Draft Resolution of Central Counterparties (Modified Application of Corporate Law and Consequential Amendments) Regulations 2023 Draft Financial Services and Markets Act 2023 (Resolution of Central Counterparties: Partial Property Transfers and Safeguarding of Protected Arrangements) Regulations 2023 Draft Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023

James Murray Excerpts

Tuesday 28th November 2023 General Committees

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

It is a pleasure to serve on this Committee with you as Chair, Mr Paisley, and to make brief remarks in relation to these three statutory instruments on behalf of the Opposition.

I begin by thanking the Minister for outlining the detail of the regulations. Throughout the debates on the Bill that became the Financial Services and Markets Act 2023, it was my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq), as shadow Economic Secretary to the Treasury, who set out the Opposition’s support for reforms designed to minimise the financial stability risks that central clearing parties, or CCPs, pose to individuals and businesses in the UK, which will be achieved through the introduction of a new CCP resolution regime, as the Minister has set out.

I am glad to confirm that we in the Opposition support the three statutory instruments that we are considering today, which relate to the delivery of legislative reforms that we supported in the Financial Services and Markets Act 2023. We support the regulations put forward today in their attempt to make sure that contractual arrangements crucial to a CCP’s operation are adequately protected when the Bank of England exercises resolution powers, as well as making sure that necessary company law modifications and amendments are made.

The Opposition also support the regulations put forward to expand the supervisory powers of the FCA over payment firms and electronic money institutions following the UK’s departure from the EU. Although our support is clear, I have a few questions for the Minister about how the FCA’s significantly expanded remit will be delivered in practice.

When the Minister responds, I would be grateful if he could set out what the Government are doing to make sure that the FCA’s greater powers are accompanied by greater accountability. Could he also explain what steps the Government are taking to make sure that additional FCA requirements on payment firms and EMIs are proportionate and that they do not hamper innovation in the UK’s world-leading payments sector?

Thank you, Mr Paisley.

Autumn Statement Resolutions

James Murray Excerpts

Wednesday 22nd November 2023 Commons Chamber

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

Today, the Chancellor confirmed what the British people already know—that there is nothing the Conservatives can say or do to hide their 13 years of failure. Government Members may have been patting each other on the back during the Chancellor’s statement, but the British people will not be celebrating. After everything that we have heard today: taxes will still be at their highest during peacetime; inflation is forecast to be higher in the years ahead than it was according to the Office for Budget Responsibility’s forecast in March; mortgage payments will still be rising for millions as their deals end; and after 13 years of low growth, we are still on a path of decline, with economic growth forecast for next year slashed by more than half.

Nothing that the Conservatives have said today will overcome the damage that they have done over the past 13 years. Nothing that they have said will overcome the cost of living crisis that families across the country are facing. Household incomes will still be 3.5% lower next year in real terms than before the pandemic, the biggest hit to living standards on record. Inflation has been upgraded in every year of the forecast period, with prices now set to be 7% higher at the end of the forecast period than the OBR forecast them to be in March. The truth is that working people are worse off under this Conservative Government.

I am sure the Chancellor will want people to focus on his announcement of a cut in the main rate of employee national insurance, but, frankly, coming after 25 tax rises in this Parliament alone, it is insulting to suggest that the British people will be fooled. Under the Conservatives, the tax burden is set to increase by £4,300 per household. Let us not forget, that, just two years ago, the Chancellor and the now Chief Secretary to the Treasury walked through the Division Lobby to put national insurance up. They may wish to forget that, but the British people will not. It is as if the Tories have nicked your car, but expect you to be grateful when they pay for your bus fare home.

After 13 years of low growth, and with taxes already at their highest level in more than 70 years, the British people will see straight through this Government’s desperate attempts to woo them. It had been rumoured that the Government were planning to cut inheritance tax in this statement. Of course, people want to be able to pass on what they have worked hard for to their children, but in the middle of a cost of living crisis, when families face rises in mortgage costs, in prices across the board, and in NHS waiting lists, we simply could not understand how the Conservatives saw that tax cut for the wealthiest 4% as a priority. The truth is that this would have been the wrong tax cut—

[Harriett Baldwin (West Worcestershire) (Con)]

On a point of order, Madam Deputy Speaker. Is it appropriate for the Opposition spokesman to be talking about measures that were actually not announced today?

[Madam Deputy Speaker (Dame Eleanor Laing)]

That is a perfectly reasonable point of order and I am grateful to the hon. Lady for raising it. I was listening carefully to the hon. Gentleman’s speech and had begun to think to myself, “That’s strange. The hon. Gentleman is addressing a point that was not in the Chancellor’s statement.” However, I have not stopped him, because—[Interruption.] I do not need any help, thank you very much. I have not stopped the hon. Gentleman because this is a very wide-ranging debate, and I have made the assumption that he was using an example of something that the Government decided not to do. Possibly he was about to state his agreement with the Government, or something along those lines. I was waiting to hear what he had to say.

[James Murray]

Thank you very much for your guidance, Madam Deputy Speaker. In fact, I was about to say that we welcome the fact that the Government appear to have finally realised that it would have been the wrong tax cut at the wrong time. I am sorry that it makes the hon. Lady so uncomfortable to talk about this, because, frankly, it speaks volumes about this Government’s instincts that they entertained that plan for so long.

My central point is that Government should not be wasting time daydreaming about an inheritance tax cut. With inflation still double the Bank of England’s target, they should be resolutely focused on what they can do now to tackle the cost of living crisis. The truth is that anything they offer now is far too little, far too late. The Conservatives simply cannot tackle the cost of living crisis that their fingerprints are all over.

Ten years ago, the Conservatives slashed energy efficiency programmes, after which insulation rates plummeted by 92%. As a result, millions of households across the country have had to pay energy bills £500 a year greater than they should be.

Last year, the Conservatives’ utterly reckless approach to the economy set off market chaos and interest rate rises. The Bank of England has said that those re-mortgaging will see their monthly payments rise by £220, and 1.5 million families will be hit by this Tory mortgage penalty next year.

[Harriett Baldwin]

All our constituents who pay mortgages are concerned about the increase in rates. Did the hon. Member hear the Governor of the Bank of England accept yesterday, as he has in earlier Treasury Committee sessions, that it is the Bank of England taking independent decisions to tackle inflation that has led to those increases? The hon. Member is wrong to label them “Tory” mortgage increases.

[James Murray]

The Opposition accept the independence of the Bank of England, unlike some Government Members, but frankly that was a fairly shameless attempt by the hon. Member to distance herself from what the Government did to the economy last year in their disastrous mini-Budget. The British people will not forget, as they are still paying the price.

[Dame Angela Eagle]

My hon. Friend is making some important points. Does he agree that, if it is the decisions of the Bank of England that have halved inflation, as the Opposition think, the Government cannot go around claiming credit for it?

[James Murray]

As always, my right hon. Friend makes an important point. The Government are trying to have it both ways. When inflation goes up, it is someone else’s fault. When it comes down, they claim the credit. I think that we can trust the British people to see through whatever way they try to distort the truth.

[Dr Liam Fox (North Somerset) (Con)]

Will the hon. Member give way?

[James Murray]

No, I will make some progress.

The truth is that the Conservatives’ fingerprints are all over the cost of living crisis, and it would be ludicrous for anyone to expect the prime suspect to be asked to solve the crime. It is clear that we cannot trust the Government with the cost of living crisis. It is also clear that we cannot trust them with our money. No wonder they want to run from their record in office when they have wasted taxpayers’ money so badly. The levels of fraud and waste on their watch make the 25 tax rises over this Parliament all the more galling, and even harder for hard-pressed families to stomach. From the £7.2 billion of public money that was lost on fraud during the pandemic to the £50 million spent on a new helicopter for the Prime Minister to make the short trips that he is so fond of, it is clear that the Conservatives are incapable of spending public money wisely.

Labour will set up an office of value for money as part of our pledge to put fiscal and economic responsibility at the heart of our approach if we win the next election. On that foundation, we will get the economy growing after 13 years of stagnation, as we know that economic growth is the key to making people across Britain better off. Had the UK economy grown since 2010 at the same rate that it did under Labour in the years before, it would be £150 billion bigger today—£5,000 more for every household, every year. That is why Labour’s plan to provide the stability, certainty and critical infrastructure improvements that businesses value so greatly is so important.

