Public Procurement Processes

Debate between Kirsty Blackman and Peter Dowd

Wednesday 25th January 2023 Westminster Hall

[Kirsty Blackman]

I absolutely do. It is disappointing, especially given some of the excellent things that are happening in Wales, particularly around the work of the Future Generations Commissioner and how that is embedded in what the Welsh Government do. To hand that over to Westminster seems a real dereliction of duty, and I am concerned that that is the direction that has been chosen.

The biggest concern that we have about the Procurement Bill is its significant impact on Scotland in relation to devolution and the implementation of trade deals, including the Australia and New Zealand trade deals. We agree that trade deals are reserved. Obviously, we want to be independent, and we will be signing our own trade deals then, but while they are reserved, we agree that that is what the devolution settlement looks like. However, the implementation of trade deals in Scotland touches on devolved areas. We should be able to implement the procurement rules that come out of trade deals ourselves. The Procurement Bill will allow UK Ministers to implement, through secondary legislation, procurement practices in Scotland, as well as in the rest of the UK. That should be the responsibility of the Scottish Parliament and Scottish Ministers, and the UK Government should put that in the Bill rather than reserving that additional power.

[Peter Dowd]

Does the hon. Lady agree that the Bill is taking back control to Westminster, not to the places that actually need it?

Customs Safety and Security Procedures (EU Exit) (No. 2) Regulations 2019

Debate between Kirsty Blackman and Peter Dowd

Monday 7th October 2019 General Committees

[Kirsty Blackman]

I absolutely agree with the hon. Lady. In reality, the legislation does not provide more clarity to businesses. In fact, it provides less, because they do not know whether HMRC will be able to grant them the waiver using this discretionary power. Businesses will still have to prepare to put in safety and security declarations because there is no clarity from the Government on whether they definitely will or will not be included in the new regime. It would have been sensible of the UK Government to lift the clauses from the Union customs code and use them to make the customs Act work, but they chose not to.

[Peter Dowd]

On readiness, as the hon. Lady points out, we are less than a month away from leaving the EU, which we have been told will happen come what may, ditches included. It says on Gov.uk:

“Contact your vehicle insurance provider 1 month before you travel to get green cards for your vehicle, caravan or trailer.”

How many of those who know that they are going away in less than a month have their documentation ready?

[Kirsty Blackman]

Certainly too few. In fact, I discovered relatively recently that France and Spain, for example, have different regulations for those taking caravans, trailers or cars abroad. If someone were planning to do some kind of tour around those countries—that is perfectly feasible, given that they have much warmer weather than us at this time of year—they would need different permissions, depending on the country that they are going to. I am particularly concerned that many individuals will not have contacted their insurer in good time.

More specifically on businesses and the waiver, we know that businesses are not prepared for Brexit. If the Government are setting out to try to make things easier for businesses, they are abjectly failing to do so. In reality, the Government chose not to lift and shift the Union customs code. Had they chosen to lift and shift from the code, they would have had to take out certain parts because of the way that it works, but when the customs Act was written—I made this point at the time—the Government chose to bodge some parts of it and do them completely differently, with no rhyme or reason about the way to take it forward. For businesses, that has made things much more complicated than they needed to be. The Government have chosen that route and made the nuts and bolts and red tape much more complicated for businesses.

In circumstances where HMRC does not decide to grant the discretionary waiver to businesses and requires them to submit two separate declarations of security and safety work, how much additional money will that cost businesses? I understand from the explanatory memorandum that an analysis of the cost to businesses has to be done if it is likely to pass a certain threshold. The explanatory memorandum does not state the amount that it would cost businesses to submit those two separate declarations if HMRC decides that it will not use its discretionary power.

The hon. Member for Feltham and Heston mentioned the “greater than anticipated” wording. What level of unreadiness is anticipated? Do the Government anticipate that 50% of businesses making declarations will fail to do so adequately? Does the power kick in only if 51% of businesses fail to do so adequately? What is the anticipated failure rate by businesses before the legislation kicks in for HMRC? I feel that this has been put together in a shoddy way, and that it could have been done much better. Better scrutiny could have been applied if the Government had chosen the better processes that the House agreed for the sifting Committee. The reason we are in this mess today—aside from Brexit in general—is that the Taxation (Cross-border Trade) Act 2018 was not good enough and did not give enough certainty to businesses. That is why we have had to amend it a number of times before exit day.

National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill

Debate between Kirsty Blackman and Peter Dowd

3rd reading: House of Commons & Programme motion: House of Commons & Report stage: House of Commons
Monday 10th June 2019 Commons Chamber

[Peter Dowd]

My hon. Friend makes an important point. The Government would have us believe that there is an amount of money that people can raise or earn before the testimonial tax—that is what it is—comes in. I am sure that the Minister will be able to explain that to us, but we have had very little help by way of explanation from the Government on this whole area, and the measure is being introduced without significant or appropriate discussion.

Members will no doubt be pleased that I will only speak for another hour—I jest. This is yet another piecemeal reform designed to penalise employers and workers alike, while raising comparatively small sums for the Exchequer compared with the total amount of national insurance contributions that it receives each year, which I identified earlier as more than £130 billion. Of course, the Government remain wedded to cutting taxes for large corporations and the wealthy alike, leaving our public services and ordinary workers footing the bill. In fact—this is important—the right hon. Member for Uxbridge and South Ruislip has committed to £10 billion of tax cuts should he become Prime Minister, with the Institute for Fiscal Studies saying that the biggest beneficiaries would be wealthy pensioners and people living solely off investments, as neither pay national insurance contributions. Actually, all the Members of Parliament here would also be better off under the proposal by the former Foreign Secretary.

The Opposition will not countenance supporting a Bill that will indirectly lead to workers’ termination pay being reduced, especially when Tory hopefuls are throwing even more money at those who do not need it. Nor will we support a Bill that fails to offer any protection for women, older workers or pregnant women who could be financially worse off as a result of this change. If the front-runner for the Tory party leadership can give £10 billion to supporting wealthy investors, we can afford to support pregnant women who have been made redundant. For those reasons, we will oppose this Bill on Report and on Third Reading. I encourage colleagues from across the House to do exactly the same. Thank you very much for your indulgence, Mr Deputy Speaker.

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to take part in a Report stage where the Government do not have amendments to their own Bill. That is quite unusual these days. Most of the Bills that we have seen recently have had Government amendments to them because there have been errors in the drafting, so I congratulate to the Minister for managing to bring in one that has not. Obviously, it would be great if he could see his way to accepting all the amendments tabled by the Opposition and by me, but he can save that up for his speech and let us know then whether he is willing to do so.

I will talk us through the amendments that we have tabled but also make it clear that we are willing to support the amendments tabled by the Opposition. Our new clause 2 is about the impact of the changes to class 1A national insurance contributions on termination awards. It asks for a number of different things, including

“an assessment of the expected impact on…the total net value of termination payments received by individuals…the average net value of such payments; and…the number of business start-ups that are funded by termination payments…in each region of the United Kingdom.”

We ask for this for a number of reasons, but mostly because I was a bit annoyed by what is in the Government’s explanatory notes, which basically said, “We expect there to be no impact on employees”, but actually meant, “We expect there to be no additional tax liability impact on employees.” But the reality is that there will be an impact on employees as employers will choose to give their employees less in termination awards because they will be liable for this class 1A contribution.

I specifically mentioned the number of business start-ups because I am acutely aware of the number of people, particularly where I am in Aberdeen, who struggled during the oil price fall that occurred in 2015-ish and were made redundant as a result of it. A number of them went on to start new businesses because of the termination payment that they received. I am concerned that reducing the amount of termination awards that people receive will mean that there will be fewer of those new business start-ups, and we may not see some of those businesses that go on to be phenomenally successful just for want of a few extra pounds in the termination award that is made.

Another thing that concerns me is that the Government’s projections show that wages for everybody will fall as a result of this additional charge on employers. The Government have admitted that; it is included within the calculation. Even people who are not receiving termination awards or are not, at any stage, likely to receive them—even those who are receiving only the Government’s national living wage, which is a pretendy living wage that people cannot live on, and those who are under 25 and therefore not eligible for it—will experience a reduction in wages as a result of the Government’s changes to employer class 1A liability in relation to termination awards. It is not fair that we are asking people who already do not have enough to live on to pay this additional contribution. That might seem to be an odd position to take in this Chamber when we have Conservative leadership candidates talking about lowering tax for the very richest, but I do not believe that wages should be lowered for those at the bottom of the pile, to increase what is in the Government’s coffers. If we are to do that, surely we should choose, as the Scottish Government have done, to levy that money through a more progressive taxation system.

The other issue with the termination awards aspect relates to the collection method that is described. Currently—this is from the Government’s website—employers pay class 1A and 1B national insurance on expenses and benefits they give to their employees. They have to fill in the forms only once a year and are given a deadline for doing so. The Government have not yet said how they intend these payments to be paid in real time, or how they intend that employers should ensure that they are recording them and paying them in real time. If the Government expect them to do this, they need to clarify that more quickly. I am particularly concerned about the employers who currently do not pay class 1A contributions in any way, shape or form because they do not allow employee benefits such as company cars or health insurance as part of their deal, yet are now being brought into class 1A contributions because, for some unknown reason, the Government have chosen to use class 1A contributions as the method of collection—the method of liability—rather than choosing a different method. Class 1A contributions are not levied on any cash just now; they are levied only on benefits in kind.

Therefore, a number of employers will need to have new computer systems to pay this money. Those who do already pay for benefits in kind will need to have a different computer system that allows them to pay in real time rather than at the end of the year. That will involve a lot of additional work for HMRC and for tax professionals who will have to advise employers on this method. That is an extra cost to employers—not just the actual additional money that they will have to pay but the additional administration cost that they will have to go through. It is incredibly important that if the Government intend to press ahead with this, they do everything they can to ensure that every employer who does not currently have any liability for class 1A contributions, in particular, is well aware of these changes and the new liability that will arise if they make any termination payments in excess of £30,000.

Let me move on to sporting testimonials. My concern is much the same as that raised by Opposition Front Benchers in relation to the donations to charities that are made as a result of sporting testimonials. There will be a new liability for people receiving money as part of sporting testimonials as long as they are not paid through an employee charitable donation-type method. It is a bit much to expect committees that are set up to have to register themselves in this way to pay the sporting testimonial beneficiary through payroll giving. That is a bit of an over-cumbersome situation. A lot of the people who receive money through sporting testimonials give a significant chunk of it to charities. I am therefore concerned about the reduction in charitable giving that there will be as a result of these changes.

The Government have pretty much said that this has a negligible Exchequer impact, but, once again, an additional administrative burden is being built up. This may stop some of these committees going forward with testimonials if they realise that they have to register for payroll giving and have to pay class 1A national insurance contributions as a result.

National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill (Second sitting)

Debate between Kirsty Blackman and Peter Dowd

Tuesday 14th May 2019 Public Bill Committees

[Peter Dowd]

I celebrate anybody getting a proper, secure, well-paid job. I am afraid that the hon. Gentleman should not expect me to celebrate somebody getting a job on two or three hours a week, and he should not expect me to celebrate the fact that £30 billion-worth of tax credits are going to subsidise people in poorly paid jobs, when only 20 years ago that was £1 billion. Do not ask me to celebrate that. Let us have the full picture. Yes, I always celebrate when somebody gets a decent well-paid, well-trained job with good terms of employment, but no, I do not welcome poorly paid, less well-trained jobs. I am sorry, but I cannot. But for the record, yes I welcome job creation—well-attuned job creation.

To get back to termination payments and their emotional significance, the amount awarded is often determined by painstaking and careful negotiations between managers and trade union representatives. A good employer might offer a generous termination payment to an employee as a sign that it is not a judgment on the intrinsic worth of the staff who are leaving, even though they have had to make them redundant. The job losses might be because of the Government’s economic policies.

The Government’s rationale for the introduction of a new class 1A employer NIC charge, which will be levied at 13.8% on termination awards above the £30,000 threshold, is to do with ease and simplification. In its “Review of employee benefits and expenses: final report” in 2014, the Office of Tax Simplification stated that

“many employers are unclear about which parts of a termination package qualify for the exemption”

from tax and national insurance. I stand to be corrected, but I am not sure whether we got a significant amount of clarity on that today.

Additionally, Ministers have cited the opportunity for well-advised employers to avoid paying the right amount of tax and national insurance on termination payments as justification for wider reform. However, neither the Office of Tax Simplification nor Treasury Ministers have been able to provide figures on the number of employers who have taken advantage of the existing loophole, or of the amount lost to the Exchequer as a result of that. That was probably confirmed today—we do not know.

Despite the many claims of Ministers about the desire to simplify the tax and national insurance treatment of termination awards, the Chartered Institute of Taxation and other tax experts have raised concerns around the lack of information in the Bill about how this new class 1A charge will be collected. We did not get a great deal of clarity on that today. Currently, Ministers plan to leave it up to secondary legislation, as alluded to earlier. That is not only a break from normal practice, but looks set only to confuse employers even more, rather than simplifying the national insurance treatment of termination awards. The people who came to speak to us today were probably a bit too polite to say that.

The provision will also add additional administrative burdens to HMRC at a time when it is hamstrung by what can only be described as the disastrous reorganisation of their estate by the Government—my hon. Friend the Member for Oxford East has been involved significantly with that—the introduction of Making Tax Digital, which has added to the problem, and of course the preparations for a no-deal Brexit, which have compounded it even further. Taken in the round, that is a challenge.

