Stamp Duty Land Tax (Temporary Relief) Bill

Dan Carden Excerpts

Committee stage & 3rd reading & 3rd reading: House of Commons & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Monday 13th July 2020 Commons Chamber

[The Financial Secretary to the Treasury (Jesse Norman)]

This Bill increases the nil rate band of stamp duty land tax from £125,000 to £500,000 from 8 July 2020 and runs until 31 March 2021. If I may, I will speak to clauses 1 and 2, and also to new clause 1 tabled in the name of the Leader of the Opposition.

This Bill contains two clauses. Clause 1 provides for the thresholds at which stamp duty land tax is due on residential property to be increased for a temporary release period, with effect from 8 July 2020 to 31 March 2021. The effect of this is that the first £500,000 of consideration for standard purchases of residential property will be free of tax, whereas previously only the first £125,000 was free of tax. The clause changes the rules in relation to other elements of stamp duty land tax, which are affected by the temporary holiday, such as the higher rate for the purchase of additional properties and first-time buyers’ relief. The higher rate traditional dwellings will continue to apply in addition to the standard rates of stamp duty land tax. This means that for purchase of additional dwellings, the first £500,000 of the consideration will be subject to the higher rates of 3% on top of any existing SDLT rates. Further, the clause ensures that section 57B and schedule 6ZA of the Finance Act 2003, which gives effect to first-time buyers’ relief, is temporarily disregarded until 31 March 2021.

Finally, the clause makes sure that no additional checks will be due when a contract is completed after the temporary relief period has ended, if the transaction was substantially performed within the temporary relief period. This is provided that the only reason for additional tax becoming due is the return to the standard rates of SDLT after the end of the temporary relief period.

Clause 2 provides that the Bill may be cited as the Stamp Duty Land Tax (Temporary Relief) Bill. The Bill comes into force on Royal Assent, but applies in relation to transactions with an effective date on or after 8 July 2020. As a result of the resolutions passed by the House of Commons under the Provisional Collection of Taxes Act 1968, the Bill’s provisions have effectively been in force since the 8 July 2020.

I shall briefly turn to Labour’s new clause 1, which calls for a review of the impact of the Act. To that I would respond that Her Majesty’s Revenue and Customs routinely publishes quarterly and annual statistics and analysis of stamp duty land tax data, including on first-time buyers and those purchasing additional dwellings. The Government also already closely monitor those statistics and keep stamp duty policy under constant review. As part of that, we will continue to examine the effect of the temporary rate change. This is a straightforward Bill to enact the temporary relief to stamp duty land tax announced last week by my right hon. Friend the Chancellor. I therefore commend clauses 1 and 2 to the House and ask the House to reject new clause 1.

[Dan Carden (Liverpool, Walton) (Lab)]

It is a pleasure to speak in the Committee stage of the Bill. The Bill was only published at the beginning of the debate, and it has just two clauses. I will direct my remarks primarily to our new clause 1. We are asking the Government at least to accept the principle behind the new clause. I do not think the Financial Secretary to the Treasury was able to put our minds at rest on the question of which people and groups will benefit from the cut set out in the Bill. He said that it was quite untrue that it would benefit the owners of second homes or multiple homes, but I think we need a review to give us the facts. We need to find out whether first-time buyers, existing owner-occupiers moving home, buy-to-let investors, those buying second homes and overseas buyers are among groups that will benefit from the policy.

The Financial Secretary did not give us a clear response to the fact that £1.3 billion of the cost of this scheme looks likely to benefit those who are already home owners. We want the Government to commit to reviewing the Bill’s impact in an open and transparent way. We want to know whether such a large sum will deliver value for money and what the broader impact of this will be on the housing sector. The Government should want to consider how this, their flagship policy, will contribute to solving the housing crisis and how it will impact on the economy overall. Our new clause will help to achieve that, and the Government should accept it.

[Wera Hobhouse (Bath) (LD)]

Covid-19 has highlighted the deep inequalities that existed long before this pandemic. Many people have been left desperate for support. Hundreds of thousands of people already have less money coming in, and hundreds of thousands have lost, or will lose, their jobs. The Government have thrown an eye-watering amount of money at our economy, but we do not yet know how this increasing mountain of debt will be paid back, or by whom. In the meantime, paying bills, rents and mortgages has become hard for millions of households. We must therefore question whether this tax cut should be a priority for the Government. It is expected to cost £3.8 billion, yet it will mainly benefit the wealthiest. The average earner, including the young generation who are struggling to pay ever-increasing rents, let alone be able to put down enough money to buy a house, will see nothing of it. The discount might provide a tax holiday for the privileged few, but it completely ignores the fact that the majority of people are unable to buy a home of their own now, and are never likely to do so in the future.

