Finance Bill 2021-22: L-Day
Jesse Norman Excerpts(3 years ago)
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The Financial Secretary to the Treasury (Jesse Norman)
The Government will introduce the Finance Bill following the next Budget.
In line with the approach to tax policy making set out in the Government’s documents “Tax policy making: a new approach”, published in 2010, and “The new Budget timetable and the tax policy making process’, published in 2017, the Government are committed, where possible, to publishing most tax legislation in draft for technical consultation before the legislation is laid before Parliament.
The Government will publish draft clauses for the next Finance Bill, which will largely cover preannounced policy changes, on 20 July along with accompanying explanatory notes, tax information and impact notes, responses to consultations and other supporting documents. All publications will be available on the gov.uk website.
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Covid-19: Government Support
Jesse Norman Excerpts(3 years ago)
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The Financial Secretary to the Treasury (Jesse Norman)
It is pleasure to serve under your chairmanship, Mr Mundell. I am grateful to the hon. Member for Midlothian (Owen Thompson) for bringing the debate to Westminster Hall and to colleagues across the House for their comments and remarks.
I have been very struck by the difference in tone among the contributions made. There has been a lot of denunciation, but there has also been a rather fair-minded strand of discussion that acknowledged the extraordinary circumstances in which we as a nation have been placed, and the scale and effectiveness of the Government’s interventions. I particularly thank my hon. Friend the Member for Somerton and Frome (David Warburton), the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) and the hon. Member for Stirling (Alyn Smith) for their fair-minded engagement with the issue.
If I may, I will talk a little about where we are and then come to the questions raised by colleagues. Let me be perfectly clear—it is important, as the hon. Member for Midlothian and others mentioned, for us to be tonally clear—that the Government absolutely understand the depth and difficulty of the situation that people have faced throughout the pandemic. That is why we have tried to support as many people and businesses as we possibly can, and to do so as quickly and as effectively as possible. The hon. Gentleman was highly dismissive of that, but actually, I am pleased to say that other hon. Members were not; they recognised that the Government provided a very wide-ranging package of national financial assistance worth over £350 billion, and that international commentators have recognised that. I think of the International Monetary Fund, which described it as
“one of the best examples of coordinated action globally”.
Those packages and bits of concentrated but wide-ranging support include the coronavirus job retention scheme—CJRS—which has supported 11.5 million jobs since its inception, and the self-employment income support scheme—SEISS—which has so far provided grants to almost 3 million people.
Jesse Norman
I am not giving way; I am sorry. I have no time whatever and I want to respond to all the comments made in the debate.
It is understood that the schemes continue to be the most generous of their kind in the world, and it is recognised by all fair-minded people that as restrictions start to ease, economic activity and demand will pick up. The Government need to tailor support accordingly, and that is why—I refer to the hon. Member for Edmonton (Kate Osamor)—we have announced that the fifth and final SEISS grant will have the value of the grant determined by a turnover test. That is because of the need to target support towards those most affected by the pandemic. I do not think that is a principle that people should wish to contest, given the overall financial impact of the crisis on taxpayers. For that reason, in relation to CJRS, we have also introduced an employer contribution.
Let me focus for a moment on the effects of that set of interventions. In its May forecast, the Bank of England projects the economy to return to its pre-crisis level by the end of the year—significantly earlier than previous forecasts. At the start of the crisis, forecasts suggested that unemployment would reach 12% or more. The numbers are now close to half that, which could mean almost 2 million fewer people losing their job than originally feared. We hope it must be so.
The five SEISS grants combined will have provided individual claimants with support of up to £36,570. That makes clear the scale of the support. I recognise, of course, that some people have not been eligible or not been able to receive support from those schemes. That is why so many other aspects of the interventions, including the support for local authorities, have been put in place.
If I may, let me pick up on some of the points made by colleagues. It was suggested by the hon. Member for Midlothian that the Government were somehow dismissing solutions that have been put in front of us by reputable independent groups for, as he put it, “spurious reasons”. Nothing could be further from the truth. As the hon. Member for Caithness, Sutherland and Easter Ross recognised in another context, we have leant into all those debates.
We carefully scrutinised the TIGS and DISS—target income grant scheme and directors’ income support scheme—proposals. In different meetings, I have met groups including the Federation of Small Businesses, ForgottenLtd, ACCA—Association of Chartered Certified Accountants—the gaps in support group, the Refused Furlough Group, the maternity petition campaign, Forgotten PAYE and a host of others. We will continue to entertain, and we very much welcome, thoughtful interventions designed to help us, recognising the constraints under which we operate.
The trouble, as I think colleagues understand, is that we are caught by the need to put in place schemes that respect fraud and error concerns. Let me remind colleagues, including the hon. Member for Glenrothes (Peter Grant) who raised this, that the very people who would denounce the Government for failing to extend support would themselves be the very ones to denounce the Government if it turned out that the fraud and error incurred by overly expensive support were to lead to a loss of revenue to the taxpayer. People cannot have it both ways. We are trying to bend over backwards to support those groups, and in many respects we are doing so.
Let me pick up a few other words. The hon. Member for Midlothian talked about “straw-manning”, but nothing could be further from the truth. There is no suggestion on my part that any limited company director is a fat cat—absolutely not. We recognise that in many cases those are extremely effective individuals. What we are trying to do is find an effective way to meet all the constraints I have described when supporting the wide range of people who have been affected.
The hon. Gentleman talked about debt management. Let me remind him that we have put in place a pioneering VAT deferral new payment scheme and that HMRC has made it clear that it is trying extremely carefully to manage the impact of different tax schemes and tax reliefs, and the withdrawal of those reliefs, on different groups.
The hon. Gentleman talked about whether the Government will show appreciation for the charities that support people through the crisis. Of course we will. We have expanded support for voluntary and charitable groups with HMRC. We very warmly support and recognise—and, as I said in another context, I work closely with—the Low Incomes Tax Reform Group, specifically trying to support people on low incomes. Of course we are working as hard as we can, and we have been for 15 or more months, to make things work.
Let me pick up a couple of important points made by other colleagues. The hon. Member for Stirling kindly referred to the work that the Government have done. He acknowledged, rightly, that the devolved Administrations and local authorities do have resources in part—they are heavily resourced by UK Government. In many cases, they have the capacity to amplify and extend their resources through local taxation of their own. That flexibility is one that they may wish to use in support of local people. I would support and welcome that as an exercise in devolved responsibility. With that, let me sit down.
Emissions Trading Scheme: VAT
Jesse Norman Excerpts(3 years ago)
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The Financial Secretary to the Treasury (Jesse Norman)
The Government are announcing today that legislation will be introduced at the earliest opportunity to allow a VAT zero rate to apply to trades in UK emissions trading scheme allowances within the VAT Terminal Markets Order (S11973/173) (TMO).
A UK Emissions Trading Scheme (UK ETS) replaced the UK’s participation in the EU ETS on 1 January 2021. The scheme has been established to increase the climate ambition of the UK’s carbon pricing policy, while mitigating the risk of carbon leakage through free allowances.
Market participants can bid for UK ETS allowances on the UK auction platform or can acquire futures contracts in UK ETS allowances on the secondary market.
The TMO permits VAT zero rating for transactions on terminal commodity markets. It is seen as an important VAT trade facilitation measure by those involved in trading commodity futures contracts, where often on these markets there are very substantial volumes of transactions over short periods of time. The zero-rating relief provided by the TMO avoids the administrative and cash flow burdens of accounting for VAT and should have no effect on the VAT amount collected at the final stage of consumption.
I can confirm today the treatment will be provided from the time when these important trades commenced in May.
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Treasury
Jesse Norman Excerpts(3 years ago)
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Jesse Norman
Let me remind him that, so far, the trader support service has processed something like, I think, 700,000 consignments, 59,000 traders have been registered, there is the Brexit support fund and there is the new movement assistance scheme, as he will know, for food and agriculture trade. We retain a focus on making those systems, rules and support work as effectively and as widely as possible.
[Official Report, 22 June 2021, Vol. 697, c. 736.]
Letter of correction from the Financial Secretary to the Treasury:
An error has been identified in my response to the hon. Member for North Antrim (Ian Paisley).
The correct response should have been:
Jesse Norman
Let me remind him that, so far, the trader support service has processed something like, I think, 700,000 consignments, 39,000 traders have been registered, there is the Brexit support fund and there is the new movement assistance scheme, as he will know, for food and agriculture trade. We retain a focus on making those systems, rules and support work as effectively and as widely as possible.
Draft Customs Safety and Security procedures (EU exit) regulations 2021
Jesse Norman Excerpts(3 years, 1 month ago)
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The Chair
Before we begin, I remind Members to observe social distancing and to sit only in places that are clearly marked. I also remind Members that Mr Speaker has stated that face coverings should be worn in Committee unless Members are speaking or they are exempt. Hansard colleagues would be most grateful if Members sent their speaking notes to hansardnotes@parliament.uk.
The Financial Secretary to the Treasury (Jesse Norman)
I beg to move,
That the Committee has considered the draft Customs Safety and Security Procedures (EU Exit) Regulations 2021.
It is a pleasure to serve under your chairmanship, Sir Gary. The statutory instrument has been introduced as one of the steps that the Government are taking to support businesses affected by covid-19, and it works by extending the staging in of customs control, specifically in relation to safety and security declarations. In this country we follow the World Customs Organisation’s SAFE framework in order to ensure that goods entering and leaving the UK do not threaten our safety and security. Customs authorities following the SAFE framework collect and risk-assess goods data before those goods arrive in or depart from their customs territories. The EU implemented that through the Union customs code, and those provisions have been retained in UK law following the end of the transition period on 31 December 2020.
The EU, as the Committee will know, forms a single safety and security zone. While the UK was part of the EU, only goods entering or leaving the EU were required to submit safety and security declarations. After the end of the transition period, to give businesses more time to prepare for new customs requirements, the Government announced that the requirements would be introduced in stages. As part of that, the Government have waived the requirement for safety and security declarations on goods imported from the EU and other territories from which such declarations would not have been required before the end of the transition period. The waiver runs from 1 January 2021 until 30 June 2021.
In December 2020, the Government also introduced a statutory instrument that granted the commissioners of Her Majesty’s Revenue and Customs time-limited powers to waive or alter the requirements for safety and security declarations on goods exported from Great Britain by issuing a public notice. Since 1 January 2021, there have been public notices in place for two categories of exports, waiving the requirement for safety and security declarations on those movements. The first category is roll-on, roll-off movements where an exit summary declaration would otherwise be required. The second is movements of empty pallets, containers and modes of transport being moved under a transport contract where such movements did not attract the safety and security requirement before the end of the transition period.
In March, in response to feedback from stakeholders about the challenges that they were facing, the Government announced their intention to extend the staging in of customs controls. To support that, this instrument extends for six months until 31 December 2021 the waiver from a safety and security declaration requirement for goods imported into Great Britain from places where such declarations were not required before the end of the transition period. Safety and security declarations will be required for those imports from 1 January 2022. The instrument has no impact on the safety and security declaration requirements for goods imported from the rest of the world where declarations will need to be submitted pre arrival.
As has been the case since the beginning of the year, Border Force will continue to undertake intelligence-led risk assessments of imports into Great Britain. There is no significant increase in the security risk to the UK as a result of this waiver. The instrument also extends until 30 September 2021 the waiver for the requirement for a safety and security export declaration for the two categories of movement where those requirements are currently waived by public notice. The powers under which HMRC commissioners issued those public notices are time limited and cannot be used to alter or waive safety and security export requirements after 30 June 2021. The Government are therefore extending the waiver by statutory instrument.
The two categories of movements covered by the waiver are the same as those covered by public notice waivers since 1 January 2021. These are roll-on, roll-off movements where an exit summary declaration would otherwise be required and movements of empty pallets, containers and modes of transport, being moved under a transport contract where such movements did not attract a safety and security requirement before the end of the transition period.
For most exports from Great Britain, a full customs export declaration is submitted, which contains information that is risk-assessed for safety and security purposes. The two categories of movements where full customs declarations are not required normally therefore require a stand-alone exit summary safety and security declaration. Border Force will continue to undertake intelligence-led risk assessments of exports from Great Britain. As such, there is no significant short-term increase in risk to the UK as a result of this waiver. Those temporary waivers of safety and security declaration requirements strike an appropriate balance between supporting businesses affected by covid-19 and maintaining security standards within Great Britain. I hope the Committee will join me in supporting these draft regulations.