So what is the rationale for the introduction of this new NIC charge on termination awards, if not to make things less confusing for employers or to tackle tax avoidance, which is supposedly rife? I suggest that the Government’s rationale is wholly to do with the revenue they expect to raise, and is little more than an attempt to increase national insurance receipts for the Exchequer, while shying away from any major tax or national insurance policy change. I think that there was an acknowledgement of that today. This is just one element of what should have been a wider examination, as set out in the press release to which I referred, on 16 November 2016. This is certainly the opinion that the Office of Tax Simplification advocated in its 2014 report, in which it stated that a new NICs charge could raise revenue for the Exchequer and offset the costs of any tax treatment change affecting termination payments.

The report went on to concede that the policy was likely to lead to increased employer NIC costs and to individual employees receiving reduced termination payments, as employers would be unlikely to increase their redundancy budgets. Similarly, the Government’s own impact assessment notes that this measure will present an “additional cost to employers” that will be

“reflected in lower wages and profit margins with a reduction in total wages and salaries of 0.1%”

within the first year of its adoption. My hon. Friend the Member for Oxford East clarified that with the Minister in today’s evidence session.

To put it simply, this new NICs charge will lead to added costs to employers, some of whom will be small and medium-sized business owners, and less generous termination payments to employees as a result. At the same time, the Treasury has downgraded its forecast of the likely amounts this new charge will raise for the Exchequer from £485 million to £200 million a year. I am sure the Minister would like to provide clarity on that.

This issue goes to the heart of new clause 4, which seeks a review of the measure’s impact on the level of termination payments that employees receive and the cost to employers, and a distributional analysis of this new class 1A charge, which Treasury officials said had not been done. On the ground, it might have been too complicated and the cohort may not have been large enough under the circumstances. Given the likely cost to employers and of falling workers’ wages and termination payments, as well as the Government’s shrinking forecast of the amount of revenue the charge would raise, surely it makes sense to pause and gather further information before proceeding. After all, the Office of Tax Simplification noted in its original report that if Ministers were to follow its recommendations for a new NICs charge on termination awards, more data on the potential winners and losers would be needed. We were not able to establish who they were today. I specifically asked that question and could not get an answer. It was like an aggregate amorphous statement.

Sadly, Ministers have not provided that information, despite having years to do so. Treasury Ministers have refused to undertake a distributional analysis, citing the cost or that the cohort is not large enough as excuses, and they are still unable to provide credible figures on the number of workers who receive statutory redundancy payments versus those who receive non-statutory payments. Uncertainty also remains about whether the Government will seek to lower the £30,000 threshold at a later date through primary legislation or secondary regulations. The Minister said they have no plans to do this, but we already raised this issue during consideration of a previous Finance Bill—in fact, I think I raised it. The question was, “If you have no intention of doing it, why introduce legislation to do it and why introduce it through the process of secondary legislation?” If it were me doing that, I would not be banking a piece of legislation unless I intended to use it. That is the case here; the Government will use this. Otherwise, why take up parliamentary time to do so? If they are taking us on a run-around to fill time, that too is inappropriate.

New clause 4 seeks a review of the proposed class 1A charge, focusing on its impact on workers’ wages, on termination payments, added costs for employers and a distributional analysis of the measure. Without such a review, which will provide a wealth of information and further evidence of the likely effect on wages, termination payments and employers, the Opposition will not support this part of the Bill.

I will comment later on new clause 3, but at this particular point, that is all I want to say. I may ask questions of the Minister in due course.

[Kirsty Blackman (Aberdeen North) (SNP)]

I apologise—I expected to be called before the Opposition spokesperson on this section. I will do my best not to repeat things that he has said, but if I do, I shall try to do it in a different way at least.

It is good to be part of a Bill Committee that has taken evidence. We do not take evidence on Finance Bills and we are less knowledgeable and less good at scrutinising the information provided to us as a result. I hope the Minister agrees that the evidence sessions were incredibly useful this morning, even though he was in the hot seat and had questions asked of him. It meant that we will ask fewer stupid questions during this part of the scrutiny process, as well as being in a better position to drill down on some of the issues raised by different individuals.

--- Later in debate ---

[Peter Dowd]

I did not want to stop the hon. Lady in her flow, but on her earlier point, I was at a meeting yesterday with many people from the defence industry and in particular the aircraft industry. One Member who does not sit on the Opposition Benches indicated that when a large aerospace manufacturer closed down in his constituency, thousands of small businesses—or at least one or two thousand small businesses—arose as a result of those people getting redundancy payments. That goes to the heart of the hon. Lady’s point about the potential impact of the reduction in the amount of money people will get from redundancy payments.

[Kirsty Blackman]

I absolutely agree. I was thinking specifically of the toastie shop in Aberdeen that does unbelievable toasted cheese sandwiches. Members should look at its Facebook page; it is called Melt and it is absolutely amazing. It sells toasted cheese sandwiches with all your calories for a week in one sandwich. That business was started by a woman who had been made redundant. A lot of people in Aberdeen and Aberdeenshire have been made redundant because of the recent crash in oil and gas prices, and they have been starting new businesses as a result.

I am particularly concerned that any change might stifle the growth of new businesses. I asked the Treasury this morning whether it has figures on the number of new businesses started with termination payments. It does not. It is very difficult for the Treasury to say that this will not have an effect—to be fair, it has not said that, but it cannot because it does not have the quantifiable numbers and cannot project them; it appears not to be keeping track of the information.

Lastly, on Opposition new clause 4, the shadow Minister has also asked for a distributional analysis of the new class 1A liability. Again, it is incredibly important for us to have that information.

The Minister suggested that the Treasury is trying to be as transparent as possible. To be fair, this is one of the more transparent Bills, with more consultation than some of the other Bills that we have seen. The issue is that the information that we are provided with, and that is in the public domain, is not good enough for us to be able to make reasonable judgments about the effect of the policy. It is all well and good for the Minister to say that it will generate £200 million and that we would have a £200 million hole in the Budget. The OBR has verified that figure, but the reality is that we do not have enough of the drill-down information on the people who will be affected.

All of us on this side of the Committee are concerned about the reduced amount that employees will receive. It would have been sensible for the Treasury to have come armed with some kind of projection around that. That would have stopped us from asking all these questions. We might have criticised the figure and said that the measure should not be taken forward, but we would not be having this debate if the Treasury had come forward with detailed figures.

The Minister has spoken in favour of clauses 1 and 2, but for a huge number of employers they do not represent a simplification when it comes to dealing with the tax system. This is a revenue-raising measure and it is about closing a loophole. I am not criticising the Treasury for either of those things, but it has badged the change as a simplification when the two principal things that it tries to do are not that, but revenue raising and closing a loophole; we would have had a very different discussion if the Treasury had made that clear rather than said that it was all about simplification.

I completely agree that the measure came from an Office of Tax Simplification report, but that did not say that class 1A contributions had to be used to achieve this end. That may not be the best possible way to progress. I have already spoken about class 1A. It could have been done in a class 1 way, which would have been clearer for employers to understand.

On collection methods, I have real concerns about this being a real-time collection measure. Less than a year out from implementation, employers may not be aware of the correct computer system or understand correctly how it will work. Obviously, if an employer is making future projections, it is going to be looking at what upgrades it will need for its IT system and be planning that as far in advance as possible. On top of all the uncertainty of Brexit, the Government are adding more complexity and future uncertainty: they are not able to say, “This is exactly how the real-time collection measure will work.” They are not able to provide that information to businesses far enough out.

Finally, on the “negligible” reduction, as the Minister described it, of 0.1% on wages, I should say that we are seeing incredibly high levels of in-work poverty. Not a surgery or a day goes by without working people getting in touch with me to say they cannot live on the amount of money they receive. I get such correspondence on a regular basis, as I imagine do all MPs across the House.

The Minister spoke about the national living wage, which is not a living wage and is not for those under 25. As the shadow Minister said, the Government do not want to allow under-25s a wage they could vaguely live on, just in case there are fewer of them employed. I do not think there is any evidence to show that is likely to be the case. It does not cost any less to live at 24 than at 26.

A 0.1% reduction in wages for people who are literally living on the breadline and having to choose between feeding their children and heating their homes cannot be swallowed up by some families. The Government say they are quite happy with a 0.1% reduction in wages as long as they get £200 million in the Treasury’s coffers. I do not think that is a sensible way to play these things off. I do not think the measure is worth the £200 million if it means more families in poverty and destitution as a result.

The 0.1% might sound very small but, for someone living on not very much money it can be the difference between being able to feed the kids and not being able to. There are a number of issues with this measure, both technically and with the stance that the Government have chosen to take on it.

--- Later in debate ---

[Kirsty Blackman]

I beg to move, That the clause be read a second time.

I put my hand up and say that I made an error in the drafting of the second part of this clause that probably confused everybody. Subsection (2) should not be there; only subsection (1) should be there. It is my error and I apologise. I will not therefore press the new clause to a vote, but I intend to speak on it.

The Minister will know from my questions this morning and our subsequent discussions of my concerns about the Treasury reporting back, and basically letting us know if a tax change has had the intended effect. I have raised this on a number of occasions, in several different forums, and now I have thought of tabling it as an amendment to the Bill, I may do it more often, particularly to Finance Bills—perhaps on each aspect.

I spoke to the previous Financial Secretary, and perhaps even the one before that, about this issue. When it comes to tax reliefs and such like, the Treasury says, “This is going to generate x amount of revenue for the Treasury.” We have no recourse to see whether that amount has been generated for the Exchequer. The Government say they constantly keep things under review. At one point, I asked the Library to provide me with a list of the reviews that it could find for the tax relief measures that had been put in place through Finance Acts to see whether they had generated the level of revenue that was expected. A number of them had not been reviewed.

We are not asking for much here. We are asking the Government to tell us whether the law that they have proposed and taken through Parliament—that they have stood up and told us will generate £200 million of revenue—has actually generated that revenue. We can make better law if we better understand the effects of the previous legislation that we have passed.

The new clause would require the Secretary of State, within three years of Royal Assent, to lay before Parliament a report on the Exchequer impact of the Bill. I appreciate the answers that were given by the Minister and HMRC this morning—within three to five years, a review is undertaken and the intention would be the same on this Bill, and that review would be sent to the Treasury Committee, which would examine it. I have a number of issues with that.

Perhaps no one from the original Bill Committee may be on the Treasury Committee, so we may not see the effect of what we have passed. It would be incredibly useful if the Minister would commit to ensuring that any reviews that happen—preferably all of them—are sent to members of the original Bill Committee, as well as the Treasury Committee. That would be very useful. I know we have a change of personnel sometimes, but that would be a good start.

I have previously criticised the lack of a link between the Treasury Committee and those who sit on Finance Bill Committees. The Treasury Committee does a lot of very good scrutiny, but those of us on Finance Bill Committees may not see or be part of that scrutiny, and therefore, unless we go and dig out the evidence, which we find out from a colleague was given six months ago, we do not necessarily know that it exists. I have criticised the lack of a link previously. It is important that any reporting that is done is not just to the Treasury Committee. I do not suggest for a moment that the Committee is not incredibly competent and very good at its job; I am just suggesting a lack of link-up and communication.

It would be much appreciated if the Minister could commit to taking this on board and to ensuring that there is wider transparency and communication about any review. If it were published in, say, a ministerial statement, and flagged to those of us on the original Bill Committee, that would give us the opportunity to follow up with written parliamentary questions, for example, even though we are not on the Treasury Committee and cannot ask questions in oral evidence sessions. We could do that much more easily if the Minister committed to providing us with that information.

[Peter Dowd]

We support the new clause, although we will not press it to a vote.

Given that there are not many people in the room and this probably will not be listened to very much, I can say that, as an Everton supporter, I none the less congratulate Liverpool on their 4-0 win. Not many people will hear that. I will deny I said it and will have it struck from Hansard. I also congratulate Man City on their win. I wish them the best of luck. At least there is a tenuous link with sporting testimonials.

[Robert Jenrick]

As a Wolves supporter, I am slightly bitter at the moment.

To answer the point made by the hon. Member for Aberdeen North, without repeating comments already made today, I appreciate her legitimate arguments. We feel that the measures in the Bill have been sufficiently consulted on. The long-standing tradition that a new piece of legislation will be reviewed within three to five years will apply. The review’s outcome will be in the public domain. It will be sent to the Treasury Committee. Ordinarily, it would be published on its website, and the hon. Lady or any other interested Members would be able to view it there. It will not be a private document only for the consumption of members of the Committee. I hope that will reassure her that we intend carry out a review in due course and that will be available for those who take an interest in it.

National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill (First sitting)

Debate between Kirsty Blackman and Peter Dowd

Tuesday 14th May 2019 Public Bill Committees

[Peter Dowd]

Q I understand that class 1A charges will arise and be paid in real time, rather than after the tax year-end, as is the case with other class 1 charges. Given that we are talking about simplification, do you not accept that payment in real time would require additional boxes on the PAYE real-time information submission, and a new process by Her Majesty’s Revenue and Customs for monthly or weekly PAYE reductions for employers? Would that not place an administrative burden on employers that is not factored into the policy note produced by Treasury officials? It does not appear to be as simple as you are suggesting, in the round.

Raj Nayyar: May I answer that for the Minister? The main point is that employers are already doing that for income tax. They already have to report and pay in near-real time, so it will not add much to what they already have to do for income tax.

Just to clarify one point, there will be instances when they will pay the class 1A termination award after the year-end, and that is when the termination award comprises a benefit in kind. For example, if an employee is allowed to keep a car for a specific period, that is a benefit in kind, and that will continue to be reported after the end of the year.

