Work, Health and Disability
Debate between Kirsty Blackman and David Gauke(7 years ago)
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Mr Gauke
I thank my right hon. Friend for her question and pay tribute to the work that she does on autism, including the work that she has done for many years now as chair of the all-party autism group. Yesterday she published a very good report on the issue and we are studying its contents closely. She highlights this issue. That is the challenge: we have made progress across the board, but is there more to do? Absolutely; there is more to do. She highlights the employment gap for those with autism. That is something that we do have to address as a society.
Kirsty Blackman (Aberdeen North) (SNP)
I thank the Secretary of State for advance notice of the statement.
The SNP is extremely disappointed in the statement and the Command Paper that have been produced today. We believe that the UK Government, as a priority, need to reverse the cuts they have made to these benefits and need to scrap the freeze on benefits, because they are harming people.
Mencap has released a statement that says:
“We are alarmed that the needs of hundreds of thousands of people with mild or moderate learning disabilities have been overlooked.”
The Government seem to have abandoned their pledge to halve the disability employment gap, and the gap is even worse for those people who have learning disabilities.
The Disability Benefits Consortium has said:
“We are extremely disappointed that they have chosen to focus on the design of ESA, instead of the broken Work Capability Assessment.”
Sixty-eight per cent. of those challenging their work capability assessment results are successful in that challenge. The system is discredited and broken. We want to see the UK Government committing to scrapping the work capability assessment. We want to see them committed to putting in a new system that puts fairness, dignity and respect for disabled people at the absolute heart of the system.
Mr Gauke
First, in response to the hon. Lady’s comments on behalf of the SNP, I know that the Minister for Disabled People, Health and Work, my hon. Friend the Member for Truro and Falmouth (Sarah Newton), has spoken to Scottish Government Ministers today and got a much more constructive response. It is the launch of the innovation fund for the Dundee gateway today and we look forward to working closely with the Scottish Government in a constructive manner.
We have consulted on the work capability assessment. It is not clear that there is consensus at this point as to the way in which the work capability assessment should be reformed, but we acknowledge that there are improvements that should be made. We have indeed made improvements in how the work capability assessment works; for example, those with severe long-term disabilities will not be reassessed in the way that they were previously. So we continue to make improvements on that. If we can reach consensus on the way in which the work capability assessment should be reformed, I will be happy to proceed with that.
Pensions
Debate between Kirsty Blackman and David Gauke(7 years, 5 months ago)
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Mr Gauke
I thank my right hon. Friend for his question. He makes some good points about the work the Government have done over the past seven years in terms of fuller working lives and helping more people to work longer, and he has a proud personal record in what he did on that as Secretary of State. He is absolutely right to highlight the irresponsibility of the position Labour Members had at the last election. Just as they have walked away from a deeply irresponsible position on student debt, I hope they will walk away from a deeply irresponsible position on the state pension age.
Kirsty Blackman (Aberdeen North) (SNP)
I thank the Minister for advance sight of the statement. I can see why the Department for Work and Pensions did not want to publish this report by the date it was supposed to have been published by—7 May—because it would undoubtedly have lost the Conservatives more seats than they did lose.
The SNP opposes plans to raise the state pension age above 66. We also have concerns about the fact that the Government have chosen the 32% rather than the 33.3%, which was the more gentle of the scenarios presented in the Cridland review. I am lucky enough to be a few days inside the 69 group, so I will get to retire at 69 rather than 70, which people a couple of weeks younger than me will retire at if the full extent of the 32% in the Cridland review is implemented.
The SNP continues to call for the establishment of an independent savings and pensions commission. The Government are not doing enough to recognise demographic differences across the United Kingdom, and an independent review would look at those and take them into full account.
Mr Gauke
John Cridland looked at exactly those issues and concluded that the divergence within the regions and nations on this matter was greater than the divergence between them. However, if the Scottish Government believe that there should be more support from the state for those approaching retirement age, they will have the power to provide it. If they wish to provide that support in Scotland—effectively, providing support a year or two years earlier than in the rest of the United Kingdom—they have the power to do that. I would not particularly advise them to do it, but that is their decision, and I really do not think there is a complaint to be raised with the UK Government on that front.
Equality: Autumn Statement
Debate between Kirsty Blackman and David Gauke(8 years ago)
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Mr Gauke
The logic of the hon. Lady’s point appears to be that there is no link between what happens in the economy and Government policies. What has been demonstrated over the past 10 years is that there is a very clear link between Government policies and what happens in the economy, and it is because of the policies of this—[Interruption.] We are the fastest-growing economy in the G7 at present, so it is going quite well, given that, among the major economies, we were the economy that was most affected by the crash in 2008. We have put in place an environment where we are creating jobs and seeing living standards improving, and that is happening across the economy for men and women.
It is, of course, right that we continue our work to address long-standing barriers to work for BME people, including through Baroness McGregor-Smith’s review, new support in schools, and new guidance for jobcentres and local partners. We have also set a public target to increase the proportion of apprenticeships started by people from BME backgrounds to 20% by 2020, building on good progress since 2010.
So we are strengthening our economy by managing stable public finances, backing our businesses and creating jobs. At the same time, we are helping people regardless of gender or race make their money go further in their day-to-day lives. That is why we confirmed in the autumn statement that we will raise the personal allowance to £12,500 by the end of the Parliament. By 2020, it will have increased by over 90% since 2010, taking millions of the lowest paid out of paying income tax, and representing a tax cut for over 13 million women by 2018, compared to 2015.
We have also introduced the national living wage at £7.20 an hour to help over a million people on the lowest wages, and we announced at the autumn statement that we would raise this to £7.50 in 2017. The national living wage is focused on hard-working, low-paid workers, regardless of their gender or race, and hon. Members should note that women are expected to account for around two thirds of those who will benefit from this, with people from BME communities expected to gain disproportionately.
Kirsty Blackman (Aberdeen North) (SNP)
I understand what the Minister is saying about the national living wage and the increase in the floor, but on the 40% tax rate, only 27% of higher rate taxpayers are women, so the changes to the 40% tax rate disproportionately benefit men, not women. What are the Government doing about that?
Mr Gauke
Income tax in Scotland will be a matter for the Scottish Government. I look forward to seeing what they will do.