Jesse Norman
I thank the hon. Gentleman for his question and for his support of this statutory instrument. He asked a series of questions; let me first say how delighted I am that he has been subjecting my previous speeches to the appropriate level of rabbinical scrutiny. I hope that they were worth it. The care and attention that he has given to what I have said so far suggests a diligent and effective intelligence.
The hon. Gentleman rightly highlights my remarks when we first debated the regulations. I pointed out that they were a contingency tool, time-limited in nature and intended to be as such, and so they are now. It is therefore appropriate to ask what has changed. It is fair to say that we are living in a world that has seen considerable change, even since December. At that point, of course, it was not at all clear what the reaction of trade would be to the change in circumstances created by Brexit or what the EU’s reaction would be on the ground. The further developments of the pandemic and the response to it—including, most recently, the new variant of concern—highlights the amount of change that has taken place. It is appropriate to recognise the concerns that continue to be shown by stakeholders about this legislation, and we have done that.
As I said, we do not plan to extend the regulations further; I mildly underline the words “do not plan”, but I do not think it appropriate to rule something out entirely. We could not have foreseen, for example—no one did, in fact—the emergence of the delta variant of the virus. We cannot pretend that we have omniscience now as to what the future will bring. However, it is absolutely not the plan that the regulations should be further extended, and we send that strong and firm signal to international neighbours and industry.
The hon. Gentleman asked a question about security and vulnerability to potential criminal behaviour. He will understand that criminal behaviour is a target for the safety and security declarations. Separate arrangements are put in place for the customs system that accommodate the lawful transfer of objects, but here we are considering the nature of consignments and what they may have in them. It is noticeable, and has been certified by Border Force and HMRC, that there is no discernible security risk arising from the continuation of this waiver. I commend that thought, based on their expert judgement and advice, to the hon. Gentleman.
The hon. Gentleman asked about data gathering. As he will be aware, the changes made in this instrument are not fully comprehensive; data will continue to be gathered, particularly on non-covered export categories, by HMRC and Border Force. It has been an important part of the overall rationale that we continue to build that data set as the trade evolves and changes. We will continue to do so and I am sure there will be long-term value from that process.
James Murray
Before the right hon. Gentleman concludes, will he address the point about the impact assessment? The explanatory notes state that
“An Impact Assessment has not been prepared for this instrument because the provisions are in force for less than 12 months.”
However, extending the pre-arrival safety and security entry summary declarations for six months, and a further six months, surely means they are enforced for 12 months. Could the Minister explain whether that is the case? Is it his view that an impact assessment should have been prepared?
Jesse Norman
I am grateful to the hon. Gentleman for raising the question. No, it is not the Government’s view that an impact assessment should have been prepared, because the regulations maintain the existing status quo in which the declarations are waived. In that sense, nothing has changed. However, I recognise the point that the hon. Gentleman raises. It is important to reflect that the Government always wish to be cognisant of the impacts of legislation that they pass, and that will continue to be true elsewhere in our legislative package as well.
Question put and agreed to.
Oral Answers to Questions
Jesse Norman Excerpts(3 years, 1 month ago)
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Ian Paisley (North Antrim) (DUP)
The Financial Secretary to the Treasury (Jesse Norman)
Top of the morning to you, Mr Speaker.
The protocol is explicit in its respect for the UK’s territorial integrity, and the Government are committed to delivering it with as little impact on businesses and day-to-day lives as possible. The Government have set up the free-to-use trader support service to support businesses trading between Great Britain and Northern Ireland at a cost of £270 million and have made full use of provisions within the protocol to ensure that no tariffs are charged on internal UK trade.
Ian Paisley
I refer to my entry in the Register of Members’ Financial Interests.
Does the Minister accept that the protocol actually discriminates against British businesses trading between GB and Northern Ireland and between Northern Ireland and GB? It undermines trade, damages consumer opportunities and rights, and increases costs to both consumers and businesses on both sides of the channel. What action will the Government take, and indeed encourage others to take, to save British businesses and the economy from this economic discrimination? How long will businesses have to wait for a solution and what compensation has the Treasury calculated to cover the loss in trade, which, at present, is running at hundreds of millions of pounds?
Jesse Norman
I thank the hon. Member for his question. Of course, this follows a wide concern that he has put in front of the House on many previous occasions. I do not accept the characterisation that he has given of the situation in Northern Ireland, but I absolutely agree with him that the Government need to continue to press for the Northern Ireland protocol to be implemented in a proportionate and pragmatic way. That is an important goal of the Government. He talks about the schemes in place. Let me remind him that, so far, the trader support service has processed something like, I think, 700,000 consignments, 59,000 traders have been registered, there is the Brexit support fund and there is the new movement assistance scheme, as he will know, for food and agriculture trade. We retain a focus on making those systems, rules and support work as effectively and as widely as possible.[Official Report, 28 June 2021, Vol. 698, c. 2MC.]
Mark Eastwood (Dewsbury) (Con)
Gavin Robinson (Belfast East) (DUP)
The Financial Secretary to the Treasury (Jesse Norman)
The details of the sector visions will be set out by the relevant Departments in the coming months. In developing the visions, the Government will consider the role of the state in supporting high-growth sectors that have the potential to build a globally competitive advantage, as well as how the sectors can also be used to support wider objectives, for example levelling up or enabling a transition to net zero.
Gavin Robinson
I am very grateful to the Financial Secretary for his response. He heard the Chairman of the Treasury Committee, the right hon. Member for Central Devon (Mel Stride), mention the tourism and travel sectors, and I encourage him to look on them favourably, but from my perspective, aerospace remains the No. 1 private employer in my constituency and across Northern Ireland. It employs more than 6,500 people. Last year was a difficult year for aerospace and still it turned over £1.4 billion. It has high-end and high-level manufacturing skills that we cannot lose. I hope the sector will feature in the plans that are brought forward.
Jesse Norman
I am very grateful to the hon. Gentleman for the comments he makes. I share his view that aerospace is a very important strategic industry for the country as a whole and, of course, particularly for Northern Ireland and his constituency. Let me reassure him that the sector visions we are discussing will be guided by considerations of comparative advantage—we have a considerable comparative advantage in many areas of aerospace—and future growth potential—I do not think anyone doubts that that is an area. He will know that we are investing very heavily in supporting that sector in the transition to net zero, with green fuels and electric flights, and also supporting levelling up. Those all play into a very positive story for Northern Ireland as well as the rest of the UK.
Anne McLaughlin (Glasgow North East) (SNP)
The Financial Secretary to the Treasury (Jesse Norman)
Her Majesty’s Revenue and Customs has a strict duty of confidentiality in relation to information it holds on taxpayers. HMRC will share information on individuals or employers with the Home Office for immigration purposes only where a clear legal basis exists, and it will share or disclose only the information that is necessary and proportionate to the intended purpose through strict adherence to data protection principles, including the UK general data protection regulation. Personal data that is disclosed is minimised where it can be and strictly governed and subject to audit.
Anne McLaughlin [V]
It is not necessary and proportionate in the cases I have been hearing about. In one case, someone who had been here as a highly skilled migrant for 10 years was refused the right to remain because he had miscalculated his tax by £1.20 years previously. What global talent does the Minister think will want to take the risk of uprooting their families to another country that may well kick them out for something HMRC previously said was a minor issue?
Jesse Norman
For reasons that I have described, I cannot comment on individual cases. However, the hon. Lady is welcome to raise them with HMRC on behalf of her constituents. I can tell her that legislation provides very specific, well-designed information-sharing gateways under an umbrella memorandum of understanding governing all data sharing between the two sides, and all of that is grounded in strict obedience with the law.
Kirsten Oswald (East Renfrewshire) (SNP)
Dr Jamie Wallis (Bridgend) (Con) [V]
The Financial Secretary to the Treasury (Jesse Norman)
Of course, local taxation in Wales is a matter for the Welsh Government. The UK Government’s primary focus, as my hon. Friend will be aware, has been on supporting recovery from the pandemic, and we recognise that the tourism sector has been particularly hard hit. That is exactly why we have provided more than £7 billion so far through the reduced VAT rate for the hospitality, accommodation and attraction industries across the UK; it is why we have extended the reduced rate until 30 September 2021; and it is why we have put in place a much wider array of support as we come out and play it long in relation to the pandemic.
Mark Eastwood (Dewsbury) (Con)
Jesse Norman
The hon. Lady will be aware that the Government have made available to local authorities, initially at least, £1.5 billion and a further top-up sum, in order precisely to meet hard cases that may fall between the cracks of the very wide-ranging support that we have given otherwise. I strongly encourage her constituent to talk to her local authority about that funding.
Robert Largan (High Peak) (Con)
Mr Richard Holden (North West Durham) (Con)
Jesse Norman
I congratulate Elddis, and I congratulate my hon. Friend on giving Elddis profile, on fighting the campaign that he has, and on the outcome and its very successful results in this case. I have it on very good authority that the Chancellor would be delighted to visit Elddis, so I am in a position to make a binding commitment from the Government side, and I am sure that he looks forward to it very much.
Mr Speaker
I am now suspending the House for three minutes to enable the necessary arrangements for the next business.
National Insurance Contributions Bill (First sitting)
Jesse Norman ExcerptsTuesday 22nd June 2021
(3 years, 1 month ago)
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The Chair
With this it will be convenient to discuss new clause 5—Freeport zero-rate relief: review of incomes and wages—
(1) The Government must conduct a review of the impact of sections 1 to 5 of this Act on income and wage ranges at all freeport tax sites.
(2) The review must assess—
(a) the average income and wage ranges of jobs in respect of which employers have claimed the secondary Class 1 relief introduced by section 1 of this Act; and
(b) for each freeport, how the incomes provided by these jobs compare to average median incomes across the local authority areas in which the freeport is located.
(3) The review must be commenced by 31 October 2022.
(4) The review must be published and laid before Parliament by 31 January 2023.
This new clause will require the Government to evaluate the wages of the jobs created as a result of the employers’ relief introduced by this Bill.
The Financial Secretary to the Treasury (Jesse Norman)
It is a great pleasure to be able to address these important clauses in a small but important Bill, and I thank all colleagues for joining us today.
Part I of the Social Security Contributions and Benefits Act 1992 stipulates that secondary class 1 national insurance contributions be calculated at a standard rate of 13.8% on earnings above the secondary threshold—currently about £8,700 a year. Part I also provides for other rates of secondary class 1 NICs—the zero rate for 21-year-olds or apprentices under 25, for example—that can be applied up to an upper secondary threshold.
Clause 1 introduces a new zero rate of secondary class 1 national insurance contributions on earnings up to a new upper secondary threshold in Great Britain. The standard rate of NICs, 13.8%, in most cases will apply above that threshold. The threshold will be set through regulations at £25,000 per annum.
Clause 1 provides employers that meet the conditions set out in clause 2, which we will shortly debate, with access to this relief where they have a secondary class 1 liability. An employer may qualify for various rates of secondary national insurance contributions. Clause 1 therefore stipulates that an employer must elect to apply the freeport relief if they wish to utilise this zero rate. By applying the rate, their status as a secondary contributor remains even if, as a result of this relief, an employer has no secondary class 1 liability. The relief will be administered through pay-as-you-earn and real-time information returns by Her Majesty’s Revenue and Customs. This approach has been welcomed by stakeholders.
New clause 5, if I may say so, recapitulates much of what the Government have already done. I remind the Committee that the Government have already published a decision-making note that clearly sets out how sustainable economic growth and regeneration are prioritised in the freeports assessment process. We will also be publishing costings of the freeports programme at the next fiscal event, in line with conventional practice. Those costings will undergo the usual scrutiny from the Office for Budget Responsibility.
It is also important to say that the Government are already taking the necessary steps to gather the information required to review the programme effectively. Before funding is allocated and tax sites are designated, each freeport will need to pass a business case process, which includes assessing how effectively tax sites can be monitored. Freeports will need to collect data on reliefs and their realised outcomes, which will include monitoring the effectiveness of tax reliefs, and the Government will continue to publish information relating to HMRC through its annual report and accounts. It is important to note that the Government have already committed to keeping this measure under review as new information becomes available. The publicly available tax information and impact note also commits the Government to keeping the scheme under review through communication with taxpayers’ groups.
The Government reject the proposal in new clause 5 because a report that focused exclusively on just one aspect of the policy would not do justice, however valuable its focus, to the whole, which includes other important aspects over and above wages, such as changes to customs rules, Government infrastructure spending and planning reform. I therefore ask that the Committee reject new clause 5.
I am sure that Committee members will not wish to delay the investment associated with clause 1, which introduces a zero rate of secondary class 1 national insurance contributions that employers can apply when they meet the conditions specified in clause 2. For that reason, and with the reassurances that I have given, I urge the Committee to agree that clause 1 stand part of the Bill.
