Oral Answers to Questions

Debate between David Gauke and Jim Shannon

Tuesday 9th July 2019 Commons Chamber

[Mr Gauke]

Family mediation offers a way to resolve child or financial arrangements without litigation, and child contact centres provide safe, neutral venues where separated couples can build sustainable long-term child arrangements. In reforming the legal process for divorce, we will look to strengthen how couples are signposted to such services. My right hon. Friend refers to counselling, a service for people whose relationships are in trouble. As well as using services such as Relate, many people draw on family, friends and others they can trust. A marriage is more likely to be saveable before the legal process of divorce has begun.

[Jim Shannon (Strangford) (DUP)]

Can the Minister outline what discussions have been held about offering support for counselling through charitable initiatives such as Relate to cut down waiting times from eight weeks? During that time many couples decide that their issues are irrevocable when in fact they might have been salvageable with help and support.

[Mr Gauke]

As I said earlier, there is a wider debate on this matter. I believe that the earlier such support can be provided, the better. When it comes to reform of divorce law, my argument is that by that stage it is often too late. In any event, the current requirement in our divorce law to attribute blame and fault makes it all the harder for marriages to be reconciled.

Oral Answers to Questions

Debate between David Gauke and Jim Shannon

Tuesday 10th July 2018 Commons Chamber

[Mr Gauke]

It is useful, but I want us to do more of it. The education and employment strategy seeks to expand the use of workplace release on temporary licence— ROTL—to get prisoners who have earned it and who have been properly risk assessed out of their cells and into real workplaces. That will enable prisoners to build trust and prove themselves with an employer. If people do ROTL, they are more likely to be employed, and if they are employed, they are less likely to reoffend.

[Jim Shannon]

I thank the Secretary of State for his response. Of the 4,221 prisoners who reoffended in Northern Ireland, over two fifths, 43.6%, reoffended within the first three months. Will the Minister outline whether any initiatives are specifically aimed at providing guidance in those all-important first three months?

[Mr Gauke]

The hon. Gentleman raises an important point. Whether through the probation service, through charities or in prisons, we need to ensure that offenders get support when they are released. A lot of that work can be done within prison, which is why the education and employment strategy is so important. We want people to be geared up to go into employment when they are released, because if they are employed, they are less likely to offend.

Oral Answers to Questions

Debate between David Gauke and Jim Shannon

Tuesday 24th April 2018 Commons Chamber

[Mr Gauke]

There is already a proper plan to address that point about staffing. That is why the numbers are going up, and that is the point I am setting out. The numbers are at a five-year high. We are ahead of what we promised in October 2016. I am pleased that we are doing that and we will continue to recruit new prison officers—net new prison officers—into the Prison Service.

[Jim Shannon (Strangford) (DUP)]

What additional training will these new officers be given to deal with the scourge of the availability of drugs in our prisons throughout the United Kingdom?

[Mr Gauke]

The hon. Gentleman makes an important point. We are refreshing the way that training works for prison officers. It is very important that we deal with the issue of drugs, which has been a real game-changer in its effect on prisons. As we change and refresh our training process, we need to ensure that new prison officers have the skills they need to deal with drugs.

Oral Answers to Questions

Debate between David Gauke and Jim Shannon

Tuesday 23rd January 2018 Commons Chamber

[Mr Gauke]

I thank my hon. Friend for his remarks. The safety of the public is the Parole Board’s overriding concern in considering whether a prisoner should be released, and that will be the Board’s concern when it comes to reviewing Pitchfork’s detention. I can confirm that the families of Pitchfork’s victims are receiving regular contact under the Probation Service Victim Contact Scheme. Specifically, they have been given the opportunity to submit a victim personal statement to the Parole Board and to make representations regarding licence conditions for any upcoming parole hearing.

[Jim Shannon (Strangford) (DUP)]

On the special protections in place for the release of sex offenders, does the Minister believe that releasing them to the same area that the attacks took place re-traumatises the victims and stirs up community anxiety?

