Draft Customs Safety and Security procedures (EU exit) regulations 2021

James Murray Excerpts

Wednesday 23rd June 2021 General Committees

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to serve with you in the Chair, Sir Gary. I am grateful for the opportunity to respond to this statutory instrument on behalf of the Opposition. As we heard, the instrument introduced by the Government seeks to waive administrative reporting requirements on certain goods moving in and out of the UK. Specifically, it provides an extension to the existing waivers on certain requirements to provide exit summary declarations until 30 September 2021, and pre-arrival safety and security entry summary declarations until 31 December 2021.

We do not oppose this instrument, because British businesses need support following the exit from the EU. We want to do all we can to support British businesses facing difficult times. However, the fact that we are back here discussing these waivers raises important questions of this Government’s approach. The Minister will be aware that he sat in a Committee on 10 December 2020 and debated this matter with my right hon. Friend the Member for Wolverhampton South East (Mr McFadden). On that day, the Committee agreed to waive requirements for pre-arrival safety and security entry summary declarations and exit summary declarations for six months until 30 June 2021.

In his speech last December, the Minister assured the Committee that

“the Government would use these powers only where absolutely necessary to preserve the smooth flow of goods at the border and after due consideration of any risks arising from their use.”—[Official Report, Fourteenth Delegated Legislation Committee, 10 December 2020; c. 4.]

My right hon. Friend pressed the Minister on whether we would be sat here again, debating a further extension of waivers. The Minister said:

“we certainly do not anticipate extending the regulations. They are specifically designed to be a contingency tool to be used in specific circumstances, for specific purposes, and for a time-limited period.”—[Official Report, Fourteenth Delegated Legislation Committee, 10 December 2020; c. 8.]

Yet here we are again. As the Minister rightly put it last December, contingency tools should be used in specific circumstances for a time-limited period. He did not anticipate extending the regulations last December, so something must have changed. Could he explain what has changed since last December? Why did he not anticipate extending the regulations then, yet today he is asking us to? How many more times does he anticipate having to extend the regulations?

In December, the Minister also noted that “due consideration” would be given, and the Government conceded that the regulations presented a trade-off with the risk to border security. The explanatory memorandum states that

“An Impact Assessment has not been prepared for this instrument because the provisions are in force for less than 12 months.”

Surely, waiving the requirement on pre-arrival safety and security entry summary declarations for six months and then extending that waiver for a further six months means that they are, in fact, in force for 12 months. Perhaps the Minister could explain whether that is the case and give us his view on whether an impact assessment should have been prepared.

The Minister previously referenced conversations and consultations taking place with the Home Office to mitigate the risk to border security. Will he update the Committee on what measures the Government are enacting to prevent smugglers and traffickers from bringing contraband into the country? At the time of the last debate on the regulations, the Minister said that data gathering on EU trade did not take place as the United Kingdom was still part of the single market. Could he update us on what data gathering arrangements are in place, so that we can have better oversight of EU trade and the associated border security risks?

I look forward to the Minister's reply. I would be grateful if he addressed all the points I have raised, and assure us that we will not be back in three or six months to seek a further extension of these time-limited contingency tools.

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[James Murray]

Before the right hon. Gentleman concludes, will he address the point about the impact assessment? The explanatory notes state that

“An Impact Assessment has not been prepared for this instrument because the provisions are in force for less than 12 months.”

However, extending the pre-arrival safety and security entry summary declarations for six months, and a further six months, surely means they are enforced for 12 months. Could the Minister explain whether that is the case? Is it his view that an impact assessment should have been prepared?

[Jesse Norman]

I am grateful to the hon. Gentleman for raising the question. No, it is not the Government’s view that an impact assessment should have been prepared, because the regulations maintain the existing status quo in which the declarations are waived. In that sense, nothing has changed. However, I recognise the point that the hon. Gentleman raises. It is important to reflect that the Government always wish to be cognisant of the impacts of legislation that they pass, and that will continue to be true elsewhere in our legislative package as well.

Question put and agreed to.

National Insurance Contributions Bill (First sitting)

James Murray Excerpts

Committee stage
Tuesday 22nd June 2021 Public Bill Committees

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

It is a great pleasure to be able to address these important clauses in a small but important Bill, and I thank all colleagues for joining us today.

Part I of the Social Security Contributions and Benefits Act 1992 stipulates that secondary class 1 national insurance contributions be calculated at a standard rate of 13.8% on earnings above the secondary threshold—currently about £8,700 a year. Part I also provides for other rates of secondary class 1 NICs—the zero rate for 21-year-olds or apprentices under 25, for example—that can be applied up to an upper secondary threshold.

Clause 1 introduces a new zero rate of secondary class 1 national insurance contributions on earnings up to a new upper secondary threshold in Great Britain. The standard rate of NICs, 13.8%, in most cases will apply above that threshold. The threshold will be set through regulations at £25,000 per annum.

Clause 1 provides employers that meet the conditions set out in clause 2, which we will shortly debate, with access to this relief where they have a secondary class 1 liability. An employer may qualify for various rates of secondary national insurance contributions. Clause 1 therefore stipulates that an employer must elect to apply the freeport relief if they wish to utilise this zero rate. By applying the rate, their status as a secondary contributor remains even if, as a result of this relief, an employer has no secondary class 1 liability. The relief will be administered through pay-as-you-earn and real-time information returns by Her Majesty’s Revenue and Customs. This approach has been welcomed by stakeholders.

New clause 5, if I may say so, recapitulates much of what the Government have already done. I remind the Committee that the Government have already published a decision-making note that clearly sets out how sustainable economic growth and regeneration are prioritised in the freeports assessment process. We will also be publishing costings of the freeports programme at the next fiscal event, in line with conventional practice. Those costings will undergo the usual scrutiny from the Office for Budget Responsibility.

It is also important to say that the Government are already taking the necessary steps to gather the information required to review the programme effectively. Before funding is allocated and tax sites are designated, each freeport will need to pass a business case process, which includes assessing how effectively tax sites can be monitored. Freeports will need to collect data on reliefs and their realised outcomes, which will include monitoring the effectiveness of tax reliefs, and the Government will continue to publish information relating to HMRC through its annual report and accounts. It is important to note that the Government have already committed to keeping this measure under review as new information becomes available. The publicly available tax information and impact note also commits the Government to keeping the scheme under review through communication with taxpayers’ groups.

The Government reject the proposal in new clause 5 because a report that focused exclusively on just one aspect of the policy would not do justice, however valuable its focus, to the whole, which includes other important aspects over and above wages, such as changes to customs rules, Government infrastructure spending and planning reform. I therefore ask that the Committee reject new clause 5.

I am sure that Committee members will not wish to delay the investment associated with clause 1, which introduces a zero rate of secondary class 1 national insurance contributions that employers can apply when they meet the conditions specified in clause 2. For that reason, and with the reassurances that I have given, I urge the Committee to agree that clause 1 stand part of the Bill.

[James Murray (Ealing North) (Lab/Co-op)]

Thank you, Ms Nokes, for the opportunity to speak on behalf of the Opposition. We begin by considering the clauses that relate to freeports. In March 2021, the Chancellor announced that eight freeports would be created in England—East Midlands Airport, Felixstowe-Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Thames, and Teesside—and we understand that discussions continue around further freeports in Scotland, Wales and Northern Ireland.

Clause 1 will introduce a new secondary class 1 national insurance contributions relief for freeport employers. It provides for that relief to apply when secondary class 1 NICs are due from an employer other than a public authority when the conditions set out in clause 2 are met. Clause 1(2)(a) states that the rate for the relief is 0% and applies up to the upper secondary threshold; subsection (2)(b) states that for earnings above the upper secondary threshold, the secondary percentage—currently 13.8%—applies. Subsection (3) states that the upper secondary threshold, or the prescribed equivalent, will be set by statutory instrument under a power established by clause 8.

As the Financial Secretary may remember, we discussed on Second Reading the fact that the upper secondary threshold for freeport employees would, according to a policy paper published by the Government on 12 May, be set at £25,000 for 2022-23. As I pointed out at the time:

“That is substantially less than the equivalent thresholds for employers’ relief for under-21s and apprentices, which is £50,270 in 2021-22…this means that employers do not need to pay any NICs for under-21s and apprentices earning up to just over £50,000 a year, but they will have to pay contributions for freeport employees next year if they earn more than £25,000.”—[Official Report, 4 June 2021; Vol. 697, c. 49.]

In response to my question about the Government’s rationale for picking the figure of £25,000 for employees of freeports, the Exchequer Secretary said:

“The answer is that, unlike other NICs reliefs that are available to employers nationally and generally are targeted at specific groups of employees with particular characteristics, businesses operating in a freeport are likely to be able to claim the relief on almost all of their new hires. To balance generosity of support with the need to consider the public finances, this broader eligibility has been balanced by limiting the amount of salary that can be relieved. We have chosen to set this limit at £25,000 per annum, which is approximately the average salary in the UK.”—[Official Report, 14 June 2021; Vol. 697, c. 69.]

I would like to take this opportunity to understand the Exchequer Secretary’s response a bit more. I would therefore be grateful if the Financial Secretary let us know the specific source of the data that says that £25,000 is approximately the average salary in the UK. I ask this because according to the Office for National Statistics the median income in all the local authority areas where the eight freeport sites are located is greater than £25,000, with the figures ranging from £25,200 in Kingston upon Hull, within the Humber freeport, to £33,200 in Thurrock, within the Thames freeport.

We would like to take this opportunity to press further on this point, which is why we have tabled new clause 5. We want to understand if the Government are concerned that making the threshold for the NIC relief in freeports £25,000 might create an incentive for employers to create posts paid less than £25,000, rather than higher paid posts, which could in turn create the risk of salaries being bunched below the threshold, thereby undermining salary progression.

New clause 5 requires the Government to conduct a review, after this policy has been in place for six months, to assess the average income and wage range of jobs in respect of which employers have claimed the secondary class 1 relief introduced by clause 1, and for each freeport to assess how incomes provided by these jobs compare with the average median income across the local authority area in which the freeport is located.

I would be grateful if, for clarity, the Minister let us know the precise statistical source of the figure of £25,000 for the average UK salary. Will the Government support the review we propose, which would assess the average incomes of jobs created by this employers’ relief? If not, does he think that setting the threshold for the relief at £25,000 risks creating an incentive for employers to create posts that are paid less—even just less—than £25,000, rather than higher paid positions?

[Jesse Norman]

I thank the hon. Gentleman for his question. I saw that he raised the issue on Second Reading and, if I may say so, it potentially reflects a slight misunderstanding.

As the Exchequer Secretary said, the decision has been taken to set the rate at £25,000, roughly the national average earnings. That is different from median earnings. I do not think it is right to suggest that the threshold has been set at a level that is approximate, because it is designed to be comprehensible and readily understandable. To make it more precise might affect that.

The overall generosity of the package of support that is being given to freeports, and the range of potential employees to which this applies, is very creditable to the Government, because it shows the intensity and strength of the intent to make the freeports policy work. This is an important part of that policy, but only one part of a set of policies that are designed to increase the attractiveness of freeports for growth and for employment as well.

The way in which this measure has been structured is focused towards longer-term employment, as the relief runs for three years, and therefore it allows the employment rights associated with longer-term employment to be vested in those employees. From that point of view, it reflects a commitment by the Government to create high-quality and stable longer-term employment.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Freeport conditions

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[Richard Thomson]

There is a pretty basic principle that lies behind this: that you shouldn’t get owt for nowt. In exchange for the substantial package of reliefs that are on offer through this Bill, we believe that businesses must offer something in return, beyond their presence and their baseline economic activity within the bounds of a freeport.

In this case that would include, through amendments 1 and 2, meeting local environmental obligations. Many freeports are built on sites that have environmental sensitivities. We believe there need to be some enhanced obligations around that. Activities in a freeport should contribute to wider environmental objectives, such as the commitments to net zero and climate targets. It is very important to protect workers’ rights, not only within the perimeter of a freeport but anywhere else that has any kind of economic relationship with the freeport. That means taking steps to actively ensure that we are preventing the exploitation of slave labour at any stage in the value chain and ensuring that a living wage, as defined, is paid to the workers in the freeport.

Those are all important objectives in policy terms and are a fair exchange for the public goods being consumed through the creation of the freeport. They are modest asks in the context of the relief being offered and are worthy of support.

[James Murray]

Clause 2 sets out the conditions that employers must meet to qualify for the relief created by clause 1. Those conditions require that the freeport employment must begin between 6 April 2022 and 5 April 2026; the relief will apply for three years from the first day of each eligible employee’s employment; and the employee must spend 60% or more of their employed time in a single freeport tax site at which the employer has business premises.

We have a number of points to raise with the Minister on the details of the clause. First, as I mentioned on Second Reading, it is hard to understand why the relief is conditional on employment not commencing until 6 April 2022. As the Chartered Institute of Taxation pointed out, with freeports expected to start operating in 2021, that would surely hamper freeport employers this year, and perhaps even create perverse incentives to delay the start of an employee’s work. In her response to my raising this point on Second Reading, the Exchequer Secretary said:

“The Government have been clear that this relief is only available on new hires from April 2022, and set this out in the ‘Freeports Bidding Prospectus’ published in autumn 2020. The reason why is that having a clear start date is a simple approach that will support the freeport businesses.”—[Official Report, 14 June 2021; Vol. 697, c. 70.]

I found it hard to understand that the Minister’s point. Having a clear start date may well be a simple approach, but my question was not about whether the relief should have a clear start date, but why the Government had chosen a start date in 2022, rather than in 2021 when freeports are expected to start operating. To press Ministers on that, we suggest a simple review, as set out in new clause 1, which would require the Government to conduct a review of job creation in 2021-22 at each of the eight freeport tax sites. The review must assess the impact on job creation decisions of the relief becoming available from April 2022 rather than April 2021. I would be grateful if the Minister committed to carrying out such a review. If he is not willing to, perhaps he could explain why the Chartered Institute of Taxation is wrong to say that this choice of date could hamper freeport employers this year and perhaps create perverse incentives to delay the start of an employee’s work.

Alongside the start date for the relief, we want to raise questions about clause 2(1)(d), which states that at the time the qualifying period begins, a freeport employer must reasonably expect that the earner will spend 60% or more of their employed time in a single freeport tax site in which the freeport employer must also have business premises. That means that the relief introduced by clause 1 is available for employees who spend 60% or more of their working time in one freeport, but not for employees who spend 60% or more of their working time across more than one freeport, but less than 60% in any one freeport. If an employee splits their working time between two freeport sites, the employee may not qualify as a freeport employee, which might not be what is intended.

We have therefore proposed, in new clause 2, a review of the impact of that feature of the policy design on employers’ decisions about job creation. Again, I would again be grateful if the Minister committed to carrying out such a review. If he is not willing to, perhaps he could explain why he does not think that issue is likely to arise.

Finally, I would like to ask the Minister about clause 2(1)(a), which provides that the employed earner’s employment is a new employment commencing between 6 April 2022 and 5 April 2026. As the Chartered Institute of Taxation has pointed out, it is unclear whether an employee who is TUPE transferred from an existing employer to a new freeport business on or after 6 April 2022 qualifies for this relief.

Although clause 2(2) would prevent an employee from qualifying if the two businesses were connected, that would not always be the case—for instance, when a freeport business buys the trade of an unconnected business and commences that newly acquired trade at a freeport site. I would be grateful if the Minister could explain whether, in such a case, we can assume that the freeport business would be a “new” employer for the purposes of this relief, while recognising, of course, that its “new” employees would have continuity of employment for employment rights purposes.

