Oral Answers to Questions

Debate between Gareth Davies and Nigel Mills

Tuesday 19th December 2023 Commons Chamber

[Gareth Davies]

I recognise and thank my hon. Friend for his work as chair of the Commission for Carbon Competitiveness. I will directly address his two main questions. On speed, implementation by 2027, at the latest, will allow the Government to engage with businesses to ensure that they are well prepared, but next year’s consultation will provide more information on timings. We have identified eight sectors that have the greatest exposure to carbon leakage, from both a trade and an emissions perspective.

[Nigel Mills (Amber Valley) (Con)]

20. What progress he has made on the introduction of investment zones.

[The Exchequer Secretary to the Treasury (Gareth Davies)]

Since the spring Budget, the Government have announced seven of the eight English investment zones and confirmed the location of four places eligible to host investment zones in Scotland and Wales. The Government are committed to ensuring that funding and tax sites go live in the 2024-25 financial year.

[Nigel Mills]

I welcome the investment zone in Nottinghamshire and Derbyshire. Will the Minister confirm that some of the benefits of these zones are not only available in the small number of large sites but are available to any business across the whole zone to apply for?

[Gareth Davies]

My hon. Friend is right to recognise the east midlands investment zone, which will bring significant benefits across the region in the advanced manufacturing and green industry sectors. I am pleased to tell him that it started with a £9.3 million anchor investment and, over time, will leverage some £323 million in private investment, supporting 4,000 jobs overall.

Plastic Packaging Tax on Imports: HMRC Enforcement

Debate between Gareth Davies and Nigel Mills

Tuesday 17th October 2023 Westminster Hall

[Gareth Davies]

To be clear, the presumption is that businesses need to demonstrate that they meet the threshold to have relief from the tax. If they cannot do that, they must pay the tax. That is clear, and I hope that that answers my hon. Friend’s question.

Businesses are also required to carry out due diligence on their supply chains and to demonstrate to HMRC what checks have been carried out in their supply chains. HMRC can and will challenge claims from businesses, and is doing so, and anyone in the supply chain can be held liable. When assessing that liability, HMRC will consider due diligence checks undertaken to ensure that the supply chain has taken appropriate steps.

My hon. Friends the Members for Rugby and for Amber Valley both talked about false and fraudulent claims. We are alive to that issue, particularly as it relates, as they pointed out, to the content of recycled plastic. We understand that that is a serious impact for businesses that are just trying to do the right thing, as I said at the beginning.

To embed the tax, HMRC delivered a wide-ranging communications programme that targeted both domestic manufacturers and importers of packaging. It focused on making them aware of the requirements and supporting them to comply with those. Recognising that some businesses may need more time to fully understand their obligations under the new tax, HMRC went even further and allowed a 12-month soft landing period, during which the focus was on education and support for businesses.

Now that that period has ended, businesses must ensure that they have gathered appropriate evidence, filed their returns and paid on time. Although HMRC continues to support businesses, it is now also focusing its efforts and targeting its resources on the areas of highest risk and non-compliance. The tax has been in place for 18 months, so HMRC now holds more data from tax returns to inform risk profiling and emerging trends. Its data-driven approach will help to identify and target instances of error and non-compliance. I will come on to what action has been taken in a second.

As with general taxation, HMRC’s compliance activity for PPT draws on a test and learn approach. That moves through various phases, and approaches can change depending on what HMRC learns along the way. Largely, it has concentrated on targeting unregistered businesses that may have a liability and on developing a better understanding of the plastic packaging tax population, particularly given the tax is so new, to build a risk compliance approach.

I want to address the question of registration. To reiterate, over 4,000 businesses have registered for the tax in 2022-23. We concede that that is lower than the initial estimate of 20,000, but that estimate was made before the final policy decisions on the tax were made. We were very clear that the estimate was always subject to a lot of uncertainty. HMRC continues to engage with businesses and hold them to account. I am pleased to say that, since the tax was launched, 250 additional businesses have now registered with HMRC.