From early 2017, we are also introducing tax-free childcare to help working parents with their childcare costs. Parents will be able to receive up to £2,000 childcare support per child each year. We are also helping around 3 million households by reducing the universal credit taper, which will further strengthen the incentives for people to increase the number of hours they work and to earn their way out of financial insecurity and welfare dependency.
That goes hand in hand with our sustained investment in the public services that families value. That includes our focus on quality schools, with the highest-ever recorded proportion of children being taught in good or outstanding schools; the pupil premium, which will be worth £2.5 billion this year alone and will support pupils from disadvantaged backgrounds; and an investment of £23 billion in the school estate over the next five years.
Our investment in infrastructure—from the roads and rails we travel on, to the homes we live in—will help all. The recent autumn statement contributed to tackling our long-standing challenge to deliver more homes, with a further £5.3 billion investment in housing, including a £2.3 billion housing infrastructure fund to deliver infrastructure to unlock up to 100,000 new homes, and £1.4 billion to deliver 40,000 new affordable homes.
So our economic plans are based on delivering an economy that works for everyone, and that means an economy that benefits all races and genders. I note the efforts to analyse the effect of the measures we have taken on women and BME groups. Hon. Members will be aware of the research of the House of Commons Library and the Women’s Budget Group, on which the premise of today’s motion is based, but a cautious approach should be taken when analysing specific impacts on that basis. Their findings should not be considered without first undertaking an honest reflection on the flaws inherent in their research methodologies. Let me provide a few examples.
First, the House of Commons Library analysis looks only at taxes and benefits. That means it overlooks key parts of the broader economic picture, which includes the benefits to women and people from BME groups of a strong economy and rising employment and earnings. It also fails to take into account the public services that families value, such as support for childcare, schools and health services.
Secondly, the analysis has been based on assumptions made about how income is shared in any given household. For example, it is not reasonable to assume that the measure to limit support as part of child tax credits and universal credit to the first two children for new claimants will overwhelmingly affect women merely because women are usually the nominal payee of child tax credits, as the House of Commons Library did in previous analysis. This not only treats women rather than children as the beneficiary of child tax credits, but assumes that other sources of income, such as earnings, are not shared within a household in response to benefit changes.
Thirdly, the analysis makes a comparison with a world where benefits were uprated between 2010 and 2015 by the retail prices index, but RPI is a flawed measure of inflation, and it lost its status as a national statistic in 2013. So there are a range of issues with the methods used to calculate these impacts, and the findings should be seen in that light.
It is, however, right that we assess carefully the effects of any new fiscal measures on groups across our society. We carefully consider the implications of all our measures for protected equality groups, which includes gender, race and disability. That is in line with not only our own guiding principle of a fairer society but our legal responsibilities under the Equality Act 2010. We publish information alongside the autumn statement about the impact of individual tax measures. We also publish a comprehensive distributional analysis to monitor how our decisions on tax, welfare and spending would support households on a range of different incomes.
Our commitment to fairness runs through everything we do. It goes to the heart of the economic approach we have taken since 2010. The Prime Minister could not have been clearer about her determination to keep taking every action to make this a country that works for everyone. That is why, for example, we have launched an audit to look into racial disparities in our public services, which stretches right across Government, covering every area from health to education, and childcare to welfare, employment, skills and justice.
This Government are fully resolved to make this a country that works for all races and genders. That is exactly what we are working to deliver through our work to build a stronger economy and to help people in their day-to-day lives, and that is what last month’s autumn statement continued to support.
Finance Bill (Fifth sitting)
Debate between Kirsty Blackman and David Gauke(8 years, 5 months ago)
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Mr Gauke
Clause 114 makes changes to ensure that charities subject to the jurisdiction of the High Court of the Isle of Man are able to obtain the same VAT release as charities in the United Kingdom. As the hon. Lady says, it is a largely technical clause, and I am not surprised that it is uncontroversial.
The hon. Lady raises the perfectly fair issue of the future of VAT in the light of the Brexit vote. That is indeed one of the issues that we will have to wrestle with. All I can say at the moment is that it is something that we will have to consider. It will depend very much on the nature of the relationship that we have with the European Union, and of course that will be a matter for negotiation, and for decision by the next Prime Minister. Although the hon. Lady raises a fair question, and her point is well made, I fear at this point I am not able to provide any clarity for her.
Question put and agreed to.
Clause 114 accordingly ordered to stand part of the Bill.
Clause 115
VAT: women’s sanitary products
Kirsty Blackman (Aberdeen North) (SNP)
I beg to move amendment 1, in clause 115, page 162, line 8, leave out from “liners” to end of line 9.
Finance Bill (Sixth sitting)
Debate between Kirsty Blackman and David Gauke(8 years, 5 months ago)
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The Financial Secretary to the Treasury (Mr David Gauke)
As we have heard, clauses 126 and 127 make changes to stop the avoidance of stamp duty on shares, which will raise £155 million over the rest of this Parliament. They will ensure that the tax system operates fairly by closing an increasingly exploited loophole in which deep-in-the-money options are used to transfer shares to financial institutions or clearance services that then issue depository receipts that represent those shares and can be traded. The measure was announced by the Chancellor in the autumn statement. Stamp duty or stamp duty reserve tax, together referred to as stamp tax on shares, are charged on the purchase of shares in UK companies at 0.5% of their price. When shares are transferred to a depository receipt issuer or clearance service, a higher rate of 1.5% applies, reflecting the fact that subsequent transactions will no longer be taxed.
HMRC has become aware of a practice of deep-in-the-money options being used to avoid the higher rate charge and the Government have acted to stop it. A call option over shares gives their holder the right to buy the shares at a given price—the strike price—on or before a specified date. The price paid for the option is its premium. Deep-in-the-money call options have a strike price significantly below their market value and a high premium, which means the premium reflects the vast majority of the underlying value of the shares. When shares are transferred using an option, stamp tax is currently charged on the strike price and not on the premium, with the result that when purchasing shares using a deep-in-the-money option, tax could be based on the strike price of only a few pence when each share is really worth much more.
