Civil Liability Bill [Lords]

Debate between David Gauke and Chris Philp

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 4th September 2018 Commons Chamber

[Sir Edward Davey (Kingston and Surbiton) (LD)]

rose—

[Chris Philp (Croydon South) (Con)]

rose—

[Mr Gauke]

I will give way, and then I am keen to make progress.

[Mr Gauke]

If the right hon. Gentleman will forgive me, we will be coming forward very shortly with those amendments. He will not have to wait long to see the details of the amendments. He will see that we are striking the right balance in ensuring that insurance companies can be properly held to account and that we are not placing unnecessary and expensive burdens that ultimately get paid by policyholders. He will see that we are taking this issue forward.

[Chris Philp]

I thank the Secretary of State for giving way. On this point about cost savings being passed on, does he take further comfort from the following two things? First, with no fewer than 94 car insurance companies operating in the UK, it is an intensely competitive market; and, secondly, in the two years after the reforms in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 were introduced, car insurance premiums dropped by £50, suggesting that, in that case, the savings were passed on.

--- Later in debate ---

[Mr Gauke]

My hon. Friend is right to raise both points. I come back to the fact that the CMA looked at this area and concluded that this is a competitive one. The history suggests that these benefits are passed on, but we are strengthening the Bill and will bring forward amendments very shortly that will enable us all to hold those insurance companies to account.

Many claims involving road traffic accidents will, of course, be genuine. It is absolutely right that they are compensated appropriately. Our reforms are focused on ensuring that genuine claimants have access to justice, receive a proportionate amount of compensation and that the system works for all who use it honestly. However, with major improvements in motoring safety in recent years, including the increased use of integrated seat and head restraints, it would be remiss of the Government not to ask what is going wrong. The reality is that some of these claims are not genuine. In 2017, the insurance industry identified almost 70,000 motor insurance claims that it considered to be fraudulent. As the learned Lord Hope of Craighead noted in the other place, it is necessary to do something to try to minimise the abuse that has given rise to such a large and disproportionate number of claims. The knock-on effect of all these claims is increased insurance premiums, particularly for young people and the elderly. As Members across the House will know, for many people, owning a car is not a luxury, but a necessity. That is especially true of those in rural communities, but it does affect all our constituents. That is why we have pledged in our manifesto to tackle these costs. Taken together, the whiplash measures proposed by the Government could result in savings of around £1.1 billion a year.

Around 85% of the UK motor and liability insurance market have publicly committed to pass on those savings to consumers. The Government intend to hold insurance companies to account by bringing forward an amendment, as I have said, to introduce an effective means for reporting on both the savings made and how they are passed on.

The purpose of our reforms is to compensate the genuinely injured and to improve the system for all by reducing the number and cost of whiplash claims and deterring fraudulent and unmeritorious claims. The measures in the Bill will do that by introducing a ban on settling whiplash claims without medical evidence. That will discourage fraud and incentivise insurers to investigate claims and provide reassurance to claimants that they are being compensated for the true extent of their injuries.

[Chris Philp]

I thank the Secretary of State for giving way so generously. Could he confirm to the House that these medical examinations prior to an offer will have to be face to face?

[Mr Gauke]

They will be face-to-face medical examinations, which I believe will provide the degree of robustness in the system that we need.

The Bill will also provide for a new fixed tariff of compensation for pain, suffering and loss of amenity for whiplash claims. The high number of whiplash claims and compensation levels that we are seeing justifies that tariff being set by the Lord Chancellor. We want fair and proportionate compensation. Its cost should not be unfair to the motorists. We will provide some important flexibilities on how the tariff operates to make sure that it remains fair and adaptable where necessary to exceptional circumstances, inflation and changes in the claims market.

Parole Board: Transparency and Victim Support

Debate between David Gauke and Chris Philp

Friday 19th January 2018 Commons Chamber

[Mr Gauke]

Yes, clearly the direction we are moving in is towards greater transparency. There are some details that we need to master and fully understand, but the direction of travel is clear.

[Chris Philp (Croydon South) (Con)]

I welcome the extended review that the Justice Secretary announced. Will he confirm to the House that it will include a very detailed assessment of the decision-making processes that the Parole Board goes through, particularly in reference to expert reports from, for example, Dr Jackie Craissati in this case, that are at the heart of such decisions, in order to ensure that those experts are suitable to give the expert advice that they provide?

[Mr Gauke]

This is clearly going to be a broad review of how the Parole Board works, and the importance of particular expert evidence will be part of the process of considering how it operates.

Pensions

Debate between David Gauke and Chris Philp

Wednesday 19th July 2017 Commons Chamber

[Mr Gauke]

My hon. Friend puts it very well. It is a cause of celebration that life expectancy is improving, but along with changes in life expectancy, inevitably, there are changes in the state pension age, as the change announced today demonstrates.

[Chris Philp (Croydon South) (Con)]

Does the Secretary of State agree that thanks to the financial responsibility shown hitherto, we have managed in the past seven years to increase state pensions quite generously by £1,250 a year, and that is why pensioner poverty has gone down?

