Finance (No. 3) Bill

Bambos Charalambous Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[Bambos Charalambous (Enfield, Southgate) (Lab)]

It is a pleasure to follow the hon. Member for Stoke-on-Trent South (Jack Brereton). This Finance Bill does not address the fundamental funding problems in our communities and public services. During the Chancellor’s Budget speech, he told us that the era of austerity was nearly over. He told us about the money for the “little extras” for our schools and that all would be rosy as he increased tax thresholds. Perhaps he was too distracted thinking up bad jokes to fully appreciate the effect of his Budget and policies, which mean that for many people the era of austerity is far from over. The Budget did not provide the substantial funding our public services need to be reliable and decent, and failed to invest properly in our public services. This is quite clearly a continuation of austerity.

My borough of Enfield has seen its funding cut by £161 million since 2010, which is well over 50% of its government funding, with other cuts still to come, and it is not alone. Like Enfield, most councils have been cut to the bone. Demand-led pressures on areas such as children’s services and adult social care will mean the council having to cut already-reduced services. Enfield has been affected by damping. The Government, having worked out what it needed, decided to take money away and move it elsewhere. I ask the Minister: when can we have that money back to fund the services that Enfield needs, and which the Government agree it needs? For such councils, austerity is not over, but will carry on for years to come. Is he pleased to see councils failing—councils such as Northampton—and going bust on the Government’s watch? The Government can fix this but choose not to.

Policing remains under-resourced. Last week, a 98-year-old man was seriously assaulted in his home in my constituency and now lies seriously ill in hospital, and today I learned there had been a stabbing near Arnos Grove station. What does the Minister have to say about the increase in crime and the cuts to policing in my constituency and across the country? Is austerity over for them? Yesterday, I spoke to the two police officers and one police community support officer charged with policing one ward of 10,000 people in my constituency. Does the Chancellor think that is sufficient? I invite him to come and listen to the concerns of local residents, victims of crime and those who live in fear. Why isn’t anything being done to reverse these cuts? Is the Minister happy with the level of police funding?

Education is another area of failure for the Government. The idea that £400 million for so-called “little extras” goes anywhere near addressing the funding crisis in schools is insulting. I am a school governor at Eversley Primary School in my constituency, and I am missing a governors meeting tonight to take part in this debate to let the Government know how schools are suffering with their budget cuts. In my conversation with the headteacher earlier today, she told me that the school was facing a £500,000 budget deficit next year and was now relying on the donations of parents and staff to pay for resources. Eversley is an outstanding primary school and is not alone in my constituency in facing a funding crisis that is a direct result of the Government’s policies. If the Minister does not believe me, he is welcome to meet me and headteachers in my constituency to look at their budgets for next year. He suggests there is more money for schools, but does he realise there are more children in our schools than ever before?

Even for school meals, the Government have taken no account of the increase in food prices or inflation since 2010, meaning that the budget for producing free school meals for all pupils from reception to year 2 has remained the same for more than eight years at £2.30 per meal. That makes it harder to provide a nutritious meal for children in their early school years. How is that joined up with the Government’s strategy on tackling childhood obesity? If the Chancellor wants to know where to find additional funding for education, he could look at the Education and Skills Funding Agency, which last year spent £17 million re-brokering failing academies to other academy chains. Why is there no scrutiny of this shocking waste of taxpayers’ money?

As my hon. Friend the Member for Swansea East (Carolyn Harris) mentioned so eloquently, in an attempt to shore up and support bookmakers, the Chancellor decided to give them more time to make more profits from fixed odds betting terminals—and thus more revenue for the Treasury—thereby condemning hundreds of people to the abject misery brought on by gambling addiction, with many suffering great personal harm and some committing suicide. What a shocking state of affairs.

There was no help in the Budget either for people on universal credit. The £1.7 billion put back in by the Government is less than a third of the £7 billion taken out. That is no help to a local resident losing £58 per week as she migrates from family tax credits to universal credit. The amount she is losing is going towards funding the tax cuts in the Budget. The Minister spoke of fairness in his opening speech. Where is the fairness for her?

The Chancellor issued a caveat in his statement, saying that the Budget would be all off if there were a no-deal Brexit. What the Bill aims to do is give the Government sweeping powers to amend tax legislation in such an event. It is another attempt at a power grab, which is something that we have become used to with this Government. Once again, Parliament is being sidelined.

The Government’s economic failure will continue with this Finance Bill. The Bill and the Budget are not fair. They are failing our communities by not replacing the police officers whose numbers have been cut since 2010, by not giving local authorities the funds that they need, by not providing what is needed for our schools, and by not helping the most vulnerable in our society.

