Universal Credit Roll-out

Debate between David Gauke and Caroline Lucas

Wednesday 18th October 2017 Commons Chamber

[Mr Gauke]

I have given way numerous time already, probably a multiple of the number of times the shadow Secretary of State gave way. I do not want the House to miss this point: universal credit represents a generation-changing culture shift in how welfare is delivered and how people are helped, creating a system that allows people to break free from dependency, take control of their lives and move into work. Our analysis shows that 250,000 more people will be in employment as a result of universal credit when it is fully rolled out. Universal credit is picking up from a deeply flawed system and striving to solve problems that were previously thought unsolvable.

[Caroline Lucas (Brighton, Pavilion) (Green)]

If the Secretary of State’s intention really is not to cause hardship and distress, why will he not get rid of that automatic six-week wait? Many people still do not know about it. Many do not know to go to their MP to seek solutions. Get rid of it. What he is talking about is a loan, which has to be paid back over six months and which many people are not eligible for. The point is that the way the system is designed is making people fall into hardship, and it is deliberate. It is not an accident. It is absolutely an integral part of the design. Change it.

[Mr Gauke]

I will come back to the six-week period.

We have to remember that we have inherited an old system, in which complexity and bureaucracy often served to stifle the independence, limit the choices and constrain the outlook of its claimants. The disincentives in the legacy system to work or earn more have been removed, along with the complex hours rules and cliff edges.

HMRC and Google (Settlement)

Debate between David Gauke and Caroline Lucas

Monday 25th January 2016 Commons Chamber

[Mr Gauke]

The point I would make is that this is a highly complex area, but there is a need for international co-operation in it, which is why we instigated the OECD looking at this as part of the BEPS process. That process has come forward with a number of recommendations. We have already legislated for two of those recommendations. There is a third that we are specifically looking at and consulting upon in terms of interest deductibility. It is right that we bring the international tax system up to date to reflect the way multinational companies are working. This has been left for too long; we are taking action.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the Minister recognise that people’s anger is very legitimate and even more justifiable given that Google is effectively freeriding on publicly funded infrastructure, not least the £1.2 billion the Government have invested in superfast broadband, and may I urge him again to make sure these calculations are put in the public domain so people can see how the figures are arrived at?

[Mr Gauke]

We will see if the National Audit Office wishes to look at this particular area, but again I point to the fact that previously when people have made allegations about particular arrangements, it has turned out on closer inspection that that has not turned out to be true.

Finance Bill

Debate between David Gauke and Caroline Lucas

Tuesday 21st July 2015 Commons Chamber

[Mr Gauke]

There is no disagreement over the need for a contribution from the banking sector towards the public purse. We have concluded that the better way to make that contribution is through a corporation tax surcharge, and that is what we are introducing. There was also a particular argument in 2010 about trying to influence behaviour, but, to some extent, that has now been addressed by a new regulatory regime. I agree that there is a need for a contribution. What we have here is a new surcharge on the banking sector, which performs precisely that task.

Britain’s insurance premium tax is also well below rates in many other countries, such as Germany, so this Bill proposes an increase to 9.5%. but that applies to only one fifth of all premiums. The Government are also committed to meeting their climate change objectives in a cost-effective way. Over the next five years, the climate change levy exemption for renewable energy is due to cost £4 billion, one third of which would subsidise overseas projects that bring no benefit to the UK. This Finance Bill therefore takes urgent action to stabilise CCL revenue.

Finally, to make the tax system fairer, the Bill restricts the amount of tax relief landlords can claim on property finance costs to the basic rate of income tax. That will ensure that landlords with the largest incomes no longer receive the most generous tax treatment. We are tackling tax avoidance by wealthy individuals and corporates, addressing imbalances in the tax system and taking bold steps to ensure that it remains fair.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The hon. Gentleman made a point a moment ago about the removal of the climate change levy for green energy. Does he recognise that that measure, by being retrospective and incredibly disproportionate to the ends he is trying to achieve, will seriously disrupt the green energy sector? The sector is already massively concerned about that. He talks about the importance of cost-effective measures to reaching green energy outcomes. Onshore wind is one of the most cost-effective energies out there, but his measures are undermining it.

