Finance (No. 2) Bill

Debate between Jesse Norman and Bernard Jenkin

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[Jesse Norman]

The right hon. Gentlemen raised a very similar question with me on Second Reading and, as he knows, the Government are engaging very closely with the Northern Ireland Executive. I am not in a position to second-guess what the EU may or may not do in that regard, but we have been very clear that we want to put a freeport in Northern Ireland and we want it to be a strong offer comparable to the freeports available elsewhere in the United Kingdom. That is what we will be seeking to achieve.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

In passing, I thank the Government for designating Freeport East, which includes Harwich in my constituency, as one of the freeports. I am struggling to find how the tax concessions in this Bill avail us of the new freedoms outside the European Union. Will my right hon. Friend identify how the freedoms in this Bill are in contention with the EU state aid rules on tax subsidies? Of course, that would not apply in Northern Ireland, where the EU state aid rules still apply. The Government might as well be completely honest about this: if there are advantages for England of being outside the EU that we do not have because Northern Ireland is still effectively inside the EU, let us hear about them, because we want to know that we have those advantages in England.

[Jesse Norman]

I think my hon. Friend has erred in his logic. It is perfectly possible for us to benefit from the flexibility of setting taxes, as we are, while being able to have a strong agreed offer that satisfies whatever rules may apply in Northern Ireland with the Northern Ireland Executive. They will be of different characters, but there is no reason to think that neither is possible.

Clauses 109 to 111 give the Government the power to designate tax sites and, once sites have been designated, to provide relief within them for the acquisition of commercial purpose property and new plant and machinery assets, as well as relief on the construction or renovation of buildings. These powers will enable the Government to move quickly to enable businesses to begin accessing the benefits of freeports as soon as is feasible.

The Government are committed to tackling non-compliance in the tax system, and freeports are not an exception to that. Anti-avoidance and evasion provisions are included in the Bill, and will be taken across further legislation for the individual tax reliefs. In addition, the Government will take further powers to create a robust system of monitoring in freeports and enable HMRC to request relevant information from businesses. This will ensure that public money is being used effectively in pursuit of the regeneration and development of freeport locations.

Clause 109 will enable the Government to designate the location of tax sites connected to any freeport in Great Britain. The tax reliefs made available as part of the Government’s freeports programme will apply only in these sites, and the Government intend to bring forward legislation to apply these reliefs in Northern Ireland at a later date.

Bidders submitted initial proposals for their tax sites during the bidding process. The Government allowed up to 600 hectares of tax site space to be proposed, across a maximum of three separate sites per freeport. Tax site proposals were also judged against a set of criteria relating to existing deprivation and unemployment, to ensure tax measures will have maximum impact in regenerating those areas. The Government will now work with the successful locations to approve their tax site proposals. Once the successful bids have completed the full tax site assessment process, the Government will designate the agreed areas as tax sites. From that point forwards, businesses will be able to claim and benefit from the tax reliefs.

[Sir Bernard Jenkin]

I am most grateful to my right hon. Friend; he is being very generous, though whenever I am tackled on a point of logic by a professor of philosophy, I wonder what is going on. But my question is quite an innocent one in this case. In Harwich, there are some businesses very near the tax sites which have been affected by Brexit and would benefit greatly from being included in the tax site. To what extent are the boundaries still adjustable, and is there an issue of principle regarding included businesses that could expand much more effectively? I am thinking of the particular example of a petrochemicals processing business, which exports substantially and would benefit very greatly by being in the tax site. It would generate many more jobs and much more wealth for the United Kingdom.

[Jesse Norman]

Of course, the circumstances for each individual freeport site will be, and I am sure are, very different. I cannot comment on the site my hon. Friend describes, but in general the emphasis of the legislation is very much on new investment and new development, rather than on existing or dead-weight investment. It may well be the case that there are businesses that would propose to make substantial new investments and, depending on the freeport in question, it may be possible for them to qualify for some of the benefits associated with that, but, again, it is not possible for me to comment on individual cases.

Clause 110 and schedule 21 will allow businesses in freeport tax sites in Great Britain to benefit from two new capital allowances: enhanced capital allowances and an enhanced structures and buildings allowance.

On clause 111 and schedule 22, the clause makes changes to provide for a new relief from stamp duty land tax for acquisitions of land and buildings situated in freeport tax sites in England that are used for qualifying commercial purposes. Relief will be available for purchases made from the date a freeport tax site is formally designated until 30 September 2026.

