Oral Answers to Questions

Lucy Frazer Excerpts

Tuesday 1st February 2022 Commons Chamber

[Marco Longhi (Dudley North) (Con)]

13. What steps his Department is taking to encourage businesses to invest.

[The Financial Secretary to the Treasury (Lucy Frazer)]

The Chancellor has brought forward a number of measures to encourage business investment, and I shall mention just two. Under the super deduction, from April 2021 until the end of March 2023, companies can claim a 130% capital allowance on qualifying plant and machinery investments. That is the biggest two-year business tax cut in modern British history. We have also extended the temporary £1 million annual investment allowance level until the end of March 2023.

[Steve Brine]

That was an interesting answer. There is a business in my constituency, Cytronex, which has developed a green solution to increase cycling rates by converting existing bicycles into e-bikes—I recommend it. Last year, its product won the e-bike of the year award; as a result, international demand has far outstripped its ability to support it. Cytronex is passionate about manufacturing its product in Britain and even assembles its own lithium battery packs in Winchester. What more can we do to help small businesses such as Cytronex make the leap into mass production, and will one of the excellent Treasury Front-Bench team meet us to discuss how we can explore that?

[Lucy Frazer]

Cytronex sounds like a fantastic company, and it is great to see it in Winchester. It is precisely the type of company that we want to support. As I mentioned, it could benefit from the super deduction that we have brought in. Under the super deduction, for every £1 a company invests, its taxes are cut by up to 25p. That type of investment will help manufacturing and the manufacturing sector.

[Marco Longhi]

Jobs and job security clearly depend on economic growth. The International Monetary Fund’s forecast putting the UK at the top of the G7 is an endorsement of this Chancellor’s and this Prime Minister’s approach to economic policy throughout covid. Will the Minister assure me and my Dudley constituents that we will increasingly return to revenue from growth as soon as possible, and continue investing in skills for jobs for the future, building on, for example, the successful delivery of Dudley’s institute of technology?

[Lucy Frazer]

My hon. Friend is absolutely right to focus on skills, and that is exactly what the Chancellor did in the spending review, with an investment, over the Parliament, of £3.8 billion. My hon. Friend mentions the Marches institute of technology, and we are investing in a total of 21 of those innovative institutions across England. Employer-led training is key to growth, and that is why we are quadrupling the scale of skills boot camps in England, including digital skills boot camps, which are available in Dudley and funded by the Government.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Businesses in financial services are more likely to invest here as opposed to European markets if an agreement is reached with the EU on financial services regulation. Last March, the Economic Secretary to the Treasury, the hon. Member for Salisbury (John Glen), said that he expected such an agreement to be signed expeditiously. It still has not been. When does the Minister think the memorandum of understanding on financial services regulation will finally be signed?

[Lucy Frazer]

The hon. Member makes an important point. Financial services are very important to the UK. We are ready to make a deal and we look forward to hearing from the EU.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

A local businessman in my constituency would love to be able to invest, but he is facing business ruin because he made an order to China for some fireplace tiles worth £15,000 and, because of anti-dumping duty, customs duty and various other taxes, he is going to be charged £43,000 of costs for a £15,000 order. He is a sole business person and he is facing bankruptcy. I have contacted HMRC about this, but I seem to be hitting a dead end, so will the Minister please look into this matter and see if anything can be done to help him?

[Lucy Frazer]

If the hon. Member wants to give me the details of her constituent’s case, I would be very happy to look into it.

[Caroline Lucas (Brighton, Pavilion) (Green)]

4. What assessment he has made of the compatibility of his policies on the taxation of fossil fuels with the Glasgow climate pact.

[The Financial Secretary to the Treasury (Lucy Frazer)]

I am pleased to have an opportunity to underline the Government’s commitment to reducing carbon emissions through taxation and the UK’s success in limiting global emissions at COP26. The Government have reduced carbon emissions through their carbon pricing policies, including through the UK emissions trading scheme. We are committed to delivering on our carbon targets, and our net zero strategy sets out a roadmap for reaching net zero by 2050.