[Kirsty Blackman (Aberdeen North) (SNP)]

Q To follow up on that, can you confirm that this is the only class 1A liability that will arise on cash earnings?

Robert Jenrick: Yes.

Raj Nayyar: Yes.

Finance (No. 3) Bill (Sixth sitting)

Debate between Kirsty Blackman and Peter Dowd

Tuesday 4th December 2018 Public Bill Committees

[Peter Dowd]

As long as that? Ten minutes? My word.

I should point out that, under a more active Government—one not simply going through the motions—these measures would already have been taken into account, acted upon and been on offer for proper scrutiny during this debate. Nevertheless, I hope the Minister will see the benefits of the review as set out in our amendment and agree that it is worth while—or that Members will choose to support amendment 98 to see that it is implemented. That brings our amendment on this particular matter to a close. Cheers.

[Kirsty Blackman]

I rise to speak to amendment 103 in my name and that of my hon. Friend the Member for Paisley and Renfrewshire South, but I would also like to speak a little more widely about the clause and the Labour amendments. First, I would like to ask the Minister a question about the post duty point dilution, which was in the Red Book. Hopefully, he can answer or get inspiration during the course of the debate. The changes do not appear to be in the legislation, so it would be useful if the Minister could explain when the legislative changes to post duty point dilution will take effect. I understand that the hope is that it will be put into legislation to be enacted in April 2020, but it would be useful if we could have an idea of the legislative process to ensure that those changes are made. I have been lobbied heavily on this by one of my constituents. I know it is important to a lot of people and that the Government have to their credit committed to making changes in the autumn Budget 2017.

Returning to our earlier discussion, I am not clear what the Government are trying to do with the changes to alcohol taxation. Are they trying to incentivise good behaviour; are they trying to disincentivise bad behaviour; or are they trying to generate revenue for the Exchequer? It is important for the Government to clarify that and accept the Labour amendment on the revenue impact on the Exchequer and on public health. That would make a big difference, because we would be clear about the Government’s intentions and what the Government expect to achieve.

On public health, people who want to get drunk quickly often drink high-strength ciders. It is important the changes focus on people who are not drinking for pleasure in the main, but who are drinking to get as drunk as they possible can. Those are the alcohol deaths we are trying to combat in Scotland with the new minimum unit pricing we introduced, which is a clear and well-intentioned public health change. Minimum unit pricing is all about making sure that high-strength alcohols that can be bought very cheaply are increased in price, so that people cannot get hold of them as easily. We predict that we will see a reduction in alcohol deaths as a result of the changes to legislation in Scotland.

What do the Government expect will be the impact of their legislation, particularly the extreme impact on people who are dying from alcohol misuse? What numbers do they expect to see as a result of the changes? If the Government accept Labour’s amendments, it would be useful if the review included the number of people whom they expect to save so that we can measure them against that.

Lastly, it is important that the Government tax this stuff and increase the tax rates as inflation increases. We want the Government to take a step back and have a holistic look at the entire system and explain why they are taxing things in the way that they are, rather than tweak and bodge and make changes year on year, as often happens in this place, so that we end up with something that is unwieldy and does not fulfil the intentions of the Bill in the first place, let alone the intentions of the world as we see it. Will the Minister provide answers?

Finance (No. 3) Bill (First sitting)

Debate between Kirsty Blackman and Peter Dowd

Tuesday 27th November 2018 Public Bill Committees

[Kirsty Blackman]

Absolutely. It is odd that the House of Lords is more democratic than this place in relation to the Bill.

The Finance Bill Committee should take evidence. I know that it is a long-standing convention that it does not, but having served on the Public Bill Committee on the Taxation (Cross-border Trade) Act 2018 and heard the evidence taken, I know how useful it was for Committee members and how many of them referred to it in subsequent debate. It was an incredibly useful exercise and the legislation that came forward was better as a result.

As I flagged up in last year’s Finance Bill debates, it is very good that external organisations have submitted written evidence, but I guarantee that the majority of hon. Members in this Committee have not read it all because of how little time we have had. Allowing us to question witnesses on the evidence that they provide on the Finance Bill Committee would be incredibly useful. The Government might not accept that this year, but can we consider taking evidence in future years? I am not the only one calling for this. The “Better Budgets” report produced by the Chartered Institute of Taxation and various other organisations called for the Finance Bill Committee to take evidence two and a half years ago, so external organisations have requested it, not just the SNP.

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I hear what the hon. Lady says. Some of us have not been in the House for a great deal of time. I sat on the Housing and Planning Bill Committee, which lasted for 20 sittings, with a marathon sitting just before Christmas three years ago. We heard a great deal of evidence that significantly informed the debates. Some members of this Committee might have been on that one. Interestingly, some of the evidence we took proved to be absolutely spot on, because the Government subsequently ended up changing some of their housing policies. The Government made the same argument at the time: “No, we have thought this through. We have consulted”, but the ability to hear from experts who live and breathe these issues was beneficial.

It was the same on the Criminal Finances Bill, which covered a pretty niche area. The job of Parliament is to scrutinise legislation, so we need the tools to do that. Whichever party is in control, it has the full back-up of the civil service, who are themselves experts and, to their credit, know their work, but it is important that the Opposition are able to get independent assessment and adjudication of what the Government tell us. That does not mean I do not believe a word that Ministers say—I believe everything they say. It is just that we do not necessarily get the full facts. I have found it very useful in the past to have evidence sessions, and the Government should give serious consideration to that.

I think this is the fourth Finance Bill I have sat on in the past two years, although my recollection is not what it used to be. We have also had the customs Bill, which is also a finance Bill, so we have had effectively five finance Bills in a short period of time and in a time of incredible turbulence and change. There might not be a convention or a tradition to take evidence in Finance Bills, but there comes a time when we think, “This is as good a time as any to take evidence because the circumstances have changed substantially.”

We have also had what amounts to movement on the convention in relation to the amendment of the law. As everybody knows, it has been used only about half a dozen times since 1929 when Winston Churchill introduced it. It has been used six or seven times, including three times by the Government in less than that period in years. That is a substantive and significant change. The Minister kindly responded to my letter about that and indicated that it was not necessarily a significant change, but it is. If we as a Committee—as a House—have done something only six or seven times in the best part of 90 years, changing that convention is significant. For that reason as well, we need to take a step back and decide that perhaps we need evidence sessions to tease out some of those important things.

It would also give assurance to the House, to Back-Bench Members and to the public in general that we take those matters seriously and that it is not business as usual—that just because we have done something for years or decades, we do not carry on doing it regardless. It would send a message that, in these turbulent times, the House takes the country’s finances seriously.

Therefore, we should seriously consider taking evidence. After all, we are all open to public scrutiny in one fashion or another—in fact, there is no doubt that we welcome it, and I do not suggest that the Government do not welcome it too. If we do not object to that scrutiny, why do we not institutionalise it, do what other Committees have done in the past and take evidence? Let experts in their field challenge us, and let us challenge them.

[Kirsty Blackman]

One of the Government’s arguments against taking evidence is the fact that the Bill is split between the Committee of the whole House and the Bill Committee, but does the hon. Gentleman agree that we in the Bill Committee tend to consider the more technical amendments on which we most need evidence to make good legislation?

[Peter Dowd]

That is a perfectly fair point. Inevitably, when we get into Committee, the clauses that we discuss are very technical and it is those technical clauses for which we need some evidence.

At the end of the day, we have had written evidence from the Chartered Institute of Taxation on clauses 7, 11, 81 and several others, which I read with great interest. Some of the comments were very pertinent. It would have been a good opportunity to tease out some of the issues in those clauses in more detail. As I said, none of us are concerned about challenge—that is why we came into Parliament. We are here to be challenged, and that is the nature of our democracy.

--- Later in debate ---

[Kirsty Blackman]

The Minister makes a slightly circular argument. He suggests that questioning him would help us to improve the legislation and that questioning external experts who have to apply tax changes would be less useful.

[Peter Dowd]

Does the hon. Lady agree that there is an issue? The Labour party tabled a number of amendments, 10 or 11 of which were ruled out of scope. I do not criticise that at all. There is no criticism—

Finance (No. 3) Bill (Second sitting)

Debate between Kirsty Blackman and Peter Dowd

Committee Debate: 2nd sitting: House of Commons
Tuesday 27th November 2018 Public Bill Committees

[Kirsty Blackman]

Will the hon. Gentleman clarify that when he says Charity Commission, he also means OSCR, which is the relevant body in Scotland?

[Peter Dowd]

Yes, I agree to that point of clarification. That is the intention. The Charity Commission and the Scottish body would no doubt recognise the seriousness of this problem, and in their strategy for dealing with fraud, they make the following point:

“The commission continues to see, and has to act on, serious problems arising in charities in relation to poor financial management and inadequate financial controls, accounting and record keeping. In 2010-11, out of 1,912 completed compliance assessment cases, the proportion involving serious concerns about fraud, theft and other significant financial and fundraising issues increased from 16% the previous year to 26%.”

Figures for subsequent years can be found in the commission’s annual publication “Tackling abuse and mismanagement”. The commission goes on to say:

“The National Fraud Authority in its annual fraud indicator report of 2012 estimated annual losses of £1.1 billion, or 1.7% of annual charity income during 2010-11.”

There is therefore a problem, because that is cash not going where it was intended. The impact of fraud and financial crime on a charity, particularly smaller charities, can be significant, going beyond financial loss and the impact of the financing of a charity’s planned activity. These crimes cause distress to trustees, and so on, and have an adverse effect on the charity. It is important to deal with them, says the Charity Commission.

If the Treasury is going to offer tax incentives for charitable donations, it is vital that the proper safeguards are in place to ensure that tax forgone does not act as an incentive to other risks. For example, from my understanding, the Charity Commission holds the only centralised list of registered charities; therefore a clear procedure for HMRC and the Charity Commission to communicate would be necessary to guarantee tax exemption. That is important.

--- Later in debate ---

[Peter Dowd]

In relation to the amendment, it is important to ensure that, where charitable donations are given—whomsoever they are given by and to—the giver knows, in good faith, that the cash that they give will go towards genuine charitable purposes. That is the key issue. Whether the definition of “charity” is open to debate in relation to any organisation is another matter. The key, and the point I think my hon. Friend is trying to make, is that charities really ought to be charities.

We hope that a statement on the discussions between the Charity Commission and the Chancellor would address some of these issues. It continues to be a big issue in this country that people who can afford to pay their taxes should pay their taxes. It is important that anybody who gives to a charity can rest assured that their charitable donation, won through their hard work, will be used with the best intentions. Our amendment would, in all good faith, ensure that.

[Kirsty Blackman]

The Committee will be glad to hear that I will speak only briefly. I am happy to support the Opposition’s amendments. I want to focus on amendment 16, which deals with the communication that is needed between HMRC and the charities regulator. That is incredibly important. We need such communication for individuals to be assured that their money will go to the right place and that the correct tax exemptions exist for that.

Amendment 16 would require the Chancellor to make a statement to the House

“detailing discussions between Her Majesty’s Government and the Charity Commission regarding the provisions of this section.”

If the Minister is minded not to accept the amendment, which is very sensible and the provisions of which it would be easy for the Government to carry out, is he willing to write to Opposition Members about the discussions between the charities regulators in England and Scotland and the Government, the nature of those discussions and the advice the Government have received from charities on the potential impact of the clause? Will he also cover the eloquent point made by the hon. Member for Bootle about ensuring that protection from fraud is built into any changes that are made under the clause?

If the Minister is minded to accept the amendment, that would be grand. If he is not, will he commit to contacting us with those details so that we are aware of the discussions the Government have had and we can be both comforted that our constituents who decide to give their benefits to charity can do so knowing they are less likely to be the victims of fraud as a result, and aware that HMRC is across the issue and ensuring that people do not unintentionally become victims as a result of the changes?

Taxation (Cross-border Trade) Bill

Debate between Kirsty Blackman and Peter Dowd

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

Given that there may not be a Third Reading, I will start very briefly with some thank yous. I would like to thank Scott Taylor, one of our researchers. I would also like to thank the work of the Public Bill Office, particularly that of Colin Lee and Gail Poulton, who have been absolutely excellent in their support to all of us who have been here throughout the passage of the Bill.

I want to talk about the history of the Bill and how we got to this point. We had the Committee stage earlier this year. On the Saturday morning after it finished, and almost out of the blue, the UK Government announced that they would not be entering into a customs union. They clearly did not think it through, bringing out the announcement at the most stupid time: after all the debates in Committee. It was totally ill-thought-out.

We then had the Chequers agreement on 6 July. The White Paper was published on 12 July, which Members will note was the day after the amendments were tabled to this Report stage of the Bill—we all had to table our amendments before we had actually seen the White Paper. I thank the Minister for coming to Westminster Hall to give us some level of reassurance, but pretty much all the reassurance he could give was, “Please look at the White Paper that’s coming out on Thursday.” It has, therefore, been really difficult to prepare for the Bill. It has been really difficult to write this speech, trying to game exactly what is going to happen tonight. I am still not clear.

There are too many factions in this House. We have the UK Government, the Conservative remainers, the European Research Group, the Democratic Unionist party, the Labour leavers, the Labour remainers and the Labour Front Bench. The UK Government will not support things put forward by anybody who supports remain. The Labour Front Bench will not support anything put forward by the Conservative remainers. The members of the ERG will not support anything put forward by anybody except themselves. The Democratic Unionist party will support whatever the UK Government tell it to, on the basis that it is being paid to do so. It is a complete shambles. Trying to do anything sensible in this House is incredibly difficult, especially given that we know there is a majority for a customs union among the Members of this House. Despite that, we are going to end up in a situation where members of the ERG, who believe in the polar opposite of a customs union, are having their amendments accepted. When the rest of us put forward anything vaguely sensible, our amendments are not accepted.

