeches, and I thank all the hon. Members who have taken part—in particular, my hon. Friends the Members for Bethnal Green and Bow (Rushanara Ali) and for Brentford and Isleworth (Ruth Cadbury), and my right hon. Friend the Member for Hayes and Harlington (John McDonnell), as well as the hon. Members for Glenrothes (Peter Grant), for Gordon (Richard Thomson), for Edinburgh West (Christine Jardine) and for Broadland (Jerome Mayhew).
The hon. Member for Broadland highlighted the importance of local communities. I look forward to scrutinising the details of the alcohol duty changes in due course.
My hon. Friend the Member for Bethnal Green and Bow spoke powerfully about the Bill’s failure to boost growth, increase living standards and tackle the climate crisis. I will return to those points shortly. She also made a very important point about wasteful Government spending and the dodgy contracts that have been given out during the pandemic.
My right hon. Friend the Member for Hayes and Harlington made a number of important points, including about fairness in the tax base, the Government’s reforms to the tonnage tax and local authority finances. I hope that the Minister can answer the specific questions that he asked about reforms to local government funding.
My hon. Friend the Member for Brentford and Isleworth spoke passionately about the cost-of-living crisis and how she has spoken to many constituents about the hardship that they face. She talked about the reality of what the Government are doing on universal credit and the shameful food and poverty crisis in this country. She also made important points about the loan charge, and I hope that the Minister will respond properly to the points that several Members made on that issue.
This Finance Bill is a product of the Government’s economic failings over the past 11 years. At the Budget, the OBR forecast growth averaging just 1.3% in the final years of the forecast period, which follows a measly 1.8% in the decade leading up to the pandemic. As my hon. Friend the Member for Ealing North (James Murray) said, we can compare that with Labour’s record of growth of 2.3% a year when we were in power. The Conservatives are a party of low growth and the Government have no plan for growth. Working people are paying the price for that failure. They are paying the price in increased national insurance contributions and the freeze in income tax personal allowances. They are paying the price through the cut to universal credit. They are paying the price through lower wages, with real wages on course to be more than £10 an hour lower in 2026 than if the pre-2008 trend had continued. And they are paying the price through inflation that is hurting family finances, with food, heating and petrol all more expensive.
Yesterday, a member of the Bank of England’s Monetary Policy Committee told the Treasury Committee that consumers are spending an increasing proportion of their incomes on food and energy. They made the point that businesses may struggle with the rising cost of materials and labour because consumers will not have additional disposable income to spend. Does the Finance Bill include measures to help people with the cost-of-living crisis? Does it reduce the burden of taxes on those who can least afford to pay? Does it encourage investment and boost growth? The answer is no. Like the Budget that it stems from, the Bill has no plans to tackle the cost-of-living crisis, no plan to grow our economy and no plan to help businesses to succeed.
Instead, the Government’s priorities in the Budget and the Bill are to cut taxes on the banks and make domestic flights cheaper. It is beyond belief that in a Budget just days before COP26 began in Glasgow, the Chancellor chose to cut domestic air passenger duty. I am afraid that that is yet further evidence that the Treasury is not serious about our net zero commitment. Clause 6 will slash the corporation tax surcharge for banking companies from up to 8% to 3% and will raise the surcharge allowance from £25 million to £100 million. Those are the wrong priorities for an increasingly out-of-touch Government.
Labour’s priorities are different. We would use the Finance Bill to bring down energy bills with a cut in VAT on domestic energy; to tackle the climate crisis, rather than making it worse; and to fundamentally reform business rates to help businesses in every part of the country.
With the transition to net zero, the Government seem intent on leaving individuals and businesses to meet the costs on their own, without recognising the opportunity for growth and jobs. Labour knows that investment can unlock good jobs across the country, while helping households to cut bills and keep their homes warm. On business rates, Labour has put forward proposals for fundamental reform, while the Government have broken their promise to do so.
This week, research by the Resolution Foundation found that business investment in the UK lags behind that in countries with higher productivity. Business capital investment in Britain was 10% of gross domestic product in 2019, compared with 13% on average in the United States, Germany and France. There are many reasons for that, including the Government’s patchwork Brexit deal, but the Bill does nothing to help to boost investment.
Labour’s plan for replacing business rates will introduce a system that will incentivise investment, reward businesses moving into empty premises and encourage environmental improvements. Our climate investment pledge will encourage billions in private finance, and unlike Government Ministers, we have a real plan for growth.
