Value Added Taxation

Jacob Rees-Mogg Excerpts

Tuesday 21st February 2017 General Committees

[The Chair]

Before we begin, it may be helpful to remind Members of the procedure in European Committees. The whole proceeding must conclude no later than two and a half hours after we start. First, I shall call a member of the European Scrutiny Committee to make a brief statement about why the Committee decided to refer these documents for debate. Secondly, I shall call the Minister to make a statement, followed by questions for up to an hour, though I have some discretion to extend that if there is an appetite to do so. Thirdly, the Committee will debate the Government motion, and I will put the question on the motion when debate or the time available is exhausted, whichever comes first.

I understand that the hon. Member for North East Somerset would like to make a brief explanatory statement about the decision to bring the documents to the Committee.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

It is a great pleasure to serve under your chairmanship, Mr Davies. It may be helpful to the Committee if I take a few minutes to explain the background to this document and why, nearly a year ago, the European Scrutiny Committee recommended it for debate.

The EU has a common system of value added taxation, governed principally by the 2006 VAT directive. The VAT directive, in its present and earlier versions, is meant to be a temporary arrangement, pending member states’ agreement on a permanent and definitive VAT system. The Commission has accepted that the existing system contributes to VAT fraud in cross-border trading.

Following extensive consultations begun in late 2010, the Commission published in April 2016—it works very swiftly—an action plan to establish a

“VAT area that is fit for purpose in the 21st century.”

It sets the direction of travel the Commission envisages for VAT and presents a set of ideas for wider EU debate under four headings: “Recent and ongoing policy initiatives”, “Urgent measures to tackle the VAT gap”—that is the difference between expected revenue and revenue actually collected, a significant part of which results from fraud—“Medium term measure to tackle the VAT gap” and “Towards a modernised rates policy”.

The European Scrutiny Committee has considered the document twice. In April 2016, it said that the document might prove to be the catalyst for the EU finally achieving a definitive VAT system. Accordingly, we recommended that it be debated in this Committee and that Members might wish to explore whether such a VAT system is indeed now in prospect in the foreseeable future; what difficulties for other member states the Government see in agreement on a definitive system; the extent to which the existing regime has contributed to cross-border fraud and the extent to which the proposal might remedy that; and what difficulties there may be for the UK in reaching such an agreement.

When we reconsidered the matter in November 2016, we deplored the Government’s inexcusable failure to schedule this debate in a timely manner. However, we also added further matters that Members might wish to explore in this debate, which include: details of the Council conclusions on the action plan and their implications for the UK; what the prospects are now for implementation of the Commission’s undertaking in relation to zero rating of sanitary products; and to what extent the Government expect there to be continued UK and EU harmonisation of VAT rules post-Brexit. I look forward to hearing contributions on those issues in the debate and to the Minister’s response.

[The Chair]

I call the Minister to make an opening statement. I remind colleagues that interventions are not allowed during a statement.

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[Mr Rees-Mogg]

May I take it from the answer given to the hon. Member for Stretford and Urmston that there is at least the possibility that we will get back duty free when we have left the European Union? It would be a wonderful gift to the British people and would increase their joy when they travel.

[Jane Ellison]

It seems unusual for a Government Minister to draw attention to the fact that she did not answer a question, but since I did not answer that question, I made no such speculation or comment. As I have said, all these matters are for the negotiations ahead and a range of different outcomes are possible.

[Mr Rees-Mogg]

I merely asked if it were possible, and the answer, being answerless, indicates that it must at least be possible.

[Jane Ellison]

I will reflect and try to understand what was just said.

Oral Answers to Questions

Jacob Rees-Mogg Excerpts

Tuesday 29th November 2016 Commons Chamber

[Simon Kirby]

We want to see the economy benefit every part of the UK. It is interesting to note that there are almost 1 million new businesses in our country since 2010, and I note the Prime Minister’s announcement at the CBI conference about the new patient capital review, which will be interesting, I am sure.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Does my hon. Friend agree that Brexit is essentially a red herring for SMEs in this context, that what matters is that the Government create the right conditions for businesses to do business and that the banks are in a sufficiently capitalised position to lend money?

[Simon Kirby]

I agree absolutely with my hon. Friend. It is about creating an economic environment in which businesses can grow and thrive. The British economy is strong and will continue to be strong as we prepare for our departure from the EU.