Our new fiscal lock, which the Conservatives voted against last week, will strengthen the Office for Budget Responsibility, helping to ensure that the disastrous mini-Budget of this time last year could never happen again. Our new road map for business taxation will give businesses from the UK and around the world the certainty and predictability that they need to invest in Britain. That need for certainty has been behind our calls to make full expensing permanent, which the Government have finally announced—though with this Government, businesses may well be left wondering how long their latest position will last. While small businesses and the retail, hospitality and leisure industries will no doubt welcome any further help with business rates, again the Government have failed to provide the fundamental reform promised at the general election.

Where the Conservatives have failed, Labour will deliver. Our proposals to overhaul the planning system will fast-track the decisions that we need to deliver clean energy, critical infrastructure, and the factories and workplaces of the future. Our national wealth fund will provide catalytic public investment to leverage three times as much private sector investment into jobs and industries across our country. Our approach will be one of a pro-business, pro-worker Government, ready to grow Britain’s economy and make working people better off. Governments in other countries around the world know that businesses want their support in growing new industries and making the transition to a low-carbon economy. As the chief executive of the UK Sustainable Investment and Finance Association said just yesterday, the Chancellor needs to

“urgently set out the UK’s overdue response to the”

US approach

“and similar measures in other jurisdictions, such as the EU, Canada and Japan”.

The truth is that through their lack of ideas, lack of ambition, and lack of the industrial strategy that we need, the Government are holding British businesses back. Ministers are making Britain the outlier, while the Governments of similar nations around the world are supporting their national industries to attract jobs and investment. The Conservatives cannot deliver what our economy needs, and people and businesses across Britain know that it is time for a change. Even the Prime Minister has conceded that our country needs change. Maybe that is why he still has misplaced confidence in the Conservatives: he thinks that because they have changed their Cabinet so much and so often, they must be on to a good thing. It is true that their record on changing who is sat around the Cabinet table is remarkable. To have had five Prime Ministers, seven Chancellors, and an astonishing 16 Housing Ministers is noteworthy—but not, of course, for the right reasons.

The problem for the Conservatives is that whatever they try to do now, they know, and the British people know, that they cannot be the change that we need. Nothing can compensate for the damage that they have already done. What on earth will they put on their election leaflets, I wonder? Will they say, “We may have increased taxes 25 times, but things will be different now—honest!” or will they say, “Don’t worry—0% growth is actually better than what it could have been.”? Maybe they will play it straight with something like: “We may have failed for 13 years, but we’d like another chance.”

We all know that that simply will not wash. The Conservatives are out of touch and, increasingly, out of time. After 13 years, working people have had enough of paying higher taxes, enough of seeing their wages stagnate, enough of their public services falling apart, and enough of Britain’s economy falling behind. The change that our country needs can only come from our changed Labour party—one that is ready to serve, ready to get the economy growing, and ready to make people across Britain better off. The truth is that people in our country should be given the chance to get Britain its future back. That is why a general election cannot come soon enough.

Oral Answers to Questions

James Murray Excerpts

Tuesday 14th November 2023 Commons Chamber

[Bim Afolami]

As the hon. Member knows, the reason why we are in this position is that there is a global phenomenon. We are doing what we can. We are working closely with the Bank of England and, over time, due to the policies of the Chancellor, the Prime Minister and this Government, interest rates will come down.

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

I welcome the hon. Member for Mid Worcestershire (Nigel Huddleston) to his post as Financial Secretary.

It has been a year since the Conservatives crashed the economy. In 2023 so far, 1.5 million fixed-term mortgages have expired, leaving working people facing sky-high increases in their mortgage costs. For people living in Wellingborough, for example, this Tory mortgage penalty means that households are paying another £190 a month on top of everything else in a cost of living crisis. The truth is that working people are paying the price for the Conservatives crashing the economy last autumn. Does the Economic Secretary think that is fair?

[Bim Afolami]

I thank the shadow Minister for his kind words, at least in relation to me.

It is important to recognise that in the eurozone, the United States and the UK there have been broadly similar increases in inflation and interest rates. We as a Government are confident that our policies will bring those down in due course.

Plastic Packaging Tax on Imports: HMRC Enforcement

James Murray Excerpts

Tuesday 17th October 2023 Westminster Hall

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

It is a pleasure to speak with you in the Chair, Mr Davies.

I congratulate the hon. Member for Amber Valley (Nigel Mills) on securing this debate on HMRC’s enforcement of the plastic packaging tax on imports. I am pleased to respond on behalf of the Opposition.

As Opposition Members made clear throughout the introduction and implementation of the plastic packaging tax, we support it as a tool to tackle plastic pollution. The tax was introduced in April last year to provide an economic incentive for businesses to use recycled plastic in the manufacture of plastic packaging. By applying a tax on products that contain less than 30% of recycled plastic, the tax was expected to create greater demand for recycled plastic, which in turn would stimulate increased recycling and collection of plastic waste, diverting it from landfill or incineration.

Of course, today’s debate has focused on the enforcement of the tax on imported plastics by HMRC. I understand that in 2022-23, the first year in which the tax applied, 48% of the plastics declared as being subject to it were flagged as plastics imported into the UK, so I would be very interested to hear the Minister’s response to the points made by the hon. Member for Amber Valley about ensuring that the tax is applied correctly to imports and making sure that there is a level playing field for UK businesses.

More widely, as we make the transition to more sustainable plastics, we know that concerns have been expressed in the agricultural sector, among domestic manufacturers and in the wider business community about how they will adapt to the changing policy context. Indeed, I know that the hon. Member for Amber Valley has spoken before about his concerns about the way in which silage film was unexpectedly added to the list of items caught by the plastic packaging tax in guidance published in late 2021. He pointed out at the time that that meant that industries had not prepared for the change and that the cost would fall directly on farmers at a very difficult time for them. That point was also made by the National Farmers Union, which successfully secured a change of course by the Government, with HMRC concluding early in 2022 that silage film fell under an exemption from the tax.

Clearly, it would have been less disruptive if the Government had taken their ultimate position in the first place, rather than publishing guidance and then changing their mind. I would be grateful if the Minister could set out some detail about what the Treasury and HMRC have learned from the experience, and what they are doing more widely to work with the agricultural sector and businesses in the broader economy to assist with the transition to more sustainable plastics.

Furthermore, although it is important to tackle less sustainable packaging products from overseas, it is also important that we build resilience here in the UK and have a clear, stable policy environment to encourage investment in our country. I was therefore concerned to note that, in response to the Government’s recent announcement that they would consult on a new, mass-balance approach to chemical recycling, the British Plastics Federation noted that a

“lack of clarity to date has prevented companies from investing in the UK and some have looked elsewhere to build facilities.”

As the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), set out last week, we believe that Britain must rebuild its domestic resilience across the economy. We must make more here in Britain while developing robust supply chains so that we are less exposed to global shocks. A clear, stable policy environment is critical to encouraging companies to invest in productive capacity here in the UK, and it is therefore crucial in securing the jobs and economic resilience that such investment would bring, so I will be grateful if the Minister can explain what the Government are doing to support private investment in the production of sustainable plastics here in the UK.

Mortgage Prisoners

James Murray Excerpts

Wednesday 28th June 2023 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Robertson.

As we have heard, this debate on mortgage prisoners takes place in the context of wider concerns about mortgages, as mortgage payers are being hit by increases in interest rates. People who have done the right thing by saving for a deposit and then buying a home now face their payments going up by hundreds of pounds a month through no fault of their own. The interest rate rises are affecting millions of families with mortgages, both those with a variable rate deal who are impacted month on month and those with a fixed-rate deal that has recently expired or is about to do so. The impact of the rises is being felt beyond mortgage payers and their families, as private renters are also often suffering an increase to their rent as a knock-on impact of higher interest rates.

Today’s debate focuses on a particular group of mortgage payers: mortgage prisoners, who face the impact of the recent increases in interest rates on top of the historic uncompetitive rates of the deal they are on. We all know how much fear and hardship rising mortgage payments can cause, so I commend the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) for securing the debate. I also commend the work of Rachel Neale and other campaigners on this issue. I listened very carefully to the hon. Gentleman as he set out his points and talked about his constituent Chris and his family. I welcome the contributions of other Members, including the hon. Member for North Norfolk (Duncan Baker) and my hon. Friend the Member for Feltham and Heston (Seema Malhotra), who mentioned her constituent Mr Masood. They set out much of the detail of the situation facing mortgage prisoners.

