UK Sovereign Wealth Fund

David Simpson Excerpts

Wednesday 14th December 2016 Westminster Hall

[Jim Shannon]

I thank the hon. Gentleman for those figures. I was not aware of them, but if that money is available, perhaps we are in a position to start the fund today with some of those resources.

I am sure that, like me, many hon. Members, including the hon. Gentleman, will know of 63-year-old women in their constituency who still have to work as their pension is unavailable. Those women are wishing that in the 1980s, at the time of the North sea oil find, which we have heard many comments about, the Government had decided to invest in a rainy day fund, which could have helped the pension pot. For that reason, the sovereign wealth fund must be considered seriously by the Government. That is why this matter is worthy of debate.

This issue is not cut and dried, by any means. There is talk of the Government’s shale fund being similar to this plan, as the hon. Member for Weston-super-Mare mentioned, but this is not the day to debate the pluses and minuses of fracking. A lot of hard work would need to be carried out before the fund saw any profit, but many people are already making claims about the potential for shale oil, if that comes through—and I suspect that, at some time, it will. We must think about what can be done for the future benefit of all people in the UK. Today’s austerity is a reality for us all. We have to be honest in this House about moneys and finances.

[David Simpson (Upper Bann) (DUP)]

I apologise for my late arrival, Mr Owen; I had another meeting. Does my hon. Friend agree that we have to look forward, when it comes to these funds? Oil prices, fracking and all the rest have been referred to, but we have to debate the issue as a whole, including wind turbines and all of that. Green energy could be as much as 40% more expensive, and we have to look at all of it. If we are going to put money in, we have to get the price correct.

[Jim Shannon]

I thank my hon. Friend and colleague for his intervention. As always, it is good to have his businesslike approach; he looks at the real issues critically and focuses on the situation that we are in. We need to look at the issue more widely and at some things that will cost more. That is part of the debate for the future.

We all know that the deficit needs to be cut, as the hon. Member for Weston-super-Mare openly acknowledged, yet it is incumbent on us all to look at the long term; in this House, we have to be visionary, and this debate gives us chance to do so, and to look at how we can secure a better future, using our resources for future generations.

I respectfully point out that, like many people, I have opposed the severity of Government cuts. I have met people in my office who have come for help and thought that they were deserving of benefits, but those have become harder and harder to get. I am sometimes overwhelmed by the cases I come across. It is very hard as an elected representative, no matter which party Members belong to and whatever their views, not to become perturbed and emotional about those cases. When I see people who should be on benefits, whose medical conditions are being made 10 times worse because there is no alternative than to work, I think, “No, we cannot sustain the cuts.” I stand by that belief. I stand by the fact that our front-line medical staff and emergency services need investment to sustain services. I stand by the belief that we need an Army that is capable of dealing with international commitments. All those things need to be in place.

Achieving all that and still cutting the deficit is incredibly hard to imagine, yet it can and must be done. Looking at the situation and saying that we need to invest in our future with a portion of the money is even more difficult, and that is why we are having this debate. Perhaps the national insurance contributions that the hon. Member for Ross, Skye and Lochaber referred to can kick-start the fund.

We expect people to budget with their money at home in exactly the same way. People must pay for a secure home with a mortgage, which should be paid off in some 30 years of work. People must pay their tax and national insurance to ensure healthcare and future security. On top of that, we ask people to pay into a compulsory private pension fund set up by their employer, and they must then live off the returns from that money. That is what we all must do in this place: we must keep all the balls in the air, as we expect our constituents to, while living a normal life. We must pay our mortgage—the deficit—at a rate that enables us to meet the rest of our obligations. Many young couples out there would love a 15-year mortgage, but it is not possible to pay that and live daily. As my mother says, “You cut your cloth to suit your needs.” We must pay off what we can afford to, and continue to spend money on what we must not neglect.

The hon. Member for Weston-super-Mare said in his paper on the sovereign wealth fund:

“We can and should start doing this immediately, because it is the only kind of Government spending which can justifiably be paid for with long term debt. It will inevitably mean a slightly longer wait to eliminate the Government deficit and achieve a balanced budget, but should earn a good financial return through higher economic growth nonetheless.”

I agree, and we should consider that. It is a difficult, but not impossible, task. We are elected to take difficult decisions in this House and to ensure that they are the right ones. That is why this debate is so helpful.

At the very least, the proposals merit full Government scrutiny and consideration. A committee should be set up to do this work and to see how the Government can invest now to help future generations. I think of Katie and Mia, my wee granddaughters—most of us probably have grandchildren—and I would give them the world, if only it were mine to give them. We would all do that for our children and grandchildren. We have an obligation to the generations ahead to do the right thing, to make the tough choices now and to secure a better future for them than seems to be on the horizon. The work needs to be done, and the hon. Gentleman has started it with this debate. We now need seriously to consider in this place how to do that. The Minister will lead on this issue, so there is no pressure on him whatever. We look to him genuinely and seriously for guidance on how best we can fulfil our obligations as MPs, and—I do not mean to sound like Trump—on how to make sure that we keep Great Britain great.

EU Referendum: Timing

David Simpson Excerpts

Tuesday 9th February 2016 Commons Chamber

[David Simpson (Upper Bann) (DUP)]

The Common Market, as it was known way back then, was founded on 25 March 1957. It did not come into operation until 1958, long before I was born—I know that is hard to believe. [Interruption.] I wish my own colleagues were supportive of that. The aims and objectives of the Common Market were to emulate what the United States had—open markets and no borders. People were jealous of that. The United Kingdom joined the European Union in 1973, just over 40 years ago. Within this timescale of almost 60 years, the United Kingdom has been part of the European Union for just over 40 years.

So why the rush now? Suspicious minds would think that perhaps the deal that the Government, or the Prime Minister and his officials, have almost negotiated is so thin that it hangs by a thread and would unravel. Or is it the case that we are going to see a large influx of people from other countries over the summer? I ask what is the reason because I have not yet heard a convincing argument from the Government as to why this referendum should be held in June.

[Alex Salmond]

I would not in any way dispute the hon. Gentleman’s chronology regarding age or anything like that. Could this not also be about the internal cohesion of the Conservative party? Could it be that the Prime Minister is so fearful of the lack of unity in his own party that he wants as short a period as possible for that to be understood?