Deep-in-the-money options are being artificially created and then exercised immediately to transfer shares to depository receipt issuers or clearance services, avoiding a significant tax charge. Clearly that is not fair. As a result of the changes being made, the 1.5% higher rate stamp tax charge now applies to either the market value of the shares or the option strike price, whichever is greater. The measure applies to all options entered into on or after 25 November 2015 if they were exercised on or after 23 March 2016. This is a targeted response that will apply to a relatively small number of transactions where HMRC has identified clear evidence of tax avoidance. The change will apply only to transfers of shares to clearance services or depository receipt issuers and only when options are settled with shares, not cash. HMRC carried out public consultation following the autumn statement and no wider market impacts were identified.
The technical consultation was open from 9 December 2015 to 3 February 2016 and received three responses. Stakeholders questioned whether there was evidence of avoidance and the magnitude of the costing. HMRC has clear evidence that the Office for Budget Responsibility certified the costing so no changes were made as a result. Separately, meetings with industry bodies and depository receipt issuers have not indicated wider issues with the measure.
The rationale for costs for the differential rates is that stamp duty and stamp duty reserve tax apply the same rates to paper and electronic share transfers. I hope that that provides some clarity.
In conclusion, the Government have acted quickly to close a new tax loophole. Clauses 126 and 127 will stop avoidance of stamp tax on shares, raising a significant sum for the Exchequer and ensuring that the tax rules operate fairly.
Question put and agreed to.
Clause 126 accordingly ordered to stand part of the Bill.
Clauses 127 and 128 ordered to stand part of the Bill.
Kirsty Blackman (Aberdeen North) (SNP)
On a point of order, Mr Howarth. Should we not be dealing with new clauses 3 and 6 with clause 128, or will we vote on them at the end? You have taken clauses 127 and 128 together.
Kirsty Blackman
I beg to move, That the clause be read a Second time.
My apologies for causing confusion earlier. If I am ever lucky enough to be on a Finance Bill again, I promise to try hard not to cause so much confusion.
The Government will not be surprised that we have tabled this new clause, because it concerns an ongoing issue between the Scottish and UK Governments. We feel that it still requires attention. To give a little background, before the incorporation of the police and fire authorities, regional authorities were gifted VAT exemption for the fire and rescue and police services. In 2013, when the single Scottish police force and the fire service were brought in, the VAT exemption failed to be carried over to the new services.
The Government argue that the exemption should not apply because national non-departmental public bodies are outside the exemptions under the Value Added Tax Act 1994. Since the issue has arisen, however, HMRC and HM Treasury have decided that tax breaks should be given to the new transport agency Highways England, which is a national non-departmental public body, and that the exemption should be given to the UK-wide Olympic legacy organisation, London Legacy Development Corporation. Those are comparable organisations in terms of territorial extent and they are national bodies, but they have been given the exemption. The Conservative Government can no longer say that the issue is one of fairness, when it is clearly one of unfairness.
The VAT charge, which is being levied unfairly, is costing Scotland’s emergency services tens of millions every year. We would appreciate the opportunity to spend the money on front-line services instead. We have tabled the new clause in the hope that the Government will look at the issue, particularly in the light of the fact that they have permitted exemptions for Highways England and London Legacy. The Government should consider fairness and parity.
Mr Gauke
This is a familiar debate. The new clause requests that the Treasury reviews the VAT treatment of the Scottish police and fire and rescue services, reporting the cost of VAT and what the change would be if they were eligible for a refund. I am tempted to refer the Committee to the speech I have given on numerous occasions previously, as well as to the history of this. Furthermore, the Scottish Government made the decision to reform their public services knowing full well about the VAT implications.
As was explained last year, any use of Treasury resource to review and produce a report into the financial position of Police Scotland and the Scottish Fire and Rescue Service would be unjustified. Neither is eligible to receive VAT refunds under existing legislation, and the Treasury has no intention of amending principles of the VAT refund scheme to change that. I recognise that the SNP has raised the issue before, and I dare say that it will again. However, we cannot support the new clause and, if pressed to a vote, I recommend that the Committee rejects it.
Kirsty Blackman
We wish to return to the matter on Report, so I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 4
Fuel duty regulator regime
‘The Chancellor of the Exchequer shall undertake a review of fuel duty to establish the form of fuel duty regulator regime which would best ensure stability of pricing, and report to Parliament within six months of the passing of this Act.’—(Philip Boswell.)
Brought up, and read the First time.
Kirsty Blackman
I beg to move, That the clause be read a Second time.
The new clause would allow the taxation of allowances payable to Members of the House of Lords to be reviewed. Members of the House of Lords receive a tax-free allowance of £300 for every day that they pitch up and sign in. They do not all claim it, but many of them do. In 2014-15, the House of Lords sat for 126 days. That was a low number of days—normally they sit for more—but I have done some calculations on the basis of that. If one peer was there for all 126 days, they would receive £37,800 tax-free for that year. If we imagine that a lot of peers are on the 40% tax rate—many will be in the 45% bracket; not many will be on a lower tax rate—we are looking at a tax loss to the Treasury of £15,120 per peer. If 798 peers pitched up on all those days, that is a tax loss to the Treasury of £12 million.
Most peers do not turn up every day. The average attendance last year was 483 peers on any given day, which means that the loss to the Treasury is more like £7 million every year. That is quite a lot of money, and considering that the majority of those who sit in the House of Lords probably do not have a huge need for that money, I believe, as a member of a progressive party, that it would be better for some of that wealth to be redistributed. Will the Government seriously consider examining whether those people sitting in the House of Lords should, in times of austerity, receive a tax-free payment? The Treasury could easily do something on this issue; it could decide to tax the £300-a-day allowance at the appropriate level, depending on what the Member earns in other income. This is not a good use of taxpayers’ money. The money could come to the Treasury, but we are using it instead for a tax-free allowance for peers.
Mr Gauke
The Government oppose new clause 5. We are committed to ensuring a fair and more sustainable tax system for everyone, but the Finance Bill is not the appropriate vehicle to review the system of financial support for Members of the House of Lords. The new clause says that the Chancellor of the Exchequer
“shall undertake a review of the tax-free status of allowances payable to members of the House of Lords”.
The Government recognise the importance of keeping the general system of tax reliefs and allowances under review. That is done routinely by the Treasury and HMRC, who consult on changes to the tax system as part of the policy-making process, but the House of Lords introduced the present system of financial support in 2010. That system and its basis have not changed, and therefore we do not consider that the tax treatment needs to be re-examined at this time. In addition, such a review could not be carried out in isolation; the system would need to be considered as a whole, and the Finance Bill is not the vehicle to consider such constitutional reform.