This is certainly not about sovereignty for the people or sovereignty for Parliament; it is about sovereignty for a very small group of elite Tories who want to have their say. The Government are letting them have their say. I could not be more angry about the fact that the ERG’s amendments are apparently going to be accepted. I do not want to direct all my ire at those on the Government Front Bench. Those on the Labour Front Bench need to be absolutely clear on their position. They need to be clear that they will support the softest possible Brexit. If they are talking about a jobs-first Brexit, they need to recognise the benefits of the customs union and the single market. They have the opportunity to do that tonight by supporting some of the amendments that have been tabled by those who support a soft Brexit.

The Scottish National party does not support fully a number of amendments that we plan to vote for tonight. Our position is that Scotland voted to remain in the EU, so we would like to remain in the EU. Scotland supports remaining in the single market and the customs union, so the SNP will support anything that keeps us in the single market and the customs union. In the absence of those options being on the table, we will do what we can to protect the economic and cultural interests of the whole United Kingdom. Even though some of the amendments are not brilliant, we will vote for anything that makes Brexit slightly softer than the Brexit that is being proposed. I needed to make it clear that just because we support an amendment here does not mean that it is a preferred option. It means that it is not quite as bad as some of the other options.

I make it clear that I will press new clause 16, in my name and the names of my colleagues, and I would also like to speak in favour of our other amendments. The SNP position is crystal clear, as I said. The UK Government position is not. I welcome some clarity that is given in the White Paper that was published after Chequers, but I have major concerns about some of it. It mentions specifically a trusted trader scheme. On the trusted trader scheme that we have—the authorised economic operator scheme—I have raised concern after concern about it, and I am not the only one; organisations such as the British Chambers of Commerce have, too. If there is to be an expanded trusted trader scheme, it needs to actually work. It needs to be applicable to small businesses and businesses need to be able to access that scheme. We are now at the stage that businesses should know what those schemes are. If the Government are going to bring them forward, they need to do so as quickly as they possibly can so that businesses can be clear on what basis they will be trading in future. That is really important.

I am pleased to see that diagonal accumulation has been recognised in the Chequers agreement. I have been talking about it for some time, and I am really glad that it has been recognised and that we will have a situation where we will possibly still be able to export cars to South Korea, because that is really important for our car industry. I am pleased that the Government have now made it clear that they are pursuing that.

Protective geographical indicators are also mentioned in the Chequers White Paper. I am slightly concerned about the way the Government are going on this. It would be very good to have more information around that. A PGI scheme that applies only to the UK and does not recognise EU PGIs is a bit of a problem, so we need more clarity from the UK Government on how they intend the PGI scheme to work. I know that there is a negotiation, but if we could have their point of view first, that would be very useful.

I want to briefly mention some of the other meat in the Bill and something that the British Retail Consortium brought to us. It encapsulated some of the issues with the Bill very neatly. It said that there are not yet agreements on security, transit, haulage, VAT and people and that we need mutual recognition on veterinary, health and other checks with the EU. It seems that the Government are pursuing some of this, so that is good news. We need investment in IT systems to deliver the customs declaration system. Again, I am still not convinced that this will come through in time, so if the Minister could give reassurance that it will, I would very much appreciate it. We need co-ordination between agencies at ports and borders, as well as investment and capacity and staff at ports. The Government have not done enough on both those things. They have not put the extra resource into ports. They have not told ports how they will be administering these things in the future. If ports are going to have to massively increase their staff numbers, they need to know now how they will do that.

On queuing, a two-minute delay at Dover will create a 17-mile queue, so it is not as though Operation Stack will just happen as normal. This will not be Operation Stack. It will be an incredibly large version of it, and Operation Stack was bad enough. The BRC also mentioned AEOs, particularly in relation to small and medium-sized enterprises. All those things are still concerns about the Bill and I will raise them on Third Reading, if we have a Third Reading debate, because I do not believe that the Bill is fit for purpose as it is.

I specifically want to talk about the new clauses from the ERG. If the UK Government are bound to accept them, we have a very, very severe problem. I have major issues with new clauses 36 and 37 and amendments 72 and 73. New clause 36 relates to reciprocity. Page 13 of the Chequers agreement says:

“At the core of the UK’s proposal is the establishment by the UK and the EU of a free trade area for goods.”

It then goes on to make clear on page 17 that

“the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

This new clause directly contradicts that.

What is the point in having a White Paper released on a Thursday if the Government are going to ignore it on Monday? I do not understand how we can be in that position. How can businesses know where we are going if the Government do not even know where they are going? For the Government to be accepting amendments by a group of around 14—who knows how many of them there are?—ERG members to get a hard Brexit is absolutely ridiculous. If there is going to be a Brexit, we need a Brexit that does what the Labour party suggests it should do: protects jobs. We need the Labour party to support a Brexit that protects jobs as well, not just us.

The Bill is a mess. It does not do what it set out to do, which is replicate the union customs code, and it does not now do what the Chequers agreement said it would on Friday. We need everybody in the House, from all the various factions I mentioned earlier, to get behind proposals that protect jobs and the sovereignty of the people, not just the sovereignty of an elite few.

[Peter Dowd (Bootle) (Lab)]

I read the White Paper on the train home on Thursday, if only out of a sense of morbid curiosity, but following the Prime Minister’s capitulation to the Brexiteers today, that curiosity has turned to a sense of the macabre. To begin with, we had the woman in the bunker with the blacked-out windows saying we were outward facing. Are we? This from the Prime Minister who invented a hostile environment for the Windrush generation and for disabled people claiming their rightful benefits and whose Government have been on the wrong side of the law more times than Arthur Daley.

The Prime Minister went on to state that we had a dynamic and innovative economy. Do we? Our economy is 35% less productive than Germany’s; we invest less and we have the most regionally imbalanced economy in Europe. Growth is sluggish and inflation stubborn. And on it goes—it gets more surreal. She says we live by common values of openness and tolerance for others and the rule of law. Really? The only thing the Conservative party is open to and tolerant of is big fat donations from Russian oligarchs. But here is where it gets really interesting. When she speaks about sticking to our principles, one has to wonder which principles she is referring to—the ones she referred to yesterday and which are enshrined in the White Paper or those she holds this afternoon, which tear the White Paper to shreds. Perhaps the Minister can enlighten us.

The Prime Minister wanted to deliver an ambition to “once and for all” strengthen our communities, our Union, our democracy and our place in the world. I will take those claims one by one: our communities have been ripped apart by austerity; our Union is in danger from Ministers out of touch with the needs of any nation and afraid to move away from their desks in case someone else takes it; our democracy is threatened by swathes of Henry VIII powers; and our place in the world is a laughing stock due to the Prime Minister’s supine sycophancy to Donald Trump, who humiliated her.

The White Paper—what is left of it—came from the pen of a Prime Minister obsessed with silly soundbites. She used to talk about “Labour’s magic money tree” until she wanted a magic money tree of her own with which to bribe the Democratic Unionist party, when that phrase was quickly ditched. What about the infamous “strong and stable” mantra? It turned out to be more like a strong and stable smell of panic during the election and was ditched as well. Finally, it seems that this White Paper has also been ditched.

As for Northern Ireland, I present, the buffer zone—a 10-mile-wide area along the entire boundary between Northern Ireland and the Republic. Under the EU’s trading rules, to be operational this buffer would have to be policed on both sides of the 10-mile divide. Did we really spend decades trying to get rid of divides in Northern Ireland only to resurrect them? I think not. As for the facilitated customs arrangement, we are not clear what about it constitutes a partnership, as it would effectively leave UK customs officials working to maintain a customs union that we are no longer a part of.

Regardless of who is responsible for managing the duties, it remains unclear how the FCA would be frictionless. Presumably, the final destination of goods would have to be queried as they enter the UK. This would slow down the passage of goods across our borders and prevent intricate supply chains from functioning properly. It would lead to waste, uncertainty and expense for business, to higher prices for consumers and to job losses and production moving abroad, as the right hon. Member for Broxtowe (Anna Soubry) pointed out. In that regard, the comments from the hon. Member for Gainsborough (Sir Edward Leigh) were unconscionable.

What about the UK border? Does the Minister expect checks to be in place to ensure that goods that claim the UK as their final destination are not diverted into the EU once they arrive? Presumably, we would need customs checks and controls between the EU and the UK to reconcile goods to documents when, for example, UK anti-dumping duties exceed those applicable on import. Can the Minister clarify? Can he tell us how many trusted traders—the Tories using the word “trusted”; that’s a laugh, isn’t it?—are currently registered with the Government’s scheme and how many they believe will be registered by the end of the transition period?

Of course, all this can be avoided if the House chooses to support Labour’s clear and pragmatic solution to the issues of frictionless trade within the EU and preventing a hard border in Northern Ireland. New clause 11 presents Labour’s practical solution to the problems that have confounded the Conservatives. In our new clause, we call on the Government to negotiate a new customs union with the European Union, to be in place when we leave the current customs union at the end of the transition period. That is the only way to ensure that we can have frictionless trade with our largest trading partner and help to prevent a hard border between Northern Ireland and the Republic. It is what business needs and producers want, and it is what would most benefit the public.

Taxation (Cross-border Trade) Bill (Eighth sitting)

Debate between Kirsty Blackman and Peter Dowd

Thursday 1st February 2018 Public Bill Committees

[Peter Dowd]

We will not press the clause to a vote, because we have persistently made this point all the time. I completely accept that it gets pretty tedious, but it gets pretty tedious from this side as well, when we keep on getting told that Parliament cannot have the scrutiny that it constitutionally and rightly deserves. We will come back to this point.

I have to say that other nations and democracies, much younger than this one, are perfectly capable of dealing with such issues, very detailed issues, without this sort of carte blanche approach that the Government seem to take, where they want to block every opportunity for us to scrutinise. They are not even prepared, when things might have calmed down in relation to the processes of exit, to give us the opportunity to check them via a sunset clause and that is deeply regrettable.

Question put and agreed to.

Clause 41 accordingly ordered to stand part of the Bill.

Clauses 42 and 43 ordered to stand part of the Bill.

Schedule 8 agreed to.

Clause 44

Excise duties: postal packets sent from overseas

Question proposed, That the clause stand part of the Bill.

[Kirsty Blackman]

I am not trying to wrong-foot the Minister, but I just want to make a brief statement in relation to postal packets from overseas. I have mentioned the issue in previous debates. I genuinely think that it will affect individuals living our constituencies across the four nations of the UK. People will be shocked when they see the changes coming in relation to excise duty. It is incumbent on the Government, when HMRC make the relevant regulations, that they are as widely publicised as possible, and that if possible, some transitional arrangement should be put in place on costs. If people suddenly find that their postal packets are subject to an incredible charge to which they were previously not subject, they will be pretty upset, and rightly so.

Whatever HMRC does on the issue, we ask the Minister to ensure that there is adequate publicity and that any charges put in place are proportionate and not excessive, because people will be incredibly upset and negatively affected.

--- Later in debate ---

[Peter Dowd]

The amendment seeks to oblige HMRC commissioners to carry out a pre-commencement review of the effect on the border experience. The Chancellor of the Exchequer will then be mandated to lay a report of that review before the House.

The reasoning behind new clause 11 is simple: we are facing a shift of enormous magnitude, which demands a corresponding change in our approach to how we practically handle the processing of customs at the border. The change comes at the same time as existing resource challenges to HMRC. We are concerned and will continue to be so about the issue of provision to the appropriate authorities. I have made that point to the Minister time and again, and I hope he listens to what we are saying, even at this late stage.

[Kirsty Blackman]

I have significant concerns about the way this clause is going to work, given that the UK Government’s priority in the Border Force has been immigration rather than customs staff. Therefore, there has been an erosion of the customs staff who have got experience and understanding of the frontline. I am not yet convinced. Although the Government are talking about putting extra people into HMRC, I have not heard enough about equivalent extra staff being put into the Border Force so that it can appropriately police things in relation to customs. I have significant concerns about the border experience, and I note that that is not just on the south coast of England. We have borders when things come in on international flights or ports outside the south coast of England. It needs to be taken over the whole geographical spread of the United Kingdom.

[Mel Stride]

Amendments 19 and 22 to clause 55 and new clause 11 seek to require HMRC to review the likely effects of the Bill on the border experience of importers and exporters, and those engaged in associated economic activities, and the Chancellor to report that to Parliament before commencement of the Bill. The reasons why the Government will resist them are similar to the reasons given for resisting the last group of amendments. It is not appropriate to legislate for such a review, because the experience of businesses at the border will depend on the outcome of the negotiations with the EU, the resulting details of the new customs regime and the resulting changes needed to maintain a fully functioning and legally operable VAT and excise regimes.

To respond to the specific points the hon. Member for Aberdeen North made about the Border Force, it is absolutely vital, as she has suggested, that we have appropriate resource. Of course, that is a Home Office matter and not within the direct remit of HMRC or the immediate scope of the Bill, but I reassure her that we are working across Government and closely with the Home Office to ensure that, whatever occurs in the negotiation and whatever the results for our day one arrangements, we will be ready in terms of both the Border Force and Customs and Excise.