As we heard, there are around 200,000 mortgage prisoners in the UK. That is the number estimated by Money Saving Expert, and it aligns broadly with the calculation by the Financial Conduct Authority of around 195,000 mortgage holders in closed books in 2021. Mortgage prisoners face being hit by the same interest rate rise as other mortgage payers, but without even having had the option to move to a cheaper rate deal in the past. We know how much stress, anxiety and hardship soaring mortgage payments cause to so many people across the country. The debate has given us a chance to focus on how particularly acute that is for mortgage prisoners who are already stuck on an uncompetitive deal. I very much look forward to hearing the Minister’s response to the points raised by so many Members about mortgage prisoners.

I would also like to take this opportunity, briefly, to once again urge the Treasury to follow through on the broader plan we set out in recent days to help mortgage holders through the difficult times that so many are facing. Action for all mortgage payers is desperately needed, as banks are withdrawing mortgage deals and the average household is facing a hike of almost £240 a month on their mortgage. Across the UK, 13 years of economic failure has left us exposed. We have the highest inflation in the G7, and UK households are paying almost £100 a month more in mortgage payments than those in other European countries. Millions of households need help now, so it is deeply frustrating that the Government are refusing to make measures to help households mandatory.

[Martin Docherty-Hughes]

I am going to challenge the shadow Minister on some of the points I made earlier. Do his Front Benchers agree that we need a moratorium on evictions and a cap on standard variable rates? Will he pledge to support a cross-party vehicle for those on closed books to pivot back into the mainstream market—yes or no?

[James Murray]

I thank the hon. Gentleman for setting out those points, and I add my voice to the call on the Minister to set out the Government’s position. We are pushing for a wider response to help mortgage holders across the piece, but the Government are in a position to respond to the hon. Gentleman’s points.

I want to use this opportunity to talk briefly about the wider impact of the mortgage rate increases on mortgage holders across the market. The plan that we set out in recent days would require lenders to allow borrowers to switch to interest-only mortgage payments and lengthen the term of their mortgage period, reverse support measures when the borrower requests, and put in place more protection for mortgage holders from repossession proceedings. We would instruct the FCA to ensure that mortgage holders’ credit scores are not affected.

I also want to focus briefly on renters, who need to be part of the conversation about mortgage holders. They are being impacted by the increase in mortgage rates, and the Chancellor did not mention them on Monday. Will the Minister take this opportunity to refer to them?

The rise in interest rates as a result of the UK’s being particularly exposed to inflation will see us paying more on our mortgages than our European neighbours. That undermines the fundamental security that families across the UK need. We therefore urge the Government to follow our plan so that people across the UK are protected. I look forward to the Minister’s response to the points we have made about mortgage prisoners.

Draft Double Taxation Relief and International Tax Enforcement (Brazil) Order 2023 Draft Double Taxation Relief and International Tax Enforcement (San Marino) Order 2023

James Murray Excerpts

Tuesday 27th June 2023 General Committees

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

It is a pleasure to serve with you in the Chair, Sir Robert. Double taxation agreements prevent income or gains from being taxed in both the territory in which they arise and the territory in which the recipient is resident. As the Minister set out, such agreements benefit taxpayers by ensuring certainty of treatment, and they include provisions to combat tax avoidance and evasion.

I understand that today’s Brazil order brings into effect a convention and protocol made in 2022 between the UK Government and the Government of Brazil, superseding previous arrangements, while the San Marino order brings into effect a double taxation agreement for the first time. As the Minister said, both double taxation agreements follow the OECD model tax convention on income and capital and include the minimum standards recommended by the OECD/G20 base erosion and profit shifting project, both of which we welcome. The detail of each order sets out the scope and the definitions of, for example, “residents” and “permanent establishment” that will be used to put the arrangements into effect. The orders also set out the rules governing the taxation of different sources of income and gains, including employment income and capital gains, as well as gains that arise from sources such as dividends, royalties and interest.

We will not oppose either order, as we recognise the value of having up-to-date double taxation agreements in place between the UK and other countries, but I will ask the Minister one specific question for the Committee’s interest. Will she explain how the double taxation agreements will operate where an individual is resident but non-domiciled in the UK? I realise that that may be a broad question, so I will give an example. Under the San Marino order, what would be the income tax treatment of someone who is resident in the UK, had income arising in San Marino, but was domiciled for UK tax purposes in San Marino and chose to pay tax on a remittance basis? I realise that that is a fairly specific scenario, but it would be helpful to understand how taxation would be applied in those circumstances, to help us better understand the interaction between double taxation agreements and non-dom tax status. I look forward to the Minister’s response.

Oral Answers to Questions

James Murray Excerpts

Tuesday 20th June 2023 Commons Chamber

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

As the war in Ukraine continues, we must not let up for a second on efforts to tighten the net on the accomplices and beneficiaries of Putin’s regime. We welcome the direction of the measures announced yesterday. Can the Minister confirm whether those measures will close all the loopholes and specifically the ownership thresholds, which Russian oligarchs and their enablers have been able to exploit to evade the bite of sanctions?

[John Glen]

The Government will be relentless in their pursuit of illicit assets. As I said, we have sanctioned 24 banks with global assets of over £940 billion and 120 elites with a combined worth of £140 billion. Working closely with our allies, we have incrementally and sequentially tightened that net and immobilised more than 60% of Putin’s war chest of foreign reserves worth £275 billion. We continue to work closely with our allies to intensify those measures as opportunities arise.

Finance (No. 2) Bill

James Murray Excerpts

Report stage
Tuesday 20th June 2023 Commons Chamber

[Victoria Atkins]

That gives me the opportunity to declare that I sat not only on the Joint Committee for that Bill but on the Select Committee. There was a great deal of concentration and discussion, as I recall—the House will have to forgive me as I am rolodexing back several years in my memory—about the meaning of communications data, because of the sensitivities in relation to some of the powers rightly given to our security services in order to safeguard national security and for other purposes.

There has been some debate about how the General Data Protection Regulation and the Data Protection Act apply in the years that have fallen since. The clarification has been made because the Home Office wanted to ensure that it defines that accurately, protects citizens’ rights and permits Government agencies, law enforcement agencies and other agencies to collect and review the data necessary to protect us all. We are tabling this amendment now at the first opportunity we have had, to ensure that that phrasing still permits HMRC to collect the vital data that we need to ensure that our taxes are collected properly. To sum up my point on new clause 5, the civil information powers allow HMRC to continue to collect vital revenue to fund our public services.

In conclusion, the Government’s proposed amendments will ensure that the legislation works as it should and that HMRC has the powers it needs to continue collecting tax revenue that is vital to fund our public services that so many in our country rely on. I will, of course, address all amendments tabled by other Members when I wind up later. I very much want to listen closely to the debate that will now follow. In the meantime, I commend amendments 9 to 19 and new clauses 4 and 5 to the House. I urge hon. Members to accept them in due course.

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

It is important, briefly, to first recognise the context in which we consider amendments and new clauses to the Bill. Yesterday we heard the news that the average rate for a two-year fixed-rate mortgage has now breached 6% for the first time since December. That news will leave the 400,000 people across the country whose existing fixed deals end between July and September feeling anxious and fearful. They face the prospect of having hundreds of pounds less in their pockets each month when their current deal expires and they have to re-mortgage. That is not to mention all those on variable rates, who have already seen their payments rise relentlessly as a result of interest rates going up again and again.

Across the country, mortgage payers are facing interest rate rises above 6% for the second time in 12 months. The first time came in the wake of the Conservatives’ disastrous mini-budget last autumn; now it is because inflation means that banks expect interest rates to stay higher for far longer than anyone feared. The truth is that mortgage payers are feeling pain because the Tories crashed the economy and have no plan to fix it. What is more, we know the current increases in mortgage payments come after 13 years of low growth and stagnant wages. They also come after 25 tax rises by the Government in this Parliament alone, increases that have pushed the tax burden in this country to its highest level in 70 years.

I will begin considering the detail of our amendments on Report by focusing on something very rare indeed: a tax cut from this Government. That tax cut is included in clause 18. Through that section of the Bill, the Government will be spending £1 billion of public money a year to benefit the 1% of people with the biggest pension pots. Ministers may claim that their decision was driven by a desire to get doctors back into work, but since the policy was first announced the Government have flatly rejected any call to consider a fairer and less costly fix targeted at doctors’ pensions.

