Oral Answers to Questions

David Gauke Excerpts

Tuesday 4th November 2014 Commons Chamber

[Heidi Alexander (Lewisham East) (Lab)]

4. What estimate Her Majesty’s Revenue and Customs has made of the amount of uncollected tax in the last year for which figures are available.

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

HMRC published its latest tax gap estimates on 16 October, and in 2012-13 the gap was estimated at £34 billion—6.8% of total tax due.

[Heidi Alexander]

Thirty-four billion pounds is a very significant amount of money, and under this Government the amount of uncollected tax has risen by £3 billion. Why has the Minister allowed that to happen?

[Mr Gauke]

Let us be clear: a rate of 6.8% is lower than was achieved in any year under the last Labour Government. In addition, HMRC’s yield—the money that has come in as a consequence of its efforts—was £7 billion higher in 2013-14 than it was in 2010-11. The fact is that this Government have an excellent record on dealing with tax avoidance, tax evasion and the tax gap.

[Henry Smith (Crawley) (Con)]

Can the Chancellor of the Exchequer say how the Government are encouraging greater payment of tax through international agreements that we have achieved, for example, with Switzerland?

[Mr Gauke]

I am sure that the Chancellor can explain that, but as I am already at the Dispatch Box, I will answer the question. The UK has very much led the way in the OECD base erosion and profit shifting process, ensuring that the international tax system is fit for purpose. We have made good progress on that, but there is still work to do.

[Nick Smith (Blaenau Gwent) (Lab)]

18. Does the Minister think that there is any link between the deep cuts to HMRC staff, particularly in Cardiff, and the uncollected tax that is rising under this Government?

[Mr Gauke]

As I say, what has happened under this Government is that the yield brought in by HMRC has increased year after year. The tax gap is lower for 2012-13 than it was in any year under the previous Labour Government. In truth, the record of HMRC is one of getting more from less, but we have invested in the areas that bring in money on tax avoidance and tax evasion.

[Mr Philip Hollobone (Kettering) (Con)]

Will the Minister ensure that the unacceptable and unwelcome £1.7 billion bill from the European Union remains an uncollected tax demand, and that there will be no payment of interest on any late payment?

[Mr Gauke]

First, I congratulate my hon. Friend on the ingenuity of his question. Secondly, let me repeat what the Prime Minister said: we will not be paying £1.7 billion on 1 December.

[Mr Speaker]

It was indeed an extremely ingenious question, as HMRC would not be the tax collector, but, understandably, that did not trouble the hon. Member for Kettering (Mr Hollobone) in any way.

[Mr Iain McKenzie (Inverclyde) (Lab)]

20. One in four children across the UK lives in poverty while this Government allow £34 billion in unpaid tax to go astray. Does the Minister not see an urgency in collecting that tax so that he can eliminate that disgraceful statistic?

[Mr Gauke]

Let us be clear: the tax gap is lower than it was under the previous Government and yield is higher. By international standards, the UK has one of the lowest tax gaps in the world. We have a good record, but we always seek to do more, which is why at the Budget and autumn statement we have always been able to bring forward measures to deal with tax avoidance and tax evasion, and that is a record with which we will continue.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

The Minister has failed to acknowledge that families struggling to make ends meet expect the Government to ensure that everyone pays their fair share, and yet the amount of uncollected tax has risen by £3 billion since he came to office. Is it not the truth that that is both deeply unfair to hard-working families and further evidence that this Government have totally failed to tackle tax avoidance?

[Mr Gauke]

No; we have brought forward 40 measures to reduce tax avoidance, reduced the tax gap as a proportion of tax receipts, and increased by £7 billion the yield brought in by HMRC. The truth is that it is this Government who have acted in this area, and the record of the previous Government does not bear comparison.

[Stephen Hammond (Wimbledon) (Con)]

5. What progress he has made on his fiscal consolidation plans.

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[Mark Hunter (Cheadle) (LD)]

7. What recent steps he has taken to reduce tax avoidance.

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

The Government have taken a wide range of actions to tackle tax avoidance over the Parliament, including introducing the UK’s first ever general anti-abuse rule. This year’s Finance Act introduced a tougher monitoring regime and penalties for promoters of high-risk tax avoidance schemes. We have also given HMRC the power to collect disputed tax bills up front. That removes the incentive for tax avoiders to delay and frustrate HMRC’s efforts to settle disputes and brings forward £4.3 billion in revenues.

[Mark Hunter]

I am aware that, as a result of measures taken by the coalition Government to crack down on tax avoidance, a record £24 billion in additional tax revenue was raised in the last financial year. Does my hon. Friend agree that much more remains to be done to make sure that multinationals such as Starbucks and Google pay their fair share?