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[Jesse Norman]

If I may, I will explain a little of the background to clause 4. In addition to the powers taken in clause 3 to amend freeport conditions if the relief is found to be subject to abuse, clause 4 excludes employers that arrange their affairs with the aim of benefiting from the relief where that arrangement is contrary to the policy intent. Clause 4 works by removing eligibility for the relief if the conditions set out in clause 2 are met only as a result of an avoidance arrangement.

The Government are aware that the incentives of the freeport package potentially lend themselves to businesses taking steps to organise their affairs so that they can benefit from the relief; that is the design of the policy. Therefore, the Government have taken a similar approach to that in section 14 of the Finance Act 2021, which exempts employers if their arrangement is contrary to the policy intent of the relief and specifically in relation to the avoidance of tax.

An example of where the Government would expect HMRC to reject a claim for this relief would be where an employer structures their employment contracts so that a workforce can easily be dismissed after three years with the sole purpose of hiring new staff so that they can benefit from another three years of relief, or if an employer were to fire their employees and rehire the exact same posts with new employees.

The Government want the freeports to thrive, to boost local investment and to be a hotbed of innovation. Clause 4 provides an invaluable backstop and gives HMRC the ability to recover any relief that has been claimed as a result of contrived arrangements. I urge that clause 4 stand part of the Bill.

[James Murray]

As we have heard, clause 4 states that the relief for freeport employers cannot be claimed if an avoidance arrangement has been used, and it defines what is meant by an avoidance arrangement. We welcome any steps to prevent employers from taking advantage of the relief in cases in which avoidance arrangements are used. As this clause sets out, avoidance arrangements are those that are, or include steps that are

“contrived, abnormal or lacking a genuine commercial purpose, or”

that circumvent

“the intended limits of the application of section 1 or otherwise”

exploit

“shortcomings in that section or in provision made in or under sections 2 and 3.”

I would be grateful if the Minister could confirm for us what extra resource, if any, has been made available to HMRC to ensure that it can identify and take action against employers in a freeport who have used avoidance arrangements. I would also like to understand what the Bill suggests about wider access to tax reliefs that arise from avoidance arrangements. I would be grateful if the Minister could offer some clarity on the wider situation.

This clause makes it clear that the tax relief in clause 1

“does not apply if it would otherwise apply only as a result of avoidance arrangements.”

Perhaps the Minister could help me to understand this by explaining whether, generally, companies are still able to claim tax reliefs if they arise only from avoidance arrangements—that is to say, arrangements that are contrived, abnormal or lacking a genuine commercial purpose. Although we of course support this relief being withheld in cases in which it can apply only as a result of avoidance arrangements, I would appreciate an explanation from the Minister about why this specific measure is needed and why the relief would not be withheld by existing provisions in law if it was deemed to have arisen from avoidance arrangements.

[Jesse Norman]

I thank the hon. Gentleman for his questions. Of course, HMRC is taking a close interest in freeports and has been closely involved in the policy design in order to minimise any potential for avoidance and any other failure to target the policy as we would desire. It is well staffed to address all the concerns that are raised. Of course, its staffing is flexible and also is something that reflects periodic conversations with the Treasury during the spending review processes and otherwise in order to ensure that it is as effective as possible—and it is highly effective, as is shown by the fact that the tax gap in this country is now lower than it ever has been. It is significantly lower than it was in 2005, for example—it is something like 40% lower than it was under that Government. That important achievement puts things into perspective.

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[Jesse Norman]

Clause 5 confirms the Government’s commitment to provide a freeport NICs relief in Northern Ireland. It gives the Treasury the power to legislate for the detail of the freeport NICs relief in Northern Ireland in secondary legislation. The power is limited in so far as the relief must be similar to or correspond to that available in Great Britain.

In Northern Ireland, the specific design of the relief will have to comply with European Union rules on the provision of state aid, due to the requirements of the Northern Ireland protocol. It will be developed and agreed through a process of engagement with the Northern Ireland Executive on the detail of the wider freeports offer in Northern Ireland.

This Bill legislates for a power to allow the Government to set out the detail of the employer NICs relief in Northern Ireland in secondary legislation once engagement with the Northern Ireland Executive is complete. These regulations will be laid at the earliest possible opportunity once negotiations with the Northern Ireland Executive have given a clear indication of consensus on the tax offer.

Given the timing of the Bill, I trust Members will see that this approach is sensible, and ensures all stakeholders are fully engaged. I commend the clause to the Committee.

[James Murray]

Clause 5 gives the Treasury a regulation-making power to provide for a freeport secondary class 1 NICs relief in Northern Ireland. On Second Reading, the Minister assured us that, although the measures in clauses 1 to 4 relate to Great Britain, it is the Government’s intention to legislate for this relief in Northern Ireland as soon as practicable. He drew attention to the fact the Bill provides the Government with the power to set out the detail of employer NIC relief in Northern Ireland in secondary legislation once engagement with the Northern Ireland Executive is complete.

I note that the House of Commons International Trade Committee’s recent report on UK freeports, published on 20 April, discussed the issue of freeports in Northern Ireland, and in particular their relationships with the Northern Ireland protocol. It quotes Professor Catherine Barnard of the University of Cambridge, who said:

“under the Northern Ireland Protocol the EU state aid regime applies, certainly to Northern Ireland where there is an effect on trade between Northern Ireland and the rest of the EU. You should also bear in mind that the protocol is probably wide enough to catch any freeport legislation that applies throughout the United Kingdom.”

The Chief Secretary to the Treasury acknowledged to the Committee that the freeport offer would have to be adapted to comply with the UK’s obligations under the Northern Ireland protocol. Acknowledging that, the Committee’s report concluded that it is clear the Northern Ireland protocol will impact the terms under which a freeport can be established in Northern Ireland. It recommended that the Government should set out in their response to the report their view on how the freeports model will need to be adapted in Northern Ireland to comply with the terms of the protocol. I would be grateful if the Minister could give us an update on the Treasury’s thinking in that regard.

I would also like to clarify a comment in the memorandum from the Treasury to the Delegated Powers and Regulatory Reform Committee on this Bill. On clause 5, the memorandum says:

“The Government’s intention is that the employer NICs relief for Freeports employers is in place by 6 April 2022 throughout the UK.”

I would be grateful if the Minister could confirm whether that means it is the Government’s intention, as set out in the memorandum, for a freeport to be established in all four nations of the UK by 6 April 2022.

[Jesse Norman]

I thank the hon. Gentleman for his questions. He asked me to update the Committee on the detail of the discussions with the Northern Ireland Executive on a freeport and noted the comments made by the Select Committee. I am afraid I am not in a position to do that. These things are subject to current discussion and negotiation. It is a matter of some complexity and I do not think it would be appropriate to do so. I assure him that once matters have reached a conclusion and a consensus, Parliament will of course be given a full picture of what has taken place and I am sure colleagues will take a great interest.

He also asked a question about timing. For the reasons I have indicated, I do not think it would be prudent to specify a time by which a particular freeport, either one in process at the moment in England or one in the devolved Administrations, will be up and running. That is something for the Governments concerned and for the freeport operators and there will of course be processes of further designation that will need to be gone through. I assure him that it is certainly the UK Government’s intention that this should be done as rapidly and effectively as possible, across the whole of the UK.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill

Clause 6

Zero-rate contributions for armed forces veterans

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

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[Jesse Norman]

We have considered the clauses concerning the zero-rate contributions for employees at freeport sites. I turn now to the second aspect of the Bill—the clauses on zero-rate contributions for armed forces veterans, starting with clause 6.

As the Committee will recall, the Government made a manifesto commitment to support ex-service personnel in their attempts to work to secure stable and fulfilling employment. Clauses 6 and 7 honour that commitment and provide employers with a zero rate of national insurance contributions on the earnings of qualifying veterans.

The Chancellor announced that policy at the spring Budget in 2020 and launched a policy consultation shortly after. The Government received 37 written responses from a variety of stakeholders and a response to that consultation was published on 11 January 2021. That response document outlined the final policy design. On 11 January 2021, the Government also published draft clauses for a technical consultation, which closed on 8 March 2021. Thus, the measure has been fully and effectively consulted upon, tested with stakeholders and debated by Parliament. It should be seen in that light.

Clause 6 introduces a zero rate of secondary class 1 NICs when the conditions in clause 7 are met. The relief can be applied on earnings up to the upper secondary threshold. Earnings above that threshold will be liable to the standard rates of NICs.

The relief will be available initially for three years. For the tax years 2022-23 and 2023-24, employers will have immediate access to the relief. For earnings in the 2021-22 tax year, employers will be able to claim the relief from 2022 onwards. The Government have sought to introduce this policy as quickly as possible, but practical and, in particular, IT considerations have meant that claims for earnings in the 2021-22 tax year will need to be at year end. That does not affect the amount of relief that an employer is able to receive.

The Government are keen to understand the effectiveness of the relief and will review the impact before deciding whether to extend it. Clause 6 provides the Treasury with the power to add additional years.

Clause 7 sets out the conditions that need to be met to allow an employer of a veteran to qualify for the zero rate that clause 6 provides. To qualify as a veteran for the relief, an individual needs to have completed at least one day of basic training in the regular forces. An employer can claim the relief for the first 12 months of a veteran’s first civilian employment since leaving the armed forces. The 12-month period starts on the first day of the veteran’s first day of civilian employment and ends 12 months later. Any employment in that period will qualify for this relief, which means that a veteran will not use up access to this relief if they take on a temporary role immediately after leaving the armed forces.

The relief will be available on the earnings of qualifying veterans from April 2021. Clause 7 also provides that a veteran can commence their first civilian employment before April 2021 and still qualify for the remaining period. Therefore, the 12-month period will begin on the first day the veteran took up their first employment and the relief will be made available only from 6 April 2021 for the remainder of that 12-month period.

Opposition new clauses 3 and 4 ask the Government to report on the impact of claiming the relief retrospectively and the impact of providing the relief for one year, rather than three. I shall explain why they are unnecessary. First, most of these issues were considered during the detailed consultation, which I have described. In addition, the Government have already committed to reviewing the measures and will, of course, be transparent about their expected impact. The policy costing for the measure and the underlying analysis were signed off and certified by the independent Office for Budget Responsibility, and the methodology was set out in the Budget policy costing document. As I say, the Government are committed to keeping the measure under review as new information becomes available. As part of the review process, HMRC and HM Treasury will speak to stakeholders to gauge their views on how the policy is operating.

Clause 6 will support veterans and help them to find stable and fulfilling employment, and it will provide employers with up to £5,500 in savings. I hope the Committee will agree to clauses 6 and 7 standing part of the Bill, and that the new clauses will not be pressed.

[James Murray]

Clauses 6 and 7 introduce an important relief, designed to help service personnel leaving the armed forces to get back into work. As I made clear on Second Reading, we believe that this is a vital issue. Veterans deserve the Government’s full support as they seek civilian employment after their service to our country. It is crucial to make sure that all veterans get the support they need.

Clause 6 sets out the detail of the relief. It provides for a 0% rate of secondary class 1 national insurance contributions up to an upper secondary threshold for the tax years 2022-23 and 2023-24. Earnings above the upper secondary threshold will be liable to secondary class 1 NICs at the secondary percentage, currently 13.8%. It also specifies that the relief is available for the 2021-22 tax year retrospectively. In practice, that means that employers need to pay secondary class 1 NICs as if the relief did not apply; then, from April 2022, they can claim the relief retrospectively for the earnings in 2021-22. The relief described by clause 6 applies if the veteran conditions in clause 7 are met. The conditions include that to qualify for the relief the earner is required to have served for at least one day in the regular forces, and that the relief is available for one year, beginning on the earner’s first day of civilian employment after leaving the armed forces.

On Second Reading, I asked Ministers to explain why the employer’s relief for veterans is for 12 months, which is much less than the relief for employers in freeports, which is 36 months. In her response, the Exchequer Secretary said:

“The answer is that the relief provides employers with up to £5,500 in savings per veteran that they employ. The aim of that policy is to support veterans’ transition into civilian life through encouraging employers to hire veterans.”—[Official Report, 14 June 2021; Vol. 697, c. 70.]

That did not address my question about why the Government had chosen to make the relief for veterans’ employers available for one year, rather than any longer; in particular, why not for three years, in line with the relief for freeport employers, which the Bill also introduces. That is why we wanted to raise the matter again, and why we tabled new clause 4, to address the impact of the Government’s decision.

New clause 4 would require the Government to conduct a review of how many veterans had been employed in jobs for which employers accessed the national insurance contributions relief provided under clause 6. The review would have to assess the impact on decisions on the creation of jobs for veterans of the relief being available for earnings paid over a one-year period rather than a three-year period. I would be grateful if the Minister agreed to undertake the review. If he does not, perhaps he will explain in greater detail why the Government have chosen a one-year period for veterans’ employers, rather than the three years for freeport employers.

New clause 3 is about enabling us to understand the impact of the Government’s reluctance to make the relief claimable in real time for 2021-22. As the Chartered Institute of Taxation sets out, it seems that the policy intention is that the relief will be available from 6 April 2021, although employers will need to pay the secondary class 1 NICs on the earnings of eligible veterans for the 2021-22 tax year, then claim them back retrospectively in April 2022. From the 2022-23 tax year onward, employers will be able to claim the relief in real time through their PAYE declarations.

The Chartered Institute of Taxation reasonably questioned why employers cannot self-serve the relief for 2021-22, once the legislation has been passed, especially given the challenging circumstances of the pandemic and the cash-flow implications. The institute asks whether HMRC could be permitted to exercise its discretion and to permit employers to make real-time claims for 2021-22 where their payroll software provides for suitable identification of eligible veterans.

--- Later in debate ---

[Jesse Norman]

I do apologise. We wait in expectancy and hope.

Clause 8 contains a regulation that would allow the Treasury to set for every tax year a freeport upper secondary threshold and a veterans upper secondary threshold over which the secondary percentage, rather than the zero secondary percentage, would apply. Different upper secondary thresholds may be set for each measure. The freeports bidding prospectus confirmed that the freeports UST would be set at £25,000 for the 2022-23 tax year. The veterans consultation document confirmed that the veterans UST would be £50,270 for the 2021-22 tax year.

On Second Reading, a question was asked about the freeport UST being lower than that for veterans. We have touched on it already, but let me come back to it. Unlike other NICs reliefs that are available to employers generally, businesses operating in a freeport are likely to be able to claim the refund for almost all their new hires. That is the basis on which the upper secondary threshold has been set, in the context of the wider generosity that has been given. Employers will still be able to claim up to approximately £6,500 of relief on the salaries of employees earning more than that. The clause also provides that regulations may specify that the veterans UST is set retrospectively, and that is for reasons that we have described and discussed.

I turn now to clause 9, which contains a consequential amendment in relation to the apprentice levy that is calculated by reference to employers’ annual pay bill. It amends section 100 of the Finance Act 2016 to ensure that earnings that are liable for the freeport and veterans zero rate of secondary class 1 NICs are still considered when calculating an employer’s annual pay bill. This approach is consistent with other employees’ NICs reliefs, such as the under-21 and under-23 apprentice reliefs.

[James Murray]

Clauses 8 and 9, which were discussed with earlier clauses, allow the Treasury to set an upper secondary threshold for secondary class 1 NICs specifically in relation to armed forces veterans and freeport earners every tax year. The Bill will therefore allow different thresholds to be set for veterans and freeport employees, and for those thresholds to be different from the thresholds that apply to under-21s and apprentices.