In my constituency of Bath, the availability of housing for first-time buyers is limited and house prices are expensive. The average house price in Bath is currently more than £430,000. A first-time buyer would qualify for £10,000 under the new rates, but even that would provide little benefit to a first-time buyer in my constituency who cannot secure a deposit or who faces an unaffordable mortgage. The cut to stamp duty will not solve the real problems at the heart of the housing crisis. Housing is one of the most important sectors for job creation—I agree with the Minister on that—but where is the focus on building social homes for rent? Social homes are the only way to provide secure and affordable housing for everyone, but, most importantly, for those on lower incomes. The private sector has completely failed to build social homes, and only a huge Government infrastructure programme to build social housing, as we saw in the ’50s and ’60s, will bring our social housing stock back to where it needs to be. That would create the jobs we need as well as the homes we need. Surely at this time, genuinely affordable homes are more important than ever, and more important than a stamp duty cut.

Lastly, the climate emergency has not gone away during covid, and we know that emissions from homes account for 30% of UK emissions. Decarbonising homes is therefore crucial to getting to net zero. Improving the energy efficiency of social housing is something that the Government could do straight away. They could also require landlords to achieve minimum levels of energy efficiency in order to be able to rent their homes. We need a Government with a vision to get the economy going, not a tax cut for only the few.

--- Later in debate ---

[Dan Carden]

The Opposition will not be opposing the Bill. We are acutely aware that people need support after months of lockdown when they were unable to buy or sell their homes, but while we are not opposed to giving homeowners and buyers additional support to get through this crisis, we have concerns about who will benefit most from the Bill.

Last week, we should have had a back-to-work Budget that targeted support at the sectors and jobs most affected by this terrible crisis, but we did not get one. Instead, we got scattergun giveaways that will not deliver for those who need it most—giveaways such as this Bill, which was frantically pulled together at the end of last week after more clumsy miscommunication at the highest level of Government.

Last week’s statement was another example of rhetoric over reality with this Government. It was cobbled together to get as many likes as possible, without due consideration for the long-term impact on the economy. It did nothing to target support to those who need it most during this difficult time. It did nothing for those who have so far been excluded from Government support during this crisis. Above all, it did nothing to address the Government’s failure to get an effective test and trace system in place so that people can feel confident leaving their homes and returning to some sort of normality.

As my hon. Friend the shadow Chancellor put it so succinctly last week, families are not staying home because they are waiting for a tenner off a meal. They are staying home because they are still worried about coronavirus. We do not just need incentives; we need confidence.

Question put and agreed to.

Bill accordingly read the Third time and passed.

Oral Answers to Questions

Dan Carden Excerpts

Tuesday 7th July 2020 Commons Chamber

[Dan Carden (Liverpool, Walton) (Lab) [V]]

The Prime Minister promised to do whatever it takes, and the Housing Minister told councils:

“spend whatever it takes, the Government will reimburse you”.

Will the Minister reaffirm that pledge? Councils need certainty. Many are already cutting services, and the one-size-fits-all approach simply does not work. Will he further commit to the principle that packages announced by the Government should meet the financial cost of coronavirus, and the social need for those local authorities?

[Steve Barclay]

The hon. Gentleman will know that the cost for local councils will be uncertain for some time, not least in terms of the impact of lost tax income. That is why we have addressed the short-term pressure through the £3.7 billion grant and additional funding that has been allocated, including the recent £600 million for infection control.

Coronavirus: Job-Support Schemes

Dan Carden Excerpts

Tuesday 7th July 2020 Commons Chamber

[Dan Carden (Liverpool, Walton) (Lab)]

I am delighted to be taking part in this debate on behalf of the Opposition Front-Bench team, with this being my first time at the Dispatch Box opposite the Financial Secretary. Let me start by thanking the Treasury Committee for its important work in preparation for this debate. This is by no means a run-of-the-mill estimates debate; these are exceptional times, and the schemes put in place by Government, called for and supported by the Opposition and the trade unions, are incomparable to anything we have seen before, with £42 billion for the coronavirus job retention scheme and £10 billion for SEISS.

Since March, communities up and down the country, families, workers, the self-employed, traders and business owners have had their way of life changed beyond recognition. A public health crisis became an economic crisis. The lockdown meant that businesses had to close, work dried up and all but essential parts of the economy came to a standstill. From the beginning, the Government have been too slow: too slow to take the threat seriously; too slow to lock down; and too slow to test, track and isolate. The key aspects of the response required Government to communicate public health messages clearly and to earn public trust for their actions. They have, regrettably, without question, failed on both those measures.