[David Simpson]

Far be it from me to go into the internal frictions, if that is the right word, within the Tory party. All parties have their issues to resolve, so I leave the Tory party to deal with that one.

One area that has not been much mentioned over the past weeks and months is the agri-food sector. Our farming community has gone through very difficult times over the past number of years. I do not speak on behalf of the Ulster Farmers Union—I do not have the authority to do so—the National Farmers Union of Scotland, the Farmers Union of Wales, or indeed the National Farmers Union. Whenever they make their decisions, they will advise their members on which way to go. However, when I speak to farmers in my constituency, they are concerned about how things are going to pan out for them in future. Will there be an agri-food industry at all? Do the Government have enough interest in the sector to help and defend it in the years to come, and encourage young farmers into it? A lot of issues across the board need to be addressed.

The European Union Referendum Act 2015 provides for a referendum to be held on the UK’s membership of the EU before the end of 2017. This adds up to approximately 15 months following the Assembly elections, yet some within the Government find it appropriate to send the electorate back to the polls within seven weeks. As we have heard, the European championship will be taking place and some 200,000 people might be out of the country. Of course, people from my constituency will be across the water supporting Northern Ireland. I want to ensure that they are at home when the biggest political decision of their day will be taken. That is vital.

During this debate there will no doubt be accusations that we are undermining the voters, as we have already heard, and that we do not trust the British people to make two different decisions within a seven-week period. Those accusations are untrue. Nevertheless, for the good of our nation, let us allow each voter the time and space to study the arguments and the effects that this will have on them and on their families to come. The EU referendum provides one of the biggest political decisions in a generation. Let us ensure that the right final decision is made and that, whatever it is, we embrace the new era and ensure that the livelihoods of our elderly, our young and our employed are changed for the better.

Post Office Closures

David Simpson Excerpts

Tuesday 1st December 2015 Westminster Hall

[Huw Merriman]

I thank my hon. Friend for making that point. Indeed, Co-op was one of the retailers we approached in Heathfield to see whether it would be willing to take on the post office, but that particular Co-op franchise at least made it clear that it was not in the business of post offices anymore. That might add fuel to my hon. Friend’s fire.

[David Simpson (Upper Bann) (DUP)]

I found it humorous when the hon. Gentleman mentioned post offices in portakabins—they would not last too long in certain parts of Northern Ireland. Does he agree that although the Co-op might have had some responsibility, so does the Post Office, because post offices are part of the fabric of the community, and are where pensioners and others meet? Surely the commitment needs to come from the Post Office.

[Huw Merriman]

I absolutely agree, and will touch on that when I discuss the effect on my constituents.

HMRC Office Closures

David Simpson Excerpts

Tuesday 24th November 2015 Commons Chamber

[Hannah Bardell]

I do not have them to hand, but I would be happy to hear the hon. Gentleman’s specific views and discuss them with him.

[David Simpson (Upper Bann) (DUP)]

rose—

[Ian Paisley (North Antrim) (DUP)]

rose—

--- Later in debate ---

[Hannah Bardell]

Let me make some progress. The City University report is proof that this Chancellor’s attempt to run an absolute surplus is not working and is not credible.

SNP Members were elected on a manifesto that offered an alternative, fiscally credible plan for a modest 0.5% increase in public spending, which would have injected £140 billion into the economy. The proposed closure of HMRC offices will have a disproportionate effect on Scotland, because the vast majority of the UK Government’s ring-fenced Departments lie outside Scotland.

[David Simpson]

rose—

[Hannah Bardell]

If the hon. Gentleman gives me some time, I would like to make some progress.

The most recent proposed closure of local HMRC offices will result in Scotland being left with no HMRC offices beyond the central belt of Scotland. The plans fail to understand or take into account the diversity and needs of the Scottish economy. There are a wide range of industries beyond the central belt of Scotland, including farming, fishing, whisky, tourism and, indeed, oil and gas. Many of those industries rely on the ability to work with their local tax offices, given the complexities of their businesses.

--- Later in debate ---

[Hannah Bardell]

The hon. Gentleman makes my point very well.

[David Simpson]

Will the hon. Lady give way?

[Hannah Bardell]

I have just got to my feet again, so let me continue. John Allan, the national chairman of the Federation of Small Businesses said:

“Our members have repeatedly told us about difficulties getting practical help from HMRC when complying with their tax requirements. The current online offering is limited, often hampered by poor broadband connectivity, and the phone help line is hard to navigate, with long waiting times.

Over the long-term, this modernisation programme must bring substantial benefits and efficiency savings. In the short-term however, members will be concerned that the closure of these tax offices will simply compound existing problems.

The Government need to reassure businesses that disruption is kept to a minimum. This should be used by HMRC as an opportunity to deliver services that are easy to access, provide clear and consistent help tailored for smaller businesses and provide the certainty they need for their tax affairs.”

If the Chancellor will not listen to the SNP, perhaps he will listen to the Federation of Small Businesses.

These closures have been happening for some time. In March 2013, the UK Government announced that they were to close all of their 281 inquiry centres by June 2015, and it was reported that closures would result in the loss of 1,300 jobs. A consultation on plans to streamline HMRC inquiry and support services through the use of telephone consultations occurred in 2012, and HMRC piloted the new service in the north-east of England from June to December 2013. In October 2014, HMRC announced plans to close 14 offices across the UK by December 2015. It was reported that that would affect 453 civil servants, and a further 690 administrative employees had been offered voluntary redundancy.

The Public Accounts Committee said in the first half of 2015, following the closures, that only 50% of calls from the public were answered by HMRC, down from 73% in the last financial year. Tam Dolan, the PCS branch chairman in Dundee, said:

“This decision is baffling. HMRC have trained staff doing an excellent job, receiving more calls than they can handle. For PCS members in Dundee, making these staff redundant while recruiting elsewhere sends a message that Dundee doesn’t feature in HMRC’s long-term plans.”

--- Later in debate ---

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

I am delighted to be able to respond to this debate, because protecting the country’s tax revenues is a key part of the Government’s long-term economic plan, and because we have already made great steps in modernising the way in which tax is collected.