No doubt at further stages there will be considerably more to say about other clauses, but I would like to make a few points now. On the residential property developer tax in part 2, we support the principle of taxing the largest developers to pay for the cost of removing unsafe cladding, but we are concerned that the levy alone will not be enough. The Select Committee on Housing, Communities and Local Government estimates that there is a gap of £13 billion between the £2 billion that the levy is expected to raise and the £15 billion cost of works—and it has been reported that the rising cost of works as a result of the Tory supply chain crisis will wipe out much of the £2 billion.
Can the Exchequer Secretary confirm who will meet the gap? Labour is clear that it should not be the leaseholders. The Government must ensure that those who are responsible for putting dangerous material on buildings pay their fair share. Time and again, the Government’s handling of the cladding crisis has left leaseholders on the hook. The Government must finally get a grip on the problem and help the thousands of people who, shamefully, are still living in unsafe accommodation.
My right hon. Friend the Member for Hayes and Harlington raised the measures on tax avoidance. We support the principle behind the new economic crime levy, which will raise funds to pay for measures to tackle money laundering. Can the Exchequer Secretary tell us more about how the levy will be spent? Does she think that it will be enough to implement the measures in the economic crime plan?
My hon. Friend the Member for Ealing North made several critical points about other measures to fight economic crime. Will the Exchequer Secretary confirm exactly when the Government will introduce the vital legislation on the register of overseas entities? “When parliamentary time allows” is simply not good enough, when the Government first announced the policy in 2016. As my hon. Friend for Ealing North said earlier, it is notable that the momentum to implement the measure seems to have disappeared since the current Prime Minister took office. We know that this Prime Minister is no fan of transparency or of playing by the rules, but we are facing a crisis of dirty money and corruption—and not all of it is in relation to the Cabinet. The Pandora Papers show how many shell companies are laundering money in this country and buying up luxury properties. We will use the further stages of the Bill to push the Government to do more about economic crime and tax avoidance.
This is a Finance Bill that fails to rise to the challenges we face. It contains nothing to make up for the years of low growth over which this Government have presided, nothing to tackle the climate crisis or to unlock opportunities that the transition to net zero brings, and nothing to ease the growing tax burden on working people. Indeed, the Government have used this Finance Bill to cut taxes on banks rather than cutting them for working people.
The truth is that the Government’s failure on growth means less money for public services while the Government increasingly take more from people’s pay packets. In contrast, Labour has a plan to grow the economy, to invest sustainably in the jobs of the future, and to make our tax system fair. It is for this reason that we will not support the Bill tonight, and I urge all hon. Members to vote against it.
Oral Answers to Questions
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Lucy Frazer
I am very pleased that my hon. Friend’s constituency has benefited and is taking part in the progress towards net zero. I should be happy to visit her there.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
In his Budget statement last week, the Chancellor did not use the word “climate'” once. On the biggest issue of our time, he had nothing to say.
As well as deciding to cut domestic air passenger duty, which will lead to 400,000 more domestic flights a year, the Chancellor failed to invest in public transport. He is subsidising those who can already afford to take domestic flights, while putting up taxes on ordinary people. How on earth does he think that this sends the right message as the COP26 summit begins? Is not the reality that he is flying in completely the wrong direction when it comes to tackling climate change?
Lucy Frazer
I am sure the hon. Lady will have seen the net zero strategy, which was published the week before the Budget. I am sure she will also know about the significant progress that the Chancellor has made on bringing other countries together to increase the international effort on climate finance. Yesterday, we set out our commitment to increase our international climate finance by £1 billion by 2025, on top of the £11 billion that we have already announced. The Chancellor, together with other Finance Ministers, is making sure that we help to reduce to net zero emissions through a number of measures. I am very happy to—
Carbon Emission Charges
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Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairship, Mr Robertson.
I thank my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) for introducing this debate on behalf of the Petitions Committee. May I welcome the Minister to her place? This is the first time that we have faced each other and I look forward to debating with her on many issues. I also thank the hon. Member for Broadland (Jerome Mayhew), who spoke passionately about the climate crisis and made recommendations for changes. I found that really insightful.
I want to begin with some general points about the Government’s approach to net zero, the Treasury’s role and what Labour believes we should be doing differently. I will then make some specific points about carbon pricing and the emissions trading scheme.