Finally, this cannot be a matter solely for the Commons; we must respect the constitutional position. For the Commons to intervene on House of Lords reform without any involvement of the other House would not be the right process. It is simply not the place of the Finance Bill to legislate for such a review.
Kirsty Blackman
Given that we are asking for a review, it is quite possible that peers and the House of Lords could be consulted and have input into that review. I think the very place to discuss taxation and allowances in taxation is the Finance Bill. That is what we did with respect to workers who work through intermediaries. This is a totally sensible place to discuss this issue.
Mr Gauke
As I said, this has to be looked at in the context of the system of financial support for Members of the House of Lords in the round; we cannot look at the tax system in isolation, which is what a review under the Finance Bill would have to do. This is not the right way in which to consider the system of financial support for Members of the House of Lords. Any review of that system would need to be done in the round, and the new clause is not appropriate for the Finance Bill. I therefore urge hon. Members to oppose new clause 5, if it is pressed to a Division.
Rebecca Long Bailey
I understand that the Review Body on Senior Salaries published a review of financial support for Members of the other place in November 2009. Our position is that there needs to be a broader review of House of Lords salaries and allowances. We are happy to support the Scottish National party if the new clause is pressed to a vote; it certainly deserves consideration.
Finance Bill (Fourth sitting)
Debate between Kirsty Blackman and David Gauke(8 years, 5 months ago)
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Mr Gauke
I am disappointed that this clause and the approach that the Government are taking do not have cross-party support, but I am sure that my hon. Friends on the Government side will support the measures.
The first point I have to make in response to the criticism of the clause is that, of course, the Government were elected and one of our manifesto pledges was to take forward measures to take the family home out of inheritance tax. We also have to bear it in mind that not doing anything on inheritance tax is not a neutral option, because the consequence of leaving inheritance tax alone is that, in a period in which property prices increase, more and more households and estates fall within inheritance tax and inheritance tax receipts will go up. It is worth pointing out that inheritance tax receipts in cash terms will continue to be higher under this Government than at any time since the introduction of inheritance tax in 1986, including the period of the last Labour Government between 1997 and 2010, when receipts peaked at £3.8 billion in 2007-08. Let us remember that.
Regarding the impact of not doing anything, do remember that relatively modest properties have increased in value. In 2015, the average house price in London was £552,000 and in the south-east it was £375,000. That means that relatively modest households were potentially finding themselves with an inheritance tax bill, which had not previously been the case under Governments of different colours.
Some technical points were made by Opposition Members. I was asked whether the downsizing rules will apply when the former house was held in a trust. Amendment 19 caters for such situations. The measure will apply only where the former home was held in a type of trust that was set up for the benefit of a person during their lifetime and that person had a right to the trust assets. It does not apply to former homes held in discretionary trusts because they would not qualify for the residence nil-rate band in those circumstances.
I was asked whether the estate would qualify for the allowance if the home is left in trust for a spouse and on their death passes to the children. The answer to that is no. If the home is transferred on death to a life interest trust to the benefit of the surviving spouse, the deceased’s estate will not qualify for the residence nil-rate band because the home is not inherited by a direct descendant at that time. However, the unused portion of the residence nil-rate band can be transferred to the surviving spouse’s estate to be used on their death. If the home subsequently passes to a direct descendant on the death of the surviving spouse or life tenant, their estate will be eligible for the residence nil-rate band.
In terms of exact numbers for the United Kingdom, I do not have those numbers; I will have to write to the hon. Member for Kirkcaldy and Cowdenbeath. However, it is the case that there are beneficiaries of this policy throughout the United Kingdom.
Kirsty Blackman (Aberdeen North) (SNP)
We are not denying that there will be people who will benefit from not paying tax or from paying less tax, but in places in Scotland you can get a castle for £1 million—albeit a small castle—and that is in no way, shape or form a family home, and it should not be classed as such.
Mr Gauke
I come back to what I was saying earlier, namely, that doing nothing will mean that many properties, often relatively modest properties, will fall within the inheritance tax bands. Doing nothing will mean that a tax that I think most people in this country would support, on the basis that it is designed for the very wealthy, would apply to people who would not necessarily have had high incomes in their lifetimes. That creates a sense of unfairness. There are certainly parts of Edinburgh where relatively modest properties are of such a value as to create concerns about inheritance tax.
Mr Gauke
As we have heard, clause 83 makes changes to ensure that when an individual dies, unused funds in a drawdown pension are not treated as part of their estate for inheritance tax purposes. Without the clause, a small number of pensions would be liable for inheritance tax in some circumstances, which was not our intention.
As the Committee will be aware, funds that remain in a pension scheme do not traditionally form part of a deceased’s estate and are generally exempt from inheritance tax. Nevertheless, under the current tax rules, in a small number of circumstances undrawn pension funds are unintentionally caught. For example, if an individual has designated funds for pension drawdown and then passes away without having drawn down all those funds, an inheritance tax charge may arise.
The Government introduced changes to the pensions tax rules from April 2015 that allowed more people to flexibly access their pension funds from age 55. That flexibility means that the inheritance tax charge might apply to more people who pass away leaving undrawn funds in their pension scheme. It was not intended that an IHT charge should arise in such circumstances; the clause ensures that it will not do so. It changes the existing rules so that an inheritance tax charge will not arise when a person has unused funds remaining in their drawdown pension when they die.
The changes will be backdated and will apply for deaths on or after 6 April 2011, so that they include any charges that could arise from the time when the general rule ceased to apply. The minor changes made by the clause will help to maintain the integrity and consistency of the pensions system while supporting those who have worked hard and saved responsibly throughout their lives. I commend the clause to the Committee.
Question put and agreed to.
Clause 83 accordingly ordered to stand part of the Bill.
Clause 84
Inheritance tax: victims of persecution during Second World War era
Question proposed, That the clause stand part of the Bill.
Kirsty Blackman
I am pleased that this clause has been included in the Bill. It seems to be a sensible measure, and I am pleased to note that there will be the ability to tidy up afterwards if anything else needs mopping up. The Scottish National party welcomes the clause.