[Mr Gauke]

My hon. Friend is right to highlight the record yield for the last financial year. Indeed, there are reasons to believe that that record may well be broken for this financial year. As for multinationals, I do not want to be drawn on individual companies, but it is right to say that we need to work internationally, as I mentioned earlier, through the OECD base erosion and profit shifting process. As my right hon. Friend the Chancellor made clear at the Conservative party conference, we are looking to take further action in respect of multinationals not paying the tax that they should.

[Mr Frank Roy (Motherwell and Wishaw) (Lab)]

The Chancellor has said that the Swiss tax deal will raise £5 billion by next year. How much has been raised so far?

[Mr Gauke]

We have already got in about £800 million, and we will get more, but that is money that we would not otherwise have received. That is a deal worth doing. It is worth pointing out that some people said that if we had not had this deal with the Swiss—which has brought in additional revenue—we would not have been able to make progress on automatic exchange of information, whereas the reality is that just last week the Chancellor signed a deal on behalf of this country that made progress on that.

[Charlie Elphicke (Dover) (Con)]

Does my hon. Friend the Minister agree that under the previous Government the tax gap grew and that all the running in this Parliament on ensuring that businesses pay their fair share of tax and cracking down on tax dodgers has come from our side of the House, and that this Government have made the case internationally as well?

[Mr Gauke]

The tax gap as a proportion of tax receipts was higher under the previous Government than for every year under this Government. We have introduced about 40 measures to close loopholes, one of which, on disguised remuneration, let us not forget the Labour party opposed.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Given the Government’s commitment to clamping down on tax avoidance, can the Minister give us a prediction or a commentary on the yield he expects next year as a result?

[Mr Gauke]

As we heard earlier, the yield for 2013-14 was £24 billion. HMRC anticipates that that will be broken and that the yield will be higher for this financial year—the details are to come, but that is encouraging. On the tax gap, the small increase is largely due to the VAT tax gap being higher in 2012-13 than the previous year, but we already know that for 2013-14 it will fall.

[John Pugh (Southport) (LD)]

8. What recent steps he has taken to rebalance regional economies.

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[Derek Twigg (Halton) (Lab)]

15. What recent comparative assessment he has made of growth in average earnings and the rate of inflation since May 2010.

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

Inflation is at 1.2%—lower than at any point since 2009. We appreciate that times have been tough for families in recent years, but as the Institute for Fiscal Studies has said, that is

“a direct but delayed result of the 2008 recession”.

Since May 2010, this Government have taken decisive action to support families. We have increased the personal allowance, frozen fuel duty and council tax, and cut energy bills. In the past year, unemployment has fallen at the fastest rate since records began, and the proportion of workless households is lower than it ever was under the previous Government.

[Derek Twigg]

For how many months under this Government have wages risen faster than prices?

[Mr Gauke]

We have gone through a difficult period, but, as I said, that is

“a direct but delayed result of the 2008 recession”.

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

16. What assessment he has made of recent trends in the level of employment.

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

The Taxation of Pensions Bill that is currently before the House will reduce tax rates that previously applied if people wanted to withdraw money from their pension flexibly. It will also reduce the 55% tax rate on pension assets when someone dies. These tax cuts will leave people with more of their own money and more choice about how to spend it.

[Stephen Metcalfe]

These measures clearly show that we are the party on the side of those who do the right thing, work hard, and save. Does my hon. Friend agree that Labour would adversely affect those people through its new pensions tax plan?

[Mr Gauke]

My hon. Friend raises an important point. We often heard Labour Members say that they were going to oppose a tax cut for hedge funds. It turned out that it was not a tax cut for hedge funds but a tax cut that benefits pension funds, yet they want to reverse it.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

While the Minister is talking about cutting tax on pensions, will he spare a thought for the 4,000 members of the British Midland International pension scheme who lost considerable sums of pension entitlement when their airline was taken over? Lufthansa offered them substantial compensation, but Her Majesty’s Revenue and Customs is now insisting on taxing it. What is he doing about that?

[Mr Gauke]

I am grateful for the hon. Gentleman’s question and I have met a couple of hon. Members to discuss the issue. Her Majesty’s Revenue and Customs needs to apply the law as it currently stands, but that does not give it a great deal of discretion. This is a complicated matter and I am more than happy to set out details in writing for the hon. Gentleman.

[Mark Menzies (Fylde) (Con)]

Given the significant number of pensioners in my Fylde constituency, may I welcome the sweeping reforms announced by the Chancellor earlier this year? What plans will be put in place to make sure that those pensioners who access their own money get sound advice?

[Mr Gauke]

As my hon. Friend will be aware, we have set out our plans for a guidance guarantee. My right hon. Friend the Chancellor has announced that we are working with Citizens Advice in particular to provide a face-to-face service. Good progress is being made, so that service will be available in good time for next April.

[Mr Dennis Skinner (Bolsover) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

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[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.

[Several hon. Members]

rose—