Finance (No. 2) Bill

George Kerevan Excerpts

3rd reading: House of Commons
Tuesday 25th April 2017 Commons Chamber

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

I wish you well in your retirement.

[George Kerevan (East Lothian) (SNP)]

May I, too, thank the new hon. Member for Copeland (Trudy Harrison) for such a passionate and entertaining speech? It is good to have a representative of the land of Beatrix Potter here in this Chamber. I listened to her last points about the deficit and her encomium that this Government are bringing it down. I will be slightly wicked in saying that I am sure she knows that the Office for Budget Responsibility is forecasting a rise in Government borrowing this financial year, and she might care to ask why that is the case.

I have one specific question for the Minister on this group, as her introduction notably failed to explain why clause 5 has been withdrawn. That clause deals with the proposed reduction in the dividend income that investors in small companies can take. Are the Government embarrassed by the clause and is that why it is being withdrawn?

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

Clause 5 disagreed to.

Clause 6 ordered to stand part of the Bill.

Clause 7

Workers’ services provided to public sector through intermediaries

Question proposed, That the clause stand part of the Bill.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Clauses 8 to 15 stand part.

Government amendment 4.

Clauses 48 to 51 and 124 to 127 stand part.

Government motion to transfer clause 127.

Clauses 128 and 129 stand part.

Government amendment 10.

That schedule 1 be the First schedule to the Bill.

Government amendments 11 and 12.

That schedule 2 be the Second schedule to the Bill.

Government amendment 57.

That schedules 16 to 18 and 27 to 29 be schedules to the Bill.

New clause 1—Review of international best practice in relation to tax avoidance and tax evasion—

‘(1) The Chancellor of the Exchequer must, within two months of the passing of this Act, commission a review of international best practice by Governments and tax collection authorities in relation to—

(a) the prevention and reduction of tax avoidance arrangements, and

(b) combatting tax evasion.

(2) A report of the review under subsection (1) must be laid before the House of Commons within six months of the passing of this Act.

(3) In this section, “tax avoidance arrangements” mean arrangements broadly comparable in their effect to arrangements in the United Kingdom which have the obtaining of a tax advantage as the main purpose, or one of the main purposes, of the arrangements.”

--- Later in debate ---

[Kirsty Blackman]

I do not believe that there is a huge amount of evidence for that. When companies are looking at where to base their headquarters and their staff, corporation tax does not feature all that high up the list. They are looking for good infrastructure, schools and support for individuals in the community. Corporation tax is not at the top of the list, so I would do other things first to try to encourage inward investment, if it were me who was in government and making those decisions.

[George Kerevan]

It will be someday.

[Kirsty Blackman]

Mr Hoyle, that is the end of my comments on this group.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clause 8 ordered to stand part of the Bill.

Clauses 9 and 10 disagreed to.

Clause 11 ordered to stand part of the Bill.

Clauses 12 to 16 disagreed to.

Clauses 17 and 18 ordered to stand part of the Bill.

Clauses 19 and 20 disagreed to.

Clause 21 ordered to stand part of the Bill.

Clauses 22 to 44 disagreed to.

Clauses 45 to 47 ordered to stand part of the Bill.

Clause 48

Employment Income Provided through Third Parties

Amendment made: 4, page 49, line 26, leave out

“Schedules 16 and 17 make”

and insert “Schedule 16 makes”.—(Jane Ellison.)

Clause 48, as amended, ordered to stand part of the Bill.

Clauses 49 to 56 disagreed to.

Clause 57

VAT: Zero-rating of Adapted Motor Vehicles Etc

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Jane Ellison]

I am delighted that the hon. Gentleman has had the opportunity to put his local scout group on the record. These issues have been discussed in general terms. In particular, I spoke at the Charity Tax Group conference recently. The point that I made there was that although we are not making exceptions for a number of reasons—some of them logistical—there are many different ways in which the Government exempt tax for charities and try to support them in other ways. The existing tax reliefs that go to charities and community groups in this country are worth many billions, and many are not taken up as much as they should be. In particular, the issue of scout groups got a very thorough airing during the passage of the gift aid small donation scheme measures that we took through the House last autumn. Those measures are designed to help such groups that do a lot of their fundraising outside their headquarters. Although I cannot give him comfort on this issue, I draw his attention to the fact that there are many other ways in which we help to relieve worthy groups. In particular, I refer to that recent change, which I encourage him to discuss with the Perivale scout group, because, as I have said, that was made very much with it in mind, especially with regard to how it collects donations.

[George Kerevan]

Essentially, this is one of the taxes that the Government are keeping in. It is the third insurance premium tax rise in 18 months. Will the Minister justify why the Government are proposing this third increase, which actually increases the rate by 20%—well above the rate of inflation?

[Jane Ellison]

I am coming to that, but the Chancellor was admirably clear when he laid the change out for the House when it was announced.

