Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have of the underlying cause of the fall in gross domestic product per head in every quarter of 2023, as reported by the Office for National Statistics on 15 February, and what action they are taking to reverse this trend.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The economy has faced an unprecedented series of shocks, including the Covid-19 pandemic and the impact of Russia’s illegal invasion of Ukraine. These have led to challenging economic circumstances.
Looking over a longer timeframe, since 2010 GDP per capita has increased by 12%. Real household disposable income per capita - a more comprehensive measure of household living standards - has grown more than France and Italy since 2010.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what steps they are taking to bring inflation back to the target of two per cent; and when they expect that to be achieved.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
Inflation has halved and was lower in Q4 2023 than had been forecast by the Office for Budget Responsibility (OBR) in the Autumn. Despite the progress there are four key things the government is doing to reduce it further.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have to increase the threshold for compulsory registration for VAT; and what plans they have to reinstate the policy of annually updating the threshold in line with inflation.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
Views on the VAT registration threshold are divided and the case for change has been regularly reviewed over the years.
In 2018, the Government consulted on how the design of the VAT registration threshold could better incentivise growth. However, there was no clear option for reform.
While the Government keeps all taxes under review, it was announced at Autumn Budget 2022 that the VAT threshold will be maintained at its current level of £85,000 until 31 March 2026.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the impact of the withdrawal of the VAT Retail Export Scheme; and if they have any plans to reintroduce the scheme.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
The Government’s assessment of the anticipated impact of the withdrawal of the VAT Retail Export Scheme (VAT RES) was set out in the original policy costing note which can be found in the Policy costings document from November 2020 p42-43.
Government analysis conducted in 2022 found that introducing a worldwide scheme could come at a fiscal cost of around £2 billion each year. This figure consists of the cost from EU and non-EU visitors and is calculated based on methodology signed off and certified by the OBR in 2020.
Whilst there are no current plans to re-introduce VAT RES, this Government keeps all tax policy under review, and we are very grateful to industry for their contribution to our invitation to provide evidence on this matter.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what plans they have to regularise the treatment of training expenses against profits subject to Schedule D income tax and profits subject to corporation tax.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
In calculating taxable business profits, expenditure on training to update existing skills would be a deductible business expense when the expenditure is incurred wholly and exclusively for the purposes of the business and is not capital in nature. The treatment of these training expenses is the same irrespective of whether the taxpayer pays income tax or corporation tax.
Any changes to tax policy are a matter for future Budgets and it would not be appropriate to comment on tax measures at this stage of the policy development cycle.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of The Mortgage Crunch report, published by the Resolution Foundation on 17 June; and what plans they have, if any, to assist mortgage holders affected by rising mortgage costs.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
The Government does not set mortgage or interest rates. The Bank Rate - which is one factor that lenders use to set mortgage and retail interest rates - is set by the Monetary Policy Committee (MPC) of the Bank of England, which is independent of Government. Commercial Banks and Building Societies also make other commercial judgements that influence the degree of pass‐through from changes in Bank Rate into mortgage and retail interest rates. The Government does not seek to intervene in these commercial decisions.
However, we recognise this will be a concerning time for mortgage holders, particularly those who are due to come to the end of their existing deal in the immediate future. The Prime Minister has been clear, the best and most important way that we can keep costs and interest rates down for people is to halve inflation, and then return it to the 2% target.
On Friday 23 June the Chancellor met with mortgage lenders, UK Finance and the FCA to discuss a new package of support for those who encounter problems keeping up with their mortgage payments. These commitments include an agreement permitting customers to switch to an interest only mortgage, or extend their mortgage term, for 6 months, after which they can switch back without a new affordability check or it affecting their credit score. Lenders also agreed borrowers won’t have their home repossessed within 12 months from a first missed payment without their consent or unless in exceptional circumstances.
If mortgage holders are concerned about making their mortgage repayment, they must speak to their lender as soon as possible. Contacting them will not affect their credit score.