[Peter Dowd]

The Minister has heard what I have to say. We will not be pressing the amendment, although we will press the new clause. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Kirsty Blackman]

I beg to move amendment 102, in clause 55, page 38, line 17, after “(2)”, insert “and (2A)”.

This amendment paves the way for amendment 103.

--- Later in debate ---

[Peter Dowd]

Further to that point of order, Mrs Main. I thank you and Ms Buck for the eloquence in which you have chaired the meeting, and for your forbearance. I thank the Clerks, Hansard and the Doorkeepers for their sterling work; they have even more forbearance. I thank colleagues who have undertaken scrutiny in a forensic, good-humoured and professional fashion, and that includes the Members on the Government Benches. I also thank all our staff, Sam Goodman, Tom Peters, Sophia Morrell and Jack Jenkins, for their hard work on the Bill.

The whole debate has been pretty commensurate and pretty good. I finish with a couple of things: the Government epitaph will be “Down with sunsets!”; and, finally, “Parting is such sweet sorrow”.

[Kirsty Blackman]

Further to that point of order, Mrs Main. In addition to the other thanks, I think this has been a very good debate and we have spoken in a lot of detail about a huge variety of issues, because the Bill covers a number of different things. The amount of knowledge expressed in the room has been a good display of what Parliament can do when it is doing something in the right way.

In particular, I say a huge amount of thanks to the Clerks, who have been absolutely invaluable in their support to me. I could not have done this without them—they have been fantastic, so I thank them so much.

Taxation (Cross-border Trade) Bill (Seventh sitting)

Debate between Kirsty Blackman and Peter Dowd

Thursday 1st February 2018 Public Bill Committees

[Peter Dowd]

We will not press amendment 6 to a vote, but we will no doubt tease the issue out a little more in due course. Again, I am not completely reassured by the Minister’s statement in relation to affirmative resolutions. I do not accept that the process is as rigorous as he has implied throughout.

The other aspect is that, if Parliament will have to do huge amounts of work, we had better make sure that we get everything right and get the ducks set up in a row. The idea that the Government’s proposal and mechanism for authorising are commensurate and proportionate is, in my opinion, far off the mark. It is a very important area, and Parliament should have significantly more of a say in it.

This issue will clearly not be resolved today, any more than many other things will be, but it is really important. We will not push the amendment to a vote today, but there is no doubt that we will, in due course, come back to this issue and the whole question of parliamentary scrutiny, particularly in relation to this sort of matter. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 31 ordered to stand part of the Bill.

Clause 32

Regulations etc

[Kirsty Blackman]

I beg to move amendment 89, in clause 32, page 19, line 18, at end insert—

“(c) regulations under paragraph 4(2), 9(3) or 14(4) of Schedule 4.”

This amendment provides for regulations made under certain provisions of Schedule 4 (regarding dumping of goods or foreign subsidies causing injury to UK industry) to be subject to the made affirmative procedure rather than the negative procedure.

--- Later in debate ---

[Peter Dowd]

I can remind my hon. Friend of what Mr Blackwell said. In relation to the 150 delegated powers, he said:

“Some of the justifications I am struggling with, particularly as regards the use of urgency and non-urgency. I think time is an issue here, particularly if you do not have the backstop of further scrutiny by a Chamber—the second House—that is usually very good at looking at delegated legislation”.—[Official Report, Taxation (Cross-border Trade) Public Bill Committee, 23 January 2018; c. 53, Q77.]

He was absolutely clear and unambiguous that this really was not a way to do matters of this nature.

[Kirsty Blackman]

It has been an interesting debate, and I am glad to have had the opportunity to start it. I really do appreciate some of the clarification that has been given by the Minister, particularly around moving from acquisition to import VAT. As I said earlier, I do not want to press any of these amendments, because I would like to return to them at Report stage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Taxation (Cross-border Trade) Bill (Fifth sitting)

Debate between Kirsty Blackman and Peter Dowd

Committee Debate: 5th sitting: House of Commons
Tuesday 30th January 2018 Public Bill Committees

[Peter Dowd (Bootle) (Lab)]

It is lovely to serve under your chairmanship again today, Ms Buck. The Minister has clearly had three or four Weetabix today, given his assertions. I say to him: legislate in haste and repent in court at leisure—for these are the sort of things that will be challenged in the courts. Unless the judges in those courts are going to be enemies of the people, we are best to get it right first-hand. Lord Judge made that very point today, and he was formerly Lord Chief Justice; so we cannot ignore parliamentary scrutiny on this particular issue.

New clause 5 establishes a system of enhanced parliamentary regulations for setting quotas under clause 13 to give effect to recommendations of the TRA, with a requirement for the House to pass an amendable resolution authorising the quota provisions of the proposed regulations. It also requires that certain regulations under schedules 4 and 5 be subject to the affirmative procedure.

I have made this point in the past and make it again. The new clause seeks to introduce a scrutiny role for Parliament in this crucial area of taxation and trade policy. The current provision in clause 13 gives the Secretary of State powers through regulation to introduce a tariff rate quota to determine the amount of import duty applicable to certain imported goods, after he has accepted a recommendation from the Trade Remedies Authority. It also gives the Secretary of State the power to revoke or suspend the tariff rate quota.

New clause 5 would instead ensure a democratic and open process, by making sure that Parliament has that power—not just the Secretary of State. The enhanced parliamentary procedure also ensures that there is a failsafe in the event that the Trade Remedies Authority makes a recommendation for the suspension of a quota and the Secretary of State refuses. In that instance Parliament has the ability to overrule the Secretary of State and side with the expert recommendation of the Trade Remedies Authority if it so decides.

I am sure that hon. Members of the Committee are hearing echoes from last week in relation to the issue of parliamentary scrutiny. We have heard about it today, and that is our job on this side of the Committee. I am not sure whether the Minister thinks we should not do that, but we will continue to do it. We are concerned that if we do not have parliamentary scrutiny and oversight and the expertise that comes with that, we will end up in the courts. The Minister’s wish that things do not get delayed will be thrown out of the window by the approach that the Government seem to be taking.

Suffice to say that, if the Government are arguing that this is a money Bill, which it is, and it goes to the House of Lords— who will probably have to watch it go past as though it was a bus—they are tacitly accepting that the measures contained here are essentially fiscal. It is therefore appropriate that statements made to the House of any regulatory changes in relation to fiscal matters are Parliament’s responsibility and duty, as they have been for centuries, and we believe that there should be a vote if appropriate. The system outlined would provide a very robust means of doing that. I know that virtually every Minister, not just this Minister, would not want to have that level of scrutiny, but it comes with the job; scrutiny has to be there. Of course, an annual fiscal statement, such as that expected in the spring, with subsequent parliamentary authority could also prove a mechanism for us to test it out.

I hope that Conservative Members will not take a blasé approach and brush aside the issue of parliamentary democracy on the grounds that the Opposition somehow want to drag the matter out in the future. We do not; we want to make sure that this works properly. We all accept that we have to have a process in place, but let us get it right and hold Ministers to account.

[Kirsty Blackman]

The Government have asked for an awful lot of trust. They are asking us to trust them to make the right decision. Given that they do not have a track record of making such decisions over a very long number of years, it is very difficult for us to trust the Government on that. There is also the fact that the Government said that they would table amendments to clause 11 of the European Union (Withdrawal) Bill, and then they did not.

I do not think that the Conservative Government have quite recognised what they are doing with all their decisions to hold power in the Executive over any number of things. When the Conservatives are inevitably no longer in government there will be another Government in place, and they will be in opposition saying, “Why are so many decisions being made by the Executive without parliamentary scrutiny?”

The UK is at a point where we are choosing how our future looks in relation to Brexit. We are choosing how things will go in this Parliament, and into the future. We are choosing how much say we will have over trade policy, so it is vital how we decide to go about this. The way that the Government are setting this up is absolutely wrong. There should be parliamentary scrutiny of such things, and democratically elected Members should have the opportunity to look at them, to have an input and not just have them done by public notice.

Taxation (Cross-border Trade) Bill (Sixth sitting)

Debate between Kirsty Blackman and Peter Dowd

Tuesday 30th January 2018 Public Bill Committees

[Kirsty Blackman]

I rise to move amendment 110, but I will mention now that if new clause 6 is moved at the appropriate stage, we will support it, because an enhanced parliamentary procedure seems sensible.

Clause 14 is headed “Increases in imports or changes in price of agricultural goods” and deals specifically with special agricultural safeguards and what can be put in place in relation to them. Our amendment is a very short one, but it is designed to require that the Secretary of State consult with consumer representatives and agricultural producers when making any decisions relating to special agricultural safeguards.

The Minister, when he spoke earlier about safeguarding, said that the decisions taken are about balancing the needs of producers with those of downstream consumers. This is exactly the kind of thing we are trying to do: we are trying to ensure that the Secretary of State, when making the recommendation to the Treasury to exercise the regulations, is doing so after consulting both consumer groups and agricultural producers. That is the only sensible thing to do in this case. The Minister has previously been clear that the Government like consulting with people and tend to try to do so wherever they can, but it would be sensible if it were stated in the Bill that they were required to do so in advance of putting in place, via a relatively unusual process, relatively unusual measures that would have an impact on our agricultural producers and consumers.

That is important because Brexit is looming on the horizon and our farmers do not know how they will be supported financially after 2020. I think Ministers have given undertakings to safeguard the money that comes from the EU until that point, and farmers have no certainty beyond that period of time. The UK Government are looking to make their own trade deals, which may change the agricultural landscape in the UK or result in our taking imports we have not previously because because of the trade deals as part of the EU—we have previously discussed things such as chlorinated chicken. Given all the changes on the horizon, both for agricultural producers and for consumers, who are already finding, for example, that the price of butter is going through the roof because of the increase in sterling, it is difficult for the Government to foresee what may happen in the future. If the Government are going to put in any measures related to increasing imports or the price of agricultural goods, particularly through the safeguarding measures, it would be sensible to consult both agricultural producers and consumers in advance of putting those in place.

[Peter Dowd]

The Minister was getting a little bit tetchy and prickly there. There is a quote from “Henry VIII” which, given that we are talking about Henry VIII powers, seems appropriate today:

“Be advised:

Heat not a furnace for your foe so hot

That it do singe yourself.”

The new clause would establish an enhanced parliamentary procedure in relation to import duties on agricultural goods. During our sittings, the Committee has heard serious concerns expressed by multiple witnesses about the democratic shortcomings of the Bill. The Bill is, first, strikingly light on detail, notwithstanding the Minister’s assurances that things will be put into place and more detail will come in due course. The Government are pushing that detail on to secondary legislation, but the delegated legislation process was designed to make administrative changes to laws—in effect, a rubber-stamping process—not for items that will form the material basis of our trade defence policies and so require proper scrutiny and debate. More worrying are the items to be channelled directly through the Executive in an unacceptable concentration of power, which ought to be subject to scrutiny, with Parliament given a say in holding the Government to account. The amendment is one of several in which the Opposition are calling on the Government to put critical decisions on tariffs, quotas and preferential rates in front of Parliament.

The measures in the Bill are at odds with the greater democratic control persistently promised to voters. Bringing back control, as we have said a million and one times, is about bringing back control to Parliament, not to a cadre of Ministers sitting in their offices in Whitehall. The new clause sets out four steps to enhance parliamentary scrutiny: first, a Minister must come to Parliament to explain the intentions of the draft regulations; secondly, a Minister must tell Parliament the import duty amount, as well as the period and trigger price under the relevant section; thirdly, the House must pass a resolution arising from the Minister’s motion; and, fourthly, regulations must be made to give effect to that resolution—all in the cold light of parliamentary scrutiny and sight. It is not for the Government to make decisions single-handedly behind closed doors, nor for the Secretary of State to steer the process unilaterally. Rather, such decisions must be subject to proper democratic accountability, with the essential checks and balances enshrined in law.

As I have said before, the Opposition recognise that the Government must make necessary preparations to create the UK customs and tariff regime post-Brexit, but they cannot have carte blanche. We should not allow, or be considering, a carte blanche process allowing the Government to concentrate all those new powers in the Executive. The Opposition’s view is that in this instance the interpretation of taking back control— moving it from Brussels to the Executive—is not acceptable. That is not only true of the provision before us today, but evident in the European Union (Withdrawal) Bill and the Trade Bill. The Government are attempting to sidestep parliamentary scrutiny, and that is not acceptable.

In our view, tariffs should undergo the same parliamentary process as taxation, with similar levels of parliamentary scrutiny. We will oppose the Government’s attempts to give the Treasury delegated powers to set future customs duties and tariffs away from the public and parliamentary eye. That is not the way we do things in Britain. New clause 6 outlines an enhanced parliamentary procedure for setting additional import duty on agricultural goods, among others, to bring scrutiny to our customs policy.

Our agricultural sector faces an uncertain future with Brexit ahead. It is distinct from other UK industries in possessing a more interwoven relationship with the European Union, given the existence of the common agricultural policy, which provides subsidies to UK farmers that the Government have indicated they will continue. The common agricultural policy provides critical support to UK farming—for example, the Department for Environment, Food and Rural Affairs estimated in 2014 that such payments represented 55% of farm income. As I said, the Government have promised to maintain those subsidies at the existing level until 2022, which I am sure is a huge comfort to the agricultural sector, but there are no guarantees yet on what will occur after a transitional period. Our step-by-step proposed parliamentary process will hold the Government to account for their policies and import duty proposals on agricultural goods.