We welcome the fact that the Minister confirmed on Second Reading that the upper secondary threshold for veterans will be £50,270 in a veteran’s first full year of civilian employment. After the Minister’s explanation, however, I remain unconvinced by his argument for setting the threshold for employers in freeports below the average wage in freeport areas, as we discussed at length during debate on earlier clauses. If the Minister has had time to think further about his argument, I would welcome further explanation in his response. If not, I will leave my remarks there.

[Jesse Norman]

No, I have nothing to add. We have already discussed this at some length.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9 ordered to stand part of the Bill.

Clause 10

Treatment of self-isolation support scheme payments

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

--- Later in debate ---

[James Murray]

Clause 10 provides a national insurance contributions exemption for payments made under a self-isolation support scheme. That ensures that they are not taken into account for the purposes of computing profits liable to class 4 NICs or for the purposes of class 2 NICs.

As I set out on Second Reading, we welcome this exemption from national insurance contributions for payments made under a self-isolation support scheme. It is crucial that people who need support to self-isolate receive it, so we welcome any steps that make the system for self-isolation payments more effective and subject to less administrative burden.

The Minister may recall that on Second Reading I asked why the exemption for class 2 and class 4 contributions was not implemented earlier, in line with the exemption for class 1 contributions. In response, his colleague the Exchequer Secretary explained that

“class 1 NICs exemptions were made in regulations. However, the self-employed exemption requires primary legislation, and therefore is included in this Bill, as this is the earliest opportunity to legislate.”—[Official Report, 14 June 2021; Vol. 697, c. 69.]

I accept that the formal processes for introducing the exemptions for the different classes of NICs may differ, but my point on Second Reading was that announcing the class 2 and class 4 exemptions earlier could have given much-needed certainty to self-employed people at an earlier point in the outbreak. I am sure that the Minister would agree that self-employed people would have benefited from such certainty. The Exchequer Secretary seemed to claim in her comments that the Government’s intention was always to provide that relief for class 2 and 4 NICs, and the delay appears to have been for solely practical reasons.

I would therefore be grateful if the Minister confirmed exactly when the Treasury announced, by way of ministerial statement or other appropriate means, that the exemption for national insurance contributions would be extended to class 2 and class 4 contributions for payments made under a self-isolation support scheme.

--- Later in debate ---

[Jesse Norman]

Clause 11 widens the existing power in the Social Security Administration Act 1992 to make amendments to the disclosure of tax avoidance scheme regime known as DOTAS, which I mentioned earlier. The changes enable HMRC to obtain information and documents much earlier for avoidance schemes that HMRC suspect should have been notified to them but have not been disclosed. The changes will allow HMRC to issue a notice to anyone they reasonably suspect of being a promoter or other supplier involved in NICs tax avoidance schemes. It would require the provision of all documents and information that relate to the schemes in question. The amendments will ensure that regulations can be made mirroring the changes to the DOTAS procedures that are included in the Finance Act 2021.

The changes here are necessary to satisfy HMRC that a NICs scheme is not notifiable. If HMRC are not satisfied, they would be able to issue a scheme reference number, or SRN. DOTAS was introduced in 2004 and seeks to provide HMRC with early information about new tax avoidance schemes, how they work and those who use them. The equivalent regime for VAT and other indirect taxes, known by the unattractive label of DASVOIT—disclosure of avoidance schemes for VAT and other indirect taxes—was introduced in 2017.

Currently, when avoidance promoters fail to meet their DOTAS obligations, it can take HMRC a considerable period of time to challenge that failure, often years. Throughout that delay period, there is no disincentive to promoters continuing to promote their schemes, meaning that taxpayers may remain unaware of the risks they face and could end up with large tax bills.

It is appropriate that we should continue to act to protect taxpayers and discourage such behaviour from promoters where they involve NICS. The clause provides that future modifications to part 7 of the Finance Act 2004—Disclosure of Tax Avoidance Schemes—can be applied or modified so that they apply to NICs without the need for primary NICs legislation. That will enable changes to be made efficiently and effectively, with the minimum of separation in time, to ensure the rules continue to move in step. It is usual practice where an existing tax rule is extended to NICs, and I hope the Committee will agree that it is appropriate to have that in place.

The DOTAS regime provides HMRC with important early information, on the basis of which we can make interventions. The prompt disclosure to HMRC of proposals and arrangements that bear the hallmarks of tax avoidance will allow them to be fully considered and tackled much earlier and more effectively, as appropriate.

[James Murray]

Clause 11 widens existing regulation-making powers so that regulations can be made for national insurance, mirroring the amendments to the disclosure of tax avoidance schemes—DOTAS—procedures that are included in the Finance Act 2021. This measure, and its counterpart in the Finance Act, means that when HMRC suspects someone has failed to disclose arrangements or proposed arrangements that should have been notified to them under DOTAS, it may issue a notice to anyone it suspects of being a promoter or other supplier involved in the supply of the arrangements. The notice explains that if the person is unable to satisfy HMRC that the arrangements are not disclosable, HMRC may allocate a scheme reference number to the arrangements.

As I made clear on Second Reading, we welcome any measures that help HMRC to track tax avoidance schemes. During the debate, I drew Ministers’ attention to a point made by the Chartered Institute of Taxation: that it believes that there is a hard core of between 20 and 30 promoters, identified by HMRC, who clearly do not play by the rules. I asked:

“Do Ministers recognise that number? If so, I would be grateful if the Exchequer Secretary set out what goals HMRC has to clamp down on those 20 to 30 hard-core promoters.”—[Official Report, 14 June 2021; Vol. 697, c. 53.]

Unfortunately, the Exchequer Secretary did not address those questions at the end of Second Reading, so I am glad to have the chance today to raise them again for the Financial Secretary to address. Would he comment on whether he recognises 20 to 30 as the number of hardcore promoters, and on whether there are any targets with dates by which Ministers expect the number of hardcore promoters at large to fall substantially?

[Jesse Norman]

Again, I thank the hon. Gentleman for his question. It is HMRC’s view—as he says that it is the Chartered Institute of Taxation’s view—that some 20 or 30 promoters are in the market at present. HMRC are vigorously applying themselves to curtailing that activity and to supporting and protecting taxpayers. The Bill will give them an important additional tool with which to do that. By their nature, the promotion of tax avoidance schemes is constantly changing and evolving; promoters are highly resourceful in seeking new ways to sidestep responsibilities and avoid the attention of HMRC. That is one reason why the earlier interventions and the greater flexibility that we have provided are so important.

For that reason, I do not think that it would be prudent to make an estimate or assessment of what the appropriate number of promoters is or could be. The number that we want, obviously, is zero: we would like to see no promotion of tax avoidance schemes in the market, because it is a reprehensible and disgraceful practice.

To reassure the hon. Gentleman and other members of the Committee, I will say that over the past six years, more than 20 promoters have left the market. That is a significant achievement that reflects the decisions that have been made. As I have also indicated, there has been a substantial reduction more widely in the overall tax gap, which bears testimony to HMRC’s wider effective prosecution and collection of unpaid tax.

Question put and agreed to.

Clause 11 accordingly ordered to stand part of the Bill.

Clause 12

Regulations

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

[Jesse Norman]

Clause 12 specifies how regulations are to be made under the Act and the parliamentary procedure that will apply to them. I ask the Committee to agree that it stand part of the Bill.

[James Murray]

As we turn to clause 12, which provides for regulations under the Bill to be made by statutory instrument, I would like to discuss which regulations can be decided by the negative and the affirmative procedures. It might be helpful to focus on clause 3(3), which is mentioned in clause 12.

Clause 3 gives the Treasury regulation-making powers to

“provide for circumstances in which a freeport condition is to be treated as being met.”

That has the effect of making the relief available in circumstances in which it would not otherwise be. We note that clause 3 also gives the Government extensive powers to

“amend, repeal or otherwise modify”

the relief. Although it will always be easier for the Government to amend legislation by way of regulations, we recognise the concerns that the Chartered Institute of Taxation has articulated that the powers to make those changes are extensive. There may well need to be flexibility to allow the finer detail of legislation to be amended, but there is a strong argument that any fundamental changes should be subject to full consultation and scrutiny.

I would be grateful if the Financial Secretary explained why he considers that the powers granted in clause 12, with effect on clause 3, to make decisions by way of regulations are proportionate. Does he agree that the clause gives the Government more powers than are desirable to change key elements of the policy by regulations? In particular, given that regulations under clause 3(3), which relate to freeport conditions, are subject to the affirmative procedure, will he explain why regulations under clause 3(2), which also relate to freeport conditions, are subject to the negative procedure instead?

[Jesse Norman]

I thank the hon. Gentleman. Clause 12(2) specifies that regulations made under the Act are subject to the negative procedure, except for clause 3(3), which relates to the power conferred on the Treasury to add, remove or alter the qualifying conditions for the freeport relief; clause 5, which relates to the power conferred on the Treasury to apply for a freeport secondary class NICs relief in Northern Ireland; and clause 8, which relates to the power conferred on the Treasury to specify the amounts of veterans’ and freeports’ upper secondary threshold. All three are subject to the affirmative procedure.

As the hon. Gentleman will be aware, the Treasury takes extremely seriously the question of what are its appropriate powers, and there has been considerable discussion and indeed parliamentary engagement on what the appropriate powers for HMRC should be in each case. In this case, the normal procedure has been followed, which is to try to recognise the public policy intent and overall public benefit of a more flexible arrangement, but also to respect the parliamentary procedure that where a measure includes new burdens or new taxes, or makes material changes of those kinds, they should be subject to an enhanced level of scrutiny by Parliament, provided by the affirmative procedure. That is the approach that we have taken.

Question put and agreed to.

Clause 12 accordingly ordered to stand part of the Bill.

Clause 13

Interpretation etc

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

--- Later in debate ---

[James Murray]

I do not have any specific concerns to raise in relation to the interpretation or the short title. May I take this opportunity, as it is the final clause under consideration in Committee, to thank my hon. Friends for joining me on the Committee, to thank you, Ms Nokes, as Chair, and to give special thanks to the Clerks, the Library and the Chartered Institute of Taxation for all their advice during the passage of the Bill so far?

[Jesse Norman]

If I may say so in a similar spirit, as I may not have the chance to do so after the conclusion of deliberations on the final provisions, let me also offer my thanks to you, Ms Nokes, to the Clerks, to my colleagues and also to the officials at the Treasury and HMRC for the work that they have done to prepare the Bill.

Question put and agreed to.

Clause 13 accordingly ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.

New Clause 6

Zero-rate contributions for employees of green manufacturing companies

(1) This section applies where—

(a) a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) of the 1992 Act in respect of earnings paid in a tax week in respect of an employment,

(b) the green manufacturing condition is met, and

(c) the employer (or, if different, the secondary contributor) elects that this section is to apply in relation to the contribution for the purposes of section 9(1) of the 1992 Act instead of section 9(1A) of that Act or section 1 of this Act.

(2) For the purposes of section 9(1) of whichever of the 1992 Acts would otherwise apply—

(a) the relevant percentage in respect of any earnings paid in the tax week up to or at the upper secondary threshold is 0%, and

(b) the relevant percentage in respect of any earnings paid in the tax week above that threshold is the secondary percentage.

(3) The upper secondary threshold (or the prescribed equivalent in relation to earners paid otherwise than weekly) is the amount specified in regulations under section 8.

(4) For the purposes of the 1992 Acts a person is still to be regarded as being liable to pay a secondary Class 1 contribution even if the amount of the contribution is £0 as a result of this section.

(5) The Treasury may by regulations make provision about cases in which subsection (2) is to be treated as applying in relation to contributions payable in respect of a tax week in a given tax year only when—

(a) that tax year has ended, and

(b) all contributions payable in respect of a tax week in that tax year have been paid.

—(Richard Thomson)

This new clause provides NIC relief for businesses in freeports dealing with green manufacturing products.

Brought up, and read the First time.

Levelling-up Agenda

James Murray Excerpts

Tuesday 15th June 2021 Westminster Hall

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to speak in a debate that you are chairing, Sir Edward. I congratulate the hon. Member for Isle of Wight (Bob Seely) on securing this debate. In his opening remarks, we heard about the very full set of interventions that he believes are needed to fix challenges in his constituency, including jobs, transport, education, housing, long-term economic development and so on.

The hon. Gentleman rightly highlighted the decade of under-investment and the impact that that has had. I know he said that he would not speak later in the debate, but I wanted to ask him who he thinks is responsible for that decade of under-investment and whether he can see in this room a Minister from the party that has been in charge for the past 11 years—because meeting those challenges will need a level of sustained investment in devolution that goes well beyond the one pot of money that is currently on offer in the form of the levelling-up fund. One pot of money will not undo the 11 years of real-terms cuts to public services, stagnating real wages and inadequate investment in the future. One pot of money will not change our country when decisions will still be taken in Westminster by Conservative Ministers, rather than democratically in our communities by locally elected politicians.

As my hon. Friends have set out, far more comprehensive change is needed. My hon. Friend the Member for Barnsley East (Stephanie Peacock) explained how local government must be in the driving seat and have the resources it needs, and my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) set out the importance of having real determination to invest in the future of all people in this country. It is also telling that as we engage in this debate, my hon. Friends the Members for Stretford and Urmston (Kate Green) and for Houghton and Sunderland South (Bridget Phillipson) are in the main Chamber right now, pressing the Chancellor and the Treasury to come clean on why they blocked the comprehensive plans put forward by Sir Kevan Collins, the Prime Minister’s appointment as education recovery commissioner. The truth is that the Government’s decisions on education recovery are very far from achieving anything that looks like levelling up.

When the chips are down—and after months of school closures, the chips are very much down for the children of this country—the choices that Governments make betray the reality behind the rhetoric. We are in no doubt that the Government have chosen to betray a generation. Their expert commissioner set out plans that matched the scale of the challenge, focusing on extending the school day, improving teaching and targeted tutoring. In February the Prime Minister promised that no child will be left behind, and Sir Kevan’s proposals sought to make that a lived reality for our children in the years ahead. Drawing on research from the aftermath of Hurricane Katrina, the proposals were informed by the knowledge that urgent, sustained and multi-year expenditure on children’s educational recovery has the biggest impact on those who are furthest behind.

That would indeed have been levelling up. Instead, the plans that have been announced are but a truly pale shadow of the programme we need. The money announced is a tiny proportion of the money invested for the same purpose in the Netherlands and the United States, and I and my colleagues refuse to believe that Dutch and American children are five or 10 times more deserving of sustained Government support than British children.

As the Financial Secretary is due to speak shortly, I want to pick up briefly on a discussion that he and I had yesterday in the main Chamber relating to the G7 communiqué, which the right hon. Member for Basingstoke (Mrs Miller) mentioned and which I believe is also relevant to this debate. A key part of any levelling-up agenda for our country must include the Government doing all they can to create a level playing field for British businesses that pay their fair share of tax, by preventing them from being undercut by a few large multinationals that do not.

I asked the Minister and his colleague three times yesterday to explain why the UK Government’s position has been to push for a global minimum corporate tax rate of 15% rather than to back the ambitious 21% proposed by President Biden. The Minister said it was

“completely inappropriate for a Minister to comment”.—[Official Report, 14 June 2021; Vol. 697, c. 50.]

