Finance (No. 2) Bill

Felicity Buchan Excerpts

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[James Murray]

No, let me make some progress.

The Government are wrong, and that is why we will be voting to stop the Chancellor’s tax break going to the biggest tech firms or other big corporations that do not support workers’ rights and the living wage. We need a fairer tax system and we need investment in jobs and growth. This Government’s Finance Bill fails on both fronts. I urge Conservative Members to show that they understand this, support our amendments today and take a stand against the Amazon tax cut.

[Felicity Buchan (Kensington) (Con)]

I speak in support of clauses 6 to 14 and against the amendments. This Finance Bill needs to be a delicate balancing act. It needs to give immediate support to businesses and individuals while setting a path to rebalance our books in the medium to long term. In my view, these provisions on corporate taxation and the super deduction get that balance exactly right. The Bill defers the increase in corporation tax for two years and applies to only one in 10 businesses at 25%, but at the same time it turbocharges the incentives to invest in business now.

This country has had a perennial problem with productivity. We need to incentivise and encourage business investment. That business investment will help productivity, growth and innovation, and that is exactly what we need. The OBR has said that it anticipates that business investment will go up by a massive 10% as a result of this measure and, as my right hon. Friend the Minister mentioned in his introductory remarks, we will go from No. 30 in the OECD rankings for attractiveness for business investment to No. 1. That is what we need over the course of the next two years as we turbocharge this economic recovery. We need the economic recovery to be strong.

[Sammy Wilson]

Does the hon. Lady accept that many of our large companies will lead the way in our export growth as we seek to capitalise on the new markets that will open to us as a result of Brexit, and that to capitalise on that we need new, competitive products and to be productive and competitive on the world stage, which is why we need to encourage investment in firms both large and small?

[Felicity Buchan]

The right hon. Gentleman makes a very good point. We need to encourage investment across the board in large, medium-sized and small firms. Productivity has lagged and we need to correct that, so I absolutely agree.

Let me move on to corporation tax. As I have said, we will increase corporation tax but that is delayed for two years. Corporation tax, by definition, is paid only by profitable companies. I am a low-tax Conservative, so I do not normally advocate increasing taxes, but given the exceptional amount of debt that we have rightly accrued and taken on, we need to be fiscally prudent and look to balance our books in the medium to long term. The reality is that we are very sensitive to interest rates and inflation, given the debt we have; so yes, I do think we need to do this, although it goes against the grain. However, as my right hon. Friend the Minister has said, even with the increase to 25% we still have the lowest headline corporation tax rate in the G7.

I also want to point out that the measure applies only to the most profitable businesses, those that make £250,000-plus. A small business that makes profits of up to £50,000 will have no change whatsoever in its corporation tax, and businesses in between will have a tapered rate. I believe that this is an unavoidable increase in corporation tax, but it still leaves us incredibly competitive on the international stage, and it applies to only one out of 10 businesses.

[Sammy Wilson]

Does the hon. Lady accept that, despite the impression being given tonight that we are going to tax firms less and take less money off them, the Red Book indicates that corporation tax take in the economy as a whole will escalate from £40 billion this year to £85 billion by the end of the Budget period? The result will be that we take more tax from firms. Hopefully, those firms will become more profitable and will therefore be paying more tax.

[Felicity Buchan]

I completely agree with the right hon. Gentleman that all the forecasts show a very substantial increase in the tax take by virtue of this move in corporation tax.

I believe that we have the right balance. We are increasing corporation tax, but only for 10% of our businesses and only in two years’ time. Importantly, we are also accelerating and incentivising investment in businesses, which will be critical to our economic recovery.

[Richard Thomson (Gordon) (SNP)]

I want to speak to the amendments and, in particular, the new clauses that have been tabled in my name and those of my colleagues.

First, I will start with the positives. We very much welcome the planned increase in corporation tax rates. For a number of years, there has been an orthodoxy that lower corporation tax rates are one way to economic growth. There was a period in the 1980s through to about the 2000s when it was possible to make the argument, as many did, that lower taxes could be a route to securing an increased level of foreign and direct investment, and that the resulting increase in economic activity could result in higher tax revenues than might otherwise have been the case. I would like to think that we are all just a bit wiser and more savvy now, given that, in the growth of that period, it is impossible to properly separate out the increase in corporation tax take and the general growth in activity that took place independently.