Mr Gauke
I thank the hon. Lady for her support. I would expect such a measure to have the support of the whole Committee. As the Prime Minister said on National Holocaust Day,
“whatever our faith, whatever our creed, whatever our politics”
it is right that the whole country should stand together to remember the
“darkest hour of human history.”
To that end, the Government have committed to building a national memorial in London to show the importance that Britain places on preserving the memory of the holocaust.
The clause provides further reassurance and certainty to holocaust victims by placing on a statutory footing their right not to pay inheritance tax on the compensation they receive as a result of their persecution. I am proud that the Government have extended the inheritance tax exemption even further to include a one-off compensation payment for the victims who endured such an unimaginable trauma in their childhood. I am delighted that the clause has cross-party support.
Question put and agreed to.
Clause 84 accordingly ordered to stand part of the Bill.
Clause 85
Inheritance tax: gifts for national purposes etc
Question proposed, That the clause stand part of the Bill.
Kirsty Blackman
A number of people have got in touch on this point. I would appreciate it if the Government could keep it in mind going forward, and consider making changes. Employee ownership is really important, and going forward we will have more and more employee-owned companies. I do not want people to be discouraged from taking that route because they will have to structure their pay bills differently as a result of the apprenticeship levy.
Mr Gauke
I note the point the hon. Lady makes. The difficulty is that carving out bonuses that are distributed to employees of owner-managed businesses from the definition of earnings would increase the incentive to remunerate employees via bonuses rather than regular salary. That could create adverse incentives, and would also have a damaging impact on public finances. I understand why the hon. Lady raises this point, but I hope that she appreciates why we have not gone down that particular route.
On the point made by the hon. Member for Salford and Eccles about employment agencies, the apprenticeship levy will be payable by employers who pay earnings subject to class 1 secondary NICs. Where an employment agency supplies labour to a client and is the NICs secondary contributor for those workers, the agency will, like any other employer, be liable to pay the apprenticeship levy, provided that its annual pay bill is in excess of £3 million.
Apprenticeships are now the cornerstone of the skills system and provide opportunities for all sectors and all levels. Everyone stands to benefit from the better-skilled workforce that the apprenticeship levy will help to deliver. It is right that everyone plays their part and contributes to that. There is no reason why an agency could not take advantage of the drawdown from its levy account, if it satisfied the relevant criteria. We are introducing a number of flexibilities in funding for apprenticeships, such as the ability to use funding for equivalent and lower-level apprenticeships where the training is materially different from the learner’s existing qualification or leads to training in a new profession.
On the point raised by the hon. Member for Kirkcaldy and Cowdenbeath about top-slicing for England-only programmes, let me reassure him that we will not top-slice levy accounts to fund administration costs. To answer his question about what regulatory framework will ensure appropriate quality, the levy is just part of the Government’s reforms designed to improve the quality of apprenticeships. We are creating a new institute for apprenticeships to monitor quality standards, and employer-led trailblazer groups, which I touched upon a moment ago, and which allow employers to design new training standards. There are also funding rules; they require 20% off-the-job training and that apprenticeships must last one year. The Ofsted inspection regime applies to English training providers in order to guarantee quality, and there is the levy itself, which fosters employee ownership.
On the devolved authority funding mechanism, we are committed to doing all we can to make the system work for employers, wherever they are in the UK. I am pleased to see that the Scottish Government will shortly consult on how the apprenticeship levy could enhance productivity and growth in Scotland, and I would encourage other devolved nations to do the same. It will not be possible to identify individual employer contributions in the block grant; I wanted to provide that point of clarity. On the wider issue of productivity, the Government remain committed to improving productivity by increasing the quantity and quality of apprenticeships. The apprenticeship levy will enable us to do that. That is why I am pleased that we have these clauses in front of us, and I hope that they will have the support of the Committee.
Question put and agreed to.
Clause 87 accordingly ordered to stand part of the Bill.
Clause 88
charge to apprenticeship levy
Amendments made: 22, in clause 88, page 144, line 32, leave out
“any of sections 90 to”
and insert “section”.
Amendment 23, in clause 88, page 144, line 33, leave out “of £15,000”.
Amendment 24, in clause 88, page 144, line 33, at end insert—
‘( ) The amount of the levy allowance is £15,000 (except where section 90 or 91 provides otherwise).”—(Mr Gauke.)
Clause 88, as amended, ordered to stand part of the Bill.
Clause 89 ordered to stand part of the Bill.
Clause 90
connected companies
Amendments made: 25, in clause 90, page 145, line 33, leave out subsections (1) to (3) and insert—
‘(1) Two or more companies which are not charities form a “company unit” for a tax year (and are the “members” of that unit) if—
(a) they are connected with one another at the beginning of the tax year, and
(b) each of them is entitled to a levy allowance for the tax year.
(2) The members of a company unit must determine what amount of levy allowance each of them is to be entitled to for the tax year (and the determination must comply with subsections (3) and (3A)).
But see subsections (3C) and (3H).
(3) A member’s levy allowance for a tax year may be zero (but not a negative amount).
(3A) The total amount of the levy allowances to which the members of a company unit are entitled for a tax year must equal £15,000.
(3B) A determination made under subsection (2) (with respect to a tax year) cannot afterwards be altered by the members concerned (but this does not prevent the correction of a failure to comply with subsection (3A)).
(3C) If subsection (3E) applies—
(a) HMRC must determine in accordance with subsection (3D) what amount of levy allowance each of the relevant members (see subsection (3E)(a)) of the unit concerned is to be entitled to for the tax year, and
(b) accordingly subsection (2) is treated as never having applied in relation to that company unit and that tax year.
(3D) The determination is to be made by multiplying the amount of levy allowance set out in each relevant return (see subsection (3E)(a)) by—
where T is the total of the amounts of levy allowance set out in the relevant returns.
The result is, in each case, the amount of the levy allowance to which the relevant member in question is entitled for the tax year (but amounts may be rounded up or down where appropriate provided that subsection (3A) is complied with).
(3E) This subsection applies if—
(a) HMRC is aware—
(i) that two or more members of a company unit (“the relevant members”) have made apprenticeship levy returns (“the relevant returns”) on the basis mentioned in subsection (3F), and
(ii) that those returns, together, imply that the total mentioned in subsection (3A) is greater than £15,000,
(b) HMRC has notified the relevant members in writing that HMRC is considering taking action under subsection (3C), and
(c) the remedial action specified in the notice has not been taken within the period specified in the notice.