[Caroline Lucas]

I thank the Minister for her answer, but she will know that the UK has one of the most lax tax regimes in the world for the oil and gas sector. In 2019, companies got away with paying 12.5 times less tax for a barrel of oil produced here compared with in Norway, for example. In 2020, Shell paid absolutely no tax in the UK, the only country in the world where it operates where that was the case. For 2021, HMRC expects that the industry will pocket £910 million-worth of tax reliefs for decommissioning. Given our commitments under the Glasgow climate pact, and given the fact that the oil and gas industry is currently making near-record profits while UK households are struggling with a real cost of living crisis, will the Minister address the imbalance and commit to a review of the tax regime?

[Lucy Frazer]

The hon. Member will know that the oil and gas sector does pay significant taxes. Indeed, it pays additional taxes, and to date it has paid more than £375 billion in production taxes.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

6. What recent discussions he has had with the Financial Conduct Authority on the regulation of the insurance industry.

--- Later in debate ---

[The Financial Secretary to the Treasury (Lucy Frazer)]

I am aware that the hon. Gentleman raised a similar question with the Chancellor when the Chancellor was a Local Government junior Minister. The hon. Gentleman will know that we announced in the middle of last month that we are closing a tax loophole that allowed owners of second homes who claimed that their often-empty properties were holiday lets to receive small business rates relief instead of paying council tax. We are also committed to ensuring that first-time buyers are able to get on and move up the housing ladder.

[Tim Farron]

Rural Britain’s housing crisis has become a catastrophe over the last two years of the pandemic. The Chancellor will know all about that, given the kind of constituency he represents. Some 80% of all house sales in the lakes and dales in Cumbria have been to the second home market, and in some rural communities there has been a reduction in the private-rented affordable market of 70%. Local families are being forced out of our communities. The need for drastic and immediate action is obvious, well over and above what has been said. Will the Minister agree—or will she agree to persuade her right hon. Friend the Chancellor—to meet me, as the Chancellor’s constituency neighbour, to sit down and look at seven steps for saving our rural communities, so that we can prevent our towns and villages being emptied of their full-time populations? That will surely include giving councils the freedom to double council tax on second homes.

[Lucy Frazer]

I am happy to meet the hon. Member to discuss the points he raises. We have taken a number of steps to ensure that people pay the full rate of council tax on second homes—96% of second home owners pay the full rate of council tax. He will know that the Government introduced the higher rate of stamp duty land tax for those purchasing additional properties, and only last year introduced a new SDLT surcharge of 2%, to ensure that houses are available for local people at reasonable prices. I am happy to discuss this further with him.

[Tom Randall (Gedling) (Con)]

11. What assessment he has made of the progress of the kickstart scheme.

--- Later in debate ---

[James Murray (Ealing North) (Lab/Co-op)]

Last month, the Government came out against Labour’s plan to help people on modest incomes pay their energy bills using a one-off £1.2 billion windfall tax on the profits of oil and gas producers. The Education Secretary complained that oil and gas companies are “already struggling”. The truth is that pensioners and people on modest incomes are the ones who are struggling. Oil and gas companies are expected to report near-record income this year. Will Ministers now admit that the Government have got it wrong and commit to looking again at our plan?

[The Financial Secretary to the Treasury (Lucy Frazer)]

The hon. Member will know that the oil and gas industry pays a significant amount in taxation—I mentioned the figure earlier. In terms of helping people who are struggling with their bills, he will know that we already have the energy price cap, the winter fuel payment, the warm home discount and the cold weather payment. We are looking out for and supporting those on the lowest income to enable them to get through this difficult period.

[Simon Jupp (East Devon) (Con)]

T7.   Pubs, restaurants, cafés and hotels were brought to their knees again over the festive period as people simply stayed at home. Will the Financial Secretary consider extending the reduced rate of VAT on hospitality and tourism to help those hard-hit businesses?

[Lucy Frazer]

My hon. Friend will know that we have already made a significant input to support those in the hospitality and tourism industries. He will know that we extended the 5% reduced rate of VAT for those sectors to the end of September. On 1 October, we reduced the rate to 12.5%. That relief has cost the Government and the taxpayer more than £8 billion. Although all taxes are kept under review, there are no plans to extend the 12.5% reduced VAT rate.

[Afzal Khan (Manchester, Gorton) (Lab)]

T3. Threats to Putin’s regime would be stronger if the Government had implemented the recommendations of the 2020 Russia report. The lack of progress in the registration of overseas entities Bill and the economic crime Bill rings alarm bells here and with our allies. Will the Chancellor explain his failure to take action in our national interest and name a date for that to be remedied?