Loan Charge 2019: Sir Amyas Morse Review

Debate between Ed Davey and Bob Stewart

Thursday 19th March 2020 Commons Chamber

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

It is a pleasure to follow the right hon. Member for New Forest East (Dr Lewis). I am delighted to say that on this occasion I agree with every word he said. It is the nature of this debate that it has brought those on all sides together. For people who normally are not necessarily in total agreement on economic and tax affairs, this has brought us together. That is for the reason the right hon. Member for Haltemprice and Howden (Mr Davis) gave: it is about natural justice.

I set up the loan charge APPG last year, and I think it has become a group that illustrates the way in which the House has come together. We now have 227 members. My co-chairs are the hon. Member for Brentford and Isleworth (Ruth Cadbury) and the right hon. Member for Hemel Hempstead (Sir Mike Penning). I should say that he wanted to be here today, but he has a family issue that has kept him away.

Not only do we represent colleagues from across the House, but I believe we have gone about our business in a pretty professional way, with the support of the Loan Charge Action Group as our secretariat. We have produced reports in the past, and as a group we have reviewed the Morse review itself and published our response. That follows two witness sessions, where we had tax experts and loan charge victims. We have received more written evidence, and we have built on our previous work. This 63-page report, published today, has 17 key findings on the Morse review and it makes 19 recommendations.

I have been on a number of all-party groups during my time in the House, as I am sure you have, Mr Deputy Speaker, and it is relatively unusual for an APPG to do such a thorough and detailed report in such a short time. If I have one disagreement with the right hon. Member for Haltemprice and Howden it is that I wish he had given us a little bit more time to do our work before this debate, although I am really pleased that we have got this debate. I hope the Minister, whatever he says from the Dispatch Box in response to this debate, will undertake to read the APPG’s report and to respond to it.

When the Morse review was set up, we welcomed it; it is what we had been seeking. We had meetings with Sir Amyas, and we gave him a huge amount of material. It is fair to say—I put this on record on behalf of the APPG—that we welcome many aspects of his report. He talks about how unusual the loan charge is and how unique it is in respect of how it overrides statutory time limits, which are meant to protect the individual taxpayer, and how it looks back over 20 years. What an astonishing piece of legislation to put forward.

The report has a number of good recommendations. For example, it says that if the loan charge continues, after 10 years of repayment any remaining liability should be written off if the taxpayer has earnings of less than £30,000. One would have thought that that was a reasonable recommendation, even if the Government want to stand by the loan charge, but they have rejected it. The Government rejected even that relatively modest recommendation.

I would have thought that Her Majesty’s Treasury and HMRC would have agreed with all the recommendations, in the spirit of the Morse review, but they have not. They have rejected some in full and some in part, and they interpret some in a way that is clearly not intended by the Morse review. For example, one group of taxpayers about whom I have been most worried is those who have had closed tax years—in other words, their tax affairs, properly given to HMRC with all the relevant material and back-up, had been accepted and the tax year had been closed. There can be no doubt that going back to such a year is complete and utter retrospection, yet the Government are still seeking to apply the loan charge to those years. They have narrowed in a most outrageous way the way we consider the concept of a closed tax year.

I am really unhappy with the way that the Government have responded to the Morse review itself, but the review does have a big flaw at its heart. Because the right hon. Member for Haltemprice and Howden set out that flaw in detail, I do not need to speak for so long. In essence, Morse says that the law that was passed in 2011 in respect of the Income Tax (Earnings and Pensions) Act 2003, and particularly part 7A, made it clear. Now, the right hon. Gentleman showed that it did not make it clear, even for those people directly linked to it, because of the timings that he set out.

In specific detail, the expert witnesses whom we saw in the APPG made it clear that that legislation covered only some of the schemes to which the loan charge applies—those schemes that involved employees who were being paid via a third party—but completely omitted entire existing schemes that involve the self-employed, companies and loans paid directly to employees. There can be no doubt that the legislation on which Morse was relying does not apply to many people, because they are just not covered by that legislation. It is not a question of debate; it is just a fact.