[Mr Gauke]

Ultimately, these are operational decisions. A number of factors have to be taken into account in deciding what licensed conditions exist, but, clearly, the views and concerns of victims are an important part of that process.

Tax Credits (Working Families)

Debate between David Gauke and Jim Shannon

Tuesday 7th July 2015 Commons Chamber

[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.

[Jim Shannon (Strangford) (DUP)]

In 1998, tax credits were introduced for two reasons—low wages and the high cost of living. They enabled the proportion of children in poverty to be reduced from 35% to 19%. Barnardo’s in Northern Ireland has expressed concerns about welfare reforms, particularly to tax credits. It says that 160,000 families will find themselves in child poverty as a result. How would the Minister answer that and reassure Barnardo’s and me as an elected representative that that will not happen?

[Mr Gauke]

We need a fair and sustainable welfare system. Five years ago we inherited a welfare system that was not working for people throughout our country. Those who worked hard found more and more of their earnings being taken away to support a welfare system that was dangerously out of control. On tax credits alone, in 2010-11, nominal spending had increased by an extraordinary 180% compared with the benefits they replaced. Worse, the benefits system as it stood created the most perverse incentive of all: for some people it made financial sense to choose to live on benefits rather than earn a living. It rewarded doing the wrong thing, punished doing the right thing, alienated millions of hard-working people and let down millions more. It was financially and morally unsustainable.

Scotland Bill

Debate between David Gauke and Jim Shannon

Monday 29th June 2015 Commons Chamber

[Mr Gauke]

There are arguments and different views as to the economic impact of cutting APD. We are legislating to devolve this to Scotland, and I am sure the hon. Gentleman will be supporting this legislation. That move is also part of the Smith commission arrangements. It has potential knock-on effects for regional airports, particularly those close to the Scottish border. As I say, we are reviewing our options there and will report later in the summer.

[Jim Shannon (Strangford) (DUP)]

One advantage of the reduction in APD that we have been able to achieve in Northern Ireland is on the main flight between Belfast Aldergrove and New York city. That flight is well used, it has made Aldergrove’s position more powerful and it has connected the United States and Northern Ireland—I could say more. That is just an example from Northern Ireland, and the effect of one flight could be replicated across the whole United Kingdom.

[Mr Gauke]

Again, the hon. Gentleman is making a particular case. There are particular circumstances applying to that flight to the US, especially the competition that existed from the Republic of Ireland, which was why steps were taken on that point. As I say, we will be setting out options—

Tourism Industry and VAT

Debate between David Gauke and Jim Shannon

Tuesday 17th March 2015 Westminster Hall

[Mr Gauke]

The point that I am making is that the number of tourists in both countries has increased at largely the same rate, at a time when one of them has reduced VAT and the other has not. Of course, these matters can be somewhat complex and there are many factors to consider, and when it comes to tourism matters, and particularly matters affecting in-bound tourists, we should not forget the importance of the exchange rate. It is very significant and, of course, recently the exchange rate has gone in different directions.

[Jim Shannon]

Will the Minister give way?

[Mr Gauke]

I am conscious that, although we have a little bit of time left because of the earlier Division, I should make progress. However, I will give way to the hon. Gentleman.

[Jim Shannon]

If the Minister wants a comparison, he should compare the Republic of Ireland and Northern Ireland. Clearly, the number of visitors to the Republic of Ireland has grown enormously above the number visiting Northern Ireland. That is a clear example of the advantage of a reduced VAT rate. We could all take advantage of that if it happened across the whole of the United Kingdom, and particularly in Northern Ireland.

[Mr Gauke]

As I say, a comparison of the Republic of Ireland with the UK as a whole suggests that there is not a big difference. Indeed, I understand that there has been a pretty positive increase in the number of tourists to Northern Ireland specifically in recent years.

