Finance Bill

David Burrowes Excerpts

Tuesday 6th September 2016 Commons Chamber

[Wes Streeting (Ilford North) (Lab)]

I rise to address amendments 180 to 182 and new clause 19, tabled in my name and those of my hon. and right hon. Friends. As a relatively new Member, I want to place on the record my enormous thanks to the staff of the Public Bill Office, who over the course of the summer assisted in the production of not only these amendments, but more than 30 amendments to the Higher Education and Research Bill. I have been busy, but I have been keeping them busy. As a new Member, I have perhaps been slightly more demanding, so I am grateful for their time and support.

As the Minister acknowledged in her opening remarks, amendments 180 to 182 arose from concerns reflected right across the Treasury Committee about the nature of appointments to the most senior offices and the dismissal of post holders. The Office of Tax Simplification has an important public duty. Many of us want the tax code to be simplified, but we know that constraints are inevitable because the tax system is as complicated as life and will therefore always have a degree of complexity. However, we also know—particularly those of us with a large number of small and medium-sized businesses in our constituencies—that the more complicated the tax code, the more complicated it is for businesses to understand what it is they should and should not be paying. Companies with the means to get a great deal of expensive advice on how to make enormous savings are at a great advantage.

During the course of yesterday’s Finance Bill debate, my right hon. Friend the Member for Don Valley (Caroline Flint) spoke about the widespread practice of aggressive tax avoidance by multinational corporations. If the tax code were simpler and clearer, that sort of aggressive avoidance would be harder. That is why there is such parliamentary interest in the work of the OTS and a determination to ensure that Government appointments to the most senior posts have an appropriate degree of parliamentary oversight—primarily, but not exclusively, through the Treasury Committee.

I welcome the Minister’s constructive approach and the agreement she made with the Chair of the Treasury Committee, the right hon. Member for Chichester (Mr Tyrie), who does a sterling job of batting for all members of the Committee and on behalf of both sides of the House. This is a good example of how the Government and the Select Committee system can work together effectively to reach the right outcome. I do not intend to press amendments 180 to 182 to a vote this afternoon, because we have received sufficient assurances from the Minister and I look forward to that process continuing under successive Governments.

Turning to new clause 19, even newer Members of the House are familiar with the regular display and theatre of the Budget. In this modern age, there is an inevitable degree of briefing, counter-briefing and misleading in the run-up to the event in order to misdirect the Opposition and to enable the Government to be fleet of foot on the day and to save the best headlines for the Budget. On the day itself, we have the routine announcements about the business that needs to be conducted in any Budget and then, of course, we get the inevitable rabbit out of the hat. Once the smoke has cleared and the mirrors have been packed away, the real analysis begins of the consequences of each Budget item for the people whom we are sent here to represent. Even members of Select Committees or Bill Committees, who follow the scrutiny of Bills closely, know that trying to penetrate the real impact of a Finance Bill or any fiscal event is a significant challenge.

I must say that that challenge has been made more difficult by the decision of the previous Chancellor, the right hon. Member for Tatton (Mr Osborne), to move away from his commendable practice of publishing alongside the Budget the distributional analysis of the impact of tax, welfare and public spending changes. The first question that all hon. Members face when presented with a Budget is about the impact on our constituents. Those of us who are committed to social justice are more interested in the impact on the poorer household than the wealthier household. In fact, the right hon. Member for Tatton described the analysis as the

“most comprehensive and robust assessment available”.

That is why it was so disappointing that he decided to abandon that practice following the general election. The move was condemned at the time by a wide range of anti-poverty charities as a serious mistake. We could spend a lot of time debating why the previous Chancellor chose to abandon that practice at that particular moment, and we could have our usual exchanges about the priorities of Conservative Governments and Labour Governments, but with the appointment of a new Prime Minister and a new Chancellor I hope that we can instead debate the merits of the principle which we believe any Government, whatever their priorities and political shade, should follow.

The Chair of the Treasury Committee wrote to the Chancellor to express concern that at last year’s summer Budget the Treasury

“replaced its previously excellent budget distributional analysis series with a manifestly deficient substitute.”