[Mr Gauke]

My hon. Friend is absolutely right. In order to do that, we need to take responsible decisions on the public finances as a whole, including on the state pension age. That is what we will continue to do, even if we will not get Labour’s support.

Budget Changes

Debate between David Gauke and Chris Philp

Monday 21st March 2016 Commons Chamber

[Chris Philp (Croydon South) (Con)]

Will the Financial Secretary confirm that spending on disability payments has increased by £2 billion over the past five years and will increase by a further £1 billion over the coming five years?

[Mr Gauke]

Actually, the figure is slightly more than that over the past five years. Disability spending has risen significantly under this Government, even though we inherited the largest deficit in our peacetime history.

Tax Avoidance and Multinational Companies

Debate between David Gauke and Chris Philp

Wednesday 3rd February 2016 Commons Chamber

[Mr Gauke]

I want to make a little progress, but let me give way to my hon. Friend the Member for Croydon South (Chris Philp).

[Chris Philp]

Does the Minister agree that the reason why this announcement is welcome is that we collected £130 million of tax from Google, while Labour collected nothing?

[Mr Gauke]

It certainly appears that next to nothing was collected in that case.

HMRC and Google (Settlement)

Debate between David Gauke and Chris Philp

Monday 25th January 2016 Commons Chamber

[Chris Philp (Croydon South) (Con)]

Thank you, Mr Speaker. Is the Financial Secretary to the Treasury familiar with the report from the Oxford University Centre for Business Taxation that was published a short time ago? It itemised 42 anti-tax-avoidance measures that the coalition Government put in place, including the general anti-avoidance provisions, the banking code of conduct and the diverted profit tax, which will raise an additional £34 billion between 2011 and 2020.

[Mr Gauke]

Yes, I am aware of that report and I am grateful to my hon. Friend for drawing the House’s attention to it.

Finance Bill (Fifth sitting)

Debate between David Gauke and Chris Philp

Thursday 15th October 2015 Public Bill Committees

[Mr Gauke]

I will respond to the remarks, not necessarily at length. The comments from the hon. Members for Kirkcaldy and Cowdenbeath and for Wolverhampton South West were pithy.

I shall deal straight away with the question of carried interest. Carried interest is a reward for a manager that is linked to the long-term performance and growth of the funds they manage. It is therefore capital in nature and should continue to be charged against capital gains tax. That has been the approach followed by Governments of both major parties for many years, and it is consistent with what happens in many other jurisdictions.

My hon. Friend the Member for Croydon South was right to say that capital gains tax was 18% when the Labour Government left office. If I remember correctly, it was possible for private equity managers to benefit from taper relief, so there was often an effective rate of 10% for many years under the Labour Government. There at least seems to be a consensus in the Committee that that was not the right approach. We believe we were right to take steps to change the capital gains tax rate, as we did at the beginning of the previous Parliament, but I would still argue that, as is the case in many jurisdictions, it is perfectly reasonable to treat carried interest as essentially a capital gain issue rather than an income issue. Of course, if any part of a manager’s rewards payments are properly regarded as income rather than capital, they should be charged to income tax. That is what drives the Government’s approach. We have launched a consultation to ensure that rewards that should be charged to income tax are always taxed in that way.

I will just pick up a couple of points made by the hon. Member for Kirkcaldy and Cowdenbeath. He is correct that national insurance is not chargeable on capital gains; it is payable only on earned income. However, it is not the case that entrepreneur’s relief can be accessed by investment managers, as the activity of the underlying fund is investing, not trading. Entrepreneur’s relief therefore does not apply in those circumstances.

If I were so inclined, I could quote extensive comments from the likes of Ed Balls, when he was a Treasury Minister, in support of the capital gains treatment of carried interest, and that was a period when the gap between income tax and capital gains tax was much greater, but I will spare the Committee that this morning. I am not sure that Ed Balls is a particular hero of the hon. Member for Wolverhampton South West, but our approach on carried interest is consistent with that of other countries and previous Governments.

We are determined to ensure that the rate at which private equity managers pay tax is never lower than their cleaners pay. That was the case under previous Governments, but it is not the case any more. Nor is it acceptable that what should be charged as income is in fact charged as capital gains. The Government have taken action on those points. I hope that provides reassurance to the Committee and I urge the hon. Member for Kirkcaldy and Cowdenbeath not to press new clause 2.

[Chris Philp]

May I add a further consideration? Given that, as the Minister said, most other countries treat carried interest as capital gain, if we adopted new clause 2 and started taxing it as income, there would be a significant risk that the population of fund managers in London would simply relocate elsewhere and the UK Exchequer would end up receiving less cash instead of more, thus increasing the tax burden on the rest of us.

[Mr Gauke]

My hon. Friend makes a good and important point. In thinking through the impact of the policy advocated by some Opposition Members, we need to understand the international implications and the implications for the UK’s competitiveness. Clearly, any assessment of the revenue effects would have to take account of what are likely to be significant behavioural responses. Claims of large revenue sums may be based on a static analysis, without an understanding that there is also a competitiveness point.