It is not just Labour who have been questioning the Government’s approach; the Conservative Chair of the Treasury Committee, the hon. Member for West Worcestershire (Harriett Baldwin), said that even she was surprised that Ministers had opted for a blanket cut rather than a bespoke policy for doctors. That is why we will be voting today for our amendment 1, which deletes clause 18, thereby abandoning plans for this blanket change that fails to spend public money wisely. As our new clause 1 makes clear, the Chancellor should finally do what so many have been calling on him to do and produce an alternative approach to pensions that is targeted at NHS doctors and provides taxpayers with value for money.

[Harriett Baldwin (West Worcestershire) (Con)]

I put on the record that while the hon. Gentleman quotes me correctly, I underline that I was pleasantly surprised.

[James Murray]

I thank the hon. Lady, I think, for that intervention. I am trying to work out exactly what point was being made there, but I think the overall point is clear. There is concern from all sides at £1 billion a year of public money being spent on a blanket change, rather than something targeted at NHS doctors.

That failure to spend public money wisely is evident again in the Bill’s proposal to reduce air passenger duty for domestic flights, the impact of which our new clause 10 seeks to uncover. Again, at a time when public finances are under severe pressure, household budgets are being stretched in all directions and the cost of inaction on climate change grows by the day, it is baffling that a tax cut for frequent flyers is the Government’s priority for spending public money.

[Kit Malthouse (North West Hampshire) (Con)]

I just want to take the hon. Gentleman back, if I may, to the point he made on pensions. Can he not see the difficulty of having a specific regime for NHS doctors? For example, if he were to bring in a specific regime, would it apply to doctors who also work in the private sector? What would happen if an NHS doctor changed career and became an accountant? There are other areas where we have difficulty securing the services of public servants beyond a certain point, for example judges, prison governors or senior police officers. Is he proposing that each of those areas should have their own specific scheme and that therefore we should build a sort of rats’ nest of complexity around pensions?

[James Murray]

I thank the right hon. Gentleman for his comments, but I feel he is misguided in claiming that it is somehow only Labour calling for a doctors-only pension scheme to be investigated. I referred to the Chair of the Treasury Committee, but I could also refer to the current Chancellor—the current Chancellor—who less than a year ago suggested that we should go for a doctors-only scheme. All we are asking is for the current Chancellor to do what he told himself to do less than a year ago and investigate the possibilities. That is important, because that is how we spend public money wisely.

To return to air passenger duty, Ministers may try to point out, when we discuss it later in the debate, that the lower rate of domestic air passenger duty has been accompanied by the introduction of an ultra long-haul rate. But when taken together, the air passenger duty changes in the Bill are set to cost the taxpayer an additional £35 million a year. That cannot be the right priority for spending public money. In Committee, we tried to get to the bottom of why this tax cut is being prioritised.

[Alun Cairns (Vale of Glamorgan) (Con)]

I am grateful to the hon. Gentleman for giving way on that point. How does the shadow Minister square his comments with those made by the Welsh Government calling for air passenger duty to be devolved and abolished to support Cardiff Airport, which they have purchased?

[James Murray]

I will leave matters for the Welsh Government to the Welsh Government to set out their position. We are trying to challenge the position of the UK Government on air passenger duty.

Whatever the UK Government say, the reasoning behind air passenger duty changes have been hard to come by. In Committee, we wanted to understand why the cost of domestic flights is so high up the agenda of this Government under this Prime Minister. I asked the Minister whether, if someone were to travel by helicopter around the UK, for instance from London and Southampton, that would be subject to air passenger duty. I could equally have asked if that would be the case if someone were to get a helicopter ride from London to Dover. At the time, the Minister clarified that there is no air passenger duty other than on fixed-wing aircraft, so that anyone wanting to make short hops in a helicopter can rest assured that this tax would not apply.

I also asked the Minister whether, if someone travelled on a private jet around the UK from, say, London to Blackpool, what rate of air passenger duty would apply in that case. The Minister confirmed that private jets will not benefit from the domestic air passenger duty cut—something the Chancellor may want to let his neighbour on Downing Street know. Finally, I asked the Minister what rate of air passenger duty would apply if someone lived in the UK but was travelling to another home of theirs, let us say in Santa Monica, California. The Minister did not say at the time whether such a flight would attract the ultra long-haul rate, but my understanding is that it would not, so anyone on the Government Benches who needs to fly to their Los Angeles home will not be hit.

It is clear from the Tories’ approach that they have no idea how to spend public money wisely, and that their judgment over what to prioritise is at odds with the British people. Under the Conservatives in this Parliament alone, people across Britain have faced 25 tax rises and 12 interest rate rises. Yet the Tories think the priorities for taxpayers’ money in the middle of a cost of living crisis should be tax cuts for frequent flyers and for those with the very largest pension pots. The truth is that under the Conservatives, working people always end up paying the bill.

[Richard Drax (South Dorset) (Con)]

On the Government Benches, we get tired of hearing from the Opposition Benches about taking taxpayers’ money. This is money the poor taxpayer is having to pay in the first place and should not be taxed on. So far as pensions are concerned, surely the aim for all of us is to have, if we can afford to, sufficient money to live free of the state and off the state at the end of our years, thereby allowing taxpayers’ money to be effectively used for those who really do need it.

[James Murray]

I thank the hon. Gentleman for his intervention. At one point I thought he was touching on a point that we might agree on, which is that spending public money is about priorities. It is about making choices on how to spend public money wisely. That is important at any stage for any Government, but in the middle of a cost of living crisis, when household budgets are being stretched and people are facing mortgage payments going up relentlessly, it is more important than ever that we prioritise the spending of public money and spend taxpayers’ money wisely. That is really at the heart of the argument I am making. We need a fairer tax system in this country, but time and again the Conservative Government have ignored chances that were in front of them to do something about it. Our new clause 9 relates to the Government’s approach to non-dom tax status—the £3.2 billion a year loophole that the Prime Minister called “that non-dom thing”.

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[Craig Mackinlay (South Thanet) (Con)]

Does the hon. Gentleman really believe that non-doms who could pay zero inheritance tax in other places around the world and need not spend money any at all in the UK will just stay here and be taxed under his plans? Or will they up sticks and go elsewhere—which they are very capable of doing—in which case we would lose the VAT and everything else that comes with non-dom spending in the UK?

[James Murray]

I would welcome a more extended debate about non-dom tax status. That might be slightly outside the remit of today’s debate, but I refer the hon. Gentleman to some very good research conducted by the London School of Economics and Warwick University on the impact of people potentially leaving the UK as a result of any changes in non-dom status. Getting rid of non-dom status would still net £3.2 billion a year according to the work done by the LSE and Warwick, which is based on HMRC data which they have looked at and which constitutes reputable evidence showing what would happen in that event. As I have said, we would replace non-dom status with a modern system like the one that operates in many other countries around the world.

Let me link the hon. Gentleman’s point to the point made earlier by the hon. Member for South Dorset (Richard Drax). This is about priorities. What is the priority for expenditure of £3.2 billion a year? Is it protecting non-dom tax status, or is it strengthening the NHS and childcare? That is at the heart of the question we are asking today.

As well as closing the non-dom loophole—about which I could speak at length— we will keep pressing the Government to close gaps in their approach to the windfall tax on oil and gas giants. Our new clause 8 presses them to think again about their investment allowance loopholes. We believe it is wrong for Ministers to leave billions of pounds of windfall profits for oil and gas giants on the table when some of that money should be helping to support families through the cost of living crisis.

We know, of course, that making our tax system fairer is not just a question of having the right legislation in place domestically; it is also a question of working with other countries to end the race to the bottom among large multinationals around the world. As our new clause 7 makes clear, we want the Government to remain committed to implementing the global agreement on a minimum rate of corporate tax. This landmark deal from the OECD is an important step towards ending the international race to the bottom on tax, as it calls time on large multinationals which operate in the UK but use low-tax jurisdictions overseas to avoid paying their fair share of tax. When large multinationals do that, it flies in the face of the British sense of fairness, it deprives public services in our country of much-needed funding, and it undercuts and undermines British businesses that play by the rules.

