Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps his Department is taking to (a) ensure vulture funds treat customers fairly; and (b) prevent the creation of mortgage prisoners through the sale of loan books to unregulated entities.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The FCA have advised that borrowers with inactive lenders, such as UK Asset Resolution (UKAR), are no less protected, when the legal title holder is regulated, than those with active lenders. The Government is also open to extending the Financial Conduct Authority’s (FCA) regulatory perimeter, but is yet to see evidence to suggest that there are borrowers that are currently being harmed by the current regulatory regime and that would therefore be helped by extending the FCA’s remit.
All sales of UKAR loans have included robust, non-negotiable protections to ensure the continued fair treatment of customers. These have included: adherence to the FCA’s Treating Customers Fairly (TCF) principles; its Mortgages and Home Finance: Conduct of Business (MCOB) rules; recourse to the Financial Ombudsman Service (FOS); and restrictions to the changes the buyer can make to standard variable rates (SVRs) for at least 12 months after the transfer of ownership. There have also been no changes to the terms and conditions of the loans which have been sold, and sales of UKAR loans have also not negatively impacted the ability of affected customers to re-mortgage elsewhere.
The Government has worked with the FCA to provide switching options for consumers with inactive lenders and will continue to support these customers where they would see genuine benefit from switching.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the effect of the net zero target on (a) the banking industry and (b) SMEs.
Answered by Kemi Badenoch - President of the Board of Trade
Our analysis of the impacts of net zero is ongoing and applies across the whole economy. In the coming year, HM Treasury will publish the Final Report of its Net Zero Review, which will set out the costs and opportunities of the transition to net zero. An interim report was published in December 2020 that set out the analysis undertaken so far. The final report will take this analysis further, focusing on innovation and growth, competitiveness, household impacts, and embedding the findings.
The government has also committed to publishing its comprehensive Net Zero Strategy this year, including further plans for reducing emissions across all the UK’s major economic sectors.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what proportion by value of taxes typically owed by businesses at the point of insolvency are expected to be covered by the extension of secondary preferential creditor status for HMRC to include VAT, PAYE, and other taxes.
Answered by Jesse Norman
The recent change to HMRC’s creditor status for certain debts ensures that when a business enters insolvency, more of the taxes paid in good faith by its employees and customers, but held temporarily by the business, go to fund public services as intended, rather than be distributed to other creditors. This measure is forecast to raise up to £255 million a year, and the average recovery will be determined on a case by case basis.
While there is no specific analysis of the impact for individual sectors the Government has engaged extensively with stakeholders in the finance industry and held a formal consultation on the policy design. Having considered all views carefully, the Government believes these reforms take a fair and proportionate approach, balancing the interests of taxpayers, the Exchequer and other creditors.
Bank lending to small and medium-sized businesses alone in 2019 was £57 billion, and the majority of business lending is by fixed charges and is unaffected by this measure. In part for this reason, this change is not expected to have a significant impact on financial institutions, the lending market or wider economy. The OBR did not make any adjustments to their economic forecast in response to this measure.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of the extension of secondary preferential creditor status for HMRC on business lending in the (a) retail and (b) manufacturing sector.
Answered by Jesse Norman
The recent change to HMRC’s creditor status for certain debts ensures that when a business enters insolvency, more of the taxes paid in good faith by its employees and customers, but held temporarily by the business, go to fund public services as intended, rather than be distributed to other creditors. This measure is forecast to raise up to £255 million a year, and the average recovery will be determined on a case by case basis.
While there is no specific analysis of the impact for individual sectors the Government has engaged extensively with stakeholders in the finance industry and held a formal consultation on the policy design. Having considered all views carefully, the Government believes these reforms take a fair and proportionate approach, balancing the interests of taxpayers, the Exchequer and other creditors.
Bank lending to small and medium-sized businesses alone in 2019 was £57 billion, and the majority of business lending is by fixed charges and is unaffected by this measure. In part for this reason, this change is not expected to have a significant impact on financial institutions, the lending market or wider economy. The OBR did not make any adjustments to their economic forecast in response to this measure.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate his Department has made of the value of deferred VAT payments under the Deferral Scheme for VAT that will become payable on or after 1 December 2020.
Answered by Jesse Norman
Approximately £34bn of the VAT that was due between 20 March and 30 June 2020 was deferred until 31 March 2021. Some businesses have started to pay deferred VAT ahead of 31 March 2021 but most of the £34bn remains outstanding.
Businesses can pay deferred VAT in full by 31 March 2021 or, should they wish, they can spread payment of deferred VAT over smaller monthly instalments. Further details are available at www.gov.uk/hmrc/vat-deferral.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how much additional revenue has been raised as a result of the decision to restrict mortgage interest relief for residential landlords to the basic rate of income tax, in each year since April 2017.
Answered by Jesse Norman
From April 2017 to April 2020, the Government phased in a restriction of deductions for finance costs for landlords of residential properties to the equivalent of the basic rate of income tax. The restriction makes the tax system fairer by ensuring landlords with higher incomes no longer receive the most generous tax treatment.
The restriction is estimated to have increased income tax liabilities by about £150 million in its first year (2017-18). Estimates for subsequent years are not available.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what progress has been made on implementing the rules governing the extension of the maximum loan term under the coronavirus business interruption loan scheme from six to 10 years.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
As part of the Winter Economy Plan, the Chancellor announced a range of measures to extend and reinforce the support provided to businesses during this challenging time.
The Chancellor announced Pay as you Grow options, providing greater flexibility to help Bounce Back Loan borrowers repay their loans on the terms which work best for them. In addition, we have since extended the application deadline for the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund until 31 January.
The Chancellor also announced our intention to allow lenders to extend the repayment period for CBILS loans where this is needed up to 10 years. This is not a blanket extension of the term of CBILS loans. Rather, the change is to enable lenders to offer an extension of the term as forbearance where a borrower is in difficulty and could be helped by the extension. We are working to implement this change as soon as possible and will provide an update in due course.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of establishing a hydrogen strategy similar to those in (a) Germany, (b) Norway, (c) Canada, (d) the Netherlands, (e) Portugal or the European Commission's proposed EU-wide hydrogen strategy.
Answered by Kemi Badenoch - President of the Board of Trade
The Government takes its environmental responsibilities very seriously and welcomes international efforts to invest in technologies that will be needed to decarbonise the energy used in our economies.
We are committed to meeting our climate change targets, including net zero greenhouse gas emissions by 2050. Hydrogen could be an important part of the transition to net zero.
We are investing in innovation, providing up to £121m to support a range of projects to explore and develop the potential of low carbon hydrogen. This includes production, storage and end use in heat, industry and transport.
In 2019 the Government published a consultation on business models for Carbon Capture and Storage, which sought views on support for low-carbon hydrogen. The response to the consultation will be published in due course.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what representations he has received on the scope of the forthcoming review of business rates; and if he will ensure that the review assesses the potential merits of solutions from across the business tax system.
Answered by Jesse Norman
The Government has committed to a fundamental review of business rates and will set out further details in due course, including how interested groups and individuals can engage with and contribute to the review.
Asked by: Kevin Hollinrake (Conservative - Thirsk and Malton)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the scope is of the forthcoming review of business rates; and what plans he has for consulting industry during that review.
Answered by Jesse Norman
The Government has committed to a fundamental review of business rates and will set out further details in due course, including how interested groups and individuals can engage with and contribute to the review.