Autumn Statement

Jacob Rees-Mogg Excerpts

Wednesday 23rd November 2016 Commons Chamber

[Mr Hammond]

I did not, because to do so would be to give away our negotiating cards in what will be a very complex negotiation. With respect to the hon. Lady, even if I or the Prime Minister set out precisely our objectives, our tactics and our strategy for the negotiations, that will not remove the uncertainty because the outcome will depend on the negotiation itself. As the Prime Minister has said, a negotiation is a process of give and take between the parties to get to a mutually acceptable outcome, and that is what will be embarked upon.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

May I congratulate the Chancellor on his excellent statement? I draw his attention to page 96 of the OBR report, which sets out the assumptions in relation to Brexit. It seems to me that there are two problems with those assumptions. First, they assume that we will apply tariffs on the same basis as we do inside the European Union, which the Chancellor will know he will be able to remove. Secondly, they are particularly gloomy on the prospects for financial services. Might we be able to take a slightly more optimistic tone and, with the freedoms that we have outside the customs union and the single market, be able to solve the productivity problem?

[Mr Hammond]

As my hon. Friend will know, the OBR is mandated to report by Parliament and I am mandated to respond on behalf of the Government to the OBR’s findings. It is an independent body. It does receive representations, and I suggest that my hon. Friend makes his concerns known to the OBR.

Outsourcing and Tax Credits

Jacob Rees-Mogg Excerpts

Friday 4th November 2016 Commons Chamber

[Simon Kirby]

Compensation is available where error has occurred. That has been made very clear. The hon. Gentleman asks whether I am prepared to apologise; I think this is now the third time I have done so. If people have not received the high-level customer service to which they are entitled and if mistakes have been made, I do apologise. I also say, however, that this is a necessary part of government and there are lessons to be learned. We will all make better decisions as we go forward. We will have to wait for the independent NAO report. That has all been said before.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

May I commend my hon. Friend for his balanced and reasoned responses today? The Opposition seem to think that everything done by the state works perfectly and that whenever it is outsourced it may go wrong. I think they forget that, over the years, HMRC has had quite a few internal problems of its own—failing to answer the telephone and the chaotic initial introduction of tax credits, for example. It is absolutely right to look to securing savings through outsourcing to the private sector throughout Government Departments where it is the right thing to do.

[Simon Kirby]

As ever, my hon. Friend makes a valuable point and worthwhile contribution. He is right that there have been mistakes and lessons to be learned over a large number of years in a number of different Departments. What is important is that we get the balance right, pay the money that people—often the most vulnerable in society—are owed, while at the same time protecting the taxpayer from unnecessary overpayment, error and fraud.

EU Draft Budget 2017

Jacob Rees-Mogg Excerpts

Monday 31st October 2016 General Committees

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

It is a pleasure to serve under your chairmanship for the first time in a European Committee, Ms Buck. I will take a few minutes to explain the background to the documents and the reason why the European Scrutiny Committee recommended them for debate.

The draft budget sets out the Commission’s proposals for EU expenditure in 2017. It is the first stage in the process of establishing the EU’s budget for the following year and provides the basis for negotiations between the two arms of budgetary authority: the Council and the European Parliament. The Economic and Financial Affairs Council agreed its first reading position on the draft budget on 12 September; the European Parliament reached its first reading position on 25/26 October. A conciliation committee is to be convened to meet with the aim of reaching agreement on the 2017 budget by 17 November. This agreement will be subject to separate approval by both the Council and the European Parliament, after which the budget for 2017 will be deemed to have been adopted.

In addition to the draft budget, this year there are three other documents relevant to this debate. These concern the EU solidarity fund, which releases emergency financial aid following a major disaster in a member state or candidate country; the flexibility instrument, which provides funding in a given financial year for clearly identified expenses that could not be covered by one or more budget headings without exceeding their expenditure ceilings; and the contingency margin, a mechanism to react to unforeseen circumstances as a last resort instrument, which allows for a maximum 0.03% of EU gross national income to be redeployed between budget headings. The three draft decisions would mobilise the EU solidarity fund, the flexibility instrument and the contingency margin for sums included in the draft budget.