The changes announced on 12 November are an important part of HMRC’s operational modernisation programme, designed to create a modern, efficient organisation that continues to protect this country’s tax revenues. Modernising and improving the efficiency of HMRC, enabling it better to tackle evasion, drive down avoidance and improve compliance, has been a key Government objective since 2010.

We have made substantial investments to achieve that aim, not least the provision of an added £800 million in the summer Budget, which will help HMRC to recover an additional £7.2 billion. As a result, we have succeeded in driving down the tax gap as a percentage of total liabilities from 7.3% in 2009-10 to 6.4% in 2013-14. This fall represents an additional £14.5 billion in cumulative tax collected. Over the last Parliament, HMRC secured about £100 billion in additional compliance yield, including a record level of £26.6 billion in 2014-15. We have also made important cost reductions to the operational side of HMRC, and I make no apology for that. HMRC cannot be immune from the requirement that its resources are spent wisely.

[David Simpson]

rose—

[Mr Gauke]

I shall give way to the very patient hon. Gentleman.

[David Simpson]

I thank the Minister for giving way. It was friendly fire for the SNP, but it did not accept it.

The Minister will acknowledge the disappointment in Northern Ireland about the fact that 10 offices are closing. We do not have the full numbers for those who will lose their job or when the redundancies will happen. Further to the comment by the hon. Member for North Down (Lady Hermon), we are vulnerable at the best of times, but with the land border this will make it even worse.

[Mr Gauke]

First, this is about offices, not about staff. On the numbers of people likely to be employed—for example, in Northern Ireland—it should not be taken that because offices are closing, the total number of staff employed by HMRC in Northern Ireland as a whole will be reduced. Of course, HMRC is aware of the specific issues with smuggling and is determined to address them. Let me reassure the hon. Gentleman about numbers of staff. It should not be taken from the announcement of office closures that there will necessarily be a reduction in staff in Northern Ireland at all.

Air Passenger Duty: Regional Airports

David Simpson Excerpts

Tuesday 20th October 2015 Westminster Hall

[Julian Knight]

My hon. Friend makes some valid points. I had no idea that we were second only to Chad when it came to air passenger duty; that is certainly new to me. I hope to address some of the issues he raised.

At a time when we are trying to clamber back from financial difficulty, revenue neutrality is something that we need to put, as much as we can, in our proposals. There is justifiable concern in the west midlands and other regions about their airports’ ability to compete with devolved areas. While devolution is a bottom-up process, the Treasury could heavily encourage the devolution of APD to combined authorities or devolved areas as soon as practicable.

What practical things can be done by the Government right now? I would suggest an APD holiday on new routes. Birmingham airport is in discussions with Hainan Airlines for a regular, scheduled service, following two summers of charter services. An APD holiday could aid that. That would provide a direct link for the UK’s second city to the powerhouse of China and further assist the west midlands’ current trade surplus with China. It would also help foreign direct investment just as with the new Gentling resort close to Birmingham airport.

Regional airports, the wider economy and future tax take would benefit from an APD holiday. While Birmingham airport and others want a general cut in APD, which is unlikely in the short term given the financial circumstances, it would accept any measures to reduce that tax. It estimates that a cut in APD on non-congested airports would boost passenger numbers by about 2.9 million in just a decade. All increases in passengers will bring goods, services and jobs.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining the debate. I am sure he agrees with the findings of the Select Committee on Transport, which said earlier this year that small, regional airports had been held back because of air passenger duty, which was affecting jobs and the skills base coming in. As the likes of Belfast City airport and the international airport in Northern Ireland are confident that passenger numbers would grow substantially if APD were removed, that should be an incentive to bring more people in.

[Julian Knight]

I thank the hon. Gentleman for that contribution. I note that the Transport Committee wanted to attach a report to the debate, which I was happy to agree to.

The hon. Gentleman made it clear that all increases in passengers will bring goods, services and jobs to an area, all of which will return money to the Exchequer through other taxes. These measures will go some way towards reversing the scandal under Labour that the UK did more trade with Ireland than with Brazil, Russia, India and China combined. The Prime Minister, through trade missions, and the Government, more generally assisting in trade with the emerging and fast-growing markets, are tackling that problem. However, there is still the issue of connecting our regions, and the country more generally, with the large and frankly now emerged, rather than emerging, economies of the world.

Tourism Industry and VAT

David Simpson Excerpts

Tuesday 17th March 2015 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in this debate, and I thank the hon. Member for Ceredigion (Mr Williams) for securing it. None the less, it is a source of frustration that we have previously debated this issue. We are in jeopardy of missing a fantastic opportunity for all our communities; that has been the thrust of every comment so far.

I declare an interest, because I represent one of the most idyllic and beautiful constituencies in the United Kingdom, if not the world. Although I realise that every Member present is envious—I do not doubt that for a second—I hope they will keep an open mind on VAT reduction, which could help their constituencies to thrive, just as it would help my constituency of Strangford. Today we celebrate St Patrick, the patron saint of Ireland, north and south, and it is always a pleasure to do so. It was my pleasure last week to attend Champ UK’s annual St Patrick’s day event, at which I heard Tourism Ireland’s fantastic news about the increasing attractiveness of Northern Ireland as a tourist destination. Tourists seem to gravitate towards the Republic of Ireland, but the Northern Ireland Statistics and Research Agency states that total overseas visitors to Northern Ireland for the first nine months of 2014 grew by 3%, which is a welcome development. However, we in Northern Ireland still fall foul of the Republic of Ireland’s 9% VAT rate, which was set in 2011.

[David Simpson (Upper Bann) (DUP)]

Across the United Kingdom and Northern Ireland, our golf clubs provide fantastic accommodation and food, but there is a distortion of VAT payments between proprietary clubs and member-run clubs. Surely that anomaly should be addressed. Doing so would create more employment and would be good for tourism.

[Jim Shannon]

My hon. Friend is right. Hospitality services—golf clubs, hotels, restaurants and attractions—all suffer as a result of VAT on tourism, and it is important that we try to address the situation. That feeling is particularly tangible in Northern Ireland because we share a border with the Republic, which has a much lower VAT rate. Although we have seen an improvement in visitor numbers over the past year, which is good news, the benefits of a VAT reduction might have assisted those numbers even further. We are four years behind the Republic in implementing this decision, and I ask why. There has been a long-running campaign by the hospitality industry in the United Kingdom to reduce the VAT rate below the standard of 20% for services supplied to tourists, and I re-emphasise the importance of that industry to our economy. Tourism makes up 10% of Northern Ireland’s GDP and provides 40,000 jobs, and the sector is still growing.

