Finance Bill

Baroness Noakes Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Friday 17th July 2020 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I welcome the tax reductions in the Stamp Duty Land Tax (Temporary Relief) Bill; they should help to get the property market moving again. Stamp duty may well be an efficient tax for collection, but it is a terrible drag on the property market. It particularly hits homes in the south-east, which account for more than two-thirds of the total yield. I hope the Government will not simply allow the system to return to its previous state when the temporary relief expires next year. They would do well to look again at the impact the tax has on the property market, in particular on the property-owning aspirations of younger people.

In previous years we have been assisted in debates on the Finance Bill by reports from the Finance Bill Sub-Committee of the Economic Affairs Committee of your Lordships’ House. Its excellent report on the off-payroll working element of the Bill is hard-hitting; the Government’s response is tone deaf. I understand that my noble friend Lord Forsyth will seek a separate debate on this report later this year, and I certainly look forward to that. As other noble Lords have said, IR35 is an area that has never really worked well. It has led to tax rules with more unfairness than fairness in them—never a good look for a tax system.

I wish the Treasury were more joined-up. On the one hand, the Chancellor has provided massive support to businesses to help them through the pandemic and to enable economic recovery, and this has been terrific; on the other, the Treasury is legislating to make business rescue and business lending much more difficult. As the noble Baroness, Lady Burt of Solihull, noted, this Finance Bill reinstates Crown preference in insolvency for tax debts. As she said, R3, the representative body for insolvency and turnaround professionals, has called it a potential £1 billion blow. That may well be an understatement. The Crown preference proposals were heavily criticised before the Covid-19 pandemic hit us, and in the current context Clause 98 could well prove disastrous if business rescues are hampered or indebted businesses cannot access further debt.

My final point is about finance Bills and our tax system in general. We have long passed the point of having the longest tax code in the world. This Finance Bill is not particularly long—a mere 207 pages—but bears the hallmark of our tax system: complexity. We have a complex web of taxes to start with. They are then complicated by reliefs and exemptions, which are in turn further complicated by anti-avoidance provisions. This does not help business. In April the economy shrank by 20%, and the bounce-back in May has so far been modest. If we are to get to where we were before the pandemic hit us, we need everything to run at top speed. Complicating the tax environment for wealth creators will not do that. A good start for the Government next year would be a finance Bill of no more than 10 pages.