However, the Exchequer Secretary, who I think spoke after the Minister had left the main Chamber, seemed quite happy to defend the Government’s backing of 15%. She said that it was settled on because it would leave

“appropriate room for countries to use corporation tax as a lever”.—[Official Report, 14 June 2021; Vol. 697, c. 70.]

There we have it: an admission that the UK Government supported a lower rate thanks to a desire to keep alive the possibility of a future race to the bottom.

This is a once-in-a generation opportunity for an ambitious global deal to prevent large multinationals from avoiding paying their fair share of tax, but our Government are letting it slip away. That is a shocking failure. Had they supported an ambitious 21% deal, that would have brought in an extra £131 million a week for public services in this country, while preventing a few large multinationals from undercutting British businesses that pay their fair share of tax. That would have been levelling up.

Lastly, I want to ask Conservative Members why they think this country needs levelling up. It has been 11 years since a Labour Prime Minister left Downing Street, and 11 years since a Labour Budget spread power, income and opportunity across the country. For 11 long years, spending decisions in this country have been under the control of the Conservative party, leaders chosen by Conservative Members, and Conservative Chancellors.

[Jack Brereton]

Will the hon. Gentleman give way?

[James Murray]

I am just about to finish. There have been 11 years of real-terms cuts in so many public services, stagnating real wages and inadequate investment in meeting the challenges of the future—11 years in which so many of the problems that we face have been ignored and their solutions underfunded. We can only conclude that levelling up is a nebulous, undeveloped and yet-to-be honoured attempt by the Conservative party to address the problems that it has created.

National Insurance Contributions Bill

James Murray Excerpts

2nd reading
Monday 14th June 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

Thank you, Madam Deputy Speaker, for the opportunity to speak about this Bill on behalf of the Opposition. We will not oppose the Bill on Second Reading. Indeed, we support the intention behind many of its measures. However, I would like to take this opportunity to raise important questions with Ministers about some of the approaches they have decided to take.

As we know, clauses 1 to 5 would introduce a new zero rate of secondary class 1 national insurance contributions for employers taking on employees in a freeport. The zero rate would apply from April 2022, and it would allow employers to claim relief on the earnings of eligible employees up to £25,000 per year for three years. As the House will recall from the Report stage of the recent Finance Bill, my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare) made it clear that we want every region and nation of the UK to succeed whether or not it has a freeport. We want secure new jobs with better pay to be created right across the country, and we want to support and protect British businesses and industries. Freeports may be part of the solution to increasing trade and investment across the UK, but we note that the International Trade Committee concluded in its recent report on UK freeports, published on 20 April, that

“it remains to be seen how successful freeports will be at achieving this objective.”

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Just to clarify, the hon. Member says that freeports might be part of the solution—to levelling up, I guess—but does he therefore support freeports or does he agree with his colleague in the shadow Treasury team, the shadow Chief Secretary to the Treasury, the hon. Member for Houghton and Sunderland South (Bridget Phillipson), who has said that they are “economically illiterate”?

[James Murray]

I was awaiting the hon. Gentleman’s intervention—I was definitely expecting it given the recent debates we have had in this place—and if he will wait just one moment, I will get on to setting out our position on freeports in more detail.

We were concerned at the recent Report stage of the Finance Bill that the Government themselves seemed to show a lack of certainty by voting against our simple amendment to the Finance Bill that would have seen the success of each individual freeport transparently evaluated. As I am sure the hon. Gentleman will remember, we wanted each freeport to be judged against the key tests of whether, across the country, they lead to any net increase in jobs, deliver improvements in training and skills for local residents, produce tangible transport and infrastructure improvements beyond the port itself and will be adequately protected against the risks of tax evasion, smuggling and criminal activity. It is disappointing that the Government voted against the transparent evaluation of their proposed freeports. Not only would this have enabled us to judge their success, but some of the factors we highlighted in our tests would in fact make investment in freeports more attractive to businesses.

Indeed, in response to the Government’s own consultation on freeports last year, many respondents argued that

“although tax incentives can be a significant driver behind businesses investing within an area, they were not usually the sole determinant.”

The Government’s summary of responses went on to explain:

“Some respondents also indicated the success of tax incentives was partially dependent on local factors, especially the quality of transport infrastructure and the skills and availability of local labour.”

As we consider the tax relief before us today, it is therefore important to remind the Government not to ignore the other aspects of the operation of freeports that may be key to their success.

On this tax relief, I would like to ask Ministers to address three specific points that arise from the Bill. First, while relief to employer’s national insurance contributions may be a reasonable part of a tax incentive package along with other tax incentive measures, it is hard to understand why this relief is conditional on employment not commencing until 6 April 2022. As the Chartered Institute of Taxation has pointed out, with freeports expected to start operating in 2021, that would surely hamper freeport employers this year and perhaps create perverse incentives about delaying the start of an employee’s work. I would be grateful if the Exchequer Secretary set out in her response the Government’s reasoning behind this condition on accessing the relief.

Secondly, clause 8 of the Bill enables the Government to set an upper secondary threshold for employer class 1 national insurance contributions specifically in relation to freeport employees—and, indeed, for armed forces veterans, which I will turn to shortly. In practice, this means that employers do not need to pay NICs until an employee’s earnings pass that threshold. We note that the upper secondary threshold for freeport employees will, according to a policy paper published by the Government on 12 May, be set at £25,000 for 2022-23. That is substantially less than the equivalent thresholds for employers’ relief for under-21s and apprentices, which is £50,270 in 2021-22. Just to be clear, this means that employers do not need to pay any NICs for under-21s and apprentices earning up to just over £50,000 a year, but they will have to pay contributions for freeport employees next year if they earn more than £25,000. It would be helpful to understand the Government’s rationale for picking this figure. According to the Office for National Statistics, the median income in all those local authority areas where the eight freeport sites are located is greater than £25,000, with the figures ranging from £25,200 in Kingston upon Hull, within the Humber freeport, to £33,200 in Thurrock, within the Thames freeport. I therefore ask the Exchequer Secretary to explain why the relief for freeport employers is set below median pay in all freeport areas and why this rate is half of that for those employing under-21s and apprentices.

Thirdly, as the plans for freeports stand, businesses taking advantage of their tax incentives will still pay corporation tax. British businesses that pay their fair share of tax will find it very hard to understand why the Chancellor has been for so long so lukewarm about a new, global minimum corporate tax rate to stop large multinationals undercutting them by exploiting tax havens around the world. The Chancellor welcomed the rate being cut from the original 21% proposed by President Biden down to 15%, even though that would cost Britain £131 million a week and leave British businesses being undercut. When I have asked the Financial Secretary before about the Government’s position, he said he did not think

“it is appropriate for Ministers to comment on tax policy in flight”.—[Official Report, 28 April 2021; Vol. 693, c. 418.]

Now, however, the outcomes of the G7 Finance Ministers’ meeting and the Carbis Bay summit are public, so perhaps his colleague, the Exchequer Secretary, could explain why the UK Government’s position has been to back a rate of 15%.

Let me move on to other measures in the Bill. As we have heard, an important relief, covered by clauses 6 and 7—

[Jesse Norman]

I am happy to give the hon. Gentleman some satisfaction on that question. What is extraordinary is how the Labour party has continuously sought to pretend that things are other than they actually are in relation to this deal. Let us just talk about that for a second. In the first case, the G7 is a package—it is a process. Were we, as Labour would have had us do, to ignore the pillar 1 aspects, there would then have been no argument, no debate and no proper taxation of platforms in the areas where the new taxing rights will reside. That would have been a serious, serious deficit. The whole point of the package is to see it as a package, and it predated the Biden Administration. We have greatly benefited as a world from their additional support, but it is by no means up to them; it is an OECD process, of which they have been an important recent supporter.

[James Murray]

I thank the Minister for engaging on what has happened in the negotiations about the new global deal, but I notice that he did not address the issue about the headline rate. I have asked him on several occasions, perhaps three or four times in recent months in this place, to explain why the Government have been so lukewarm about an ambitious rate of 21%, as proposed by President Biden, and instead favoured its being cut to 15%, which is indeed what has happened. I note that when the right hon. Gentleman got to his feet a few moments ago, he did not address the headline rate. Labour Members continue to worry that we are missing out on a once-in-a-generation opportunity to strike a truly ambitious global deal to stop a few large multinationals avoiding paying their fair share of tax.

[Jesse Norman]

rose—

[James Murray]

I will make some progress, if that is okay.

[Hon. Members]

You asked him a question.

[James Murray]

I tell you what, Madam Deputy Speaker, I will give way if the right hon. Gentleman addresses the specific point about 15% and 21%.

[Jesse Norman]

As the hon. Gentleman knows, it is completely inappropriate for a Minister to comment on confidential negotiations with allies and other nations around the world. He is ignoring that this is a package and the package involves two pillars, the second of which is a 15% rate, globally agreed, one that reconciles and acknowledges different countries around the world which have different tax regimes and different supports. The Government have been in no way lukewarm on pillar 2. What the Government have insisted on, in contradiction to the Labour party and against the ill-fated and ill-advised suggestions that it has made, is pillar 1, which is the crucial component of this that allows us to tax platforms. It is extraordinary that the hon. Gentleman refuses to acknowledge that under a Labour party Administration, there would have been no taxation of these platforms. What on earth does he say to that?

--- Later in debate ---

[James Murray]

As the right hon. Gentleman well knows, I have set out many times that we believe that there should be a deal on both pillar 1 and pillar 2. However, pillar 2 stands to generate a huge amount of revenue for British public services and to stop a few large multinationals avoiding paying their fair share of tax and thereby undercutting British businesses that are paying their fair share of tax.

The Minister keeps referring to the idea that it is inappropriate for him to comment on the British Government’s position. The position is there in public, following the G7 Finance Ministers’ meeting and the G7 summit over the weekend. People have a right to know what our Government were arguing for and we can arrive at no conclusion other than that the British Government were at least lukewarm and perhaps even against the tax rate being set at 21% because it has fallen to 15%, thereby losing out on £131 million a week, meaning that we are potentially missing a once-in-a-generation opportunity for a truly ambitious global tax deal.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[James Murray]

Certainly. I am conscious, Madam Deputy Speaker, that this is not all entirely within the frame of the Bill, but I give way to the hon. Gentleman.

[Kevin Hollinrake]

The hon. Gentleman does keep mentioning it. Just on the point about corporation tax, he seems to imply that somehow we are in favour of lower corporation tax, but he is aware that the Government are increasing corporation tax from 19% to 25%. On pillar 2 and pillar 1, I have heard him at the Dispatch Box on numerous occasions urging the Government to sign up to a deal that was only on pillar 2. It did not involve pillar 1, so how can he say now that he was in favour of a wider negotiated agreement? That is not what he was saying at all.

[James Murray]

I am surprised—because the hon. Gentleman always seems to be here when I am speaking at the Dispatch Box—that he does not seem to remember me advocating for a deal on pillar 1 and pillar 2. I will happily send him the reference in Hansard after this meeting so he can refresh his memory. The point here is that we have President Biden suggesting 21% in pillar 2 as an ambitious global deal. We had the British Government being at least lukewarm and potentially anti the proposal of 21%. We have now settled on a position where it has dropped to 15%, and we will not cease pushing the Government to be more ambitious in what they seek to achieve, because this will mean that Britain will lose out on £131 million a week that could be invested in our public services and British businesses will continue to be undercut by a few large multinationals that do not pay their fair share of tax.

I will move on to other measures in the Bill. As I was saying, there is an important relief, covered by clauses 6 and 7, that sets out to help service personnel leaving the armed forces back into work. This is a vital issue. Veterans deserve the full support of the Government as they seek civilian employment after their service to our country. It is crucial to make sure that all veterans get the support they need. I noted that the Government’s consultation document for this measure refers to an existing career transition package to service personnel leaving the armed forces and explains how 6% of veterans accessing the service remain unemployed for up to a year after leaving the armed forces. We believe that this relief on employers’ national insurance contributions is a positive step, and we hope it will particularly help the 6% of veterans who the Government acknowledge are not benefiting from the current service on offer.

We recognise that this measure may not, on its own, be enough to get everyone into work, so I would like to ask the Exchequer Secretary to set out what further help the Government are offering the 6% of veterans, in particular, who need greater support. We also want to make sure that the employers’ relief is as effective as possible, so I ask why the employers’ relief for veterans is 12 months, which is much less than the relief for employers in freeports, which is 36 months. Perhaps the Exchequer Secretary could explain the Government’s thinking in setting the relief for just one year rather than three years, in line with the approach taken for employers in freeports.

Moving on to further measures in the Bill, clause 10 provides a national insurance contributions exemption for payments made under a self-isolation support scheme. Ministers will know that we in the Opposition have been calling on the Government to expand eligibility for this scheme for some time. It is crucial that people who need support to self-isolate receive it, so we welcome any steps that make the system of self-isolation payments more effective and subject to less administrative burden.

We note that the Government introduced secondary legislation to exempt self-isolation support scheme payments from class 1 and 1A national insurance contributions in October 2020 for England and January 2021 for Scotland and Wales. We recognise that the measure in front of us, which exempts self-isolation support scheme payments from class 2 and class 4 national insurance contributions, will bring the treatment of the self-employed in line with the employed. We also recognise that it will be retrospective for the year 2020-21, and so can be reflected in the relevant tax returns.

Can the Minister explain, however, why the exemption for class 2 and class 4 contributions was not implemented earlier, in line with the exemption for class 1 contributions? If the class 2 and class 4 exemptions had been announced earlier, that could have given much-needed certainty to self-employed people at an earlier point in the outbreak. I would be grateful if the Exchequer Secretary explained why that did not happen.

Finally, clause 11 widens existing regulation-making powers so that regulations can be made for national insurance to mirror the amendments to the disclosure of tax avoidance schemes procedures in the Finance Act 2021. Under DOTAS, introduced by the Government in 2004, promoters of tax avoidance schemes are required to notify the tax authorities of any new scheme they are planning to offer taxpayers. The measure in clause 11 and its counterpart in the recent Finance Act aim to help HMRC obtain details earlier than it can now where promoters fail to provide information about their avoidance under DOTAS.

We welcome any measures that help HMRC track tax avoidance schemes, and we believe it is crucial that it targets the promoters of such schemes. I therefore want to use this opportunity to ask Ministers how effective they think the measures that flow from clause 11 will be. As they may know, the Chartered Institute of Taxation believes that there is a hard core of between 20 and 30 promoters, identified by HMRC, who clearly do not play by the rules. Do Ministers recognise that number? If so, I would be grateful if the Exchequer Secretary set out what goals HMRC has to clamp down on those 20 to 30 hard-core promoters. Are there any targets, and are there dates by which Ministers expect the number of hard-core promoters at large to fall substantially?

As I set out at the beginning of my remarks, we will not oppose this Bill today. Indeed, we support the intention behind many of its measures. As I have explained, however, we have a number of questions about the design of the measures in it, and I look forward to the Exchequer Secretary addressing them directly in her reply. We want to see effective measures in place to support British businesses, jobs in every part of this country and veterans seeking work. On this Second Reading and in later stages of the Bill, we will be pushing the Government to make sure that is the case.

Business Rates Reduction Services

James Murray Excerpts

Wednesday 26th May 2021 Westminster Hall

[James Murray (Ealing North) (Lab/Co-op) [V]]

Thank you, Mr Hollobone, for the chance to respond on behalf of the Opposition to this important debate. I applaud the hon. Member for Thirsk and Malton (Kevin Hollinrake) for having secured the debate on the need to regulate business rate relief services and for drawing our attention to the shocking and distressing detail of what happened to Miss Carter’s business in his constituency and of the wider appalling behaviour of RVA Surveyors.