As we have made clear throughout consideration of the Bill, we are glad to see this legislation being implemented. We want to see the global agreement in place so that large multinationals pay a minimum level of 15% tax in each jurisdiction in which they operate. We have raised the need for such an international deal many times with the Government. Indeed, I first pressed Treasury Ministers on the subject more than two years ago, on 13 April 2021, during Second Reading of an earlier Finance Bill. At the time, we suspected that the Government might be dragging their feet because they wanted to keep alive the possibility of a race to the bottom in the future, but now, with Ministers having finally agreed to implement the deal—albeit in a version that they allowed to be weakened from what was originally proposed—opposition to it has galvanised those on the Tory Back Benches.

Two days ago, the right hon. Member for Witham (Priti Patel) published an opinion piece in The Sunday Telegraph. The headline described the common-sense approach taken with the global minimum corporate tax rate—the approach that her colleagues on the Conservative Front Bench want to implement—as a

“radical plan for permanent worldwide socialism”.

The right hon. Member has tabled an amendment to this part of the Bill, which she said in her piece on Sunday was

designed to be helpful and easy to adopt.”

I would be interested to hear whether the Minister agrees, and how helpful she thinks the amendment is, because we believe that it is designed to undermine fatally the implementation of the landmark deal on a global minimum corporate tax rate. Efforts to scupper the implementation of the deal constitute an astonishing act of self-sabotage on our public finances. The reality is that if the UK walks away now from implementing these rules, businesses will simply be taxed by other countries which have implemented the deal. Let me reassure the Minister that if the amendment is pushed to a vote by Conservative Back Benchers, we will oppose it, so Ministers need not worry about whether they will be able to vote it down even if they lose their majority through a Back-Bench rebellion.

What on earth does this situation say about the state of the Conservatives and about the weakness of the Prime Minister? The amendment, which brazenly undermines the Government’s position, has been signed by right hon. and hon. Members who, within the last 12 months, have held the offices of Prime Minister, Chief Secretary to the Treasury, Secretary of State for Levelling up, Housing and Communities, Secretary of State for Business, Energy and Industrial Strategy, and a raft of other ministerial positions. What would happen to the implementation of these rules if the right hon. Member for Richmond (Yorks) (Rishi Sunak) became the third Conservative Prime Minister to be forced from office in 12 months, and an MP who supports this amendment took over his role? The truth is the Conservatives have now become totally incapable of offering any certainty or stability, but that certainty and stability is what businesses and investors so desperately want so that they can play their part in growing our economy and raising living standards for people across Britain.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

Has the shadow Minister seen today’s report from the Institute for Public Policy Research? It states that the UK is in the middle of an economic growth “doom loop” as a result of decades of under-investment by Government and businesses. Recent statistics indicate that the UK has the lowest business investment in the G7, ranking 27th among the 30 OECD countries. Does that not suggest that businesses have no confidence in the Government’s strategy, and that alarm bells should be ringing in the Treasury?

[James Murray]

The hon. Gentleman is right to describe the state of the economy as a doom loop. It is on a managed path of decline, which even the former Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng) described as a “vicious cycle of stagnation”. The fact is that without any stability or certainty and without a plan for growth, we cannot get the economy out of that doom loop, which is exactly what we are pressing the Government to do.

I know that Conservative Members may be feeling rebellious today, so perhaps they will consider supporting our new clause 6, which requires the Chancellor to follow Labour’s lead and set out a plan for business taxes that increases certainty and investment. The truth is, however, that even if the Conservatives did set out a plan, no one would believe that they would or could stick to it. Everyone knows that this Prime Minister is weak, hostage to his party, and unable to lead. Only a new Labour Government can bring the stability and certainty that businesses need.

That is what we need in order to boost investment, create jobs and grow Britain’s economy. That is what we need to get us off this path of managed decline, to provide security for family finances once again, and to make people across Britain better off.

[Harriett Baldwin]

I rise to speak to new clause 2 and amendment 7, which were tabled in my name and those of all the other members of the cross-party Treasury Committee.

“Taxes are far too complex.”

Those are not my words but the words of the Chancellor of the Exchequer when he gave evidence to our Committee. The amendments to which I am speaking would give legislative effect to the recommendations of the report we published last week on the work of the Office of Tax Simplification. The report is on the Table, and I encourage all hon. and right hon. Members to read it.

Across the House, I think we can all agree that, regardless of the level of tax, the tax system itself has become far too complex. To give an example, as a result of the Committee’s current inquiry on tax reliefs, we have finally found out how many tax reliefs there are in the tax code—1,180. The unnecessary complexity in our tax code makes the tax system expensive and difficult for HMRC to administer, makes the tax system confusing and makes it difficult for taxpayers to understand the choices on offer and the consequences of those choices for their after-tax income.

A complex tax system can be hugely costly for taxpayers and for those responsible for compliance with the tax code. The Financial Secretary to the Treasury was kind enough to give evidence to our Committee on the VAT system last week, and she described it as the “most complex” part of the tax system. VAT creates a crippling compliance burden for small businesses and, as a result, there is a massive pile-up of companies just underneath that £85,000 turnover threshold. This shows that small, potentially dynamic, growing businesses—the engines of our economy—would rather stay under the threshold than deal with the VAT system.

Unfortunately, the VAT threshold is far from the only cliff edge in our tax and benefits systems. At worst, these cliff edges result in people being worse off for earning more money. In recent evidence to a joint session of the Treasury Committee and the Work and Pensions Committee, we heard how people can suddenly find themselves much worse off, after losing entitlements such as free school meals and council tax support, when they earn only a little more money. Indeed, next winter a person who earns an extra £1 will take home £900 less because they lose the cost of living support entitlement, which we reflected in a recent report. People would actually be better off by working less, or perhaps not working at all, and surely that is something we do not want to see in our tax and benefits systems.

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[James Murray]

I take this opportunity to thank the many people who have supported me and my colleagues throughout the consideration of this Bill, not least all my colleagues on the shadow ministerial team, the Whips and the Opposition Back Benchers. I also thank the Clerks and parliamentary staff, and third parties, including the Chartered Institute of Taxation, which always provides invaluable support and evidence for us and all Members of the House.

Let me speak briefly to this Bill, which we have considered in detail over recent months. Our feeling as we approach the end of this is that it could have been a chance to make the tax system fairer. A fairer tax system is desperately needed after 13 years of low growth and stagnant wages, and after 25 tax rises by the Government in this Parliament alone—increases that have pushed the tax burden in this country to its highest level in 70 years. But instead, we see the Government prioritise £1 billion of public money a year to benefit the 1% of people with the biggest pension pots. They are prioritising a tax cut for frequent flyers. They are refusing to scrap the non-dom tax status. They are refusing to close windfall tax loopholes. And they are spending their time battling their own MPs over implementing common-sense plans to stop multinationals race to the bottom on tax.

Beyond any individual tax changes, what British businesses and families need now is a credible, ambitious plan from the Government to grow the economy and to make everyone in every part of our country better off. The failure to do that is perhaps the greatest failure of this Bill and the approach of this Government.

The Conservatives have had 13 years and they have failed. As long as they stay in power, the vicious cycle of stagnation stays, too. It is time for a new Government who will get us off this path of managed decline and make sure that people and businesses in Britain succeed.

BACKBENCH BUSINESS

James Murray Excerpts

Thursday 15th June 2023 Westminster Hall

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

It is a pleasure to serve under you, Mr Sharma, my parliamentary neighbour in Ealing. I start by wholeheartedly congratulating the right hon. Member for Hemel Hempstead (Sir Mike Penning) on securing the debate. I listened to him with great interest and I thought his speech was very thoughtful, heartfelt and informative. Indeed, in preparing for this debate, I found it informative to understand the nuance of the issues relating to audiobooks in greater detail. As well as thanking the right hon. Member, I thank several organisations that have campaigned for this change, including the Macular Society, the Society of Authors, and the Writers’ Guild of Great Britain, all of which have called for the exemption of audiobooks from VAT.

Before coming to the debate, I read an early-day motion that has been tabled as part of the campaign. I also found that informative in setting out the benefits of audiobooks for the many people with sight loss, visual impairment, dyslexia or other reading disabilities. The motion explains how audiobooks offer unique opportunities for visually impaired and dyslexic people to improve their education on a par with their peers. It recognises the role of audiobooks in enabling visually impaired and dyslexic people to continue working independently for longer and thereby contribute to the economy for longer. It explains how audiobooks open up a world of information, literature and poetry to visually impaired and dyslexic people. The attractions and benefits of audiobooks are clear, but there is the question of how much they cost.