James Murray (Ealing North) (Lab/Co-op)
Thank you, Ms Nokes, for the opportunity to speak on behalf of the Opposition. We begin by considering the clauses that relate to freeports. In March 2021, the Chancellor announced that eight freeports would be created in England—East Midlands Airport, Felixstowe-Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Thames, and Teesside—and we understand that discussions continue around further freeports in Scotland, Wales and Northern Ireland.
Clause 1 will introduce a new secondary class 1 national insurance contributions relief for freeport employers. It provides for that relief to apply when secondary class 1 NICs are due from an employer other than a public authority when the conditions set out in clause 2 are met. Clause 1(2)(a) states that the rate for the relief is 0% and applies up to the upper secondary threshold; subsection (2)(b) states that for earnings above the upper secondary threshold, the secondary percentage—currently 13.8%—applies. Subsection (3) states that the upper secondary threshold, or the prescribed equivalent, will be set by statutory instrument under a power established by clause 8.
As the Financial Secretary may remember, we discussed on Second Reading the fact that the upper secondary threshold for freeport employees would, according to a policy paper published by the Government on 12 May, be set at £25,000 for 2022-23. As I pointed out at the time:
“That is substantially less than the equivalent thresholds for employers’ relief for under-21s and apprentices, which is £50,270 in 2021-22…this means that employers do not need to pay any NICs for under-21s and apprentices earning up to just over £50,000 a year, but they will have to pay contributions for freeport employees next year if they earn more than £25,000.”—[Official Report, 4 June 2021; Vol. 697, c. 49.]
In response to my question about the Government’s rationale for picking the figure of £25,000 for employees of freeports, the Exchequer Secretary said:
“The answer is that, unlike other NICs reliefs that are available to employers nationally and generally are targeted at specific groups of employees with particular characteristics, businesses operating in a freeport are likely to be able to claim the relief on almost all of their new hires. To balance generosity of support with the need to consider the public finances, this broader eligibility has been balanced by limiting the amount of salary that can be relieved. We have chosen to set this limit at £25,000 per annum, which is approximately the average salary in the UK.”—[Official Report, 14 June 2021; Vol. 697, c. 69.]
I would like to take this opportunity to understand the Exchequer Secretary’s response a bit more. I would therefore be grateful if the Financial Secretary let us know the specific source of the data that says that £25,000 is approximately the average salary in the UK. I ask this because according to the Office for National Statistics the median income in all the local authority areas where the eight freeport sites are located is greater than £25,000, with the figures ranging from £25,200 in Kingston upon Hull, within the Humber freeport, to £33,200 in Thurrock, within the Thames freeport.
We would like to take this opportunity to press further on this point, which is why we have tabled new clause 5. We want to understand if the Government are concerned that making the threshold for the NIC relief in freeports £25,000 might create an incentive for employers to create posts paid less than £25,000, rather than higher paid posts, which could in turn create the risk of salaries being bunched below the threshold, thereby undermining salary progression.
New clause 5 requires the Government to conduct a review, after this policy has been in place for six months, to assess the average income and wage range of jobs in respect of which employers have claimed the secondary class 1 relief introduced by clause 1, and for each freeport to assess how incomes provided by these jobs compare with the average median income across the local authority area in which the freeport is located.
I would be grateful if, for clarity, the Minister let us know the precise statistical source of the figure of £25,000 for the average UK salary. Will the Government support the review we propose, which would assess the average incomes of jobs created by this employers’ relief? If not, does he think that setting the threshold for the relief at £25,000 risks creating an incentive for employers to create posts that are paid less—even just less—than £25,000, rather than higher paid positions?
Jesse Norman
I thank the hon. Gentleman for his question. I saw that he raised the issue on Second Reading and, if I may say so, it potentially reflects a slight misunderstanding.
As the Exchequer Secretary said, the decision has been taken to set the rate at £25,000, roughly the national average earnings. That is different from median earnings. I do not think it is right to suggest that the threshold has been set at a level that is approximate, because it is designed to be comprehensible and readily understandable. To make it more precise might affect that.
The overall generosity of the package of support that is being given to freeports, and the range of potential employees to which this applies, is very creditable to the Government, because it shows the intensity and strength of the intent to make the freeports policy work. This is an important part of that policy, but only one part of a set of policies that are designed to increase the attractiveness of freeports for growth and for employment as well.
The way in which this measure has been structured is focused towards longer-term employment, as the relief runs for three years, and therefore it allows the employment rights associated with longer-term employment to be vested in those employees. From that point of view, it reflects a commitment by the Government to create high-quality and stable longer-term employment.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Clause 2
Freeport conditions
Richard Thomson (Gordon) (SNP)
I beg to move amendment 1, in clause 2, page 2, line 26, at end insert—
“(e) the employer pays, as a minimum, a living wage, to all staff it employs, and
(f) the businesses operating in the freeport in which the employer has business premises have collectively—
(i) put in place a strategy setting out how the freeport will contribute to the target for net UK emissions of greenhouse gases in 2050 as set out in the Climate Change Act 2008 as amended by the Climate Change Act (2050 Target Amendment) Order 2019,
(ii) put in place a strategy setting out how the businesses will ensure that no goods passing through the freeport are the products of slave labour, and
(iii) carried out an environmental impact assessment of the operation of the freeport.”
This amendment provides conditions to businesses in freeports. These include a strategy on how the freeport will contribute to the target for net UK greenhouse gases emissions, a strategy ensuring no goods passing through the freeport are products of slave labour, and an environmental impact assessment of the freeport.
Jesse Norman
I am grateful to the hon. Members for Gordon and for Ealing North for their contributions. We have discussed already how clause 1 introduces a new rate of secondary class 1 national insurance contributions. If I may, I would like now to explain the freeport conditions that enable a freeport employer to qualify for the relief. That is set out in clause 2, and I will then discuss clause 3 and the amendments and new clauses that have been tabled.
Clause 2 has the following effect. It sets the conditions that an employment must meet to qualify for the freeport employer’s NICs relief. A freeport employer is an employer that has a business premises in the freeport tax site—business premises being defined as building or structure out of which the business is carried out. A freeport employee is an employee of a freeport employer who spends 60% of their working time in a freeport tax site and has not been employed by that employer in the previous 24 months. A freeport employer can apply the zero rate for 36 months on new hires from April 2022. The earnings of freeport employees hired before April 2026 will qualify for the zero rate for the full 36 months.
Clause 3 provides the Treasury with the power to legislate for the finer detail of the measure in secondary legislation. It provides a power to add, to amend and to remove certain conditions. The practical effect of that is to allow the Government to react to the economic realities of today, and also to give a degree of future-proofing to the measure against unintended policy outcomes.
The hon. Member for Ealing North raised the question of the starting date in 2022, and I understand that he is repeating the concern that he raised on Second Reading. It is adequately and properly met by the response that the Exchequer Secretary gave. It is a hypothetical matter as to when these freeports will begin to operate. We expect that to be soon, and we are pressing forward, but there are number of further steps to be undertaken before a freeport tax site can be designated and a freeport can go into operation. It is useful therefore to have a date certain for the operation of the policy.
The hon. Gentleman asked whether the 60% rule discriminates against people who work flexibly. It is important to understand that this is a place-based policy—that is to say, it is a policy designed to focus and operate from a very specific location. To meet the objective of encouraging new investment and economic activity, and to maintain the focus and the targeting of the policy overall, it is important to restrict reliefs to those whose jobs are based in a freeport tax site. The Government will do that by making it a requirement that eligible employees spend at least 60% of their working time in a tax site.
Opening up that relief to employees who did not meet that requirement would undermine the policy aim of supporting employment in the freeport area, because it would mean that employers could effectively claim relief on employees carrying out work outside a freeport area—indeed, in an area that may not be related to the freeport at all.
The hon. Gentleman raised the question about TUPE-ed employments. These are not regarded as new employments, and the employment is transferred but is not regarded as new, and therefore the employee would not be eligible for the reliefs offered in the Bill.
I turn now to the questions raised by the Scottish National party in the speech made by the hon. Member for Gordon. It is important to note that the SNP’s amendment would place additional eligibility criteria—with respect to employment rights, equalities and the environment —in the Bill. Of course, those would add complexity to what is a well-established and rapidly moving process, and they would create potential delay. For that reason, it is not an attractive amendment.
The Government are committed to reducing carbon emissions, which is why this country was the first major economy to implement a legally binding net zero greenhouse gas emissions target by 2050. Of course, it remains open to the Scottish Government to impose higher standards if they wish, either on freeports or on other ports that exist in Scotland, since environmental policy is a devolved area. The hon. Gentleman may want to take up his concern with the Scottish Government if he wishes to see higher standards in ports in Scotland. From the Government’s standpoint, we are also committed to supporting those in employment, which is why we introduced the national living wage in 2016. This month, workers have seen a pay increase to £8.91 an hour, which is a 2.2% pay rise.
The hon. Gentleman raises an important point about ensuring that goods passing through freeports should in no way be the products of slave labour. This is a global problem, and employers and freeports will need to meet the same high regulatory standards on slave labour that other businesses in the UK meet. That is to say that they must abide by the landmark transparency and supply chain provision in the Modern Slavery Act 2015, by which the UK became the first country in the world to require businesses to report on the steps they have taken to tackle modern slavery in their operations and global supply chains. With that said, I hope hon. Members will withdraw their new clauses and amendments.
Richard Thomson
I thank the Minister for his response. One of the things that we hear most often is that any amendment that may be desirable may add complexity, which seems to be a standard phrase that gets thrown in whenever the Government do not wish to proceed with something and cannot think of a better argument.
On the basis of what I have heard, I am unpersuaded that the suite of benefits and reliefs that are offered should make it easier to help achieve those objectives. I take what the Minister said about the obligations that already exist under the Modern Slavery Act 2015, but I still think that more can be done to embed the expectations that we have, and not just in Scotland. I take the Minister’s point that the Scottish Government have a certain latitude in this area, but the point is to ensure that the provision applies all over and that there is some kind of equality. On that basis, I will press the amendment to a vote.
Question put, That the amendment be made.
Jesse Norman
If I may, I will explain a little of the background to clause 4. In addition to the powers taken in clause 3 to amend freeport conditions if the relief is found to be subject to abuse, clause 4 excludes employers that arrange their affairs with the aim of benefiting from the relief where that arrangement is contrary to the policy intent. Clause 4 works by removing eligibility for the relief if the conditions set out in clause 2 are met only as a result of an avoidance arrangement.
The Government are aware that the incentives of the freeport package potentially lend themselves to businesses taking steps to organise their affairs so that they can benefit from the relief; that is the design of the policy. Therefore, the Government have taken a similar approach to that in section 14 of the Finance Act 2021, which exempts employers if their arrangement is contrary to the policy intent of the relief and specifically in relation to the avoidance of tax.
An example of where the Government would expect HMRC to reject a claim for this relief would be where an employer structures their employment contracts so that a workforce can easily be dismissed after three years with the sole purpose of hiring new staff so that they can benefit from another three years of relief, or if an employer were to fire their employees and rehire the exact same posts with new employees.
The Government want the freeports to thrive, to boost local investment and to be a hotbed of innovation. Clause 4 provides an invaluable backstop and gives HMRC the ability to recover any relief that has been claimed as a result of contrived arrangements. I urge that clause 4 stand part of the Bill.
James Murray
As we have heard, clause 4 states that the relief for freeport employers cannot be claimed if an avoidance arrangement has been used, and it defines what is meant by an avoidance arrangement. We welcome any steps to prevent employers from taking advantage of the relief in cases in which avoidance arrangements are used. As this clause sets out, avoidance arrangements are those that are, or include steps that are
“contrived, abnormal or lacking a genuine commercial purpose, or”
that circumvent
“the intended limits of the application of section 1 or otherwise”
exploit
“shortcomings in that section or in provision made in or under sections 2 and 3.”
I would be grateful if the Minister could confirm for us what extra resource, if any, has been made available to HMRC to ensure that it can identify and take action against employers in a freeport who have used avoidance arrangements. I would also like to understand what the Bill suggests about wider access to tax reliefs that arise from avoidance arrangements. I would be grateful if the Minister could offer some clarity on the wider situation.
This clause makes it clear that the tax relief in clause 1
“does not apply if it would otherwise apply only as a result of avoidance arrangements.”