As my hon. Friend the Member for Newcastle upon Tyne North said, the debate comes while COP26 is taking place in Glasgow, which I think has affected attendance at this debate. I want to state clearly that Labour hopes that COP26 is a success. We do not believe that the Government have done enough in the run-up, but for the sake of our planet and our future, we hope that it is a success.
A couple of weeks ago, the Government published their long-awaited net zero strategy and the accompanying Treasury review. We welcome the fact that the Government have published a detailed strategy for reaching net zero, but we are concerned that there are serious flaws in the strategy and the Government’s overall approach. The strategy does not go far enough to close the gap between the Government’s promises and delivery. First, in too many areas, there are issues: heat pumps, hydrogen, electric vehicle infrastructure, heavy industry and carbon capture and storage. We are not seeing credible plans from the Government that match the scale of ambition that is needed.
Secondly, the strategy underlines the total failure to provide the investment that is needed. The blame for that falls squarely on the Treasury and the Chancellor. The Treasury’s net zero review argued against borrowing to invest in the net zero transition because it would deviate from the polluter pays principles and would not be consistent with inter-generational fairness. That is extraordinary––an extremely worrying statement. It is precisely future generations who will benefit from the green transition, cleaner air and the jobs of the future. There is a failure to act and it would be an unfair legacy to leave this to future generations. I hope that the Minister will reconsider that statement.
It is also staggering that, in last week’s Budget, the Chancellor did not use the word “climate” once: on the single biggest issue facing the planet, the Chancellor has said nothing. When we look in detail at the Budget, we can see why, because it failed to take the decisive action needed on climate change. The Budget had no plans for economic growth, and certainly no plan to invest, at scale, in the transition to a zero carbon economy.
In contrast, the shadow Chancellor has set out Labour’s climate investment pledge: £28 billion of green capital investment each and every year for the rest of the decade. That would go towards critical sectors, such as retrofitting and insulating 90 million homes, bringing down energy bills in the process, and helping industries, such as steel, to transition and keep the good jobs that so many communities rely on.
Unlike the Government, we will not leave households and businesses to face the costs of net zero transition on their own. That has been welcomed by a number of environmental and business groups as a serious offer that meets the scale of the challenge. Business groups and others know that the cost of inaction is far greater than that of action. Just last week, the Office for Budget Responsibility said that the Government’s failure to set out a clear plan for apportioning net zero costs between businesses, households and Government is a source of long-term fiasco risk.
We feel that a responsible Chancellor must be a green Chancellor, and I am afraid that our current Chancellor is simply not either. In fact, one of the major announcements in the Budget was to cut domestic air passenger duty, as has already been mentioned by the hon. Member for Kilmarnock and Loudoun (Alan Brown). We are talking today about the price of carbon, and yet the Chancellor is cutting duty on domestic air travel, which produces significant emissions, while failing to invest properly in rail travel. That is not a choice that Labour would have made, and it is baffling that the Government did.
I will now make a few points about the UK’s emissions trading scheme. In the Government’s response to the petition we are considering, they say,
“The UK has now launched its own Emissions Trading System (ETS) to replace membership of the EU ETS. This will be the world’s first net zero cap and trade market, delivering a robust carbon price signal and promoting cost-effective decarbonisation by allowing businesses to cut carbon where it is cheapest to do so.”
We support that in principle, but I have questions for the Minister on how the ETS is operating and what plans the Government have for its development.
First, the Minister will know that two thirds of emissions are not currently covered by the UK ETS. Will she update us on what plans the Government have to expand it into more sectors? Secondly, the Government have previously stated that they are open to linking the UK ETS to other international schemes. Have they made any progress on that? Are the Government in discussion with the EU about linking it with the EU ETS? Thirdly, there have also been concerns about the stability of the UK ETS, given its relatively small size. Can the Minister tell us how the market is functioning in this regard, and whether the Government consider any changes are required?
Finally, can the Government tell us what further plans they have for carbon pricing policy? The Treasury’s net zero review leaves us with many big questions unanswered, such as how costs will be rebalanced from electricity to gas, the future of vehicle and fuel taxes, and where new sources of revenue will come from.
To conclude, we need the Treasury and the Chancellor to get serious about our net zero transition. We need to end the delays and insufficient investment. We need a plan backed by funding to help us meet our moral obligations to the planet and to future generations. Anything less is simply not good enough.
Access to Cash
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Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to serve under your chairship, Mrs Miller. I congratulate my hon. Friend the Member for Pontypridd (Alex Davies-Jones) on securing the debate and thank all Members who have contributed. It is clear how keenly the issue is felt by so many of our constituents up and down the country.