We suggest that among the matters that Members might explore are: how the UK’s proposed exit from the EU affects its interests in relation to EU expenditure and revenues in 2017; the degree of support the Government are receiving from other member states for a disciplined approach to next year’s EU budget; whether the Government are satisfied with the proposed margins below multiannual financial framework ceilings; whether there are any particular programme expenditure proposals that cause the Government concern; the significance for budgetary discipline of the proposed mobilisation of the EU solidarity fund, the flexibility instrument and the contingency margin; and to what extent the use of the flexibility instrument and the contingency margin to help address the challenges of migration, refugee and security crises might involve the UK in justice and home affairs expenditure—for example, in relation to Frontex, for which we should not be liable.

It is the custom of the European Scrutiny Committee to recommend the draft budget for debate before the Council concludes its first reading. Regrettably, this debate is taking place long after the Council’s first reading was agreed.

Finally, in a press release of 26 October, the Council set out the issues where the Council and Parliament disagreed: the Parliament wants the level of commitments in 2017 to be way above the multiannual financial framework expenditure ceilings; the Parliament wants the level of payments for 2017 to be above the estimated needs; the Parliament wishes to reopen the agreement on financing the European fund for strategic investments, which the Council considers would reduce the EU’s financial leeway for meeting unexpected needs for research and other future-orientated expenditure; the Parliament wishes for its own staff reductions to be lower than the 5% reduction by 2017 already agreed; and there is disagreement on the scope of the conciliation talks themselves, which should be limited to the 2017 budget.

[The Chair]

I call the Minister to make an opening statement. I remind the Committee that interventions are not allowed during the statement.

--- Later in debate ---

[Mr Gauke]

I fear that the hon. Gentleman wants to take me down a path that is a little way away from the motion in front of us. We are in new circumstances. The determination of the Government is to ensure that we deliver the best possible outcome for the British people in the negotiations with the European Union and in our relationship with the EU and other parts of the world, post-Brexit. That is our focus.

[Mr Rees-Mogg]

I was going to sit quietly for once, but the questioning has gone along a certain line. May I remind the Chief Secretary to the Treasury that the Chancellor, in front of the Treasury Committee, said that the reports before 23 June no longer applied, because their assumptions were out of date already? We therefore do not have to work on the maxim of gloom and nonsense that came from the Treasury at that point, and can look to the broad sunlit uplands. One thing we can be certain of is that once we leave, we will no longer have to pay into the budget, will not be part of the multiannual financial framework, and will not have to have these debates any more.

House of Lords Reform and Size of the House of Commons

Jacob Rees-Mogg Excerpts

Wednesday 19th October 2016 Commons Chamber

[Pete Wishart]

Absolutely, and we have an increasing population. I still do not know the Government’s case for the reduction in the number of MPs—well, I think I know why they decided to reduce the number of MPs. I think it was an attempt to stuff the Labour party, but the Labour party does not need any favours, help or assistance in that regard. It seems to be doing a pretty good job of that on its own.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

The hon. Gentleman is being very unfair on that point. I think that the decision was made to reduce the number of MPs because in 2010, when the policy came forward, there was a great deal of public feeling that MPs had become too expensive. It was a response to the national mood at the time.

[Pete Wishart]

Of course there is a national mood in favour of such a cut. If we were to ask any member of the public whether they would like to see the size of Parliament and Government reduced—I am sure I will find this when I go back to my constituency at the weekend—they would say, “Yes, of course.” My point, and I believe that the hon. Gentleman might respect this, is that we seem to be reducing the number of elected Members but letting the other place grow exponentially. That is the key point. I am beginning to get the sense that the public are starting to look at what we have got down the corridor and deciding that we have to do this. Enough is enough.

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[Michael Ellis]

The appointment of Ministers is ultimately a matter for the Prime Minister and I am certainly not going to comment on that. Ministerial numbers must reflect what the Prime Minister of the day feels she or he needs for the Government to work effectively.

[Mr Rees-Mogg]

On the number of Ministers, the maximum is set by legislation. It is not purely in the gift of the Prime Minister.

[Michael Ellis]

I recognise that—the Ministerial and Other Salaries Act 1975, I think—but that relates to the maximum, not the minimum. However, the appointment of Ministers is a matter for the Prime Minister.