Perhaps the Minister could help me to understand this by explaining whether, generally, companies are still able to claim tax reliefs if they arise only from avoidance arrangements—that is to say, arrangements that are contrived, abnormal or lacking a genuine commercial purpose. Although we of course support this relief being withheld in cases in which it can apply only as a result of avoidance arrangements, I would appreciate an explanation from the Minister about why this specific measure is needed and why the relief would not be withheld by existing provisions in law if it was deemed to have arisen from avoidance arrangements.
Jesse Norman
I thank the hon. Gentleman for his questions. Of course, HMRC is taking a close interest in freeports and has been closely involved in the policy design in order to minimise any potential for avoidance and any other failure to target the policy as we would desire. It is well staffed to address all the concerns that are raised. Of course, its staffing is flexible and also is something that reflects periodic conversations with the Treasury during the spending review processes and otherwise in order to ensure that it is as effective as possible—and it is highly effective, as is shown by the fact that the tax gap in this country is now lower than it ever has been. It is significantly lower than it was in 2005, for example—it is something like 40% lower than it was under that Government. That important achievement puts things into perspective.
Jesse Norman
Clause 5 confirms the Government’s commitment to provide a freeport NICs relief in Northern Ireland. It gives the Treasury the power to legislate for the detail of the freeport NICs relief in Northern Ireland in secondary legislation. The power is limited in so far as the relief must be similar to or correspond to that available in Great Britain.
In Northern Ireland, the specific design of the relief will have to comply with European Union rules on the provision of state aid, due to the requirements of the Northern Ireland protocol. It will be developed and agreed through a process of engagement with the Northern Ireland Executive on the detail of the wider freeports offer in Northern Ireland.
This Bill legislates for a power to allow the Government to set out the detail of the employer NICs relief in Northern Ireland in secondary legislation once engagement with the Northern Ireland Executive is complete. These regulations will be laid at the earliest possible opportunity once negotiations with the Northern Ireland Executive have given a clear indication of consensus on the tax offer.
Given the timing of the Bill, I trust Members will see that this approach is sensible, and ensures all stakeholders are fully engaged. I commend the clause to the Committee.
James Murray
Clause 5 gives the Treasury a regulation-making power to provide for a freeport secondary class 1 NICs relief in Northern Ireland. On Second Reading, the Minister assured us that, although the measures in clauses 1 to 4 relate to Great Britain, it is the Government’s intention to legislate for this relief in Northern Ireland as soon as practicable. He drew attention to the fact the Bill provides the Government with the power to set out the detail of employer NIC relief in Northern Ireland in secondary legislation once engagement with the Northern Ireland Executive is complete.
I note that the House of Commons International Trade Committee’s recent report on UK freeports, published on 20 April, discussed the issue of freeports in Northern Ireland, and in particular their relationships with the Northern Ireland protocol. It quotes Professor Catherine Barnard of the University of Cambridge, who said:
“under the Northern Ireland Protocol the EU state aid regime applies, certainly to Northern Ireland where there is an effect on trade between Northern Ireland and the rest of the EU. You should also bear in mind that the protocol is probably wide enough to catch any freeport legislation that applies throughout the United Kingdom.”
The Chief Secretary to the Treasury acknowledged to the Committee that the freeport offer would have to be adapted to comply with the UK’s obligations under the Northern Ireland protocol. Acknowledging that, the Committee’s report concluded that it is clear the Northern Ireland protocol will impact the terms under which a freeport can be established in Northern Ireland. It recommended that the Government should set out in their response to the report their view on how the freeports model will need to be adapted in Northern Ireland to comply with the terms of the protocol. I would be grateful if the Minister could give us an update on the Treasury’s thinking in that regard.
I would also like to clarify a comment in the memorandum from the Treasury to the Delegated Powers and Regulatory Reform Committee on this Bill. On clause 5, the memorandum says:
“The Government’s intention is that the employer NICs relief for Freeports employers is in place by 6 April 2022 throughout the UK.”
I would be grateful if the Minister could confirm whether that means it is the Government’s intention, as set out in the memorandum, for a freeport to be established in all four nations of the UK by 6 April 2022.
Jesse Norman
I thank the hon. Gentleman for his questions. He asked me to update the Committee on the detail of the discussions with the Northern Ireland Executive on a freeport and noted the comments made by the Select Committee. I am afraid I am not in a position to do that. These things are subject to current discussion and negotiation. It is a matter of some complexity and I do not think it would be appropriate to do so. I assure him that once matters have reached a conclusion and a consensus, Parliament will of course be given a full picture of what has taken place and I am sure colleagues will take a great interest.
He also asked a question about timing. For the reasons I have indicated, I do not think it would be prudent to specify a time by which a particular freeport, either one in process at the moment in England or one in the devolved Administrations, will be up and running. That is something for the Governments concerned and for the freeport operators and there will of course be processes of further designation that will need to be gone through. I assure him that it is certainly the UK Government’s intention that this should be done as rapidly and effectively as possible, across the whole of the UK.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill
Clause 6
Zero-rate contributions for armed forces veterans
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause 7 stand part.
New clause 3—NIC relief for employers of veterans: review of the tax year of relief claims—
(1) The Government must conduct a review of how many veterans have been employed in 2021-22 in jobs for which employers have accessed the National Insurance contributions relief provided for under section 6 of this Act.
(2) The review must assess the impact on decisions around job creation of the requirement that the relief must be claimed retrospectively for 2021-22 rather than being available in real time.
(3) The review must be commenced by 30 April 2022.
(4) The review must be published and laid before Parliament by 31 July 2022.
This new clause would assess the impact of NIC relief for employers of veterans being claimable retrospectively for 2021-22, rather than in real-time.
New clause 4—NIC relief for employers of veterans: review of the period of NIC relief—
(1) The Government must conduct a review of how many veterans have been employed in jobs for which employers have accessed the National Insurance contributions relief provided for under section 6 of this Act.
(2) The review must assess the impact on decisions about the creation of jobs for veterans of the relief being available for earnings paid over a one-year period rather than a three-year period.
(3) A review must be conducted for each of the financial years 2021-22, 2022-23, and 2023-24.
(4) Each review under subsection (3) must commence within 30 days of the end of the relevant financial year.
(5) Each review under subsection (3) must be published and laid before Parliament within three months of its commencement.
This new clause will require the Government to evaluate the impact of the NIC relief for employers of veterans being available only for one year rather than three years.
Jesse Norman
We have considered the clauses concerning the zero-rate contributions for employees at freeport sites. I turn now to the second aspect of the Bill—the clauses on zero-rate contributions for armed forces veterans, starting with clause 6.
As the Committee will recall, the Government made a manifesto commitment to support ex-service personnel in their attempts to work to secure stable and fulfilling employment. Clauses 6 and 7 honour that commitment and provide employers with a zero rate of national insurance contributions on the earnings of qualifying veterans.
The Chancellor announced that policy at the spring Budget in 2020 and launched a policy consultation shortly after. The Government received 37 written responses from a variety of stakeholders and a response to that consultation was published on 11 January 2021. That response document outlined the final policy design. On 11 January 2021, the Government also published draft clauses for a technical consultation, which closed on 8 March 2021. Thus, the measure has been fully and effectively consulted upon, tested with stakeholders and debated by Parliament. It should be seen in that light.
Clause 6 introduces a zero rate of secondary class 1 NICs when the conditions in clause 7 are met. The relief can be applied on earnings up to the upper secondary threshold. Earnings above that threshold will be liable to the standard rates of NICs.
The relief will be available initially for three years. For the tax years 2022-23 and 2023-24, employers will have immediate access to the relief. For earnings in the 2021-22 tax year, employers will be able to claim the relief from 2022 onwards. The Government have sought to introduce this policy as quickly as possible, but practical and, in particular, IT considerations have meant that claims for earnings in the 2021-22 tax year will need to be at year end. That does not affect the amount of relief that an employer is able to receive.
The Government are keen to understand the effectiveness of the relief and will review the impact before deciding whether to extend it. Clause 6 provides the Treasury with the power to add additional years.
Clause 7 sets out the conditions that need to be met to allow an employer of a veteran to qualify for the zero rate that clause 6 provides. To qualify as a veteran for the relief, an individual needs to have completed at least one day of basic training in the regular forces. An employer can claim the relief for the first 12 months of a veteran’s first civilian employment since leaving the armed forces. The 12-month period starts on the first day of the veteran’s first day of civilian employment and ends 12 months later. Any employment in that period will qualify for this relief, which means that a veteran will not use up access to this relief if they take on a temporary role immediately after leaving the armed forces.
The relief will be available on the earnings of qualifying veterans from April 2021. Clause 7 also provides that a veteran can commence their first civilian employment before April 2021 and still qualify for the remaining period. Therefore, the 12-month period will begin on the first day the veteran took up their first employment and the relief will be made available only from 6 April 2021 for the remainder of that 12-month period.
Opposition new clauses 3 and 4 ask the Government to report on the impact of claiming the relief retrospectively and the impact of providing the relief for one year, rather than three. I shall explain why they are unnecessary. First, most of these issues were considered during the detailed consultation, which I have described. In addition, the Government have already committed to reviewing the measures and will, of course, be transparent about their expected impact. The policy costing for the measure and the underlying analysis were signed off and certified by the independent Office for Budget Responsibility, and the methodology was set out in the Budget policy costing document. As I say, the Government are committed to keeping the measure under review as new information becomes available. As part of the review process, HMRC and HM Treasury will speak to stakeholders to gauge their views on how the policy is operating.
Clause 6 will support veterans and help them to find stable and fulfilling employment, and it will provide employers with up to £5,500 in savings. I hope the Committee will agree to clauses 6 and 7 standing part of the Bill, and that the new clauses will not be pressed.
James Murray
Clauses 6 and 7 introduce an important relief, designed to help service personnel leaving the armed forces to get back into work. As I made clear on Second Reading, we believe that this is a vital issue. Veterans deserve the Government’s full support as they seek civilian employment after their service to our country. It is crucial to make sure that all veterans get the support they need.
Clause 6 sets out the detail of the relief. It provides for a 0% rate of secondary class 1 national insurance contributions up to an upper secondary threshold for the tax years 2022-23 and 2023-24. Earnings above the upper secondary threshold will be liable to secondary class 1 NICs at the secondary percentage, currently 13.8%. It also specifies that the relief is available for the 2021-22 tax year retrospectively. In practice, that means that employers need to pay secondary class 1 NICs as if the relief did not apply; then, from April 2022, they can claim the relief retrospectively for the earnings in 2021-22. The relief described by clause 6 applies if the veteran conditions in clause 7 are met. The conditions include that to qualify for the relief the earner is required to have served for at least one day in the regular forces, and that the relief is available for one year, beginning on the earner’s first day of civilian employment after leaving the armed forces.
On Second Reading, I asked Ministers to explain why the employer’s relief for veterans is for 12 months, which is much less than the relief for employers in freeports, which is 36 months. In her response, the Exchequer Secretary said:
“The answer is that the relief provides employers with up to £5,500 in savings per veteran that they employ. The aim of that policy is to support veterans’ transition into civilian life through encouraging employers to hire veterans.”—[Official Report, 14 June 2021; Vol. 697, c. 70.]
That did not address my question about why the Government had chosen to make the relief for veterans’ employers available for one year, rather than any longer; in particular, why not for three years, in line with the relief for freeport employers, which the Bill also introduces. That is why we wanted to raise the matter again, and why we tabled new clause 4, to address the impact of the Government’s decision.
New clause 4 would require the Government to conduct a review of how many veterans had been employed in jobs for which employers accessed the national insurance contributions relief provided under clause 6. The review would have to assess the impact on decisions on the creation of jobs for veterans of the relief being available for earnings paid over a one-year period rather than a three-year period. I would be grateful if the Minister agreed to undertake the review. If he does not, perhaps he will explain in greater detail why the Government have chosen a one-year period for veterans’ employers, rather than the three years for freeport employers.
New clause 3 is about enabling us to understand the impact of the Government’s reluctance to make the relief claimable in real time for 2021-22. As the Chartered Institute of Taxation sets out, it seems that the policy intention is that the relief will be available from 6 April 2021, although employers will need to pay the secondary class 1 NICs on the earnings of eligible veterans for the 2021-22 tax year, then claim them back retrospectively in April 2022. From the 2022-23 tax year onward, employers will be able to claim the relief in real time through their PAYE declarations.
The Chartered Institute of Taxation reasonably questioned why employers cannot self-serve the relief for 2021-22, once the legislation has been passed, especially given the challenging circumstances of the pandemic and the cash-flow implications. The institute asks whether HMRC could be permitted to exercise its discretion and to permit employers to make real-time claims for 2021-22 where their payroll software provides for suitable identification of eligible veterans.