All hon. Members will be aware that this Government’s priority is to tackle our budget deficit decisively but fairly and to restore confidence in our economy. The Government have concluded that a VAT cut would not produce sufficient economic growth to outweigh the revenue shortfall. I have not seen any new conclusive evidence that has led me to revisit that conclusion. So at present the Government have no plans to introduce a VAT cut for this sector.

I reassure hon. Members that the Government recognise the importance of the tourism industry and we remain committed to a wide range of other measures to support the sector. For example, to date we have invested more than £129 million through VisitBritain and VisitEngland, to market great British holiday destinations at home and abroad. This has already leveraged significant private sector investment of more than £84 million. We have announced a £10 million tourism in the north fund in the next financial year. We have announced £2 million in the next financial year, to help promote our cities and regions overseas as part of the GREAT campaign, through VisitEngland.

The tourist industry has benefited from other policies introduced by this Government. I thank my hon. Friend the Member for Aberconwy (Guto Bebb) for making this point. For example, capping business rates and doubling business rates relief benefits the retail and hospitality sector by a considerable sum. Those sectors have benefited from the introduction of the employment allowance and will benefit from the abolition of employer's national insurance contributions for under-21s and for apprentices under 25.

Farmers Markets

Debate between David Gauke and Jim Shannon

Wednesday 5th March 2014 Commons Chamber

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

I congratulate the hon. Member for Birmingham, Northfield (Richard Burden) on securing this debate and putting his case so eloquently. I am sure he will appreciate that it is difficult for me to comment on the tax affairs of any specific community interest company, but I will do my best to provide answers on some of the general points that he has made.

It seems likely that the dormant status of the particular farmers markets in which the hon. Gentleman has expressed an interest has simply been subject to the usual periodic review that HMRC undertakes for all dormant companies. There has been no recent change of Government policy in respect of the taxation of CICs. As hon. Members may be aware, CICs were specifically designed to provide a legal framework and a brand identity for social enterprises that operate for the benefit of their community. As such, they provide an alternative to setting up a charity. Indeed, the major attraction of such companies is that they can be set up and operated in a manner significantly less regulated and more commercially focused than charities. The use of a CIC also ensures that the assets of the company are locked away for a public benefit purpose. Indeed, he touched on the differences between the regulation of charities and of CICs.

It is important to note that, unlike charities, CICs are not not-for-profit organisations. They do aim to make a profit, which can be distributed to the company’s owners or shareholders, or may be used to benefit the community. For that reason CICs are liable to corporation tax in the normal way. That is entirely consistent with the Government’s long-standing level playing field policy, whereby profits that arise from trading activity are subject to corporation tax, regardless of the nature of the entity undertaking the activity.

[Jim Shannon]

The thrust of what has been put forward for consideration relates to the difference between the taxes paid by a company and those paid by organisations such as the one that has been mentioned, which plough money back into the local community. Does the Minister not feel, as the hon. Member for Birmingham, Northfield (Richard Burden) and I do, that their situation is different? If the community is being regenerated, with opportunity and confidence created, is that not sufficient reason for doing away with the corporation tax because of the benefits that come to the community, which may lead to more jobs and other people paying tax?

[Mr Gauke]

Let me just elaborate on the point I was making and the reason we have a level playing field approach in this area. For example, a farmers market could operate in competition with other local businesses, and should not be given a competitive advantage over those other businesses purely by reason of being a CIC. A different regime is in place for charities, although one must bear in mind what applies in terms of trading there. CICs are under a different regulatory regime. They are, and have always been, chargeable to corporation tax on any trading profits, investment income or capital gains, but they are also able to take advantage of any corporation tax reliefs that are available.

HMRC treats some entities as dormant for corporation tax purposes when they are in fact active, but they must meet specific criteria to do so—for example, where a particular type of organisation has a corporation tax liability of £100 or lower. Rather than that being an exemption from the tax, this is an administrative issue based on a consideration of the costs that would be incurred through processing returns and collecting payments for such small amounts of tax.

