Transferable Tax Allowances

Jeremy Lefroy Excerpts

Wednesday 28th November 2012 Westminster Hall

[Mr Jackson]

I am sure that the wise point made by my hon. Friend will be heard by the Minister, the Front-Bench spokesman for the Treasury.

In presenting these options, I hope that the Government do not opt to introduce the limited partially transferable allowance mooted in The Sunday Telegraph just published, which would be worth only £150, or £3 a week. If the limited funds available are such that we have to start with a limited transferable allowance proposal, it would be much better to focus a transferable allowance on those with young children, providing such families with a meaningful transferable allowance, rather than something minimal spread over all one-earner families.

[Jeremy Lefroy (Stafford) (Con)]

My hon. Friend is making a powerful argument. I agree with everything he said. Does he agree that tax allowances should be given by introduction of a transferable marriage allowance, rather than by substantial tax allowance given to higher-rate taxpayers on their pension contributions, even if they are earning six-figure salaries?

[Mr Jackson]

Exactly. My hon. Friend makes a good, important point. This is an opportunity to make real our commitment to fairness and equity.

It is worth noting that the Prime Minister himself seemed a bit bothered by the nature of the partial allowance proposal. On 10 April 2010, he told Sky News:

“Of course, I want to go further”

than just a partially transferable allowance

“and I’m sure over a Parliament we would be able to go further, but this is a good first step that says commitment is important, marriage is important. I want us to be the most family friendly country in Europe and this is one step along that road.”

For the reasons I have elucidated in the past 20-odd minutes, the transferable allowance policy is a win-win policy for this Government that will help us make our fiscal arrangement less hostile to marriage, deal with some current unfairnesses in our tax system and help to make work pay. I hope that the Chancellor does the right thing next Wednesday and brings in a transferable tax allowance, which will be good for our constituents and for the country.

Small Charitable Donations Bill

Jeremy Lefroy Excerpts

Tuesday 4th September 2012 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

It is an honour to follow the hon. Member for Clwyd South (Susan Elan Jones). I welcome this Bill. Many hon. Members have looked forward to it for a long time, and I congratulate the Government on introducing it. The importance of improving tax benefits for charities has had cross-party consensus in the House for many years, from the introduction of gift aid in 1990 and its improvement under the previous Government, to this Bill—an honourable thread of legislation.

This Bill is long overdue and will hugely benefit smaller charities in all our constituencies. This morning I was with a group from the Rotary club of Stafford Castle. They do a lot of collecting in the town centre and would benefit from the Bill and, like many volunteers, they give up huge amounts of time to collect donations. Research shows that around 50% of all charitable donations in the UK are made in cash, against 29% by direct debit and the rest by cheque or card. The Bill will make a welcome contribution to those charities, adding 25% to the value of donations.

The Bill is important for two reasons. First, it is important for small charities, as other hon. Members have made clear, but secondly, it is important because it concerns donations from those in lower income groups, who until now have not really been recognised. At the moment, a person must be an income tax payer in order to claim gift aid. With the welcome increase in the income tax threshold for the 20% rate, fewer people will be taxpayers, and hence fewer people will be able to reclaim gift aid. As we search for equality in many areas, it is important to have equality among donors. Those who do not pay income tax should have the same right as those who pay it to have income tax on their donations reclaimed by charities.

Last year, the Centre for Charitable Giving and Philanthropy found in its report, “How generous is the UK?”, that

“donor households towards the lower end of the expenditure distribution tend to give away more of their money to charity”

than those at the upper end. Donors at the lower end of the income scale donate something like 3% of their income, and those at the upper end 1%. At the moment, however, donations to charity made by those on lower incomes do not receive tax back.

Figures from 2009-10 showed that tax was reclaimed through gift aid on 40% of all charitable donations in the UK. There is, however, a huge gap between large and small donations because 73% of larger donations of more than £100, which come mainly from wealthier donors, use gift aid to boost the impact of their donation, while only 20% of donations under £10 claimed gift aid.

This Bill will make a great difference not only to small charities but to the way in which those who give regularly and faithfully view their donations, which they will see recognised by the state through the return of tax relief.