--- Later in debate ---

[Mr Gauke]

I will say a little about that. For example, the case has been made that in the Republic of Ireland there has been an increase in the number of tourists in recent years, since there was a reduction of VAT on the tourism sector there. However, we have seen a very similar increase in the number of tourists in the United Kingdom. So, we should not jump to the conclusion that there is necessarily a causal link.

[David Simpson]

Earlier, I raised the issue of the distortion of VAT payments between certain golf clubs—the disparity between the proprietary clubs and the member-run clubs. Surely that disparity should not exist. If it is a golf club, it is a golf club, and there should be a level playing field. Golf clubs create tourism, food and accommodation.

[Mr Gauke]

The hon. Gentleman leads me to a different debate on the VAT treatment of golf clubs, which I am sure he will understand is a matter of some complexity and indeed of some litigation, too. So, Ms Dorries, I hope you will forgive me, but I will not be too diverted by the particular point that he has put on the record.

In the UK, we apply a zero rate of VAT to food, newspapers and books, and passenger transport. The UK also refunds VAT incurred by many world-famous museums and galleries, making them free to visit for all. In addition to the sector-specific reliefs, the UK’s VAT registration threshold is the highest in the EU, meaning that much tourist accommodation and many attractions do not have to charge any VAT to their customers.

As I have said, Ministers from both the Treasury and DCMS have discussed the Cut Tourism VAT campaign, and recently I have both met and engaged in correspondence with campaigners. VAT raises more than £100 billion a year, which has been critical in enabling us to manage the UK economy through tough economic times, and the latest figures from the Office for National Statistics suggest that reducing the rate of VAT to 5% for catering services, such as the supply of meals, snacks and drinks sold by restaurants, pubs, cafés and canteens, would cost the Exchequer £10 billion per year. Similarly, a cut in VAT to 5% for accommodation would have an estimated cost of around £2 billion a year to the Exchequer. I do not have to remind hon. Members that those costs would have to be met either by increasing other taxes, which may well have an adverse effect on growth and jobs elsewhere in the economy, or by increasing borrowing. That would risk raising interest rates, which would undermine our hard-won recovery and would have an adverse impact on families and small businesses.

Diverted Profits Tax

David Simpson Excerpts

Wednesday 7th January 2015 Westminster Hall

[Nigel Mills (Amber Valley) (Con)]

A happy new year to everyone who is here for what I hope will be an interesting debate on a whole new tax. It is not often we get whole new taxes in this country, and I thought we should mark this one with a bit of parliamentary scrutiny, because I fear it will sneak through in the pre-election wrap-up Finance Bill and will not get much debate in Committee. It would therefore be helpful for Parliament to have a bit of a chance to work out the Government’s intentions and exactly where they intend this tax to go.

If we judge Government measures by how balanced the reaction to them is, this tax has probably gone down about right with people. Some advisers regard it as the worst-drafted legislation in some time, while some have said it is relatively narrow and focused—there has even been a cautious welcome from Richard Murphy, although he is perhaps thinking again about that. Another tax campaigner, David Quentin QC, regards the tax as “widely and aggressively drafted” with “a penally high rate”. If we take the average of all those reactions, it is probably about where the Government would want it to be. It appears that the tax will deter some people from doing some things, but it will not do so ridiculously little that it destroys the UK tax regime, so we are perhaps starting in the right place.

It would be useful to understand what the Government see as the way forward. We have had Treasury tweets suggesting, “This tax isn’t ever really meant to apply to anyone. We hope everyone will change their behaviour. We’ll accept they all have establishments in the UK after all. They’ll stop using artificial transactions, and everything will be fine. We’ll rarely have to apply this tax. It’ll be a big stick that never actually gets wielded.”

In some ways, the Treasury forecast of how much the tax will raise suggests it is not intended to apply to the many thousands of multinational companies it could apply to. Some advisers say that, in theory, the tax could apply to a large number of people and raise a large amount, but the Treasury seem to think it will raise a small amount. I assume, therefore, that behavioural change is the main motivation, but it would be interesting to see whether the Minister confirms that. It would also be useful for everyone to know that the Government actually intend to put this tax through before Parliament is dissolved so that it is on the statute book exactly on 1 April—the date on which it is intended to come into force.

That leads me to one of the main concerns about the new tax—its impact on, and the Government’s strategy for, the base erosion and profit shifting process, which is intended to produce an international agreement on stopping multilateral companies flouting tax rules around the world and avoiding paying tax on profits they earn in various countries. Everyone accepts that that is the right place to get to. It is ludicrous that a large global company can earn profits in the UK and not pay tax here. We all want that to stop, and we all welcome the fact that the Government have introduced a proactive measure to achieve that. However, what I suspect no one wants to happen is that, rather than moving forward with a global agreement so that we have globally consistent rules that can be applied everywhere, we end up with a load of countries taking a piecemeal approach, putting in place slightly different rules that overlap or conflict with each other. In other words, rather than a sensible level global playing field, where everyone knows what the rules are and applies them, we end up with some horrible complexity that results in a similar mess to the one we started with or, equally as bad, a load of double taxation risks. We are a main global trading nation, and I suspect we have a lot to lose from a load of conflicting double taxation rules.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman, who is a colleague on the Northern Ireland Affairs Committee, on securing the debate. The message I get from many in the business community in my constituency is that if Her Majesty’s Revenue and Customs had been doing its job in the first place, there would be no call for this new tax. HMRC does not seem to go after the large companies that avoid paying tax, but it does go after the medium-sized to small companies, and that is unfair. What we really need is a level playing field.