Since her elevation, the Prime Minister has made great fanfare of the commitment she made outside No. 10 Downing Street to lead a Government who work

“not for a privileged few, but for every one of us.”

I would dearly love to have a debate with the Government about the means by which we achieve social justice and about whether it is a good thing in and of itself, but I certainly agree with the Chairman of the Treasury Committee that a

“high level of transparency about the effects of tax and welfare policy on households across the income distribution would seem to be a logical, perhaps essential starting point.”

That is what motivated the tabling of new clause 19.

It is important that all Governments are clear and transparent about a Budget’s effects to enable proper parliamentary and public scrutiny of decisions—as happens in the Chamber, in Select Committees and in conversations around kitchen tables up and down the country. Knowing that the analysis is being produced and seeing it form as the Budget is prepared helps to concentrate the minds of Ministers and civil servants. It asks the question and gives the Chancellor, before he or she stands at the Dispatch Box to announce their Budget, an opportunity to reflect on the Budget in its entirety.

Successive Governments and Chancellors have once or twice fallen foul of public opinion by realising that the Budget as a whole is not necessarily as great as they thought it was when each part was being considered. Having the analysis in place as the Budget is prepared will not only aid public and parliamentary scrutiny, but enable Ministers to make the right judgment about how Budgets should be balanced. The Opposition believe, particularly when difficult judgments are to be made about tax and welfare changes and public spending, that the books should never be balanced on the backs of the poorest. I hope that we can find agreement in that area with the new Chancellor and Prime Minister, particularly given her stated aims, but whoever occupies the highest offices of this land, we can surely agree that parliamentary scrutiny is vital.

We should also agree that, as the Treasury has the evidence to hand and we are not asking it to do additional work—the analysis already exists—simply requesting that it be put in the public domain is not too much to ask. I welcome the fact that this afternoon the Minister has left the door open and says that this area will be considered by Ministers. On that basis, I accept that Ministers, the Chancellor and the Treasury will consider it. I assure the Minister and the Chancellor that we will return to this issue, through the Select Committee and at future fiscal events, if a change is not made. On the basis that the Government have an open mind and open ears on this issue, I am prepared not to press new clause 19 to a vote.

[Mr David Burrowes (Enfield, Southgate) (Con)]

It is a pleasure to take part in this stage of our consideration of the Finance Bill. I was interested to hear the carefully constructed arguments of the hon. Member for Ilford North (Wes Streeting). Let me pick up on the point he made about wanting to see social justice from this and future Budgets, and to see it at the heart of the Government’s agenda, as was made clear on the steps of No. 10 by the new Prime Minister. He also talked about the impact on the poorest households, which is the focus of new clauses 2 and 3 and the reviews that they propose. As ever, it was also interesting to hear from the hon. Member for Wolverhampton South West (Rob Marris), and to listen to his thesis on post-factual analysis, be it on the Labour leadership contest or on this Bill. He mentioned roads, so perhaps he should come down to Enfield and give us a post-factual analysis of the cycle lanes that are planned in my borough to see whether we should continue with that expensive proposal, given the need for best value.

Let me return to the matters at hand. First, I wish to speak to new clause 2, which stands in my name and those of my hon. Friends the Members for Congleton (Fiona Bruce) and for Totnes (Dr Wollaston). Sadly, the latter cannot be here as she is leading her Health Committee on a visit, although she would want to be here to support this new clause. I hope and expect that across the House there is support for the principles of wanting to carry out a proper review of the impact of the duty regime, particularly in relation to high-strength cider, although I very much welcome the Minister’s comments. She will know all too clearly from her previous role in public health of the impact of alcohol and high-strength alcohol in particular, including cider, on the poorest and those most in need of our attention. I welcome the hint that a wider, more coherent view of the relationship between alcohol duties and harm could be taken, which was mooted by the previous Prime Minister but seemed to get kicked into the long grass—it has never returned. The Minister will be well aware of the permutations and the different interests across Government in relation to that review and its final outcome. The previous Prime Minister was talking about minimum alcohol pricing in terms of when not if, but this has now gone back to an if. I look forward in future Budgets and future consideration to a wider review and factual analysis of the relationships to harm and the impact on behaviour, particularly among the poorest.