My hon. Friends the Members for Pontypridd, for Ogmore (Chris Elmore), for Harrow West (Gareth Thomas), for Makerfield (Yvonne Fovargue), for Stockport (Navendu Mishra), for Slough (Mr Dhesi), for Merthyr Tydfil and Rhymney (Gerald Jones) and for Luton South (Rachel Hopkins) and the hon. Member for Hyndburn (Sara Britcliffe) all spoke about how important access to cash is for the most vulnerable in their communities. They also talked about how many small businesses still rely on cash, especially in areas with poor broadband. We heard from colleagues across the Chamber who represent both urban and rural constituencies, so we know that the issue affects a wide range of areas, although clearly, as we have heard, there are specific issues in rural areas.
The pandemic has brought many changes to our lives. In some cases it has sped up trends that were already occurring. It has accelerated the move away from cash to online purchasing and contactless payments. That has put pressure on the cash system and contributed to a decline in the use of cash to make payments. Withdrawals from cash machines are more than 40% lower than pre-pandemic levels. For many people, this is a shift that they are embracing as digital payments bring greater control and convenience. We in the Labour party support innovation in payments and a thriving FinTech industry. We want UK businesses to create jobs and wealth in the sector, but we do not want a drift towards a cashless society with no thought of the consequences for social inclusion or national resilience.
For the low-paid, older people and those in remote communities, the shift away from cash brings challenges. As has been mentioned, a significant range of evidence shows that many people remain reliant on cash and vulnerable to the rapid changes in this area. That has been evidenced in the debate, particularly by the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), who talked about his constituency. FCA research shows that 5 million adults use cash for most of their purchases. The Bank of England found that 1.2 million adults in the UK did not have bank accounts, and an analysis in Which? showed that one in six people have struggled with the shift towards cashless payment as a result of the pandemic. Lower-income households and those that do not have or cannot use the internet are much more likely to depend on cash.
There is evidence that during the pandemic, cash use declined less in constituencies with higher deprivation. The access to cash survey carried out a few years ago estimated that 70% of the population would still need cash in the future. Even as technology changes and advances, there is an important duty to maintain an easy-access and free-to-use cash network. We believe that is essential because we do not want to see a proportion of society cut off from full participation in society, unable to access goods and services. We also believe that it is important not to force small businesses to go cashless simply because it becomes too inconvenient and troublesome to work with cash.
There are also important resilience arguments for maintaining a cash network. The covid pandemic exposed weaknesses in our national resilience regarding personal protective equipment and ventilator capacity. We do not know what the next crisis will be. It could be a cyber-attack or some sort of technological breakdown—in those circumstances, cash would be essential. That is why it is important not to drift towards a cashless society without thinking through the consequences. Too often, we have seen banks rush to close branches without recognising the impact on the local community. At the same time, the number of free-to-use ATMs fell by 13% between 2018 and 2019, while the number of pay-to-use machines went up. Many of those pay-to-use machines are in deprived communities.
The Government promised legislation on the issue as far back as March 2020, but the consultation was not published until July 2021. We have also seen changes to allow cashback without purchase and access to cash pilots to show how banking hubs could work. The Government say they are analysing the responses to the consultation, and I look forward to their response in due course. However, I have a number of questions for the Minister on the issues raised today.
First, what do the Government actually mean by access to cash? Does the Minister accept that it must be about more than limited-hours access through local shops, and that it must include both ATMs and either branches or bank hubs, where people can transact business and deposit cash? Do the Government believe that access to cash includes face-to-face services? Labour believes that we need a comprehensive ATM and branch network, because access to cash is about not only withdrawing cash, but being able to deposit cash, for small businesses, as raised by some of my colleagues.
Secondly, do the Government believe that competition law should change to allow banks to co-operate in banking hubs, rather than leaving towns and villages with no banks at all? Thirdly, what are the Government doing to ensure that the agreement between the Post Office and banks continues, so that people can access banking services through the Post Office? Finally, on the Government consultation, when does the clock stop on what comprehensive coverage looks like? Legislation was first promised in March 2020; thousands of ATMs and hundreds of bank branches have closed since then. The Association of Convenience Stores says the clock should stop at that time. The consultation was launched in July 2021, but there have been more closures since then. Legislation will most likely be introduced next year, and there will be even more closures by then. When will the Government declare a moment to say what comprehensive coverage looks like, and that we are not going backwards from there?
