Oral Answers to Questions

Jesse Norman Excerpts

Tuesday 1st October 2019 Commons Chamber

[Mr Gregory Campbell (East Londonderry) (DUP)]

18. If he will make it his policy to suspend the 2019 loan charge for the duration of his Department’s review of that charge.

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

The Government have listened to concerns expressed across the House about the loan charge, and, as the House will know, an independent review is now in progress under the leadership of Sir Amyas Morse. While it is under way, it is right for the loan charge to remain in force and for the Government to implement legislation on which the House agreed. The review will conclude by mid-November, to let anyone who may be affected know, and to give people time to plan in advance of the January self-assessment filing deadline. To help taxpayers who may need longer to pay, Her Majesty’s Revenue and Customs has confirmed again that there is no maximum time limit for payment plans.

[Mr Bone]

The loan charge is the worst form of retrospective taxation. It is causing real hardship and distress to law-abiding taxpayers, and this week it was reported that a seventh person had taken their own life because of it. How many more people are going to take their lives before the loan charge is scrapped?

[Jesse Norman]

Let me correct my hon. Friend on the facts. We have been notified of three suicides that may have some connection with the loan charge, and which have been referred to the Independent Office for Police Conduct. In one case there has been a referral back to HMRC, but in all other cases there has been no further development, so I do not recognise the picture that my hon. Friend has described. Let me also remind him that although these effects have been much bruited, there is also the question of collecting the several billion pounds of back tax that is due.

[Nic Dakin]

What is clear is that the retrospective loan charge is causing huge pain and upset as people’s livelihoods and homes are threatened. Will the Minister ensure that the review hears directly from people who have been so affected, and will he either suspend the loan charge or at least tell HMRC that those who have signed a settlement agreement can pause their payments until the review has been concluded?

[Jesse Norman]

I am grateful for the question. Of course any injury to individuals from any act of Government or their agencies is to be deeply regretted. I recognise that, and if it has happened here, it is appropriate for the House to feel that way.

I have no powers to direct Sir Amyas Morse. I understand that he is taking evidence from external sources, including the loan charge all-party parliamentary group and the Loan Charge Action Group, which acts as its secretariat. I have met the APPG and the secretariat separately. So the matter is being fully addressed. The details of settlement have been set out on gov.uk.

[Mr David Davis]

On the issue that my hon. Friend the Member for Wellingborough (Mr Bone) raised with the Minister, the hard fact is that seven people facing challenge or investigation for the loan charge have taken their own lives. He can attribute cause as he wishes. The fact is also that the distress has been caused by the historical incompetence of HMRC and the subsequent willingness of Ministers to use retrospective taxation. Are the Government going to give up on the premise of using retrospective taxation, or does it fall to the House to pass laws that will stop them doing so in future?

[Jesse Norman]

The legislation is not retrospective. [Hon. Members: “It is.”] There are defined circumstances in which HMRC and the Government may seek to use retrospective taxation, and they do so with extreme care and attention. All that I am doing is referring my right hon. Friend to the facts as reported to the IOPC. As he will be aware, these are immensely difficult cases in which many circumstances and factors may be in play.

[Dr Offord]

Despite the review, the loan charge remains in place and HMRC continues to pursue people for advance payment notices for which there is no right of appeal. That clearly goes against the spirit of the review. Will the Minister now suspend all activity?

[Jesse Norman]

The review is designed to assess whether the Government’s policy is appropriate, and it would be wrong to change it until the review has had chance to make a decision on it. The Treasury and the House have a great interest in supporting the provision of public services, which the recovery of tax avoided in this way, in many ways egregiously, is designed to fund.

[Anne Milton]

I honestly do not think that the Minister is paying attention. These comments are coming from Members behind him, not opposite him. [Hon. Members: “From all sides.”] These people followed professional advice and declared their arrangements to HMRC, which did nothing. Yet it is now going back and taxing them retrospectively, all the way back to 1999 in some circumstances. The Minister cannot stand at the Dispatch Box and just ignore what he is hearing from the Benches behind him.

[Jesse Norman]

Nothing could be further from the truth. We are carefully attending to concerns that have been expressed. That is why I announced changes in July and have written on two occasions to colleagues to inform them of changes and developments. That is why we have instituted this independent loan charge review, the purpose of which is precisely to scrutinise the extent to which Government policy is appropriate.

