Oral Answers to Questions

Lucy Frazer Excerpts

Tuesday 28th June 2022 Commons Chamber

[Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)]

1. What recent discussions he has had with (a) Cabinet colleagues and (b) stakeholders on the potential merits of zero-rating VAT on domestic fuel.

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

The hon. Member’s question is about the Government’s support for those who are struggling with the cost of living. The Government recently announced an additional £15 billion-worth of additional support, targeted particularly on those with the greatest need. Government support for the cost of living now totals £37 billion this year.

[Neale Hanvey]

VAT on domestic fuel continues to be levied on rising fuel bills while one in three Scots households live in fuel poverty. With 8% of the UK population, Scotland has 96% of the UK’s crude oil reserves, 63% of the UK’s natural gas reserves, 90% of the UK’s hydropower and 25% of Europe’s offshore wind and tidal resources. Scotland’s vast energy potential far exceeds the needs of our people yet we receive no revenue. Can the Minister tell me the true value of Scotland’s energy to the UK Treasury, and set out how the Government will service their massive debts when they can no longer fleece Scotland of its energy resources following a vote for independence in 2023?

[Lucy Frazer]

We of course recognise Scotland’s contribution to energy across the country and the fantastic industry that we have in Scotland, but the hon. Member will know that Scotland has a record sum this year in terms of money that comes through the Treasury, through the Budget and through the Barnett formula.

[Karl MᶜCartney (Lincoln) (Con)]

The original question was about heating fuel, and I wonder if the Minister could let us know the proportion of people in London who use heating oil compared with those out in rural areas such as Lincolnshire or even in Scotland?

[Lucy Frazer]

My hon. Friend is right: more people use heating oil in rural areas, and the Treasury and the Department for Business, Energy and Industrial Strategy are looking at energy across the board to ensure that all people are protected.

[Dame Nia Griffith (Llanelli) (Lab)]

2. Whether his Department is taking steps to reduce Her Majesty’s Revenue and Customs paperwork for alcohol exporters.

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

The 2025 UK border strategy sets out the Government’s vision for the UK border to be the most effective in the world. We are investing £180 million to build a UK single trade window, which will streamline how traders share information with the Government, making it as straightforward as possible for business to comply with customs requirements.

[Dame Nia Griffith]

We all understand the need to protect revenue and to prevent fraud, but some alcohol exporting companies find that their exports are being hindered by HMRC’s refusal to accept standard invoicing as proof of tax paid. HMRC, in requiring additional letters of confirmation, is therefore causing companies considerable hindrance to their exports. Will the Minister agree to meet me to find a way forward that can both protect revenue and facilitate exports?

[Lucy Frazer]

I would be very happy to meet the hon. Member and look at the specific issues that she has raised, but I reassure her that HMRC is currently in a programme to ensure that traders have to fill in fewer forms and that forms are prepopulated, so that customs can be streamlined for the trader.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does the Minister agree that a trade agreement with India would be a huge boost to our exporters, including our alcohol exporters?

[Lucy Frazer]

The Government are very much committed to trade agreements across the globe and would welcome a trade agreement with India.

[Stephen Farry (North Down) (Alliance)]

3. What fiscal steps he is taking to help reduce the impact of rises in the cost of living in Northern Ireland.

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[Dan Carden (Liverpool, Walton) (Lab)]

T4. Recently, it was revealed that Her Majesty’s Revenue and Customs is failing to use the third-party data information that we get through international agreements to investigate how much tax is being evaded through offshore assets. Given that £850 billion is held offshore, with two thirds of it stashed in known tax havens, either Ministers are content for the super-rich to evade paying their fair share in the knowledge that their offshore wealth is not being systematically checked, or they will direct HMRC to use this reporting data, as is done in the US and Denmark, to uncover tax evaders. Which is it?

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

I am proud that HMRC is a leader in tax transparency, has a number of double tax treaties and co-operates with a large number of countries and international organisations to share tax information to ensure that people pay their fair share.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

T3.   The global cost of living crisis is affecting many of our constituents, so it is welcome that those on means-tested benefits—one in three households—will receive £1,200 in support from the Government this year. When will that vital support be hitting bank accounts?

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[Mr Gagan Mohindra (South West Hertfordshire) (Con)]

T8.   Yesterday morning, I had the pleasure of hosting a roundtable discussion with farmers from my constituency in collaboration with the National Farmers Union. My constituent Andy Cornthwaite informed me that he was struggling to employ extra staff to grow his business due to the current £85,000 VAT threshold. I am aware that my right hon. and learned Friend recently responded to a written question from my hon. Friend the Member for North West Durham (Mr Holden) on the subject, but will she consider an early review of the VAT threshold due to the increase in labour and/or materials costs for small and medium-sized enterprises?