On the meat of the Bill, many hon. Members have spoken of the need to simplify the measures, which I echo. I shall not go into great detail, but I urge hon. Members in Committee to look at the limit of £20, which seems arbitrary. I would be interested to know from the Minister where the limit came from. Why not £25 or £50? It is important that we do not impose unnecessary bureaucracy in the Bill and make people afraid. We do not want people thinking, “I will not claim gift aid because I am not sure whether people have put more than £20 in this bucket and I do not want to break the law.” We should look at that problem. Clearly, we must strike the right balance between simplicity and the prevention of fraud, but I get the impression that we are perhaps erring slightly too much on the side of the prevention of fraud as opposed to the side of the simplicity that all hon. Members want.

Another question is this: how can we encourage those fine national organisations that rely so much on street collections for the bulk of their income? I am thinking of the Royal British Legion and the poppy day appeal. Such organisations might be registered as one charity and do not have community buildings in each borough or district of the country. Is there a way for them to register individually, but not as individual charities, which would involve too much paperwork and bureaucracy? Perhaps such organisations could be entitled to claim up to £5,000 in each collection district. In my area of Stafford borough, the Royal British Legion is immensely proud of the fact that it increases the amount it collects every year, even in a recession. Almost all of what it collects is taken on the streets, in cash. It would be excellent if the Royal British Legion could see the result of that in the tax brought back from donations made in the district.

Finally, on schools, I regret to say that young men between the ages of 16 and 24 are the least likely segment of society to donate to charitable causes—just 31% donated to a charity in 2009-10. All hon. Members have schools in their constituencies that raise a lot of money for charities and it is great thing to encourage young people to do. Charity committees in schools are excellent, and we need to look at how we can encourage them to become eligible for tax relief on small donations, and particularly small cash donations. We should bear in mind that committees are often set up for only one year—one group of people in the lower sixth or fifth form will set up a committee for a specific purpose—so it will be difficult for them to meet the three-year requirement. Perhaps we could examine in Committee how we can encourage schools to benefit from the Bill.

I repeat my congratulations to the Minister and the Government on this excellent Bill, which will doubtless bring a lot of additional, much-needed income to many of our local charities. However, I urge hon. Members not to forget the important fact that it will for the first time recognise the small donations from millions of people throughout the country who put something in the bucket week in, week out.

LIBOR (FSA Investigation)

Jeremy Lefroy Excerpts

Thursday 28th June 2012 Commons Chamber

[Clive Efford]

I apologise, Mr Deputy Speaker.

[Jeremy Lefroy (Stafford) (Con)]

The prices of many important international commodities are set in London, such as cocoa and robusta coffee, and tens of millions of smallholder farmers and poor people around the world depend on these. Is my right hon. Friend confident that the kind of problems that we have seen with LIBOR are not spreading to such markets, which are so important for people around the world?

[Mr Osborne]

Of course we should be vigilant in the supervision of all markets. Although there have been many complaints of the kind that my hon. Friend makes, every investigation here and, as far as I am aware, in other jurisdictions has not found the kind of market manipulation in those commodity markets as we see in LIBOR.

Amendment of the Law

Jeremy Lefroy Excerpts

Monday 26th March 2012 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

For me, the most significant figures in the Budget are in tables D.3 and D.4 in the Red Book, which set out receipts and expenditure over the next five years. Total tax receipts are increasing by £153 billion, from £550 billion to £703 billion. At the same time, cash expenditure will rise from £696 billion to £756 billion—a rise of £60 billion. However, of that increase, £17 billion alone will be down to the increase in debt interest. The cost of public pensions is rising by £7 billion, to £15.4 billion, net of contributions, while net expenditure on social security and the state pension will rise by £25 billion. In broad terms, over the next five years we have to raise an extra £150 billion a year in taxes to eliminate the deficit and pay for the increases in interest, social security, pensions and, of course, health.

The only way to raise such additional revenue—which will be an extremely difficult task—and tackle the curse of unemployment is by being completely open for business. The Budget, as this week’s cover of The Economist says, gives that clear sign. We have a reduction in the corporation tax rate, the patent box, above-the-line research and development tax credit reliefs for the creative sector, deregulation and, indeed, better regulation. Is that enough? No, it is not enough. The loan guarantee fund will also be extremely important, but, again, we will have to watch that carefully—not every six months in statements, but every month—to find out whether our businesses are getting the credit they will need for growth. My hon. Friend the Member for Stourbridge (Margot James) mentioned exports, which are vital. The improvement in the export credit guarantee scheme is important, but it is still a fraction of the help that the Germans give their exporters. There need not be a cost to the Treasury; rather, the money can be recouped through the premiums on the scheme.