A fair taxation system is for the common good, and should underpin shared prosperity through universal services. The Bill does not offer a progressive and fair tax system, and it means more austerity for the vast majority of the people. The Minister forgets at his peril that the people who benefit from tax cuts are also the people who are asked to make donations to cover the funding cuts in their children’s schools, who experience the burglaries that police no longer attend, who have seen a deterioration in public services, and who are worse off under universal credit. Austerity is not over for them either.

The Bill is not fair. It does not help our communities, including the most vulnerable, and it is not fit for purpose.

Finance (No. 3) Bill (Second sitting)

Bambos Charalambous Excerpts

Committee Debate: 2nd sitting: House of Commons
Tuesday 27th November 2018 Public Bill Committees

[Peter Dowd]

That is a nice start to the afternoon. I will turn to amendment 17 to 19 and 22 which, I must say at this stage, we will also push to a vote unless we have the acquiescence, capitulation or otherwise of the Minister after he has heard my words of wisdom. I hope he has even more divine intervention and inspiration this afternoon from his officials telling him to agree with me.

Clause 7 introduces further reforms to optional remuneration arrangements for cars and vans. The measure seeks to make two changes to the current regime, as outlined in the Treasury’s policy paper. First, it is designed to

“ensure that when a taxable car or van is provided through OpRA, the amount foregone, which is taken into account in working out the amount reportable for tax and National Insurance contributions purposes, includes costs connected with the car or van (such as insurance) which are regarded as part of the benefit in kind under normal rules”.

Secondly, this measure is also expected to

“adjust the value of any capital contribution towards a taxable car when the car is made available for only part of the tax year.”

I imagine that the Treasury’s line is that this seeks to ensure that the value of this benefit is connected only to cost, but we are concerned that these changes may further complicate pre-existing optional remuneration arrangements that are already in place for employers and employees to utilise company cars and vans. That in turn may be a deterrent, as some employers may consider that it is too much hassle or too bothersome, and that there is too much red tape, when it comes to offering such a scheme. Similarly, employees may decide that the risks and liabilities of taking up the offer of a company car or van scheme may be too high, and that under these circumstances both rentals and automotive sales may fall.

To put it as succinctly as I can—I accept that I am prone to being succinct, which is a fault of mine—the Opposition do not believe that it is in the interest of our economy, which is heavily reliant on the automotive sector for jobs, or that of workers, to make it harder for them to use a company car or van through an optional remuneration scheme. That is why we have tabled amendment 17, which would amend page 5, line 2 of the Bill and insert:

“The Chancellor of the Exchequer must review the effect of the provisions in this section on the motor vehicle industry in parts of the United Kingdom and regions of England and lay a report of that review before the House of Commons within six months of the passing of this Act”

as linked to the nations.

I accept that Government Members must recognise the clear link between automotive sales and their use as company cars or vans in optional remuneration arrangements. Work vehicles make a significant contribution to the automotive industry’s more than £82 billion annual turnover and £20.2 billion of value added.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

Does my hon. Friend agree that further complicating the optional remuneration arrangements for employees who wish to use a company car or van could have an effect on the automotive sector as a whole? That would be terrible.

[Peter Dowd]

It would be. That goes to the heart of the point. We want to tease this issue out and have a review. I know we have raised a million and one issues for review, but that is as much as we can do in the current climate. That is what we want to do: we want to tease all these matters out.

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[Peter Dowd]

Yes, I agree to that point of clarification. That is the intention. The Charity Commission and the Scottish body would no doubt recognise the seriousness of this problem, and in their strategy for dealing with fraud, they make the following point:

“The commission continues to see, and has to act on, serious problems arising in charities in relation to poor financial management and inadequate financial controls, accounting and record keeping. In 2010-11, out of 1,912 completed compliance assessment cases, the proportion involving serious concerns about fraud, theft and other significant financial and fundraising issues increased from 16% the previous year to 26%.”

Figures for subsequent years can be found in the commission’s annual publication “Tackling abuse and mismanagement”. The commission goes on to say:

“The National Fraud Authority in its annual fraud indicator report of 2012 estimated annual losses of £1.1 billion, or 1.7% of annual charity income during 2010-11.”

There is therefore a problem, because that is cash not going where it was intended. The impact of fraud and financial crime on a charity, particularly smaller charities, can be significant, going beyond financial loss and the impact of the financing of a charity’s planned activity. These crimes cause distress to trustees, and so on, and have an adverse effect on the charity. It is important to deal with them, says the Charity Commission.