New clause 2 hones in on an area that is about not just health harms, although that is the core of the argument, but an anomaly in our treatment of cider and of beer.

[Rob Marris]

I was a “remainer”, so at the risk of sounding like the right hon. Member for Wokingham (John Redwood), may I ask the hon. Gentleman whether he agrees that this is one area where, as a small silver lining, leaving the European Union may assist, because the rates of excise duties, the definitions and so on are related to our membership of the EU? For example, I am thinking of the way in which wine is treated, because of the Italian, Spanish and French wine industries. If and when we leave the EU, we will have more flexibility in this regard.

[Mr Burrowes]

I welcome reluctant converts to the cause of Brexit, whenever they come. That is a silver lining among many. I see this very much as sunshine, rather than silver linings. At the heart of it all, this is about our taking back control over a duty that has an impact on the most vulnerable, and we have already had arguments about VAT. I look forward to hearing the Scottish Members’ support for the same silver lining, because they have been battling to ensure that their proposal for minimum unit pricing is not subject to court and European Court interference. They, too, would perhaps welcome that silver lining; I look forward to their joining the hon. Gentleman in what he has just said.

As much as anything else, new clause 2 is about dealing with an anomaly to do with high-strength ciders. In the recess, hon. Members may have enjoyed ciders of all varieties. They may have popped their corks and had some sparkling cider, which is a substitute, perhaps a poor one, for champagne. They need have no fear about this, because the essence of my proposed review is very much about the nasty stuff. I doubt many hon. Members will have partaken in it, although they may have done. I am talking about people going down to their local office licence to get a large bottle or can of white cider, which is not particularly sparkling or pleasant. However, it attracts under-age drinkers and, in particular, dependent drinkers—

[Rob Marris]

It has never seen an apple!

[Mr Burrowes]

It has never seen an apple. The Minister intimated that the same is true of pears. We need to look at the fact that white cider attracts the lowest duty per unit of alcohol of any product while representing the cheapest way to consume alcohol and get drunk, and to enable addicts to continue their dependency. Three-litre bottles of high-strength ciders are available for just £3.50; people can get completely wasted on £3.50, but they would struggle to buy a bottle of some mainstream ciders for that. As a result, these products are causing disproportionate levels of harm, which is closely associated with dependent, street and under-age drinking. The Government are rightly emphasising and prioritising tackling street homelessness and putting funds into preventing homelessness. My hon. Friend the Member for Harrow East (Bob Blackman) has introduced the very helpful Homelessness Reduction Bill. We hope that, with cross-party support, he will be navigating its safe passage through this House on 28 October and all hon. Friends will attend to that.

Let me make a wider point about future Budgets, as connected to that is the need to examine the impact of duty and the evidence that price has a particular impact on behaviour.

[Mr Stewart Jackson (Peterborough) (Con)]

My hon. Friend pre-empts the point I wished to make, and is making a typically eloquent speech. For too long, under all Governments and under generally liberal regimes, whether we are talking about salt, sugar, alcohol or fixed-odds betting terminals, there has not been a holistic approach from the Treasury that looks at the indicative costs to society. I am talking in terms of health services, social services and so on. I do not think any Government have got that right over the years: there is a cost if we do not get the fiscal policy right in trying to change behaviour across all these areas.

[Mr Burrowes]

That is a welcome intervention. I welcome the Minister to her place, as she has wide experience in this area. I understand that she was the longest-serving Conservative public health Minister. She can bring that experience to bear, not least because she has added responsibilities, given the make-up of the limited number of Ministers on the Treasury Bench, to cover those aspects of what some might call sin taxes and to create a better overall review. That can be linked up with what we look forward to receiving from the Government: the long-awaited life chances strategy. Be it on the social justice strategy, social reform strategy or life chances strategy, we must ensure that we focus on the poorest and most disadvantaged, who are particularly badly affected by high-strength ciders and other issues that have been mentioned.