[Lucy Frazer]

The Government recognise that accounting for VAT can be a burden on small businesses. That is why we maintain the highest VAT registration threshold in the OECD and as compared with EU member states. At spring Budget 2021, to give businesses certainty, it was announced that the VAT threshold would be maintained at its current level until March 2024. Although there are no plans to change the VAT threshold at this time, we keep all taxes under constant review.

[Mr Clive Betts (Sheffield South East) (Lab)]

Last year, at the spending review, the Government announced that after years of austerity there would be a small real-terms increase in local authorities’ spending power—but that was when inflation was around 2% to 3%. Has the Chancellor seen the recent assessment from the Local Government Association showing that, with inflation at a somewhat higher level now, it will cost local councils £2.4 billion extra this year? What steps will he and the Levelling Up Secretary take to have talks with the Local Government Association about extra help for local authorities so that we do not get another round of austerity imposed on our constituents?

[Felicity Buchan (Kensington) (Con)]

T9. My constituents want to see a low-tax, high-growth economy where work and productivity are prioritised and incentivised. Will my right hon. and learned Friend assure me that the next move in taxes will be downwards and that that will happen at the first available opportunity?

[Lucy Frazer]

The Chancellor set out at the spring statement that he would be cutting taxes. We have seen that already in the universal credit taper rate and in the increase in the national insurance contributions threshold to £12,570, which will come in just a few weeks. We have also seen the announcement that income taxes will be cut in 2024.

[Ben Lake (Ceredigion) (PC)]

Small businesses in Ceredigion have told me how increasing electricity and fuel costs are having a direct impact on their operating costs in addition to an indirect impact in reduced demand for their goods and services. They are concerned that those costs are being disproportionately felt in rural areas. Does the Treasury share that assessment? Will it consider bringing forward bespoke measures to support the rural economy?

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[Peter Aldous (Waveney) (Con)]

Investment in clean, low-carbon energy infrastructure will be crucial to creating long-term, rewarding jobs in coastal constituencies such as Waveney. Has my right hon. Friend carefully considered the impact that changes to tax policy on electricity generators would have on investment in the UK?

[Lucy Frazer]

The Chancellor is looking very carefully at this industry, and he engages with industry stakeholders. My hon. Friend the Member for Waveney (Peter Aldous) will know that there are a number of ways in which the tax system supports low-carbon energy infrastructure, including through the super deduction, research and development tax relief, our consultation on broadening the emissions trading scheme, and the £1 billion investment in the carbon capture and storage fund.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The rural fuel rebate was introduced 10 years ago at 5p a litre and remains unchanged. With inflation and the cost of living crisis, what thought has the Treasury given to increasing the rural fuel rebate to at least 10p a litre?

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[Mr David Davis (Haltemprice and Howden) (Con)]

The laws around IR35 are loosely defined, and it looks as though Her Majesty’s Revenue and Customs is using the tribunals and courts to pin down the case law on it. The effect is that I now know of a number of people whose legal bills are many times what their original tax bill might have been. This is impoverishing them, and in some cases bankrupting them, and obviously it is terrifying them. Will the Chancellor institute a review of this procedure? Although it is important that HMRC raises all the money necessary, it should not do so by destroying lives.

[Lucy Frazer]

As my right hon. Friend will know, IR35 was brought in to ensure that people doing the same job paid the same tax. I understand that he would like to discuss some issues with me, and I look forward to doing that this afternoon.

[Christine Jardine (Edinburgh West) (LD)]

TaxWatch UK has just published research showing that on a like-for-like basis, the tax gap—or the money lost every year through unpaid tax—has gone up for two years in a row. That is before we include in the figures the estimated amount lost to error and fraud through the HMRC-administered covid-19 support schemes. The tax gap resulting from fraud is now 45% and stands at £14.4 billion. When will the Government do something about that? They could perhaps create a fraud Minister with the remit of tackling this growing problem, which takes money from other parts of the economy.

[Lucy Frazer]

The Government are taking a number of steps to tackle fraud, including coronavirus fraud, which the hon. Member mentions. The taxpayer protection taskforce was set up to do specifically that. I will have a cross-governmental meeting this afternoon to understand how we can we work across Departments to tackle fraud.