I hope the Minister will be able to answer those questions shortly. However, most importantly, I hope that the Government will recognise that now is the time for action. If they delay for much longer, the most vulnerable in our society will be left behind. I think we all agree that that should not be allowed to happen.
Health and Social Care Levy Bill
Abena Oppong-Asare ExcerptsTuesday 14th September 2021
(2 years, 8 months ago)
Commons ChamberRead Full debate Health and Social Care Levy Act 2021 View all Health and Social Care Levy Act 2021 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 14 September 2021 - (14 Sep 2021)
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is a pleasure to respond to this Second Reading debate on behalf of the official Opposition. I thank all hon. Members for their contributions. As several have said, it is good that we are now debating these issues, even though the Government have provided a short time today.
We have heard some excellent contributions, including from my right hon. Friend the Member for Barking (Dame Margaret Hodge), who spoke about how unfair the new tax is on working families. She also made it clear how many alternatives there are to this tax. My hon. Friend the Member for Birkenhead (Mick Whitley) talked about how the combined impact of this tax and the universal credit cut will push more families in his constituency into poverty. My hon. Friends the Members for Dulwich and West Norwood (Helen Hayes) and for Putney (Fleur Anderson) spoke powerfully on behalf of hard-working and underpaid social care staff, pointing out that the Government are increasing their tax through this Bill. As my hon. Friend the Member for York Central (Rachael Maskell) said, there is nothing in the Prime Minister’s announcement for unpaid carers. My hon. Friends the Members for Swansea West (Geraint Davies), Liverpool, Riverside (Kim Johnson) and for Hornsey and Wood Green (Catherine West) talked about the unfairness in this Bill.
The hon. Member for Rushcliffe (Ruth Edwards) made a powerful speech about her family’s experience with dementia and reminded us about the people at the heart of this debate. Several Conservative Members also called on the Government to think again about this tax rise, including the right hon. Member for Wokingham (John Redwood) and the hon. Member for Basildon and Billericay (Mr Baron). I hope they will join us in the Lobby tonight.
As the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), set out last week, and as my hon. Friend the Member for Ealing North (James Murray) said earlier, Labour has two tests for the Government’s proposals: first, do they fix the health and care crisis; and secondly, are they funded in a fair way? The answer to both is a resounding no.
Gary Sambrook
We have had three hours of this Second Reading debate, and as far as I am concerned, not a single Opposition Member has actually said how they are going to fund their plan and how it is going to be fair, so will the hon. Lady take this opportunity now to tell the House what individual tax Labour would put up to fund it?
Abena Oppong-Asare
I am a bit concerned that the hon. Member has not been listening to the debate carefully. We have made it very clear: if a tax has to be raised, it should be fair across income groups and generations. The national insurance rise fails to pass these tests, and the Chancellor wants us to believe that there is no way to do so. That is not the case. I want to hear from the hon. Member what he is going to tell his constituents about breaking his manifesto promise, and why he has done so. What will he say to the low-paid hospital cleaners who will have to pay this tax when some of the wealthiest people in his constituency will not?
It has become increasingly clear that this Government do not have a plan to fix the social care crisis or to tackle spiralling NHS waiting lists. It is certainly not in this Bill, which only says that the Chancellor will decide how to distribute the revenues between health and care. Even if we look at the broader proposals, it is clear that there is still no plan for social care. Indeed, the Chair of the Health Committee made this point earlier. A promise of a White Paper is simply not good enough. Despite the Government repeatedly stating that they have finally grasped the social care nettle, the small print reveals that only a fraction of this spending will go to social care over the next three years—and even that is not guaranteed.
Of course our NHS needs more funding, not least because the Tories have underfunded it for a decade, but funding without a plan is not an answer. On social care, the Institute for Fiscal Studies has said that
“the extra funding will not be sufficient to reverse the cuts in the numbers receiving care”
since 2010. Under the Tories, billions have been cut from social care despite growing demand, vacancies have soared, and waiting lists have grown ever longer. This sector is in crisis and it needs help now. Instead, the Government are making it wait. The hard-working and underpaid staff in the care sector deserve better than that. As my hon. Friend the Member for York Central said, even with the new cap, hundreds of people will be left with high care costs, with many costs associated with being in a care home excluded completely from the cap. The cap does not even kick in until 2023. For those paying for social care, or those who need it but cannot afford it, this is no help at all. Even when it does start, too many will begin to face charges of hundreds of pounds a week even after they hit the cap.