High-strength ciders are usually about 7.5% alcohol by volume, they are sold in three-litre bottles and they contain 22.5 units of alcohol. That is over 50% more than the Government’s weekly limit guideline, just in a single container. The leading brands are Diamond White and White Ace. The price means that heavy drinkers of white cider can spend only a third as much on alcohol as low-risk drinkers would spend. These low-strength ciders and high-strength ciders range between 1.2% and 7.5% ABV, but we need to focus on the white ciders, because at the moment the tax is based on volume rather than strength. That has an impact on behaviours. Obviously, it has an impact on the behaviour of manufacturers. When they look at incentives and what they produce, they may say, “Let’s just go for volume. We won’t then be hit on strength.” There is not a similarity with the beer regime, which has that grading, and that has an impact, not least on what products come out. Unsurprisingly, on the high street there is much more of a market for lower-strength beer and different qualities of lower-strength beer. Meanwhile, there is a wide range of mainstream ciders, but no impact in duty terms on high-strength ciders.

In considering the impact of high-strength ciders, we should perhaps discuss Glasgow and Edinburgh where, I understand, 25% of alcohol treatment services patients drink white cider. Of those, 45% drink white cider exclusively, so this is a huge issue whether in Glasgow or Edinburgh, where there is a significant problem with high-dependency drinkers, or in London or elsewhere.

I am sure hon. Members will know of constituents who are particularly dependent on this harmful drink, which is the drink of choice for many a harmful drinker. Indeed, the chief executive of Thames Reach, Jeremy Swain, has said that 78% of deaths among his clients can be traced back to high-strength drinks such as white cider. That is a shocking statistic that needs to be out there. I implore the Minister, perhaps when she considers future Budgets, to look at what is happening, and why. Efforts have been made in relation to manufacturers and others—she will be aware of this from her previous role—to sort things out and become responsible, and it has to be said that retailers have done that: Heineken and Bulmers have withdrawn their white cider brands as they believe them to be socially irresponsible. That is to be welcomed and we should praise those companies.

Furthermore, retailers such as Costcutter, Morrisons, Nisa and Spar have acknowledged the problems associated with those products and reduced their stocking and promotion of white cider, but if hon. Members come to Green Lanes in my constituency, although they will not get near any of those established off-licences, they will see that high-strength ciders are readily available. They are, sadly, targeted at the heavy drinkers, who are more likely to have those white ciders. Also—this is based on evidence that needs wider debate and review—they are more responsive to the cheapest price for alcohol.

Those supporting such a review and such a measure are indeed those responsible retailers and manufacturers, as well as the health sector—those who see the impacts of liver disease and the changes brought about by lack of accessibility to and an increased price for such products. In addition, alcohol treatment charities, various parts of the drinks industry and dependent drinkers themselves have also made the point that they recognise the impact of having an increased price.

It is indeed time for the Government to provide additional reassurance that there will be a honed focus on the issue in future Budgets, as well as a wider review of the impact of high-strength alcohol, particularly with respect to cider duty and targeting on white cider sales. As the Minister said, we must always be proportionate in the way we handle duties and ensure that people are not unduly impacted when they either buy or go out for a cider, but these measures would not impact on most mainstream ciders of between 4% and 5% ABV.

On the issue of simplification, which was alluded to earlier, these measures would bring such products into line with the treatment of beer. Since 2011, there have been three tiers of beer duty, with low rates on low-strength beers and high rates on high-strength beers, so why do not the Government, to achieve simplicity, clarity and coherence, make similar provision in relation to ciders, particularly because of the impact of high-strength ciders on the poorest?

The Government have rightly put social justice at the heart of all they do, and that must include this area, where the spotlight of social justice must also shine in preventing harmful drinking. I look forward to the Minister perhaps adding a few words of support for a targeted increase in the price of high-strength cider, or at least agreeing to look at the issue again seriously in time for the next Budget so as to help the vulnerable and end the anomaly to which I have referred. That would recognise these proposals as part of a wider review of the important issue of alcohol duties and their relationship to harm.