I turn now to the schemes. More than 9 million jobs have been furloughed and more than 2.5 million claims have been made for self-employed income support. Where improvements are needed, we have made suggestions, plugging gaps and ensuring flexibility, and we are still calling on the Government to abandon their one-size-fits-all winding down of these schemes. It was a shame to see the Chancellor dig his heels in on this earlier today. And we are still calling for changes to sick pay so that people are not forced to choose between their health and their income.

There have been problems and missed opportunities with these schemes. All of us will have dealt with the heart-breaking situation of constituents being laid off, despite their employers being eligible for the scheme. The scheme was made available to all employers, but early communication failed to make it clear that firms were expected to furlough staff, not lay them off. New starters were not covered by the scheme. There was a lack of clarity to ensure that employers furloughed staff who needed to shield at home even if businesses continued to function. Agencies, including umbrella agencies, too often chose not to furlough staff, but rather to keep them on their books without work.

[Meg Hillier]

We were shocked in the Public Accounts Committee to discover that, despite planning for a pandemic, there had been no planning for what to do with the economy in a pandemic, which rather goes to the point that my hon. Friend was making about the muddled advice and the changes to the scheme as it was being implemented.

[Dan Carden]

I thank my hon. Friend for that intervention. She is absolutely right that far too little preparation was done. We saw that with the stocks of PPE at the beginning of this crisis.

Too many did fall through the gaps. We have heard that it was as many as 3 million, according to ExcludedUK, and upwards of 1 million, according to the Treasury Committee. Perhaps most shamefully, some companies, such as British Airways, have used lockdown and the job retention scheme not to protect jobs, but as cover to plot mass redundancies and drive down the pay, terms and conditions of their workforce. That is a situation that could have been avoided had our Government followed the example of Denmark by making support schemes conditional on jobs being retained. So why did the Chancellor fail to act in the interests of workers? There were also missed opportunities to change corporate tax behaviour, to secure environmental gains, to drive up employment rights and to work with trade unions. It is just plain wrong. Companies that have avoided paying their taxes have received taxpayer bail-outs, with no requirement to change their behaviour, to stop tax avoidance, to stop profit shifting and to stop their use of tax havens. So did the Chancellor fail to act in the interests of taxpayers?

We have called for a full back-to-work Budget, one that is focused on preventing mass unemployment and on creating the jobs of the future, but instead we have an economic update from the Chancellor tomorrow, and we will have to wait to see what comes of that. Some 3.4 million people have already been moved on to universal credit since March and, with lockdown easing, it seems that we have an exit without a strategy.

Let me turn to HMRC itself and where the principle of job retention, it would seem, does not apply. HMRC’s staff numbers have fallen from 105,000 in 2006 to 65,000 in 2019. During those years, the UK cut more revenue collectors than any other European tax authority. Only Greece cut more staff as a proportion of population. The current office closure programme puts a further 2,000 HMRC jobs at risk on top of the more than 900 jobs already cut. One hundred and seventy local tax offices are closing around the UK, leaving 13 regional hubs and four London offices. That will leave no tax office for the south-west closer than Bristol, no tax office in East Anglia at all, and none in Scotland north of Edinburgh and Glasgow, severing the connection with the communities they serve. We oppose the office closures programme. Counter to the Government’s levelling-up narrative, it will see offices closed and jobs lost in towns across the country, from Wrexham to Warrington, Stockton, Dudley, Shipley and Solihull.

Low pay, poor staff retention, high staff turnover and redundancies are all wasting thousands of years of institutional knowledge and expertise at HMRC. It is the incredible work of staff administering the coronavirus schemes that has done so much for people across the country, but it has also meant that key duties elsewhere have had to be suspended. Perhaps our biggest challenge in the coming years will be to restore our public finances and reinstate our tax base, and for that we need HMRC firing on all cylinders.

We know that tax audits bring in at least four times what they cost—£4 to £6 for every £1 spent—and those subject to audits also declare more of their profits in future years. Quite simply, we need tax collectors in order to collect tax. I say sincerely to the Minister that, in the light of the challenges ahead, he should halt the redundancies, stop the office closures and commit to a properly funded and resourced HMRC.

We need the Government to break away from their blanket approach to this crisis. They must look again at sector-specific support beyond October. It can make no sense for viable jobs and sectors simply to be left to collapse, and I implore the Minister to work with trade unions and the TUC to that end. As my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) said, the Government have fostered, and indeed pursued, the growth of a gig economy across this country, and the lack of support for those people has been astounding. We have a crisis of hunger in our communities, with food bank use multiplying and people unable to pay their bills, their rent or their mortgages. The Government must do more for those left unemployed by the coronavirus pandemic.