(3F) The basis in question is that the member making the return is entitled to a levy allowance (whether or not of zero) for the tax year concerned.
(3G) If any member of the company unit mentioned in subsection (3E)(a) is not a relevant member, that member is entitled to a levy allowance of zero for the tax year.
(3H) If subsection (3J) applies—
(a) HMRC must determine in accordance with subsection (3I) what amount of levy allowance each of the members of the unit concerned is to be entitled to for the tax year, and
(b) accordingly subsection (2) is treated as never having applied in relation to that company unit and that tax year.
(3I) Each member of the unit is to be entitled to a levy allowance for the tax year equal to—
where N is the number of the members of the company unit for the tax year.
Amounts determined in accordance with the formula in this subsection may be rounded up or down where appropriate provided that subsection (3A) is complied with.
(3J) This subsection applies if—
(a) the total amount paid by the members of a company unit in respect of apprenticeship levy for a tax year or any period in a tax year is less than the total of the amounts due and payable by them for the tax year or other period concerned,
(b) either the members of the unit have made no apprenticeship levy returns for any period in the tax year concerned or the returns that have been made do not contain sufficient information to enable HMRC to determine how the whole of the £15,000 mentioned in subsection (3A) is to be used by the members of the unit for the tax year,
(c) HMRC has notified all the members of the unit in writing that HMRC is considering taking action under subsection (3H), and
(d) the remedial action specified in the notice has not been taken within the period specified in the notice.
(3K) Subsection (3A) is to be taken into account in calculating the total of the amounts due and payable as mentioned in subsection (3J)(a).
(3L) The Commissioners may by regulations provide that in circumstances specified in the regulations the members of a company unit may alter a determination made under subsection (2) (despite subsection (3B)).
(3M) In this section “apprenticeship levy return” means a return under regulations under section 94(4).”
Amendment 26, in clause 90, page 146, line 1, leave out “section” and insert “Part”—(Mr Gauke.)
Clause 90, as amended, ordered to stand part of the Bill.
Clause 91
connected charities
Amendment made: 27, in clause 91, page 146, line 5, leave out subsections (1) to (3) and insert—
‘(1) Two or more charities form a “charities unit” for a tax year (and are the “members” of that unit) if—
(a) they are connected with one another at the beginning of the tax year, and
(b) each of them is entitled to a levy allowance for the tax year.
(2) The members of a charities unit must determine what amount of levy allowance each of them is to be entitled to for the tax year (and the determination must comply with subsections (3) and (3A)).
But see subsections (3C) and (3H).
(3) A member’s levy allowance for a tax year may be zero (but not a negative amount).
(3A) The total amount of the levy allowances to which the members of a charities unit are entitled for a tax year must equal £15,000.
(3B) A determination made under subsection (2) (with respect to a tax year) cannot afterwards be altered by the members concerned (but this does not prevent the correction of a failure to comply with subsection (3A)).
(3C) If subsection (3E) applies—
(a) HMRC must determine in accordance with subsection (3D) what amount of levy allowance each of the relevant members (see subsection (3E)(a)) of the unit concerned is to be entitled to for the tax year, and
(b) accordingly subsection (2) is treated as never having applied in relation to that charities unit and that tax year.
(3D) The determination is to be made by multiplying the amount of levy allowance set out in each relevant return (see subsection (3E)(a)) by—
where T is the total of the amounts of levy allowance set out in the relevant returns.
The result is, in each case, the amount of the levy allowance to which the relevant member in question is entitled for the tax year (but amounts may be rounded up or down where appropriate provided that subsection (3A) is complied with).
(3E) This subsection applies if—
(a) HMRC is aware—
(i) that two or more members of a charities unit (“the relevant members”) have made apprenticeship levy returns (“the relevant returns”) on the basis mentioned in subsection (3F), and
(ii) that those returns, together, imply that the total mentioned in subsection (3A) is greater than £15,000,
(b) HMRC has notified the relevant members in writing that HMRC is considering taking action under subsection (3C), and
(c) the remedial action specified in the notice has not been taken within the period specified in the notice.
(3F) The basis in question is that the member making the return is entitled to a levy allowance (whether or not of zero) for the tax year concerned.
(3G) If any member of the charities unit mentioned in subsection (3E)(a) is not a relevant member, that member is entitled to a levy allowance of zero for the tax year.
(3H) If subsection (3J) applies—
(a) HMRC must determine in accordance with subsection (3I) what amount of levy allowance each of the members of the unit concerned is to be entitled to for the tax year, and
(b) accordingly subsection (2) is treated as never having applied in relation to that charities unit and that tax year.
(3I) Each member of the unit is to be entitled to a levy allowance for the tax year equal to—
where N is the number of the members of the charities unit for the tax year.
Amounts determined in accordance with the formula in this subsection may be rounded up or down where appropriate provided that subsection (3A) is complied with.
(3J) This subsection applies if—
(a) the total amount paid by the members of a charities unit in respect of apprenticeship levy for a tax year or any period in a tax year is less than the total of the amounts due and payable by them for the tax year or other period concerned,
(b) either the members of the unit have made no apprenticeship levy returns for any period in the tax year concerned or the returns that have been made do not contain sufficient information to enable HMRC to determine how the whole of the £15,000 mentioned in subsection (3A) is to be used by the members of the unit for the tax year,
(c) HMRC has notified all the members of the unit in writing that HMRC is considering taking action under subsection (3H), and
(d) the remedial action specified in the notice has not been taken within the period specified in the notice.
(3K) Subsection (3A) is to be taken into account in calculating the total of the amounts due and payable as mentioned in subsection (3J)(a).
(3L) The Commissioners may by regulations provide that in circumstances specified in the regulations the members of a charities unit may alter a determination made under subsection (2) (despite subsection (3B)).
(3M) In this section “apprenticeship levy return” means a return under regulations under section 94(4).”—(Mr Gauke.)
Clause 91, as amended, ordered to stand part of the Bill.
Clauses 92 to 108 ordered to stand part of the Bill.
Clause 109
general interpretation
Amendment made: 28, in clause 109, page 155, line 35, at end insert—
““company” has the meaning given by section90(5);” —(Mr Gauke.)