Given that we did not see conspicuously high levels of investment or wage growth over that period, except perhaps in boardrooms, and given the condition of our public finances and the importance of public goods as a driver of wellbeing and sustainable growth and prosperity, we consider that this increase, which will apply a new 25% rate on the top 10% of firms, is fully justified. We are relieved that firms will have until 2023 to plan for this move. We believe it was misguided for the Chancellor to try to increase it from 19% to 20% in September, ahead of any recovery starting, beyond the anticipated return-to-trend growth that we are seeing anyway.

The SNP firmly believes that it is important that our corporate citizens pay their share towards the maintenance and good functioning of the market and the public goods that allow them to flourish. However, domestic corporation tax is only part of that story. If re-elected—obviously, we have elections coming up in Scotland, which I am sure hon. Members are focused on avidly—the SNP Government will be looking to explore the possibility of levying a higher poundage on properties where the owner is registered in a tax haven. That is part and parcel of the package of measures that is needed to ensure that everyone who benefits from participation in the market is making a suitable contribution towards it.

Further, we believe that the UK must seize the opportunity that this moment presents to work closely with the Biden Administration in the USA. We must heed the call of that Administration’s Treasury Secretary, Janet Yellen, to set a global minimum tax take for companies to ensure the global economy can thrive, based on a more level playing field and the taxation of multinational corporations, and help spur innovation, growth and prosperity.

New clause 13 would oblige the Government to review the impact of the changes made by clauses 6 to 14 in all parts of the UK, particularly in respect of business investment, employment, productivity, GDP growth and poverty, and to compare the difference in actual and forecast outcomes between having a deal in place with other OECD countries on a minimum level of corporation tax and not.

Similarly, new clause 19 asks the Government to review these changes but in a way that looks both forwards and backwards. As I said earlier, orthodoxies may change in economics, and the Chancellor’s commitment to increasing the headline rate seems to mark the end of a protracted period of a race to the bottom on corporation tax rates. The Chancellor himself said on 3 March that cuts

“might not be the most effective way to drive capital investment up”.

On that basis, it is very important that the Government should compare the estimated impact of corporation tax changes in the Bill with the impact of the changes in corporation tax rates that we have seen in each of the past 12 years.

New clause 20 seeks a review of corporation tax provisions on the link between corporate profit rates and ownership, and the cost of reintroducing a small profits rate. We believe that the lower small profits rate introduces an unnecessary degree of complexity into the tax system. We were unable to find specific costings for the reintroduction of the small profits rate in the OBR policy costings. Instead, they appear to have been rolled into the costings for the overall rate increase. The Treasury should publish details of the revenue forgone through this measure for the purposes of proper scrutiny.

New clause 21 seeks a report on the impact of the super deduction on progress towards the Government’s climate emissions targets and capital investment in each of the next five years. It is important that we understand properly not just the impact that the super deduction is expected to have but the impact it actually has, because it is one of the most significant spending measures in the Budget and a very significant giveaway to big business.

The super deduction is poorly targeted, since it applies to physical assets rather than investments in software, for example, and seems to mostly benefit larger companies. Smaller investments are already tax-deductible under the annual investment allowance. OBR analysis suggests that some £5 billion of the super deduction will, in any event, be spent on previously planned investments. It is hard to avoid the conclusion that this measure will benefit larger companies in a way that does not necessarily drive growth in the way that the Chancellor would hope and certainly does not target the small and medium-sized enterprises that benefited from those deductions anyway and are the engine of growth in most parts of these islands.

When setting policy, it is always a good idea to know what we are doing and why and to have the most solid evidential base for doing so. The fact that we will not put these measures to a vote does not diminish the significance and importance of what we propose. I can assure the Minister that we will return to these matters and will look to the Government to act, even if these matters are not addressed in the final version of the Bill.

Covid-19: Ethnic Minority Disparities

Felicity Buchan Excerpts

Monday 1st March 2021 Commons Chamber

[Kemi Badenoch]

I am afraid the hon. Lady is confusing one initiative for helping to improve vaccine take-up with the vaccine take-up plan. I wrote to her in October, asking her to take part in the vaccine trials. I sent that message to the Opposition Whips Office as well as to the Government Whips Office. I took part in vaccine trials in October, and there is a big difference between taking part in vaccine trials, and being vaccine-confident. One key thing about disinformation is that people believe the Government are testing vaccines on ethnic minorities, and the messaging we need to use for vaccine trials, which the hon. Lady mentioned earlier, is completely different from that needed for a vaccine-confidence campaign. She can rest assured that those of us in government know what we are doing, even if she does not.