I welcome the comments made by the hon. Member for Glenrothes (Peter Grant) on the wider need for action on predatory business practices, and those made by my hon. Friend the Member for Walthamstow (Stella Creasy), who added to the description of the shocking behaviour of RVA Surveyors, reminding us that she is a tireless campaigner for businesses in her constituency. I also recognise the comments of the hon. Member for Strangford (Jim Shannon), who mentioned the need for business rates to be looked at more widely to reflect the modern world and to support our high streets.

Our high streets are only just beginning to be able to get back on their feet after more than a year of covid restrictions in some form. Many of the problems they face, however, did not begin when covid hit; they have faced challenges in making ends meet since long before the pandemic started. In that context, it is shameful that con artists should prey on the financial insecurity of some small and medium-sized businesses at this of all times, and I am sure that all Members welcome the hon. Member for Thirsk and Malton bringing such concerning practice to our attention.

Let us be clear about how some providers of so-called business rate relief services operate. As we have heard, they claim that they will navigate through the local authority’s system on behalf of businesses and perhaps play hard ball with the Valuation Office Agency to negotiate business rate relief for companies. Their claims, however, could not be further from the truth. In fact, some of the businesses that need support most are lured—often on a no relief, no fee basis—into multi-year contracts that entitle the service providers to a huge percentage of any business rates savings made by the company. That results in astonishing and predatory commission fees for arranging benefits that are often applied freely and automatically by local authorities. Many businesses are entitled to small business rate relief, and others in the retail, leisure and hospitality sectors receive grants automatically or can apply through their local council website.

To spell out what that means in practice, let me set out an example, using conservative values nowhere near as bad as the worst cases that have been reported in the media. Take a new small business with a rateable value of about £13,500—a nursery, perhaps, or a small café. Its business rate prior to any relief would be in the region of £6,750. Were it unaware that it was entitled to small business rate relief, it might be tempted to contract with a business rate relief service, which would promise to negotiate a discounted rate for business in exchange for—again being conservative—say a 30% commission on any money saved. The service might stipulate—again, conservatively—a two-year contract, well below the five years or far longer that we have seen in the press or spoken about today.

In the 2019 financial year, that business would have been entitled to a 50% deduction through the small business rate relief. In the following year, covid measures increased that to 100%. Over those two years alone, with just a 30% commission, the provider of that so-called business rate relief service would take just shy of £3,000 off the new café or nursery. That is money that the new business was automatically entitled to and should have benefited from, yet the service provider took it off that business having added no meaningful value.

That is a deeply unethical business practice; it is exploitative, and targets those who need the relief the most. At present, these services are free to prey on vulnerable businesses, because there is no regulation in place and perhaps because too many businesses are unaware of the reliefs they are automatically entitled to. Although the hon. Member for Thirsk and Malton disagrees with me fairly often in the Chamber, I have no disagreement with him whatever in saying that there is no place for this kind of practice in the UK. I look forward to hearing from the Minister what the Government intend to do about this parasitic behaviour, which can do so much to harm small businesses.

I would also be grateful if, as the hon. Gentleman alluded to, the Minister would take the opportunity in his response to set out his position on some of the wider challenges posed by the business rates system to small and medium businesses, particularly those on the high street, which have faced difficulties for many years in making ends meet. I am of course aware that the Government have said that their final report on a fundamental review of business rates will be published in autumn 2021, so perhaps the Minister can start by confirming that this deadline will still be met. While recognising the promised publication date in the autumn, will the Minister none the less take this opportunity to update us on the Government’s thinking regarding any alternatives they are considering to the current system, as introduced in 1988? Can he guarantee that high street businesses will benefit from the reform and that online retailers will be asked to take on a fairer share? Finally, despite restrictions potentially—hopefully—being lifted on 21 June, we expect the impact of covid on businesses to continue beyond that date. Are there any circumstances in which the Minister would consider extending the 100% business rate relief for a further three months beyond the end of June, as called for by the Opposition ahead of the Budget?

As I have made clear, we agree with the concerns raised by the hon. Member for Thirsk and Malton. He is right to raise them, and I hope the Minister will be clear about what the Government will do to tackle the parasitic behaviour of so-called business rate relief services. As he will know, however, business rates are in need of a comprehensive review, so I would welcome his also updating us on the Government’s latest position on the wider points I have raised.

Finance Bill

James Murray Excerpts

Report stage & 3rd reading
Monday 24th May 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Eleanor Laing)]

With this it will be convenient to discuss the following:

New clause 6—Review of impact on corporation tax revenues of global minimum rate of corporation tax—

‘The Chancellor of the Exchequer must within six months of Royal Assent lay before the House of Commons an assessment of the effect on corporation tax revenues in 2022 and 2023 of a global minimum corporation tax rate set at 21%.’

This new clause would require the Government to publish an assessment of the revenue effect of a global minimum corporation tax rate of 21%.

New clause 12—Review of impact of Act on investment—

‘(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider the effects of the changes on—

(a) business investment,

(b) employment,

(c) productivity,

(d) GDP growth, and

(e) poverty.

(3) A review under this section must consider the following scenarios—

(a) the United Kingdom reaches an agreement with OECD countries on a minimum international level of corporation tax, and

(b) the United Kingdom does not reach an agreement with OECD countries on a minimum international level of corporation tax.

(4) In this section—

“parts of the United Kingdom” means—

(a) England,

(b) Scotland,

(c) Wales, and

(d) Northern Ireland;

and “regions of England” has the same meaning as that used by the Office for National Statistics.’

This new clause would require a report on the effect of the changes in the Act on investment, comparing scenarios in which (a) the United Kingdom reaches an agreement with OECD countries on a minimum international level of corporation tax and (b) the United Kingdom does not reach an agreement with OECD countries on a minimum international level of corporation tax on various economic indicators.

New clause 22—Eligibility for tax reliefs—

‘(1) For the purposes of Clauses 9 to 14 and 109 to 111 no tax reliefs shall apply to companies registered or with subsidiary companies registered in countries or jurisdictions listed in the EU list of non-cooperative jurisdictions for tax purposes.

(2) The Secretary of State shall also have the power to list additional jurisdictions or countries as non-cooperative jurisdictions for the purposes of subsection (1) that he/she perceives to be non-cooperative jurisdictions for tax purposes.’

This new clause would stop companies registered, or with subsidiary companies registered, in tax havens from benefiting from the UK Government tax reliefs in this Bill.

Amendment 1, in clause 9, page 4, line 2, at end insert

“provided that any such company which has more than £1 million in qualifying expenditure must also make a climate-related financial disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures within the 2021/22 tax year.”

This amendment would, in respect of companies with qualifying expenditure of over £1 million, add a condition relating to climate-related financial disclosure to the conditions that must be met in order for expenditure to qualify for super-deductions.

Amendment 29, page 4, line 2, at end insert

“provided that any such company must also not be liable to the digital services tax”.

Amendment 30, page 4, line 2, at end insert

“provided that any such company which has more than £1 million in qualifying expenditure must also—

(i) adhere to International Labour Organisation convention 98 on the right to organise and collective bargaining, and

(ii) be certified or be in the process of being certified by the Living Wage Foundation as a living wage employer.”

Government amendment 2.

Amendment 31, page 5, line 15, at end insert—

“(11) Expenditure shall not be qualifying expenditure under this section if it is incurred by a company which has at any time been involved in arrangements giving rise to a liability for diverted profits tax, or which would give rise to such a liability but for the effect of section 83 of Finance Act 2015.

(12) For the purposes of subsection (11), involvement in arrangements shall include being connected within the meaning of section 1122 Corporation Tax Act 2010 to any company involved in such arrangements.”

This amendment would bar multinationals with a history of corporate tax avoidance from accessing super-deductions.

[James Murray]

The vaccine has given us all hope, but we know that the health crisis from covid is far from over, and the impact on jobs, businesses and the economy resulting from the pandemic will be with us for a long time to come. People across our country and British businesses that have been struggling want to be able to get back on their feet. This Bill should have offered them the support they need to do so, but instead the Government chose to make half of all people in the UK pay more income tax, and its headline measure for businesses, quickly and with good reason, earned the nickname, “the Amazon tax cut”. This Amazon tax cut was proudly announced by the Chancellor as the new super deduction—a £25 billion tax cut that he has said represents the biggest two-year business tax cut in modern British history. What he was less keen to make clear is that this tax cut is not targeted at British businesses that have been struggling in the outbreak, but stands to benefit some of the biggest multinational tech firms that have done very well indeed over the past year or so.

As we have heard during previous debates on the Bill, small and medium-sized businesses can already benefit from the annual investment allowance. That allowance, extended by clause 15, offers a 100% tax break on investment up to £1 million, and we know that it will benefit almost all businesses already. The Financial Secretary to the Treasury has said exactly that. He stated very clearly in a written ministerial statement on 12 November last year that the annual investment allowance:

“Simplifies taxes for the 99% of businesses investing up to £1 million on plant and machinery assets each year.”

We pushed the Government on this matter in Committee of the Whole House, when the Financial Secretary claimed:

“The super deduction benefits all businesses that are in a position to take advantage of the eligible deduction it provides”.—[Official Report, 19 April 2021; Vol. 692, c. 764.]

He will know, however, that the 99% of businesses already benefiting from the annual investment allowance will benefit only marginally from the new super deduction.

The real winners of the super deduction were identified in Committee of the Whole House by my right hon. Friend the Member for Barking (Dame Margaret Hodge), who made the powerful argument that it will most benefit

“the companies with oven-ready capital investment plans, benefiting from the increased demand that they have enjoyed over the last torrid year—companies such as…the notorious tax avoider Amazon.”—[Official Report, 19 April 2021; Vol. 692, c. 751.]

As that phrase reminds us, Amazon already avoids paying much corporation tax in the UK at all by shifting profits to low-tax countries overseas—I will return to that point shortly—but it is depressing that, through his super deduction, the Chancellor is finishing the job Amazon started and wiping out the last little bit of tax it pays in this country.

As the House may remember, we asked the Government to look again at this matter in Committee of the whole House. Our amendment at that stage would have explicitly prevented the biggest tech firms from taking advantage of the Chancellor’s tax break, as well as other big firms that do not support workers’ rights and the living wage. At the time, the Financial Secretary to the Treasury objected to our amendment on the basis that it sought to

“restrict the relief only to certain companies”—[Official Report, 19 April 2021; Vol. 692, c. 742]

and that it imposed “burdensome conditions” on companies that want to benefit from it. That latter phrase told us plenty about the Government’s views on people’s rights at work. The conditions the Minister saw as “burdensome” are the rights to organise and to be paid a living wage. When even basic rights at work and a living wage are seen as burdensome, it is perhaps no wonder that this Government broke their promise to include an employment Bill in the Queen’s Speech earlier this month.

It is clear that we will need to push Ministers over workers’ rights on future days—from banning the shameful practice of fire and rehire to ending exploitation by rogue umbrella companies—as cross-party amendments tabled to this Bill by right hon. and right hon. Members seek to achieve. Today, we have made it very straightforward for the Government, through amendment 29, to focus specifically on preventing the very biggest tech firms—those companies liable to pay the digital services tax—from benefiting from the super deduction. This should be easy. Only a very small number of very large multinational firms that have done very well over the past year are liable for the digital services tax. The detail of that tax means that businesses are liable only when a group’s worldwide revenues from digital activities—such as providing social media platforms, search engines or online marketplaces—are more than £500 million, and when more than £25 million of these revenues are derived from UK users.

The vote on this amendment will come down to the very simple question of how Members of this House believe public money should be spent. As the Bill stands, the Government’s biggest business tax cut in modern British history will finish the job Amazon started, wiping out the last bit of tax it had to pay on the few parts of its business the profits of which it has been unable to shift overseas. A vote in favour of our amendment 29 would stop Amazon and a small number of similar firms benefiting from a giveaway of public money—public money that could be better spent for so many purposes, including to support British businesses that have been struggling throughout the past year. I urge Conservative Members to consider how they vote on amendment 29.

Before we come to that vote, I will turn to our new clause 23, through which we seek to push the Government finally to back President Biden’s plans for a global minimum corporation tax rate. I have explained how the Government’s super deduction will wipe out Amazon’s remaining tax bill in the UK, and how the amount it was due to pay in the first place was paltry compared with what it should be paying. Despite its business success in the UK, profit shifting to Luxembourg meant Amazon’s corporation tax contribution in the UK in 2019 was less than 0.1% of its turnover. People are fed up with large multinational companies avoiding their tax. It goes against the fairness that must be at the heart of our tax system, and in this year of all years, when so many British businesses are struggling to get back on their feet while Amazon’s business booms, it is clearer than ever that change is long overdue.

We have heard brazen claims from the Government about their work to combat international tax avoidance. In the debate in Committee of the whole House on this Bill, the Minister went so far as to claim that the Government have “led the international charge” in a number of ways, yet since the Biden Administration announced their proposals for a global minimum corporate tax rate, we have seen that, not for the first time, actions from the Government fail to match their words, with the UK now the only G7 country not to back the US plan. This is a once-in-a-generation opportunity to grasp the international agreement on the global taxation of large multinationals that has evaded our country and others for so long, yet rather than stepping up, our Government are stepping away.

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

The hon. Gentleman advances the extraordinary claim that the UK is the only country among the G7 not to have backed the Biden plan. Will he put in the Library the evidence for that claim?

--- Later in debate ---

[James Murray]

I am very happy to put in the Library references to comments from the other G7 countries indicating their support, but what I ask the Financial Secretary to do is put in writing the support from the UK Government for the plans proposed by President Biden, which he should be able to do today. He should act, because the British people want the Government to act. He need only look at polling carried out at the end of April by Yonder, formerly Populus, which showed overwhelming public support for action to tackle global corporate tax avoidance: three quarters of respondents thought that

“The UK should play a leading role.”

The polling also showed that less than a third of people

“trust Rishi Sunak and Boris Johnson to tackle global tax avoidance”.

The public are right to be sceptical, because the Government have shunned ample opportunities to come out in favour of President Biden’s plans; indeed, since we began debating the Bill, I have put them to the Financial Secretary and his colleagues three times. On Second Reading, I urged the Exchequer Secretary

“to confirm to the House that she and the Chancellor back plans for a global minimum corporate tax rate and that they will do all they can to make this a reality.”—[Official Report, 13 April 2021; Vol. 692, c. 197.]

She did not respond. In case his colleague’s lack of response was simply an oversight, I asked the Financial Secretary in Committee of the whole House

“to confirm whether the Chancellor backs plans for a global minimum corporate tax rate”—[Official Report, 20 April 2021; Vol. 692, c. 897.]

He refused to do so, saying only that the Government

“welcome the renewed commitment that the US Administration have made in this area”.—[Official Report, 20 April 2021; Vol. 692, c. 914.]

In a debate the following week, I put the question to him again, as simply and directly as possible:

“does the Chancellor back the plans proposed by the US President?”—[Official Report, 28 April 2021; Vol. 693, c. 415.]

The Financial Secretary replied:

“I do not think it is appropriate for Ministers to comment on tax policy in flight”.—[Official Report, 28 April 2021; Vol. 693, c. 418.]

It is very hard to conclude anything from that pattern of responses other than that the Government are not backing these proposals to succeed.