Jesse Norman
I thank the hon. Gentleman for his questions. He repeated the question from Second Reading of why the measure is for one year, contrasting it with the freeports measures, which are for three years. The Exchequer Secretary was absolutely right, but it is important for me to add more colour.
The freeports measure is set at a lower upper secondary threshold, but for a longer period, because the goal is to bring people into an environment that has already been greatly supported by taxpayers, but to create circumstances in which they can have long-term secure employment, in particular with all the employment rights that come with more durable employment. The NICs relief for veterans is at a higher level for a shorter period, because the goal is to support a very specific process of transition, which veterans have as they come out of the armed forces.
Many people in the room have constituencies in which there are veterans or serving armed forces personnel, so they will appreciate the importance of the measure. Veterans are extremely skilled individuals who have extraordinary life experience, but there is often that process of transition. Therefore, the more effective approach is to provide more support for a shorter period to assist that transition in as flexible a way as possible.
Liz Twist (Blaydon) (Lab)
I understand the concept of the transition, but does the Minister not share my concern that it might go against the grain of what he is trying to do if we were to find that, after a period of one year of having the national insurance relief, people were out of employment? The proposal to look over a longer period would be beneficial to veterans in maintaining long-term employment.
Jesse Norman
I fully understand the concern of the hon. Lady, and precisely because the Government have been concerned about transition, we have introduced the relief. If it were the case that veterans still had a serious problem of finding secure and stable employment, of course that would be a matter that the Government would wish to reflect on and consider. I thank her for raising it.
To go to the second point raised by the hon. Member for Ealing North, he asked about the timing and the issues of real-time payments that the Bill contemplates. I understand the concern, in particular at this moment of pandemic when the Government are seeking to protect and support the cash flow of businesses and have done so across a vast number of them, across the whole of the United Kingdom, in many different forms. The Committee is aware of that.
The hon. Gentleman asked if we would look at that. Of course, I am happy to consider the matter further and to ask HMRC to consider it, but as he will recall, the matter has been given extensive consultation and internal discussion, and the IT and other problems that I described are not ones that can be wished away.
Sarah Owen (Luton North) (Lab)
When it comes to veterans’ national insurance contributions relief, I really feel that it needs to be for much longer than a year, for some of the reasons that the Minister has just highlighted. The cuts to 10,000 armed forces personnel come at a time when people are losing their jobs due to the economic pressures from the pandemic, and it seems very odd to say that we are looking at a long-term solution yet giving armed forces personnel the security of only one year.
Jesse Norman
I thank the hon. Lady for her question. I would repeat the points that I made earlier, which is to say that this is about managing a process of transition. The process of transition is one that has a beginning and an end. The key thing is to offer genuine support at a moment when a veteran needs it as they come out of the armed forces and go into employment, and to design that flexibly. That is what we have done. It has been extensively consulted on throughout a process with a series of stages, which have taken place during the pandemic and in which colleagues and wider stakeholders have been well sighted. It reflects the shared and calibrated understanding, but of course we recognise the concern that colleagues have raised, and we will continue to reflect on this policy, as we will on other tax policies.
Jesse Norman
No, I think we have had quite enough discussion of this topic. If the hon. Lady is going to raise a new point, of course I am happy to take the question.
Mrs Lewell-Buck
I am. The Minister says that he is confident about the argument he is making, and that the Government believe they are on the right track. With these new clauses, all the Opposition are asking the Government to do is evaluate and assess the decisions that they have made. Why will the Minister not do that, if he is confident about what they are doing?
Jesse Norman
As I have explained, we already have in place processes of evaluation and assessment. We will be following them, and this reflects an extensive process. It is lovely to see the Labour party waking up at last after its long slumbers, but the question that the hon. Lady raises is not, in fact, a new question; it is a reiteration of the same question, so I am going to stick with the answers I have already given.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clause 7 ordered to stand part of the Bill.
Clause 8
Upper secondary threshold for earnings
Question proposed, That the clause stand part of the Bill.
Jesse Norman
I do apologise. We wait in expectancy and hope.
Clause 8 contains a regulation that would allow the Treasury to set for every tax year a freeport upper secondary threshold and a veterans upper secondary threshold over which the secondary percentage, rather than the zero secondary percentage, would apply. Different upper secondary thresholds may be set for each measure. The freeports bidding prospectus confirmed that the freeports UST would be set at £25,000 for the 2022-23 tax year. The veterans consultation document confirmed that the veterans UST would be £50,270 for the 2021-22 tax year.
On Second Reading, a question was asked about the freeport UST being lower than that for veterans. We have touched on it already, but let me come back to it. Unlike other NICs reliefs that are available to employers generally, businesses operating in a freeport are likely to be able to claim the refund for almost all their new hires. That is the basis on which the upper secondary threshold has been set, in the context of the wider generosity that has been given. Employers will still be able to claim up to approximately £6,500 of relief on the salaries of employees earning more than that. The clause also provides that regulations may specify that the veterans UST is set retrospectively, and that is for reasons that we have described and discussed.
I turn now to clause 9, which contains a consequential amendment in relation to the apprentice levy that is calculated by reference to employers’ annual pay bill. It amends section 100 of the Finance Act 2016 to ensure that earnings that are liable for the freeport and veterans zero rate of secondary class 1 NICs are still considered when calculating an employer’s annual pay bill. This approach is consistent with other employees’ NICs reliefs, such as the under-21 and under-23 apprentice reliefs.
James Murray
Clauses 8 and 9, which were discussed with earlier clauses, allow the Treasury to set an upper secondary threshold for secondary class 1 NICs specifically in relation to armed forces veterans and freeport earners every tax year. The Bill will therefore allow different thresholds to be set for veterans and freeport employees, and for those thresholds to be different from the thresholds that apply to under-21s and apprentices.
We welcome the fact that the Minister confirmed on Second Reading that the upper secondary threshold for veterans will be £50,270 in a veteran’s first full year of civilian employment. After the Minister’s explanation, however, I remain unconvinced by his argument for setting the threshold for employers in freeports below the average wage in freeport areas, as we discussed at length during debate on earlier clauses. If the Minister has had time to think further about his argument, I would welcome further explanation in his response. If not, I will leave my remarks there.
Jesse Norman
No, I have nothing to add. We have already discussed this at some length.
Question put and agreed to.
Clause 8 accordingly ordered to stand part of the Bill.
Clause 9 ordered to stand part of the Bill.
Clause 10
Treatment of self-isolation support scheme payments
Question proposed, That the clause stand part of the Bill.
Jesse Norman
It may help the Committee if I start by explaining some of the background to clause 10. We are making good progress, and we move now to the treatment of self-isolation support scheme payments in respect of contributions paid by the self-employed.
In response to the coronavirus pandemic, the Government announced last September the launch of a £500 support payment in England for low-income individuals who had been told to self-isolate but who could not work from home and would lose income as a result. The Scottish and Welsh Governments announced similar schemes shortly after that. To ensure that those payments, which are provided by local authorities, would not be subject to employee and employer class 1 and class 1A NICs, the Government introduced secondary legislation to exempt payments under the support schemes from employee and employer class 1 and class 1A NICs.
Clause 10 is intended to extend that exemption to the self-employed and retrospectively exempts Test and Trace support payments from class 2 and class 4 NICs for the 2020-21 tax year. The clause also enables the Government to ensure, through regulations, that future Test and Trace support payments will not be included in profits liable to class 2 and class 4 NICs.
Jesse Norman
The hon. Gentleman asks why it was not exempted earlier; the Exchequer Secretary was absolutely right that it is a quirk of our tax system that regulations should be used to exempt national insurance contributions on the employment side, but not these ones. I do not have the date that he describes at hand, and I am happy to write to him on that. It has always been the Government’s intention that the self-employed should benefit from that, as one would expect, given the nature of national insurance contributions and the overall treatment of employment and self-employment.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11
Disclosure of contributions avoidance arrangements
Question proposed, That the clause stand part of the Bill.
Jesse Norman
Clause 11 widens the existing power in the Social Security Administration Act 1992 to make amendments to the disclosure of tax avoidance scheme regime known as DOTAS, which I mentioned earlier. The changes enable HMRC to obtain information and documents much earlier for avoidance schemes that HMRC suspect should have been notified to them but have not been disclosed. The changes will allow HMRC to issue a notice to anyone they reasonably suspect of being a promoter or other supplier involved in NICs tax avoidance schemes. It would require the provision of all documents and information that relate to the schemes in question. The amendments will ensure that regulations can be made mirroring the changes to the DOTAS procedures that are included in the Finance Act 2021.
The changes here are necessary to satisfy HMRC that a NICs scheme is not notifiable. If HMRC are not satisfied, they would be able to issue a scheme reference number, or SRN. DOTAS was introduced in 2004 and seeks to provide HMRC with early information about new tax avoidance schemes, how they work and those who use them. The equivalent regime for VAT and other indirect taxes, known by the unattractive label of DASVOIT—disclosure of avoidance schemes for VAT and other indirect taxes—was introduced in 2017.
Currently, when avoidance promoters fail to meet their DOTAS obligations, it can take HMRC a considerable period of time to challenge that failure, often years. Throughout that delay period, there is no disincentive to promoters continuing to promote their schemes, meaning that taxpayers may remain unaware of the risks they face and could end up with large tax bills.
It is appropriate that we should continue to act to protect taxpayers and discourage such behaviour from promoters where they involve NICS. The clause provides that future modifications to part 7 of the Finance Act 2004—Disclosure of Tax Avoidance Schemes—can be applied or modified so that they apply to NICs without the need for primary NICs legislation. That will enable changes to be made efficiently and effectively, with the minimum of separation in time, to ensure the rules continue to move in step. It is usual practice where an existing tax rule is extended to NICs, and I hope the Committee will agree that it is appropriate to have that in place.
The DOTAS regime provides HMRC with important early information, on the basis of which we can make interventions. The prompt disclosure to HMRC of proposals and arrangements that bear the hallmarks of tax avoidance will allow them to be fully considered and tackled much earlier and more effectively, as appropriate.
James Murray
Clause 11 widens existing regulation-making powers so that regulations can be made for national insurance, mirroring the amendments to the disclosure of tax avoidance schemes—DOTAS—procedures that are included in the Finance Act 2021. This measure, and its counterpart in the Finance Act, means that when HMRC suspects someone has failed to disclose arrangements or proposed arrangements that should have been notified to them under DOTAS, it may issue a notice to anyone it suspects of being a promoter or other supplier involved in the supply of the arrangements. The notice explains that if the person is unable to satisfy HMRC that the arrangements are not disclosable, HMRC may allocate a scheme reference number to the arrangements.
As I made clear on Second Reading, we welcome any measures that help HMRC to track tax avoidance schemes. During the debate, I drew Ministers’ attention to a point made by the Chartered Institute of Taxation: that it believes that there is a hard core of between 20 and 30 promoters, identified by HMRC, who clearly do not play by the rules. I asked:
“Do Ministers recognise that number? If so, I would be grateful if the Exchequer Secretary set out what goals HMRC has to clamp down on those 20 to 30 hard-core promoters.”—[Official Report, 14 June 2021; Vol. 697, c. 53.]
Unfortunately, the Exchequer Secretary did not address those questions at the end of Second Reading, so I am glad to have the chance today to raise them again for the Financial Secretary to address. Would he comment on whether he recognises 20 to 30 as the number of hardcore promoters, and on whether there are any targets with dates by which Ministers expect the number of hardcore promoters at large to fall substantially?
Jesse Norman
Again, I thank the hon. Gentleman for his question. It is HMRC’s view—as he says that it is the Chartered Institute of Taxation’s view—that some 20 or 30 promoters are in the market at present. HMRC are vigorously applying themselves to curtailing that activity and to supporting and protecting taxpayers. The Bill will give them an important additional tool with which to do that. By their nature, the promotion of tax avoidance schemes is constantly changing and evolving; promoters are highly resourceful in seeking new ways to sidestep responsibilities and avoid the attention of HMRC. That is one reason why the earlier interventions and the greater flexibility that we have provided are so important.
For that reason, I do not think that it would be prudent to make an estimate or assessment of what the appropriate number of promoters is or could be. The number that we want, obviously, is zero: we would like to see no promotion of tax avoidance schemes in the market, because it is a reprehensible and disgraceful practice.
To reassure the hon. Gentleman and other members of the Committee, I will say that over the past six years, more than 20 promoters have left the market. That is a significant achievement that reflects the decisions that have been made. As I have also indicated, there has been a substantial reduction more widely in the overall tax gap, which bears testimony to HMRC’s wider effective prosecution and collection of unpaid tax.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Clause 12
Regulations
Question proposed, That the clause stand part of the Bill.