At the time, experts looked at the legislation and responded in the way that one would expect: they looked at what the legislation said and changed their advice accordingly. Indeed, HMRC’s advice was based on what was actually in the Act, surprisingly enough. There is a 2016 technical note to which our report refers and in which HMRC specifically says that that is what the legislation said.

I find it quite extraordinary that successive Ministers have tried to defend this double-talk from HMRC. As the right hon. Member for Haltemprice and Howden said, no court rulings in any way interpreted legislation in the way that the Morse review does. I have a huge amount of respect for Sir Amyas Morse, but on this point he is entirely wrong. I do not read all the tax literature, but the tax experts who have contacted us are really clear that Morse is getting the legislation, as it was understood the time, completely wrong.

[Bob Stewart]

When the right hon. Gentleman took evidence from people who are subject to the loan charge, did he receive any evidence to the effect that their chartered accountants or financial analysts since 2010 had told them—the people they were being paid by—that they were in real danger and had better change the way in which they paid their taxes?

[Sir Edward Davey]

We took no such evidence and no such evidence was proffered to us. It might exist out there, but we have certainly not seen it.

I do not want to detain the House any longer, as I have made my core point. The whole reason why this has been such a big issue and has united the House is that the loan charge is retrospective, and that is unfair and wrong. We have to defend individual taxpayers, even if we think they might have been ill-advised in the first place. We have to defend the law. Why do we meet in this House? Why do we pass laws, unless we come back here and say, “Government—you’re breaking the law”, and hold them to account for that? That is our constitutional job, and I thank right hon. and hon. Members from across the House for doing their duty.

Offensive Weapons Bill

Debate between Ed Davey and Bob Stewart

Ping Pong: House of Commons
Tuesday 26th March 2019 Commons Chamber

[Sir Edward Davey]

There I have sympathy with the Minister, and I want to propose an alternative which addresses that very point. However, she was beginning to suggest—I am not sure that she meant to—that a criminal test had to be passed, and that is not what is in the Bill. It is not a criminal test that must be passed; it is a civil test, which could then result in a criminal record. I think that the House should think very carefully before going down that road.

Let me say a little about the alternative model that I want the Minister to consider. I am proposing what I have called anti-blade contracts. The idea is that a police officer, along with the parents or a carer, or possibly a youth officer, would sit down with a young person and require them to sign a contract saying that they should not carry a knife and that there would be consequences—for instance, fines or community sentences —if they were caught doing so. Crucially, however, linked with the public health or prevention approach would be positive elements. Young people could, for example, contact a named youth worker or police officer if they were concerned about their safety. There could also be a package of other support, which might involve access to youth services.

That is the way to change behaviour. That is the way to prevent a young person from ending up on the pathway to more crime. People who go to prison often see it as a college of crime, and we must try to avoid that. The approach that I am suggesting would do what the Minister wants: it would meet her objectives, but without the cost and without the potentially damaging impact that her orders would have.

[Bob Stewart]

Is the right hon. Gentleman suggesting that all young people should sign such contracts? That has a certain appeal to me—the idea that everyone at school, say, is given a lesson and then signs a contract, so that they understand what they are doing. Is that what the right hon. Gentleman is proposing?

[Sir Edward Davey]

Not in the first place. The idea—and this goes alongside the Government’s proposal—is not that every young person would be open to the process, but that it could be offered to young people who were thought to be in danger. I am not sure whether we would want it to be applied to every young person, although it could go further and be part of an educative process as well. Given the lack of resources in the police and youth services, I think that we should target those who are most at risk in the first instance.

The crucial part of my argument is that I am putting forward something that is based on evidence. The evidence from the Home Office, in its reports on the difference between antisocial behaviour orders and acceptable behaviour contracts back in 2004, and the evidence from the National Audit Office in a 2006 report, suggested that ABCs were far more effective in changing young people’s behaviour, which is what we want to do. More important—or, at least, as important—was the fact that they were cheaper. They took less time. Orders that need to go to court require considerable police resources, and we do not have those resources. They also take up the time of magistrates, which is already rather stretched, so we are putting forward something that goes against the evidence from the past and that we know is going to be more expensive and more time consuming. This is an urgent problem, and our proposal based on evidence does not need even this place to legislate. We could get on with it; we could issue guidance. Why on earth are we doing this? The situation is far more urgent than the Government seem to think. The Minister’s proposal would take so much time and money when we know that is not available.