[Mr Gauke]

I do not accept that point. Removing this exemption will achieve better value for money in the Government’s support for low-carbon generation by targeting support directly at generators and preventing UK taxpayers from subsidising overseas renewable projects that bring no benefit to the UK. That was the weakness; that was the failure of the existing regime, and it is right that we address it.

I now wish to deal with productivity. As my right hon. friend the Chancellor set out in the recent Budget, the rate of UK productivity has been a historical problem. It is vital to increase our productivity, because that is one of the fastest routes to creating jobs and raising the standard of living for everyone. Earlier this month, we published our productivity plan, setting out how we will tackle this long-term challenge. This Bill implements a number of measures taking this plan forward. A stable tax regime with competitive rates and strong investment incentives is essential to drive productivity forward. In the previous Parliament, the main rate of corporation tax was cut from 28% to 20% as a central part of the Government’s economic strategy. This Bill goes further, by cutting it to 19% in 2017 and 18% in 2020, saving businesses more than £6 billion by 2021 and giving the UK the lowest rate of corporation tax in the G20.

--- Later in debate ---

[Mr Gauke]

Our record on business rates is that we have consistently looked after the interests of small businesses: we have extended small business rate relief on numerous occasions; we have introduced the rebate for retail premises; and we have made a number of reforms to business rates to assist small businesses in particular, as well as capping increases in business rates. A review is ongoing and I am not going to make any announcement today, however nicely the hon. Gentleman asks me what its contents will be. It is ongoing and the consultation period has only relatively recently finished. We are keen to progress this and we have brought forward the timetable by which we will complete that review; we will have something by the end of the year.

Improving productivity also means prioritising investment in infrastructure. Our road network has suffered from decades of underinvestment. This Bill implements reforms to vehicle excise duty to support the creation of a roads fund. The reforms will ensure that VED still incentivises purchases of the cleanest cars, while putting revenues on a sustainable long-term footing.

[Caroline Lucas]

The Minister will not be surprised to hear that I completely disagree with him, but it is not just me, as the Society of Motor Manufacturers and Traders also says that this change to VED means that the take-up of low-emission vehicles will be disincentivised. How can that be a positive thing to do? He talks about productivity and in other places about the importance of air quality, but these measures, again, undermine both.

[Mr Gauke]

That is an unlikely alliance, but what I say to both the hon. Lady and the SMMT is that there is still an incentive in the first year and the evidence suggests that that is most important in influencing behaviour. There are incentives within the system.

Tax Credits (Working Families)

Debate between David Gauke and Caroline Lucas

Tuesday 7th July 2015 Commons Chamber

[Mr Gauke]

He did it very skilfully, but unsuccessfully, I fear. If we want to help small businesses, we need to put in place a pro-enterprise environment and if he wants to see a Government who have done that, he should look at the record of the Government over the past five years.

[Caroline Lucas]

The Minister is talking about borrowing, but does he recognise that further cuts to Government spending are leading to a rapid rise in household borrowing? Official forecasts project that household debt will surpass the record pre-crisis levels of 2008 before the end of the decade. Does he not recognise that that instability, which his policies are creating, is likely to lead to yet another financial crash as he is simply moving debt from the public sphere to the private sphere, and making it very unstable?

[Mr Gauke]

I do not accept that argument. On the question of the fear of further crises and so on, we need to ensure that the public finances are on a sound footing, recognising that there will be times at which there will be turbulence in the economy. This is one of the differences we had at the general election. The Government recognise that we have to be serious about getting debt down, which is why we believe that there should be a surplus in normal years. If the Opposition are coming to that view, I welcome it, but their refusal to consider a role for the welfare budget in making a contribution towards reducing the deficit suggests that their heart is not in it.

Fair Tax Mark

Debate between David Gauke and Caroline Lucas

Tuesday 18th March 2014 Westminster Hall

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

It is a great pleasure to serve under your chairmanship this morning, Mr Howarth. I congratulate the hon. Member for Brighton, Pavilion (Caroline Lucas) on securing the debate. As she said, she has a long-standing interest in the issue of tax transparency. She set out her case clearly, and I welcome her contribution. Before I speak about the fair tax mark, I will provide some context about wider Government policy on tax levels and tax avoidance.