I have a number of brief suggestions to make in the last couple of minutes available to me. First, there has been concern about the effect of the reliefs on charities. At present, the tax relief fund for the excess above the standard rate is returned to the taxpayer—in the form of a tax refund—who can then keep it. It should surely be possible to require that this tax refund be paid to a charity; indeed, if it were paid in that way, it could be taken outside the suggested cap. As for the age-related allowance, it is important that fair notice be given—as it is with anything to do with retirement, whether changing the retirement age or changing tax arrangements. Although I understand the argument for bringing tax allowances into line over a period, the Government might consider letting personal allowances catch up with the age-related allowance. The additional cost of doing so could be paid for—I believe we must always pay for the things we suggest—by further restrictions on tax relief for higher rate pension contributions.

That brings me to a further suggestion. In the summary of Government receipts, income tax receipts are shown as net of everything except tax credits, yet the reliefs given on income tax are, in effect, a major item of expenditure. We should be explicit in the Government accounts about the cost of such reliefs—whether they are against pension or charitable contributions, or are enterprise reliefs—and not just net them off against income tax.

Finally, I have a couple of caveats. The first is about regional pay, which I suggest should be considered carefully. I am sceptical about its value, but I am willing to listen to the arguments. However, I am extremely sceptical about the value of relaxing Sunday trading rules during the Olympics, and I am firmly opposed to any permanent relaxation. This is not simply a question of keeping Sunday special as a time for families, friends or worship, although I for one consider that to be important; it is also about protecting the interests of those who work in the retail trade. However, in general, I welcome what this Government are doing to make Britain open for business.

Tax Avoidance (Public Servants)

Jeremy Lefroy Excerpts

Thursday 2nd February 2012 Commons Chamber

[Danny Alexander]

Well, I am here answering questions about it, and that is appropriate, given that the question was a general one about tax avoidance, which I am very pleased to answer.

[Jeremy Lefroy (Stafford) (Con)]

I welcome the Chief Secretary to the Treasury’s announcement today, and the robust action that the Government are taking against tax evasion and tax avoidance everywhere. They are certainly doing more than the previous Government did. Will he extend his review to cover the extraordinary salaries paid by NHS trusts up and down the country?

[Danny Alexander]

I am grateful to my hon. Friend for welcoming the tough action that we have taken in this case. I have contacted the Secretary of State for Health and the accounting officer in the Department of Health to ask whether any such arrangements apply in the areas for which they are responsible.

Autumn Statement

Jeremy Lefroy Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

It was the Labour Government who let the City explode. They allowed that to happen when the shadow Chancellor was the City Minister. They had 13 years to regulate the City and I suspect that on not one occasion did the hon. Lady write to either Tony Blair or the last Prime Minister calling for that regulation. The Labour party presided over the biggest financial crisis in our country’s history. We are properly regulating the banks and introducing ring-fencing. We have brought in a permanent bank tax and transparency in bankers’ pay. None of those things existed in the 13 years of Labour Government.

[Jeremy Lefroy (Stafford) (Con)]

I welcome the Chancellor’s statement which includes measures that will really help Staffordshire such as the M6 managed motorways scheme and the announcement on energy-intensive industries. How much does my right hon. Friend expect to make from the anti-tax avoidance measures that he has taken and that the previous Government did not?

[Mr Osborne]

I am glad that my hon. Friend welcomes the support that we have given to businesses and families in Staffordshire. I am also glad that he welcomes the M6 managed motorways scheme. We have taken specific measures to deal with both tax avoidance and unfair tax treatment. For example, the measures that I have announced to deal with double tax relief and asset-backed pension contributions will raise £450 million and the measures to deal with low-value consignment relief, which was strangling music shops on our high street, will raise £100 million. We have taken action, which the previous Government failed to take, to ensure that everyone pays their fair share.

Independent Banking Commission Report

Jeremy Lefroy Excerpts

Monday 12th September 2011 Commons Chamber

[Mr Osborne]

The hon. Gentleman says we’re all doomed, but the idea of these reforms is to ensure that we are not doomed in the future.