As a general rule, a community interest company is unlikely to meet the specific criteria to be deemed to be dormant, but if the criteria were met, as appears to have been the case in the example given by the hon. Member for Birmingham, Northfield, HMRC would then review the matter periodically and decide whether to continue to treat the company as dormant or whether the company should start submitting tax returns. It should also be noted that the company itself is obliged to tell HMRC if its situation changes such that it is no longer within the criteria to be treated as dormant.

HMRC’s administrative discretion to depart from the strict statutory position is extremely limited. What we are talking about here, as far as I can tell, is essentially that a periodic review having been undertaken, an assessment was made that the farmers markets in question were liable to corporation tax. Although I accept the point that the great bulk of the tax gap that HMRC seeks to address will not be found from dealing with dormant companies or CICs, none the less it is appropriate that HMRC properly enforces the law, which we in Parliament have made, and ensures that companies or CICs are not treated as dormant when in fact they are not.

Tourism (VAT)

Debate between David Gauke and Jim Shannon

Tuesday 11th February 2014 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for South Down (Ms Ritchie) on securing the debate and putting her case so strongly and on the fact that the debate is so well attended. Her constituency is known as one of the most beautiful in the United Kingdom, but I appreciate the strong case made by several other hon. Members for their constituencies to be on that list. In the interest of time, I shall not attempt to comment on each of those areas, but I can reassure hon. Members that the Government appreciate the value and importance of the tourism sector. Ministers from the Treasury and the Department for Culture, Media and Sport have been working closely with the industry to increase inbound and domestic tourism.

VAT is governed by EU law, which strictly limits reliefs. However, as hon. Members have pointed out, VAT law allows member states to implement certain reduced rates of VAT, which are listed in annex III of the VAT directive, at the discretion of the member states. Two of the reliefs are

“accommodation provided in hotels and similar establishments, including the provision of holiday accommodation and the letting of places on camping or caravan sites;”

and restaurant and catering services, excluding alcoholic drinks. As several hon. Members have pointed out, when the list of optional reduced rates of VAT entered into force in 2006, the UK opted not to implement those two reliefs and has maintained that position since.

Several other member states have chosen to implement a reduced rate of VAT on tourism, but the Government have yet to find any evidence of a causal link between VAT rates and tourism activity. Comparisons with other countries tend not to take into account the significant VAT reliefs that the UK provides for cultural attractions and public transport, or the other tourist taxes that other member states choose to levy. In addition to the sector-specific reliefs, the UK’s VAT registration threshold is the highest in the EU. Therefore, many tourist attractions do not have to charge any VAT to their customers. It is interesting to note that France, which is often the country quoted as reducing the rate and reaping the rewards, put its VAT rate on restaurant services up from 7% to 10% in January. Also, many businesses in the tourism sector are small businesses and will benefit from the £2,000 cut in national insurance contributions—the employment allowance—that will come into effect in April.

As I mentioned, Treasury and DCMS Ministers have discussed the Cut Tourism VAT campaign, and I have met campaigners and engaged in correspondence with them about the report mentioned by the hon. Member for South Down, among other things. The campaign’s analysis assumes that the revenue shortfall associated with a VAT cut should be met by increasing Government borrowing, but the latest figures from the Office for National Statistics suggest that reducing VAT to 5% for all catering services provided by restaurants, pubs, cafes and canteens would cost the Exchequer between £9 billion and £10 billion a year. Cutting VAT to 5% for accommodation would cost the Exchequer an estimated £2 billion a year. I do not have to remind hon. Members that those costs would have to be met by increasing other taxes, which would be likely to affect growth and jobs adversely elsewhere in the economy, by reducing spending or by increases in borrowing. That would be contrary to the Government’s long-term economic plan and risk raising interest rates, undermining the recovery and adversely affecting families and small businesses.

[Jim Shannon]

Many hon. Members spoke in the debate about the jobs that could be created; the figure for Northern Ireland was almost 15,000. Those jobs would result in taxes being paid and people coming off benefits. What weight has the Minister given to that part of the equation, in the figures he has just outlined?