Amendments 43 to 52 amend the provisions introduced by clause 111 and schedule 22 to provide certainty that property investors using sharia-compliant alternative finance are able to benefit from stamp duty land tax relief in the same way as investors using conventional finance. That will be done by taxing the alternative finance intermediary’s acquisition as though it were an acquisition by the investor. The amendments ensure that the tax payable by someone using alternative finance is the same as that which would be payable were the property purchased using a conventional financial product.

Opposition Members have tabled two new clauses relating to clauses 109 to 111. Among other things, they would place additional eligibility criteria in respect of employment rights, equalities and the environment on the claiming of capital allowances and stamp duty land tax relief in freeports. It is important to say that freeports will deliver tangible benefits that will help to level up areas. By imposing those additional criteria, the new clauses would potentially delay the implementation of these measures by making freeports more complicated for businesses to navigate, and therefore reducing their impact and effectiveness. In any case, the Government have a very strong commitment 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. The Government will continue to ensure that the role of tax is considered alongside other policy measures needed to meet environmental goals.

As I have already indicated, freeports will also have an important role in reducing regional disparities. The rigorous assessment of bids that has been undertaken has ensured that tax benefits are available only in areas that require regeneration and would benefit from being a tax site, helping the Government to level up those that have been left behind.

New clauses 5 and 25 as tabled would have the following effect. New clause 5 would make the commencements of clauses 109 to 111 dependent on the Secretary of State publishing a report that would allow Members to assess the economic case for freeports, and on both Houses agreeing that report. New clause 25 contains a similar request for a review of the impact of clauses 109 to 111 and schedules 21 and 22, and for a report of that review to be laid before the House within six months of the passing of this Bill and once a year thereafter. A robust and transparent bid assessment process, using the criteria set out in the bidding prospectus, ensured that the eight English freeports so far granted all demonstrated a good or better economic case, including a strong economic rationale for their proposed tax site locations.

In the interest of transparency and accountability, the Government have also published a decision-making note that clearly sets out how sustainable economic growth and regeneration were prioritised in this process of assessment. The Government will publish costings of the freeports programme at the next fiscal event, in line with conventional practice. Imposing an additional economic incentive on top of what has been outlined would only risk delaying the delivery of the programme and therefore the associated benefits of the increased investment and employment.

Amendment 54 would make the commencement of a freeport tax site in any UK nation subject to approval by the three devolved Administrations. The hon. Member for Ceredigion (Ben Lake) has already introduced that. Let me say to him that tax is first and foremost a reserved matter unless it is specifically devolved. The UK Government have the power to set tax sites that offer reserved tax reliefs across the UK, and Ministers for the devolved Administrations have the power to set devolved tax reliefs. Devolved Ministers will be accountable to their Parliaments for the use of tax instruments under their control in a freeport tax site within their nation under the proposed plans.

The Government are determined to establish freeports across the UK, not just in England. That is why we are committed to continuing discussions with the Administrations in Scotland and Wales, when their new Governments have been established, and with the Northern Ireland Executive. The Government intend to have a freeport in each nation, and are determined to deliver that as soon as practicable. They will be national hubs for trade, innovation and commerce, regenerating communities across the country. They can attract new businesses and spread jobs, investment and opportunity to towns and cities up and down the UK, which will boost international trade and economic growth.

[Sir Bernard Jenkin]

Wil my right hon. Friend give way?

[Jesse Norman]

I am happy to take a third intervention from my hon. Friend.

[Sir Bernard Jenkin]

I am most grateful. Well, it is the Committee stage of a Bill. The hon. Member for Ceredigion (Ben Lake) raised an issue that I had not considered before, which is that the provision of a freeport in a devolved nation might actually reduce the revenue being collected by that devolved Government. Has my right hon. Friend given consideration to that? I cannot see how that would actually happen, but will he give an assurance that there is a means of addressing that if it were to occur?

[Jesse Norman]

As far as I am aware, this is a very remote contingency and I see no evidence to suggest that it might be the case in the context that has been described, but I can certainly tell my hon. Friend that, when the Government engage with the Welsh Government, we will be sensitive and open to discussion of the potential economic effects of a freeport in Wales, as one might expect.

Community Transport

Debate between Jesse Norman and Bernard Jenkin

Thursday 10th May 2018 Westminster Hall

[Jesse Norman]

We continue to consult local authorities. We will pursue the current consultation, which has been very full and wide-ranging, and then publish the results on that matter—properly considered and legally advised—in due course. I will say, though, that local authorities should heed the words I have just said and take a large degree of comfort from them for existing practice.

[Mr Jenkin]

Will the Minister give way very briefly?

[Jesse Norman]

I have taken a lot of interventions and I have a lot of stuff to get through, but of course—if my hon. Friend is very quick.

