Oral Answers to Questions

Debate between Lucy Frazer and Baroness Keeley

Thursday 22nd February 2024 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

This week in the House, I raised with the Economic Secretary to the Treasury the fact that serious delays in His Majesty’s Revenue and Customs issuing A1 forms mean that touring musicians are waiting months to be paid. A1 forms ensure that musicians do not have to pay additional tax when touring in the EU, but some musicians are waiting six to nine months, or even a year, for those forms. One leading singer told me that musicians feel like “hostages” of HMRC incompetence, so what is the Secretary of State doing alongside Treasury Ministers to sort out this mess, which is hitting UK musicians so hard?

[Lucy Frazer]

I recognise the importance of touring to many of our fantastic industries. We have bilateral agreements with many other countries to ensure that touring can take place, but I will continue to ensure that as a Government, we take every step across the board to make sure that our musicians can tour appropriately.

Finance Bill (Second sitting)

Debate between Lucy Frazer and Baroness Keeley

Thursday 17th September 2015 Public Bill Committees

[Barbara Keeley]

I do not see how that follows the flow of what I am talking about, but if I find a place to give a reply, I will do so.

In 2014-15, corporation tax made up 7% of the total tax take in the UK. We need to be clear that cutting corporation tax amounts to a transfer to the largest businesses that disproportionately benefits them. We are concerned that a more effective policy measure, such as the one suggested at the election, could have been used to help all businesses, rather than just the largest companies. We question the reasoning behind the Government’s policy decision. It appears that corporation tax has been used because it is relatively easy to alter. I am sure the Government recognise that a substantial amount of money is going to businesses. Will the Minister outline how the Government intend to pay for the rate cut, which in 2020-21 will cost £2.5 billion? We have not seen a breakdown of exactly how that will be paid.

We have heard the point about firms being attracted to this country due to our tax regime. KPMG’s December 2014 survey of tax competitiveness revealed that only 8% of respondents saw favourable tax policies as the factor with the most impact on our recovery. Only 18% saw tax as having a high influence on where companies base themselves. That contradicts the point that the Minister just made. We believe that the focus of support for small and medium-sized businesses should be a priority and that policies to encourage businesses would have been better targeted elsewhere than this tax rate change.

Many small and medium businesses will have been disappointed that the Chancellor failed to mention business rates in his Budget speech. During the general election campaign, we outlined proposals to cut and then freeze business rates, so that smaller firms could have the support needed to invest, innovate and raise productivity. That would have helped more than 1.5 million small business properties. Small and medium-sized businesses are concerned about the pressures on business rates. Every time I visit such businesses in my constituency, that is almost the first thing they raise. Labour, along with small and medium-sized businesses up and down the country, will be waiting to see whether the Government will take action to reduce the business rates burden. There are reports that the valuation office now has to deal with 500 appeals a day. Will the Government give small and medium-sized businesses a gesture of support by providing them with an interim report on their business rates review?

Rates reform continually tops many small retailers’ and business groups’ lists of areas that need real reform, but the tax, over which there is a backlog of more than 250,000 complaints, failed to get a mention in the Chancellor’s speech. That caused a lot of disappointment. The British Retail Consortium has warned that the level of business rates could cause 80,000 shops to close by 2017, and business groups including the Confederation of British Industry say that the antiquated system of business rates is a major barrier to investment.

Let me return briefly to the point about the 80,000 shops. Very many MPs, including me, have in our constituencies the situation of empty shops on high streets and we all want to do something about that, but here is the big problem. John Allan, chairman of the Federation of Small Businesses, urged the Government to take action. He said:

“Bringing forward reforms to business rates is an immediate priority.”

We urge the Minister and the Chancellor to ensure that the ongoing review of business rates does not result in small businesses paying disproportionately more. We call for greater attention to be given to business rates as a means to support small businesses.

It is quite common in these debates to hear questions backwards and forwards about the different priorities. During the general election campaign, Labour set out further ways to support small businesses, including elements that are often talked about here in debates. One was the tackling of late payments with a new requirement on larger businesses to set out the extent of late payment that they have been responsible for and the action that they have taken to compensate suppliers. We would have given business organisations, such as the Federation of Small Businesses, the right to take cases on behalf of their members, because they believe that that is very important.

We wanted to strive to reduce unnecessary regulation in the small business arena by establishing a small business administration, which the FSB has called for, to co-ordinate work across the Government to benefit smaller businesses and cut unnecessary regulation as it affects them. Our small business administration would have been given a remit to ensure that regulations or requirements on small business were proportionate and appropriate and avoided unnecessary burdens or compliance costs. They want to see regulation designed from the perspective of the smaller firm and they feel that it is not.

There is a need to deliver a longer-term road map for capital allowances and incentives for research and innovation such as the research and development tax credit, and not just for the headline rate of corporation tax. There is also a need to improve support for entrepreneurs and small and medium-sized enterprises that want to grow rapidly.

We understand that the Government have started to take steps to address the issue of late payments and that a consultation on the proposed role of small business commissioner was undertaken. As we are talking about the different scale of businesses, may I ask whether Ministers can provide us with an update on the new role, because that consultation ended on 21 August?

What other action are the Government taking to offer the support needed for small and medium-sized businesses? Feedback from a cross-section of businesses, ranging from start-ups to FTSE 100 companies, that was gathered by PricewaterhouseCoopers stated a number of key messages about their view on how the UK tax system should be shaped in the future. They included the following. The UK needs to be clearer on tax; that is the issue of the road map to instil confidence. A longer-term approach to tax needs to be taken. We will talk about that later in terms of how some taxes and allowances have changed. Businesses feel that the tax system should be more focused. It is too complex, with many different reliefs and exemptions; reliefs should be better targeted at specific purposes. Also—I have already made this point—national insurance contributions should be aligned with income tax. That was the view of those businesses.

