Finance Bill

Debate between David Gauke and David Rutley

Tuesday 28th June 2016 Commons Chamber

[David Rutley]

I am sorry that my hon. Friend is in so much pain when he stands up.

I am surprised by some of the things said in this debate. We all recognise the importance of enterprise and of encouraging further enterprise, particularly in the northern powerhouse, as the hon. Member for Salford and Eccles (Rebecca Long Bailey) recognised. We can achieve the aim of encouraging enterprise by using exactly the mechanism that my hon. Friend talks about. Does he agree that that is why the bodies he mentions have made this proposal? It will make a material difference to our enterprising spirit and economic growth.

[Mr Gauke]

My hon. Friend makes an excellent point. We must create wealth in this country to be a successful economy. We need to have an entrepreneurial and dynamic economy. He made this point earlier in the context of corporation tax, but similar arguments can be made in the context of CGT as well.

On the criticism that entrepreneurs relief is badly targeted, I argue that, of course, as with all tax reliefs, it is entirely appropriate that the Government keep it under review to ensure that it is well targeted and not open to abuse, but we believe that it is right to incentivise individuals to set up and expand their businesses. Entrepreneurs relief plays an important part in our pro-growth agenda. It is a highly popular and widely used relief, which supports about 40,000 entrepreneurs a year, according to our latest data. We do not believe that this support should be withdrawn. The latest published cost of entrepreneurs relief is £3 billion, but that is a static figure; the true cost will be different, due to potential changes in the disposals and behavioural change. That behavioural change is very important. On when the data for 2014-15 will be released, these statistics are published annually, and the new release is due in October 2016.

On rates going up and down, let me point out that the 28% higher rate of CGT was introduced in 2010, by the coalition Government, and this is the first change since then. The Government have published the “Business tax road map”, setting out plans for business taxes over the entire Parliament and providing some certainty and stability to businesses.

On the argument that employee shareholder status should be withdrawn, we believe that ESS provides vital flexibility for early-stage firms and that it is right that employee shareholders receive tax benefits on shares awarded in exchange for relinquishing certain employment rights. The purpose of the lifetime limit is to ensure that small firms can offer attractive tax benefits to employees, while ensuring that the benefits are proportionate and fair.

I hope that, with those remarks, I can seek to dissuade the Labour party from voting against the reductions in CGT and the SNP from pressing its amendment to a vote, but if I have been unsuccessful in persuading them not to do so, I urge my right hon. and hon. Friends not to support such measures.

Question put, That the clause stand part of the Bill.

Oral Answers to Questions

Debate between David Gauke and David Rutley

Tuesday 19th April 2016 Commons Chamber

[Mr Gauke]

We are providing more support to help the disabled get into employment, but let me just make this point to the hon. Gentleman, and to the House: the way this country is going to be prosperous and able to afford good public services and support for the most vulnerable is by having a strong, growing economy, and competitive business taxes help us to have that strong, growing economy.

[David Rutley (Macclesfield) (Con)]

Is my hon. Friend aware that the Federation of Small Businesses has said that the decision to further lower corporation tax to 17% is an important statement of intent and will provide a boost for the affected firms? Does he agree that that will help to further underpin the enterprising economy that we need?

[Mr Gauke]

I completely agree, and my hon. Friend is absolutely right to highlight the comments of the FSB. The reductions in corporation tax will help small businesses and large businesses, and they will help to drive a competitive and dynamic economy.

Budget Changes

Debate between David Gauke and David Rutley

Monday 21st March 2016 Commons Chamber

[Mr Gauke]

If the hon. Gentleman is worried about black holes in the public finances, he really ought to have a word with his own Front Benchers.

[David Rutley (Macclesfield) (Con)]

Does my hon. Friend agree that the Government’s positive track record of tackling unemployment and creating apprenticeships clearly demonstrates their commitment not only to enterprise but to improving life chances?

[Mr Gauke]

The Government’s record is that, again and again, we have taken steps to improve the life chances of the British people. It also helps, in the long term, the life chances of the British people to have public finances under control. Only a Conservative Government will deliver that.

Oral Answers to Questions

Debate between David Gauke and David Rutley

Tuesday 21st July 2015 Commons Chamber

[David Rutley (Macclesfield) (Con)]

7. What fiscal steps he is taking to support businesses.

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

In addition to the measures we took in the last Parliament, in the summer Budget we announced that we will: cut the main rate of corporation tax to 19% in 2017 and 18% in 2020; publish a business tax road map by April 2016, giving businesses the certainty they need to plan for long-term investment; support business investment by increasing the annual investment allowance from £25,000 to £200,000—its highest ever permanent level; and increase the employment allowance from £2,000 to £3,000.

[David Rutley]

The announcement that national insurance and corporation tax will both be further lowered will be welcome news for businesses in my constituency and across the country, as we take forward our long-term economic plan. The Labour party went into the election promising to increase tax on businesses. Does my hon. Friend agree that that is the wrong approach and that it is by lowering taxes that we best back businesses to create the jobs needed by our families?