[Mr Jenkin]

I am most grateful. In the final analysis, the Minister’s legal advisers are there to advise; they do not instruct him. I advise him to get alternative legal advice from outside his Department, because Government legal advice tends to be a little over-cautious, which is why we finish up gold-plating these things. It is tempting just to blame the European Union.

[Jesse Norman]

Well, there were moments when colleagues sounded very much like Brexiteers in their rejection of this piece of EU legislation. There has been no undue deference to legal advice on this matter. We are considering it and consulting widely on this topic. We remain very open to legal advice. The hon. Member for Nottingham South has not clarified, in response to the question from my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), whether her Committee took legal advice. If it did, we would welcome its sharing and publishing it. I say to all colleagues around the House and to representative organisations that we would be very grateful to receive any legal advice or opinions they have. This is a matter of some legal complexity, and we are interested in hearing those views. The point was rightly made that aspects of social value in other legislation need to be taken account of, too.

I hope that it is understood that we as a Department are taking a tone of warmth towards the sector on this issue, while respecting our obligation to uphold and clarify the law. I very much offer community transport operators and colleagues reassurance about that. It is important to realise that there are genuine questions here about what the law is, how it relates to other aspects of law and how it is properly applied. We recognise that, and it is important to place that on the record, too.

Local authorities have not been much mentioned, except by me when I clarified that they should not withhold contracts until further clarification is given, but they are a very important part of this equation. As part of our further work during the follow-up to the consultation, my officials and I will talk closely with local authorities to think about best practice for how they commission services in this area and to encourage them to a proper understanding of the legal position as we see it.

In the few minutes I have left—I want to allow the hon. Member for Nottingham South a chance to respond—let me make a couple of comments on colleagues’ remarks. I think the hon. Lady is caught in a slight dilemma. She rightly praised the light-touch, affordable regime that successive Governments have adopted for the sector, which has been allowed to evolve of its own accord in a very big society way. I was grateful for the triumphant praise for the big society from the hon. Member for Ealing North (Stephen Pound). He was absolutely right about that. He did not quite bring himself to say those words, but of course that is what he was doing, like the good Tory he is. I hope he lasts in his party under those circumstances.

House of Lords Reform Bill

Debate between Jesse Norman and Bernard Jenkin

Monday 9th July 2012 Commons Chamber

[Jesse Norman]

My hon. Friend makes a shrewd point very quickly and elegantly.

The Bill is being pushed through the Commons by the Government—before the summer, on a whipped vote and with a guillotined debate—but the central question concerns the likely constitutional crisis that will arise from the Bill, which will transform the Lords into a Chamber competing with the Commons. The result will be gridlock, cronyism and a rise in special-interest politics.

The US offers a useful cautionary tale. The American political system is manifestly struggling: beset by gridlock; vulnerable to powerful special interests, from the gun lobby to the American Association of Retired Persons; and its politicians elected by corporate lobbyists through political action committees, recently liberated by the Supreme Court from any spending constraints under the first amendment. The two Houses have repeatedly found it impossible to achieve consensus on important legislation. Pork-barrel has been replaced by stand-off. President Obama’s health care Bill is a classic example and it ended up in the Supreme Court.

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

Is not my hon. Friend adverting to the fundamental conundrum at the heart of the Government’s presentation of the Bill? On the one hand, they are arguing for a more legitimate House; on the other, they are arguing that there will be no change in the relationship between the two Houses. It does not add up.

[Jesse Norman]

My hon. Friend is exactly right. As my noble Friend Lord Forsyth put it, what would be the point of electing these people if not to give them more power? Exactly the same thing as has happened in the US will happen here. I refer my colleagues and Members across the House to Lord Pannick’s brilliant memorandum on the issue, which has been published this afternoon. Lord Pannick is widely regarded as one of the most excellent lawyers and advocates of his generation, and is specifically expert in the Parliament Acts. He is also precisely the kind of person who would never be willing to stand for election to a new Senate. In his words:

“The Bill does not adequately address the central issue of constitutional concern: the fact that a House of Lords most of whose members will be elected will almost certainly be much more assertive than the unelected House of Lords and reluctant to give way.”

Lord Pannick states that the Parliament Acts

“only relate to the end of the legislative process, and not the day-to-day conventions which (at present) result in the Lords giving way to the Commons. Indeed, the Parliament Acts do not apply at all to Bills introduced in the House of Lords or to subordinate legislation.

The crucial question is this: should the Bill seek to regulate all these matters, or leave them to convention? If it leaves them to convention, then the result will be disputes between the two competing chambers. If it regulates these issues, then the result will be that relations between the chambers become justiciable in law, as they did over the Hunting Act, which went all the way to the Supreme Court.”