[Mr Gregory Campbell]

The Minister is bound to be aware of the scale of concern across the House and among those who are directly affected. He has outlined a date of mid-November. Immediately upon that date being reached, will he take urgent action to assist those affected?

[Jesse Norman]

I have no idea what the loan charge review will conclude, but I guarantee that we will look at its findings with all due speed and dispatch.

[Justine Greening (Putney) (Ind)]

Like many Members, I have constituents who have been egregiously affected by the loan charge. The Minister’s response is unacceptable from their perspective. He should suspend all the loan charge activity while the review is under way and until the Government have responded to it. What preparation is happening in HMRC for the policy shift if the review says that the loan charge is unfair and needs to be changed? How will he deal with my constituents who have already had to pay but may be proven to have paid erroneously?

[Jesse Norman]

I am unable to comment on what the review will conclude. We can certainly look at whether there may be changes that HMRC would take rapidly thereafter. It possesses the capacity to do so quite quickly if necessary, as does Government. We will have to review that moment when it comes.

[Carol Monaghan (Glasgow North West) (SNP)]

19. Seven needless deaths; seven families tragically left to deal with the consequences, and yet companies such as AML that have promoted the schemes are getting away scot-free. AML and its director, Doug Barrowman, appear to have moved away with no consequences whatever. In fact, they are boasting that HMRC is not pursuing them for any assets or unpaid taxes. Will the Minister detail the efforts that are being taken against such companies, which have caused so much pain and tragedy?

[Jesse Norman]

The hon. Lady is absolutely right to focus on the activity of the promoters. They are extremely ingenious in operating within the framework of law, but doing some very nasty and duplicitous things. They often operate offshore and it is extremely difficult to close them down when they are constantly mutating from one company to another. I assure hon. Members that we are looking at the problem extremely closely, and I hope to return to the House at some point fairly soon with some thoughts.

[Mr Dominic Grieve (Beaconsfield) (Ind)]

I worry that the Government characterise those who are suffering from the loan charge as in some way egregious tax avoiders, when it is abundantly clear that in the case of my constituents they acted on advice, openly, and in the belief that the scheme was approved by HMRC. I also worry that HMRC is behaving towards taxpayers in a fashion that is new, and in many cases, tax advisers say, unprecedented. I also think that the retrospectivity is deeply questionable.

[Jesse Norman]

I must say, I am surprised to hear a man of my right hon. and learned Friend’s legal standing and status regard this as retrospective, because it plainly is not. [Hon. Members: “It is!”] There are many parts of tax policy that have to look back to the basis of an asset or a liability, and that has happened here. In this case, HMRC has taken quite vigorous action over the years, in different forms, to let people know. Of course, it is subject to the loan charge review; we will see what that concludes. However, I remind my right hon. and learned Friend that these people were in many cases paying very little or zero in tax. [Interruption.] Of course the circumstances can differ, but there are a large number of people who knew, or should have known, that they were avoiding tax, and doing so un—

[Several hon. Members rose—]

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[Janet Daby (Lewisham East) (Lab)]

16. What assessment his Department has made of the effect of increases in income tax thresholds on income distribution in the last 10 years.

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

That was a cruel blow for my right hon. Friend, Mr Speaker, if I may say so.

In answer to the hon. Lady’s question, the House will I am sure rejoice that between 2010 and 2019 the personal allowance has been increased by more than 90%, so that those on the lowest incomes do not pay any income tax, and since 2015-16 alone 1.74 million people have been taken out of income tax altogether. We will publish a full distributional analysis of the recent spending round alongside the next Budget, and it will also capture the effect of any budgetary announcements made at that time.

[Janet Daby]

Can the Minister explain how it is fair that a small handful at the very top have run into the distance, making up the top 10% of the population and owning 44% of the nation’s wealth?

[Jesse Norman]

The hon. Lady may not be aware that at the moment the top 1% of the country pay 29% of all tax. That is up from the 25% in 2010-11.

[Christine Jardine (Edinburgh West) (LD)]

T1. If he will make a statement on his departmental responsibilities.

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[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

T5. As my right hon. Friend knows, those affected by the devastating loan charge have welcomed the independent review, but feel that it would be better conducted by a tax judge. Does the Minister agree? Does he also agree that a suitable outcome of the review would be to apply the loan charge only from when it was introduced, in 2016, not retrospectively?

