Budget Changes

Debate between Barry Gardiner and David Gauke

Monday 21st March 2016 Commons Chamber

[Mr Gauke]

Forty-five, 40, and about 4 million.

[Barry Gardiner (Brent North) (Lab)]

Does the Minister agree that it would have taken real courage for the Chancellor to come here today, and that in failing to show that courage he has shown he is not fit to lead his party? His failure of courage is not only that, however. It is a discourtesy to this House that renders us incapable of properly examining the Budget, because we do not know how the Chancellor proposes to meet his fiscal targets.

[Mr Gauke]

With the greatest of respect to the hon. Gentleman, that is a load of pompous nonsense. The Chancellor of the Exchequer will respond to the Budget debate, the first time a Chancellor has done so since the 1990s.

Oral Answers to Questions

Debate between Barry Gardiner and David Gauke

Tuesday 4th November 2014 Commons Chamber

[Barry Gardiner (Brent North) (Lab)]

Her Majesty’s Revenue and Customs figures released this month show that the amount of uncollected taxes has increased by £3 billion each year under the Chancellor. What difficulties has he found in collecting those taxes, and what does he propose to do about them?

[The Financial Secretary to the Treasury (Mr David Gauke)]

I am not sure whether the hon. Gentleman was in the House when we debated that at some length a few minutes ago. The fact is that the tax gap for 2012-13 was lower as a percentage of tax receipts than in any year under the Labour Government. Tax yield from HMRC has gone up by £7 billion since 2010-11.

Income Tax

Debate between Barry Gardiner and David Gauke

Wednesday 28th November 2012 Commons Chamber

[Mr Gauke]

I admire the hon. Gentleman’s ambition. To be fair, he did not make this point, but, when Labour voted on this matter in the Finance Bill debates, effectively they would have got us to a 40p rate—but there we go. It was HMRC’s assessment that a reduction from 50p to 45p would be relatively inexpensive, and, given the damage the 50p rate was doing to our competitiveness, we believed it would be well worth doing. Of course, all taxes are under review, but the 45p rate remains in place.

[Barry Gardiner (Brent North) (Lab)]

I understand the Exchequer Secretary’s point. He calculates that the reduction in the top rate of tax has been, in his eyes, more than compensated for—five times over, he said—by the other taxes. How, then, will the reduction in the top rate of tax provide the incentive to those taxpayers he wants to domicile here? How will this fivefold increase in tax not send them rushing abroad? I thought that was precisely his point.

[Mr Gauke]

Very simply, different taxes have different elasticities. It is perfectly simple: people are more likely to respond to high direct rates of income tax than to stamp duty. Of course, the OBR took into account the behavioural impacts when it assessed how much revenue would be raised on, for example, stamp duty land tax. As Tony Blair sets out in his memoirs, which I was flicking through last night, direct rates of income tax are not a good way of raising income.

Small Charitable Donations Bill

Debate between Barry Gardiner and David Gauke

Tuesday 4th September 2012 Commons Chamber

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

We have had a thoughtful and constructive debate, although the hon. Member for Harrow West (Mr Thomas) perhaps introduced a party political element in the past few minutes.

Throughout the debate we have heard hon. Members from all parties raise thoughtful points. My hon. Friend the Member for Dartford (Gareth Johnson) made the point that the purpose is to complement, not replace, gift aid. The hon. Member for Clwyd South (Susan Elan Jones) gave us a history of charity law and taxation going back to 1601, although she missed a bit before returning to more recent years—the House is probably grateful that she did not run through the 17th, 18th and 19th centuries in detail. My hon. Friend the Member for Stafford (Jeremy Lefroy) pointed out the need to strike a balance between simplicity and preventing fraud. A number of speakers returned to that point, including the hon. Member for Banff and Buchan (Dr Whiteford), who raised a number of detailed points, as did my hon. Friend the Member for Warwick and Leamington (Chris White). I know that he has also done so in correspondence with my hon. Friend the Economic Secretary. As has already been pointed out, he also highlighted the generosity of the good people of Leamington. The hon. Member for Foyle (Mark Durkan) also set out a number of detailed points, as did my hon. Friend the Member for Milton Keynes South (Iain Stewart) and the hon. Member for Brent North (Barry Gardiner). I hope to address as many of those points as possible this evening, but I am sure that the Public Bill Committee will enjoy scrutinising them very thoroughly.