We are also living through the most incredible demonstration of the value of our public services. There has never been greater urgency to ensure that our tax system is fit for purpose, so that those with the broadest shoulders pay their fair share. Never again can a crisis be heaped on the least well-off and the least able to afford it.

During the last decade of austerity, the richest 1,000 people in the UK increased their wealth by 183%. Aggregate private wealth is now over six times our GDP. We therefore welcome the serious academic research under way on how a UK wealth tax would work. That research is being carried out at the London School of Economics and the Centre for Competitive Advantage in the Global Economy at the University of Warwick, alongside the Institute for Fiscal Studies, the Institute for Government, the OECD and the Resolution Foundation.

In order to sustain funding for universal public services, deliver the coronavirus support schemes and create the sustainable green jobs of the future, we need fair and progressive taxation that confronts growing wealth inequality, to build a just and sustainable economy that puts people, jobs and the planet first.

Finance Bill (Ways and Means)

Dan Carden Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 19th May 2020 Commons Chamber

[Dan Carden (Liverpool, Walton) (Lab) [V]]

I am delighted to contribute to this debate as shadow Financial Secretary. May I start by acknowledging the significant interest and the strong feelings of people across the country on this issue? We are considering a technical change to our tax system, reforming compliance on IR35 rules for the private sector, but for many people watching us, there is genuine concern that this technical change—this attempt to strengthen the system against tax avoidance—may affect their incomes and their livelihoods. I and the Labour party approach this matter with the seriousness and the consideration that it merits.

The ambition of IR35 rules and the associated difficulties have been a long-running saga over three decades, and it is a near impossible task to do the issue justice in the five minutes I have to contribute today.

Provisions were introduced by the last Labour Government in 2000 for HMRC to investigate and identify the relationship between businesses and contractors and to ensure that, where individuals actually perform the role of employees, they were contracted as such, to pay the correct tax and benefit from the correct employment protections, two issues that remain at the heart of the difficulty around IR35.

The nature of today’s economy, with the weakening of workers’ rights and employment protections and with zero-hours contracts, demands a radical overhaul. We need a progressive tax system, and we need to rebalance the relationship between those at the top and those at the bottom. In the meantime, what we have are piecemeal attempts to stop some, perhaps the more blatant, tax avoidance arrangements utilised by some companies. The challenge for tax authorities and for us is to understand, and differentiate between, fair and correct contractual relationships for the genuinely self-employed who are providing a crucial service to business and those who are all too often forced into bogus self-employment by unscrupulous employers, a practice that has become all too common and is designed to cheat the tax system and to deprive working people of their rights and even their entitlement to a minimum wage and fair pay. HMRC estimates such bogus self-employment schemes cost around £3 billion a year in lost tax revenue, and the February 2020 Treasury review put the cost of non-compliance with IR35 at £1.3 billion a year by 2023-24.

Having taken effect in the public sector in April 2017, these measures were initially meant to be rolled out to the private sector last month, but that is being delayed by a year due to the current pandemic, and the Labour party broadly supports the decision to delay. We have raised concerns about the implementation of this reform and have called for a proper and thorough review before the roll-out to the private sector, and, as the Financial Secretary recognised, the additional time now available gives him an opportunity to get to grips with these concerns, but we do need reform.

The Labour party is committed to modernising the law around employment status, including new statutory definitions of employment status, and the Government’s own Taylor review was right to conclude that the nature of the tax system acts as an incentive for practices such as bogus claiming of self-employed status, both by businesses and individuals. It called on the Government to make the taxation of labour more consistent across employment forms while at the same time improving the rights and entitlements of self-employed people. I would also add—as we consider these changes in the midst of the coronavirus pandemic that has forced 2 million people on to universal credit and millions to rely on the Government’s furlough scheme, unsure of their future—that we need a social security system fit for the modern era that can protect all of our people in one of the wealthiest countries on the planet.

I would just like to finish with a few points that I hope the Financial Secretary can respond to when he winds up. Can he explain how reforms will only affect people working like employees through a company, and does he agree that there can be no space in our economy for zero rights employment? Will he respond to concerns most recently set out by the House of Lords Economic Affairs Finance Bill Sub-Committee that lessons have not been learned from the roll-out to the public sector, and will he look again at serious problems highlighted with the “check employment status for tax” online tool?

We need a joined-up approach in the consideration of tax regulations and employment law. We need better protections for the self-employed, and we need to tackle tax avoidance, and the Labour party will work constructively to achieve that end.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I now call David Davis, who is asked to speak for no more than four minutes.