Although this debate concerns VAT on audiobooks in particular, there is a wider context. Inflation and the high tax burden in our country affect people’s spending across the board. Before the debate, I also read that the application of VAT to printed publications dates right back to the introduction of VAT in 1973, when printed books, newspapers and magazines were given a zero rate.

Recent technological changes are raising questions over how the tax system across the board adjusts to a more digital world. That applies in many parts of our society and economy, and it raises questions about fairness, consistency and revenue raising. In response to technological changes, since 1 May 2020, the zero rate of VAT charged on printed books, newspapers and magazines has also been applied to e-publications. However, as we heard from the right hon. Member, the sale of audiobooks continues to be subject to the standard rate of 20%.

I will listen with interest to the Minister’s response, because the attractions and benefits of audiobooks are clear, and I am sure that she will recognise many of the points made about the importance of audiobooks for people with sight loss, visual impairment, dyslexia and other reading disabilities. The Opposition appreciate, however, that expanding the scope of VAT is complex and can add pressures to the public finances. I am sure that the Government will carefully consider this issue, and like other Members, I look forward to hearing the Minister’s response.

Finance (No. 2) Bill (Third sitting)

James Murray Excerpts

Committee stage
Thursday 18th May 2023 Public Bill Committees

[The Financial Secretary to the Treasury (Victoria Atkins)]

It is a pleasure to serve under your chairmanship, Mr Stringer.

As a matter of housekeeping, I should say that the shadow Minister, the hon. Member for Ealing North, asked me questions on Tuesday regarding the implementation of changes to the company share option plan, and I committed to write to him with those details. That letter has gone to him this morning, with copies deposited in the Libraries of the Houses. Indeed, I have also arranged for it to be sent to the other Committee members, for their convenience.

The clause will amend existing stamp duty land tax rules to ensure that registered providers of social housing are exempt from the tax when purchasing property using funding allocated under section 31 of the Local Government Act 2003. In December last year, the Government announced an additional £650 million for the Homes for Ukraine support package, which included giving local authorities in England an additional £0.5 billion to reduce homelessness by obtaining housing to reduce pressure on social housing and to help accommodate Ukrainian and Afghan refugees. On 28 March this year, the Government announced a further £250 million of funding, the majority of which will be used to house Afghan families in bridging accommodation. The rest will be used to ease existing homelessness pressures.

The additional funding, as I said, is allocated under section 31 of the Local Government Act, and the existing stamp duty land tax system includes an exemption for social housing purchases. However, not all social housing providers in receipt of the additional funding would benefit from those exemptions, so we are looking to correct that and to enable registered providers of social housing to benefit from the exemption when they use the new funding. It is a sensible clarification and I hope that the Committee will support the clause standing part of the Bill.

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

It is a pleasure to serve in Committee with you as Chair, Mr Stringer.

The acquisition of certain properties by registered social landlords is exempt from stamp duty, provided that the purchase is funded with the assistance of public subsidy. As the Minister set out, in December last year the Department for Levelling Up, Housing and Communities announced an additional £500 million in funding for local authorities to secure additional housing stock for those fleeing conflict, including those from Ukraine and Afghanistan. We understand that that additional funding was allocated under section 31 of the Local Government Act, and the clause will add that section to the list of public subsidies that enable a purchase to qualify for the stamp duty exemption. For the purposes of the stamp duty exemption, we understand that local authorities that intend to register with the Regulator of Social Housing are treated as not-for-profit registered providers of social housing.

The explanatory notes state that £500 million was announced for the local authority housing fund in December 2022, and I welcome the Minister’s assurance that the additional £250 million announced since will also be covered by this clause. We will not oppose the clause, as any support it offers to local authorities that buy homes to provide social housing is welcome.

[Dame Angela Eagle (Wallasey) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Stringer. This is not the first time that I have been on a Committee with you in the Chair.

Will the Minister give a view about how many extra homes this change to stamp duty land tax will enable local authorities to fund? Has any analysis been done? There will obviously be a positive effect, but how large will it be? Many Afghans are still in hotels and are unable to put down roots so that they can begin to establish themselves in this country and flourish. For large families living in hotels, this is a difficult time, so I would have thought that Members from both sides of the House are anxious to see this scheme work. Knowing the Treasury, it will have done some analysis of the positive benefit of the proposal, so will the Minister share it with the Committee?

How long does the Department for Levelling Up, Housing and Communities expect these extra moneys to last? Will the Minister come back to Parliament to extend this exemption further, or will that happen in a spending review?

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The clause provides the commissioners of His Majesty’s Revenue and Customs with a power to designate which deposit schemes are covered by the clause, to ensure that the special VAT accounting rules apply only to official Government deposit schemes, including those under discussion at the moment in Scotland. Consumers will not be affected by the VAT accounting, as they will pay a fixed deposit. If they return a container, they will receive the same amount back. I urge that the clause stand part of the Bill.

[James Murray]

As we have heard, the clause introduces rules for VAT accounting for deposit return schemes. As the Minister set out, it means that when making sales within the scope of the relevant deposit scheme, no VAT will be charged in relation to the deposit amount. However, VAT on unreturned deposit amounts will be paid by the first seller of a deposit scheme product.

We recognise that, under existing legislation, deposit return schemes may be introduced across the UK, and we recognise that the clause helps to facilitate the operation of such schemes by introducing VAT accounting rules. The clause ensures that no VAT will be charged at any point in the supply chain in relation to the deposit element of the price for a deposit scheme product. There will only be a requirement to account for VAT where suppliers make the first sale of standard-rated deposit scheme products that include a deposit amount.

More widely, we have been disappointed by the delays in the introduction of a deposit return scheme. It was only after multiple consultations that the Government finally announced in January 2023 that they would introduce a deposit return scheme for plastic and cans, but not for glass, in England, Wales and Northern Ireland from 2025. We will not oppose the clause. Indeed, we want to see a deposit return scheme introduced as soon as possible, so I would be grateful if the Minister could use this opportunity to confirm whether the Government are still committed to introducing one in England, Wales and Northern Ireland by 2025.

[Dame Angela Eagle]

Obviously, the VAT rules account for some of the most complex parts of the duties and excise that the Minister has to wrestle with on a day-to-day basis. When one talks to businesses of all sizes, often one of the biggest complaints is about the complexity of the VAT rules. Given how much revenue VAT brings in and how all-encompassing it is, perhaps that is not surprising, but I wonder whether the Minister is happy with increased complexity that the changes bring. Perhaps she could give us a flavour of her thoughts and considerations in dealing with the issue of deposit schemes and the complexity of the VAT rules.

Given that VAT will be levied only on the first seller, the Minister has clearly tried to make the rules as simple as possible. But how much complexity does she think the clause will introduce, given that it will be applicable to plastic and cans—presumably aluminium—both of which are easily recyclable, but not to glass? I assume that she is not introducing glass straight away because of the sheer number of glass bottles and the size of the task. Again, perhaps she could give us a flavour of the thinking behind excluding glass, and tell us whether the intention is to include it at a later stage. How complex does she think doing that might be?

I am old enough, as I am sure—I am going to put this politely—you are, Mr Stringer, to remember when we had deposit return schemes for glass, long before anyone thought about digitally scanning anything or any of the computer-based structures that I assume will facilitate the VAT inspectors’ task. Perhaps the Minister could give us some indication of that. Again, how much revenue does she think will have to be forgone?

What assumptions have His Majesty’s Revenue and Customs and the tax inspectors made about the actual cost of schemes such as this in revenue forgone? Clearly, the idea—to incentivise good behaviour that will assist in increasing recycling—is one we would all support. We all want that to work, but if it is not done properly, it could be an enormous fiddling thing that does not really have much effect at all. All of us would applaud the decision not to impact the customer and, clearly, we want to see the containers for recycling brought back.

Can the Minister say a little about whether she has considered how the scheme might interact with the packaging regulations? Again, they are a moveable feast, given that we have left the EU and they have had to be changed as well, but there is clearly a direct connection between the two. We must make certain that the way the packaging regulations work increases, if possible, the incentive for the recycling to work.

There is also the landfill tax, which might have an impact on behaviour. I am sure that the Minister has had a towel on her head thinking all that through to try to make certain that it works as intended. It is currently due to come into effect in 2025. Given the complexity, is she confident that that will happen, given that there have already been delays and the scheme itself is now smaller than most people want it to be, because it excludes glass?