I am grateful for the widespread support from across the House for the principle behind the scheme and I hope to be able to respond to the issues raised, but before I do so let me recap. As my hon. Friend the Economic Secretary set out at the beginning of the debate, the new scheme is not designed to replace gift aid. It complements it, allowing charities to claim for the cash donations they receive for which it is too difficult or impossible to get a gift aid declaration. The scheme is not intended to replace gift aid or to be a substitute for it in cases where it is straightforward to operate for charities of all sizes. Whenever and wherever possible, we want charities to make full use of gift aid, which is a very successful tax relief that contributes more than £1 billion annually to the charitable sector’s income.

A number of Members were concerned about complexity in the scheme and the fact that it might exclude the small community charities that could benefit most from it. Let me assure Members that it will not do that, as the basic scheme is very simple. Claiming on donations under the scheme will be simple, with no requirement to obtain a gift aid declaration from donors and with claims being made on the same form used to claim gift aid payments. Charities will not be required to keep any additional records of the money received over and above best practice record keeping. As the scheme is simple and based on cash donations and will have limited donor records, the scheme could, however, become attractive to fraudsters. I am sure that all hon. Members will agree that we must protect the scheme from abuse and one way of doing that is by linking it to gift aid.

It was said that the gift aid small donations scheme excludes those charities that would most benefit from it—the small charities that do not currently claim gift aid—but it is right that it should be a requirement for charities participating in the small donations scheme to claim gift aid alongside it. Gift aid is easy to use if the charity is simply collecting donations of money and it will soon become even easier when HMRC introduces its new online system for claiming gift aid next year. We hope that the small donations scheme will encourage those charities that do not use gift aid to do so.

The design of the scheme, with a requirement for a three-year successful track record of claiming gift aid, is one way to counter the fraudsters and protect the scheme from abuse. It is a straightforward way to protect the scheme from exploitation without reintroducing all the paperwork that it is designed to remove. I am sure hon. Members will agree that it is only sensible for the scheme to have a test, such as that three-year check, so that HMRC can be more certain that a charity will not abuse the scheme. Reducing the three-year limit, as has been suggested, would significantly increase the cost of the scheme.

Let me turn now to the point specifically raised by the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) about trustees and the concern about charities that are connected by a shared trustee. The Bill sets out that for trustees to be connected they would have to have purposes or undertake activities that were the same or substantially similar. If someone was a trustee of two charities that were completely unrelated and did very different sorts of charitable activities, those charities would not be connected under the scheme. We received some feedback on that rule during the consultation and adapted it to meet concerns that charities would unintentionally be caught by the rule as originally proposed. We are looking further into that, however, to see whether it would be possible to amend it further to ensure that no charities are caught unintentionally.

Another concern that has been raised is the community building rule and the question of access to the scheme for those charities doing similar work at a local level. The community building rule has been written into the Bill to ensure fairness of access and to avoid significantly unfair results. Most charities will not need to worry about the rule because they are independent and collect less than £5,000 in small donations, so they will get their £5,000 allowance regardless of their activities or where they collect the donations. But we sought fair access to the scheme. As my colleague the Economic Secretary said, in developing the scheme, it soon became clear that without some special rules, some charities would benefit hundreds or even thousands of times more than others, based purely on the way they were historically set up. That clearly is not right, so the community building rule was introduced to avoid significantly unfair results between charities carrying out similar activities in local communities, either as independent charities under an umbrella organisation or as local groups operating as part of a single large charity.

The vast majority of charities will not need to concern themselves with the extra allowance. For those that do, there will be detailed guidance to ensure that it is simple to access. It is important to remember that the basic principle of the scheme is that each eligible charity should be entitled to top-up payments on a maximum of £5,000 in donations. I am sure hon. Members will agree that we are doing the right thing to ensure fairer access to the scheme for charities that would otherwise lose out, just because of the way they were historically set up.

The intention of the community building rule is not to allow all buildings where charitable activities take place to receive a separate allowance of up to £5,000 of small cash donations; it is to remove the worst inequalities that would otherwise exist, so that some charities would be able to claim hundreds, perhaps thousands, times more payments under the scheme than others undertaking similar activities. We believe that the rule as drafted achieves that objective.

I want to pick up a point about the definition of charitable purpose raised by the hon. Members for Kilmarnock and Loudoun and for Banff and Buchan and about its application in Scotland as well as in England, given that charitable purpose is being used in the English definition. Given that top-up payments are not a tax relief, clause 17(2)(a) makes it clear that the definition of charitable purpose according to the law of England and Wales is to be applied across the United Kingdom. The hon. Member for Banff and Buchan raised an important point about the Bill applying across the UK, and said that we should ensure that devolved issues are considered. I assure the House that the devolved implications have been explored and agreed with policy administrators in all the devolved Administrations.