Given the reliance in some quarters on subsidies and the fact that our EU counterparts will continue to be in receipt of subsidies across the continent, there will be a number of factors to consider when the UK comes to setting tariffs on agricultural imports. It is worth noting that the value of UK agricultural production at market prices was £25.8 billion in 2014, according to official Government statistics, and the farming sector provides 400,000 jobs in the UK. I accept that not many of them are in the constituency of Bootle, but there we are.

As the National Farmers Union has highlighted, the UK trade balance is negative to the tune of £22.4 billion, which makes the UK a net importer of food. Although there is an ambition for that figure to improve as the UK becomes more self-sufficient in food production, it shows that the UK is quite heavily exposed in terms of import dependency. As the NFU also highlights, the UK will be duty-bound to establish its own set of schedules with the World Trade Organisation, once we leave the EU. Although we know the Government have announced their intention to replicate the existing trade regime as far as possible in those new schedules aligned with existing arrangements, we have no guarantees on that front, and that must also be agreed by the other members of the WTO. Given the broad range of potential outcomes here and the importance of the agricultural sector to the UK economy, it is vital that any decisions made on import tariffs are subject to proper scrutiny and debate.

The amendment proposes that the relevant Minister must lay before the House of Commons full statements and drafts of regulations so that they can be properly scrutinised by Members from around the country who can represent the diverse interests of the agricultural community—the producers—and British consumers. It is almost a binary position.

--- Later in debate ---

[Mel Stride]

I would not describe the clause as creating loopholes. It simply allows us, by regulation, to ensure the kind of importations to which I referred earlier. The authorised use importation, for example, relates to goods coming into the country for a specific process before typically being exported out of the United Kingdom. Levying an import duty on such goods would clearly not be appropriate, since they get exported shortly thereafter.

The measures facilitate those particular circumstances, or indeed the loan of an artwork. We are told that the French President is suggesting that the Bayeux tapestry might come over here; that particular gesture would be another example where no import duty would be appropriate, and that particular item should be able to come in and out of the country without being bothered by Customs and Excise. I would argue that the measures are important facilitations rather than loopholes.

Each relief provided for under this power will be for a particular purpose and set out the detailed requirements—for example, in relation to the origin of goods or the purposes for which they are imported. The power will be necessary in the first instance to replicate existing reliefs within the EU, to give certainty to traders directly following our exit from the European Union. However, as circumstances change it may be necessary to adapt our system of reliefs to give UK businesses and individuals the support they need to flourish, and to do so in a timely and flexible manner. For any future reliefs, the Treasury would follow established processes, consulting on draft legislation.

[Peter Dowd]

The hon. Member for Aberdeen North made some valid points. The reality is that this, to all intents and purposes, is a tax relief. It can be dressed up in whatever way the Minister would like, but it is de facto a tax relief. We already have something like 1,400 tax reliefs, which ordinarily would come to Parliament for their ratification. This seems to be a potential slew of tax reliefs—I will not comment on whether they are good, bad or indifferent—that will be given the imprimatur of a Minister or the Treasury without Parliament having any say whatsoever in that tax raising. That is not a power that Parliament should give away lightly, so I am afraid we cannot accept the Minister’s explanation that these are somehow technicalities and nothing to do with tax and raising money, which is the prerogative of Parliament.

[Kirsty Blackman]

I am concerned that this is a tax relief, and about the unintended consequences that might flow from it. The Minister almost seemed to say that the Government will make decisions on a case-by-case basis, but that should not be their intention. They should lay out the circumstances in which each kind of widget falls into each category. They are not deciding whether the Bayeux tapestry should be exempt from this duty, but whether artworks should be exempt. Those are pretty significant and major decisions, and I do not think they will be made with the frequency that the Minister suggests.

It might be that in 10 years’ time the world will have changed dramatically and we will be quite a different country, importing things that will need relief in a different way. That is fair enough, but the situation will not require regular change. Given that the measure seeks to encourage industry to flourish and to allow artworks to come to this country to be displayed, it will have a real impact on the UK’s future, so it is completely reasonable to ask the Government to allow more scrutiny. Such instances will not be that frequent, and the measure will have a big impact.

--- Later in debate ---

[Kirsty Blackman]

I appreciate the Minister’s clarification and I hope to be able to share that with businesses and organisations that are concerned about the possible change. In that spirit, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 21 ordered to stand part of the Bill.

Clause 22

Authorised economic operators

[Peter Dowd]

I beg to move amendment 128, in clause 22, page 14, line 17, leave out “HMRC Commissioners” and insert “The Treasury”.

This amendment provides for the power to make regulations under Clause 22 to be exercisable by Treasury Ministers rather than HMRC.

[Peter Dowd]

Amendment 128 would confer powers on the Treasury to act as authorised economic operators instead of HMRC commissioners, for whom the clause currently creates powers.

Clause 22 allows the setting up of an authorised economic operator scheme, which is an internationally recognised quality mark indicating that an operator has met recognised standards of compliance. The status could give special access to some customs procedures and the right, in some cases, to fast-track shipments through customs. Clause 22 gives HMRC the powers to make regulations to not apply sections of part 1 of the Bill to those with such a status, or to ensure that the status is recognised procedurally in other ways.

Once again, this is a very wide power given to HMRC commissioners to ignore large sections of the Bill in relation to certain operators. Under the amendment, we hope to shift the powers from HMRC commissioners to Treasury Ministers. There is a simple reason for that: Treasury Ministers are democratic agents, accountable to the general public. We cannot allow a situation where unelected officials can disapply large sections of parliamentary legislation with no democratic recourse or public oversight. The clause would effectively give HMRC power to refuse to apply all of part 1 of the Bill, from clause 1 all the way to clause 38. Surely this sweeping power, if it has to be created, should be held by a Minister of the Crown—ideally with additional parliamentary scrutiny, as we have tried to ensure throughout other parts of the Bill.

The clause highlights yet another case where democracy is being brushed aside for the purpose of expediency. Our amendment seeks to restore accountability. I hope that members of the Committee will support it today.

Amendment 129 and consequential amendment 130 seek to amend clause 22 and clause 32 respectively. In both cases, the amendments would add a requirement for the Government to introduce affirmative regulations to make further policy. Under clause 22, that is for the purposes of setting up an authorised economic operator scheme.

The use of the negative procedure in that case was commented on in the Lords Delegated Powers and Regulatory Reform Committee report, which addressed the matter of regulations made under the negative procedure under clause 22 as follows:

“Clause 22 allows HMRC Commissioners to make regulations ‘disapplying or simplifying’ any of the law relating to import duty made by or under Part 1 of the Bill (clauses 1 to 38) in relation to “authorised economic operators”, a term that will be amplified in regulations and which essentially covers operators who meet internationally recognised standards of compliance. Bearing in mind that clause 22 covers the other 31 regulation-making powers found in Part 1 of the Bill, its scope is very wide. Given the width of this power enabling HMRC to waive compliance with the law, we consider that these regulations should be subject to an affirmative procedure.”

Again, the Lords are bringing home the point about democratic accountability.

Amendment 129 seeks to amend the Bill, following the advice of that cross-party Committee, because of another example of the Government sidestepping parliamentary scrutiny. We want—we will say this time and again—to reintroduce some measure of scrutiny into the process. Similarly, amendment 130 brings the notes under clause 32 into line with the changes made in clause 22, as I described earlier. It is therefore a consequential amendment in ensuring that the Bill properly reflects the comments made by the Delegated Powers and Regulatory Reform Committee. As I am sure everyone will agree, the proposals are all about parliamentary scrutiny in the important area of customs policy.

[Kirsty Blackman]

It is most unusual to hear the Lords held up as champions of democratic accountability, but the work of the Delegated Powers and Regulatory Reform Committee on the Bill has been incredibly useful, and it has allowed us to have a more knowledgeable debate on the subject. It was quite reasonable of the Opposition to have brought forward their amendments.

I will speak to amendment 116, which I intend to press to a vote. It is about authorised economic operators, which is what the clause covers, because I have real concerns about the system. I am not the only person to have concerns—they have been expressed previously—about how the UK manages the AEO scheme within the UK. The UK scheme is managed dramatically differently from schemes in other countries, which is a real concern for businesses.

The Government’s customs White Paper mentioned that people could be authorised economic operators, and basically suggested that that would solve all their woes. Given how difficult it is for companies to become authorised economic operators, and given HMRC’s shortcomings in overseeing the process and ensuring that it is as smooth and quick as possible, I have real concerns that the system cannot be used effectively by many businesses as a way to ensure—slacker customs procedures is not the right term—slightly different customs procedures that would allow things to move a bit more smoothly.

In the amendment in my name and that of the hon. Member for Dunfermline and West Fife, we are looking for the Government to provide more information. Part of that is about giving businesses certainty further in advance, and part is about ensuring that the Government think about how the authorised economic operators scheme will go forward.

Among the various things we are asking for in the amendment is

“the proposed criteria to be applied in determining whether or not any person should be an authorised economic operator”.

Part of that is to do with the issue that the UK Government and HMRC have had with requiring companies to have someone with three years of customs experience in order to be approved as an authorised economic operator. That is how things have been applied and work now, but if we suddenly include the, I think, 130,000 new companies that have not previously had to do customs checks, we will need a different system, because those companies will not have someone who has been working for three years in a customs-related role. The Government will have to agree that some sort of external company can take on the role of that person, or that the companies can have a differentiated system until they have had that three years of experience in exporting. It is reasonable to expect the Government to be a bit more flexible.

Our proposed new paragraph (b) asks for

“an assessment of the structure of the authorised economic operator system in Germany, Austria and such other countries as the Chancellor of the Exchequer considers relevant”.

Although the scheme is internationally recognised, the way in which it is implemented and the way in which the equivalents of HMRC oversee it varies wildly by country. In some places, the system is much quicker, and it is much easier to get through the process. Companies receive more assistance and guidance to get them through the process, and the officials make a determination about applications more quickly.

It is important for the Government to look at other countries. The British Chambers of Commerce said that Austria and Germany do this in a much smoother way; that is why those countries are included in the amendment, but it would be completely reasonable for the Government to include any other countries that they think are relevant.

Paragraph (c)—

“the proposed differences between the structure that is proposed to be established by the first exercise of the power to make regulations under subsection (1) and each of those structures described in accordance with paragraph (b)”—

would again require the Government to provide us with more information in advance. Paragraph (d), on

“the level of proposed resources to be allocated by the HMRC Commissioners for the authorisation of new authorised economic operators”,

is pretty critical. Given that I assume the Government expect to see a dramatic increase in the number of applicants for authorised economic operator status because of the number of companies that will be exporting for the first time, it is reasonable that they should report on how they intend to ensure that sufficient resources are allocated to seeing the process of authorised economic operators through.

Paragraph (e) is about

“the target timetable for the authorisation of…new authorised economic operators in each class, and…authorised economic operator certification renewals in each class.”

We have heard concerns that the renewal process for an authorised economic operator can take 12 months. If that is so—that may be an outlier—that is a ridiculous length of time for a renewal. The Government may decide that they want a first application to take that long, but I would contend that even that is pretty excessive. It would be incredibly useful for the Government to set out what the targets are, so that companies know, when they are going into the system, how long the Government intend to take in making a decision. When a company is considering, for example, exporting to a new market or changing the way it does it exporting, it should be able to look at the Government’s timeline and plan on the basis of how long it will take them to process the authorised economic operator approval or renewal.

It would be sensible for the Government to come back with all those answers. Businesses would be very happy if the Government gave them more certainty about all those matters. This is a pretty comprehensive amendment, and it relates to a number of aspects of the authorised economic operator scheme that I have concerns about. I hope the Minister will provide a degree of certainty about all of them. If he cannot, I will be keen to press this amendment to a vote.

Taxation (Cross-border Trade) Bill (Fourth sitting)

Debate between Kirsty Blackman and Peter Dowd

Thursday 25th January 2018 Public Bill Committees

[Peter Dowd]

The Government have done precisely the same thing in relation to scrutiny—they have turned it off.

As I said, we cannot allow this to be left to the whims of a Minister, because as has been suggested in the last day or two, the amount of Ministers coming and going has been vast, and it is causing a certain amount of dissonance in the operation of Government from what I can gather, and from what the report says. So, we cannot have a system that is at the whim of this dissonance, so to speak, in two or three years’ time—whichever party is in power.

Ultimately, this comes back to the phrase by James Otis, which must have been quoted millions of times in the House in the three or four centuries since it was spoken: “No taxation without representation”, because that leads to tyranny.

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to be here and to have you in the Chair this afternoon, Mrs Main. We support new clause 1, which has been tabled by the Opposition, and we would be happy to support it if they decide to put it to the vote.

I have concerns about clause 8 because of the deficiencies that we discussed earlier. I hope that, by Report, the Government will have come back to some of the suggestions that the official Opposition and the Scottish National party have made, and given them some level of consideration. Although clause 8 has deficiencies, it is my working assumption that even if we were in a customs union—which would be my preferred option—we would still need to set our tariffs and to lodge those schedules with the World Trade Organisation, so, even in the event of the UK being in a customs union with the EU, I imagine that there would still be a requirement for the Government to have the power to set tariffs.

On that basis, clause 8 is necessary whether or not the Government decide to come out of the customs union or to pursue a customs union. So, although it is deficient, we need to do something. It would be useful if the Minister was to say that he might consider coming back on Report to some of our amendments—even if he said he would consider it, that would be incredibly helpful—but as I said, we will support Labour’s new clause.

--- Later in debate ---

[Kirsty Blackman]

I beg to move amendment 107, in clause 9, page 6, line 24, leave out “may make regulations” and insert

“must make regulations following consultation with relevant stakeholders”.

