Oral Answers to Questions

Jane Ellison Excerpts

Tuesday 29th November 2016 Commons Chamber

[Robert Flello (Stoke-on-Trent South) (Lab)]

9. If the Government will establish a public inquiry into Her Majesty’s Revenue and Customs’ contract with Concentrix.

[The Financial Secretary to the Treasury (Jane Ellison)]

The independent National Audit Office is carrying out an inquiry into the Concentrix contract and it plans to publish its report in early 2017. That is in addition to Select Committee and Public Accounts Committee scrutiny, which has been extensive to date and will no doubt be extensive in the future.

[Melanie Onn]

I should like to take this opportunity to congratulate my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), who is not in her place, whose hard work got this issue on to the agenda and forced HMRC to act. In July, the independent Social Security Advisory Committee said that the Concentrix contract was a

“major departure for HMRC, as decisions about a claimant’s past eligibility to a benefit are being made by a commercial organisation”,

and that

“this same organisation is then performing mandatory reconsiderations when a claimant challenges the initial decision.”

What are the Government going to do to prevent this situation from happening again?

[Jane Ellison]

The chief executive of HMRC addressed that particular issue in one of his evidence sessions to a Select Committee. I hope the House will be pleased to hear that HMRC has taken back and completed all 181,000 cases from Concentrix and has now cleared most of the mandatory reconsiderations. [Interruption.] There are of course issues to consider. That is why the National Audit Office is carrying out its inquiry, which is already under way, and the Government will of course respond to its report in due course.

[Robert Flello]

The Concentrix scandal left huge numbers of people in hardship, and some of them are still paying off the debts to loan sharks that they took out to see them through. Ministers must have seen the complaints letters, and they must have seen what was in the media. Were they asleep at their desks? Were they just caught napping? Concentrix, HMRC and the Minister at the time need to be held responsible for this, and we need a proper inquiry.

[Jane Ellison]

I would make the point to the hon. Gentleman that a proper inquiry is exactly what the National Audit Office will be undertaking, and I am sure that the hon. Member for Hackney South and Shoreditch (Meg Hillier) and her Committee will have that report in front of them in due course. This matter will be properly looked at in some detail. Over the course of the contract, considerable savings were made for the taxpayer in relation to fraud and error, but it is true that things went badly wrong towards the end of the contract, which is why swift action was taken.

[Richard Graham (Gloucester) (Con)]

While recognising the points made by the hon. Members for Great Grimsby (Melanie Onn) and for Stoke-on-Trent South (Robert Flello) on the Concentrix contract, which will be covered in the Select Committee’s report, I would like to congratulate Treasury Ministers on responding very fast when these issues really came to a climax in August and on being extremely prompt in looking after constituents who contacted their MPs about this matter.

[Jane Ellison]

I thank my hon. Friend for those words. Having looked carefully at the profile of complaints from Members over the period of the contract, it is clear that there was sharp increase in their number right at the end of the contract, when it became apparent that a number of Members were contacting us on behalf of their constituents. As I have said, it was the sharp decline in service that led to the actions that we took. It is also worth noting that all the 181,000 cases that were taken back have now been resolved and that, where appropriate, compensation has been paid. Most importantly, when claims have needed to be renewed and reinstated, this has been done.

[Kevin Foster (Torbay) (Con)]

Given the issues in my constituency that I have raised, I am pleased that the Concentrix contract has now been brought to an end. Does the Minister agree that an inquiry by the National Audit Office, which works for and answers to this House, will be far more effective in getting lessons learned than a long-winded public inquiry that could become a lawyer-fest?

[Jane Ellison]

My hon. Friend is exactly right to say that the National Audit Office inquiry is the way to go. This is an area in which it is deeply experienced and the work is already under way. The report will be produced in the new year. In order to draw conclusions and to find these reports helpful, that speed of inquiry is important. We will have the report early in the new year, and the House will have further chances to scrutinise it at that time.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

4. What steps he is taking to reduce the effect on small businesses of penalty surcharges levied by HM Revenue and Customs.

[The Financial Secretary to the Treasury (Jane Ellison)]

Ultimately, the Government want to collect the right tax at the right time, not charge penalties. As it happens, we are currently reviewing ideas for how we charge penalties. A discussion document was published last year, and we recently consulted on a new approach to sanctions for late submissions of returns and late payment of taxes. We are currently considering all the comments received and if my hon. Friend wants to contribute to that process, I will be happy to look at any detailed points.

[Gordon Henderson]

I am more than happy to contribute. A small building company in my constituency has paid large VAT bills on time since 1972. However, on one occasion, because of a mistake by a member of staff, the company’s VAT return was one day late and the company was hit with a totally unfair £12,000 penalty charge. During the review, will Ministers consider changing the penalty charge system so that they are levied only on businesses that repeatedly fail to pay their VAT on time? “Three strikes and you’re fined” might be a good system.