Clause 109, as amended, ordered to stand part of the Bill.
Clause 110 ordered to stand part of the Bill.
Finance Bill (First sitting)
Debate between Kirsty Blackman and David Gauke(8 years, 5 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Kirsty Blackman (Aberdeen North) (SNP)
We argued against English votes for English laws all the way through. It was a dreadful initiative. The Government intend to reassess English votes for English laws at the end of this year and look at how it has worked, so I think we might be jumping the gun on some of the income tax measures. I will not move against them, but this is possibly doing things a bit too soon. Obviously, we will have our own Scottish rate of income tax, which we can set; it is fabulous that the devolved Administration will be able to do that. However, Scottish MPs will be excluded from discussions on income tax—a major, serious part of the Finance Bill—and that further compounds the difference between Scottish MPs and English and Welsh MPs in this House. The impression given to the general public by the change in the law to enable that to happen will be even worse, and that will hasten the break-up of the United Kingdom.
Mr Gauke
First, I will respond to the hon. Lady. I have certainly heard the comment by the likes of the hon. Member for Perth and North Perthshire (Pete Wishart) that the people of Scotland could not care less about English votes for English laws. He changed his position, and then found himself somewhat outraged by EVEL.
It is perfectly reasonable that when measures affect one part of the UK but not another, those MPs who represent the constituencies affected by it are able to express their views on it and vote on it, and that any such measure should have the support of people representing that part of the UK.
Kirsty Blackman
I understand that the issue is whether or not a measure affects people in those areas, but will the Minister not concede that changes on income tax rates might have a knock-on effect, albeit indirect, on people in Scotland, particularly those who live around the borders?
Mr Gauke
I suppose that is true, but if one wanted to follow the logic of that argument through, independence for Scotland would certainly have a very significant knock-on effect on people living south of the border, and I suspect that the hon. Lady does not advocate any future referendum on that issue requiring the consent of the whole of the United Kingdom. Sir Roger, we could debate this matter for some time, but I suspect the Committee’s appetite to do so is not great.
I do not think that this measure particularly adds to complexity. Non-savings income and non-dividend income, such as employment income, are already taxed differently from other sources of income, such as savings and dividends, so separating out in legisation the rates of income tax on non-savings and non-dividend income from savings will not introduce any real additional complexity. Employees, individuals and pension providers will see no changes to the level of tax paid or the way they pay tax as a result of legislation being introduced in the Finance Bill to separate out the main rates of income tax.
On the specific technical point made by the hon. Member for Wolverhampton South West, if I may, I will write to him on that.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clause 19
Standard lifetime allowance from 2016-17
Question proposed, That the clause stand part of the Bill.
Finance Bill (Second sitting)
Debate between Kirsty Blackman and David Gauke(8 years, 5 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Gauke
The clause makes changes to exclude all remaining energy-generation activities from the tax advantage venture capital schemes, thereby ensuring that the schemes continue to be well targeted towards high-risk companies and that the tax reliefs are in keeping with the original policy intent.
The venture capital schemes offer generous tax reliefs to encourage investment in small and growing higher- risk companies that cannot otherwise access finance. In recent years, there has been a significant increase in tax-advantaged investment in energy-generation companies. Such activities are generally lower risk, with predictable, reliable and regular income streams. The Government have previously made changes to exclude from the schemes those companies that have benefited from guaranteed income streams for the generation of energy. However, those exclusions have resulted in investment shifting to other forms of energy generation, rather than to the higher-risk investment that the schemes are intended to support. The changes made by this clause will ensure that the Government remain consistent in their approach by keeping the venture capital schemes targeted at higher-risk companies.
The clause will exclude all forms of energy generation from qualifying for the venture capital schemes, including the seed enterprise scheme, the enterprise investment scheme and venture capital trusts. The Government also intend to apply the exclusions to the social investment tax relief once it is enlarged. The measure is expected to yield £95 million annually from 2016-17 onwards, helping the Government to deliver on their commitment to tackle the budget deficit.
Amendment 135 would require a report to be published on the impact of the exclusion of energy generation from the venture capital schemes on the renewable energy sector, community energy projects and the energy sector. Such a report would need to be published within one year of the Bill becoming an Act. The Government provide a range of support for renewable energy, and that support will double over this Parliament, reaching more than £10 billion in 2020-21. That represents a sixfold increase in spend since 2011-12. The relief schemes I have mentioned serve a different purpose: to help smaller, higher-risk companies across a range of sectors to access the investment they need to grow and create jobs.
Energy generation is typically a lower-risk activity for which investment can be secured without tax relief. Allowing it to qualify for tax relief diverts investment away from the companies that need it most. In addition, from a practical perspective, companies that raised investment for the purpose of energy generation before its exclusion have up to two years to spend the money. A report in just one year’s time would therefore serve little purpose.
A report as suggested by the amendment would have little value from a practical point of view. The exclusion of energy from the venture capital schemes is a principled decision based on the lower risk profile of the activity. The Government therefore believe the amendment is unnecessary, and I hope it will be withdrawn.
Kirsty Blackman (Aberdeen North) (SNP)
With all the changes the Government are making to the support of energy policy and with the lack of a pot 1—established technologies—contracts for difference round in the near future, does the Minister not feel that projects such as onshore wind are much less likely? This measure has to be taken in the round. It may cause problems because the Government are doing many other things that go against, in particular, onshore wind generation.
Mr Gauke
Where I agree with the hon. Lady is that these things should be looked at in the round. The Government are committed to supporting the investment and innovation needed to achieve a cost-effective transition to a low-carbon economy while ensuring security of energy supply and avoiding unnecessary burdens on businesses and households. We are making great strides towards our commitments, with emissions down 30% since 1990. Support for renewables from taxpayers and bill payers will double over this Parliament, reaching more than £10 billion in 2020-21, as I mentioned. That is a sixfold increase in spend since 2011-12. We have more than trebled our renewable electricity capacity since 2010. In the round, the Government’s record is strong.
We are committed to supporting small and growing businesses. The presence of low-risk, asset-backed investments such as those described today crowds out investment in higher-risk propositions. It is right that the Government act to exclude such investors.
Finance Bill
Debate between Kirsty Blackman and David Gauke(8 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Gauke
Thank you, Mrs Laing. I am grateful for those remarks.