Another issue has been of interest during previous debates on Finance Bills, and I wish to bring a strong focus to bear on it by speaking to new clause 3, which stands in my name and the names of 15 of my right hon. and hon. Friends. Indeed, others have indicated to me their support for a review of the marriage and civil partnerships transferable tax allowance. I want to comment particularly on low-income households, especially couples with young children. It would be very progressive if the Government were to focus on achieving more take-up—I welcome the Minister’s comments on that—and arriving at a more significant amount, which would disproportionately impact on lower-income households.

I welcome the introduction of the transferable allowance for married people and civil partners last April, so, unlike in previous debates, I will not, along with my hon. Friends, be imploring the Government to establish such an allowance in the tax system. We have that. That battle has been won and that promise has been kept. There is that recognition of marriage in the tax system, and it is evidence-based: the institution of marriage is valuable as it helps individuals to build social resilience, improves mental wellbeing and aids healthy relationships, particularly with children. I shall not dwell on that past battle because, as the Minister said at the Dispatch Box, she also, on behalf of the Government, is wholly committed to that transferable allowance. It is here to stay under this Government, which is wholly welcome and I very much appreciate it. If any other hands got on the tiller, I am sure that it could be under threat.

However, we must not sit back and be content. The bauble is there and we have recognised marriage, but we need to look, as we do across Government, at how that measure will impact on poorer households. Indeed, we need to consider incentives, including financial incentives, and disincentives around different couple relationships and penalties that still exist. I believe that we must prevent marriage, with its particular social benefits, which have been evidenced, from becoming the preserve of the more wealthy.

I am sure that Members from across the House will join me in not being content with the fractured society that is based around relationships breaking down. We must do all we can to support couples to stay together, particularly those with children, and consider the impact on children when couples do not stay together. Evidence states very clearly that the children of married couples, who have grown up with them, are better served by the fact that the couple stay together.

I recognise that there are different incentives and this is not all about the tax allowance. A range of support can be given to keep couples together, although that is perhaps the subject of another debate for another time. However, we can play our part through fiscal incentives. I recall a recent speech from the former Chief Rabbi Lord Sacks, who spoke about an issue that we often discuss. We pray in aid the fact that we are a party of one nation and that we want to build a country of one nation. Interestingly, Lord Sacks referred to the fact that there is a growing phenomenon of two nations, which he saw in terms of a failure to support marriage creating two nations with two very different sets of life chances. As the Government build on their strategy, we should not ignore this issue, and immediately the life chances strategy is published I shall be doing research on the word “marriage” and how much we are supporting marriage.

It is important to heed the words of Lord Sacks. He said:

“In Britain today more than a million children will grow up with no contact whatsoever with their fathers. This is creating a divide within societies the like of which has not been seen since Disraeli spoke of ‘two nations’ a century and a half ago. Those who are privileged to grow up in stable loving association with the two people who brought them into being will, on average, be healthier physically and emotionally. They will do better at school and at work. They will have more successful relationships, be happier and live longer.”

We should not allow that to be the preserve of one part of the nation. We can play our part fiscally to ensure that we are not divided and that many gain the opportunities derived from couples being together.

--- Later in debate ---

[Kirsty Blackman]

On that point, and particularly on the point about whether parents choose to stay at home or to work, despite the measure that has been put in, I support anything that allows parents to have a choice, or more of a choice, over whether they stay at home to look after their children or put them in childcare. However, we still have a massive problem with families not being able to make those choices, because childcare is not affordable for them, particularly for those caring for under-fives. Parents are still forced into being stay-at-home parents or taking low-wage jobs at strange hours because of the lack of affordable childcare. Does the hon. Gentleman support measures to change the childcare regime as well as the tax regime relating to this issue?

[Mr Burrowes]

The hon. Lady tempts me into a wider debate. If the Minister were to respond on this, she would certainly point to the measures on childcare. When one looks at supporting couples with young children, there are other things the Government have been very much involved in to improve the offer. There is work to do on access and affordability, not least, in my constituency, in relation to poor households accessing childcare.

I appreciate the fact that the hon. Lady talked about choice. There is also an issue about choice in that the Government are rightly encouraging as many people as possible to work and to exercise that choice, but it is sometimes an invidious choice for those who would want to stay at home, and the fiscal incentive to do that is not currently there.