A key priority for the Government is to ensure that the UK boasts a competitive and fair tax system so businesses can flourish, but we also want to stamp down on avoidance. We have reduced the main rate of corporation tax from 28% to 21% from next month, and it will go down to 20% next year. We have introduced a single rate for all companies, small and large, and the lowest corporation tax rate of any G8 company and the joint lowest rate in the G20. We have introduced the patent box; the seed enterprise investment scheme, which helps new businesses starting up in the UK with equity finance; and substantial new tax reliefs aimed at the creative and high-tech industries. Taken together, those steps encourage businesses to invest, innovate and create employment in the UK.

We want to offer competitive tax rates to ensure that companies locate jobs, invest and expand in the United Kingdom, but we are also determined to deal with tax evasion and contrived tax avoidance schemes, so individuals or businesses are not able to gain an unfair advantage. It is sometimes argued that the objectives of ensuring competitiveness and dealing with avoidance and evasion are contradictory. I do not accept that. I believe that it is possible to create a tax system that is attractive to businesses, ensures that tax law is not exploited in ways that Parliament does not want and is properly enforced. To that end, the Government are investing almost £1 billion in Her Majesty’s Revenue and Customs in this Parliament to clamp down on avoidance and evasion. We are also giving HMRC new legal powers to tackle tax evaders and the promoters and users of tax avoidance schemes. The amount of money that HMRC obtains from taxpayers as a consequence of the actions it has taken has increased to record levels and is substantially higher than the levels we inherited in 2010. We have made great progress in dealing with tax avoidance and evasion.

It is not surprising that, as the hon. Lady said, public concern and interest in this issue has never been so strong. We are addressing the challenges of our large deficit, and bringing it down requires tough decisions. The public rightly expect the Government to be vigilant and ensure that everybody pays the share of tax that is required under law and that nobody abuses the system that is designed to ensure that everybody makes a fair contribution.

As the hon. Lady said, it is right to say that the issue of tax—corporation tax, in particular—should not be looked at solely as a domestic issue. There is international concern about tax transparency, and we are working closely with our international partners. Our goal is simple: we want to reform the international tax system so companies pay the tax that is due where it is due. It is right and fair that they pay tax in the jurisdiction in which their economic activity occurs. Last year, the United Kingdom used our presidency of the G8 to focus on improving transparency by proposing a new tool to require multinationals to report to tax authorities on where they make their profits and pay their taxes around the world. We also proposed a tool for securing more extensive information exchanges to tackle tax havens and pierce through the corporate veil. On top of that, the Prime Minister announced last autumn that the Government will establish a publicly accessible registry of company beneficial ownership.

Transparency is vital to tackle a range of illicit finance threats and to discourage tax evasion by removing the secrecy that enables businesses and some individuals to hide information from HMRC. As the Prime Minister said,

“We need to know who really owns and controls our companies.”

Therefore, the hon. Lady is right to raise the issue of transparency.

[Caroline Lucas]

I am grateful to the Minister for his full answer, but will he focus on the EU accounting directive? He said that the Government want greater transparency, and he implied that they are in favour of country-by-country reporting, which is positive. However, the message we are hearing is that the UK has not supported the EU accounting directive.

[Mr Gauke]

I will make three points. First, the UK believes that there is a need for greater transparency. There have been discussions about that issue in the G8, in particular about the UK Government’s proposal that companies should provide information about where their activity takes place and where they pay tax.

I will not digress for long on this point, Mr Howarth, but a year or so ago I had a meeting at Euston tower with the HMRC officials who deal with transfer pricing matters. They said it would help them to have a relatively simple form to provide information about the companies into which they enquire so they know where those companies make their profits and where they pay tax. The officials said it would help them to have high-level information that could tell them, for example, that a high proportion of profits were being transferred to a low-tax jurisdiction. They said that type of information would enable them to assess risks and determine where to put their resources. That conversation and others resulted in our proposal for the high-level tool.

Secondly, we want to ensure that we have the information that can help HMRC to make risk assessments and know where to focus its efforts. However, we want to do so without in any way compromising our desire not to impose unnecessary burdens on businesses and not to create a whole lot of bureaucracy that does not necessarily help tax authorities much.

The hon. Lady may not have much sympathy with our third point, but the long-standing position of the UK Government—under all parties—is that tax is principally a matter for member states. We have concerns about a tax measure being included in a non-tax directive, thereby undermining the competency of member states in direct tax matters.