Labour wants certainty for businesses looking to invest.

[Lucy Frazer (South East Cambridgeshire) (Con)]

The hon. Lady mentions certainty. Does she accept that other measures in the Budget, such as the national insurance contribution ceiling, will not only create certainty, but help the small businesses that she is mentioning?

[Barbara Keeley]

Indeed; that is why we made that pledge first. There is nothing else to say about that. We understood how important that was, and made the pledge first—on income tax, national insurance and VAT. The only difference between us on that is that we would not have spent the time of a Public Bill Committee or Committee of the whole House on gimmicks—on putting forward legislation to bring in what we pledged. We support action to help small and medium-sized businesses, and a system in which business reliefs are clear and focused. We want to ease the burden on smaller business of navigating the myriad reliefs that, we have to admit, exist today.

Finance Bill (First sitting)

Debate between Lucy Frazer and Baroness Keeley

Thursday 17th September 2015 Public Bill Committees

[Lucy Frazer (South East Cambridgeshire) (Con)]

The hon. Lady may know that courts are overruled by higher courts day in, day out in the court system. Should the initial legislation not be passed because it may be overruled at some point in the future?

[Barbara Keeley]

I am not in any sense challenging it; I am asking the Minister to tell us what he thinks the impact on the legislation will be of that Court’s decisions. Those cases seem to suggest that the lock on UK VAT is not as robust as the Chancellor claims, so it would be helpful if the Minister outlined what impact future EU Court rulings could have.

On the scope of the VAT lock, clause 2 prevents any increase in the standard and reduced rates, and prevents anything from being moved out of the scope of the reduced or zero rates, but there is no mention of exemptions. It would be helpful if the Minister confirmed that the current exemptions from VAT will remain over the course of this Parliament.

SNP Members tabled a new clause that seeks a report on the impact of exempting women’s sanitary products from VAT. Labour supports the new clause. We welcome the opportunity to call again for those essential healthcare products to be made tax-free. Women do not choose to use sanitary products; they are essential. Although the reduction in the rate of VAT on sanitary products in the UK from 2000 was welcome, more needs to be done. This is not just a female issue, but a family and household issue. Women supporting families across the country should be able to purchase those necessary items VAT-free. We recognise the complexity of the EU rules on VAT and the challenges faced by national Governments that want to make such unilateral changes. I ask the Minister to take action at an EU level to support the exemption of women’s sanitary products from VAT in the UK.

National Insurance Contributions (Rate Ceilings) Bill

Debate between Lucy Frazer and Baroness Keeley

Tuesday 15th September 2015 Commons Chamber

[Barbara Keeley]

In a minute, I will record how other commentators also think it is a gimmick. I have said we are not going to oppose the Bill because we do not want working people to pay more, but we have just seen in this Parliament a tax-raising Budget. I will talk more about that in a moment.

One of the main concerns about this policy gimmick is the serious constraints it will place on the Treasury and the Government’s ability to raise taxes or maintain the flexibility to raise revenue in response to economic events. As Alex Henderson, tax partner at PricewaterhouseCoopers, said:

“Arguably the lock means the Government has less flexibility on where tax revenues could come from, with the burden more thinly spread.”

He also pointed out that it would not constrain Ministers’ ability to raise revenue from the same taxes in other ways—for example, by delaying the uprating of thresholds and removing reliefs. So it is not true that people are not going to pay more; there are other ways. We know the Chancellor used such measures, otherwise known as fiscal drag, to great effect in the last Parliament, because, according to the Institute for Fiscal Studies, they have raised taxes of roughly £64 billion a year by doing so. The headlines people read do not indicate tax rises, but the measures used do.

Simon Walker, director general of the Institute of Directors, said:

“While IoD members are opposed to increases in the rates of VAT, Income Tax and National Insurance, we consider it imperative that the Government’s commitments do not prevent bold tax reforms to both simplify taxation and reduce the burden upon businesses and individuals.”

As Paul Johnson, director of the Institute for Fiscal Studies, pointed out, the tax lock could rule out sensible tax reforms, such as the treatment of national insurance contributions for the self-employed, which has already been referred to.

[Lucy Frazer (South East Cambridgeshire) (Con)]

I am a little confused. The hon. Lady has said that she supports the policy but is now quoting a load of people who do not support it. Surely, she supports it because it gives hard-working people the chance to keep more of their income and gives businesses certainty about the number of people they can employ.

[Barbara Keeley]

The hon. Lady confuses our not opposing a pledge that we made first on 25 March—it is our pledge, if you like—with a Bill that I am denouncing as a gimmick. It is not just me who is denouncing it as such; a range of commentators have done so as well.

Finance Bill

Debate between Lucy Frazer and Baroness Keeley

Tuesday 21st July 2015 Commons Chamber

[Lucy Frazer]

I am answering the question. It is interesting that the Opposition were pushing for less austerity but now, when the Chancellor increases the time frame in which he wants to make the changes, the hon. Lady opposes it.

The Bill reduces taxes on working people by further increasing the personal allowance to £11,000 in 2016. The living wage will improve the lives of many people across the country. With tax credits, people are often penalised by deciding to change their hours because they lose far too much of their earnings. The Budget changes that.

It is worth noting that Labour has proposed no amendments of any nature to the Bill, which suggests that, at the very least, not everyone in the Labour party is opposed to all of it.

[Barbara Keeley]

The hon. and learned Lady is just not right on the detail. This is not the time for amendments today; this is Second Reading. We will table many amendments; she just needs to wait.

[Lucy Frazer]

I am grateful for that intervention. But clearly it is the time, because the SNP has tabled an amendment, and so have the Greens.