The Government have worked to eliminate the deficit and to invest in Britain’s future. We want to ensure that the public finances remain sustainable and to build resilience to future shocks. We have prioritised tax changes to help ordinary working families, and encouraged businesses to invest in the UK. We are supporting jobs and helping people’s money to go further through increases to the personal allowance and the national living wage. We have committed to investing £23 billion for infrastructure in the national productivity investment fund and an extra £2 billion for social care, which will ease pressures on the national health service.

By increasing insurance premium tax, we will ensure that we can maintain the balance between that investment and controlling the deficit. The additional revenue gives the Government the flexibility to invest. IPT is a tax on insurers. They are not in any way obliged to pass on the tax through higher premiums. However, if insurers do choose to pass on the increase, it will be spread thinly across a wide range of people and businesses. In line with the informal agreement between the Government and the Association of British Insurers, firms have been given more than six months’ notice, which gives time to implement the change. The agreement aims to give insurers proper warning of a rate change and to ensure that the correct rate of tax on a policy is known when the policy is arranged.

The changes made by clause 58 will raise approximately £840 million each year to reduce the deficit, while ensuring that we can fund spending commitments. That really is the answer to the intervention by the hon. Member for East Lothian (George Kerevan). Insurance premium tax is a tax on insurers, not consumers. It will be insurance companies’ choice whether to pass on the 2% rate increase. Even if the increases were passed on in full, the impact would be modest, costing households less than 35p a week on average.

The changes made by clause 59 will protect revenue by ensuring that insurers cannot artificially avoid paying the new rate of IPT by adjusting contract dates. As I have said, the Government are committed to reducing the deficit, while still investing in the UK. This requires some difficult decisions, including this 2% increase to the standard rate of IPT. The change will be invaluable in funding vital public spending, such as the additional £2 billion committed to social care.

--- Later in debate ---

[George Kerevan]

I have two points. First, I reiterate to the Minister, who artfully shifted to saying that there was a 2% rise in the tax, that there is a two percentage point rise. It is a 20% rise in the tax. I asked the Minister how she justified that massive, excessive increase relative to inflation. She did not reply—I suspect because, as a Conservative tax cutter, she is embarrassed. I have a further question for the Minister. Will she rule out extending the provision of IPT to reinsurance? Clearly, IPT has been hit on by the Government because it is one of the few things that they have not yet legislated not to increase as a form of taxation. That will doubtless change in the Conservative manifesto. But as long as this is the tax that the Government are hitting on because it is the one they have left, will the Minister state that they will not in future years extend IPT to the reinsurance market, which would net them even more money?

Question put and agreed to.

Clause 58 accordingly ordered to stand part of the Bill.

Clause 59 ordered to stand part of the Bill.

Clause 60

Landfill tax: taxable disposals

Question proposed, That the clause stand part of the Bill.

[The Chairman of Ways and Means (Mr Lindsay Hoyle)]

With this it will be convenient to consider the following:

Clauses 61 to 64 stand part.

Amendment 1, in clause 65, page 73, line 4, leave out subsection (2).

Clauses 65 to 70 stand part.

New clause 3—Review of oil and gas corporation tax rates and investment allowances—

“(1) The Chancellor of the Exchequer must, within two months of the passing of this Act, commission a review of the corporation tax rates and investment allowances applicable to companies producing oil and gas in the UK or on the UK continental shelf.

(2) A report of the review under subsection (1) must be laid before the House of Commons within six months of the passing of this Act.”

New clause 4—Review of tax regime relating to decommissioning of oil and gas infrastructure—

“(1) The Chancellor of the Exchequer must, within two months of the passing of this Act, commission a review of the ways in which the tax regime could be changed to increase the competitiveness of UK-registered companies in bidding for supply chain contracts associated with the decommissioning of oil and gas infrastructure or the development of new fields in the UK continental shelf.

(2) In undertaking the review under subsection (1), the Chancellor of the Exchequer must consult—

(a) the Department for Business, Energy and Industrial Strategy;

(b) the Oil and Gas Authority;

(c) Scottish Ministers; and

(d) such other stakeholders as the Chancellor of the Exchequer thinks appropriate.

(3) A report of the review under subsection (1) must be laid before the House of Commons within six months of the passing of this Act.”

--- Later in debate ---

[Kirsty Blackman]

I appreciate the Government withdrawing the making tax digital provisions. I understand their commitment to making tax digital, but the changes are reasonable.

[George Kerevan]

With your indulgence, Sir David, I thought that this might be an appropriate moment to pay tribute to the outgoing right hon. Member for Chichester (Mr Tyrie), the Chair of the Treasury Committee, which has paid a lot of attention to making tax digital. There could be no more fitting tribute to the right hon. Gentleman leaving this House than the Government withdrawing the making tax digital provisions.