I implore the Minister: I am pleased that she has nodded from a sedentary position to indicate that she is prepared to meet me to discuss our proposal—

Leaving the EU: Negotiations

Debate between Ed Davey and Bob Stewart

Tuesday 10th July 2018 Commons Chamber

[Bob Stewart (Beckenham) (Con)]

Will the Minister give way?

[Sir Edward Davey]

Will the Minister give way?

Ahmadiyya Muslim Community

Debate between Ed Davey and Bob Stewart

Thursday 24th May 2018 Commons Chamber

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

It is a huge pleasure to follow the right hon. Member for Putney (Justine Greening). I apologise for not always notifying her when I go to the mosque in Southfields to meet his Holiness the spiritual leader of the Ahmadi Muslim community and others to talk to them about their issues, although I am sure that she does not really mind. I also pay tribute to the hon. Member for Mitcham and Morden (Siobhain McDonagh) for her leadership on the all-party parliamentary group, of which I am proud to serve as vice-chair. Our current inquiry is a very important piece of work, and I hope that the House will have a chance later this year to look at it. I pay tribute to her for securing this debate.

I do not want to repeat all the warm and correct words that have been spoken already about the role that the Ahmadi Muslim community plays in our country, except to say that one of the joys in my constituency has been getting to know Ahmadi Muslims, learning about the role they play in Britain and around the world, including of course in Pakistan, and seeing how hard they work. I am always astounded by their discipline and by the amount of time they give to charities, in particular, and to raising money. As others have said, the amount of money they raise and the things they do to help British communities in distress, such as during the floods, and through Humanity First, which does amazing work for some of the poorest in our world, is an example of people of faith living that faith through their actions.

The persecution that Ahmadi Muslims face, particularly in Pakistan, is quite abhorrent. The way in which the law in Pakistan—from the constitutional provisions to the penal code—allows state persecution is quite shocking and quite unique. By putting that into its laws, the state of Pakistan gives a green light to the people of Pakistan—many of whom I am sure, in many ways, are extremely religious and good people—to commit awful behaviour, which means that people who persecute, attack and even murder Ahmadi Muslims get away with it. They know that they will not be prosecuted or brought to justice, which means the rule of law does not exist for Ahmadi Muslims in Pakistan, which is atrocious. That is why this country needs to speak loudly and clearly to the Government of Pakistan about how this is absolutely unacceptable.

[Bob Stewart (Beckenham) (Con)]

I thought the Foreign Office was quite big on this matter and was talking about it quite a lot to the Government of Pakistan. This debate will help, but the Government are already trying their best.

[Sir Edward Davey]

The hon. Gentleman is right. This debate is not an attack on the Minister, who has done a good job. The right hon. Member for Putney mentioned Lord Ahmad. As an Ahmadi Muslim, he is able to speak with authority and credibility, and I pay tribute to him.

Energy Price Freeze

Debate between Ed Davey and Bob Stewart

Wednesday 2nd April 2014 Commons Chamber

[Mr Davey]

I am prepared to give credit to all parties, which is something the Opposition rarely do. I am pleased that they voted for our Energy Act 2013 and now support the market investigation reference, but it was the Conservatives and Liberal Democrats, in opposition, who had to push time and again to get the Labour Government to act on things such as feed-in tariffs, so we will not take any lectures on that.

We are acting to bring far greater openness to the retail markets so that the energy suppliers can be held to account for their prices, and we are acting to increase liquidity in the wholesale markets, further boosting competition. All these actions maintain the pressure that bears down on prices. As the competition authorities take forward their work in the proper manner, we will continue to act to ensure that we have a real evidence base on how to continue to mend the markets that Labour ran into the ground. That work will take around 18 months to complete, but as I said at the start, because of Government action, the energy companies are now saying that there should be no further rises in bills over the next year unless circumstances change drastically. Some have gone further, and I welcome that.