We know that much of the discussion around President Biden’s plans and the proposals formulated in recent years by the OECD and G20, with which his plans largely align, has centred on the so-called pillars 1 and 2 of any agreement. In broad terms, pillar 1 relates to where profits are taxed, while pillar 2 relates to a global minimum corporate tax rate. Both are important to developing a fairer tax system, both feature in President Biden’s proposals, and the Opposition want to see progress on each.

We have been trying to understand why the Government are so reluctant to get behind President Biden’s plans. There was a suggestion in the Financial Times last week that what the UK wants is more movement on where large multinationals pay taxes—pillar 1—before it will agree to support the President’s global minimum corporate tax rate, pillar 2. The paper quoted a UK Treasury official:

“The core UK proposition is that we’ve got to solve the digital tax issue…It’s not primarily about a minimum tax”.

To quote the chief executive of Tax Justice Network, that argument is “absolute nonsense”. Many commentators have joined him in taking a very sceptical view of what the UK claims its position to be; they point out that President Biden’s plans include steps to make progress on pillar 1, and that although any estimates are necessarily rough, pillar 1 would bring in only a few per cent. of the estimated £14 billion that a global minimum corporate tax rate at 21% under pillar 2 would raise.

A report by Bloomberg, however, implied that the real reason behind the Government’s position may be cynically to disguise their real agenda: a desire to keep alive the possibility of a race to the bottom in the future. That would be such a damaging and short-sighted approach. People are fed up with the race to the bottom. We thought that even the Chancellor had had a conversion when he admitted to the BBC’s “Today” programme around the time of the Budget that years of Conservative economic policy had failed, telling the BBC that

“there was an idea”

that corporation tax cuts

“could help spur investment, and what we’ve seen over the past few years is that we haven’t seen a step change in the level of capital investment that our businesses are doing as a result of those corporation tax decreases.”

After years of people being frustrated with tax avoidance by the biggest multinational companies, the new global deal finally within reach would be a game changer. It would raise billions of pounds a year for investment in our British public services and industry, it would stop British businesses being undercut by large multinational firms that shift their profits overseas, and it would change the behaviour of Governments around the world by calling time on the race to the bottom with tax rates. That is why a global minimum corporate tax rate is so important.

This is a once-in-a-generation opportunity. It would be a shameful failure for our Government, at the G7 meeting that we are hosting in Cornwall next month, to fail to lead on securing a global deal. It is crucial that we show support and help to build momentum behind the Biden Administration’s ambitious plans.

--- Later in debate ---

That is what we are doing, and in doing it we are merely following a tradition and a pattern of leadership that this Government have exercised over many years, so let me just pick up some examples. We have seen leadership on base erosion and profit shifting; leadership in the G20 on a comprehensive global solution based on the two pillars we have described; leadership, now, in our presidency of the G7; before that, the diverted profits tax, the corporate interest tax restrictions and the requirements for large businesses to publish their tax strategy; even last year, the digital services tax; and, in the present Bill, a plastic packaging tax. We are constantly innovating to seek to improve the quality and payment of taxation and to ensure that tax is paid in the due amounts by those who are due to do so. That is what this Bill does, and that is why I commend these measures to the House.

[James Murray]

I thank so many Members for their contributions to this debate, which has focused on the importance of fairness in the tax system, supporting British businesses and the need for the Government to step up and help to strike a global deal to stop tax avoidance.

We heard from my right hon. Friend the Member for Barking (Dame Margaret Hodge), who spoke with great experience about how the UK should be a prominent voice leading the charge to support President Biden’s proposals. She said that deliberately allowing tax-avoiding large multinationals to benefit from the super deductions is unbelievably foolish. My right hon. Friend the Member for Hayes and Harlington (John McDonnell) spoke about the unfairness of certain firms getting a super deduction. We also heard passionate contributions from my hon. Friends the Members for Liverpool, Walton (Dan Carden), for Coventry South (Zarah Sultana), for Jarrow (Kate Osborne) and for Leicester East (Claudia Webbe) about their and the public’s disbelief that the UK appears to be blocking the best opportunity in a generation to strike a deal on global tax avoidance, especially with the UK hosting the G7 summit in June.

We also heard from Conservative Members. The hon. Member for South Cambridgeshire (Anthony Browne) seemed rather eager to welcome the fall from 21% to 15% as a minimum, rather than wanting to help the US Treasury, which has publicly said that “15% is a floor” and that we

“should continue to be ambitious and push that rate higher.”

The hon. Member for Devizes (Danny Kruger) spoke about backing Biden and backing Britain. That is what our approach seeks to do. His Ministers are backing Bermuda.

Unfortunately, the Minister gave no reassurance in his speech that the Government are committed to taking a lead on this once-in-a-generation opportunity for a global deal on tax avoidance by a few large multinational firms that undermine British businesses and fail to pay their fair share. We were hoping that, today, the Government might finally indicate their support for President Biden’s plans, but instead we heard more of the same nonsensical justification for inaction. Through the vote on our new clause, we will push them to review and be transparent about the impact that a global minimum corporate tax rate no lower than 21% would have.

We were also hoping that the Minister might have indicated his support for our very simple amendment that would stop Amazon and a few other tech giants from benefiting from the tax break that the Chancellor announced at the Budget. He and his colleagues failed to address that point, so we will seek a vote on that amendment to see if any Conservative Back Benchers feel uneasy at their Ministers effectively finishing the job that Amazon started, wiping out the last bit of tax that Amazon would have to pay on the few parts of their business whose profits they have been unable to shift overseas.

This debate has exposed the failure of this Bill and this Government to be on the side of the British people and of British businesses trying to get back on their feet. Ministers have resisted stepping up to the challenge of stopping a few large multinational firms that are not paying their fair share of tax. We urge any Government Members who are uncomfortable with the position that their Government are taking to join us in voting for new clause 23 and amendment 29.

Question put¸ That the clause be read a Second time.

--- Later in debate ---

[James Murray]

People and businesses across our country need the Government to support them as they begin to get back on their feet after all the damage to people’s lives and livelihoods that the covid outbreak has brought. Six weeks ago, when we began to consider this Bill, it was clear that its provisions and those in the Budget that preceded it failed to provide that support.

We opposed the Bill on Second Reading, because far from helping people to get back on their feet, it would force half of all people in the country, including those earning only just enough to pay tax at all, to pay more from next year by freezing income tax personal allowances. That hit to household finances came alongside an immediate sharp council tax rise, a cut in universal credit later this year and a shameful real-terms pay cut for NHS workers after their unparalleled service over the last year and more. The sense of unfairness was made even more acute as the Bill, at the same time as hitting household finances, gave an immediate tax cut to some of the biggest multinational tech firms, which have done so well over the last year.

Throughout the Committee stage of the Bill, we tried to right some of these wrongs. We voted to reject the Bill’s plans to make all income tax payers pay more from next year, and we voted to stop the tech giants from benefiting from the Chancellor’s tax cut. We did not succeed in making changes to the Bill, despite giving Government Members today, in as straightforward a way as possible, another chance to exclude tech giants from their tax cut.

Throughout the debates on this Bill, we have also seen the Government reject opportunities to support decent, well-paid jobs, to end tax avoidance by large multinational firms and to back British businesses that have been struggling throughout the outbreak. It was telling that the Minister described workers’ rights and the prospect of paying a living wage as “burdensome conditions” when we suggested that they should be basic conditions of large companies taking the Government’s tax break.

As I said earlier today, it is no wonder that the promised employment Bill was absent from the Queen’s Speech earlier this month. The decision to drop it proves that the Government have no plan to tackle low pay or improve protections for working people. My colleagues and I will push the Government to honour their promises on workers’ rights and to go further, from banning the practice of fire and rehire, which has been deployed so shamefully during covid, to ending exploitation by rogue umbrella companies, as cross-party amendments tabled by right hon. and hon. Members earlier today sought to do.

It is also deeply frustrating and disappointing that, before today, Ministers had failed on three occasions since we began discussing the Bill to take up opportunities to back President Biden’s plans for a global minimum corporate tax rate. Today, they refused again, and they voted against our new clause, which would have required them to be transparent about the impact that a global minimum corporate tax rate on large multinationals would have in the UK. Britain should be taking a leading role in striking this global deal. It would bring in billions of pounds of tax every year, which could be invested in British public services and industry. It would level the playing field for British businesses that are currently undercut by a few large multinationals that shift profits overseas. It would also show the world that Britain believes in playing fair when we host the G7 summit next month.

The Government should have used the Bill to help people get back on their feet as we begin to emerge from covid. They should have been supporting British businesses that have been struggling throughout the outbreak. They should have begun building a country that lets neither workers be treated badly, nor a few large multinationals avoid paying their tax. Our tax system must have fairness at its heart, yet this Government are making households right across the country pay more tax, while letting Amazon pay no tax at all and leaving British businesses to be undercut by large multinational firms that shift their profits to tax havens overseas. That is not what our country needs. Those are not the actions of a Government who can claim to be on the side of the British people, and this is not a Bill that we can support.

Capital Gains Tax

James Murray Excerpts

Wednesday 28th April 2021 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

I am grateful for the opportunity to respond on behalf of the Opposition to the motion concerning these two statutory instruments.

The two orders bring into effect arrangements between the United Kingdom and Germany and Sweden, respectively, as set out in the bilateral protocol signed earlier this year. Both protocols amend existing arrangements between the two relevant Governments for the avoidance of double taxation and the prevention of fiscal evasion with regard to taxes on income and capital gains. We will not oppose the Government on this motion. The protocols that the motion seeks to bring in would give effect to certain provisions recommended by the base erosion and profit shifting, or BEPS, project to protect tax treaties against avoidance activities. As the Minister will know, we welcome any provisions to combat tax avoidance and evasion. However, I would appreciate his addressing in his response some important questions and concerns about how the changes are being introduced and their wider context.

First, the total parliamentary scrutiny of these changes comprises the current debate, which has three speakers and is unlikely to last more than half an hour. This differs greatly from the standard practice in other countries. In the United States, for instance, tax treaties must be considered by a fully staffed congressional committee. That raises an important question about transparency and accountability as we find parliamentary scrutiny lacking. Perhaps, however, we should not be surprised by this Government seeking to avoid scrutiny. Just last week, the Government voted down a Labour amendment to scrutinise the impact of their policies on tax avoidance and evasion. That sense of a lack of transparency is compounded by the fact that the explanatory notes on the orders simply paraphrase the treaty changes in largely technical language and, therefore, do little to elucidate the matter for a wider audience.

Inaccessible explanations are an obstacle to full, open accountability. The explanatory notes explain that the protocols will have

“no, or no significant, impact on business, charities or voluntary bodies.”

Will the Minister explain what that implies about the revenue implications of the protocols being enacted?

Finally, as these orders relate to international tax avoidance and evasion, will the Minister further clarify, for the avoidance of any doubt, whether the Chancellor backs plans for a global minimum corporate tax rate, as proposed by the US President. The Financial Secretary may recall that I asked him this question in Committee of the whole House on the Finance Bill last week. He said that the Government

“welcome the renewed commitment that the US Administration have made in this area”.—[Official Report, 20 April 2021; Vol. 692, c. 914.]

That was not quite a yes to a global minimum corporate tax rate, so again I put a very simple question to the Minister: does the Chancellor back the plans proposed by the US President?

Oral Answers to Questions

James Murray Excerpts

Tuesday 27th April 2021 Commons Chamber

[Jesse Norman]

A very large majority of the self-employed are, of course, covered by the schemes, and therefore I think that the hon. Gentleman’s concern is misplaced. Of course there will always be change in employments of different kinds, and in a dynamic economy such as ours, that is to be expected. If we can get through this desperate crisis—the worst for 300 years—with anything like any of the projected outcomes, that is something we can all, self-employed or not, be profoundly grateful for.

[James Murray (Ealing North) (Lab/Co-op)]

In a recent letter to me, the Financial Secretary admitted that 710,000 freelancers who receive a portion of their income from dividends have missed out on covid support schemes. He recognised that most people are honest in their dealings with HMRC, but said that concerns over fraud meant

“it has not been possible to support everyone in the way they might want”.

The Government have had a year to put in place a process with adequate safeguards. Why have they given up?

Finance (No.2) Bill (Fourth sitting)

James Murray Excerpts

Tuesday 27th April 2021 Public Bill Committees

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

I thank you, Dame Angela, and all Committee members for sticking with us for our fourth sitting in Public Bill Committee.

These clauses introduce a new approach to how Her Majesty’s Revenue and Customs penalises the small minority of taxpayers who fail to file or pay their tax on time. The reforms are designed to improve compliance and to enhance public trust in the tax system. They are built on fairness and proportionality. The change addresses long-standing taxpayer concern about existing penalties and draws on four successive public consultations. It is an important step in delivering the Government’s ambition to build a trusted, modern tax administration system.

The clauses apply this new approach to VAT and income tax self-assessment, also known as ITSA. Clause 112 and schedules 23 and 24 introduce a new points-based approach to penalties for regular tax return obligations. That replaces the existing penalties for VAT and income tax self-assessment. It also introduces a separate penalty for the deliberate withholding of information that prevents an assessment of tax due. Clause 113 and schedule 25 introduce a new two-penalty model for VAT businesses and ITSA taxpayers who fail to pay their tax on time. Clause 114 and schedule 26 introduce joint consequential amendments arising from clauses 112 and 113.

The changes will take effect by way of regulations: for VAT taxpayers, for accounting periods beginning on or after 1 April 2022; for ITSA taxpayers with an income over £10,000 per year who are required to submit quarterly returns digitally, for accounting periods beginning on or after 6 April 2023; and for all other income tax self-assessment taxpayers, for accounting periods beginning on or after 6 April 2024. The changes made by the clauses will impact those who are required to submit a return for VAT and/or income tax self-assessment. They will also affect anyone working on behalf of taxpayers such as tax agents.

I recognise, and HMRC recognises, that taxpayers may need some time to familiarise themselves with the new approach. I can confirm that HMRC will adopt a light-touch approach in the first year. As long as taxpayers have made reasonable efforts to fulfil their obligations, the first late payment penalty of 2% will not be applied after 15 days. In effect, therefore, for the first year taxpayers will have 30 days to contact HMRC before any late payment penalties are charged. That is a proportionate and balanced approach, ensuring the new regime is fair to all.

If I may, I will respond briefly to amendments that have been tabled in this group. Amendment 24, which relates to schedule 23 to clause 112, would reduce the time limit for HMRC to assess a penalty for failure to make a return from two years to three months. That two-year time limit, however, is long standing, and the Government do not intend to change it through these reforms. The two-year time limit strikes a careful balance between giving taxpayers sufficient notice that a penalty has accrued and allowing adequate time for HMRC to make an assessment. That helps to ensure the integrity of the tax system and benefits us all. In the vast majority of cases, penalties will be levied quickly and automatically close to the date of any missed obligation. Of course, there will be times when HMRC needs longer to conduct its investigations, which is why the two-year time limit is required. I therefore urge Members to reject the amendment.

Amendments 3 to 14 relate to clause 113 and schedule 25, and would remove the first penalty entirely, leaving only the second penalty. Our approach has evolved in line with feedback from several consultations and it strikes a balance between encouraging early engagement with HMRC and penalising those who avoid doing so. The first late payment penalty is essential to incentivise compliance and protect the public finances. Although the vast majority of taxpayers comply with their tax obligations and try their best, a minority consistently fail to meet their tax obligations. If they faced no consequences, they would have an unfair advantage over the vast majority of taxpayers who follow the rules and pay on time. As I mentioned earlier, it is also the case that no penalty will be charged if a taxpayer approaches HMRC to request a “time to pay” arrangement within the first 15 days.