[Nigel Mills]

The hon. Gentleman comes from an area that would like to be a tax haven—under these rules, a tax haven is defined as somewhere where the tax rate is less than 80% of the UK rate, and I suspect he hopes that the rate in Northern Ireland will be less than that in the relatively near future, although I would be intrigued to see whether the rules would actually apply to profits diverted into Belfast. However, I agree with him in part, and we have had all the stories about sweetheart deals. It is much harder for the Revenue to go after very large companies with very sophisticated advisers who can resist the rules, and it may be tempted towards softer targets that are perhaps not as well advised. However, it is not fair to say that we have this new tax because the Revenue has failed to use the rules that exist. There is a gap in the law, and certain companies have managed artificially to avoid having a permanent establishment in the UK and have, therefore, avoided paying tax on UK profits. I think a general agreement has been reached through the OECD BEPS—Base erosion and profit shifting—process that the rules need changing to bring those profits into tax in the right places. The point the hon. Gentleman made at the start of his criticism was therefore perhaps not entirely fair, given the context we are talking about.

To return to the concern regarding BEPS, no one would want the UK, by acting unilaterally, to unravel that process so that we do not get the co-ordinated international outcome we all expect later this year. It would be helpful if the Minister could explain the Government’s strategy on BEPS. Is the tax meant to be complementary to it? If the outcome of the BEPS process is inconsistent with the tax, do we change the tax, or do we end up keeping both?

--- Later in debate ---

[Nigel Mills]

My hon. Friend makes a fair point about the UK doing some sponsoring of the Channel Islands and the Isle of Man, but I will leave the Minister to answer for the Government’s policies on tackling that. My hon. Friend says our hands are not entirely clean; it is interesting that we have introduced the Patent Box to try to have a lower tax rate for intellectual property in the UK—presumably on royalties charged in countries around the world. We have also been trying to get our tax rate down to a low level to encourage international investment. Someone sitting somewhere with a tax rate much higher than 20% might think that we are trying to encourage profits to be taxed here that perhaps should not be, but I am sure that is not the Government’s intention.

To wrap up on the BEPS process, the Association of Revenue and Customs—the trade union for professionals at HMRC—raised the concern that the Government’s proposals were unilateral and stood outside the BEPS proposals. The ARC suggested an alternative approach, whereby the Government remain in the BEPS process and timetable, but use their current initiative to show they will have legislation in place in case the process falters or is impeded. I presume the Government will confirm that they do not intend to slow down on the rules and wait for the BEPS process and that we will see them on the statute book later in the year.

The second area I would like to look at briefly is how likely the rules are to be effective. We all want the tax to be collected in the UK. We do not want to see these corporates able to artificially avoid paying the tax that is due here, but there is a question on whether the rules will survive a challenge under the UK’s many double tax treaties or under EU law. People suspect that the Government have chosen to do a whole new tax, rather than just tweak the existing corporation tax rules, to try to ensure that the rules are not struck down by our international treaties or by EU law. Can the Minister confirm that the Government have looked into that and are satisfied that the treaty analysis is correct? Paragraph 4 of article 2 of the OECD’s model tax convention states:

“The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes.”

At first glance, it looks as though the direct profits tax will be a tax on corporate income, which sounds similar to a corporate income tax and our corporation tax. The definition in the convention suggests that the tax might be caught by the treaties. Article 7 of the convention, which is on business profits, states:

“Profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein.”

The problem we are trying to fix with the avoided permanent establishment part of the rules is that if a company does not have a PE, we cannot tax them. We think they are diverting profits out of the UK and we want to tax those profits, but if we are dropped back into the treaty, we might end up in the same position as we started. It would be useful to understand how the Government have satisfied themselves that the tax will not be caught. Is it because they are trying to tax the UK establishment that already exists, or do they believe that it is a new tax that falls outside the treaty?

On the EU law point, I am no big fan of the EU interfering in our tax system. Tax is meant to be for nation states and not the EU. I have never been keen on the view that the European Court of Justice should interfere in sensible tax avoidance rules, so I will not advocate that here, but there must be a risk for the many companies that choose to site themselves in Luxembourg, as my hon. Friend the Member for Warrington South (David Mowat) said. We have all seen the tax rulings that have been published, and we know how many companies are doing that. A company based in Luxembourg might say, “Wait a minute: if I am established in the UK and pay tax there, I pay it at 20%. Why, because I am in Luxembourg, do I pay a slightly different tax at 25%? Is that not fundamentally contrary to some kind of freedom of establishment principle?” There is a risk of a legal challenge to the rules on that basis. It would be useful to understand how the Government have satisfied themselves that the European courts would not strike down what many of us see as a sensible anti-avoidance measure that we would not want to lose.

The flipside to that is whether the provisions have been drawn up in the right way, so that they catch those we are aiming at, but do not create onerous burdens for loads of “innocent” corporations or place a ridiculous burden on HMRC. We want targeted rules that attack the corporations engaging in what they must know to be pretty aggressive artificial structuring. The guidance is clear on some of the structures that HMRC and the Treasury are targeting. We would all probably agree that it looks artificial if a sales force gets 95% of the way through a sale and cannot sign the final contract, but has to refer it to Luxembourg, Switzerland or somewhere else. If the rules are drafted too broadly, there is a risk of thousands of companies that the Government had not intended to be caught fearing that they will be caught. That creates a burden on them, and they will have to go through the whole compliance process to satisfy themselves that they are not caught.

The flipside to that is the risk that HMRC gets thousands of notices that it cannot possibly deal with, and then misses the notices that have all the tax at stake. By drawing the rules too widely, people could sneak through the middle who should not. The adviser community is expressing sensible concerns and asking, “Have the rules been drawn too broadly? Is there any way that they can be focused, perhaps through filters, such as those in the controlled foreign company rules?” Through that, we could be clear to taxpayers on who is intended to be caught, and what the hallmarks are that let them know that they are caught. That can give those who are not trying to avoid UK tax artificially some kind of comfort that they are not in the rules and do not need to do the self-assessment.

[David Simpson]

In the new tax legislation and the new tax that we are hoping to see implemented by April, is there any provision to protect against brass plating?

[Nigel Mills]

I should probably let the Minister explain the tax that the Government are trying to introduce, but there are two parts to the rules. One is about avoided PE and the other is aimed exactly at brass plating. It looks at where companies are paying fees, royalties or other things to companies that do not have the substance to justify the income they are earning. If the hon. Gentleman reads the examples that HMRC has put in the guidance, he will see that the rules target the routing of large fees into entities with very little substance in tax havens. I think we would all accept that that is an appropriate, sensible and fair target. I am sure the Minister will correct me later if I have misunderstood and am too optimistic about what the rules are trying to achieve.