If the Treasury is going to offer tax incentives for charitable donations, it is vital that the proper safeguards are in place to ensure that tax forgone does not act as an incentive to other risks. For example, from my understanding, the Charity Commission holds the only centralised list of registered charities; therefore a clear procedure for HMRC and the Charity Commission to communicate would be necessary to guarantee tax exemption. That is important.

[Bambos Charalambous]

My hon. Friend is making an excellent speech and raising some excellent points. Does he agree that there is a need for further transparency on how these proposals were put together by the Treasury? Does he agree that there is a case for a public register of charities that benefit from this tax exemption?

Finance (No. 3) Bill (Seventh sitting)

Bambos Charalambous Excerpts

Committee Debate: 7th sitting: House of Commons
Thursday 6th December 2018 Public Bill Committees

[Clive Lewis]

Yes, I was aware of that. Labour local authorities in Oxford and across the country do fantastic work on the issue, but they often do so in isolation and with limited support from central Government. The Government should really be getting behind them, given the severe impact that poor air quality can have, not just on children, but on all of us—it is now believed to be connected to the onset of Alzheimer’s and other degenerative diseases.

The London Mayor has proposed a targeted scrappage scheme that uses camera data to ensure that only vehicles that are regularly in the ultra low emission zone receive scrappage funding. The proposal meets the criteria set out in the five-case model in the Treasury’s Green Book and has a positive business case ratio.

Will the Minister confirm that none of the general VED revenue will be spent in London, because the Treasury plans to give it to Highways England to maintain strategically important roads outside London? Strategically important roads in London are maintained by Transport for London without any Government support or a share of VED income. Frankly, I suspect that any assessment made under our amendments would reveal that money is available from the proceeds of VED, which of course will rise under the new rates proposed in clause 57. I am also confident that any assessment under amendment 111 would show that reducing harmful emissions in London is vital to our national effort on climate change and air quality, let alone the fact that it would address the suffering of ordinary people in our most congested city.

It is fair to say that there is a strong suspicion that the Government’s political refusal to support Londoners owes more to Londoners’ refusal to support them at the ballot box than to the best interests of the city or the country as a whole. If the Minister wants to dispel that impression, will he clarify what share of VED revenue comes from London now and what share he expects to come from London after the passage of the Bill?

[Bambos Charalambous (Enfield, Southgate) (Lab)]

I am a London MP and my constituency borders the North Circular road. The Mayor has introduced a low emission zone for part of the road, but more is needed to reduce emissions. Does my hon. Friend agree that funding from this measure should go towards introducing low emission zones in other parts of London as well?

[Clive Lewis]

Yes, I do. I do not think that there is a lack of ambition from the Mayor of London or from local authorities around the country; ultimately what holds them back is a lack of resources. Will the Minister commit to using the revenue to offer London the same air quality funding that is being made available to other parts of the country, to ensure that ultra low emission zones are a success?

--- Later in debate ---

[Clive Lewis]

Yes. An update of the DFT’s mode shift benefit values technical report in 2015 doubled previous estimates of the cost per HGV mile to road infrastructure. Campaign for Better Transport research suggests that HGVs are paying for only 11% of their UK road infrastructure costs, predicting a shortfall of about £6 billion.

Will the Minister tell us whether the Government have made their own such estimate during the development or passage of the Bill, or does our amendment give them the opportunity to assess it for the first time? Will he produce a fresh assessment of the cost shortfall that the new HGV road user levy rates will leave for other road users and taxpayers in general to pick up? In any case, will he give us the Government’s view of whether the total revenue raised will reflect a fair share of the total tax take from road users, as compared with that of those who drive smaller vehicles? In the Chamber, many MPs complain about potholes and funding for them. The statistics give a clue as to where in part the responsibility lies for so many potholes on our roads.

[Bambos Charalambous]

As the driver of a Ford Focus, I want to clarify something. Does my hon. Friend agree that yes, a greater proportion of the money ought to go towards repairing potholes, because that will leave more money available for schools and other resources?

[Clive Lewis]

My hon. Friend makes an interesting point from his Ford Focus. The issue is that there is a massive externality that those HGVs are causing on our roads. No one wants to see HGV businesses go out of business, but everyone in Committee would agree that it is right for people to pay the appropriate level of tax for the damage that they cause to our road infrastructure. If they are to be subsidised, that subsidy ought to be transparent, so that we can appreciate and make a proper assessment of the value that HGV companies contribute to our economy, while taking into account the externalities that they create as well, because there are impacts on other tax areas where the Government would need to spend—he mentioned schools, and there are hospitals and so on and so forth.