I hope that I have provided some context for our thinking on the matter. Nevertheless, I want to underline the point that that does not diminish the fact that the UK is leading the way in ensuring that the right kind of information is provided to tax authorities to enable them to assess a company, how aggressive it is in its tax planning, how much it is putting into low-tax jurisdictions and how much it is putting into mainstream jurisdictions.

Let me turn to the subject of the debate, namely the fair tax mark, although I appreciate that we are having a wider discussion. I welcome any contribution that informs and progresses the debate about transparency and a better understanding of the taxes paid by companies. We welcome any business moving to improve the transparency of its own tax affairs. Indeed, as a Minister I have made the point for at least three years that companies must do more to explain the tax that they pay and some of the complexities of their situation, which can be lost in a febrile public debate. They must be much more open and transparent in explaining their arrangements, because it would be to the benefit of all companies if people understood such matters better. Often, companies’ silence leads to suspicion, whether well-founded or not.

The specific proposal for a fair tax mark is a new initiative—let us see how it works. I generally welcome anything that progresses the debate. If such an initiative is to work effectively, clear and objective criteria must be in place and must be applied fairly and objectively by informed and credible experts who are well respected by business and the wider public. There must also be a governance structure that addresses any concerns about conflicts of interest and ensures independence. If the fair tax mark can meet those tests, it will be a particularly valuable contribution to the debate.

Of course, HMRC’s role is different. It must collect the tax that is owed under the law, help businesses to understand their obligations and make them aware of reliefs to which they are entitled and, of course, pursue relentlessly the minority who bend or break the rules. HMRC is also leading the way in improving transparency by opening up its own processes to greater public scrutiny, both to restore public confidence and to demonstrate to the public that it does not settle disputes with any taxpayers otherwise than in accordance with the law. We welcome efforts by businesses to improve the transparency of their affairs, and I see the fair tax mark as part of that debate.

As time permits, I would like to say a little about country-by-country reporting. The hon. Lady pointed out that the international base erosion and profit shifting process—the BEPS project—is under way. I very much welcome the development of a standardised country-by-country reporting template, a proposal that the UK initiated under our G8 presidency last year. The template will help tax administrations with their risk assessment, provided that it is focused on useful information that will show, at a high level, where businesses are making their profits and paying their taxes around the world. That will give tax authorities, including those of developing countries, a new tool to help them to identify and assess risks efficiently. I would emphasise that, although the UK supports the OECD’s work on the template, we remain mindful of the need to balance that against the need not to disproportionately increase the compliance burden on business.

[Caroline Lucas]

I am grateful to the Minister for giving way—he is being very generous. I feel that there is a gap between the strong words of welcome he gives to the idea of greater transparency and the actual actions he is prepared to see taken to follow them up. To return to the EU accounting directive for a moment, the issue is simply one of transparency. He says that the Government are not in favour of it because it brings tax matters under a non-tax regulation, but it is about transparency, which is cross-cutting.

Similarly, the Minister says, for example, that the Government would welcome contracts not being awarded to companies that aggressively avoid paying tax. Will he tell me about any concrete action that the Government are going to take to follow that up? We can either change EU laws or work with other countries to make it possible for that to be operational.

Tax Fairness

Debate between David Gauke and Caroline Lucas

Tuesday 12th March 2013 Commons Chamber

[Mr Gauke]

Let us be clear. One of the weaknesses in the tax system that we inherited was the fact that people were able to walk around the paying of stamp duty. On very valuable properties, it was all too easy for people to arrange their affairs thorough corporate vehicles and not pay stamp duty. In the last Budget this Government introduced measures that will deal with that enveloping and deal with one of the unfairnesses in our tax system. One of the ways in which we are going to do that, as well as a high stamp duty charge for properties held in corporate vehicles, is to bring in an annual residential property tax. That is focused only on properties worth more than £2 million held by a corporate vehicle. It would apply to only 6,000 properties, we estimate. It is a very narrowly focused policy that will enable us to deal with an area of avoidance that was allowed to carry on for far too long under Labour.

[Caroline Lucas]

As a tax that is much harder to evade or avoid, there is the land value tax. That is supported by one half of the coalition and by the OECD and the IMF. The IFS has said that the case for a land value tax is overwhelming because it is much fairer. Given that that is the case, can the Minister explain why his Government will not even do some basic research into it, as my private Member’s Bill requested?

