The Economy
Debate between John Glen and Ged Killen(5 years ago)
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Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)
It is a pleasure to follow my hon. Friend the Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney).
It does seem rather bizarre to be talking about a Queen’s Speech that the Government have no intention or any ability to implement, and I would not exactly describe myself as a monarchist but I do think the way the Prime Minister has treated Her Majesty through all this is shameful.
First, I want to touch on the implications for the UK. The Government say:
“The integrity and prosperity of the union that binds the four nations of the United Kingdom is of the utmost importance to my Government”
and Scotland will see a £1.2 billion cash bonus as a result of the latest spending round, but this Queen’s Speech ends freedom of movement, which will have a disproportionate impact on Scottish sectors, and even by the least damaging Brexit that would mean a reduction in Scottish GDP of 2.7%, and we know that a disastrous no-deal exit could mean a loss of economic output for Scotland of as much as £12.7 billion by 2030.
And it is not just prosperity in Scotland that is under threat from the Government; so too is the very existence of the United Kingdom itself. We have seen over a decade of austerity that Scotland did not vote for; we had David Cameron’s English votes for English laws speech on the steps of Downing Street on 19 September 2014; of course we had the Brexit referendum in 2016; and now we have this Government’s reckless deal, which tears up workers’ rights and simply delays a no-deal Brexit until the end of next year. The Conservative party, in truth, has done almost as much as the Scottish National party to undermine the United Kingdom. It is no longer the Conservative and Unionist party; it is the Conservative and Brexit party.
I was deeply disappointed, once again, to see nothing for 1950s-born women who are being denied a pension. That is a huge missed opportunity. Just as we are seeing with PPI repayments, we could have seen a boost for the economy had those women been paid what is rightfully theirs. As one of the leading members of the local WASPI branch in my area put it,
“these women are not going to be squirrelling this money away in offshore accounts.”
It will be spent in our local towns and on our high streets. However, the campaign will go on and I can assure them of my continued support.
Lastly, I want to touch on the lack of any new measures to protect free access to cash. I have been campaigning on that issue since my election. It has become increasingly clear, from the work of consumer rights groups, from international examples, from what is happening in many of our constituencies and from reports like the Access to Cash review, that this issue will not simply resolve itself. The banks have made a conscious decision to shift responsibility for running ATMs to private companies, and now they have decided that they really do not want to have to pay for that either. So the pressure they have put on LINK means that the fee being paid to the operators has been cut, and we are now seeing free-to-use ATMs closing, or turning fee-charging. That is having a particularly difficult impact in rural communities and in small towns such as those in my constituency, where businesses on the high street are already struggling and do not need any new additional barriers, such as a lack of availability of cash.
The Joint Authorities Cash Strategy Group, which the Government have set up to look at this issue, is no more than a talking shop.
Ged Killen
The Minister shakes his head, but what has that actually done since it was set up? The Government have to get real, or millions of people—some of the most vulnerable in society—will be left behind in a so-called cashless society.
In conclusion, this is a completely unnecessary Queen’s Speech, which has wasted everyone’s time and will do nothing at all for my constituents in Rutherglen and Hamilton West.
IR35 Tax Reforms
Debate between John Glen and Ged Killen(5 years, 7 months ago)
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John Glen
I certainly agree with the hon. Gentleman’s instinct that tax simplification is how all Governments should seek to develop tax reforms. I will make some observations about that later.
As we have heard, the Government have set about extending the reform of the rules that govern off-payroll working. Those rules, known as IR35, were introduced in 2000—in fact, in the previous year’s Budget—to ensure that people working through their own company, who but for the existence of that company would be taxed as employees, pay broadly the same tax and national insurance as other employees. The rules do not affect the genuinely self-employed, and the Government recognise the massive contribution that contractors make to business and public services across the country. Our aim is simply to ensure that contractors who work through their own company pay the right tax.
However, evidence suggests that the rules have frequently been misapplied, meaning that contractors acting as employees were incorrectly paying less tax than if they had been employed in the usual manner. In April 2017, the Government introduced reforms for public sector organisations that take on contractors through their own companies. The reforms mean that public sector organisations are now responsible for deciding whether the contractor is acting as an employee and is therefore within the rules, as well as for ensuring that the right amount of tax is paid.
HMRC estimates that the reform has raised an additional £550 million in income tax and national insurance contributions over the first 12 months.
Ged Killen
Does the Minister know—I am not claiming that I do—how much of that £550 million is the result of the public sector incorrectly sweeping up contractors into the IR35 rules?
John Glen
I am not aware of any distribution analysis, but I will check with officials, and if I can give clarification on that, I will do so by letter.