Amendment 116 would require the Chancellor to review the impact of the clause on CO₂ emissions and climate change targets. As I have described, the use of HGVs has increased hugely in recent years. Inevitably, that has had an adverse effect on the UK’s greenhouse gas emissions. Studies from the Government’s own 2017 freight carbon review proved that HGVs are also disproportionately responsible for pollution when compared with other road vehicles. In 2014, HGVs were estimated to account for about 17% of UK greenhouse gas emissions from road transport, and about 21% of road transport nitrogen oxide emissions, while making up only 5% of vehicle miles. Will the Minister confirm those figures?

Clearly, if we are to stay in line with EU emissions targets, which have themselves been agreed at the necessary level to ensure that we meet our Paris climate agreement targets, CO₂ emissions from HGVs must drop by at least 15% by 2025, and be at least 30% lower by 2030. Will the Minister agree to conduct an analysis of just how far the changes in the clause go towards the country’s ability to meet our climate targets? Will he also consider addressing the generality of the need to meet those targets with either taxation of the sector, or other measures that the Government might put in place to meet our obligations and to safeguard our shared environment?

Amendment 117 would introduce a similar requirement to review the impact of clause 59 on the overall volume of traffic on roads, which is fairly self-evidently a major contributory factor to road traffic congestion. The Centre for Economics and Business Research estimates that congestion will cost the economy as much as £307 billion by 2030. Similarly, the latest INRIX figures show that the UK currently ranks as the fourth most congested developed country, and the third most congested in Europe.

Will the Minister tell us what assessment the Government have made of the economic—not to mention environmental —impact of traffic congestion? I hope he will agree that it is undeniable that the increase in HGV traffic is contributing to the problem. Is he willing to undertake a formal assessment of the impact of HGVs on overall road congestion and traffic, which in turn clearly has a significant impact on the economy? If he intends to resist the amendment, perhaps he will tell us what assessment the Government have made to date and how it informed their choice of the relative levels of taxation that the clause sets for more or less polluting vehicles.

The amendment also addresses the important issue of road safety. The volume of traffic is clearly relevant to road safety outcomes. The Campaign for Better Transport’s analysis of Department for Transport road safety statistics shows that HGVs are twice as likely to be involved in a fatal collision on minor roads as they were 10 years ago. In 2016, HGVs were almost seven times more likely than cars to be involved in fatal collisions on minor roads, despite making up just 5% of overall traffic miles. There has been little or no improvement in recent years in the rates of fatal collisions involving HGVs either on motorways or on A-roads. In 2014, HGVs were involved in almost half of all fatal collisions on motorways, although they accounted for only 11.6% of the miles driven on them. Will the Minister tell us whether, in the course of considering the relative levels of taxation for different types of HGV, the Government have made any assessment of the impact on road safety of HGVs on motorways and A-roads across the UK? In developing the clause, did they consider whether the tax system for vehicles might in any way be used to improve the safety record of HGVs?

Amendment 118 would make equivalent provision in relation to air quality standards. In launching its call for evidence about the HGV road user levy, the DFT conceded the importance of working

“with industry to update the Levy so that it rewards hauliers that plan their routes efficiently, to incentivise the efficient use of roads and improve air quality.”

As the results of the consultation are yet to be published, I ask the Minister whether the Treasury is able to review whether the changes proposed in clause 59 will succeed in encouraging an improvement in air quality standards.

If the Minister does not intend to accept the amendment, perhaps he will tell the Committee whether, and when, the Government intend to publish the evidence they have gathered, and their formal response to it, for scrutiny by the House and the public. Perhaps he will also confirm that the evidence that they have gathered to date shows that, nationally, 20% of lorries are now driving around completely empty and only 36% are full by volume. Not only is that a highly inefficient use of scarce road space, but it exacerbates the existing problem that more than 40 towns and cities in the UK have already exceeded air pollution limits set by the World Health Organisation. Can he confirm that air quality standards will be assessed when looking at the important impacts of the HGV road user levy? Can he give us any timetable or detail?

The Committee will note that our amendments have a similar theme. Perhaps I can ask the Minister to outline in general terms what assessment or review of the success of these measures the Government have planned, what impacts they will consider, how they will measure them and how they will publish their results. I also reiterate my point about the Government’s various calls for evidence that relate to the measure in clause 59. Will he commit to publishing the evidence received and giving a formal response from the Government? We often hear about evidence-based policy making, but as legislators we, too, need to hear that evidence if we are to agree to the legislation that implements that policy.