Those concerns about how broadly the rules have been drafted are echoed by the ARC, which is concerned that HMRC will end up swamped by a load of notifications from people. It recognises the burden that that will place on companies and HMRC. Can the Minister confirm whether the Government are prepared to look in the consultation at whether any filters could be introduced to try to make the compliance burden easier for companies that are not trying to avoid tax, or does she think that that is too risky and might narrow the rules and allow some companies that should be caught to squeeze out?

Clarity on the direction of the Government’s thinking, and on how we can get the rules to apply only to those to whom it should would be welcomed by a lot of people. One way of achieving that would be a clearance mechanism. Will the Government consider that? Is there a way that taxpayers could seek an advance ruling from the Revenue, or confirmation that what they have done does not bring them under the rules?

That brings us to how the Government propose to handle large corporates that have been through inquiries on their transfer pricing or their permanent establishments and think they have an agreement with the Revenue that says that their tax affairs are okay. Are those agreements still in force or, because the tax did not exist when those agreements were made, are they outside the rules? If the company has been engaging in activities that HMRC thinks are avoidance, are those activities safely in scope? Do we expect customer relationship managers to give their customers any assurances on that? Exactly when can people get assurances? When will HMRC staff be trained on the new rules? The rules will apply from 1 April. If a company has an April year-end, it will in theory have to submit its notice by the end of July. The rules will apply in six months’ time, and people will have to start complying with them. When will the support be available for people to work out what they need to do?

The final area I will touch on is the assessment and collection process. This is a new tax with a different assessment method from the one we are used to in this country. We normally accept that people self-assess how much tax they owe and then pay it. HMRC chooses whether to inquire and challenge how much that tax is. With this tax, we have almost the reverse of that. A taxpayer has to write and say, “I think I might be caught”—that is perhaps not quite the technical language—and HMRC has two years from year-end to issue an initial charging notice stating, “Here is how much we think you owe.” The taxpayer has 30 days to make representations and HMRC has 30 days to issue a final charging notice. The taxpayer has to pay that then. Then there is a year in which that charge can be inquired into, challenged and discussed before it is finally agreed. Effectively, that is saying, “Pay now, argue later”, rather than agreeing the liability before it is charged. There are questions about how reasonable that approach is. I accept that it will enable the Revenue to get the money early and leave the arguing until later. Perhaps part of the intention behind the tax is to prevent people from engaging in that behaviour in the first place.

There is a practical question. If the Revenue gets a notice from a multinational corporation that it has not inquired into regularly in the past, how can it issue an initial notice saying, “Here’s how much we think you owe”? If it has absolutely no idea other than a territorial disclosure of its UK turnover, how can it have any idea of how much tax to assess in the first place? Will it put a finger in the air and say, “Don’t worry, we’ll sort it out in the fullness of time”, or will there be some process to enable the initial assessment to be at least relatively in the right ballpark? No one wants a system in which someone gets an assessment that is far too low and chooses not to challenge it, or one in which they get an assessment that is ridiculously high and that creates unintended business survival issues, although those are clearly extreme situations.

I am also slightly intrigued about what will happen if we think a whole load of tax is owed by a non-UK resident party. How do we collect it? I assume that we can go through the mutual collection procedures, but I have never been entirely convinced that it is easy to make them effective. There is a provision in the rules that enables us to collect tax from any UK member of the group, but if there are relatively small UK group companies that do not make any money due to artificial tax avoidance, how will we get the money from them? Are we assuming that all the multinationals that have apparently been engaging in artificial tax structuring will decide that standing behind their subsidiaries and ensuring that they can pay their tax bills is the right and noble thing to do, or is that one level of optimism too much?

In my 20-minute canter round the new rules, I have been trying to extract from the Government further information about their policy direction, the intent of the rules and who they are trying to catch. Are the Government happy that the rules are catching the right people, and not just spreading the net so wide that it will create compliance burdens? We do not want to make the UK a less attractive place for corporates to establish themselves. We clearly do not want to attract artificial tax abusers, who come here to take advantage of our tax regime. However, our strategy has been to make ourselves a territory in which companies want to base their head office, and in which they want to invest by creating a stable, predictable tax regime.

UK Trade & Investment published a helpful document, “A guide to UK taxation”, which notes that we have a stable tax regime, that we avoid unnecessary changes to the rules and that our tax policy is aligned with business practice. It states that we have

“legislation which minimises complexity…a level playing field for taxpayers”

and

“A transparent and consistent approach to policy-making”.

Our objective is to create a level playing field in the UK territorial system, so we want everybody who operates here to pay taxes on their profits here. I see this tax as a way of ensuring that everybody pays their tax, and as a way of creating a level playing field so that UK companies are not out-competed by multinationals that do not pay tax.

However, is the Minister concerned that the speed at which the rules are being introduced will worry some corporates? Will their breadth put some people off investing here or make some corporations think, “Well, the easy way out of these rules is to have no UK establishment at all. We’ll just ship everything in from Rotterdam”? Is there a risk that we will lose jobs and the tax that we do get by chasing such things too onerously? I suspect that most of us will say that we are a great place to do business, so if companies want to make money here, they must pay their tax here. If they do not want to pay their tax here, perhaps they are not the kind of people we want. However, I am not sure it is easy in the real world to make that stick.

Are the Government happy that the rules are proportionate and in the right place? Do they target the right people? Will they be effective in tackling those people? Are the Government sure that they will not be struck out by some other international law? Will the Government respond to the various responses by tweaking the rules to ensure they focus on the right places, so we get the tax off people who owe it without unduly burdening those who do not?

Offshore Wind Developments

David Simpson Excerpts

Tuesday 6th January 2015 Westminster Hall

[Mr Weir]

I am not familiar with that case, but it sounds like it was. Offshore wind farms give the opportunity to provide not only clean energy, but employment. That is important for the hon. Lady’s area and mine, and for much of Scotland. That point was reinforced in a report from the think-tank Green Alliance, which found that CfDs form part of a strong new investment framework for offshore wind, but that a lack of clarity over post-2020 policy and funding

“is contributing to a shrinking of the offshore wind project pipeline”.