[Mr Gauke]

I reiterate that funding the cut by additional borrowing would be contrary to our long-term economic plan to get the deficit down and put our public finances in a credible position. It would entail a risk to the recovery. As all hon. Members know, the Government’s priority is to tackle the record budget deficit decisively but fairly and to restore confidence in the economy and support the economic recovery. The conclusion that we reached, therefore, which I announced in Parliament last year, is that a VAT cut would not produce sufficient economic growth to outweigh the revenue shortfall. I have not seen any new evidence since then that has led me to revisit that conclusion, so, at present, the Government have no plans to introduce a VAT cut for the sector.

Annuities for Pensioners

Debate between David Gauke and Jim Shannon

Tuesday 7th January 2014 Westminster Hall

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

It is a great pleasure to serve under your chairmanship, Mr Dobbin. I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this debate and opening it so well. He brings to the matter his professional experience before entering the House, his experience as chairman of the all-party parliamentary group on pensions and his experience of discussing these matters in Gloucester pubs, all of which have helped our deliberations. I thank my hon. Friend the Member for Fareham (Mr Hoban), who served with such distinction as a Treasury Minister dealing with such matters for more than two years and made a substantial contribution to the Government’s achievements in the area. I also thank my hon. Friend the Member for Warrington South (David Mowat), who spoke with great passion and demonstrated his determination to ensure that consumers—our constituents—are served well by the annuities market.

It is a priority for all of us that the annuities market should work in consumers’ best interests. When people have saved hard for a pension, it is right that they should get the best out of their savings on retirement. The decision that people make about their savings on retirement can determine what income they receive for the rest of their lives. Undoubtedly, it is one of the most important financial decisions that a person can make. As we have heard, more than 400,000 people purchase annuities each year, and studies show that there can be more than a 30% difference in the incomes offered by providers, highlighting the importance of making the right decision.

The Government want to ensure that the annuities market works in favour of the consumer and that consumers can make well-informed decisions to secure the best rates and exert effective competitive pressure on the market. The Government have been working with industry and consumer groups to make effective changes in the market, including work carried out by the open market option review group, which has introduced a number of measures aimed at encouraging consumers to shop around on the open market when buying an annuity.

For example, as my hon. Friend the Member for Gloucester pointed out—as did my hon. Friend the Member for Fareham, who worked so hard on the matter—the Association of British Insurers has introduced a code of conduct for retirement choices, which came into effect on 1 March last year. The code is binding on all ABI members that sell annuities, covering almost all the market. In addition, tailored advice and tools have been developed by the Money Advice Service and the Pensions Advisory Service to help consumers understand their choices and promote the benefits of shopping around.

The ABI code has brought about an important change in how annuity providers communicate with their customers, a point raised by my hon. Friend the Member for Fareham and my hon. Friend the Member for South Derbyshire (Heather Wheeler). The removal of application forms from pre-retirement packs actively encourages consumers to engage with the important process of choosing their annuity type and provider, ensuring that they do not automatically settle for the default. Through requirements on providers to provide better information to retirees in their wake-up packs, and new and improved tools such as the Money Advice Service’s comparison tables and the Pensions Advisory Service’s online planners, we can ensure that consumers have the resources that they need to make informed decisions.

The ABI will evaluate the impact of its code in March this year, one year after its implementation. The OMO review group will also evaluate its wider package of measures and their effectiveness.

[Jim Shannon (Strangford) (DUP)]

I apologise for not being here in time, Mr Dobbin. My plane was an hour late, so I could not be here. I also apologise to the Minister and to the hon. Member for Gloucester (Richard Graham). I wanted to speak in this debate, but I did not have the chance. Does the Minister agree that the language used in the selling of annuities, especially to elderly people, must be such that they can understand what they are getting themselves into? I believe that they do not.