This amendment requires the Treasury to consult relevant stakeholders before making regulations giving effect to an arrangement for a preferential tariff.

To explain the reasoning behind our amendment I need to mention a couple of things in the clause. It is headed, “Preferential rates: arrangements with countries or territories outside UK” and the explanatory note explains more about those:

“This clause broadly covers any arrangements, international agreements or memoranda of understanding”.

Therefore it relates to whenever there is a move away from a most favoured nation tariff into a free trade agreement, or some other form of preferential tariff rate.

This short amendment would make two changes to the Government’s intentions around the clause. First, it would leave out “may make regulations” and insert “must make regulations”. In subsection (1), the Bill states that,

“the Treasury may make regulations to give effect to the provision made by the arrangements”.

If there has been an international agreement, surely the Treasury must make regulations, because that would be sensible. That is the first change we suggest.

The second change we suggest is on consultation. It is clear that there has not been the right level of consultation. The Government have said that if they are varying the rate of import duty downwards rather than upwards, there should be a less rigorous procedure, but if the rate of import duty is varied downwards, that may have a greater effect on our local producers and manufacturers. The amendment asks for there to be “consultation with relevant stakeholders” in advance of not just international agreements, but any of these changes.

When the Government are deciding to make international regulations, it would be useful if they first consulted the House using the existing processes. I understand that most Governments across the world make trade regulations with the authority of the House, rather than simply by the authority of the Executive. In the absence of those kinds of changes, which are outside the scope of the Bill, we are asking for the Government to definitely make the regulations—if they are bound by an international treaty or agreement, it would be sensible to do so—but to consult with relevant stakeholders. We want to put that duty of consultation on the Government.

[Peter Dowd]

The points that the hon. Lady makes hit the nail on the head in relation to engaging with those who will be affected by the legislation. I fully understand where she is coming from.

The clause allows the Government to introduce through regulations a lower preferential rate of duty applying to goods originating from specific territories. It also covers a broad range of situations, including arrangements between the UK and a British overseas territory, free trade agreements negotiated with Britain and other countries, and a possible customs arrangement with a large economic regional organisation such as the European Union. Preferential trade agreements comprise a variety of arrangements that favour member parties over non-members by extending tariff and non-tariff preferences. PTAs, particularly free trade agreements, have proliferated in recent years. In the post-war period, the EU has developed the largest network of PTAs in the world. The explanatory notes state:

“The ability to use a preferential rate under an arrangement may be subject to any conditions specified in the arrangement, including…quotas, rules of origin or safeguard measures.”

Given that context, it is important that stakeholders are taken into account, as the hon. Lady says. There could be a wide range of stakeholders, and the proposal suggested by the Minister did not go far enough. He almost seemed to suggest that everybody is included, but everybody is not included if the Secretary of State does not want to include them. The clause presents another example of the litany of delegated powers found throughout the Bill. The Treasury takes immense powers without proper consultation right across the board.

Clause 9 is beyond vague when it comes to explaining what consideration the Treasury will make when introducing regulations that will pave the way for offering preferential rates. The clause leaves a range of questions unanswered, particularly around the test that the Treasury will put in place before preferential rates can be included.

I am sure that all members of the Committee agree that reciprocal preferential rates are the foundation of free trade agreements. Again, that goes to the heart of who is to be consulted on this one, and the clause gives a free hand to introduce regulations that will create preferential rates and seem to open the door to the Treasury to—

--- Later in debate ---

[Kirsty Blackman]

I thank the hon. Gentleman for that clarification. I appreciate that his knowledge of sugar is better than mine.

On quotas in particular, the situation is that the UK and the EU Commission have now decided how to divide the quotas and the amount that is lodged as a schedule with the WTO. However, in September 2017, Uruguay, Canada, Thailand, Argentina, Brazil, New Zealand and the US wrote a letter to say that they contested the way in which the UK and the Commission had decided to divide up the quotas, and that they had a concern about the decision taken. I can understand that concern.

For example, let us say that beef is coming into the UK and the EU. If we have a collapse in the beef market in one of those places, the beef cannot simply be redistributed to other countries. That is particularly so in the case of the UK. If the UK ends up with a tenth of the EU’s quota for beef, and the quota allows for 100 tonnes of beef, 10 tonnes of that are a quota allocated to the UK. If something strange happens in the UK, everyone decides that they do not want beef burgers or steaks any more and the market collapses, the country exporting the beef to the UK cannot just send it to another country, because the UK schedule will be the UK schedule alone.

I can therefore understand why countries are unhappy with how that division is working and why they have come back to say that they do not think it is a technical rectification. That is a serious thing in the WTO, because if the change of quota is not a technical rectification but a modification of the schedule, it needs to go through more of a process in order to be agreed.

My big concern is that none of that seems to be in this legislation. None of the way in which the UK Government will be dealing with the WTO on quotas or defending itself against challenges brought to the WTO seems to be in the Bill. While I am on the subject, to throw the cat among the pigeons, I have not seen anything in the European Union (Withdrawal) Bill, in this Bill or in the Trade Bill that gives the UK Government the power to lodge schedules with the WTO. I hope the UK Government have not missed that and it is written somewhere in one of the pieces of legislation, because it would be rather unfortunate if the UK Government were, post-Brexit, unable to lodge schedules with the WTO or to have its most favoured nation tariffs lodged with the WTO.

I hope that that power is in one of the pieces of legislation—I am happy for the Minister to come back to me and mention it afterwards—because clearly we want to be in a situation in which, post-Brexit, the UK continues to be a functioning country and is able to have tariffs, not just preferential ones but most favoured nation ones as well. Generally, I have concerns about the provisions on quotas because I am not sure that they adequately fulfil all the things that the UK will need to do on quotas.

I have thrown an awful lot of things at the Minister—not literally, I hasten to add for anyone reading this later—and I am happy for some of them to be dealt with at a future sitting. My concern, however, is that because we are leaving the EU and doing so in a short period of time, so legislation has been hastily drafted, some things might be missing. If that is indeed missing, that would be amusing because it is pretty fundamental going forward. I will appreciate the Minister’s providing some clarification, if he can, on the clause.

[Peter Dowd]

Our new clause 3 would require the House of Commons to pass an amendable resolution authorising the key provisions of the proposed regulations. It would also require that regulations establishing a licensing or allocation system are subject to the affirmative procedure.

As with the other related new clause we have discussed today, there are four steps set out in our proposed process. First, the Minister lays a statement to the House along with the draft regulation that is proposed to be made. Secondly, the Minister lays a motion setting out the various duties and tariffs that the Government wish to impose. Thirdly, the House would have to pass a resolution on that motion. Finally, the regulations will be made. Amendment 11 is consequential on the above, making a small technical change to clause 32 to accommodate our proposals.

Ultimately, however, we are less concerned with the exact steps for any process for ensuring parliamentary oversight. We just want to see that the Government are acting on the principle that Parliament should have an extended role in scrutinising the changes in this regard. As I have said previously in relation to the other clauses, we seek to guarantee an enhanced parliamentary process. The logic is pretty undisputable. The Government have tabled this Bill as a financial Bill, as I referred to earlier on. In that regard, the House of Lords does not have any capacity to scrutinise it and the Commons does not have the same capacity it usually would. We ask, therefore, that as in all other financial matters a case is presented to the House for a debate and a vote.

It would be a very unfortunate outcome if the Treasury was to acquire powers to alter the rate of taxation without such basic democratic processes. The Government really should think a little longer than this—it is not a short-term matter. It is of course more conceivable that they may be in opposition sooner than they think. They should be looking to construct a fair process for scrutiny, with, in effect, cross-party agreement as to what that would be, in the light of this significant change that we are about to face in one way or another, maybe within the next 12 months or so, possibly a little longer, but the reality is that we are facing change. This House has to face up to the fact that scrutiny processes need looking at, especially with regard to finance.

[Mel Stride]

The hon. Member for Aberdeen North rightly raises the issues around quotas. First, we have to work out what those quotas will be. We have existing arrangements through the European Union and we are currently in discussions regarding, as she has suggested, how the various quotas should be allocated, whether that be on the basis of consumption, or consumption and other issues that we might consider. The point I would make on that is that this Bill is enabling, in that sense, rather than prescribing or seeking to suggest any particular outcome to those discussions.

In the hon. Lady’s second point she raised an example of 100 tonnes or 100,000 tonnes of beef, and a certain amount coming by way of a quota to the UK, and then circumstances of that changing not to our liking, and asked what we would do in such a situation. That prompts the question as to where the quota itself originated.

Taxation (Cross-border Trade) Bill (First sitting)

Debate between Kirsty Blackman and Peter Dowd

Tuesday 23rd January 2018 Public Bill Committees

[Peter Dowd]

Q Just a very quick one. There are quite wide-ranging issues here today. How about the actual hard costs for your various organisations and the companies you represent of the introduction of the new processes, new liaison arrangements and new engagement processes?

Anastassia Beliakova: It would be very difficult to assess, because there are a number of factors. One is just the cost of a customs declaration. That will perhaps be more challenging for a smaller business that is trading ad hoc. If you are a large business trading at big volumes, the cost will be quite marginal for you.

But then there are other considerations. There is the time issue. Are you going to factor in any potential delays? If so, does that mean you have to provide for more warehousing facilities? Does that mean you have to keep an inventory? All those things are very difficult to quantify for a median figure, but they are things we know our members are starting to consider—some quite actively.

William Bain: If you move away from a just-in-time supply and sourcing mechanism, you have to look at stockpiling. That means you have to look at extra warehousing capacity. You have to change IT systems in terms of VAT and customs. All that comes at a cost for businesses, at a time in which we see the pressures in terms of footfall and retail spending.

Peter MacSwiney: As a software supplier, we support about 350 companies in probably 800 locations. We estimate that making the necessary changes, just to roll out our system, is going to cost in excess of £250,000 over the next two years. I do not know whether that is any help to you.

Gordon Tutt: One of the other issues is underwritten by the fact that some of the changes being introduced to the software systems would have been required anyway as part of the requirements to meet the UCC—new data set, new message types, more engagement in terms of electronic transactions. In addition, we are already working on CHIEF replacement, so the costs of that are already borne as part of the decision to replace CHIEF. As high as these costs are for some of the software suppliers and some of the trade sector, some of that cost would have already existed had we decided to remain within the EU.

[Kirsty Blackman]

Q Customs and immigration forces were put together in the Border Force. Given the Government’s political priority around immigration, do you feel that there is a resourcing issue with customs staff or do you feel that it is a structural issue and that decoupling customs and immigration would fix that?

Peter MacSwiney: I think there is a structural issue. It is the view, certainly at the airports, that freight is the poor relation where the Border Force is concerned.

Anastassia Beliakova: I would say it is both. It is very difficult to assess within the Border Force how much emphasis is given to goods checks versus checks on people. We have heard from members that it seems as if the focus has definitely shifted over the years. It is therefore an area that would require either a change of focus with more focus to goods, or more people dedicated just on goods checks, from our perspective.

Finance (No. 2) Bill (Third sitting)

Debate between Kirsty Blackman and Peter Dowd

Thursday 11th January 2018 Public Bill Committees

[Kirsty Blackman]

I very much agree with my hon. Friend. A lot of these projects have been brought to fruition because of the benefits of EU money. The UK Government have not committed to filling the EU funding gap that there will be, particularly for universities and for the research and development of vital products that UK companies can sell on.

It is welcome that the Government are putting some focus on research and development expenditure. That is a positive thing. However, it is not in any way the end of the story. To simply stand still, the Government need to make significantly more commitments. We would appreciate the Westminster Government being much more positive about the innovation culture. They need to put their money where their mouth is and make sure they fund these things more appropriately.

[Peter Dowd (Bootle) (Lab)]

Again, it is a pleasure to serve under your stewardship, Mr Owen. I want to speak first to the points made by the hon. Member for Aberdeen North and then go on to my substantive comments on our amendment. It is worth noting what the hon. Lady says about funding research. Bill Gates, who knows a thing or two about research and development, said:

“I believe in innovation and that the way you get innovation is you fund research and you learn the basic facts.”

Are the Government funding research and development sufficiently? The answer, quite simply, is no. Neil Armstrong said:

“Research…is creating new knowledge.”

When set against that, the amount of research and development that the Government are funding, or indeed encouraging, is not creating that much more new knowledge.

Following on from the comments of the hon. Member for Aberdeen North about new clause 4, I am deeply concerned about the level of the Government’s research and development expenditure, particularly once we have left the European Union. The important question is not whether we are in or out—we are moving out; we recognise that—but how we fill that gap.

There is a rightly held concern that as a result of Brexit, the UK risks losing its reputation as a scientific powerhouse. In November, the Chair of the Public Accounts Committee stated that we are “sorely lacking” in leadership from the Government to maintain Britain’s position as a leader in robotics and in research to tackle climate change. She was responding to a National Audit Office report that highlighted that between 2007 and 2013, the UK was a “net recipient” of EU research funding and received more than £7.9 billion. In 2015, the UK Government’s expenditure on research and development was £8.7 billion, so it is almost equal.

The Government will have to make up the funding shortfall once we leave the European Union if the UK is to keep its status as a world leader in research and development.

Finance (No. 2) Bill (First sitting)

Debate between Kirsty Blackman and Peter Dowd

Tuesday 9th January 2018 Public Bill Committees

[Kirsty Blackman]

I would go so far as to bet that all Committee members have not read all the written evidence that has been provided. I bet that they have not had time, given that the customs Bill is running at the same time, and the majority of us who are Front-Benching for that Bill are also Front-Benching for today’s Bill.