That seems to be the case in Northern Ireland, given what the hon. Lady said.

Clear decisions over future support for the sector will need to be taken in the early days of the next Parliament if the pipeline is to be sustained at levels necessary to support continued growth of the sector out to 2030. Specifically, the report finds that:

“The UK will need a minimum of 25GW of offshore wind by 2030, of which 10GW is projected to be in operation by 2020. Currently, 13GW of additional offshore wind projects are at an advanced stage of development, and a further 20GW have entered development.

Policy, regulation and funding challenges mean the pipeline is shrinking. 8.2GW of offshore wind projects were withdrawn in the 12 months to June 2014, with other projects since shelved. New projects must compete for government funding which will only be sufficient to deploy an additional 1.2GW in the five years up to 2020.

However greater policy stability could result in capital investment worth in the region of £1.8 billion a year between 2015-30 into the UK offshore wind supply chain, over three quarters of which is made up of small and medium sized UK companies.”

That shows the potential; at this stage, much of it is just potential.

Previously, of course, these developments were funded through the renewables obligation, under which developers built projects, gained accreditation and received a fixed sum on top of the market price. However, under the new system of contracts for difference introduced under the Energy Act 2013, projects must be developed to a point at which they have planning consent and a grid connection offer; then they can bid into a competitive allocation round to secure a contract for difference, which tops up the market price to a specified strike price.

I stress that this debate is not an attack on the change in the system. It is fair to say that most, if not all, parties in the House supported the change to contracts for difference.

[David Simpson (Upper Bann) (DUP)]

Although I support the hon. Gentleman’s message on this subject, a number of businesses and others in my constituency are concerned about the cost of green energy, and believe that it is not properly regulated. Does he agree that we need proper regulation to make it more efficient, and so that more companies can use it?

[Mr Weir]

Clearly, there is a balance to be struck between the interests of the bill payer and the interests of creating renewable energy. We all have to take that into account. My point is that as well as being clean, renewable energy also produces investment in industrial development and creates jobs. I agree that there is a balance to be struck. We must always bear in mind the impact on the bill payer of all these projects, and we must always seek value for money. The point that strikes that balance will vary over time.

Fairness and Inequality

David Simpson Excerpts

Tuesday 11th February 2014 Commons Chamber

[Jim Shannon]

Who am I to get on the wrong side of you, Madam Deputy Speaker? Of course I will not mention it.

We are coming out of a recession, and times are tough for many people throughout the whole of the United Kingdom, but may I point to the fact that there have certainly been some successes? I am thinking of the recent contracts and job creation secured in Northern Ireland, thanks in no small part to the tremendous work done by the Minister of Enterprise, Trade and Investment. Yesterday, for example, she secured a contract in Singapore to supply defibrillators to the Singapore army, and she has secured a new contract through her “Going Dutch” campaign. Of course, everyone here knows that Northern Ireland has a strong relationship with Holland—something to do with the 16th and 17th centuries—but we have relationships across the whole of the United Kingdom and into Europe, where Northern Ireland can have influence and be better for it.

[David Simpson (Upper Bann) (DUP)]

I agree with my hon. Friend that we are seeing some economic recovery and that is very important, but does he agree that we still have inequality and unfairness affecting the younger generation, who want to buy homes but cannot and will not be able to do so for the foreseeable future?

[Jim Shannon]

I thank my hon. Friend for making that point—not one of us here would disagree. Just this morning, we discussed VAT and tourism in Westminster Hall, in a debate led by the hon. Member for South Down (Ms Ritchie). We talked about opportunities for jobs in tourism, and most of those who benefit will be young people, so we would like to see that happen.

My hon. Friend is right: I cannot, in all fairness, paint a completely rosy picture. People are struggling, and we in this place are tasked with finding ways to help them and to help those who are trying to help others. As time has passed in this economic climate, we are seeing people who once had more than enough struggle to make ends meet. I can think of developers who, five years ago, were donating hundreds, sometimes thousands, of pounds to charity, but who are now seeking help with their benefits as a result not of losing the desire to work, but of losing the work to do. That is a fact facing many people in my area.

With more and more people struggling, one of the local churches took matters into its own hands and set up the first Trussell Trust food bank in Northern Ireland. Like the Minister, I see the benefits of the food bank in bringing people together, with people energised to help others in a clear, practical and physical demonstration of love for others. Thriving Life church in Newtownards realised that people simply needed help and was the first to do this, but there are now 12 food banks across the Province, all manned by people who volunteer to make a difference, all stocked by a community who understand that by donating a few groceries, they can help others who are struggling.

Since opening, the food bank in Newtownards has fed some 3,000 people and the number rises every day. Forty tonnes of food were donated by the local community. The food bank is staffed by a group of volunteers who collect, sift and sort through donations and make up the packs—they even have foodstuffs specifically for diabetic people donated by constituents. They keep a record of why people are referred to the food bank and they worked out four reasons, of which the first is low income. At the time the work was done, last summer, there were 604 referrals because of low income, almost 500 because of debt, just over 410 because of benefits changes and almost 400 because of benefit delays, so 65% to 70% of people were referred because of low income or debt and 30% to 35% because of benefit issues.

There are 86 regular donors to the food bank, including churches, businesses, schools and community organisations. Mash Direct and Willowbrook Foods—two major companies in my constituency—give regularly, and such donations are crucial to the Newtownards food bank. The sense of community has been expanded to supermarket stores such as Tesco and Asda, whose partnerships are crucial: not only do they allow store collections, but one store recently donated an additional 30% of food to what had been collected in a two-day drive. I have been pleased to be present and helping on the two occasions they did that. The big stores recognise the problem and try to help.

Not only does our food bank provide food in a crisis but, through the organisation Christians Against Poverty operating from the church, it also provides professional assistance with budgeting and debt issues and teaches people how to live on their income. Trained workers go through people’s debts to find a manageable payment scheme and do all the set-up work. That work is very important and must happen. Not only can people get food to feed their children, but they can get help to lift them out of the dark hole of despair that many are in.