Jesse Norman
Clause 12 specifies how regulations are to be made under the Act and the parliamentary procedure that will apply to them. I ask the Committee to agree that it stand part of the Bill.
James Murray
As we turn to clause 12, which provides for regulations under the Bill to be made by statutory instrument, I would like to discuss which regulations can be decided by the negative and the affirmative procedures. It might be helpful to focus on clause 3(3), which is mentioned in clause 12.
Clause 3 gives the Treasury regulation-making powers to
“provide for circumstances in which a freeport condition is to be treated as being met.”
That has the effect of making the relief available in circumstances in which it would not otherwise be. We note that clause 3 also gives the Government extensive powers to
“amend, repeal or otherwise modify”
the relief. Although it will always be easier for the Government to amend legislation by way of regulations, we recognise the concerns that the Chartered Institute of Taxation has articulated that the powers to make those changes are extensive. There may well need to be flexibility to allow the finer detail of legislation to be amended, but there is a strong argument that any fundamental changes should be subject to full consultation and scrutiny.
I would be grateful if the Financial Secretary explained why he considers that the powers granted in clause 12, with effect on clause 3, to make decisions by way of regulations are proportionate. Does he agree that the clause gives the Government more powers than are desirable to change key elements of the policy by regulations? In particular, given that regulations under clause 3(3), which relate to freeport conditions, are subject to the affirmative procedure, will he explain why regulations under clause 3(2), which also relate to freeport conditions, are subject to the negative procedure instead?
Jesse Norman
I thank the hon. Gentleman. Clause 12(2) specifies that regulations made under the Act are subject to the negative procedure, except for clause 3(3), which relates to the power conferred on the Treasury to add, remove or alter the qualifying conditions for the freeport relief; clause 5, which relates to the power conferred on the Treasury to apply for a freeport secondary class NICs relief in Northern Ireland; and clause 8, which relates to the power conferred on the Treasury to specify the amounts of veterans’ and freeports’ upper secondary threshold. All three are subject to the affirmative procedure.
As the hon. Gentleman will be aware, the Treasury takes extremely seriously the question of what are its appropriate powers, and there has been considerable discussion and indeed parliamentary engagement on what the appropriate powers for HMRC should be in each case. In this case, the normal procedure has been followed, which is to try to recognise the public policy intent and overall public benefit of a more flexible arrangement, but also to respect the parliamentary procedure that where a measure includes new burdens or new taxes, or makes material changes of those kinds, they should be subject to an enhanced level of scrutiny by Parliament, provided by the affirmative procedure. That is the approach that we have taken.
Question put and agreed to.
Clause 12 accordingly ordered to stand part of the Bill.
Clause 13
Interpretation etc
Question proposed, That the clause stand part of the Bill.
James Murray
I do not have any specific concerns to raise in relation to the interpretation or the short title. May I take this opportunity, as it is the final clause under consideration in Committee, to thank my hon. Friends for joining me on the Committee, to thank you, Ms Nokes, as Chair, and to give special thanks to the Clerks, the Library and the Chartered Institute of Taxation for all their advice during the passage of the Bill so far?
Jesse Norman
If I may say so in a similar spirit, as I may not have the chance to do so after the conclusion of deliberations on the final provisions, let me also offer my thanks to you, Ms Nokes, to the Clerks, to my colleagues and also to the officials at the Treasury and HMRC for the work that they have done to prepare the Bill.
Question put and agreed to.
Clause 13 accordingly ordered to stand part of the Bill.
Clause 14 ordered to stand part of the Bill.
New Clause 6
Zero-rate contributions for employees of green manufacturing companies
(1) This section applies where—
(a) a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) of the 1992 Act in respect of earnings paid in a tax week in respect of an employment,
(b) the green manufacturing condition is met, and
(c) the employer (or, if different, the secondary contributor) elects that this section is to apply in relation to the contribution for the purposes of section 9(1) of the 1992 Act instead of section 9(1A) of that Act or section 1 of this Act.
(2) For the purposes of section 9(1) of whichever of the 1992 Acts would otherwise apply—
(a) the relevant percentage in respect of any earnings paid in the tax week up to or at the upper secondary threshold is 0%, and
(b) the relevant percentage in respect of any earnings paid in the tax week above that threshold is the secondary percentage.
(3) The upper secondary threshold (or the prescribed equivalent in relation to earners paid otherwise than weekly) is the amount specified in regulations under section 8.
(4) For the purposes of the 1992 Acts a person is still to be regarded as being liable to pay a secondary Class 1 contribution even if the amount of the contribution is £0 as a result of this section.
(5) The Treasury may by regulations make provision about cases in which subsection (2) is to be treated as applying in relation to contributions payable in respect of a tax week in a given tax year only when—
(a) that tax year has ended, and
(b) all contributions payable in respect of a tax week in that tax year have been paid.
—(Richard Thomson)
This new clause provides NIC relief for businesses in freeports dealing with green manufacturing products.
Brought up, and read the First time.
Richard Thomson
Okay. In that case, on new clauses 6 and 7, I simply seek to make the point that there is a strong appetite to find new ways to support the economy, especially in those sectors that can contribute to green recovery, beyond the covid recovery and into the future.
A key element in progressing that, along with the cost curve for new technologies, is driving competition and, through that, improvement. Providing exemptions on NICs and ensuring that they are targeted on businesses engaged solely in green manufacturing could do much to drive that innovation and improvement. That requires that incentives are targeted at enterprises that are engaged in green manufacturing and in driving that new green industrial revolution.
New clause 7 provides examples of two categories of products that clearly fall within that bracket, although there is certainly scope to expand beyond that, but I think that the principle stands. If that strategy is not to be achieved in that manner, it certainly should be achieved in other ways. I would welcome the Minister’s remarks on that. It is not my intention to push the new clause to a vote.
Jesse Norman
I thank the hon. Gentleman for his speech and his attention to the Bill. The new clauses tabled by the Scottish National party would create a new zero rate of secondary class 1 NICs for employers that are classed as “green manufacturing companies”, including those that produce wind turbines and electric vehicles. In considering such a measure, it is important for the Government to balance the different potential benefits and costs in a context that respects the requirement to manage public money and support public services.
A change to the tax system of this kind needs careful consideration and assessment of costs and benefits and goes far beyond what should be done via amendment in such a Bill. Designing a sector-focused relief is not straightforward and it adds complexity to the tax system. Having said that, the Government take supporting green manufacturing companies extremely seriously, and we have a raft of policies in place to do that. For example, since 2013, the Government have provided £150 million a year for the Aerospace Technology Institute, match-funded by industry to support the development of incremental improvements to existing aerospace technology, alongside zero-emission technology to protect and secure the sector. That includes £84.6 million of investment to develop zero-emission flights, and further support for other potential zero-emission aircraft concepts. There are many other areas, including support for the Advanced Propulsion Centre and the Faraday battery challenge, let alone all the work that has been done to subsidise the development of offshore wind, which attest to the importance the Government place on green manufacturing and green manufacturing jobs.
I encourage the Committee to reject the new clause, but I acknowledge that the Government fully share the policy intent.
Richard Thomson
On the basis of the Minister’s remarks, the principle stands, but on this occasion, I will not seek to progress by moving to a vote. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 8
Scottish Government Covid payments: exemption from primary Class 1 contributions
(1) A primary Class 1 contribution is not to be payable in respect of any Scottish Government Covid payment.
(2) For the purposes of subsection (1), a ‘Scottish Government Covid payment’ means a payment of £500 pro rata to any NHS Scotland or social care worker in accordance with the announcement made by the Scottish Government on 30 November 2020.”—(Richard Thomson.)
This new clause provides exemptions for Scottish Government Covid payments to social care workers.
Brought up, and read the First time.
Richard Thomson
I beg to move, That the clause be read a Second time.
As this will be my penultimate contribution, I would like to offer my thanks to the Clerks and everyone who has helped the proceedings to move so smoothly, through your chairmanship, Ms Nokes, which has helped considerably with that objective.
On Second Reading, I remarked on the unfairness that was caused by the Treasury’s refusing to exempt income tax on the thank-you payment that the Scottish Government made to health and social care workers. It was in the form of a £500 thank-you bonus to reflect how health and social care workers were valued for their contribution during the incredibly challenging period that we have been through. The full benefits of that payment have been put at risk by the UK Government’s ability to tax us. Contrary to a number of assertions, the Scottish Government do not have the ability to get round that, other than by paying far more than the £500. It would therefore be far better to have the exemption in place.
Although an exemption for the bonus would be welcome, we recognise that the majority of welfare employment powers reside with the UK Government. We therefore want to press the new clause to ensure that clarity is provided and that any future payments for health and social care workers can be exempt from national insurance contributions.
Jesse Norman
I thank the hon. Gentleman for his comments and, again, his attention to the Bill. The Government recognise, as he does, that covid-19 is the biggest threat the UK has faced socially, economically and in many other respects for many decades. Key workers, including social care workers and workers in the NHS, have demonstrated an astonishing commitment to keeping the public safe in the fight against the disease. The Government massively value and appreciate those contributions. However, in this case, although I understand where the hon. Member is coming from, the Government do not believe that the new clause is appropriate or necessary. We fully recognise the hon. Member’s concern, but we do not believe the new clause is the appropriate way to proceed.
Under long-standing rules, any payments made in connection with an employment are chargeable to income tax and national insurance contributions. They also count as income for the purposes of calculating entitlement to certain benefits. The £500 payments made by the Scottish Government to health and social care workers function as a top-up to wages. We therefore consider that those payments are taxable as earnings under normal rules, as I think has been recognised by the Welsh Government.
The UK Government have provided more than £5.9 billion of additional funding for the Scottish Government this year through the Barnett formula. If the intention of the Government in Scotland is for health and social care workers to benefit by at least £500, it remains open to them to gross up the payment to take into account the tax and NICs liabilities, as the Welsh Government have done.
Levelling-up Agenda
Jesse Norman Excerpts(3 years, 1 month ago)
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The Financial Secretary to the Treasury (Jesse Norman)
It is a pleasure to serve under your chairmanship, Sir Edward, as it was to serve under your predecessor, the right hon. Member for Basingstoke (Mrs Miller), when she was in the Chair. I thank her very much for stepping into the breach.
I congratulate my hon. Friend the Member for Isle of Wight (Bob Seely) on securing this debate. It is testimony to the importance of the issue and the breadth of the debate that he has created that so many colleagues have made interventions and speeches today—and very welcome they were, too. I am replying for the Government on behalf of the Exchequer Secretary.
My hon. Friend is right that this is a very important public issue. It has been the mission of this Government to seek to overcome geographical disparities—disparities of prosperity and of opportunity—and to do so through what we have called levelling up.
By and large, this has been a very good debate and generally good mannered. I think everyone would acknowledge that it has been a bit of a gallop, given the number of speeches, but that is testimony to the huge interest in the topic. I congratulate colleagues who have passed the conversational baton seamlessly from one to another on the vigorous and effective way in which they have put on the public record their own local concerns. I will talk a little about the wider agenda before turning to some of those contributions.
It is plain that the Government believe in the substance and the importance of levelling up. What does that mean? It will mean different things in different places, but the core idea is that everyone should have access to good jobs, good wages and good economic prospects, wherever they live, whether that be in Barnet, Birmingham, Bolton, Bristol or, indeed, Bembridge.
It is built into the energy of our society that at different parts of their lives many people will want to move to different parts of the country to seek work and opportunities, but some may not wish to do so and many will not. We want people to be able to take pride in their local areas and to see them as vibrant, exciting places to live their lives and build their livelihoods. That is at the heart of levelling up and that is why the Government announced a series of significant policy measures designed to begin a longer-term process of redressing geographical imbalances.
Those measures include, as has rightly been touched on, freeports, which are going to be an important catalyst for regional economic growth. We want them to be magnets for innovative businesses, to provide a platform to generate the greater prosperity that will revitalise each area, and to create great jobs and great economic growth.
At the Budget, the Government announced the locations of eight freeports across England, ranging from Teesside in the north-east, to the Solent, close to the constituency of my hon. Friend the Member for Isle of Wight. That is a potentially very significant intervention, but they are only one part of a wider picture, which is, of course, infrastructure.
Last year we published a national infrastructure strategy that contemplates £600 billion-worth of investment over the next few years—half from the private sector, half from the public sector. Very high levels of capital investment are already being made in many different areas up and down the country, including in roads, through the road investment strategy, in railway, through High Speed 2 and other works, and in many other modes of transport and activities. The transforming cities fund has done a huge amount to support cycling, walking and greener transport across the country.