Amendment 25 also relates to clause 113 and schedule 25, and would remove any penalty for a taxpayer who agrees a “time to pay” arrangement with HMRC but then fails to fulfil the terms of that agreement. Of course, some taxpayers may encounter difficulty in paying their taxes on time and HMRC recognises that there are often valid reasons for that. “Time to pay” arrangements are designed to help taxpayers who are struggling to meet their obligations and HMRC strongly encourages those taxpayers to talk to HMRC as soon as possible, if they need to do so. HMRC will always look to agree a “time to pay” arrangement tailored to the taxpayer’s needs. If a taxpayer’s circumstances change, “time to pay” arrangements can themselves be renegotiated.

HMRC must strike a balance between supporting taxpayers who are struggling to meet their obligations and identifying those who are deliberately avoiding them. If a taxpayer has not upheld a “time to pay” arrangement and has not approached HMRC to amend that arrangement to reflect a change in their circumstances, it is appropriate that a penalty is applied. This is designed to encourage anyone who may be struggling to meet their obligations to engage actively with HMRC in order to agree further support. It is also designed to ensure that those taxpayers who regularly meet their obligations are not put at an unfair disadvantage.

I turn now to new clause 6, which relates to clauses 112 to 114, and to schedules 23 to 26 and 28. New clause 6 would require the Government to review the effects of the changes being made by these measures on reducing the tax gap and, within six months of the Act being passed, report to the House on these changes, including the expected change in corporation tax and income tax being paid that is attributable to the provisions. The new clause specifies that these should include taxes payable by owners and members of Scottish limited partnerships.

The Government publish information each year on the tax gap. Sanctions are only one of a series of tools used to tackle non-compliance and reduce the tax gap, so the effect of the changes made by these measures should not be viewed in isolation. The Government are committed to open policy making and we ensure that systematic evaluation of the effectiveness of policy is built into the policy-making process at every stage. With regard to new clause 6, the Government have set out, within the tax information and impact note published at Budget 2021, that this measure will be monitored through information gathered from HMRC systems, and that implementation will be monitored closely, collecting stakeholder feedback to inform future policy development.

Furthermore, the first financial penalties levied under these measures will not occur until after six months of the Act being passed, so it simply would not be possible to provide any worthwhile estimates of tax saved in that time period. Corporation tax is currently out of scope of these reforms. Therefore, we do not believe that a review of the type being proposed is necessary and we urge Members to reject the new clause.

Finally, I will briefly respond to amendment 26, proposed by the Opposition. It relates to clause 114 and schedule 26, which deal in consequential amendments, removing redundant references to the VAT default surcharge, which of course is being replaced by clauses 112 and 113 in the Bill. The amendment would confusingly and mistakenly retain references to the repealed default surcharge. Therefore, it serves no purpose and I urge Members to reject it.

As many in this Committee will be aware, the vast majority of taxpayers fulfil their obligations by submitting their returns and paying their taxes on time. Therefore, these changes should only affect a small number who do not do so. It is right that HMRC has in place appropriate penalties to discourage such behaviour. I therefore move that these clauses and schedules stand part of the Bill.

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to serve on this Committee with you in the Chair, Dame Angela.

I am pleased to begin by discussing clause 112, which, as we heard, introduces two new schedules. The first, schedule 23, sets out a new points-based penalty system for the failure to make, or the late submission of, various returns. The second, schedule 24, makes minor changes to the penalty for deliberately withholding information from HMRC by failing to submit returns.

We welcome the stated aim of the Government: to encourage compliance without wanting to punish taxpayers who make occasional mistakes. It is right to give people in the regular course of events an opportunity to clear penalty points without incurring a penalty charge, while making sure a stronger deterrent is provided in cases where behaviour is shown to be deliberate. The explanatory notes for the clause point out that the regime has been developed through three separate consultations. However, as the Low Incomes Tax Reform Group—LITRG—makes clear, while HMRC has taken on board comments on the structure of a new penalty regime, it considers legislation in the Bill to be far more complex than originally envisaged.

LITRG points out that taxpayers come under Making Tax Digital for VAT for the first time in April 2022, and Making Tax Digital for income tax self-assessment for the first time in April 2023, so they face a complex and unfamiliar penalty regime at the same time as having to get to grips with their obligations under Making Tax Digital. For people with a single source of income, Making Tax Digital for income tax self-assessment appears to have six separate filing obligations over the course of a year, for which penalties could be incurred: four periodic updates, one end-of-period statement, and one final declaration.

I welcome the fact that the Minister set out his view of the suggestion by LITRG that the introduction of the new penalty regime should be delayed to allow those taxpayers time to familiarise themselves with the new obligations before they begin to accrue penalty points for non-compliance. I would also welcome the Minister’s thoughts on the suggestion by LITRG that the legislation should include an obligation on HMRC to keep taxpayers regularly informed of their penalty points total.

Clause 113 introduces schedule 25, which includes a new two-penalty model for businesses and individuals that fail to pay their tax liability on time. The first penalty is 2% of the amount of tax unpaid 15 days after the due date, plus 2% of the amount of tax unpaid 30 days after the due date. The second penalty is a penalty interest rate of 4% per annum that applies from the 31st day of the tax being unpaid. Again, the Low Incomes Tax Reform Group has expressed a number of concerns about the operation of this new regime, including concern about the interaction of time-to-pay arrangements with the new late-payment penalty regime. We would welcome the Minister’s views on that point.

Clause 114 introduces schedule 26, which, as we heard, is consequential to previous clauses and schedules that have been introduced. We tabled amendment 26, which suggests leaving out schedule 26, paragraph 36. We do not intend to press the amendment, but we welcome the Minister’s clarification on the point we sought to raise by tabling it. Our understanding was that schedule 26, paragraph 36 amended section 1303 of the Corporation Tax Act 2009. We were concerned that the amendment appeared to remove a prohibition on any surcharge in VAT, a penalty for missed payment, late payment or non-payment of VAT being written off as a loss in the company’s taxes. We therefore welcome the Minister’s clarification regarding the intention behind that amendment, particularly the message that it sends.

[Peter Grant (Glenrothes) (SNP)]

It is a pleasure once again to serve with you in the Chair, Dame Angela. As the Minister pointed out, the intention behind amendment 24 is to reduce HMRC’s time limit to assess whether a penalty is due if someone is late in submitting their statutory return. Although the Minister is right that the two years have been there for a long time, that does not mean that two years is right. It seems unfair, considering how quickly potential taxpayers are expected to respond to queries from HMRC, which has been known to take two years to make an assessment for which it already has all the necessary information. The stated policy intention of the new regime is to be proportionate, penalising only the small minority who persistently miss their submission obligations, rather than those who make occasional mistakes. However, the Bill as drafted provides for penalties to be levied against people who have made occasional mistakes and allows HMRC up to two years—and an even longer period in some cases not covered by our amendment—to assess a penalty.

--- Later in debate ---

[James Murray]

As we have heard, clause 116 and schedule 28 make amendments to the Finance Act 2009 relating to late payment and repayment interest for VAT. We understand that these changes generally ensure that late payment and repayment interest work in the same way for VAT as they currently do for income tax self-assessment. We recognise that the clause and schedule make amendments to repayment interest on VAT to bring it in line with income tax self-assessment, ensuring that interest is charged and paid to customers consistently across taxes. We do not oppose the clause’s standing part of the Bill.

Question put and agreed to.

Clause 116 accordingly ordered to stand part of the Bill.

Schedule 28

Late payment interest and repayment interest: VAT

Amendment made: 19, in schedule 28, page 286, line 39, leave out from beginning to end of line 14 on page 287. —(Jesse Norman.)

This amendment removes the provision that would have prevented an amount of VAT credit from carrying repayment interest under Schedule 54 to the Finance Act 2009 for a period referable to the raising and answering of an inquiry by HMRC or the correction by HMRC of errors or omissions in a VAT return.

Schedule 28, as amended, agreed to.

Clause 122

Financial institution notices

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

[Jesse Norman]

Clause 122 makes changes to enable HMRC to issue a new financial institution notice that in certain circumstances will require banks and others to provide information about a specific taxpayer to HMRC that is required to check a tax position or collect a tax debt without the need for approval from the independent tax tribunal. In around 500 cases a year, HMRC uses its formal powers to obtain information with tribunal approval. That includes domestic cases where HMRC wants to check information, and also cases where the information is needed by other tax authorities.

Co-operation with other tax authorities is crucial if international tax evasion and avoidance is to be tackled. The UK relies on other countries helping it, and they rely on the UK. In international cases, obtaining information takes, on average, 12 months, despite the fact that HMRC works with the Ministry of Justice to speed up the process and has more than doubled the number of HMRC staff dealing with such requests. That means that the UK does not meet its commitments to the OECD standards that we ourselves helped to develop, which require such international requests to be completed within six months. All other G20 countries can meet that standard, and the UK is under an obligation to demonstrate compliance with the standard when it is peer reviewed, in order to maintain co-operation with other countries. Following consultation, therefore, the Government decided to make the changes while ensuring that there are appropriate safeguards for taxpayers.

Timely access to information is central to international efforts to tackle tax avoidance and evasion. The changes allow the UK to meet its obligations under the OECD standards and bring it in line with all other G20 countries, while ensuring the appropriate safeguards.

[James Murray]

The key change introduced by clause 122 are the new powers for HMRC to issue financial institutions with a statutory demand for information—a financial institution notice—about a known taxpayer. Such notices differ from existing HMRC powers as they may be issued without the prior approval of taxpayer or tribunal, the financial institution has no right of appeal against a notice, and a notice may be issued for the purposes of collecting a tax debt from the taxpayer.

The Low Incomes Tax Reform Group has expressed its concern that that represents the removal of important taxpayer safeguards. I understand that HMRC has justified the introduction of financial institution notices on the basis that the existing statutory safeguards on third-party information notices mean that they cannot meet the international obligation to tackle offshore tax avoidance and evasion in obtaining information on behalf of overseas jurisdictions on a timely basis.

As the Minister knows, we welcome any efforts to tackle tax avoidance and evasion, but we would like to ask him why that approach is justified. HMRC is introducing powers that will be used in a domestic context, even though there is no domestic justification for them. HMRC’s apparent reason is that it is not possible to introduce a new process for domestic cases because of restrictions in UK law and international treaties.

However, the House of Lords Economic Affairs Finance Bill Sub-Committee recently heard evidence, including from HMRC, that the vast majority of the delay in obtaining information for international cases was down not to the UK’s Court Service, which HMRC acknowledged took four to six weeks to process an application, but rather to delays in obtaining information required from overseas jurisdictions, which HMRC told peers takes eight months on average. The Lords recommended that, rather than removing important taxpayer safeguards, HMRC should review the whole process for dealing with international information requests requiring tribunal approval and should work with the financial institutions, the tax tribunal and others to find other means to streamline the process.

We would welcome the Minister addressing those points directly in his response, as there are clearly concerns that new financial institution notices might not in fact speed up the process of obtaining information in international cases. We would also welcome him addressing the concern as set out by the Institute of Chartered Accountants in England and Wales that new financial institution notices will be used routinely as a way of obtaining information, with the number of domestic information requests far exceeding the number of times the notices are used for international information exchanges. Is the Minister confident—and if so, why— that financial institution notices will be used only in accordance with the original policy intent, which is to speed up HMRC’s dealings with international exchange of information requests from overseas jurisdictions, rather than as an additional compliance tool for inquiring into the affairs of UK taxpayers?

--- Later in debate ---

[Jesse Norman]

Clause 123 makes changes to allow information notices to be used to obtain documents and information for the purpose of collecting a tax debt. I remind the Committee that the UK helped to develop and remains committed to—this is a bipartisan matter—OECD international standards for exchange of information. It is crucial that this country can co-operate with other tax authorities to tackle international tax evasion and avoidance. We rely on other countries to help us, and they rely on us. However, the UK is currently unable to assist with exchange of information requests from other jurisdictions where formal powers need to be used to obtain debt collection information. That means that the UK does not fully meet its commitments to the OECD standards. The UK must demonstrate compliance with those standards when peer reviewed to maintain co-operation with other countries. Therefore, following consultation, the Government decided to make this change.

The changes made by clause 123 will allow information notices to be issued by HMRC to obtain information for the purpose of collecting tax debts. That will allow HMRC to assist with international exchange of information requests relating to debt, and will support HMRC’s domestic activity to collect tax debts. Assisting with international exchange of information requests is an important part of international efforts to tackle tax avoidance and evasion. By those means we can meet our commitments as a country to the OECD standards.

[James Murray]

Clause 123 amends schedule 36 of the Finance Act 2008 to give HMRC a new power to issue an information notice for the purposes of collecting a tax debt. We would like to raise with the Minister a point articulated by the Chartered Institute of Taxation in connection with the amended schedule 36. It is concerned that the new notice for collection of tax debts can be used for the purposes of collecting a tax debt, whenever arising. That means that the use of these notices is not restricted to cases involving tax years after the measure becomes law, which raises a concern that this is a very wide-ranging power. What reassurance can the Minister offer that HMRC will use the new power granted by this clause proportionately and with appropriate oversight?

[Peter Grant]

I do not have any issue with the changes proposed in clause 123 but, like the hon. Member for Ealing North, I think it is important to make clear that, in passing the legislation, Parliament has to give what may appear to be draconian powers to HMRC or other Government agencies to use when they have to. We then have to rely on Ministers to set policy, and sometimes on HMRC or Government Departments, in terms of their operational management decisions, not to use those draconian powers except when they absolutely must.

As we have begun to come out of the covid recession, a lot of individuals and businesses have found that their cash-flow position is as bad as it has ever been—and hopefully as bad as it ever will be. If HMRC manages itself only in terms of its own performance statistics on how quickly it can get the money in, there is a danger that it will do damage to the wider economy; in the longer term, it will do damage to the public finances. If a business is struggling to pay its tax, it is struggling to pay all its bills too. If we move in too quickly to get the tax out of that business, the chances are that it will go down and will no longer have any chance of paying its suppliers, so the suppliers go down as well. We will end up with a domino effect, with several businesses, and possibly three or four times as many jobs, being lost.

It is not a question of saying that there are circumstances where HMRC should say to somebody, “You don’t need to pay your debts,” but there will be times when it will be better for it to say, “We aren’t going to chase you for your debts now, but it’s up to you to get your circumstances sorted out, and then we will expect you to pay your dues.” I say that because I have known instances in constituency casework, as I suspect many Members have, where HMRC did not seem to take that approach. It appeared to have been chasing businesses to the point of liquidation, and individuals to the point of bankruptcy, for amounts of money that, in the grander scheme of things, were completely irrelevant to it, but highly relevant to those individuals and businesses.

I hope that we will get an assurance from the Financial Secretary today that the draconian powers in the Bill and in existing legislation will be used with an even softer touch over the next few years than they were supposed to be used with in the past. Otherwise, we will find that the difficulties that businesses are facing will get worse over the next few years, rather than better.

--- Later in debate ---

[Jesse Norman]

Clause 124 and schedule 33 will make changes to ensure that necessary technical amendments are made to HMRC’s civil information powers. Further to the changes introduced in clauses 122 and 123, it is necessary to make consequential changes to the legislation that regulates those powers.