This does not absolve the Government of doing all they can to ensure that no family in the UK goes to bed hungry. We have a role to play through ensuring that our welfare system runs smoothly, so that delays in benefits do not mean delays in provision. The Government have a massive role to play. They must begin by thanking the individuals and groups that work tirelessly to make a difference to people’s lives and to communities, and by asking how they can assist them.

In conclusion, tough decisions have been made. I have agreed with some and disagreed with many others. I oppose the implementation of the bedroom tax when no housing is available for people to move into. We have to work in this House to make savings. At the same time, we must work hard to ensure that we change lives for the better. Further, we must ensure that when the game of blame is finished, we are taking action to make those changes.

Consumer Rights Bill

David Simpson Excerpts

Tuesday 28th January 2014 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I congratulate the shadow Minister on the points she made, which we fully endorse, underlining the need for tighter consumer protection. This subject involves myriad issues often arising out of constituency concerns.

I am pleased that the Bill is before the House. Like everyone in the Chamber, I am often contacted on the need for tighter legislation and greater rights for consumers and others. Staff in my advice centre regularly refer cases to the Consumer Council, and sometimes they have to contact the council themselves to ensure that it pushes a matter strongly. It does not always do that, so we have to underline what we are asking it to do. Sometimes it tells us that the legislation is not strong enough and it is important to address that.

[David Simpson (Upper Bann) (DUP)]

My hon. Friend mentions constituents and the Consumer Council. Like other hon. Members, I am sure, I often receive complaints about the process and bureaucracy of exchanging goods. I think, in particular, about older folk, who have a paper trail to keep, and who sometimes are not good at it. It would be good if that could be addressed.

[Jim Shannon]

I thank my hon. Friend for bringing that matter to the House’s attention. I think that every speaker has underlined that issue, and many have spoken on behalf of elderly constituents who find it difficult to return goods. I have had people in my office complaining about particular retailers, but in true British form, rather than complaining, they say, unlike Arnold Schwarzenegger, “I’ll not be back” to make a complaint. Someone might have lost £100 on a pair of shoes because the heel is too wobbly to walk on, but feel that there is no point in complaining. That underlines the crucial issue that my hon. Friend the Member for Upper Bann (David Simpson) mentioned.

I regularly hear complaints in my office about flights that have been cancelled, about the service and about the fact that prices quoted are often different from the actual prices. These are issues that regularly come to my attention. Many retailers get away with selling substandard merchandise. When somebody brings something back, they simply point to the sign that says, “No sale return”. That is not correct. It does not affect a consumer’s statutory rights. Why does the consumer sometimes have to push so hard to get their rights? Many people are not aware of their rights, and it is my hope that the Bill will clarify consumer rights and make them a little easier to understand and regulate.

Hon. Members have referred to energy suppliers. We have a regulator that controls—or tries to control—prices, but more often than not prices rise faster than inflation. We feel that the regulator should have more power, so I hope the Bill will give us a regulator that can enforce the issue on energy prices. Every one of us, as elected representatives, will be aware how energy prices affect the households we represent.

I am also concerned about insurance premiums. The hon. Member for South Down (Ms Ritchie), who is not here, brought this issue to the Chamber a short time ago. I think every Member from Northern Ireland contributed to that debate. It frustrates and angers me, and it certainly angers my constituents, that people advertise insurance premiums on the television that are available anywhere in the UK—Scotland, Wales and England—except, according to the small print, Northern Ireland. I am as British as anyone in Edinburgh, Cardiff or London and I expect to be treated the same, as do my constituents.

The regulatory measure will reduce the effort both consumers and businesses have to make to resolve problems. Consumers will now have the right to get some money back after one failed repair of faulty goods or one faulty replacement, to demand that substandard services are redone or, failing that, to get a price reduction and a repair or replacement of a piece of faulty digital content such as a film or music download, online game or e-book. It is clear that the more we shop online, the more regulation there needs to be in place. After Christmas, the newspapers indicated that there were greater sales online than there have ever been in the past. In my constituency that is an issue as well; the trend is for online shopping.

In my constituency, there is a business called Excel which, to use its own word, is excelling in online sales. It is a prestigious clothes shop in Newtownards that moved into online sales a few years ago. That business has grown and it gives consumer protection. When it sells goods, it has a sale or return policy. That gives the consumer the opportunity to buy a good, which they are doing in increasing numbers. That business has grown greatly. It is now hoping to sell to the Republic of Ireland, another stage of that growing business in my constituency.

There are many sites online that help someone to stand up for their rights but the ordinary person would never think to look those up and would also not think that they were capable of fighting their corner. Many times people do not want to be involved in controversies or to have to complain. The Bill must be easily readable and understandable and I urge the Minister to ensure that anyone of any educational background is able to apply it to their own situation.

Some hon. Members today have spoken about the issue of those who use Google to get an idea of their rights but are then drawn down a road that takes them away from their real consumer rights. That is an issue about which we need to be concerned. We need to stop the exploitation of the vulnerable because most of the people who come to me are vulnerable people who have no knowledge of all the issues involved. I am concerned that those people are sucked into a process that they find difficult to get out of.

Hon. Members have mentioned credit card companies, banks and payday loans, where consumer protection is needed. Many companies now advertise a method to reclaim or redeem unfair charges. That also needs to be monitored because sometimes we wonder what it all means. If someone is phoned and told that they have a chance to claim back money, a financially vulnerable person might respond and disclose details that they should not disclose. We need a consumer rights Bill that protects people from those things.

The Bill proposes a set 30-day time period during which consumers can return faulty goods and get a full refund. At present, consumers can reject goods as faulty within a reasonable period; interpreted by some retailers as 14 days and by others as up to two months. There is diversity among retailers; let us get it correct for everyone so that everyone knows their rights.

In my constituency, a lady left her shoes to be re-heeled. When she came back to the same place to collect them a few days later, as she was told to do, the shoeman had disappeared and the shop was closed for two months. In such cases there should be a method by which the police or local authority has the right to be involved and to enter the shop; it is about consumer protection and consumer rights.

I hope that the Minister will tell us what attention she will pay to all of the issues raised today about the Bill and protecting consumers. All in all, I believe that the Bill seeks to enhance consumer rights. I support it in principle and look forward to the Minister’s response.