The hon. Member for Kilmarnock and Loudoun and my hon. Friend the Member for Stafford referred to the £20 limit and asked what is meant by managers taking reasonable steps to find out whether a gift was £20 or less. Charities will be expected to have a process to ensure that their staff and volunteers do not deliberately include gifts of £20 or more as small donations. HMRC is developing guidance to explain the steps it would be reasonable for charities to take, but those steps will be proportionate to the risk because we want to ensure that the rules are applied with a light touch and give charities maximum flexibility. The aim of the scheme is to allow a top-up payment without a gift aid declaration on small donations, and we think £20 covers that. For larger donations, charities are more likely to be able to ask the donor for a declaration. We have already increased the limit from £10 to £20 following earlier representations.

Another issue raised by the hon. Member for Banff and Buchan related to donations by text—which are growing in use—cheque or credit card, which are not allowed under the scheme. The aim of the new gift aid small donations scheme is to allow charities and community amateur sports clubs to claim a gift aid-style payment on cash donations received in circumstances where it is difficult to collect a donor’s details or where donors may be reluctant to give them. As a donor may be giving details to the charity through other channels, and the extra amount of information needed for a gift aid declaration is therefore relatively small, we are focusing the scheme on cash. Where a charity has an ongoing relationship with a donor, we believe it should use gift aid if at all possible.

In an intervention and in his speech, the hon. Member for Brent North asked about the Treasury’s assessment of how many charities would take up the scheme. We estimate that around 80,000 individual charities will claim annually by 2016-17. Some charities will make extra claims on behalf of their local groups under the community building rule and some of those local groups may make claims for gift aid on behalf of their parent charity. However, it is only an estimate, so the take-up rate could be higher or lower. The fundamental methodology for costing the scheme, at around £100 million, as my hon. Friend the Economic Secretary pointed out earlier, was signed off by the independent Office for Budget Responsibility in the 2011 Budget. The final numbers, including assumptions about local groups, will be submitted to the OBR for approval at the next fiscal event.

[Barry Gardiner]

I am grateful to the Minister for answering the question directly. Could he be slightly more specific than just the number of groups? The concern is not just about the number of charities, because they may be medium-sized or larger; it is about their nature, scope and size. Does he have any evidence about that from Treasury assessments?

[Mr Gauke]

More information may be available during the Public Bill Committee—the hon. Gentleman looks like an enthusiastic volunteer. My hon. Friend the Economic Secretary pointed out earlier that a pool of about 100,000 charities have claimed gift aid in the past four years, and we think about 80,000 of them will make a claim under the scheme.

To return to the central point, there is a reason for linking the scheme to gift aid: to prevent fraud and ensure that the money goes to genuine charities. I am sure we share the belief that the measure is the best way of doing that. I hear the concerns that have been raised about smaller charities that may not submit gift aid applications, but we have to remember that the scheme involves paying out taxpayers’ money, so we need to ensure that it goes in the right direction.

To conclude, in designing the gift aid small donations scheme the Government have listened to the sector and made a number of changes following consultation. We reduced the level of matching required between gift aid claims and donations under the scheme, to make it easier for small charities to claim. We refined the rules for better targeting when charities are connected to one another, and we increased flexibility for connected charities to share their allocation under the scheme. However, I remind hon. Members that the overall objective of the scheme is to allow individual charities to claim a top-up payment on up to £5,000 of donations. The Bill will provide much-needed additional financial support to the charitable sector in these tough times. I therefore commend it to the House.

Question put and agreed to.

Bill accordingly read a Second time.

small charitable donations bill (programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Small Charitable Donations Bill.

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 30 October 2012.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Angela Watkinson.)

Question agreed to.

SMALL CHARITABLE DONATIONS BILL (MONEY)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Small Charitable Donations Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Angela Watkinson.)

Question agreed to.

Budget Leak Inquiry

Debate between Barry Gardiner and David Gauke

Thursday 22nd March 2012 Commons Chamber

[Mr Gauke]

I do not think that we can draw a conclusion that there has been a decline in the standards of journalism just from the fact that in 2005 the predictions of what was in the Budget were more consistently accurate than in 2012.

[Barry Gardiner (Brent North) (Lab)]

Surely a leak is an unauthorised or inadvertent publication of restricted and confidential information. On that basis, this could not have been a leak, because it was clearly not inadvertent and it was clearly authorised. It was none the less in severe conflict with the ministerial code, and that surely is what the Prime Minister should investigate.

[Mr Gauke]

I am not sure that there was a question there, but I thank the hon. Gentleman for his views. The Government clearly authorised some information to be put out in advance of the Budget. For example, there was a speech by the Prime Minister. The Prime Minister makes speeches from time to time; I am not sure that people should be getting upset about that.