Given the complexity of VAT—when it must be done, when the returns must be made and how difficult that can be for businesses—does the Minister think that moving on without a set timescale, and the uncertainty created by that, give the best background for a successful introduction? The delivery of the scheme in Scotland seems to have run into trouble. I do not know whether the hon. Member for Dunfermline and West Fife has insights that he can share with us—it is almost as late as a TransPennine Express train.

I am interested in what the Minister has to say about some of my questions. The scheme might seem to be a fiddling little thing, but it fiddles with a very complex tax and interacts with many other things. A bit more insight into the Minister’s thinking and her confidence about whether the scheme can be delivered on time would be really welcome.

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[James Murray]

As we heard from the Minister, clause 316 introduces schedules 19 and 20, which relate to the Trade Remedies Authority. When the UK left the EU, the UK Government established their own UK Trade Remedies Authority to undertake work on trade remedies previously carried out by the EU. The organisation was established in June 2021 to carry out investigations and recommend remedies related to dumping, foreign subsidies and safeguards for internationally traded goods.

The explanatory notes to the Bill explain that schedule 19 is intended to allow the Secretary of State to exercise a great deal of flexibility when making decisions on trade remedy cases. The notes also explain that schedule 20 extends the TRA’s remit to include bilateral safeguards in some of the UK free trade agreements. It also seeks to enable Ministers to request that the TRA open an investigation to determine whether the criteria to apply a measure has been met and what form a potential measure should take. It further provides Ministers with the power to apply a measure to ask the TRA to reassess its determination and recommendation, and to enable Ministers to take a different decision from the TRA’s recommendation.

It seems clear that the schedules represent a significant increase in the power of Ministers over the Trade Remedies Authority, which was established just two years ago. Despite its short life, the Trade Remedies Authority found itself at the heart of a political storm in Downing Street last year. Right hon. and hon. Members might recall that in June 2022 Lord Geidt resigned from his position as the ethics adviser for the right hon. Member for Uxbridge and South Ruislip (Boris Johnson) when he was Prime Minister. In his resignation letter Lord Geidt wrote:

“I was tasked to offer a view about the Government’s intention to consider measures which risk a deliberate and purposeful breach of the Ministerial Code. This request has placed me in an impossible and odious position.”

In his response, the then Prime Minister confirmed what the dispute concerned. He wrote to Lord Geidt:

“You say that you were put in an impossible position regarding my seeking your advice on potential future decisions related to the Trade Remedies Authority.”

Despite that brush with the former Prime Minister, the Trade Remedies Authority has continued to exist. The measures being introduced by the two schedules that we are discussing will have a significant impact on its relationship with Ministers. This is a fair amount of change for an organisation that has existed for less than two years.

To help members of the Committee put the proposals in context, will the Minister explain the Government’s reasoning behind the initial arrangements for the Trade Remedies Authority two years ago, and how the changes to the arrangements that we are considering today were decided? Will she explain whether there has been any international benchmarking of similar authorities in other countries? What are their levels of independence and their relevant relations with politician?

Clause 316 would allow customers to apply to HMRC for advance valuation ruling decisions. Advance rulings provide traders with a legally binding decision from customs authorities in advance of a shipment, which gives them certainty about how their goods are treated with implications for duty levied. The UK currently issues advance rulings in respect of tariff classification and origin of goods but has not provided advance rulings on customs valuation. That is because customs valuation rulings were not provided for in the EU. However, as the Minister said, they are widely offered by customs authorities worldwide.

We understand that the measures would allow HMRC to provide businesses with more certainty when they are deciding on the most appropriate method of customs valuation for valuing their goods for import. Anything that gives businesses greater certainty is to be welcomed, so we will not be opposing the clause. On a specific point of clarity, however, I would be grateful if the Minister could confirm that the clause’s advanced rulings provision is required as a condition of the UK’s accession to the comprehensive and progressive agreement for trans-Pacific partnership.

Finally, clause 317 updates legislation to permit HMRC to require financial guarantees to be given for duty amounts payable on imported goods and ensure that decisions to require such guarantees will be subject to review and appeal rights. Since January 2021, section 119 of the Customs and Excise Management Act 1979 has been used to require a financial guarantee from importers as a condition of releasing imported goods from the control of an HMRC officer where the amount of customs duty due for the goods is unclear. However, there has been no statutory right for an importer to request a review of, or an appeal against, such a guarantee requirement. Those appeal and review rights were inadvertently omitted when EU legislation was transposed into domestic legislation, which seems to have been an oversight by the Government. We will not oppose the clause, which seeks to remedy the Government’s mistake, but will the Minister explain what impact that mistake has had? Specifically, how many appeal and review requests by importers have been lodged but denied consideration since January 2021, and what steps are being taken to rectify any individual grievances that have arisen as a result?

[Dame Angela Eagle]

The clause seems quite mild, but it seems to have many implications for the policing of import duties; the prevention of widespread dumping or misuse of products on our markets, which could destroy establishing domestic industries; and the regulation of free trade agreements that we make around the world. Will the Minister give us some indication of how the Trade Remedies Authority changes that are encompassed in clause 315 and schedules 19 and 20 will impact on its independence? From listening to the Minister, it seemed to me that that was one of the most important aspects of the changes, and the Committee needs to understand it as we continue to scrutinise the Bill.

Clearly, a trade remedies body must be independent of those it oversees, so that it is seen as an appropriate body to make decisions that might have serious economic consequences for one side or the other. It is, effectively, a trade judiciary; if it is to be effective, it has to be seen to be independent and widely respected for its independence. The changes made by the clause seem to eat away at some of that. The Minister was talking about different changes to the way in which the authority can pursue its job, including increases in different kinds of information and having to notify Ministers before initiating reviews. It is a quite a big step to put that in legislation, rather than have it as memorandum of understanding. Reading between the lines, that implies that Ministers are not happy with the way in which the Trade Remedies Authority is behaving. Why have the Government decided to put these changes in legislation, rather than in a memorandum of understanding, and why do they think that the Trade Remedies Authority needs to be constrained by law? Is it because there has been a breakdown in the relationship between Ministers and the people who run the authority? Is because there is a lack of trust, or is it simply because Ministers want more direct control over the way in which the authority behaves? That would have implications for the TRA’s independence, and it would certainly have implications for how its independence would be perceived by those wishing to approach it for a jurisdictional reason or for decision making.

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[Victoria Atkins]

I hope I will be able answer some of the questions that the hon. Member for Wallasey asked about why the changes are being made. We announced our decision to reform the trade remedies framework in June 2021, and this is the end of a review process to look at how our framework is working. As I suspect Members across the House, not just this Committee, might expect, we have been talking and listening to industry, asking it for its views on how the trade remedy system could be improved. Consultations on including bilateral safeguard provisions have taken place as part of new free trade negotiations, and those will continue to occur for each negotiation. Importantly, we have asked not only the industry but the TRA, and we will work with it to ensure that the changes are implemented effectively.

The hon. Member for Ealing North asked about international comparators. I confirm that all the changes we are making are in line with our obligations under the WTO. Advance rulings are a key component of the UK’s accession to the comprehensive and progressive agreement for trans-Pacific partnership and other key free trade agreements, but they also help business. Those are some reasons for introducing them. On clause 317, no statutory right of appeal for traders has existed since we left the EU, but we continue to offer the trader the right to be heard scheme, which gives a trader a period of 30 days to present additional information before HMRC confirms the decision.

The hon. Member for Wallasey asked some important questions about the TRA and its independence, including why this has to be done through legislation. The TRA very much remains an independent body, and we genuinely value its expertise and advice. Its core objective will be to investigate allegations of unfair trading practices and unforeseen surges in imports, and to make recommendations to Ministers. It will continue to run fair, impartial and evidence-based investigations. The Secretary of State will then decide whether a measure should apply based on the evidence provided.

The Bill injects another element of transparency, because the Secretary of State for Business and Trade will have to make a statement to Parliament if Ministers decide to apply an alternative remedy to that recommended by the TRA—I imagine that the Treasury Committee would take a great interest in that—and the statement would set out the reasons for their decision. The TRA will continue to maintain a public file of the evidence and publish its conclusions as well. I hope colleagues will be reassured by the transparency that we seek to bring in.