[Mr Gauke]

The hon. Gentleman raises an important point. It must be right that we should do all that we can to ensure as much transparency for consumers as possible. That includes a number of aspects, some of which I have mentioned. Let me go further.

The code and other measures will only be as successful as the outcomes that they prompt. We want clear evidence that more people are making active, better choices about their retirement income as a result of the changes. If we do not, we will not hesitate to consider further action. In addition to the ongoing work to help consumers make better choices, the FCA is currently conducting a thematic review of the annuities market and how well it is working to serve consumers’ interests, a pricing survey of all annuity providers and a comparison of the rates available to consumers through a range of distribution channels. The review will consider whether firms create barriers that can restrict consumers from shopping around, and what risks and potential for detriment those barriers may present for consumers. I look forward to the report’s initial findings, which will be published next month.

Although it is imperative that the annuity market works in the consumer’s interests as an effective option for retirement income, it is important to consider the retirement income market as a whole to ensure that consumers have income flexibility in retirement. To increase flexibility, the Government have removed both the default retirement age and the effective requirement to purchase an annuity by age 75. Whether they annuitise or not, individuals are permitted to take 25% of their accumulated pension savings as a tax-free lump sum before going on to secure an income with the remaining savings. To ensure that that income can best serve retirees’ needs, the Government have reformed the capped draw-down rules and raised the annual withdrawal limit from 100% to 120% of the value of an equivalent annuity. That can help to raise the retirement incomes of individuals in draw-down arrangements who may recently have experienced reductions in income due to wider economic conditions.

There is additional flexibility for those with a guaranteed income of at least £20,000 a year. With income already secured, they have the option of a flexible draw-down arrangement, in which they can withdraw any amount from their pension pot. Those coming to retirement will benefit from having more flexibility in deciding how to provide an income for themselves in retirement, and for those with small pension pots, the Government have taken steps to reform the trivial commutation pensions tax rules. An individual who is aged 60 or over with total pension savings of less than £18,000 can withdraw the entirety of their savings as a lump sum. The first 25% of that lump sum is normally tax-free, with the remainder taxable as income. In addition, small occupational pension pots under £2,000, and up to two small personal pension pots under £2,000, can be taken as a lump sum for those aged 60 or over, even when people have savings in excess of the aggregate limit. All those options add flexibility.

Having a decent retirement income is driven by two factors: saving enough for retirement through working life, and making good choices at retirement to secure a reliable and maintainable income throughout retirement. It is important to remember that the biggest determinant of how much income someone receives in retirement is how much they have saved during their working life. With the introduction of auto-enrolment, the Government have taken a huge step forward towards ensuring that consumers start to save for their retirement and carry on saving throughout their working life. Auto-enrolment is the most important pensions change for a century—around 6 million to 9 million people will make new savings and increase savings for their retirement. It is estimated that that will generate around £11 billion in extra pension saving by 2020, which will mean an extra £11 billion coming to the retirement income market within the next six years and a new wave of retirees with robust defined contribution pension pots, making it all the more important that we ensure that the retirement income market is working effectively.

The Government are also acting to protect those valuable savings. We recently consulted on proposals to cap pension charges and introduce a range of transparency measures as a means of ensuring that savings are not eroded by charges. We are currently assessing the responses to the consultation and an announcement will be made when that work is completed.

Finance Bill

Debate between David Gauke and Jim Shannon

Tuesday 3rd July 2012 Commons Chamber

[Mr Gauke]

The advantage of the way in which we have introduced this measure—through the listed places of worship scheme—is that there is already a mechanism in place for providing grants for repairs. That is something we inherited, and although I cannot say this about everything we inherited, it is quite helpful. We anticipate that there will be a monthly repayment process through the listed places of worship scheme. With regard to the hon. Lady’s concern about cash flow, the main point to make is that the Church is content with the arrangements.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his clarification on that matter. I understand that if churches want to reclaim VAT in such circumstances, such a claim will have to apply to work on the footprint of the original construction. When work is done not only to the old part of the church but also to the new, will it be possible to differentiate a claim so that the work done on the old part and that carried out on the new extension can be treated differently?