The Government has also already taken a number of measures aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans for those in receipt of an income-related benefit, and protection in the courts through the Pre-Action Protocol, which makes it clear that repossession must always be the last resort for lenders.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the reasons behind UK citizens borrowing from loan sharks; and what steps they will take to reduce the number of UK citizens borrowing from loan sharks.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
HM Treasury regularly monitors developments in the consumer credit market, including those regarding illegal money lending, as part of its normal process of policy development.
However, it does not conduct its own research as to the scale of illegal money lending in England. Instead, HMT draws on the research of various stakeholders, including the Illegal Money Lending Teams (IMLTs), consumer groups and thinktanks, to inform policy development.
HM Treasury recognises the risks posed by illegal lenders and the harmful impacts they cause to their victims and communities
That is why, in financial year 2022/23, the Government will provide over £6.7 million of funding to IMLTs across the UK, an increase of over 5% compared to 2021/22. This funding enables IMLTs to investigate and prosecute loan sharks and use their legal powers to tackle the wider criminality they inflict on communities, such as violence and blackmail.
Consumers use illegal lenders for a variety of reasons. However, the Government is overseeing many innovative affordable credit initiatives which will expand the provision of affordable credit to those who may otherwise use an illegal lender. This includes by:
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of (1) the number of UK citizens who are indebted to loan sharks, and (2) the total value of loans that are currently outstanding; and what steps they plan to take as a result.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
HM Treasury regularly monitors developments in the consumer credit market, including those regarding illegal money lending, as part of its normal process of policy development.
However, it does not conduct its own research as to the scale of illegal money lending in England. Instead, HMT draws on the research of various stakeholders, including the Illegal Money Lending Teams (IMLTs), consumer groups and thinktanks, to inform policy development.
HM Treasury recognises the risks posed by illegal lenders and the harmful impacts they cause to their victims and communities
That is why, in financial year 2022/23, the Government will provide over £6.7 million of funding to IMLTs across the UK, an increase of over 5% compared to 2021/22. This funding enables IMLTs to investigate and prosecute loan sharks and use their legal powers to tackle the wider criminality they inflict on communities, such as violence and blackmail.
Consumers use illegal lenders for a variety of reasons. However, the Government is overseeing many innovative affordable credit initiatives which will expand the provision of affordable credit to those who may otherwise use an illegal lender. This includes by:
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the impact on high street retail businesses of the Chancellor of the Exchequer's decision to withdraw the VAT-free shopping scheme for non-resident visitors announced on 23 September.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
On 23 September, as part of the Growth Plan 2022, the previous Chancellor announced that HM Treasury, in partnership with HMRC, would introduce a modern, digital, VAT-free shopping scheme, with the aim of providing a boost to the high street and creating jobs in the retail and tourism sectors. Due to the changing economic picture, on 17 October, the current Chancellor announced that the Government would no longer be proceeding with the introduction of such a scheme. This decision was included as part of the reversal of almost all of the tax measures set out in the Growth Plan on 23 September which have not been legislated for in Parliament. The purpose is to ensure the UK’s economic stability and to provide confidence in the Government’s commitment to fiscal discipline. The Chancellor made clear in his statement that the UK’s public finances must be on a sustainable path into the medium term.
Asked by: Lord Allen of Kensington (Labour - Life peer)
Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the potential benefit of zero-rating VAT on fuel oil to assist households that are reliant on fuel oil to heat their homes; and what plans they have to reduce VAT on fuel oil.
Answered by Baroness Penn - Minister on Leave (Parliamentary Under Secretary of State)
This year the Government is providing over £37 billion in cost of living support, including helping people cope with the impact of higher energy bills, with £400 off their bills from October through the expansion of the Energy Bills Support Scheme (EBSS) and with millions of the most vulnerable households due to receive at least £1,200 in total.
Domestic fuels such as gas, electricity and heating oil are not subject to the standard rate of VAT at 20 per cent but to a reduced rate of VAT at only 5 per cent.
The Government keeps all taxes under review.