Luke Evans
Main Page: Luke Evans (Conservative - Hinckley and Bosworth)Department Debates - View all Luke Evans's debates with the HM Treasury
(4 months, 1 week ago)
Commons ChamberI could not disagree more with the hon. Member’s premise. If anybody has shown support for the sector, this Government have. We have shown huge support for the sector, in an appropriate and proportionate way, while also encouraging the industry to decarbonise. As I said, we are taking fiscally responsible decisions to extend the energy profits levy for one year. We are also providing confidence and certainty to businesses in the sector by legislating for an energy profits levy price floor. That is what is in the Bill. That will effectively abolish the energy profits levy if the six-month average for both oil and gas is at or below a set threshold. Doing so was the sector’s main ask in the 2024 spring Budget, and it could help to unlock around £9 billion in uncommitted investment spend, according to Offshore Energies UK, which welcomed the decision. I am sorry that he feels unable to welcome it as well.
Those measures will ensure that investment in our economy continues to grow. I will now outline some measures in the Bill’s property package. The Bill will cut the higher rate of capital gains tax on residential property from 28% to 24%, encouraging landlords and second home owners to sell their properties, which could increase revenues because there would be more transactions.
The capital gains tax cut is very welcome, but will the Minister outline whether it will come into play retrospectively? Hypothetically, if a Labour Front Bencher happened to owe some capital gains tax, would they benefit from a Conservative tax cut?
I think I know where my hon. Friend is heading. Of course I cannot comment on individual tax situations. His point, though, is an important one: everybody should always pay the taxes that they owe. I think that principle is shared across the House. The measure will be implemented from 6 April 2024, so some people may be disappointed that there is no retrospectivity, but as I say, it will make more homes available to purchase for a variety of buyers, including first-time buyers.
We also need to ensure that the property system is fair and working as intended. The Government are clear that where policies are not meeting their policy objectives, we will take action. That is why we are abolishing multiple dwellings relief, a bulk purchase relief in the stamp duty and land tax regime, from 1 June 2024. That follows an external evaluation that found no strong evidence that the relief is meeting its original objective of supporting investment in the private rented sector, and because HMRC has recorded high and clear instances of its abuse. We are also amending rules to ensure that victims of domestic abuse are not unfairly penalised if they wish to buy their first homes anonymously, and that those in difficult circumstances do not face additional barriers to purchasing homes. We will ensure that registered providers of social housing in England and Northern Ireland are not liable for stamp duty land tax when purchasing property with a public subsidy, and exempt public bodies from the 15% anti-avoidance rate.
Finally, I turn to measures that will simplify and modernise our tax system, making it easier to engage with the tax system and closing loopholes that could be used for avoidance. The negative impacts of inefficient, complex taxes on both businesses and the wider economy cannot be overstated. That is why the Government are taking action to ensure that the system works for everyone. As a starting point, we are amending two primary VAT interest provisions in legislation to ensure that they apply to all cases intended by the policy. That will mean that the interest payments that HMRC recovers are correct, and it will save time and resources for HMRC and businesses.
The Government recognise that it is everyone’s responsibility to pay their fair share of tax to support our vital public services, so we are closing another anti-avoidance loophole—one that enables individuals to avoid tax by moving assets abroad via a company. That is one of 200 measures that we have undertaken since 2010 to close loopholes and reduce the tax gap, which now sits at just 4.8%—down from 7.5% under Labour. Yes, that is an inconvenient truth for the Opposition, who recently claimed to be so enthusiastic about tackling tax avoidance yet did not take the actions that we have taken when they were in power. Importantly, Labour failed to support the last Finance Bill, which included further measures to tackle tax avoidance. However, Labour was in good—or, rather, bad—company, because the Lib Dems and the SNP did not support it either.
It is not the first time that we have seen such—how should I put it?—distance between what the Opposition say and what they do. Recently, the Labour party even said that it would support our national insurance tax cuts, but when it came to the vote, I did not see a single Labour MP in the Aye Lobby with the Conservatives. Nor were there any Lib Dems, while SNP Members were in the No Lobby actively voting against tax cuts for their constituents.
The Government are getting on with delivering on our plan to cut taxes, grow the economy and boost investment, but the Labour party would put all that at risk and send us back to square one. Instead of taking the responsible decisions to back businesses, the Labour party wants to saddle them with new regulations. Labour’s so-called new deal for workers is in fact a bad deal for jobs, workers and businesses. The 70 new regulations from the deputy leader of the Labour party and the unions would ban flexible working, disincentivise small businesses from making new hires and unleash waves of low-threshold, zero-warning strikes.
I thank the hon. Gentleman for his mini-speech. I feel I may have touched a nerve. He talks about people being scared; yes, I think people are scared when they hear the Government making a £46 billion unfunded spending commitment and not saying how they will pay for it. When the previous Prime Minister made an unfunded tax cut commitment of a similar order of magnitude, we know what havoc that caused in the economy, and people are still paying the price in higher mortgage payments and rent payments. I will just say to the hon. Gentleman that I gave him a chance to rule out cuts to the NHS or the state pension, or tax rises elsewhere, to pay for this black hole. I am not quite sure if he did that—maybe he has not got the line from his boss in No. 10 Downing Street—but the truth is that until the Government rule those things out, people will rightly worry about the impact his unfunded commitment will have on the economy.