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

I thank my hon. Friend for that question. I have addressed the substance of it, but let me make a point about Sir Amyas Morse. I think that Sir Amyas is a superb choice. As my hon. Friend may be aware, in a debate in the House of Commons on 6 March 2019, the Chamber united across the parties in praise of Sir Amyas. The Chair of the Public Accounts Committee, the hon. Member for Hackney South and Shoreditch (Meg Hillier), called him

“a fearless advocate for what is good in the public sector and for challenging Governments of whatever party”.

The Liberal Democrat spokesman, the hon. Member for Oxford West and Abingdon (Layla Moran), said that he was not only “unfailingly courteous”, but had

“an intelligence of steel. He has a knack for calling out obfuscation, fudge and imprecision”,

and

“a reputation for being completely fair.”—[Official Report, 6 March 2019; Vol. 655, c. 1004-05.]

He is a very good choice to lead this review.

[John McDonnell (Hayes and Harlington) (Lab)]

Will the Chancellor give the House a quick fact-check of his speech yesterday? The Conservatives have cut funding for buses by £640 million a year. Yesterday, he announced nothing new; he simply reannounced £220 million from the spending review. His Government have cut £900 million a year from annual youth services budgets. Yesterday, he offered £500 million, possibly as a one-off. The National Infrastructure Commission says that we need £33 billion to roll out full-fibre broadband. Yesterday, he offered £5 billion. All of those promises will count for nothing if there is a no-deal Brexit. Has he not just followed the Cummings code: grab a headline, possibly wrap it around a bus and ignore the truth? But there is one figure that I would like to ask him about: 120,000. What significance does the figure 120,000 have for him?

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[Amber Rudd (Hastings and Rye) (Ind)]

I have had heartbreaking meetings with constituents from Hastings regarding the loan charge, where I have heard tragic and sad stories about the destruction of families and their finances. Although I of course welcome the review that is to take place, may I urge the Chancellor to reconsider the position of not suspending the loan charge during the review period?

[Jesse Norman]

I do not know whether my right hon. Friend caught the discussion we had about this matter earlier, but the purpose of the review is to establish whether the Government are pursuing the right policy. It makes no sense at all to change the policy until we have heard from the review. I absolutely sympathise with the concerns that have been felt across the House, and both the Government and HMRC itself have taken steps to try to mitigate them.

[Grahame Morris (Easington) (Lab)]

T2. The former coalfields of England, Scotland and Wales have a combined population of 5.7 million. If they were treated as a single distinct region, that would be the poorest region in the United Kingdom. By any measure or definition, the coalfield communities are left-behind areas, so what fiscal policy steps is the Chancellor taking to address the specific structural and economic weaknesses of former coalfield areas such as mine in going forward with the shared prosperity fund?

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[Stephen Timms (East Ham) (Lab)]

T7. In June, HMRC said that at least 20% of the 10,000 trucks reaching Dover on day one of a no-deal Brexit will not comply with French customs, leading to very long delays and causing shortages of fresh food and medicines. How many non-compliant trucks does HMRC currently project at Dover on day one?

[Jesse Norman]

I do not have the number to hand, but I would be glad to write to the right hon. Gentleman with it.

[David Duguid (Banff and Buchan) (Con)]

I welcome the Chancellor’s commitment yesterday of £5 billion to support gigabit broadband across the whole of the United Kingdom. He will be aware that, historically, the Scottish Government have been responsible for the roll-out of superfast broadband, which is way behind what they promised, and not a penny of the £600 million that they announced in 2017 has been spent. Will my right hon. Friend confirm that future broadband funding will be paid directly to local authorities, bypassing the Scottish Government, who have failed rural constituents such as mine more than most?

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[John Cryer (Leyton and Wanstead) (Lab)]

Can the Minister answer the question asked earlier by the right hon. Member for Hastings and Rye (Amber Rudd): what is the reason for not suspending the loan charge scheme until the inquiry is completed? It is a request not for a change of policy, but just to suspend the scheme.

[Jesse Norman]

The reason is that the inquiry is designed to test the policy, and the policy remains in place until the inquiry is over. If the policy were ended now or suspended, all that potentially would occur is more confusion if the inquiry took the view that, ultimately, the Government were in the right.

[Fiona Bruce (Congleton) (Con)]

I thank Ministers for providing funding to help evidence and establish the business case for reopening Middlewich railway station—a key priority for my constituents. What wider fiscal steps are they taking to support my constituency by supporting the northern powerhouse and midlands engine?