[Jane Ellison]

I note what my hon. Friend says with interest. It is worth clarifying that the VAT default surcharge system already contains safeguards to help businesses avoid penalties and that no business incurs a surcharge the first time it makes a late payment. My hon. Friend may want to write to me about that individual case because I cannot address it here in the House. The current system of surcharges is structured in a way that allows the smallest businesses up to four late payments without incurring a surcharge, so I suggest that he writes to me with the details, which I will pass on to HMRC.

[Sammy Wilson (East Antrim) (DUP)]

The new “Making tax digital” arrangements, which will require businesses to submit quarterly returns, increase the likelihood of sanctions being imposed following late returns or non-submission. How does that fit in with the Government’s promises to make it easier to start a business, to cut red tape and to make businesses more competitive?

[Jane Ellison]

I do not recognise the hon. Gentleman’s description of “Making tax digital”—an important reform that we will consider carefully. We said in the autumn statement that we will respond in the new year, but it is not right to say that there will be four returns; information will be digitally uploaded to the system more regularly. It is also the case that one of the driving forces behind “Making tax digital” is to help small businesses to get things right first time, because there is an awful lot of error that often costs businesses money that they would otherwise be owed.

[Mrs Theresa Villiers (Chipping Barnet) (Con)]

I must press the Financial Secretary on that point. I appreciate that the “Making tax digital” programme does have advantages, but many small businesses are worried about quarterly reporting. Will she consider making it voluntary rather than mandatory?

[Jane Ellison]

I reiterate to my right hon. Friend that it is envisaged that people will upload information quarterly, but that is not the same as four tax returns a year, something which got some currency at the time. Several significant concessions regarding the number of small businesses that were exempt from the system were announced over the summer, but I am listening carefully to the points being made both by colleagues in the House and by some of the important stakeholders with whom we have been engaging. That is why we said that we will respond in the new year. We do not want to rush our response; we want to consider all the points carefully.

[Rebecca Pow (Taunton Deane) (Con)]

5. What steps he is taking to improve productivity in the south-west.

--- Later in debate ---

[The Financial Secretary to the Treasury (Jane Ellison)]

My hon. Friend is right to point to the fact that we inherited a complex system in that regard. Her Majesty’s Revenue and Customs has enhanced its online services. There will be an online service, for example, for people making new claims for tax credits starting in April 2017. The use of real time information through pay-as-you-earn has really helped to pick up potential errors in claimants’ income, and it is making a difference.

[Christian Matheson (City of Chester) (Lab)]

T5. Chester’s status as a centre for the financial services industry, particularly FinTech, is under threat from continuing problems with retention by businesses, which cannot get staff to come to the area. Staff cannot get there, because our infrastructure is not good enough. Instead of gloating about the Oxford to Cambridge corridor, can we have some news about when money will be spent on the M56 to upgrade it to a smart motorway?

--- Later in debate ---

[Fiona Mactaggart (Slough) (Lab)]

T7. A feature of the modern gig economy is that more and more people are sticking together mini jobs, in most of which they earn below the national insurance threshold. HMRC manages to add together that money to tax it, but it does not manage to add together that money to make sure that those people have pensions. What is the Treasury going to do to make sure that older women, in particular, get access to pensions when they have mini jobs?

[Jane Ellison]

The right hon. Lady and I have recently spoken about this issue, and as she knows, there has been some work done to look at the broader issue. It is complicated, but I undertake to look at it again and respond to her. Of course, some of the broader aspects of the gig economy will be covered during the Taylor review.

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

According to the Library, infrastructure spending per head is 2.5 times greater in London and the south-east than in the regions. Does the Chancellor agree that now is the time for a fairer distribution of investment spending across the UK?

--- Later in debate ---

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

As other Members have mentioned, there is growing alarm about the impact of making tax digital on small business people, of whom I am one. Will the Chancellor confirm that, in time, quarterly tax returns will also apply to Members of Parliament?

[Jane Ellison]

As my hon. Friend mentioned, we touched on this earlier. Making tax digital is an important reform. I have mentioned already that some important concessions were made during the summer, by taking many very small businesses out of making tax digital, but it has much to offer small businesses. I am looking carefully at all the responses that have been made, and as he knows, I have listened carefully to the points that he has made on a number of occasions.

[Ms Margaret Ritchie (South Down) (SDLP)]

T10. Will the Chancellor confirm that the devolution of corporation tax, which is conditional on the Northern Ireland Executive’s finances being on a sustainable footing, is not a vehicle for the Treasury to interfere in Northern Ireland’s devolved policies?