The pledge the hon. Gentleman was speaking about sounds like exactly the sort of pledge that the right hon. Member for South West Norfolk (Elizabeth Truss) would approve of, because it comes to almost exactly the same amount as her Government’s unfunded tax cuts. Of course, the previous Prime Minster has been touring the TV studios and talking to newspaper journalists in recent days, saying, among other things, that people who claim that she crashed the economy are
“either very stupid or very malevolent”.
I wonder if the Minister would like to intervene to say whether he shares that view. No? He is not leaping to his feet now. I would have thought he would; I would have thought that Treasury Ministers would want to put as much distance as possible between themselves and the previous Prime Minister. Instead, with their £46 billion unfunded commitment, they seem determined to be a tribute act. Frankly, whatever the previous Prime Minister says, people across Britain know what impact her time in office is having on all of us, as we face higher mortgages and higher rents as a direct consequence of her economic recklessness.
That is the context in which we are debating this Finance Bill. The context is one of a Government who are out of time, out of ideas and out of touch with reality, and of a country that is feeling the impact of 14 years of Conservative economic failure. Even a simple clause such as clause 2, which sets the main rates of income tax, highlights the impact on ordinary people of decisions taken by this Government. Although the basic and higher rates of income tax are unchanged by this Bill at 20% and 40%, the tax burden on working people is rising as a result of the income tax personal allowance and the higher rate threshold being frozen from 2021-22 to 2027-28. Those tax thresholds would ordinarily have risen this April, but instead they are in the middle of a six-year freeze. According to the Office for Budget Responsibility, which I assume the Minister has respect for, these freezes will create 3.7 million extra taxpayers by 2028-29 and mean that 2.7 million more people will be paying the higher rate.
The truth is that, even taking into account any reductions to national insurance rates, the freezes in thresholds and the rises in council tax mean that by the end of the forecast period, the average family will still be £870 worse off. As the Resolution Foundation noted at the time of Budget, despite the reductions in national insurance, there will still be a net rise of £20 billion a year by 2028-29 in personal taxes. It pointed out that those over the state pension age, who do not benefit from national insurance cuts, will be particularly badly hit, and will face an average tax rise of £960 a year. The reality has been summed up by Paul Johnson, the director of the Institute for Fiscal Studies, who said following the Budget:
“This remains a parliament of record tax rises.”
That is the record of the Conservatives in government.
There is a certain Leader of the Opposition who, when standing for their post, said that as part of their No. 1 pledge, which was for economic justice, they would increase income tax for the top 5% of earners and reverse corporation tax cuts. If the hon. Gentleman’s party was voted into government, would it stand by that pledge? That too would increase the tax burden significantly.
I am sorry, but I did not quite follow the hon. Gentleman’s question. I can, however, respond to the general point that I think he was making. We have been very clear that this is a Parliament of record tax rises. The tax burden is set to be the highest in 70 years, and we think that the tax burden on working people should be lower. However, we would only ever support tax rises if they were responsible, and done on a basis of economic security and stability.
I will make some progress, because I have made that point quite clearly.
The tax burden has been pushed to a record high, and we have also seen a record number of changes and U-turns on tax rates and reliefs under this Government. That applies not just to personal taxation, but to tax rates and reliefs relating to businesses. Let us consider the Chancellor’s approach to the rate of corporation tax, which the Bill sets at 25% in clause 12. In July 2022, during his leadership bid, the current Chancellor pledged to cut the headline rate of corporation tax from 19% to 15%, yet when he became Chancellor just three months later, one of his first acts was to U-turn on what he inherited and to commit to raising that tax from 19% to 25%. He has been typical of the Conservatives in lacking any certainty, predictability or consistency, and we know how damaging that is to businesses that are trying to make investment decisions.
As the shadow Chancellor set out, if we win the next general election, we will bring back certainty by capping the headline rate of corporation tax at its current rate of 25% for the whole of the next Parliament. We would take action if tax changes in other advanced economies threatened to undermine UK competitiveness. We believe that the current rate of 25%—the lowest in the G7—strikes the right balance between what our public finances need and keeping our corporation tax competitive in the global economy. We also recognise the importance of stability and predictability in the reliefs available to businesses. We have seen a great deal of chopping and changing in capital allowances in recent years—indeed, this is a rare example of a Finance Bill from this Government that does not change the annual investment allowance or expensing regime.
We have made it clear that if we win the next general election, we will publish a road map for business taxation in our first six months in office, to give businesses the stability, predictability, and long-term plan that is so important to those making investment decisions. We have been pushing for a proper windfall tax on the profits of oil and gas companies operating in the North sea. The Government, despite initial opposition, U-turned on that and adopted some of our proposals with the introduction of the energy profits levy. Ahead of the general election, we have set out our plans to make the windfall tax stronger, and to raise more revenue to support our country’s energy transition, but it is also right that we give as much certainty as possible to those companies affected.