[Jeremy Lefroy (Stafford) (Con)]

Following on from the Chancellor’s answer to the hon. Member for Middlesbrough (Sir Stuart Bell), the figures in the Vickers report indicate that there will need to be between £200 billion and £400 billion of equity capital and other funds at risk within the ring fence. What impact will that have on the provision of capital and credit to business?

[Mr Osborne]

John Vickers explicitly examines the argument that this will somehow undermine credit and comes to the conclusion that it will not. He says that, first, because the broader benefits of a stable banking system to the banks themselves and to the economy outweigh the costs and, secondly, because retail banks will, as I say, be more encouraged to use their retail deposits to support retail lending.

Global Economy

Jeremy Lefroy Excerpts

Thursday 11th August 2011 Commons Chamber

[Mr Osborne]

Of course we bear in mind advice from the IMF and others, but it makes it clear that that is not its central view at the moment. It asked itself a specific question, and it says this:

“The weakness in growth and rise in inflation raises the question whether it is time to adjust macroeconomic policies. The answer is no…Strong fiscal consolidation is underway and remains essential”.

That is what the IMF says in its article IV report into the United Kingdom published on 1 August this year.

[Jeremy Lefroy (Stafford) (Con)]

Recently, the UK has been the highest per capita exporter of services in the world, and that is vital for future growth. What action are the Government taking to ensure that we can continue to compete globally in services on a level playing field, and particularly in the European Union?

Oral Answers to Questions

Jeremy Lefroy Excerpts

Tuesday 10th May 2011 Commons Chamber

[Justine Greening]

My hon. Friend is absolutely right to raise that issue. In fact, it is part of the rationale behind tackling problem drinking. One way we have sought to do that is by introducing the limits on the below-cost selling of alcohol in supermarkets. That will be done by a formula of assessing duty plus VAT as the below-cost level. My hon. Friend is also right to point out that we need to do what we can to support pubs, which are the lifeblood of many local communities. They will also benefit from the various packages of measures we have brought forward to support small businesses, including reduced corporation tax, increased national insurance thresholds and, of course, the plan for growth.

[Jeremy Lefroy (Stafford) (Con)]

14. What recent discussions he has had with his international counterparts on strategies to reduce budget deficits.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

At the G20 summit in Seoul in November, advanced countries committed to formulate and implement credible growth-friendly, medium-term fiscal consolidation plans. The Chancellor has been involved in discussions with our international and European counterparts since the Seoul summit, including in the International Monetary and Financial Committee and the International Monetary Fund spring meetings. As was the case with the previous Administration, it is not the Government’s practice to provide details of all such discussions.

[Jeremy Lefroy]

I thank the Minister for his reply. The OECD’s recent report says that the UK is striking

“the right balance between addressing fiscal sustainability…on the one hand, and preserving short-term growth on the other.”

In his contact with international colleagues, has my hon. Friend found other support for this view or, indeed, any support for the opposing view?

[Mr Gauke]

It is quite striking that on one side of the argument, saying that we must be serious about getting the deficit down, there is the OECD, the IMF, the European Commission, the CBI, the Governor of the Bank of England and the US Government, whereas on the other side we have the Labour party. We do not find the Labour party’s case terribly persuasive. On the evidence of last week, nor do the British people.

Oral Answers to Questions

Jeremy Lefroy Excerpts

Tuesday 21st December 2010 Commons Chamber

[Mr Osborne]

The hon. Gentleman seems to forget that child poverty was rising under the last Labour Government and we have put forward policies to increase social mobility and tackle the causes as well as the symptoms of poverty.

[Jeremy Lefroy (Stafford) (Con)]

T9. As the Chancellor knows, I have written to the Treasury with details provided to me by a Staffordshire resident of an extraordinary tax avoidance scheme inherited from the last Government. I hope that it will not last long. In the spirit of Christmas, will the Chancellor invite his predecessors around for a dram so that they can explain why they found tax avoidance such a hard nut to crack?

[Mr Gauke]

As we have heard, Her Majesty’s Revenue and Customs’ assessment of the tax gap was £42 billion, but we are taking measures to address that. It is right that we do so, and we showed our determination this month when we announced a series of measures to reduce tax avoidance.