Office of Tax Simplification

Debate between Barry Gardiner and David Gauke

Tuesday 20th July 2010 Commons Chamber

[Mr Gauke]

On the appointment process, we will see how we go. We are keen that the OTS should be accountable to Parliament, and I dare say that it will give evidence to my hon. Friend’s Committee. As for the cost, as I said a moment ago, the intention is that the costs will be borne from the existing budgets of HMRC and the Treasury. There will be secondees from the private sector, and we expect them to fund that at their own cost. As regards longevity, the initial appointments are for 12 months. We have set up the OTS for a Parliament, but I hope that it will be a permanent feature of our tax system.

[Barry Gardiner (Brent North) (Lab)]

One of the pieces of tax complexity that Treasury officials will be counselling this body to get rid of swiftly is perhaps one of the most important that has recently been introduced—the patent box, which enables intellectual property developed in this country to be domiciled in this country for tax purposes, not domiciled overseas at a great loss to the British taxpayer. Will the Minister ensure that the new body is not bamboozled by Treasury officials who have opposed that measure for far too long, and will continue to try to get rid of it?

[Mr Gauke]

As I mentioned earlier, the intention of the OTS is to look at the existing stock of tax law, not to examine new proposals for tax law. On the patent box, as we announced in the Budget, the intention is to carry out a consultation on intellectual property and on how the patent box works, how research and development tax credits work, and how the controlled foreign company rules apply in that context. We will be carrying out that consultation in the autumn.

Finance Bill

Debate between Barry Gardiner and David Gauke

Monday 12th July 2010 Commons Chamber

[Mr Gauke]

As I have already explained, the Chancellor or the Exchequer set out a business tax package in the Budget that included rate cuts and reductions in allowances that are good for business and growth overall. Amendment 49 proposes that clause 1 be amended to reduce the main rate of corporation tax to 26% for those companies whose tax bill will increase by more than 1% as a result of the reduction in investment allowances. That is a somewhat complex mechanism, but it provides an opportunity to raise the matter of capital allowances.

As part of a package to improve the UK’s competitiveness, it was announced that from April 2012 there would be reductions in the rates of writing-down allowances for plant and machinery and a reduction in the annual investment allowance. The Government will reduce the main rate of corporation tax to 26% that year—2012—and by that reduction, alongside changes to allowances, we will achieve the results that the amendment seeks. Furthermore, by not implementing the changes to allowances for two years, but reducing corporation tax rates next year, we are giving companies a full year to benefit from the reductions in rates, alongside current levels of allowances. Further reductions in the main rate of corporation tax follow in later years and capital allowances remain broadly in line with average rates of economic depreciation. To answer the shadow Minister’s questions, no changes are made to the so-called investment allowances in this Finance Bill and none is planned for the next financial year.

[Barry Gardiner (Brent North) (Lab)]

Why does the Minister believe that, if the Budget begins to work and we see businesses begin to pull the country out of recession, that is the right time for the Government to take away the incentive for further investment in business growth? That seems paradoxical to us all and to damage the very prospects of the recovery that he claims he wants to aid.

[Mr Gauke]

As I said a moment ago, the changes to capital allowances will take effect from 2012, and we believe that there is a substantial benefit for the UK economy in reducing the corporation tax rate. Indeed, it is a direction of travel that our predecessors followed when they reduced the rate from 30% to 28%, but we do not think that that went far enough. The point was raised in earlier debates that the UK has lost its competitive advantage in having a relatively low rate of corporation tax, as a number of other countries have cut their corporation tax rates much further than we have over the last 13 years. We believe that the lower rate sends a very clear signal that Britain is open for business and it is a demonstration of the direction of travel in which we are going. Assessment of the impact of Budget measures on investment over the next few years suggests an increase in investment of £13 billion.

The Budget thus provides a set of proposals and a set of reforms to corporation tax that will encourage further investment. As I say, it is a sign that Britain is open for business and a sign to investors and businesses throughout the world that the UK is a good place in which to do business. We believe that the package as a whole is well balanced and that it will aid a private sector recovery, partly funded through reforms to capital allowances and partly through the bank levy, as we debated earlier. Legislation is not required for the changes in capital allowances in this Finance Bill or indeed in next year’s, but we have set out a clear sense of direction that has been welcomed by business groups as a whole. We therefore urge the shadow Minister not to press the rather complicated amendment 49. It will not make any difference, because we will legislate to this effect in any event—without the complicated mechanism in the amendment. I urge him to withdraw it.