There are many different views on what form the House of Lords should take and we have heard some of them this afternoon. Without consensus, as I have said, there is no practical possibility of taking such reform forward, and this was clear from the attempted passage of the House of Lords Reform Bill in 2012. It was withdrawn not for lack of commitment from the Government, but because there was no overall agreement about what that reform should look like. When there are so many pressing constitutional reforms, not least devolving more powers to Scotland and Wales and delivering all that is necessary for the UK’s exit from the European Union, it is on those subjects that we should focus our attention in this Parliament. It would not be right to distract from or derail important reforms elsewhere by making House of Lords reform a priority. That is why we do not support the motion.

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[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Thank you, Mr Deputy Speaker. It is an enormous pleasure to follow the hon. Member for West Dunbartonshire (Martin Docherty-Hughes), who expressed himself with such vim and vigour.

The motion tabled by the hon. Member for Perth and North Perthshire (Pete Wishart) is an important motion and a proper subject for us to debate. It is something that we have been debating for hundreds of years. The earliest debate I can find for deciding to limit the House of Lords is in 1719, and we will all remember that the Parliament Act 1911 states that it is a temporary measure until a more democratic means of choosing an upper House can be found.

These problems are not new, and there are serious problems with the House of Lords. I do not think anyone would try to pretend otherwise. It is not by any means perfect and its imperfection is partly in its size, partly in its unaccountability and partly, as the hon. Member for Perth and North Perthshire so rightly said, in its Liberal Democrats. I do not say that as a cheap shot against the Liberal Democrats, though those are perfectly fun. I say it because the very large number of Lib Dems who are there, who are abusing their position in the Lords to thwart the will of the elected Government, have made a real problem for the Government and for the democratic legitimacy of the House of Lords. There are unquestionably problems, but what is the solution?

What we have considered in previous Parliaments is a democratically elected upper House. That sounds very sensible in theory, but there is a fundamental problem for us in this House that if we have a democratically elected House of Lords, its powers will be equal to ours. Even if the letter of the law allows us to overrule the Lords, that will soon cease to be a political reality. A democratically elected House of Lords challenges the Commons, and if a democratically elected House of Lords is on a different electoral system, it might even claim a higher validity than we have and therefore the right to overrule us. Then we would probably have a gridlocked system like that in the United States, with the two Houses being unable to co-operate and an inability to govern and to get legislation through.

[Mr Jackson]

Does my hon. Friend agree that the Liberal Democrats were complicit in the failure of their once-in-a-generation opportunity for House of Lords reform by bringing forward a ludicrous proposal for a 15-year non-renewable mandate, which would have challenged the authority and mandate of this House?

[Mr Rees-Mogg]

That was part of the problem. The other problem was that they were quite unwilling to set out what they would do between the conventions that both Houses have. If those conventions are legislated for, who is to determine whether the conventions are followed? Would that be the courts, and then would the courts interfere in Parliament? Or would the conventions be decided by consensus between the two Houses? In that case we would be back to the gridlock that I was warning about.

That is why the problem has not been solved. There is not a good democratic solution unless we are willing to downgrade the House of Commons, which I personally would be very much against doing. With our constituency-based relationship we have a wonderful system of democracy through this House. The hon. Member for Wansbeck (Ian Lavery) made a very powerful speech, but I disagree with him in thinking that the reform to constituencies is gerrymandering. It really is not. It is getting the numbers to be equal, which is a proper thing to do.

It would be wrong to fight the next general election on the electoral roll from 2000. That needs to be updated, and although the later the date the better—so I am not unsympathetic to the call to move it on two years later— that is not practical. It cannot be done on the absolutely last electoral roll, but by doing it every five years, we ensure that there is continuity in updating and a regular fairness in the size of the constituencies. I disagree with the hon. Gentleman on that point and think it is important, through that constituency link, to defend the primacy of this House, which is the democratic House.

That is why I am less worried than the hon. Member for Perth and North Perthshire about the failures of the House of Lords. Ultimately we are in charge. We can use the 1911 Parliament Act. We may decide to use that to do something on statutory instruments if the House of Lords challenges the Government on their democratically mandated implementation of policy. The democratic right overrides the undemocratic element. That gives me certainty and security that the nation is not becoming the People’s Republic of China, Lesotho or whatever other random examples have been brought up, because they do not have that democratic underpinning. Therefore, the size of the House of Lords is just a problem that we will have to live with.