[Mr Gauke]

The arrangements that will be in place following the legislation will mean that repairs and alterations will be chargeable for VAT. However, the listed places of worship scheme will apply to both types of work. It has been the case for some time that repairs involved the payment of VAT. The listed places of worship scheme will enable people to reclaim the VAT costs relating to those repairs. An extension—which is an alteration, rather than a repair—will now have VAT charged to it, but it will be possible to reclaim it through that same scheme. The scheme is now more generously funded than it was before the Budget, which means that a higher proportion of the costs that the churches would have incurred will now be able to be reclaimed. We have taken steps that the churches have widely welcomed.

Finance (No. 3) Bill

Debate between David Gauke and Jim Shannon

Wednesday 4th May 2011 Commons Chamber

[Mr Gauke]

As I said, the OBR considered the package in the June 2010 Budget and incorporated the changes along with other announcements. From that it anticipated an increase in business investment, and clearly there was a link between the corporation tax package and that increase in investment. We believe that by reducing the cost of capital, we will increase business investment above the levels that would otherwise have been the case.

I was struck by the right hon. Gentleman’s speech this morning in which he took considerable time to outline more than once the unemployment numbers in various regions of the UK. I was struck by the contrast between the argument he appeared to be making this morning, which was that the corporation tax cut needs to be targeted at regions with higher unemployment, and the argument he made during our considerable debate on the National Insurance Contributions Act, which was that it was wrong for us to target the national insurance contributions holiday at regions where the public sector was strong and unemployment high. I am not sure there was much consistency there, but there was great ingenuity in his speech earlier today.

[Jim Shannon (Strangford) (DUP)]

Obviously any advantage to industry is to be welcomed. I understand that figures released show that only 4 million people are employed in the manufacturing sector. Has the Exchequer Secretary discussed how the corporation tax changes will benefit that sector? Is the cut acceptable to the sector? Does it feel that it will achieve the recovery in that important sector? The Government have recognised it as an important growth industry, so I would be interested to hear his response.

[Mr Gauke]

I suspect that we will debate manufacturing at greater length in the next group of amendments. However, manufacturing will benefit from the package as a whole, including the changes to capital allowances. It will benefit considerably. Indeed, it is one of the sectors that pays a great deal in corporation tax. We also believe that the changes will benefit all regions. It is perfectly right for the right hon. Member for Delyn to highlight the different requirements in different regions, and as the hon. Member for Strangford (Jim Shannon) will know, the Government are exploring the case for greater flexibility for corporation tax in Northern Ireland. We continue to explore that matter.

On the subject of jobs, the OBR, in its 2011 Budget publication, forecast that 2010-15 total employment would increase by about 900,000. That will not all flow directly from the corporation tax cut, but that reduction will play a part in it. We also have to recognise that most of the recent academic analysis—certainly a recent report published by the OECD—makes the case that taxes on corporation income are the most growth-inhibiting ways of raising revenue. They are inefficient, so it is right that we seek to have a lower rate of corporation tax to help the economy.

PAYE Contributions

Debate between David Gauke and Jim Shannon

Wednesday 8th September 2010 Commons Chamber

[Mr Gauke]

I urge them to wait. I understand the frustration, but if we are to provide support to people efficiently and effectively, it is better to wait. Limited support can be provided until that letter arrives, so I urge his constituents to be patient.

[Jim Shannon (Strangford) (DUP)]

It would seem that the left hand of HMRC does not know of the information held in the right hand. What assurance can the Minister give to members of the public that such information can be better co-ordinated to ensure that such mistakes do not happen again?

[Mr Gauke]

The hon. Gentleman makes a good point. To be fair, the NPS system brings the information together, but unfortunately, that has highlighted more difficult cases. In fact, as we move forward with the NPS system and—potentially—further reforms, HMRC should have more accurate information and so be able accurately to assess the level of tax due.