[Felicity Buchan (Kensington) (Con)]

I recently visited the vaccination centre at St Charles’ Hospital in North Kensington, and while I was there I was delighted to see that the majority of patients getting the jabs were from ethnic minorities. We have also seen a pop-up centre at the mosque, Al-Minaar, in North Kensington. Does my hon. Friend agree that we need to focus on discrete individual communities to ensure that vaccine take-up is as high as possible?

[Kemi Badenoch]

I agree with my hon. Friend, and that is one of the reasons we are discouraging the use of the term “BAME” when talking about these issues, as this conflates lots of different communities. We must be very specific about who we are talking about, and what their individual needs are. Various different initiatives will be tackled, based on the specific needs of community groups, and I am pleased that it looks as if there is successful vaccine take-up in her constituency.

Exiting the European Union (Excise)

Felicity Buchan Excerpts

Wednesday 3rd February 2021 Commons Chamber

[Felicity Buchan (Kensington) (Con) [V]]

I will focus my remarks on the abolition of VAT RES—the VAT retail export scheme. It has potential implications for my constituency, which is a major international hub of shopping and tourism, and also for rest of the country, since so many manufacturing jobs in luxury goods are scattered throughout the country, including in the north-east, the south-west and Scotland.

Let me just give a few numbers. Some 16 million non-EU international visitors come to the UK in normal times, although clearly not this year. They spend more than £17 billion, of which only £2.5 billion approximately is in tax-free shopping. I am concerned that if we disincentivise these visitors from coming to the UK, we materially affect other areas of our economy, and potentially also the Treasury’s tax take. For instance, these visitors stay in hotels and use restaurants, and the Treasury could lose the VAT on that expenditure. My concern is that these shoppers, who are a very distinct group of people, are highly mobile. The risk is that if we are no longer competitive, and we are the only European country not offering tax-free shopping, they will simply go to Paris or Milan. I am also concerned about the effect that it will have on my high streets, which are clearly already suffering from coronavirus and online shopping.

This measure has already taken effect as of 1 January. I ask the Minister that we continue to review the effect of this measure and that we do a full impact assessment that not only includes the top line, but looks at all the effects on the economy—the loss of VAT, the potential loss of business rates, and the potential effect if retail or manufacturing jobs go. I hope, from the bottom of my heart, that these things do not happen, but I ask the Minister to monitor the situation, and if the data and evidence do not look good, we should be prepared to revisit the decision.

Economic Update

Felicity Buchan Excerpts

Monday 11th January 2021 Commons Chamber

[Rishi Sunak]

As part of the announcement made last week, half a billion pounds of discretionary funding is being made available to local councils. That comes on top of the £1.1 billion that was made available at the end of autumn last year. If local councils want, some of that funding can go to support the very people the hon. Gentleman is talking about.

[Felicity Buchan (Kensington) (Con)]

Financial services are very important to my constituency and to the country as a whole. I welcome the free trade agreement, but clearly there is more to be negotiated on financial services. Will my right hon. Friend outline how we can retain the strong relationship with Europe on financial services, while retaining autonomy to adapt the industry to our needs?

[Rishi Sunak]

I praise my hon. Friend for being a fantastic representative of her constituents when it comes to financial services. I have enjoyed my conversations with her, and I look forward to working with her and the industry to ensure that we maintain a close relationship with the EU, but also that we look to capitalise on the new opportunities, making sure that London remains a pre-eminent global centre and that the UK does its bit. Whether it is on greening the financial system or taking advantage of new digital technologies, we must lead the world, and I know that she will help me to do that.

Future Relationship with the EU

Felicity Buchan Excerpts

Thursday 10th December 2020 Commons Chamber

[Penny Mordaunt]

The hon. Gentleman is right to say that the efforts the civil service went to in order to prepare for a no-deal scenario last year stood us in much better stead for what then happened with regard to the pandemic. That is not an argument for Brexit; it is simply a fact that this nation was much more resilient because of the no-deal planning scenario. I cannot give him drug by drug, line by line details on the stocks, as he will appreciate, but I am sure the Department of Health and Social Care can. I can, however, reassure him on those matters. A huge amount of work has done, in a multi-layered approach, asking suppliers of medicines, medical products and other medical devices to help us replenish those stocks, while making sure that they themselves are trader-ready, so that their businesses are not interrupted. [Interruption.] No, I am saying that he should have reassurance on the points he has raised, and I will be happy to follow up with him with further detail regarding paracetamol and the other items he mentioned.

[Felicity Buchan (Kensington) (Con)]

Financial services are crucial for not only London but Scotland and many of our regional cities. Will my right hon. Friend assure me that financial services, and indeed the service sector as a whole, will be at the forefront of our minds in the next few days, given the importance of services to our economy?