I look forward to the Minister’s response to our amendments, but I want to make one final argument about the clause itself. While it is to be expected that the reforms in clause 59 will lead to improvements in fuel efficiency and reductions in pollution from HGVs on Britain’s roads, we believe that those reforms are incomplete and unsatisfactory because the HGV levy will continue to be charged according to time spent on UK road networks. It is widely acknowledged that the existing time-based charging system is inefficient and not cost-effective. As it stands, the current daily charge bears no direct relationship to the amount of use of the network and therefore the system does not incentivise efficient use of the network. To improve economic efficiencies, there should be a direct relationship between taxes per mile travelled and the marginal cost that a distance-based charging system can provide.

Finance (No. 3) Bill

Bambos Charalambous Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 8th January 2019 Commons Chamber

[Sir Edward Davey]

Having taken that wonderful intervention, I bring it to the House’s attention that the hon. Member for Wellingborough (Mr Bone) has signed my new clause. It is bringing the House together at a time when elsewhere it is divided.

I end on what this loan charge and its retrospective nature have meant for our constituents. It has caused misery. It has affected people’s lives, their health, their families. It has caused gross misery. Some people believe they will have to go bankrupt if they are forced to pay, or that they might lose their homes, and that is why the House is united against this retrospective action. I really hope that the Minister will get to his feet, accept the new clause, go ahead with the review and bring it back before the end of the tax year, so that the House can see it and vote on it.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

I rise to speak in support of new clause 2. I was staggered to learn that entrepreneurs’ relief costs the Treasury an estimated £2.7 billion, and this to allow people selling companies worth up to £10 million to keep half the money they would otherwise pay in capital gains tax.

I was even more surprised to learn that this tax relief was concentrated among a few very wealthy individuals, with 6,000 people making gains of over £1 million and averaging £450,000 in tax relief each. This relief is only benefiting the very wealthy and should be reviewed as to its effectiveness. If it is scrapped, the £2.7 billion could be used to fund schools buckling under the pressure of funding cuts and provide huge investment in special educational needs and children and adolescent mental health needs. It could also go some way to funding children’s services and social care in local authorities and policing.

This is not the only area where the Government are giving away money that could otherwise be put to better use. Under amendment 22, in the name of the hon. Member for Aberdeen North (Kirsty Blackman), the Government are being asked to review the expected effects on public health of the changes made to the Alcoholic Liquor Duties Act 1979. The Alcohol Health Alliance has stated that the Government’s own figures show that alcohol duty cuts from 2013-14 have cost the Treasury £4 billion, which is the equivalent yearly cost of employing over 100,000 teachers. The figure is expected to rise to £9.1 billion by 2024. Considering the pressures on budgets as a result of austerity, that is not an insignificant amount.

The freeze on duty on beer, spirits and cider for 12 months from February 2019 is in effect a cut, as it is not keeping in line with inflation. Indeed, it has not done so for six of the last seven years. Cheap alcohol has a tremendous effect in causing damage to people’s health, the economy and wider society. Alcohol is the leading risk factor in respect of the deaths of people aged 15 to 49. In England alone, there are more than 1 million hospital admissions and 24,000 deaths related to alcohol every year. That is a clearly an impact that the Government need to consider when they set duties on beer, spirits and cider. Cuts in alcohol duty have a double effect. They reduce revenue for the Treasury, which in turn reduces the amount of funding for the NHS, while simultaneously increasing demand and costs in the NHS by encouraging the consumption of cheap alcohol. I therefore ask the Government to review the impact of the alcohol duty freeze on public health.

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[Liz Twist (Blaydon) (Lab)]

Does my hon. Friend agree that the stories we hear from our constituents suggest that some of them are not only afraid of losing their homes and livelihoods, but are actually having suicidal thoughts because of the pressure that is being put on them to pay the money?

[Bambos Charalambous]

That is an excellent point, which I was about to make myself. While the large accountancy firms have gone unpunished for creating tax avoidance schemes for big banks, those individual contractors are bearing the brunt of HMRC’s powers. I have been informed by the Loan Charge Action Group of suicides, bankruptcies and relationship breakdowns as a result of the stress involved in their dealings with HMRC. The group has said that many of the people being pursued by HMRC unwittingly signed up to loan-based schemes, but the promoters of the tax avoidance vehicles have not been targeted.

I ask the Minister to reconsider these measures and to ensure that people are not punished when they should not be.