Non-compliance in the private sector remains a persistent and growing problem that, if left unchecked, will cost the taxpayer as much as £1.3 billion by 2023-24, according to the Government’s estimates. In last year’s Budget, the Government announced that we will extend the reform of off-payroll working rules to all sectors, including the private and voluntary sectors. That will help to address the issue of non-compliance and to ensure there is a level playing field for the public sector and other sectors when hiring contractors.
The Government have listened to the views of individuals and businesses and have decided that the reform will apply only to medium and large organisations. It will not extend to the smallest 1.5 million businesses. In addition, it will take effect from April 2020, to give businesses and other organisations time to prepare. The Government are consulting on the detailed design of the planned reform, and we are listening carefully to the representations made. Our aim is to provide the individuals and organisations concerned with greater certainty about how the off-payroll working rules will operate from April 2020 in all sectors, including about the actions they can take to prepare for the changes.
Hon. Members talked about HMRC’s check employment status for tax—CEST—tool and raised some questions about its effectiveness. CEST was developed in consultation with stakeholders, including tax specialists and contractors, to assist individuals and public authorities in making the correct determinations. HMRC will stand by the result of CEST, provided the information entered is accurate and in line with HMRC guidance. It gives an answer in 85% of cases, and where it does not, more detailed guidance and support are available through a telephone number for individuals.
To support organisations in applying the rules, HMRC will continue to review and improve CEST. HMRC has already held user research sessions, and will continue to work with stakeholders over the coming months to ensure that the tool and the wider guidance suit the needs of all sectors, and to address specific points raised during the consultation. Enhancements will be tested and rolled out before the reforms are introduced in 2020. I asked officials for greater clarity on what that is likely to mean, and we are talking about improved guidance, better phraseology and improved language that gives greater certainty to individuals who make inquiries.
The hon. Member for Brentford and Isleworth (Ruth Cadbury) mentioned the issue of blanket decisions in the example she gave. Members have expressed concern that businesses might take a blanket approach to applying the off-payroll working rules to contractors without looking at the facts of individual cases. Independent research suggests that has not generally been the case in the public sector, where the reform has been in place since April 2017. I cannot account for every case, but research was done to evaluate the issue because it was a legitimate area of concern. The vast majority of public bodies are making assessments on a case-by-case basis. I have looked into how that research was done— HMRC commissioned an external independent organisation to speak to central Government Departments, the NHS and local government departments to ascertain that.
Having listened to people’s concerns, we included proposals in our recently published consultation to help to ensure that processes are put in place for individuals to resolve disputes with their engagers directly and in real time. The proposals would put a legal requirement on engagers to have a status disagreement process in place, and would require them to consider evidence provided by an individual contractor and review their status determinations accordingly. HMRC is committed to working with organisations to ensure they make the correct status determinations, and will publish detailed support and guidance to help organisations prepare well ahead of April 2020.
Ged Killen
I thank the Minister for his response and hon. Members for attending the debate. This is a very complicated issue, and it is not necessarily one that sets pulses racing. However, for the people affected, their livelihoods are at stake, so I am pleased that Members have had the opportunity to raise their constituents’ concerns.
My hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) spoke about what is going on in the NHS, and the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) pointed out how many public services in rural communities are dealt with in this manner. We have not yet got this right in the public sector. That is the crucial point: if we cannot get it right in the public sector, these issues will only be amplified in the private sector. We have to consider that carefully.
As my hon. Friend the Member for Clwyd South (Susan Elan Jones) said, people’s livelihoods and incomes are at risk because, for example, expenses will be treated as earnings. For a lot of small businesses, having expenses treated differently could be the difference between success and failure. Small decisions in this respect may have major impacts.
My hon. Friend the Member for Glasgow North East (Mr Sweeney) mentioned the CEST tool, which I touched on in my opening remarks. I am not comforted by what the Minister said about that tool, purely because I have experience of it in a previous life and I know just how inconclusive it can be.
Ged Killen
I thank the Minister for that. I appreciate that we can have a constructive approach. I do not think any of us disagrees about the principles; this is about getting it right.
HMRC’s idea of working with people to assist them is different across the board. I point out gently to the Minister that it can be daunting for people to have HMRC assisting them, because it provides guidance but it is also the enforcer. People are therefore keen to get things right on their own, so we need a fair and transparent system that everyone can understand and use fairly. If we can get a tool that works, that is great, but let us make sure we have one before we come down too hard on people.
I did not hear the Minister confirm whether the changes will eventually be rolled out to small businesses in the private sector. I appreciate that he might not be in a position to answer that today. If the Government are considering that, I urge real caution. They have not suggested that yet, but, having come from a small business background, I can say that that would be a very difficult prospect.