Businesses found to be negligent or cheating the system will incur penalties in addition to the tax due and can face liabilities of up to 100% of the tax due. They can also face legal action to recover the tax; in the most serious cases, as I have said, criminal prosecution may take place. My hon. Friend the Member for Amber Valley asked for statistics on this. I can tell him that so far HMRC has contacted 2,000 businesses proactively and conducted 400 interventions on compliance since the tax went live. So far, £3 million has been recovered as a result of that action. I point out that HMRC will always be open to receiving any information or evidence where businesses or individuals feel that compliance is not in order.

[Nigel Mills]

I do not know whether the Minister knows this, but was the enforcement action against the importer or against somebody further up the supply chain?

[Gareth Davies]

I had anticipated the question, but was unable to obtain the information in time. If we have that information, I will be happy to follow up and write to my hon. Friend on the breakdown, because he is focused on importers and it is a reasonable question.

I will finally address the point on mass balance and chemical recycling. I should point out that we have launched a consultation on this matter. We are looking at it carefully and will respond to that soon, so watch this space on that point.

As in other areas of tax fraud, the Government are committed to taking strong action across the tax system to address any activity that is unfair and that undermines businesses that are doing the right thing. The plastic packaging tax revenues in the first year, as has already been said, were £276 million, which is broadly in line with the Office for Budget Responsibility’s forecasts. That indicates that the amount of plastic packaging subject to the tax is in line with expectations. However, as hon. Members will have heard, work to ensure that all obligated businesses are registered and compliant with the tax continues to this day. If a business or individual has specific concerns or, I reiterate, intelligence about tax non-compliance, I encourage them to report it to HMRC through the normal channels, so that we can ensure a level playing field for everyone. Everybody in this Chamber has expressed a desire to achieve that.

Oral Answers to Questions

Debate between Gareth Davies and Nigel Mills

Tuesday 5th September 2023 Commons Chamber

[Gareth Davies]

We are clear that we want all taxes relating to the environment to have an impact. The plastic packaging tax, for example, will clearly have an impact on the amount of recycling that takes place and on the amounts put into landfill. Those are all things that we assess as part of evaluations, and the plastic packaging tax will be evaluated this year.

[Nigel Mills (Amber Valley) (Con)]

10. What steps his Department is taking to incentivise pension schemes to invest in the UK.

Saving for Later Life

Debate between Gareth Davies and Nigel Mills

Tuesday 7th February 2023 Westminster Hall

[Nigel Mills]

The hon. Lady is absolutely right. It is important to explain to people not just from that background, but from all backgrounds, that pensions are a good thing, safe and a good way of saving for retirement. People just do not understand pensions, and they are quite cynical and sceptical about the idea that their money will be there. The more we can do to reassure them, the better.

I have two more quick points to make. We have wrestled for years with the conflict for younger people: should they save for a deposit to get on the housing ladder, or should they save for a pension? The pension industry screams if it is suggested that the former is possibly a good idea. There have been various ideas about how to link the two, but we have not yet made any progress on which one to go for. A key determinant of someone’s financial health in retirement is whether they own a house. If they do, they do not have housing costs to pay and they have an asset that they may be able to downsize to boost their pension pot, so getting young people on the housing ladder earlier is good for their retirement just as saving for a pension is good for their retirement.

[Gareth Davies (Grantham and Stamford) (Con)]

Is my hon. Friend aware of the KiwiSaver scheme in New Zealand? It combines the two aspirations—to save for a pension in later life and to get on the housing ladder—in that someone can divert a portion of their pension saving pot towards a deposit for a house. Is that something that the UK Government should consider?

[Nigel Mills]

There are various ideas out there, and people could use that sort of scheme. They could take a loan out of their pension scheme to get their deposit, and pay it back. We could allow people to be auto-enrolled and have their employer contributions go into their help to buy ISA. There are various ways to try to achieve the aim, but we need to pick one and bring it forward. We have not made the progress that perhaps we should. To be honest, I can see no way of getting more money into young people’s savings to achieve a deposit other than allowing the use of some kind of employer support that is currently going into their pension, because in reality, young people will not have the scope to save much more for themselves. We have already tried to give them the taxpayer top-up through the help to buy ISA. Where else is new money coming from to improve this situation if not from money that is going into their retirement saving?