United Kingdom Statistics Authority

Debate between Jesse Norman and Bernard Jenkin

Tuesday 13th December 2011 Commons Chamber

[Mr Jenkin]

I am most grateful to my hon. Friend for raising that point, which he raised in the pre-appointment hearing and to which Andrew Dilnot responded favourably. I think he sees the potential of improving public access to statistics and the public’s ability to understand why they appear as they do, what value they offer and, therefore, how they can influence the democratic process. This goes to the heart of so much of what we do in this place, and the way in which we try to engage our public. Technology, particularly the internet, enables us to do that in an unprecedented way. There is no reason why every citizen cannot have access to the same information that we have—the information that informs the decisions that we make in this Parliament. We should therefore involve the public much more in that. Indeed, we have an obligation to ensure that what the Government and the Opposition say is objective, truthful and properly informative, rather than otherwise; we all know what Disraeli said about damned lies and statistics. We need to ensure that the quality of the numbers and the data that the Government produce genuinely informs the debate, rather than just advancing the partisan interests of those producing them.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Does my hon. Friend share the view that it is a proper function of the UK Statistics Authority to be fully separate, over and above the Office for National Statistics, or does he see some scope for reducing the number of quangos in this area?

[Mr Jenkin]

We are talking about a quango that survived the cull. Given that it was so recently established by an Act of Parliament, it would have been an absolute travesty if it had fallen to the cull. The reason is that for many years those who understand the rather arcane world of statistics have been campaigning for much more independent oversight of statistics. Indeed, independence is one of the key tests that the Government applied in the Public Bodies Bill and the review of arm’s length bodies. If a body’s independence is fundamental to the function it performs, that justifies its existence. Therefore, the United Kingdom Statistics Authority was never on the list.

Fixed-term Parliaments Bill

Debate between Jesse Norman and Bernard Jenkin

Wednesday 1st December 2010 Commons Chamber

[Mr Jenkin]

I am grateful for that assurance. The Minister, who in all these debates has shown impeccable manners and tact despite the pressure he is under, should be looking for an alternative way of delivering this part of the coalition agreement, to which the hon. Member for Stoke-on-Trent Central (Tristram Hunt) alluded.

The Speaker’s decisions will be taken under immense political pressure, as he decides what constitutes a confidence motion, what amendments might be tabled to amend a confidence motion, whether, if carried, that would invalidate the motion, whether the amendment could constitute a motion of confidence, and the consequences of amendments being carried or the motion being carried.

I quote again from the Clerk’s memorandum:

“As these would become justiciable questions, the courts could be drawn into matters of acute political controversy.”

I respect the fact that many in the House think we should have a Supreme Court like the European Court of Justice in the European Union or the Supreme Court of the United States, which is essentially a political court, but that is a very big constitutional change. We ought to have a royal commission about it, there ought to be debates on the Adjournment about it and the implications of drawing the courts into politics, if that is what we are going to do, ought to be properly explored. The way in which the Supreme Court is appointed to make it accountable for its political judgments is another important question.

We are importing continental and American-style jurisprudence into our judicial decision making. Some judges are becoming more and more adventurous about how they interpret statute and where they feel entitled to make judicial interpretations, and the Bill invites them to decide when there might be a general election under particular circumstances.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Will my hon. Friend distinguish between two things: judicial activism, where there is extraordinarily little evidence that judges in this country are overreaching, although the same is not necessarily true in Europe and in the European Court, and impingement on the prerogatives of Parliaments, which is what the Bill covers? We should be focusing on the latter point.

[Mr Jenkin]

I am perfectly prepared to accept that point. I refer to judicial activism only because there are champions of judicial activism who would like the courts to be more judicially activist. The Bill creates circumstances whereby we tempt judicial activism, which is contrary to our legal traditions. It increases the danger of the Government’s assurances simply not being delivered, or of their not being able to make these assurances with any confidence.

The Clerk, in his memorandum, specifically says:

“In the case of Clause 2(3) it would be for the court to determine whether a document issued by the Speaker was a ‘certificate’ for the purposes of that clause. It is not impossible for a court to take the view that what appeared to be a certificate was not a ‘certificate’”.

The memorandum has been considered by the Select Committee, which attempted, in the short time available, to conduct pre-legislative scrutiny. It reached two principal conclusions. Paragraph 8 states:

“The Government needs to respond to the concerns expressed by the Clerk of the House of Commons about the potential impact of clause 2 of the Bill on parliamentary privilege.”