[Penny Mordaunt]

I can give my hon. Friend those assurances. Services were one area where we were very poorly served by our membership of the EU. As well as the negotiations, the Department for International Trade has been doing fantastic work in signing roll-over trade agreements and new agreements with many nations. There are fantastic opportunities for our service economy in those nations.

Oral Answers to Questions

Felicity Buchan Excerpts

Tuesday 1st December 2020 Commons Chamber

[Rishi Sunak]

My right hon. Friend will have seen the analysis we did publish, which talked specifically about sectoral impact. In the document, there were specific links to the various places that people can find GVA and employment by sector and, indeed, the financial resilience of local businesses at some stages by sector and by region. It is that analysis, as we have said, that will determine the particular economic impact in an area. That information is all provided in the report for people to look at.

[Felicity Buchan (Kensington) (Con)]

What steps his Department is taking to support self-employed people affected by the covid-19 outbreak.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

What steps his Department is taking to support self-employed people affected by the covid-19 outbreak.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jesse Norman)]

As my hon. Friend the Member for Kensington (Felicity Buchan) will be aware, the Government have taken unprecedented steps to support the self-employed during this crisis, and that includes through the self-employment income support scheme, which has been extended up to April, with details of the third grant published last week.

[Felicity Buchan]

Many self-employed people are at the forefront of innovation and start-ups. Can my right hon. Friend tell me what the Treasury is doing to support innovation as we look to rebuild our economy?

[Jesse Norman]

My hon. Friend is absolutely right about the importance of innovation. She will be delighted to know that the Government are protecting innovators and start-ups from the impact of covid through almost £900 million of future fund loans to date, £79 million for innovation loans as well as other grants, and that comes on top of more than £5 billion of support through research and development tax credits claimed for 2018-19 so far, which support more than £35 billion of R&D expenditure.

Covid-19: Economy Update

Felicity Buchan Excerpts

Thursday 22nd October 2020 Commons Chamber

[Rishi Sunak]

That is an interesting idea. Obviously, for areas in tier 3, the local authorities are receiving funding to use at their discretion. It may well be that that is an idea they want to take up. Of course, for both open and closed businesses in tiers 2 or 3, I have announced a series of grants today and it will be up to those businesses to use them on whatever they want. Primarily, we assume that they will use them to cover the fixed costs of things such as rent, but, of course, it will be up to them what they use them for. None the less, my hon. Friend makes a good suggestion, which, together with our planning changes, means that those businesses can serve as many customers as possible, even though they face restrictions at the moment.

[Felicity Buchan (Kensington) (Con)]

I warmly welcome the additional support for tier 2 areas, such as my constituency in London. Does my right hon. Friend agree that we need to get London back into tier 1 as soon as possible as London is the engine of this country’s economy, accounting for 25% of all tax revenue?

[Rishi Sunak]

My hon. Friend is a rightly proud champion of her businesses in central London. Obviously, what is happening not just to our capital city but to all our city centres is incredibly sad. We all want to see them springing back to life and vibrancy. Hopefully, the measures that we have announced today will provide some support and breathing space to help them get through a difficult period until they can get back on their feet and do exactly what we want them to do, which is return to where they were—bustling and welcoming us all back into their shops and restaurants.

Black History Month

Felicity Buchan Excerpts

Tuesday 20th October 2020 Commons Chamber

[Felicity Buchan (Kensington) (Con)]

I am proud to represent the constituency of Kensington, which has Notting Hill and North Kensington at its beating heart. I am delighted that, when the Windrush generation came to the UK, many settled in Notting Hill and the Ladbroke Grove area. We saw the birth of one of the most iconic cultural celebrations of black British life: the Notting Hill carnival. Although it was clearly not possible for it to take place physically this year, I am glad to say that it went ahead virtually.

There is so much to celebrate about the black community in Kensington, and I am delighted that my council recognised that this month in awarding Black History Month grants to many local groups and institutions to celebrate the involvement of black British people in our cultural life. One of those was the Harrow Club—an inspirational charity and youth club that I had the pleasure of taking the Home Secretary to see at the beginning of the year.

There is so much talent in the black community, as has been referred to, in the arts, in media, in film and in sport, and we must harness that talent. We must understand that it is present not only in the creative arts, but also in business, which is my background. There are so many talented black people in the corporate world, and so many young, talented black entrepreneurs in my constituency want to go out there, set up businesses, create wealth and create opportunities for the wider community.