[Mr Gauke]

First, may I express my sympathies to my hon. Friend’s constituents affected by the tragic incident in Bosley on Friday? I know he raised that matter in the House yesterday. I agree with him that if we want to improve investment in the UK, and therefore productivity, we should be looking to cut corporation tax, not raise it. It would have been a big mistake to have reversed the progress we have made.

Future Government Spending

Debate between David Gauke and David Rutley

Wednesday 4th March 2015 Commons Chamber

[Mr Gauke]

Let me give way to my hon. Friend.

[David Rutley (Macclesfield) (Con)]

One of the reasons the Opposition are focusing on the gun licence is that they have got it wrong on just about everything else. Will my hon. Friend remind us who said it was not possible to cut spending and create jobs?

[Mr Gauke]

I think the Leader of the Opposition might be the person in my hon. Friend’s mind. I think he was making predictions of 1 million more unemployed as a consequence of our policy.

Corporation Tax (Northern Ireland) Bill

Debate between David Gauke and David Rutley

Wednesday 4th March 2015 Commons Chamber

[Mr Gauke]

I beg to move, That the Bill be now read the Third time.

I would like to start by noting the immense amount of hard work done by my right hon. Friend the Secretary of State for Northern Ireland and, before her, my right hon. Friend the Member for North Shropshire (Mr Paterson) in getting this policy to where it is today. The parties of Northern Ireland are united in calling for this measure, saying that

“Securing the power to lower corporation tax is a key priority for the Executive to promote the growth of the local community.”

I welcome the ongoing co-operation of colleagues in the Northern Ireland Executive. I thank all hon. Members who have contributed constructively and positively to the scrutiny of the Bill, even if we have not managed to reach complete agreement this afternoon. We have now reached the final stage of this House’s consideration of the Corporation Tax (Northern Ireland) Bill. I have been pleased by the wide-ranging and informed debate we have had.

This measure will allow the Northern Ireland Executive and the Northern Ireland Assembly to set a different rate of corporation tax from the rest of the UK for most types of trading profits arising in Northern Ireland. The tax base, including reliefs and exemptions, will remain under the control of the UK Government. The earliest financial year for which Northern Ireland could have its own rate is 2017. This allows time for businesses and agents to become familiar with the new rules. The power will enable the Executive to encourage genuine investment that will create jobs and growth, meeting the shared goal of the UK Government and the Executive of rebalancing the Northern Ireland economy away from our dependence on the public sector.

I would like briefly to remind hon. Members of the aim of this policy and the key measures within the Bill. As my right hon. Friend the Chancellor said in the autumn statement:

“we recognise the strongly held arguments for devolving corporation tax-setting powers to Northern Ireland.”—[Official Report, 3 December 2014; Vol. 589, c. 314.]

These include: its land border with the very low corporation tax environment in the Republic of Ireland; the fact that Northern Ireland is more dependent on the public sector than most other parts of the UK—estimates of the extent of this dependence vary, but it is generally accepted that about 30% work in the public sector, compared with about 20% in the rest of the UK; the claimant count in Northern Ireland in October 2014 was 5.9% compared to 2.8% in the UK as a whole, and the unemployment rates are reducing more slowly than the rest of the UK; and economic prosperity—GVA per capita—is persistently some 20% below the UK average and has been for a number of decades. To a large degree, many of these issues are the legacy of the troubles.

Devolving corporation tax recognises these unique challenges. The Northern Ireland regime has been carefully designed to enable the Executive to encourage genuine investment that will create jobs and growth, while minimising opportunities for avoidance and profit shifting. It balances this with the need to keep the costs of a reduced rate proportionate, both for the Executive and in relation to any additional administrative burdens for businesses. The design of the regime builds on the principles agreed in 2012 by the joint ministerial working group, which included Ministers from the Treasury, the Northern Ireland Office and the Northern Ireland Executive. In essence, companies trading in Northern Ireland will attract a Northern Ireland rate on their qualifying trading profits but continue to pay the UK rate on profits from non-trading activities, which do not generate jobs or economic growth in the same way.

Similarly, the regime does not extend to financial trades such as lending, leasing and reinsurance, as they offer significant scope for profit shifting without the benefits of substantial new jobs. The regime does not provide opportunities for brass plating, but the policy recognises the genuine growth and employment potential for Northern Ireland offered by back-office operations. Companies with financial trades not covered by the Northern Ireland regime may make a one-off election in respect of profits, determined by mark-up, on the back-office functions of those trades to qualify for the Northern Ireland regime.

[David Rutley (Macclesfield) (Con)]

I thank my hon. Friend for his hard work in taking the Bill through the House. It is important for Northern Ireland and its unique circumstances, but does he agree that there will probably be lessons for the rest of the UK to learn from Northern Ireland about further reducing corporation tax to make our country even more competitive?