Paragraph 9 states:

“The purpose of the Bill needs to be achieved without inviting the courts to question aspects of the House’s own procedures or the actions of the Speaker, except where this is absolutely unavoidable and clearly justifiable.”

The qualification reflects the fact that on the Committee there was some disagreement about the seriousness of the threat and between those who are in favour of a written constitution and those who are in favour not of a written constitution but of the settlement that relies upon our immunity.

On whether there are alternative ways of achieving the Bill’s intentions without the risk of judicial interference, the Committee noted, in paragraph 38:

“As the Committee has noted, setting out the requirement in Standing Orders would not be satisfactory because Standing Orders can be amended, suspended or revoked by a single simple majority vote of the House of Commons only.”

That is not correct. I have taken further advice from the Clerks and I have a letter from the Clerk Assistant and Director General, Mr Robert Rogers, which, if the Committee will indulge me, I will quote. He explains that there is a precedent of super-majorities in Standing Orders being used, for example, on closure motions in the 1880s. He says:

“As to the practical issue of a “super-majority” SO being able to be amended or repealed only by a super-majority, I see no difficulty. The Speaker would be the arbiter of whether a motion…either was (a) orderly and (b) had been agreed to; he would be bound by the Standing Order (which should perhaps contain an explicit prohibition on “notwithstanding”-type Motions), and his decision would be beyond any external review.”

That neatly and devastatingly removes the need for the entire Bill. We could be operating entirely through Standing Orders, which would be protected by the super-majority that the Government want to embed in legislation for general elections. It leaves the question of why the Government are resisting this advice.

Amendment 6 is a more elaborate way of saying what the Government have already put in the Bill. I would be the first to accept that it may be regarded as a more elaborate bit of sticking plaster, because the clause will be subject to judicial interpretation. A certificate could not be presented to the courts—not even the Speaker could present one to a court for adjudication. The word “whatsoever” in the amendment means that we are referring not just to our own courts, but to the European Court of Human Rights, which is not just a figment of some Eurosceptic’s imagination. The Clerk himself has adverted to the fact that the ECHR, under article 10, could be adverted to as a cause for judicial review.

If a Member of Parliament was prevented from voting in the motion of confidence, they could say that their vote should be taken into account for a valid certificate to be issued by the Speaker. They could therefore mount a challenge saying that the certificate was not valid because they were prevented from voting. A question also arises if sick colleagues cannot get into the Lobby and are nodded through. Would that constitute a ground for challenging a vote of confidence?

[Jesse Norman]

Was not there an example in the 1970s of whether a Member had been able to vote? There was a tied vote and Harold Lever, I think I am right in saying, felt that he had not been able to exercise his vote. He might have had grounds under this Bill, if the Clerk is right, to invoke the care and attention of the courts.

[Mr Jenkin]

My hon. Friend adverts to an extremely relevant precedent. What would happen if a two-thirds majority was obtained, or not obtained, by just one vote, or the Speaker interpreted the result as a vote of confidence where there was one vote in it that was represented by somebody who was or was not present for whatever reason? These are very dangerous areas.

I have two final points, and I am grateful for the indulgence of the Committee in allowing me to quote extensively from documents. The Bill is being driven by an extraordinary consensus on some issues and by the fact that it is so close to the survival of the coalition that it is difficult openly to debate it. The Prime Minister said before the election that Committee stages of Bills should not be whipped, so that what a Committee thought can be understood. The Whips are out in force today, and I do not think that we will really find out what Members think about it. However, that invites the other place to look at the privilege and immunities of the House, and to propose comprehensive amendments that protect Parliament from judicial review.

--- Later in debate ---

[Mr Jenkin]

My hon. Friend is making an extremely important point about the European Court of Human Rights. As soon as something gets into the Court, it respects no immunities whatsoever—nor does the European Court of Justice, but that is not adverted to in this case. Once a case is in that system, we do not know where it will lead. The European Court of Human Rights certainly would not respect the limitations of the 1689 Act.

[Jesse Norman]

I do not wish to comment on the procedure or intention of the European Courts, but I note merely that it is true historically that their scrutiny has extended itself over time. It is noted less than it should be that European judges have expressed concern about the exercise of parliamentary privilege and about the lack of remedies that people possess against its exercise.

The final reason why the Government should look again at the amendment is that the consequences of a mistake could be momentous. In the short term, a dissolution of Parliament and thereby an election could hang on it. In the longer term, there could be wider political and constitutional implications of judicial scrutiny of our power.

The amendment is simply worded, it offers an additional layer of protection for Parliament against a serious threat, and it does so at little or no additional cost. I urge the Minister to give it serious consideration.