We must also recognise the challenges in the black community, a number of which have been referred to. Clearly, the treatment of many in the Windrush generation by successive Governments, Labour and Conservative, was unacceptable. Those injustices cannot be unwound, but I am glad to say that the Home Secretary has accepted the recommendations of the Wendy Williams review. The recent coronavirus crisis has shown up health inequalities, and I am glad that my hon. Friend the Minister is leading on six new research projects to look at the correspondence between covid and ethnicity.

Average hourly earnings are still less among black people in the 30-plus age group, but, interestingly, they have almost evened up between black people and white people in the 16 to 30-year-old age group. Interestingly, the Chinese community and the Indian community surpass the white community in both those age groups. That is why this Government’s agenda of levelling up is so important—not only levelling up as between the north and the south, but levelling up in our inner cities. I believe passionately in equality of opportunity in education, in the workplace and in healthcare. Let us celebrate the huge contribution that the black community have made to Kensington and to the UK, and let us look forward to even more.

Stamp Duty Land Tax (Temporary Relief) Bill

Felicity Buchan Excerpts

2nd reading & 2nd reading: House of Commons
Monday 13th July 2020 Commons Chamber

[Felicity Buchan (Kensington) (Con)]

I promise I will be very brief. I warmly welcome the temporary cut to stamp duty. This will benefit approximately 90% of new homebuyers in the country. However, alongside some of my Conservative colleagues, I urge my right hon. Friend the Minister to be bolder and broader, and to look at a fundamental reform of stamp duty. Stamp duty, ultimately, is a tax on social mobility and aspiration. It prevents people from moving house to pursue new job opportunities, it prevents growing families from moving to more appropriate accommodation and, at the same time, it prevents those who want to downsize.

In my constituency, stamp duty has unintended consequences. People cannot afford the stamp duty to move to a bigger house, so what do they do? They start to renovate and to extend their existing house. For people who live in dense terraces in central London, that often means basement excavations, with all of the nuisance and noise that they cause to neighbours. Similarly, a lot of people who are in private rented accommodation are put off buying because they are concerned about the amount of stamp duty.

I completely accept the comments of the Minister that we cannot simply cut taxes without thinking about where revenue will come from, but I argue that the current levels of stamp duty at 5%, 10% and 12% are punitive levels of taxation. Certainly in my constituency, we have simply seen the number of transactions fall. I had a look at the numbers in Kensington: from 2015-16 to 2018-19, the fall in the total number of transactions was 38%, and the fall in the value of those transactions to the Exchequer was 26%. My hon. Friend for South Cambridgeshire (Anthony Browne) made the point about what we lose not only in stamp duty, but in building and renovations and in lawyers’ fees.

I welcome this measure. I am not naive—we need tax revenue in future—but I feel that this tax needs to be looked at in detail and can be finessed.

Finance Bill

Felicity Buchan Excerpts

Report stage & Report: 2nd sitting & Report: 2nd sitting: House of Commons
Thursday 2nd July 2020 Commons Chamber

[Felicity Buchan (Kensington) (Con)]

I believe that the hon. Member for Houghton and Sunderland South (Bridget Phillipson) said that there were no female Members on the Conservative Benches, so I just want to reassure her that I am still a woman. I am also delighted to say that on the Treasury Select Committee we have five Conservative Back Benchers, of which three are women. So women are very much represented on the financial side on these Benches.

I promise to be brief, so I want to talk about only two areas in this Bill, which are really relevant to my constituents in Kensington. The first is the digital sales tax, which I commend to the House. We all want it to be superseded by a multilateral solution, but it is an important and bold interim measure. Kensington High Street, like high streets across the country, is suffering. That is partly due to the burden of business rates, but it is also due to changing shopping habits. The new tax will be an important source of revenue for the Exchequer, and it will also go some way towards levelling the playing field between online retail and high streets. I am also looking forward to the fundamental review of business rates that we shall see later in the year.

I also commend to the House the measures in this Bill that incentivise the greening of the economy. Over the last 10 years, we have shown that we can have economic growth while lowering emissions. The environment is critical to my residents in Kensington and, in particular, air quality, since we are in central London. I am glad that my area, Kensington and Chelsea, has seen the largest three-yearly decline in emissions in the whole of London, but we all know that there is an awful lot still to be done, so I welcome many of the measures in this Bill, such as the support for zero-emission vehicles, the changes to the vehicle excise duty regime and the preparations for the introduction of the plastic packaging tax. These will all be warmly welcomed in Kensington.

In the interests of brevity, I am going to conclude there and commend this Bill to the House.