Finance Bill

Debate between Jane Ellison and John Redwood

Tuesday 6th September 2016 Commons Chamber

[Jane Ellison]

In this final debate, there is an array of amendments and new clauses to consider across a wide range of subjects. I am sure that we will cover a great deal of ground.

Let me first outline briefly the Government amendments, starting with Government new clause 9. To ensure fairness in the tax system, new clause 9 allows for the exemption from income tax of supplementary benefit payments funded by the Northern Ireland Executive. Government amendments 132 to 134 deal with disguised remuneration and Government amendment 139 deals with aqua methanol. Amendments 132 to 134 change the date for withdrawing a relief on returns arising from disguised remuneration for those who have not settled tax due to 1 April 2017, while amendment 139 changes the date on which the new aqua methanol duty rate comes into force to 14 November.

Government amendments 135, 146 to 148 and 138 concern venture capital trusts, the lifetime allowance and dividends respectively. They make changes to ensure that these policies work as intended.

Let me deal with the new clauses and amendments tabled by the Opposition. New clause 15, tabled by the hon. Member for Salford and Eccles (Rebecca Long Bailey) and her colleagues is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials. Since 2001, the UK has applied the 5% reduced rate of VAT to the installation of 11 different types of energy-saving materials. That reduced rate remains in place and is unchanged. The European Court of Justice ruled last year that the UK had interpreted VAT law too broadly. Following that judgment, the Government published a consultation on this particularly complex issue, and we are considering the responses. While this new clause is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials, the tax lock legislated for by this Government already achieves the same effect. Indeed, it goes further.

[John Redwood (Wokingham) (Con)]

Will the Minister confirm that, now we are leaving the EU, we would have no intention of raising VAT to that rate? I hope that we will scrap it altogether.

[Jane Ellison]

As the Secretary of State for Exiting the EU said yesterday in his responses to the lengthy statement, those are all matters that will be looked at. He confirmed that he is indeed looking at it, as is the Treasury.

We feel that the tax lock goes further by preventing the use of secondary legislation to vary the scope of any reduced or zero rate. In effect, the new clause would serve no purpose except to duplicate existing legislation.

New clause 3 on the marriage allowance would place a legal requirement on the Government to carry out a review. Although I am sympathetic and have discussed the concerns of my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and others who support the new clause, I hope to be able to show that such a report is unnecessary and to address some of these concerns.

Let me reiterate that the Government remain committed to recognising marriage in the tax system and to ensuring that the marriage allowance is delivered successfully. As hon. Members will be aware, take-up of this policy was initially lower than expected, but the Government have taken decisive action to change that. In spring this year, HMRC ran a successful marketing campaign to help raise awareness among eligible families, and the results were quite dramatic. Daily applications increased by a factor of seven between November 2015 and March 2016. Next month, HMRC will receive its 1 millionth successful marriage allowance application.

We are going even further. HMRC will launch a more ambitious campaign to raise awareness next month to help to continue the momentum. The Government have also assessed the distributional impact of the policy, which I know is a matter of interest to my hon. Friend the Member for Enfield, Southgate. We found that a quarter of those who will benefit are households with children, and most of the benefit from the marriage allowance will go to those in the bottom half of the income distribution scale. I understand that my hon. Friend will want to make more points about this issue in his contribution. I will seek to respond, briefly if I can, at the end.

My hon. Friend has also tabled new clause 2, which proposes a review of the impact of the rate of duty charged on sparkling cider of an alcohol strength exceeding 5.5%. The concerns that he raises—he has raised them before—are important, and the Government will continue to tackle alcohol problems as a driver of crime and support people to stay healthy, building on the alcohol strategy of 2012. The Government are aware that some ciders can be associated with alcohol harm and we have already taken action. Since 2010, for example, we have required drinks to contain a minimum of 35% apple or pear juice to be defined as cider, which is designed to increase the cost of the cheap white ciders.

From my previous role as a public health Minister, I am obviously aware of the concerns about alcohol harm. Further changes to alcohol policy would need sufficiently to target cheap drinks associated with these harms, without of course penalising responsible drinkers. The Treasury is always willing to consider any evidence about how these products should be taxed. Although I do not think a legislative requirement for a review is necessary, I look forward to hearing my hon. Friend’s contribution to the debate.

Amendments 180 to 182 deal with the Office of Tax Simplification. The amendments, tabled by the hon. Member for Ilford North (Wes Streeting), would require appointments to or dismissals from the position of the OTS chair to be subject to the consent of the Treasury Select Committee. The OTS provides the Chancellor with independent advice on simplifying the tax system. As I alluded to in the last part of the previous debate, to ensure that the OTS continues its important work, the Government are putting it on a permanent statutory footing and increasing its powers. I am grateful to my right hon. Friend the Member for Chichester (Mr Tyrie), the hon. Member for Ilford North, whom I see in his place, and other members of the Treasury Select Committee for their commitment to safeguarding the independence of bodies within government and to increasing their transparency. The Government’s view is that there is a balance between ensuring that there is robust scrutiny and doing so in a way that is proportionate to the function of the OTS.

Having considered the representations of my right hon. Friend the Member for Chichester and the hon. Member for Ilford North, the Government will ensure that the Treasury Committee is able to hold hearings with future OTS chair candidates before their appointments are formalised, and to put appointments to a vote in the House. We believe that those arrangements should be a permanent method of appointment of future OTS chairs. I do not think there is any justification for going further and legislating for a power of veto, which is what the amendments would do. I hope that members of the Treasury Committee will welcome the arrangements that I have outlined, and I invite them not to press their amendments.