The measures I will outline ensure the simple, clear and fair tax treatment of employment income and benefits, strengthen incentives to choose the cleanest cars and vans, and ensure that those who have used artificial arrangements to avoid paying tax pay their fair share. Given the number of measures selected for debate, I will briefly set out how I will speak on them today. I will first discuss clauses 8 to 11, concerning company car taxation and the van benefit charge. I will then outline clause 7 and clauses 12 to 17, which address tax treatment of income and certain benefits. Finally, I will outline clause 18, which addresses disguised remuneration schemes.
I turn first to clauses 8 to 11. Clause 8 will increase the appropriate percentage for conventionally fuelled cars by three percentage points in 2019-20; it will also widen the tax advantage of ultra-low emission cars over conventionally fuelled cars in 2019-20 compared with previously announced plans. As a result of the changes, in 2019-20 a basic rate taxpayer driving a popular ultra-low emission company car will be £113 better off. Clause 9 makes a minor technical update to ensure the legislation works as is intended in 2017-18 and 2018-19. The update applies to a small number of rare company cars. It is estimated that exposure to nitrogen dioxide is linked with 23,500 deaths annually in the UK, costing approximately £13.3 billion.
As was announced in the autumn statement in 2015, clause 10 retains the three percentage point supplement for diesel company cars until 2021. That will support the UK’s transition from diesel cars to cleaner, zero and ultra-low emission cars. As a result, a basic rate taxpayer with an average ultra-low emission company car will save an additional £150 in 2016-17, compared with an employee who has an average diesel company car.
Clause 11 retains the van benefit charge for zero-emission vans at 20% of the rate paid by conventionally fuelled vans for 2016-17 and 2017-18, rather than increasing it to 40% and 60% as currently planned. That means that a basic rate taxpayer who drives a zero-emission van will save £126 in 2016-17 and £258 in 2017-18. Together, clauses 8 to 11 will incentivise business and employees to take up the cleanest cars and vans. That will help to ensure that the market for those new technologies becomes established in the UK, and to support the UK’s carbon emission and air-quality targets.
In anticipation of what we will hear from the Opposition, let me turn to amendments 2 and 3 to clause 10. The amendments would require the exemption of diesel cars from paying the supplement if they achieve the same level of nitrogen dioxide emissions as petrol cars. I appreciate that hon. Members want to incentivise people to purchase the cleanest cars, but the amendments would only introduce confusion and uncertainty. They are not linked to the wider regulatory programme to achieve the latest air quality standards, even when cars are driven on our roads. Clause 10 retains the supplement until 2021 when those new standards will be mandatory for all new cars. That approach is transparent and easy to understand, and it will give consumers confidence that all new diesel cars are comparable to petrol cars. Our approach incentivises people to purchase the cleanest cars, and in anticipation of what will be said later, I hope that Labour Members will not press the amendments to a vote.
Let me consider those clauses that clarify and simplify the tax treatment of income and certain benefits, and ensure fairness in the tax system. Clause 7 will clarify how the cash equivalents of certain taxable benefits are calculated, and ensure that fair bargain does not apply to those taxable benefits in kind where the level of computing the value of the benefit is set out in statute. The Government have made minor technical changes in amendments 22 to 26, which ensure that the legislation works as intended.
Clause 12 and schedule 2 will provide clarity that all income from sporting testimonials for an employed or previously employed sportsperson will be taxable. However, we are aware that careers in sport can be short, so we have also introduced an exemption for the first £100,000 of income received from a sporting testimonial that is not contractual or customary. The Government believe that that is a fair compromise, and the vast majority of employed sportspersons who have testimonials will not be impacted. Clause 13 introduces a statutory exemption for certain benefits costing up to £50 that employers provide to their employees. That will simplify the tax treatment of those benefits and reduce the administrative burden for employers. To ensure that the exemption is not misused, a £300 annual cap will apply in certain circumstances. That sensible and simplifying measure will reduce burdens on employers and HMRC alike.
Clause 14 will ensure that no individual or business can obtain an unfair tax advantage through claiming tax relief on home-to-work travel and subsistence expenses. It is an established principle in the UK that people are not able to claim tax relief on the cost of ordinary commuting, and the vast majority of workers are not able to do so. Individuals who are engaged through intermediaries—such as umbrella companies and their employers—currently benefit from that relief and the cost of commuting from home to work, simply because of the way they are engaged to work.
Kirsty Blackman (Aberdeen North) (SNP)
Has the Minister considered whether this measure will have a disproportionate impact on rural communities where travel is much more expensive and sometimes an overnight stay is necessary when undertaking those roles?
Mr Gauke
I will say a little more about clause 14, but I believe that this is a matter of fairness. For the vast majority of people, home-to-work costs do not have tax relief, and it is right to apply the same rules across the board. If there is a difference in treatment just because an arrangement is made through an umbrella company or other form of intermediary, clause 14 will put those workers on the same terms as everybody else. That underpins the Government’s commitment to ensure that the tax system is fair and treats all individuals who are doing the same thing in the same way.
Kirsty Blackman
Absolutely we do. When we talk about “intermediaries” and “different types of worker”, we mean all those who will be impacted by this change in the taxation measures.
Mr Gauke
I am grateful for the various points made in this debate. I will not repeat everything I said in my opening remarks, but I will try to address the questions raised, and we have had plenty of those. Perhaps I should begin by saying how pleased I was to see the hon. Member for Wolverhampton South West (Rob Marris) join us, as one never knows these days who will be on the Labour Front Bench. Given the considerable work that he clearly put into his speech—not forgetting the considerable work put in by Imogen Watson—it would have been a great pity were he not to have been on the Front Bench to ask those questions, so I am delighted to see him.
Oral Answers to Questions
Debate between Kirsty Blackman and David Gauke(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Kirsty Blackman (Aberdeen North) (SNP)
Will the Minister and his Front-Bench colleagues commit to taking action to ensure that companies in the oil and gas sector have appropriate access to finance at this time?
Mr Gauke
The Government do all they can to support businesses the length and breadth of the United Kingdom in all sectors. My point is that we are able to take action and support the oil and gas sector because we are the United Kingdom. Had Scotland become independent, it would be facing a very substantial loss of revenue and have great difficulties absorbing that.