[Mr Gauke]

We are left with the same issues of complexity of valuation across the board, and the issues of the asset-rich, cash poor. That is why my part of the coalition is not keen to proceed with that matter, but it is worth pointing out that we are raising more money from property. There is a stamp duty land tax of 7% on residential properties costing £2 million or more, a policy that is easy to administer and will not impact on existing home owners.

On the mansion tax, we have made no secret of the fact that the two parties disagree. If we did not disagree on some things, we would be one party, not two. But in the circumstances that we are in, it has been perfectly possible for two parties to work together in a sensible and mature way and to reach agreement on a host of measures that have made our tax system fairer, easier to understand and competitive. We heard much from the hon. Member for Nottingham East to the effect that we should do more to help low-income workers. May I just remind him and the House of the progress that we have made in raising the personal allowance? In 2010, someone on £6,500 was paying income tax at 20%. From next month, someone has to earn £9,440 before paying any income tax at all. Our measures on the personal allowance have provided a huge tax cut for millions of people and will take more than 2.2 million of the lowest earners out of income tax altogether. In fact, over the course of this Parliament, someone working full time on the national minimum wage will have seen their income tax bill cut in half.

Let us contrast our record with that of our predecessors. Let us remember that when the right hon. and absent Member for Kirkcaldy and Cowdenbeath (Mr Brown) did his last Budget, rather than cut taxes for the working poor, he increased them. People talk about the scrapping of the 10p rate, but Labour did not scrap it, they doubled it. They turned it into a 20p rate. For example, someone earning £9,000 a year in 2007 would have heard a Labour Chancellor stand up and announce that a Labour Government were going to increase their income tax bill by more than £200. Last year, someone on £9,000 a year would have heard a Conservative Chancellor stand up and announce that a coalition Government were going to take them out of income tax altogether. Our constituents on £9,000 a year will soon be paying no income tax at all, saving more than £500 since the coalition came to power. Labour turned a 10p rate of income tax into a 20p rate. This coalition has turned a 20p rate into a 0p rate.

Finance (No. 4) Bill

Debate between David Gauke and Caroline Lucas

Thursday 19th April 2012 Commons Chamber

[Mr Gauke]

The only benefit received by those in the top 10% of earners, which includes all of us, is child benefit, if they have children. That is the only benefit that we receive, so it is the only one that can be reduced or withdrawn. That is why we have this approach. It is perfectly fair that steps are taken to remove child benefit from those households that contain people in the top 10%.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Has the Minister heard of progressive taxation? That would be a concrete way of clawing back money from those who can afford it. The danger of the Government’s approach arises when everyone has a service and everyone stands up to defend it. As soon as one starts to chip away at it, it is undermined, and the poorest lose out most.

[Mr Gauke]

We do have progressive taxation, and under this Government the top 1% of earners pay 27.7% of all income tax at a higher rate than at any point in our history. While considering the universality of child benefit, what is being done was not our first choice, but given the position that we were left in it was necessary. When a Government need to raise revenue it makes sense to turn to a measure with a broad base where a significant number of recipients are not reliant on the additional payments they receive, and child benefit is just that sort of payment. That is why my right hon. Friend the Chancellor said that we would seek to withdraw child benefit from higher rate taxpayers. We always said that we would consider how to implement the measure, and we have been clear that a complicated new means test is not a sensible way forward. Instead, we should look to the existing systems and processes to ensure that we can achieve this goal.

Oral Answers to Questions

Debate between David Gauke and Caroline Lucas

Tuesday 21st June 2011 Commons Chamber

[Caroline Lucas (Brighton, Pavilion) (Green)]

The Chancellor will be aware of the recent Office for National Statistics finding that the regressive nature of VAT means that the UK tax system is doing almost nothing to prevent income inequality. In that context, will he pay particular attention to a Fawcett Society report, to be launched tomorrow, which shows that his fiscal policies, such as increasing VAT, cause particular harm to lone parents, 92% of whom are women?

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

May I also point out that our tax policies include taking hundreds of thousands of people out of income tax altogether? On the particular subject that the hon. Lady raises, of those taken out of income tax following the announcement in the Budget earlier this year, 56% will be women.