[Bob Stewart (Beckenham) (Con)]

It seems that the way to bring prices down for consumers is to encourage more independents, which seem to have tripled their customer base over the past two years. Will we get more independents, as they seem to keep their prices down?

[Mr Davey]

My hon. Friend is right. The independents’ share of the retail market has gone from 1% in 2010 to 5% under this Government. We have seen people switching from the big six to the small independents. Just last month 40% of those switching went to the smaller independent suppliers. Their customer base has been growing, but it is because we are not complacent, unlike the previous Government, that we have asked Ofgem to make their competition assessment, and we are supporting its proposal for a market investigation reference.

Were the Government to fix prices by law, as the Opposition propose, without any idea of the consequences, we would risk undoing all the progress we have made for consumers and business, risking the investment we need to keep the lights on into the next decade for consumers, undermining the independent suppliers and forcing consumers back into the hands of the big six. Let us continue to expose Labour’s energy gimmick to the oxygen of debate between now and the next election. The Sun may well re-run the Kinnock front page from 1992.

Energy Bills

Debate between Ed Davey and Bob Stewart

Monday 2nd December 2013 Commons Chamber

[Mr Davey]

We approached the review with the intention of ensuring not only that we kept the support for the fuel-poor and the investment for green energy, but that it was carbon neutral. The package we have put together, not only with the energy efficiency investments we have announced today but with announcements that will be made in the autumn statement, will show that it is indeed carbon neutral.

[Bob Stewart (Beckenham) (Con)]

Would it be possible to tackle the problem of VAT on fuel by ignoring a European Union directive and saying that we are just not going to collect it?

[Mr Davey]

I think that would be very unwise. I am sure that the Chancellor’s lawyers would explain that it is not legally possible.

UK Nuclear Energy Programme

Debate between Ed Davey and Bob Stewart

Monday 21st October 2013 Commons Chamber

[Mr Davey]

I believe it is, and the investors certainly do as well. One of the things that gives me confidence about today’s decision is the high degree of planning that has gone into the project. We will benefit from the fact that the reactor design has already gone through a long period of generic design assessment in the Office for Nuclear Regulation, and that EDF has learned lessons from Finland, France and China. My hon. Friend should therefore not worry that the supply chain will not be capable of meeting the demands. This is all in EDF’s plan.

[Bob Stewart (Beckenham) (Con)]

The Chinese have developed a whole division concerned with cyber-security. The Chinese already own three electricity transmission grids in this country and they will now substantially own Hinkley. Will my right hon. Friend assure us that as much safety as possible has been put into this plan? We are in a benign environment at the moment, but if that changed, I would be concerned about running risks with our infrastructure.

[Mr Davey]

Of course the Government have considered the national security implications; we looked at them in some detail. My right hon. Friend the Foreign Secretary and, indeed, others have looked at cyber-security as a whole to make sure that this country is protected, not just from potential investors in the UK but more broadly. I believe that this Government have put in place the sort of protections that I think my hon. Friend is seeking.

Gas Market Fraud

Debate between Ed Davey and Bob Stewart

Tuesday 13th November 2012 Commons Chamber

[Mr Davey]

I am grateful to the hon. Lady for her question. She will know that consumer credit markets are regulated. I know she has been campaigning for a particular type of regulation and a particular type of credit, but it would be a caricature to say that consumer credit markets are not regulated at all. These markets are also regulated, and this Government have strengthened that regulation.

[Bob Stewart (Beckenham) (Con)]

Will my right hon. Friend ensure that, if gas market fraud has occurred, the investigation identifies exactly who gave the order and who gave the instruction, because that person, in whatever company, is the person most guilty—and they most of all should have the book thrown at them?

[Mr Davey]

I share my hon. Friend’s sentiments, but I stress that it is up to the independent regulators to investigate in the way that the law prescribes. I do not think my hon. Friend would expect me to do the investigations myself. We create the legal framework, and it is under that framework that Ofgem, the FSA and, if necessary, the OFT conduct their work.