Clause 124 and schedule 33 will prevent the person who receives a financial or third-party information notice from copying the notice, or anything relating to it, to the taxpayer to whom it relates, where this has been approved by an independent tax tribunal. The provisions will also correct a drafting error in the original legislation concerning daily penalties, and address a stamp duty land tax issue by enabling HMRC to check that relief given on the basis of future actions by the purchaser continues to be due. The additional technical amendments are necessary to ensure that HMRC’s civil information powers work as intended.

[James Murray]

We recognise that clause 124 and schedule 33 make miscellaneous changes, including to correct a drafting error in schedule 36 of the Finance Act 2008, which governs the issuing of increased daily penalties for failure to comply with an information notice. The schedule also introduces a rule to prevent a third party telling the taxpayer about a third party information notice where the tribunal has decided that is appropriate. We do not oppose the clause and schedule standing part of the Bill.

--- Later in debate ---

[Jesse Norman]

Clause 125 introduces a new power that will enable the Government to subsequently make regulations to implement international reporting rules for digital platforms following consultation—in particular, the OECD model rules for reporting by platform operators with respect to sellers in the sharing and gig economy are in scope here. As announced at Budget, the Government will consult on the implementation of these OECD rules in the summer.

The OECD rules require digital platforms to report information about the income of sellers providing services on these platforms to their tax authority. The rules affect platforms that facilitate the provision of services such as taxi and private hire services, food delivery services, freelance services and short-term letting of accommodation through apps and websites. The platforms will also be required to provide a copy of the information to the sellers.

Sometimes these sellers do not fully understand their tax obligations, or they may work on multiple platforms and find it hard to keep track of their income. This will make it easier for UK gig workers who provide their services through digital platforms to complete their returns and get their tax right. To be clear, there will be no change in the amount of tax due. The information will simply help taxpayers to declare the correct amount of income first time. However, where sellers are not declaring all of their income from platforms, the information reported to HMRC will help to support the Government’s efforts to detect and tackle tax evasion.

HMRC will also be able to exchange information with other countries that sign up to the OECD rules. This exchange of information will allow HMRC to access data on UK sellers from platforms based outside the UK much more quickly and efficiently than is currently possible. The benefit is not, it is important to say, only for gig workers and tax authorities. The Government have heard directly from some of the major digital platforms that they welcome this international approach as it provides them with a set of standardised rules to follow. The UK is committed to its role as a global leader on tax transparency. In line with this ambition, the UK is one of the first major economies to announce that it will consult on the implementation of the OECD rules.

[James Murray]

The clause introduces a power to make regulations to implement the OECD model rules for reporting by platform operators. These rules will require certain UK digital platforms to report information about the income of sellers of services on their platform. The power also allows regulations to be made to implement other, similar international agreements or arrangements. The clause allows for greater oversight of gig economy digital platforms, which in turn allows for more effective action to enforce tax compliance. So it is a positive change, which we support.

The OECD issued a report in July 2020 setting out new rules to oblige shared and gig economy platforms to report the activity of their users. As we have heard, the UK was involved in discussing and agreeing the model rules at the OECD. The reported information can be shared by other participating tax authorities using a new tax information exchange framework, simplifying compliance for taxpayers and making data easier to interpret and exchange. It is designed to help sellers on these platforms comply with tax obligations and to help HMRC detect and tackle tax evasion when they do not.

These new measures will have a significant combined impact on an estimated 2 to 5 million businesses that provide their services via digital platforms, though we acknowledge that the impact to each seller may be small. Although we welcome these changes, I invite the Minister to use his remarks to set out what support the Government will provide for digital platforms and the businesses providing services on them, to ensure that they are well prepared for new tasks that they have not had to undertake before.

[Jesse Norman]

Let me say a couple of things about the impact mentioned by the hon. Gentleman. It is important to say that the Government very much recognise that businesses will need time to get to grips with new reporting requirements and the rules, therefore, are not intended to come into force earlier than January 2023, with reporting due no earlier than January 2024. There will be a consultation on the implementation of the rules in 2021.

The goal is to set a framework and a regime that can stand effectively and flexibly over time, but with a degree of care about how it is consulted on and developed, with good notice for those who are affected to be able to change some of their practices if they need to.

The question arises: will there be a substantial amount of additional administrative burden? The answer is no. Having been in discussion with different parties involved, we think it will be easier for platforms to report information using agreed international standards. That is why the measure has been welcomed by some of the platforms.

Where there are costs, we will seek to minimise them where possible. For example, I expect there will be an optional exemption for start-ups and perhaps a phasing-in period for some of the obligations, to spread their initial impact. All those arrangements, therefore, should have the effect of creating a phased, calibrated and well structured introduction of the new measure.

Question put and agreed to.

Clause 125 accordingly ordered to stand part of the Bill.

Clause 126

Unauthorised removal or disposal of seized goods

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

[Jesse Norman]

Clause 126 is a small but important clause that would amend schedule 3 of the Customs and Excise Management Act 1979 to allow HM Revenue and Customs and UK Border Force to levy a civil penalty for goods seized in situ that are removed without prior authorisation.

The background to this measure is that goods that have been seized are normally kept in Border Force-controlled Queen’s warehouses. Sometimes, however, seized goods are kept on the trader’s own premises and are known as goods seized in situ. Currently, schedule 3 of the 1979 Act allows for goods to be seized and kept on the trader’s premises, but does not refer to seizure in situ; therefore, if seized goods are removed without prior authorisation, no penalty can be issued.

Pressures on existing warehouse space mean that goods are increasingly being seized in situ at traders’ premises. Removal of those goods by traders without prior authorisation from HMRC does not, the Committee might be surprised to know, currently attract a penalty. That risks the unauthorised removal of seized goods. The measure is a legislative amendment to schedule 3 of the 1979 Act to include a civil penalty for where goods seized in situ are removed without authorisation.

Goods will remain in situ for a month to allow the owner to contest the seizure. After that period, the goods will be condemned and HMRC may dispose of them. The amendment to the schedule of the 1979 Act to include a civil penalty under the Finance Act 1994, for where goods seized in situ are removed without authorisation, will mirror the existing penalty for detained goods in paragraphs 4 and 5 of schedule 2A to the 1979 Act for detentions.

HMRC has a duty to take robust action to deal with those involved with goods that have not had duty paid on them, or are prohibited or restricted. The detention and seizure of goods is a valuable tool to deal with and to deter duty evasion. This measure will assist HMRC in tackling non-compliance and is proportionate to ensure compliance and protection of the revenue.

[James Murray]

Clause 126 enables HMRC and Border Force officers to use a civil penalty to combat the unauthorised removal of things that have been seized in situ. When HMRC seizes goods, they are normally kept, as we heard, in Border Force-controlled warehouses. When goods that have been seized are kept on the trader’s premises, the seizure is known as seizure in situ. Currently, the law does not refer to seizure in situ; therefore, if seized goods are removed without prior authorisation, no penalty can be issued. We recognise that the clause will amend that.

We want HMRC to take robust action to deal with those who import illicit items into the UK or seek to bring in things on which duty has not been paid. We want the detention and seizure of things to be a valuable tool in the fight against duty evasion. We therefore do not oppose the clause.

Question put and agreed to.

Clause 126 accordingly ordered to stand part of the Bill.

Clause 127

Temporary approvals etc pending review or appeal

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

[The Exchequer Secretary to the Treasury (Kemi Badenoch)]

Clause 127 makes changes to customs and excise review and appeals legislation, to safeguard the right to appeal. To do this, HMRC will be given the power to temporarily approve a business, on application and subject to meeting certain criteria, in order that the business may continue to conduct controlled activities until the conclusion of its appeal into an earlier decision.

As Committee members may be aware, businesses in a number of regimes operated by HMRC require approval before they may conduct certain controlled activities. These include the alcohol wholesaler registration scheme, which regulates the sale of alcoholic drinks, and the raw tobacco approval scheme, which requires the approval of anyone conducting activities involving raw tobacco.

Approval is dependent on a business continuing to satisfy certain fit and proper criteria, which are defined in law. Where evidence shows that the business is no longer fulfilling those criteria, HMRC may, as a last resort, revoke its approval. As with all HMRC decisions, the recipient may request an internal review by an independent officer and, ultimately, has the right to appeal to a tribunal and higher courts.

On receipt of HMRC’s decision to revoke, a business must cease the controlled activity, even where it contests the decision. HMRC currently has no power to pause or suspend its decision, or to allow the business to continue with the controlled activities while it pursues its right of appeal.

Previously, it was believed that where a business sought relief from the courts, such a suspension could be granted. However, comments made by the Supreme Court in 2019 in OWD Ltd v. HMRC highlighted that that may not be the case. If neither HMRC nor the courts have the power to suspend revocation, it could, in theory, cause a business to fail before its appeal has been concluded, fundamentally undermining the right of appeal. It is in order to protect this right that changes are being made. To be clear, the process of temporary approval would apply only in appeals involving civil cases. Those cases where revocation of an approval is linked to criminal prosecution would not be considered.

The changes made by the clause create a new power for HMRC to issue temporary approvals in respect of the control schemes covered by this clause, as they all contain similar fit and proper criteria. Temporary approval would be conditional on the business providing sufficient evidence to support its case that, without that temporary approval, its appeal right is ineffective.

The clause also creates a new appeal right in relation to HMRC’s decision on whether to grant temporary approval. That will ensure that a business has every opportunity to seek protection following a decision by HMRC. The business must demonstrate that it would suffer irreparable harm—rather than just inconvenience—by not being able to conduct the controlled activity in the period between revocation and the outcome of its appeal. That does not alter HMRC’s position that it has judged the business to no longer satisfy the requirements to hold approval; the object of the change is to safeguard appeal rights and not to allow unfit businesses to gain extended periods to trade before an appeal is heard.

The evidential requirements for gaining a temporary approval are intentionally high, to protect revenue and ensure compliance. Any temporary approval would be issued with strict conditions, allowing HMRC to monitor activity closely; any new evidence of unacceptable trading would result in removal of this temporary approval, to protect revenue. HMRC will specify through its public notices the evidence that must be submitted with a temporary approval application, along with details of timings and other relevant matters. The legislation will come into force at a future date to be determined by HMRC and will be brought in by regulations made by statutory instrument.

In conclusion, the clause gives HMRC the power to grant businesses a temporary approval to conduct controlled activities in appropriate circumstances. This power does not currently exist, and it is right that we remedy that situation to provide fairness to taxpayers appealing a decision to revoke their right to trade.

[James Murray]

Clause 127 introduces a new power to grant temporary approval to a business appealing a decision to remove or reject a trading approval so that its appeal right is safeguarded. Where HMRC has revoked or refused an approval to trade, a business has a right to appeal that decision. If the business cannot survive that appeal process on account of being unable to trade, its appeal right may be rendered ineffective in practice.

This measure introduces a new statutory power, based on the power that had been assumed to lie with the High Court, allowing HMRC to temporarily approve relevant businesses, and provides for a right of appeal to the first tier tribunal. As the clause seeks to help ensure that a business’s right to an effective appeal will be safeguarded, we do not oppose its standing part of the Bill.

Question put and agreed to.

Clause 127 accordingly ordered to stand part of the Bill.

Clause 131

Interpretation

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

[The Chair]

With this it will be convenient to discuss clause 132 stand part.

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[Jesse Norman]

On a point of order, Dame Angela. I would like to thank you and Sir Gary, Hansard, the Whips, parliamentary private secretaries and officials. I am sure that I speak for those on both sides of the Committee when I thank those who have supported us through the Committee stage. I would particularly like to call out the names of Edwin Ferguson and Sarah Hunt and of our Bill team at the Treasury, Bill manager, Mikael Shirazi, Helena Forrest, Barney Gibb and Sam Shirley. I thank colleagues across this Committee for their commitment to scrutinising and debating the legislation. I am keenly aware, as they will be, that we do so under the picture of William Gladstone and his Cabinet at the time—a very forbidding chancellorial figure. With that in mind, I thank everyone for their contributions, and thank you, Dame Angela, for presiding so ably.

[James Murray]

Further to that point of order, Dame Angela. I would like to put on record my thanks to you for being a very patient Chair on my first time in a Public Bill Committee, following Sir Gary Streeter last week. I also thank the Clerks for helping us to draft amendments, and the wider House authorities for making it possible to hold a Public Bill Committee in these strange circumstances. I would also like to thank all members of the Committee. On behalf of my hon. Friend the Member for Erith and Thamesmead, I particularly thank our Whip—my hon. Friend the Member for Manchester, Withington—and my hon. Friends the Members for Vauxhall and for Luton North for giving up their time to sit on this Committee.

[Peter Grant]

Further to that point of order, Dame Angela. Although, there are obviously parts of the Bill that I do not agree with, I endorse the Minister’s comments on the work that has been done by his colleagues on the Treasury team and by Hansard and other parliamentary staff, without whom democracy in this place simply would not happen—we should never forget that.

I thank my hon. Friend the Member for Glasgow Central, who was unfortunately not able to be with us today, for her work as the senior SNP Treasury spokesperson. I also thank—this is a name that most Members will not recognise—Scott Taylor from the Scottish National party research team. When people ask me what Westminster researchers do, I say, “Their job is to make it look as if their MPs know what they are talking about.” We may all have different opinions on how effectively they do that, but Scott and his colleagues have certainly done a huge amount of work over the last months.

Finally, I thank the large number of external stakeholders who have engaged fully with us as a third party, and no doubt with other parties as well, in a constructive way. They understood when they put forward things that we simply did not feel we could support, but at the same time they gave us a lot of background information so that our understanding of the likely impact of the Bill was much greater than it would otherwise have been, whether we were able to take their requests on board or not. As I said, although I disagree with parts of the Bill, we should recognise that, overall, it is a better piece of legislation thanks to the contribution that those external bodies have made.

Question put and agreed to.

Bill, as amended, accordingly to be reported.

Finance (No.2) Bill (First sitting)

James Murray Excerpts

Thursday 22nd April 2021 Public Bill Committees

[The Exchequer Secretary to the Treasury (Kemi Badenoch)]

[James Murray (Ealing North) (Lab/Co-op)]

[The Chair]

[James Murray]

[Kemi Badenoch]

[Jesse Norman]

[James Murray]

Although we note that no public consultation was carried out on this matter, the clause’s effect on the public finances is negligible and is time limited during covid. The beneficiaries will be a small number of plant or machinery leaseholders, and the main stakeholder is the Finance and Leasing Association, which supports the clause. We therefore do not oppose its standing part of the Bill.

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[Alison Thewliss]

[James Murray]

[Jesse Norman]

[Jesse Norman]

[James Murray]

[Jesse Norman]

[James Murray]

[The Chair]

[James Murray]

[Jesse Norman]

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Social enterprises play a vital social and economic role across the United Kingdom. That is something that you, Sir Gary, and I know from personal experience. They have been a deeply important factor in this country’s development history. Many have brilliantly supported communities through the covid-19 pandemic. The Government want to continue support for the sector, but they need to ensure that these reliefs are appropriately managed. That is what this clause does.

[James Murray]

[Jesse Norman]

[James Murray]

[Jesse Norman]

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[Alison Thewliss]

[James Murray]

[Jesse Norman]

[Kemi Badenoch]

[James Murray]

[The Chair]

[Alison Thewliss]

[James Murray]

[Jesse Norman]

[Jesse Norman]

[James Murray]

[Jesse Norman]

[Jesse Norman]

[James Murray]

[Jesse Norman]

[James Murray]

[Alison Thewliss]

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[Jesse Norman]

[James Murray]

[Jesse Norman]

[James Murray]

[Jesse Norman]

[James Murray]

Adjourned till this day at Two o’clock.