That investment also includes the towns fund. One or two colleagues have been rather dismissive of the towns fund, and wrongly so. One cannot say that there has been inadequate transparency but then grumble when the details of the fund and the methodology by which the selections were made have been put on the internet for all to review or interrogate. The fund itself is turning out to be a remarkably effective and interesting way to build a holistic local platform for economic growth, because it is not something that can be dominated by local authorities. It requires voluntary and private sector leadership to work with local authorities and, in doing so, bring the best ideas to the table, build long-term pipelines, pump-primed with public money, that will, certainly in many cases, last for years. It is going to prove to have been a very important intervention.
It goes a long way, picking up the point made by the hon. Member for Westmorland and Lonsdale (Tim Farron) on the importance of supporting rural areas. I come from a rural area myself, in Herefordshire, and I am keenly aware of that. He will be aware that although many of the effects of covid will be, in some respects, negative, they will also be positive effects. People will move out of cities, often at earlier points in their lives, to conduct effective and successful careers, no longer fettered by geography as they might have been, adding new energy and vibrancy to areas that are already vibrant. That is another good thing, in many ways.
We are working on the creation of the new UK infrastructure bank, which will be an important intervention. We will announce its launch soon, but many details are already available for colleagues to look at on the internet. It is designed to act as a cornerstone investor for infrastructure projects, to partner with the private sector and local government to develop major infrastructure projects, with the twin goals of green growth and levelling up.
The bank will act across Government as a place to pool expertise, so that people can pick up the phone and get a cross-governmental view about how projects should be financed, which will itself be very important. It will prep and prepare important development work in sectors of green economic growth that we have not yet seen—for example, hydrogen for powering the next generation of transport or potentially for home heating, carbon capture and storage, and the like. About a third of the initial £12 billion in funding for the new UK infrastructure bank will be earmarked for local and mayoral authorities, which will make a huge difference. If we can, as we anticipate, then crowd in private sector investment, that will make a remarkable difference.
It is important not to talk about levelling up without mentioning some of the most important aspects of it, which are to do with skills and training. The Chamber will know about the work we have done on the lifetime skills guarantee, on employer-led skills retraining and on apprenticeships. They all point to a holistic approach, designed to tie skills and infrastructure together, with a local perspective that brings a fuller understanding of local needs to bear.
Bob Seely
I thank the Minister for his extensive response. That brings to the fore one of the problems here. When he stood up, he said he would answer to the Exchequer section or the economic section, but who is leading? How are Government going to deal with a coherent, integrated approach that brings in everything from landscape protection to stamp duty for second home owners, to the skills and education agenda, to immediate economic progress? Who is dealing with that?
Jesse Norman
Of course, my hon. Friend is right to point to this. In many cases, the core is going to be effective local leadership that brings the different elements together. As a Member of Parliament, he knows that the stronger towns fund has shown that energy can be brought in. For example, the Ministry of Housing, Communities and Local Government can have a view on the housing aspect of a stronger towns fund bid, and what expertise and expectation will be there. The same is true of other aspects of Government. It may be a bid with a heavy environmental component or a heavy transport component.
Government also need to be joined up. At the Treasury, I lead on the national infrastructure but on levelling up specifically it is the Exchequer Secretary to the Treasury, my hon. Friend the Member for Saffron Walden (Kemi Badenoch), who leads—she would be here under normal circumstances, but she is in Committee at the moment. However, she and I work closely on this issue, as my hon. Friend the Member for Isle of Wight would imagine.
I turn to some of the points that have been made. My hon. Friend the Member for Isle of Wight rightly highlighted aspects of his own bid, including East Cowes and Newport. I could not hear him talk about the development of the Isle of Wight without thinking about my own uncle Desmond, one of the founders of Britten-Norman, who designed the aircraft whose wings came off in “Spectre,” the James Bond movie, and that went skiing as a result, which was built on the Isle of Wight. Indeed, he was one of the developers of the first hovercraft, the Cushioncraft. I am well aware of the technology and the genius of the Islanders and the espoused Islanders, one of whom Desmond certainly was.
The hon. Member for Barnsley East (Stephanie Peacock) mentioned the importance of local authorities. She is right about that. They have been a very important part of stronger towns fund bids. It is quite interesting when local opinion is surveyed about the public services delivered locally. Whatever one may think about the local authority funding settlement, which was very generous in the past year and before that in many cases, it has not led to a perceived reduction in public services—quite the opposite. In many local areas, public services are regarded as having gone up in quality over the past 10 years.
My hon. Friend the Member for Waveney (Peter Aldous) talked about skills. He was absolutely right and I thank him for that. My right hon. Friend the Member for Basingstoke talked about the importance of women and gender equality. That was absolutely right and I salute what she said, because that is an important part of levelling up. There is some wonderful evidence from India, where they looked at the effect of women mayors and leaders in villages. It turns out that, based on the regressions that economists have done, women leaders in those contexts have been more co-operative, more effective and less prone to forms of corruption than their male alternatives. That is an important lesson that we will reflect on.
The hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) invited Ministers to bed and breakfast —a very fine offer that will receive deep consideration in the Treasury—for which I thank him very much indeed. My hon. Friend the Member for Somerton and Frome (David Warburton) reminded us that Stonehenge would never have been built if they had to drag the stones down the A303. I fully concur, having been more or less parked outside Stonehenge, as have many others.
My hon. Friend the Member for Stoke-on-Trent South (Jack Brereton) talked about the bid that he is putting in for the levelling-up fund. I congratulate him on that and encourage all Members to do that, because the levelling-up funding will be a very important national initiative. I have touched on the remarks of the hon. Member for Westmorland and Lonsdale. I am glad he mentioned cutting out the loophole on holiday lets, because that was important. I hope he also noticed the speed with which we acted on that, because the tax process is never an instant thing, but we have moved as quickly as we could, given the circumstances, to try to address the issue. Obviously, it has become particularly important in the context of covid.
Tim Farron
Once the announcement was made, they did act swiftly, but I first raised the issue with the then junior planning Minister, who is now the Chancellor of the Exchequer. It took quite a long time to get to the stage where they made the announcement, but I thank the Minister anyway.
Sir Edward Leigh (in the Chair)
Minister, could you please give the hon. Member for Isle of Wight (Bob Seely) a couple of minutes to make his closing remarks?
Jesse Norman
I will end in 26 seconds to allow my hon. Friend plenty of time to speak.
I want to engage quickly with the points made by Opposition Members. It is not paternalistic of the UK Government to wish to take a view and to support people up and down the country. It is not paternalistic of the UK Government to offer enormous support for the devolved Administrations on an agreed basis, as we have done in a time of crisis. It is non paternalistic for this country’s collective resilience to have seen Scotland through three periods of crisis in the last 15 years: the financial crisis of 2008, the fall of the oil price and most lately in covid, which might have had disastrous effects but for our collective resilience.
In answer to the hon. Member for Ealing North (James Murray) quickly, it is not appropriate for me to accuse another Member of Parliament of hypocrisy, but I remind him that this Government are raising corporation tax from 19% to 25%. On 24 February, he himself said, in relation to the Budget and the question of corporation tax, that
“we don’t want to see tax rises—this is not the time to do that”.
I do not think he is in any position to lecture the Government about corporation tax.
National Insurance Contributions Bill
Jesse Norman ExcerptsMonday 14th June 2021
(3 years, 1 month ago)
Commons ChamberRead Full debate National Insurance Contributions Act 2022 View all National Insurance Contributions Act 2022 Debates Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Jesse Norman)
I beg to move, That the Bill be now read a Second time.
The Bill before the House today is a short one, with just four measures: an employer’s national insurance contributions relief for employees in freeports; an employer’s NICs relief for employers of veterans; an exemption for Test and Trace support payments from self-employed NICs; and changes to the disclosure of tax avoidance schemes legislation with regard to national insurance contributions. The measures are all important, and I shall explain each of them in more detail.
I shall start with the employer’s NICs relief for employees in freeports. At the Budget, the Chancellor announced the locations of the first eight freeports. These sites, which range from Teesside to Tilbury, will become hubs for trade, innovation and commerce. They will attract new businesses and they will regenerate communities by creating jobs, boosting investment and spreading prosperity. Overall, freeports present an extraordinary opportunity to drive regional economic growth, and the Government want as many areas as possible to benefit.
An important part of the appeal of freeports for employers is undoubtedly the wide range and variety of tax reliefs that they provide. These include an enhanced 10% rate of structures and buildings allowance, an increased 100% capital allowance for companies investing in plant and machinery, and full relief from stamp duty on land or property purchases.
The employer’s NICs relief for workers in freeports contained in the Bill encourages employment while supporting regional growth. Under this measure, employers with premises in a freeport in Great Britain will be exempt from employer’s NICs on up to £25,000 of a new worker’s wages. This legislation applies to all new workers who spend 60% of their working time at a freeport tax site in the first three years of employment.
The relief will be available from April next year until at least April 2026. At that point, a sunset clause will require the Government to lay secondary legislation to extend the relief, if they wish, for up to a further five years to April 2031. Any decision to extend will only be taken upon review of the relief’s impact. However, even if the Government decided not to extend the relief, employers will be able to claim it for the full three years on new hires taken on before April 2026. While these measures relate to Great Britain, let me assure the House that it is the Government’s intention to legislate for this relief in Northern Ireland as soon as is practicable. Indeed, the Bill provides the Government with the power to set out the detail of employer NICs relief in Northern Ireland in secondary legislation once engagement with the Northern Ireland Executive is complete.
The second of our measures concerns NICs relief for employers of veterans. As colleagues will recall, this policy was announced at spring Budget 2020. It also fulfils a manifesto commitment to reduce employer NICs for a full year for every new employee who has left the armed forces. The House will know well that I am very closely connected to the astonishing work of special forces in Hereford, but the veterans of our armed forces across the United Kingdom give extraordinary service to this nation. We know that some face great challenges in obtaining secure and fulfilling employment, so it is only right that we should do all we can to change this situation. Under the Bill, employers will not pay employer NICs on earnings worth up to £50,270 in a veteran’s first full year of civilian employment. This amounts to a saving of up to £5,500 per hired veteran. I am sure that colleagues across the House will agree that this measure should give a real boost to veterans’ employment prospects, and should mean that many more businesses benefit from their often extraordinary skills and personal experience.
I now turn to the exemption of Test and Trace support payments from self-employed NICs. Last September, the Government announced the launch of a £500 support payment in England for low-income individuals who had been told to self-isolate but who could not work from home and would lose income as a result. Shortly afterwards, the Scottish and Welsh Governments announced similar schemes. These payments, which were provided by local authorities, would be subject to employee and employer class 1 and 1A and self-employed class 2 and class 4 NICs under long-standing legislation. Last year, however, the Government introduced secondary legislation to exempt payments under the support schemes from employee and employer class 1 and 1A NICs. The measure contained in the Bill will extend this exemption to the self-employed. It will ensure that these workers are treated consistently with their employed counterparts and do not have to pay NICs on support payments. The legislation will therefore retrospectively exempt Test and Trace support payments from class 2 and class 4 NICs for the 2020-21 tax year. It will also ensure that in future Test and Trace support payments will not be included in profit liable to class 2 and class 4 NICs.
The final measure in the Bill relates to changes in the disclosure of tax avoidance schemes—DOTAS—regime in relation to NICs. As colleagues will recall, the DOTAS legislation was introduced in 2004. It seeks to provide Her Majesty’s Revenue and Customs with early information about new tax avoidance schemes—information on how they work and about those who use them. The provisions in the Finance Act 2021 enhanced the operation of the DOTAS regime, and the Bill includes changes to an existing regulation-making power in the Social Security Administration Act 1992. This will ensure that HMRC can act decisively over a wider range of promoters and their supply chains if they fail to provide information on suspected avoidance schemes. It will also ensure that HMRC can warn taxpayers about suspected avoidance schemes at an earlier stage than at present. In addition, the Bill places responsibility for the obligations within DOTAS and for any failure to comply with them both on promoters of these schemes and their suppliers. I am sure all colleagues across the House will welcome these measures.
The Bill supports regional growth and, with it, the Government’s levelling-up agenda; boosts employment while helping to protect those on low incomes from the financial impacts of covid-19; and strengthens the Government’s powers to tackle promoters of avoidance schemes. For all those reasons, I commend it to the House.
James Murray
I was awaiting the hon. Gentleman’s intervention—I was definitely expecting it given the recent debates we have had in this place—and if he will wait just one moment, I will get on to setting out our position on freeports in more detail.