[Mr Gauke]

My hon. Friend raises an important point. We are in an era when countries are generally reducing corporation tax rates. In this Parliament, we have reduced our rate from 28% to 21% and are about to reduce it further to 20%, although some advocate that we reverse some of that progress. I also note that the Indian Government set out a plan at the weekend to reduce their corporation tax rates. Certainly, I think that the whole UK will be watching the experience in Northern Ireland very closely to see what economic benefits arise as a consequence of a reduced rate.

Tax Avoidance (HSBC)

Debate between David Gauke and David Rutley

Monday 9th February 2015 Commons Chamber

[Mr Gauke]

I have to say to the hon. Gentleman that that is pretty desperate. He says we have not dealt with tax avoidance and tax evasion. Look at the record. Look at the way the yield has increased. Look at the rules that have been changed. Look at HMRC’s additional powers. Look at the culture change we are seeing in this country, in terms of tax evasion and tax avoidance. I just regret that 10 years ago there was such a lax attitude to these things. The Government of the time have to accept some responsibility for that.

[David Rutley (Macclesfield) (Con)]

Does my hon. Friend agree that the failure of the previous Government to act on this matter fits with a pattern of inactivity on the deficit, on banking regulation and, again, on tax avoidance?

[Mr Gauke]

I think that is right. I suspect that the reason why the previous Government had a lack of grip and focus on tax evasion and tax avoidance was that there was simply the view that the public finances were going to be fine whatever, and that they did not really need the money and did not need to strain in this area. That is why there was a lack of progress. I am pleased that we are making that progress now.

Oral Answers to Questions

Debate between David Gauke and David Rutley

Tuesday 6th November 2012 Commons Chamber

[Mr Gauke]

The cost of implementation of the child benefit policy will be £100 million over five years, but it will bring in £1.7 billion in the first year. I should also point out that the likelihood is that the number of people in self-assessment next year will be no higher than the number in self-assessment last year.

[David Rutley (Macclesfield) (Con)]

Will my hon. Friend tell the House what steps he is taking better to support small and medium-sized enterprises through the tax system?

[Mr Gauke]

We have taken a number of measures, including reducing the small profits rate from 22%, which it would have been, to 20%. We have also introduced measures such as seed enterprise investment schemes and small business rate relief. We have taken such measures because we recognise that small businesses will be an engine for growth for our economy and in employment.

Budget Leak Inquiry

Debate between David Gauke and David Rutley

Thursday 22nd March 2012 Commons Chamber

[David Rutley (Macclesfield) (Con)]

Does my hon. Friend agree that it is a bit rich to be asking this question today—[Hon. Members: “A bit rich!”] Does he agree that it is more than unfortunate to ask the question today, when articles such as the one I have with me, from The Guardian on 11 March 2008, state:

“Alastair Darling is set to deliver his first budget to the House of Commons tomorrow…but in reality, much of it has already been trailed”?

[Mr Gauke]

Some things are not entirely new. The Labour party really does have to think back to its time in government and to the behaviour undertaken then. What is remarkable is that Opposition Members managed to brief some of their announcements, given that most were decided only at the very last minute.

PAYE Contributions

Debate between David Gauke and David Rutley

Wednesday 8th September 2010 Commons Chamber

[Mr Gauke]

On the last point, yes, interest is applicable and a statutory duty. We are not in a position to assess the costs to HMRC. It is worth putting the matter in perspective by saying that most people have had their tax calculated accurately through the PAYE system, and that more will receive repayments than will have to pay extra. People should wait until they receive their letters. It is worth pointing out also that the problem of underpayments has existed in previous years, and many hundreds of thousands of people have had to repay tax through the PAYE system, so the phenomenon is not entirely new, although the scale is somewhat greater now.

[David Rutley (Macclesfield) (Con)]

Have the appropriate risk assessments been undertaken of other key HMRC systems that were set up under the previous Labour Government to ensure that we do not have to clean up other messes such as this in future?

Oral Answers to Questions

Debate between David Gauke and David Rutley

Tuesday 13th July 2010 Commons Chamber

[David Rutley (Macclesfield) (Con)]

6. What representations he has received from employers in the north-west on relief from national insurance contributions for new businesses; and if he will make a statement.

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

The holiday on national insurance contributions will support enterprise and private sector job creation. Representations from employers have been supportive of reducing taxes on jobs, and 400,000 new businesses are expected to benefit from the holiday on employer national insurance contributions, including about 70,000 in the north-west.

[David Rutley]

It is clear that this important Budget proposal will help to generate much-needed jobs for small businesses. Does my hon. Friend agree that this is a much better way of supporting job creation in places such as Macclesfield and the north-west, and in other regions, than relying on the public sector, as the Labour party did?

[Mr Gauke]

My hon. Friend is right. We cannot rely on the public sector for growth, simply because we have run out of money.