On the TRA itself, it started to investigate cases in 2021. To date, its completed cases include one new investigation and 11 measures transitioned from the EU. It investigates, for example, allegations of dumping, subsidy and unforeseen surges in imports, and it provides objective, independent and evidence-based advice to Ministers, which we will very much continue to value.

As to why we have to make the changes through legislation, the TRA is a statutory body, it can therefore only act within its statutory powers. That is why we have to bring forward the legislation. Furthermore, it will give certainty to parliamentarians should it be needed in future—though I hope that will not be the case.

[James Murray]

I thank the Minister for her response, although she might have misunderstood my question on international comparators. Her response, I believe, was that what the UK Government are doing is in line with WTO requirements, but my question was whether there had been any international benchmarking of the TRA, its role, its powers and its relationship with politicians—its level of independence and so on—against similar authorities in other countries. Perhaps she will address that question.

[Victoria Atkins]

I do not have that information to hand, but I will endeavour to get it as quickly as possible and furnish the Committee with it.

Question put and agreed to.

Clause 315 accordingly ordered to stand part of the Bill.

Schedules 19 and 20 agreed to.

Clauses 316 and 317 ordered to stand part of the Bill.

Clause 318

Excepted machines etc

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

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

I am afraid you’ve got me, Mr Stringer. It is a great pleasure to serve under your chairmanship.

Clause 318 makes technical amendments to the legislation that restricts the entitlement to use rebated fuels to a number of qualifying uses from 1 April 2022 to adjust the restrictions and ensure the legislation operates as intended. It makes minor amendments to changes that were introduced in April 2022 to restrict the entitlement to use rebated fuels.

At Budget 2020, the Government announced that we would remove the entitlement to use rebated diesel and biofuels, including marked oils, from most sectors to help meet our climate change and air quality targets. The changes were legislated for in the Finance Act 2021 and amended by the Finance Act 2022. The changes ensure that most users of rebated fuels prior to April 2022 are now required to use fully duty-paid fuel, like motorists. That more fairly reflects the harmful impact of the emissions that they produce.

Following the implementation of the changes, the Government were made aware of a small number of unintended impacts on fuel users. This measure will make minor amendments in relation to them and will correct a technical issue in section 14B of the Hydrocarbon Oil Duties Act 1979.

The changes in the clause will adjust restrictions on the entitlement to use rebated fuels to a number of qualifying uses, will qualify how the changes to the new rules work, and will allow the legislation to operate as intended. They will allow machines or appliances used to generate electricity or provide heating primarily for non-commercial premises to use rebated fuels even if they also provide some of the electricity or heat to commercial premises. They will also add arboriculture to the list of activities for which machines and appliances, other than vehicles, can use rebated fuels. That clarification will allow those working in the sector to use rebated fuels in the same machines and appliances as they did before April 2022.

The changes allow the use of rebated fuels in tractors and gear owned by lifeboat charities used to launch and recover their lifeboats. Finally, they make minor technical corrections to remove an anomaly of section 14B of the Hydrocarbon Oil Duties Act 1979.

These changes reflect feedback received from stakeholders since the Finance Act 2022 received Royal Assent. The technical changes in the clause will ensure that the Government’s reforms to the tax treatment of rebated fuels made in April 2022 work as intended. I commend the clause to the Committee.

[James Murray]

As we know, at Budget 2020, the Government announced that they would remove the entitlement to use rebated diesel and biofuels from those sectors. As we heard, these changes took effect from April 2022, and they ensure that most users of rebated diesel prior to April 2022 are now required to use fully duty-paid diesel, as motorists do.

As the Minister set out, the Government have been made aware of unintended impacts of the legislation on fuel uses, so further amendments to it have been needed by way of the clause. As we heard, the clause amends the Hydrocarbon Oil Duties Act 1979 to adjust restrictions on the entitlement to use rebated diesel and biofuels.

We understand from explanatory notes that the changes will affect businesses and individuals who use rebated fuels to provide electricity or heating to premises that are used for both commercial, and non-commercial purposes, businesses and individuals using machines or appliances other than vehicles for purposes relating to arboriculture, and charities operating lifeboats. I ask the Minister for further information on that last category. Can he help us better understand what issue the measures in the clause are seeking to address specifically in relation to charities operating lifeboats? Can he explain what impact the law, as it currently exists, has been having on those charities operating lifeboats?

[Gareth Davies]

Essentially, as the hon. Gentleman points out, the measure is to correct some unintended consequences. One of those does relate to lifeboats. The initial provision was to include lifeboats and their ability to use rebated fuel. It did not include tractors and geared machines, which enable lifeboats to get in and out of the water. It is not something that was raised as part of the consultation process initially, but it was raised after the legislation went through. We are now amending that to ensure that not only lifeboats but tractors and geared machines can use rebated fuel.

[James Murray]

I thank the Minister for his clear response on that point. Obviously, charities operating lifeboats are ones that we all seek to support and to ensure are not disadvantaged inadvertently by any laws. Has the Minister had any discussions with those charities about whether they have lost out because of the unintended consequences, and whether there will be any redress?

[Gareth Davies]

I personally have not had that engagement. I will look into what discussions have taken place, and I would be happy to report that back to the hon. Gentleman.

Question put and agreed to.

Clause 318 accordingly ordered to stand part of the Bill.

Clause 319

Rates of tobacco products duty

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

--- Later in debate ---

[Gareth Davies]

Clause 320 and schedule 21 legislate to amend part 2 of the Finance Act 2017 to bring into scope the soft drinks industry levy on liquid flavour concentrates used in fountains, also known as dispensing machines, which combine added sugar with the concentrate when the soft drink is dispensed to produce a soft drink with at least 5 grams of sugar per 100 ml. The change takes effect from 1 April 2023.

The Government launched a consultation on the design and implementation of the soft drinks industry levy in August 2016 and set out a response confirming the broad policy approach. The soft drinks industry levy came into effect in April 2018 and supports the Government’s strategy to tackle obesity by encouraging reformulation at manufacturer level. The soft drinks industry levy applies to packaged soft drinks containing at least 5 grams per 100 ml of added sugar. Producers, manufacturers and importers of liable soft drinks must register a report and pay the soft drinks industrial levy on the volume of liable soft drinks packaged in and imported into the UK.

The soft drinks industry levy has driven substantial reformulation, resulting in a sugar reduction in soft drinks of 46% between 2015 and 2020 and the reformulation of more than 50% of sugary soft drinks in response to the levy. The changes made by clause 320 and schedule 21 will close a minor technical loophole within the soft drinks industry industrial levy, improving the consistency of its application. The changes are in line with the intent of the original legislation. The measures extend the definition of a soft drink liable to the soft drink industry levy to include packaged concentrates that are mixed with sugar when dispensed from a soft drink fountain machine. Other fountain machines used in the restaurant, retail and leisure industry that use a packaged syrup or concentrate containing added sugar are already in scope of the soft drinks industry levy.

The change will bring consistency across the soft drinks industry by ensuring that all packaged concentrates used in fountain machines, regardless of the stage when the sugar is added, are captured by the soft drinks industry levy. Existing soft drinks industry levy rules, including registration, rates, accounting and payment will apply to manufacturers and importers of flavour concentrates manufactured to be mixed with sugar in a dispensing machine. The change takes effect from 1 April 2023 and will bring consistency across the soft drinks industry by ensuring that all packaged concentrates used in fountain machines, regardless of the stage at which sugar is added, are captured by the soft drinks industry levy.

[James Murray]

I will speak briefly to clause 320 and schedule 21, which relate to the scope of the soft drinks industry levy. As the Exchequer Secretary set out, the result of these measures is that the levy will now apply to liquid flavour concentrates that are manufactured in, or imported into, the UK. The concentrates are products that are mixed with added sugar in a dispensing machine to dispense a soft drink for the final consumer.

The soft drinks industry levy was announced at Budget 2016 and came into force in April 2018. It has been targeted at producers, manufacturers and importers of soft drinks containing added sugar by encouraging the reformulation of drinks to reduce levels of added sugar and portion sizes, and the marketing of low-sugar alternatives and so on. We recognise that this technical change will bring liquid flavour concentrates within scope of the levy, and we will not oppose the clause.

[Victoria Atkins]

Out of an abundance of caution, I refer Members to my entry in the Register of Members’ Financial Interests and my ministerial interests. I am recused from this subject matter in a ministerial capacity.