There is a huge impact generally across the tax system on single-earner couples, which is not getting sufficient attention, and this proposal for the transferable allowance addresses that. There are lots of other measures across the tax and benefits system that seek to focus support on children, but we must particularly support the benefits of this allowance, which is around couples, marriage and the commitment to marriage and civil partnership.

In conclusion, following the cause of new clause 3 can be a win-win situation for the Government. It not only, obviously, recognises what we do already on marriage in the tax system, but it allows us to get the maximum effect from the Government’s original commitment, which I believe was welcome, but which was somewhat partial in terms of its original intentions. Recognising the financial challenges, I think new clause 3 would ensure that we can seek to remove some of the disincentives to marriage for those who wish to marry; it would help us to support social resilience and help with transferability; and it is also fiscally conservative. In short, new clause 3 is about getting more bang for our buck in supporting marriage and social justice.

[Philip Boswell]

There are several new clauses on which I intend to speak—most of them briefly—and the first is new clause 18.

New clause 18 calls for a review of the impact of section 24 of the Finance Act 2015. I and my SNP colleagues have concerns that the changes made in section 24 may have adverse consequences on the availability of affordable housing in Scotland and beyond. That legislation seems to be yet another London-centric policy that fails to take account of the diversity of the housing market throughout the UK.

Unlike other parts of the UK, where large rental agencies dominate, Scotland has a disproportionate number of landlords who own a small number of properties. That is hugely beneficial to tenants—particularly those on low incomes—as those small-scale landlords are often more willing to rent properties at an affordable price and to those relying on social security as a safety net. Owing to the changes introduced in section 24, we are concerned that those small-scale landlords may be forced drastically to increase rental costs, causing houses to be less affordable, or to sell their properties, potentially resulting in their being purchased by less sympathetic landlords or agencies. Given the UK-wide housing crisis that we are suffering and the rising cost of rented accommodation, it is incredibly important to ensure that landlords who rent at affordable prices and to those who depend on social security as a safety net are not pushed out of the market. New clause 18 therefore calls for a review of the impact of these changes on the availability of affordable housing so that those on lower incomes are not adversely affected.

New clause 6 calls for a review of the VAT treatment of the Scottish Police Authority and the Scottish fire and rescue service. I thank the Minister for her comments and consideration in her introductory remarks. Many in this Chamber may be familiar with the matter of VAT in relation to the Scottish police and fire rescue services, which my colleagues have raised in this House on a number of occasions. This remains an incredibly important matter that this Government have failed properly to address. Since the incorporation of police and fire authorities in 2013, the Scottish Police Authority and the Scottish fire and rescue services have been charged VAT by the UK Treasury. This UK Government have refused to grant an exemption to these vital services in Scotland, despite the fact that since the time of incorporation the HMRC has handed out exemptions to the new transport agency Highways England, and Olympic legacy organisation the London Legacy Development Corporation.

This Tory-backed charge on essential Scottish public services is costing emergency services tens of millions every year that could and should be spent on frontline services. Only in June, it was reported that Scotland’s police force has paid £76.5 million in VAT since it was formed three years ago and remains unable to claim this money. It is worth noting that only the Scottish police and fire services have been expected to pay VAT to Her Majesty’s Revenue and Customs and not English, Welsh or Northern Irish services. This is a disgrace. It seems absurd and unfair for this Tory UK Government to continually expect the Scottish Government to rectify the matter and cover the difference, especially given the consistent cuts to the pocket money they grant Scotland to run devolved matters. New clause 6 therefore seeks a review of the impacts of the VAT treatment on the Scottish police and Scottish fire and rescue services, including analysis of the impact of the financial position of these services arising from their VAT treatment.

I turn briefly to new clause 15, which seeks to prevent VAT from being increased on the installation of energy-saving materials. I agree with the intent of the right hon. Member for Wokingham (John Redwood) to prevent these VAT increases, if not his methods. This Tory Government have consistently instituted regressive policies in relation to clean energy and energy-efficiency measures, from cuts to the solar subsidies—