In 1719, the main reason for opposing a limit on the numbers in the House of Lords was that a limit would make the Members who were already there more powerful because their power could not be diluted by adding more peers. That remains true today, because the one great authority this Chamber still retains over the House of Lords, via the Prime Minister, is not so much the 1911 Act, but the threat of creating many more peers, which was, of course, threatened in 1832 and in 1911—on both occasions to ensure the democratic will could prevail. We must maintain the ability to do that, even while recognising that the House of Lords is too big and has problems. However, this needs to be an evolutionary reform, which I would happily go into, Mr Deputy Speaker, but on another occasion.

Small Charitable Donations and Childcare Payments Bill

Jacob Rees-Mogg Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 11th October 2016 Commons Chamber

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Will my hon. Friend give way?

[Rebecca Pow]

Of course I will give way to another hon. Friend from the west country.

[Mr Rees-Mogg]

While my hon. Friend is on about sport, may the Bill not help Somerset win the county championship for the first time ever, after coming second this year? Would that not be a real triumph after Yorkshire and Middlesex stitched it up?

[Rebecca Pow]

I know that my hon. Friend was down at the county ground not very long ago, because I had so many comments about the fact that he had been there. I am sorry that I missed him, because I was down there every day of that championship. I am not sure that Somerset is allowed to collect on the streets with buckets, but smaller sporting charities would be very much helped by the new enabling measures in the Bill.

Oral Answers to Questions

Jacob Rees-Mogg Excerpts

Tuesday 19th July 2016 Commons Chamber

[Mr Speaker]

In the hope that the hon. Gentleman will provide a masterclass in the asking of a question, I call Mr Jacob Rees-Mogg.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

Thank you, Mr Speaker. I congratulate my right hon. Friend on his appointment. I accept that that is not a question but a statement. May I go on to point out to him that Brexit provides a great opportunity? The £24 billion purchase of ARM by SoftBank is a sign of that. The trade deals that are being offered are a sign of that. Will he grasp this fantastic opportunity and lead us through to the “broad, sunlit uplands”?

[Mr Hammond]

My hon. Friend rightly points to the fundamental strengths of the UK economy. Britain is still one of the most attractive places in the world to do business, to start a business and to invest money, and it is right that we should focus on those positive aspects. But it is also right that we are conscious of the short-term turbulence that we will inevitably experience and of the need to manage that carefully over the next 18 months.

Article 50: Parliamentary Approval

Jacob Rees-Mogg Excerpts

Monday 11th July 2016 Commons Chamber

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

In terms of the doctrine of the sovereignty of Parliament, is it not true that that sovereignty is delegated by the British people, not given to us by divine right? It is absurd to think of the sovereignty of Parliament as being by divine right as it is the divine right of kings. The British people have spoken and given us a mandate, and that mandate must be fulfilled, but the details of that mandate will no doubt be implemented by legislation.

[John Penrose]

I defer to my hon. Friend and parliamentary neighbour on the legality of where sovereignty begins and ends, and where it is delegated from and to. The fundamental point that is clear from his remarks—and, I hope, from my previous remarks—is that the people have spoken, we are now honour bound to deliver on that democratic decision, and we should not try to resile or step back from it in any way.

Bank of England and Financial Services Bill [Lords]

Jacob Rees-Mogg Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 19th April 2016 Commons Chamber

[Mr Tyrie]

That argument can be turned on its head. One can argue that this sets a precedent that is more easily rolled out, without the need for statutory change, to other bodies. In the Treasury field, we now have a statutory double lock for the appointment and dismissal of the head of the Office for Budget Responsibility, which was recently found to be of some use following controversy about alleged interference in the production of the forecast—again, we did not find any evidence of that, but the perception of it might have weakened the OBR. We have a requirement for a resolution of the House prior to the appointment of the chairman of the Office for National Statistics, and now we also have these arrangements. So we have a battery of different arrangements on which to draw.

[Mr Jacob Rees-Mogg (North East Somerset) (Con)]

I congratulate my right hon. Friend on achieving this great success for parliamentary scrutiny, and I suggest that it is better to proceed in a non-statutory way. Bringing statute into the proceedings of the House always presents longer term problems, and setting a non-statutory precedent has lots of advantages.

[Mr Tyrie]

I always like listening to my hon. Friend, who is a member of the Treasury Committee and, of course, a constitutional expert. It is certainly true in this place that a good deal of quasi-constitutional change, which is what we have here, tends to take place gradually and often due to the development of informal arrangements. I think that that is all to the good, which is what I think my hon. Friend is saying.