The timescale is not working. If we were to allow evidence sessions this Thursday, and then allowed the Public Bill Committee stage to stretch slightly—I am not sure it would even end up stretching as far as 18 January, because we could have a number of sittings before then—that would be a really positive change for the Committee. We would all be better informed, and it would be a good step for scrutiny and transparency, which the Government and the ministerial code suggest that we should have.

[Peter Dowd (Bootle) (Lab)]

It is a pleasure, as ever, to serve under your chairmanship, Mr Owen. I have sympathy with the Scottish National party on their amendment to the programme motion, which would require the Government to ensure that there was an evidence sitting this week. This is my third Finance Bill since becoming shadow Chief Secretary to the Treasury, and I have made the point on each one that we should have evidence sittings. The argument might be made, “We have had three Bills; what’s the point?” However, there is a pretty compelling argument that having had three Finance Bills is all the more reason to not just pause for breath but catch up, and get some people in to give evidence. The point is well made, and it was also part of the context for the debate in the House yesterday.

This is not simply an event; it is part of a process. Most of the traditions or protocols that we follow in the House have a perfectly rational basis, but there are occasions—I think this is one, in the light of the three Finance Bills this year—when we might want at the very least to step back from them. Every other piece of legislation that passes through the House gets its day in court, so to speak, as regards giving evidence, and of course the complex changes made to UK tax laws and systems have far-reaching consequences for everyone and for the economy.

It is important that when matters are incredibly complex—and, let us be frank, many of the matters in question are complex—we should be able to tease out issues with experts. It is not that I do not believe the Financial Secretary to the Treasury and everything that he tells us; I do, implicitly. However, I am sure that he would like us to test his assertions, and we might want to do that with other people—and with other experts.

Several provisions in the Bill, and in previous Finance Bills, rewrite earlier measures and close loopholes. It is important for us to tease out those things, too. Why are we where we are, and what could we have done differently? Possibly we could not have done anything differently, but I am sure that if there had been evidence sittings for previous Finance Bills, the experts offering testimony might have pointed out to the Government technical pitfalls in some of the measures they wanted to introduce.

The amendment is in the spirit of attempting to move things on; it is not a wrecking proposal. I acknowledge that we will not win the debate, but it is important to state the need to push for evidence sittings. I do not think that I am alone in that view. Not only does the SNP take it, but so do many outside the House: the Institute for Fiscal Studies, the Institute for Government and the Chartered Institute of Taxation made a similar case in the report “Better Budgets: making tax policy better”, published in April 2016. Its authors pointed out that Finance Bills could be improved by oral evidence sittings, with little disturbance to the parliamentary timetable. I am sure that the Opposition would be more than happy to discuss parliamentary timetable issues with the Government.

--- Later in debate ---

[Kirsty Blackman]

In a number of places in the written evidence, various organisations said, “This was not consulted on in draft; we would have suggested these changes, if it had been.” The Committee is losing out because it does not take evidence. It would be better if it did. I do not understand why the Government are scared to take evidence.

[Peter Dowd]

Does the hon. Lady agree that it is important to understand the position that Parliament is in? The Government do not have an overall majority, notwithstanding the arrangement with the Democratic Unionist party. Their position has changed. Given that, and given that the Government have taken control of the Committees, again notwithstanding the fact that they do not have the majority as a party, the question of scrutiny has changed a little.

[Kirsty Blackman]

Absolutely. An added dimension is that because the Government do not have a majority, and because all the Brexit legislation is going through, there is an incredibly heavy legislative timetable with an incredible number of incredibly technical pieces of legislation. Therefore, it would be better for Members to have the opportunity to inform themselves. I do not think this is about increasing external organisations’ scrutiny, because, as the Minister said, there are a number of opportunities to do that. This is about giving Members the opportunity better to inform themselves and ask questions of those incredibly knowledgeable organisations so that we can make better decisions about tax law, and so that the Treasury does not create tax law that is not good and that it has to go back and fix a couple of years later. It would be better for everybody if members of the Committee were more informed and therefore able to take better decisions and make better laws.

Question put, That the amendment be made.

Finance Bill (First sitting)

Debate between Kirsty Blackman and Peter Dowd

Committee Debate: 1st Sitting: House of Commons
Tuesday 17th October 2017 Public Bill Committees

[Peter Dowd]

That is a very valid point that people should listen to. As I said before, that goes to the nub of the situation.

In the light of that, I have a number of very reasonable amendments that the Committee members certainly will agree are pertinent, which need to be asked for and which need answers. Perhaps the Minister, who I know is the epitome of helpfulness, could explain to the Committee how the figure of £500 was reached, who was consulted on the figure, and the basis of the figure, in terms of the pensions advice market—or is the figure arbitrary? Dare I say, is there a smokescreen?

I am sure that the Government do not want to be seen to be acting without providing adequate funds to address the root problem. The cost of financial advice will inevitably inform the value of the advice. That is why we have put forward the amendment, which would raise the threshold for tax-free pension advice from £500 to £1,000. Pensions advice is, after all, the greatest protection against the threat of fraudsters keen to prey on some of those in vulnerable positions. Because we are talking about large sums of money that people rarely engage with until the end of their lives, pension savings are often an active target for scams.

We must recognise that as technology makes it easier for us to access our pension pots, it also increases the risk of fraud. This is also true of the reforms brought in by the Government under the previous Chancellor, giving pensioners greater freedom to withdraw a portion of their pensions earlier. That has been a benefit to some pensioners, although it has brought with it substantial risks and the problems that we continue to see today. The Money Advice Service website outlines the common signs of pension fraud. They include unsolicited approaches by way of a phone call, text messaging or emails. Other practices include a firm not allowing a person to call it back, and people being pressurised and forced into making a quick decision, or being encouraged to transfer pensions quickly and to send documents by courier. Contact details provided are mobile phone numbers only, or a post office box address.

Other tactics include claiming to be a person who can help to unlock a pension before the age of 55, which is sometimes known as pension liberation or referred to as a personal loan. This is possible only in very rare cases, such as very poor health. People say they know of tax loopholes, or they promise extra savings. They offer a suggested high rate of return on investments, but claim that the risk is low.

The Money Advice Service recommends that people looking for pensions advice check against the FCA register of approved pension advisers. The Opposition welcome the loosening of the advice that an individual can claim under the tax-free allowance, as I indicated earlier. Over the past few years, it has become apparent that people not only are concerned about the level of savings in their pensions, but have taken a greater interest in where their pension savings are being invested. Of course this is a good thing, and ultimately pension funds should be accountable to the person whose savings they invest.

All these issues that I have raised so far summarise the Opposition’s concerns about this clause and why we have put forward an amendment that would require a review of the effectiveness of the tax-free relief in the years 2017, 2018 and 2019. It is important that the Government accept the review, rather than rushing ahead with further reforms that may be considered tinkering around the edges. We are suggesting an increase from £500 to £1,000, and a review of the allowance system in due course.

[Kirsty Blackman (Aberdeen North) (SNP)]

It is a pleasure to take part in another Finance Bill Committee, and I am looking forward to another one coming later this year. It feels like we have been discussing this one for quite some time, so I am glad to finally be at the Committee stage in a Committee Room. Thank you for your chairmanship, Mr Howarth.

I wanted to highlight our amendment on this. There have been a huge number of changes in the pensions landscape in relatively recent years. In my working lifetime, we have seen a move away from a final salary pension scheme to career average for the majority of people, even in the public sector. We have seen changes to things such as the lifetime individual savings account and the ability to withdraw pensions. Those are pretty significant changes in the landscape; pensions for people my age look very different from how they looked not that many years ago.

We have also seen changes to the Women Against State Pension Inequality issue, and the equalisation problem. A number of people have come through the door of my surgery and talked to me about how they have been caught by the WASPI issue. If they had had different pensions advice, they would not have retired in the way they did. More than one person who took early retirement now finds that they are caught by the WASPI issue when they should have retired under ill health, which would have given them a completely different outlook on their pensions. If they had had more appropriate advice when they were deciding when to retire, they would have been much better off.

I welcome the Minister’s proposal to make the first £500 of pension advice tax-free; that is an important change and one that we all generally agree with. I agree with the shadow Minister, however, who asked whether £500 is the most appropriate amount. Should it be £1,000? Should it be less? The amendment we have put forward specifically asks about the issues for women born on or after 6 April 1950, because they are the ones who have been caught by this WASPI issue. I am keen to see an increased uptake of pensions advice by those women, because for some of them changing the way in which they retire would make a difference.

Those women have been failed by the system. They have been failed by the Government, who have moved the goalposts and changed the date on which they expected to retire. Some of them retired not long ago and were completely unaware of the change. Those are people who would have read every bit of paper that came through their door. A medical secretary came to my surgery the other day. A medical secretary is someone very diligent about reading bits of information that come through the door, particularly about financial matters that are important for her future, and I believe that she would have chosen a different route to retirement if she had had appropriate advice, and if she had known what would happen on state pension equalisation and what would happen to her.

Value Added Taxation

Debate between Kirsty Blackman and Peter Dowd

Tuesday 21st February 2017 General Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

I have a few things to add to our debate. First, I want to talk about the Scottish context, particularly on VAT for police and fire. It has previously been said that there cannot be changes to VAT for police and fire because of European regulations, and that there cannot be a change within what is classed as one member state.

In Scotland, our police and fire services are paying £35 million a year in VAT that we believe we should not be paying. We have made that case on a number of occasions, but the UK Government have refused to make changes to the system, despite allowing both the London Legacy Development Corporation and Highways England a derogation in terms of their VAT, which has not been the case for the Scottish police and fire services. If we are leaving the European Union, which it seems we are, will there be changes in that regard?

The other thing to consider is that if we go forward on the basis of what has been provided today—the document that has been put forward by the EU—there is a suggestion that there will be more flexibility for member states regarding what they can and cannot zero-rate. So if we continue with these regulations, would there be a possibility that the UK Government could more easily zero-rate the police and fire services than they have so far been willing to do? That is a specific point about the Scottish context.

I will also mention sanitary products. Again, this document mentions a couple of options for the future, option 1 and option 2, both of which involve changes around some of the derogations; option 2 in particular involves changes of that kind. We have this historical situation whereby the derogations were created when we first joined the European Union and they make little sense in today’s context. Some things that are luxury products—I consider them to be luxury products—currently have a derogation, and there are some things that I would consider essential products, such as sanitary products, that do not. I am not just talking about products for the absorption of blood but those for the absorption of urine or breast milk, which I have pressed the Minister on previously.

Those products should have a zero rate of VAT, because they are necessary. There are strange contextual issues around products used for the absorption of urine, but a number of people have got to pay VAT on them even though they are absolutely necessary products for them. It is really important that the Government consider this issue as we go forward.

I will put both those things in context. I disagree with the hon. Member for Bootle, who said that this debate is almost irrelevant; the opposite is actually true. What we need to do, as current members of the European Union, is ensure that decisions taken around VAT are as favourable as possible for the UK. We need to go into those negotiations and make our position clear, which is why I am taking the time today to speak about those things that I think are really important, so that the Minister is aware, when he goes into those negotiations, that I think they should be key priorities.

The wider context is that we will be outside the EU and we will have less of a seat at that table than we do currently. The Minister has mentioned the seat that we have around the OECD table, but when it comes to the single EU VAT area the likelihood is that it will take some time to create it and that we will lose our seat at the EU table before it actually comes into force. So we need to make our voice heard as clearly as possible right now, so that future regulations are positive for us.

One of the reasons I think this issue is really important is that if Members look at the top of page 8 of the papers we have been given they will see that the second paragraph says:

“better cooperation with international organisations and non-EU countries over VAT should make it possible to extend the EU system of administrative cooperation to non-EU countries, particularly to ensure effective taxation of e-commerce.”

[Peter Dowd]

I do not understand why people do not get this point, but does the hon. Lady agree that the Commission will not discuss anything in this whole debate about post-Brexit issues with us? It just will not do that. Does she accept that?

[Kirsty Blackman]

In the context of the article 50 negotiations that we will have, I think that the Commission will say to us, “No, we’re not very keen to discuss some of the ongoing future framework.” However, we are currently a member state. We have not yet triggered article 50 and while the article 50 negotiation period is happening, we have two years as an EU member state. The Commission does not have the ability to exclude us from negotiations about how things will develop in the future. So if the Government and the UK fail to do what I am suggesting, there will be a huge issue regarding how the UK gains access to things such as the single market in the future.

--- Later in debate ---

[Peter Dowd]

I repeat what I said earlier: this action plan—not a future action plan or one we would like—sets out the pathway to the creation of a single EU VAT area. Does the hon. Lady not understand that we are not going to be in a single EU VAT area?

[Kirsty Blackman]

We will not be in a single EU VAT area because we will not be an EU member state. However, the paragraph that I have just read out says that it should be

“possible to extend the EU system of administrative cooperation to non-EU countries, particularly to ensure effective taxation of e-commerce”,

so we will be involved as a third country. Given the way the EU does trade deals, it will look to ensure that there is as much equivalence and commonality as possible in a number of areas. We therefore need to make the case for the industries, sectors and products that we think are important. Ensuring that our voice is as loud as possible in these negotiations will benefit us as a country.

The likelihood is that the EU will look to include some commonality or equivalence in relation to VAT systems in a post-Brexit deal with the UK. The EU is a much bigger entity than the UK, so we need to think carefully about how the EU is currently structured and what it is currently doing to ensure that it is as favourable as possible for us when we become a third country and try to make a trade deal with it.