The Government cannot even guarantee that this new system will prevent people from being forced to sell their home to pay for care. For those who live in the north, where house prices are generally lower, that is even more likely—£86,000 is a big proportion of house values in the north and the midlands. The plan fails on its own terms, and it is not only Labour saying that. Last week, the Conservative chair of the Local Government Association said that the Government’s announcement would make the situation worse because private care providers would face increased tax bills. Let that sink in: the leading Tory voice for local government is not only saying that the proposals will not help, but that they will make things worse, and it is not just him. The hon. Member for Stevenage (Stephen McPartland)—also a Conservative, last time I checked—said:
“The new health and social care levy provides no new money to fund social care for three years. No money for living costs, only personal care costs. Selling your home is just deferred. It is a tax on jobs.”
The Government have no plan for social care and no plan to bring down NHS waiting lists. Instead, all we are left with in this Bill is a manifesto-breaking tax rise on working people and the businesses who employ them—a tax rise that will cost a typical employee an extra £261. I say that again to the hon. Member for Birmingham, Northfield (Gary Sambrook): this tax rise will cost a typical employee an extra £261. It is a tax rise that leaves many graduates with a marginal tax rate of nearly 50% and that comes after this Government are already hitting working families with higher taxes and a freeze in the income tax personal allowance.
That is a triple whammy of taxes on working people, yet the Government have chosen not to extend the health and care levy to rental income, even though 67% of people who own buy-to-let properties are in the top fifth of income distribution. Nor have the Government looked properly at financial assets, stocks and shares, or income from other forms of wealth. The proposed dividend tax rise will raise only £600 million, compared with the £11.4 billion coming from workers and businesses, and it is not even in the Bill. Just £1 in every £20 is coming from dividends, rather than people’s wages, and the Government will not even rule out further tax rises on working people during the rest of this Parliament.
The tax rises could not come at a worse time. A fragile recovery is being put at risk at precisely the time we need businesses to create jobs. Family incomes are being hit by the universal credit cut and rising household bills. In fact, when combined with the universal credit cut, a care worker will be over £1,000 worse off a year. Let me repeat that: £1,000 worse off over a year. The Government’s own tax impact assessment, which my hon. Friend the Member for Ealing North referenced earlier, states:
“There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.”
That just sums up how this Government are treating workers and families.
The impact assessment also states that the new tax will affect business decisions about hiring new workers and putting up wages. It is a tax on jobs, a tax on workers, a tax rise with unfairness at its heart, and a tax rise without a plan. Politics is about choices—Labour would not have made these choices. We cannot support this Bill, and I urge Government Members to remember their manifesto commitments that they each made, to think of the lowest paid in their constituencies and those in desperate need of care today and to do the right thing and vote against the Bill on Second Reading.
Oral Answers to Questions
Abena Oppong-Asare Excerpts(2 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Kemi Badenoch
I thank my hon. Friend for that question. The Government recognise the important role of financial markets in supporting the UK’s transition to a net zero economy. The British Business Bank is a Government-owned economic development bank that makes finance markets for smaller businesses work more effectively, and its remit includes venture capital. I note her point about a meeting and believe that my hon. Friend the Economic Secretary is happy to meet her on this issue.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
It is only 55 days until COP26 in Glasgow and households, consumers and businesses urgently need clarity and certainty about how the costs and benefits of our transition to net zero will be shared. Labour’s approach to tackling the climate crisis would have fairness at its heart, because we know that while some are planning to build personal heated swimming pools in their homes, millions of others are struggling with energy bills. The net zero review is supposed to consider fairness. At the last Treasury questions, the Chancellor told my hon. Friend the Member for Leeds West (Rachel Reeves) that the final report would
“of course be published imminently”—[Official Report, 22 June 2021; Vol. 697, c. 750.]
That was 11 weeks ago. Where is it?
Kemi Badenoch
As I said, the report will be published in advance of COP26, but we have published other things that the hon. Member does not seem to have heard of or read. We have set out ambitious plans about the net zero target and published the energy White Paper, the industrial decarbonisation strategy, the transport decarbonisation plan, which has not happened anywhere else in the world—we are the first country to do a transport decarbonisation plan—and a hydrogen strategy. We will publish the heat and building strategy in due course. The Government have been busy setting out plans on net zero, and we would appreciate it if Opposition parties took some time to read them.