We were concerned at the recent Report stage of the Finance Bill that the Government themselves seemed to show a lack of certainty by voting against our simple amendment to the Finance Bill that would have seen the success of each individual freeport transparently evaluated. As I am sure the hon. Gentleman will remember, we wanted each freeport to be judged against the key tests of whether, across the country, they lead to any net increase in jobs, deliver improvements in training and skills for local residents, produce tangible transport and infrastructure improvements beyond the port itself and will be adequately protected against the risks of tax evasion, smuggling and criminal activity. It is disappointing that the Government voted against the transparent evaluation of their proposed freeports. Not only would this have enabled us to judge their success, but some of the factors we highlighted in our tests would in fact make investment in freeports more attractive to businesses.
Indeed, in response to the Government’s own consultation on freeports last year, many respondents argued that
“although tax incentives can be a significant driver behind businesses investing within an area, they were not usually the sole determinant.”
The Government’s summary of responses went on to explain:
“Some respondents also indicated the success of tax incentives was partially dependent on local factors, especially the quality of transport infrastructure and the skills and availability of local labour.”
As we consider the tax relief before us today, it is therefore important to remind the Government not to ignore the other aspects of the operation of freeports that may be key to their success.
On this tax relief, I would like to ask Ministers to address three specific points that arise from the Bill. First, while relief to employer’s national insurance contributions may be a reasonable part of a tax incentive package along with other tax incentive measures, it is hard to understand why this relief is conditional on employment not commencing until 6 April 2022. As the Chartered Institute of Taxation has pointed out, with freeports expected to start operating in 2021, that would surely hamper freeport employers this year and perhaps create perverse incentives about delaying the start of an employee’s work. I would be grateful if the Exchequer Secretary set out in her response the Government’s reasoning behind this condition on accessing the relief.
Secondly, clause 8 of the Bill enables the Government to set an upper secondary threshold for employer class 1 national insurance contributions specifically in relation to freeport employees—and, indeed, for armed forces veterans, which I will turn to shortly. In practice, this means that employers do not need to pay NICs until an employee’s earnings pass that threshold. We note that the upper secondary threshold for freeport employees will, according to a policy paper published by the Government on 12 May, be set at £25,000 for 2022-23. That is substantially less than the equivalent thresholds for employers’ relief for under-21s and apprentices, which is £50,270 in 2021-22. Just to be clear, this means that employers do not need to pay any NICs for under-21s and apprentices earning up to just over £50,000 a year, but they will have to pay contributions for freeport employees next year if they earn more than £25,000. It would be helpful to understand the Government’s rationale for picking this figure. According to the Office for National Statistics, the median income in all those local authority areas where the eight freeport sites are located is greater than £25,000, with the figures ranging from £25,200 in Kingston upon Hull, within the Humber freeport, to £33,200 in Thurrock, within the Thames freeport. I therefore ask the Exchequer Secretary to explain why the relief for freeport employers is set below median pay in all freeport areas and why this rate is half of that for those employing under-21s and apprentices.
Thirdly, as the plans for freeports stand, businesses taking advantage of their tax incentives will still pay corporation tax. British businesses that pay their fair share of tax will find it very hard to understand why the Chancellor has been for so long so lukewarm about a new, global minimum corporate tax rate to stop large multinationals undercutting them by exploiting tax havens around the world. The Chancellor welcomed the rate being cut from the original 21% proposed by President Biden down to 15%, even though that would cost Britain £131 million a week and leave British businesses being undercut. When I have asked the Financial Secretary before about the Government’s position, he said he did not think
“it is appropriate for Ministers to comment on tax policy in flight”.—[Official Report, 28 April 2021; Vol. 693, c. 418.]
Now, however, the outcomes of the G7 Finance Ministers’ meeting and the Carbis Bay summit are public, so perhaps his colleague, the Exchequer Secretary, could explain why the UK Government’s position has been to back a rate of 15%.
Let me move on to other measures in the Bill. As we have heard, an important relief, covered by clauses 6 and 7—
Jesse Norman
I am happy to give the hon. Gentleman some satisfaction on that question. What is extraordinary is how the Labour party has continuously sought to pretend that things are other than they actually are in relation to this deal. Let us just talk about that for a second. In the first case, the G7 is a package—it is a process. Were we, as Labour would have had us do, to ignore the pillar 1 aspects, there would then have been no argument, no debate and no proper taxation of platforms in the areas where the new taxing rights will reside. That would have been a serious, serious deficit. The whole point of the package is to see it as a package, and it predated the Biden Administration. We have greatly benefited as a world from their additional support, but it is by no means up to them; it is an OECD process, of which they have been an important recent supporter.
James Murray
I thank the Minister for engaging on what has happened in the negotiations about the new global deal, but I notice that he did not address the issue about the headline rate. I have asked him on several occasions, perhaps three or four times in recent months in this place, to explain why the Government have been so lukewarm about an ambitious rate of 21%, as proposed by President Biden, and instead favoured its being cut to 15%, which is indeed what has happened. I note that when the right hon. Gentleman got to his feet a few moments ago, he did not address the headline rate. Labour Members continue to worry that we are missing out on a once-in-a-generation opportunity to strike a truly ambitious global deal to stop a few large multinationals avoiding paying their fair share of tax.
James Murray
I tell you what, Madam Deputy Speaker, I will give way if the right hon. Gentleman addresses the specific point about 15% and 21%.
Jesse Norman
As the hon. Gentleman knows, it is completely inappropriate for a Minister to comment on confidential negotiations with allies and other nations around the world. He is ignoring that this is a package and the package involves two pillars, the second of which is a 15% rate, globally agreed, one that reconciles and acknowledges different countries around the world which have different tax regimes and different supports. The Government have been in no way lukewarm on pillar 2. What the Government have insisted on, in contradiction to the Labour party and against the ill-fated and ill-advised suggestions that it has made, is pillar 1, which is the crucial component of this that allows us to tax platforms. It is extraordinary that the hon. Gentleman refuses to acknowledge that under a Labour party Administration, there would have been no taxation of these platforms. What on earth does he say to that?
Business Rates Reduction Services
Jesse Norman Excerpts(3 years, 1 month ago)
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The Financial Secretary to the Treasury (Jesse Norman)
I thank my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for having secured this important debate on a matter that is of considerable public interest generally, but also locally in his constituency and to those affected by this company. It is a pleasure to speak in a debate that is not disfigured by party politics; all Members have made very constructive contributions, and I am grateful for them.
I will start by expressing my sadness that, inevitably, proceedings elsewhere in this House at the moment are going to be overshadowed by this very important consideration of business rates. I only hope that the media will find some time to indulge Mr Cummings in his comments in between reporting on this vital topic. In a slightly more serious vein, I apologise that the Government have not been able to supply a Minister with specific responsibility for this area to respond to the debate. As the hon. Member for Glenrothes (Peter Grant) rightly said, its focus is not on business rates—although there has been the occasional attempt to crowbar the rest of the business rates system in—but on the reduction services aspect that my hon. Friend raised. That aspect is a matter of business regulation, and therefore falls to the Department for Business, Energy and Industrial Strategy. He and the hon. Member for Walthamstow (Stella Creasy) have also focused on some individual cases of predatory practice by specific companies, and they will understand that I cannot comment in any detail on specific cases. It would set a very bad precedent for a Financial Secretary to do so, given the connection to the tax system in a different context.
I think Members recognise that, at its core, the system of business rates is a relatively simple and straightforward one. Companies and individuals who occupy non-domestic properties are liable for business rates. The rates bill is the product, in the literal, mathematical sense, of the rateable value of the property and the multiplier for the financial year concerned, offset by any rate reliefs. The rateable value is set by the Valuation Office Agency and, broadly speaking, it is the rental value at a set date —presently 1 April 2015.
In cases where businesses are unsure about the rateable value of properties, there are plenty of helpful resources on the website of the Valuation Office Agency. For example, I can go online and see a detailed valuation of No. 2, Marsham Street, which is the headquarters of the Home Office, and an explanation for how its valuation has been reached. You will be pleased to know, Mr Hollobone, that it has rather a high valuation, as befits its position in central London.
If ratepayers are unhappy with their rateable value, there is an online system known as check, challenge and appeal, which allows them to check the facts and, if necessary, to dispute the valuation that has been reached. This system was introduced to provide ratepayers with a service that is easier to use and understand than its predecessor and that enables quicker resolution of cases. An evaluation of the system last year found that it is working and that ratepayers are getting their cases resolved faster, without the automatic need to make appeals.
Rate reliefs are applied by individual local authorities, but most of these are automatic or require minimal information from the ratepayer. For example, transitional relief, which is used to phase in the effects of revaluations, is entirely automatic. For small business rate relief, rate- payers need only provide a little information about other properties on which they pay business rates, before being able to claim. All rate bills must explain the various reliefs available, and local authorities have many excellent websites that explain how to claim those reliefs.
Much of the £16 billion of relief that the Government have provided to the retail, hospitality and leisure sectors in response to covid-19—this was picked up by the hon. Member for Strangford (Jim Shannon)—has been applied automatically to rates bills. So there are many automatic methods of applying reliefs currently within the system. The relevance of that to the present debate is that there is no reason why a ratepayer should have to use an agent to claim rate relief. If they believe they are eligible for relief, they should instead contact their local authority. Of course, that is not in any sense to criticise people who have been found to be clients or would-be clients of the predatory organisations that have been highlighted by Members in the debate.
Let me pick up on the nature of some of the protections that exist within the system, of which there are several. One is the rules that apply to business-to-business contracts and that arise from the Business Protection from Misleading Marketing Regulations 2008, which prohibit advertising that misleads traders. There is also the Misrepresentation Act 1967, which may also apply to business-to-business contracts, and which says that if someone has entered into a contract following misrepresentation by the other party, they would be entitled to rescind that contract. Additionally, if they have suffered loss, they can claim damages against the other party.
Small businesses can seek help through other channels. If a ratepayer feels that there may have been illegal or fraudulent activity, they can choose to take court action, as I understand a number of businesses have successfully done in at least one of the cases under discussion. Alternatively, my hon. Friend the Member for Thirsk and Malton mentioned the Insolvency Service, which offers some protections, although they appear not to have been availing in this case.
It is worth just picking up the point about consumer protections. At present, the services are provided to the businesses that I have described, and consumer protections do not apply in the case that we have described. I note, and my hon. Friend the Member for Thirsk and Malton has argued, that microbusinesses share many of the characteristics of consumers, and he and other Members have therefore argued that they are worthy of protections in their own right. Members have highlighted the predatory practices of the companies they have discussed, which are, I am afraid, also exercised by a relatively small number of other companies, and cause extreme distress to the people who are affected by them.
It is important to note that, in other markets—for example, financial markets—it has proved possible to differentiate between protections afforded to different kinds of people in the client relationship. Therefore, there is a clear case here for the Department for Business, Energy and Industrial Strategy to revisit this area and to assess what further protections can, in principle, be provided. Let me conclude with a very simple message.
Stella Creasy
I hesitate to stop the Minister in full flow, because it is very interesting to hear what he is saying. I just want to come back on a point he made about businesses being entitled to rates relief automatically. Of course, that does require businesses to know about that. I agree with him, and I think we all agree, that differentiating between businesses—often small businesses —and consumers does not make any sense in terms of the expectation of protection, which is the reason why we have consumer regulations.
However, might he be convinced that it would be helpful in these instances for Government to be proactive in telling people that they might be entitled to rates relief? One reason why this company has been able to exploit people is a lack of awareness of the scheme. Although the Minister may feel that it is relatively straightforward, for a new business, the idea that there might be some things that do not have to be paid and others that do adds complexity. Is there a case, perhaps, in the absence of the further consumer protections we are talking about, for requiring local authorities, when they send a bill, to say, “Most small businesses would be entitled to rate relief, and therefore it is worth your time investigating”?
Jesse Norman
I thank the hon. Lady for her question. I have already said that all rates bills are required to explain the various reliefs available and that local authorities have, in many cases, excellent websites that explain how to claim the reliefs. Of course, the fact that reliefs in the cases I have described are automatic means that they flow through in and of themselves. That is a very attractive feature, where that can be engineered into the system. Where it cannot, it is for good reasons, and it may not be possible.
I do not think it is right to suggest—I do not think anyone who has participated in this very thoughtful debate would suggest—that there is any easy fix here, but there is a clear case to be addressed. I thank my hon. Friend the Member for Thirsk and Malton for bringing it to our attention and for raising it with the Government. I think the Government—across my colleagues and myself—need to consider what more can be done, both by themselves and in their further discussions with local authorities.