Ways and Means

Luke Graham Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I appreciate the chance to take part in this Ways and Mean debate, which is one of the few not to follow a Budget—somebody told me it is the first since 1987, when I was 1.

From the shadow Front Bench, the hon. Member for Bootle (Peter Dowd) talked about some of the process issues and timelines involved in how we got to where we are now, and I want to briefly mention them. The spring Budget was presented to the House on 8 March. We are looking at introducing the Finance Bill, which takes up some of the measures from that spring Budget, now, which is a pretty long time from 8 March. We have seen some changes from what we expected to happen, and what the Office for Budget Responsibility suggested might happen is not necessarily what has happened in the intervening period, so it is a bit strange that, in the main, the measures we are looking at are almost exactly the same as the ones introduced in the Finance Bill back in March. I understand that there needs to be a consultation, but I am concerned about the length of this process and about whether the changes to legislation in this Finance Bill are wholly appropriate.

In my intervention on the Chair of the Treasury Committee, I mentioned the Public Bill Committee taking evidence. I have raised the issue before and I will not stop raising it. The Finance Bill Committee should take evidence from external organisations so that it is in the best possible position to make the best decisions. I have been on a Finance Bill Committee and found it a useful experience whereby Members on both sides of the House had an in-depth debate about the matters raised. Enabling the Committee to take evidence would only add value to the scrutiny provided both by the Opposition and by Back Benchers, particularly those from the Conservative party.

The Minister will probably be surprised to hear that I welcome some of the Government’s proposed Ways and Means resolutions, including the changes to the treatment of corporation tax with regard to museum and gallery exhibitions. However, I wish to raise the issue of the Value Added Tax (Refund of Tax to Museums and Galleries) (Amendment) Order 2017. The intention was that it be laid before the House in advance of the summer recess, but then the general election happened. The order has not been mentioned and I am concerned that some museums and galleries may lose out on the VAT that they had expected to get back. They expected it to be paid to them, but the amendment has not yet been laid before the House. I know that that is a slightly different matter from that in the Ways and Means resolutions, but it is related to it. I would appreciate it if the Minister or his team could look into the order.

I also welcome the changes to grassroots sports and to pensions and legal advice. It is particularly important that people have better access to legal advice, especially when they are not the accused and are entering legal situations. That is a scary prospect for a number of people, so it is incredibly positive that they will get easier access to appropriate legal advice.

The Scottish Government’s programme for government was announced yesterday and they are incredibly positive about changes to enable electric vehicles to become more prevalent on our roads and petrol and diesel vehicles to be phased out. I am therefore pleased that there are likely to be changes to electric vehicle charging points. I hope that this Government will continue to make changes to allow electric vehicles and their associated infrastructure to become more affordable.

I support the Government on a couple of other things. If the proposed changes in the Ways and Means resolutions on petroleum revenue tax are the same as those proposed in the previous Finance Bill, they are positive because the oil industry has asked for them. I am pleased that the Government have acted on that. I am also pleased that the Government will take action against people who have been found to be enabling tax avoidance schemes, not just those who participate in such schemes. That is really positive and I hope that it will achieve the Government’s intention and discourage people from being clever and coming up with tax avoidance schemes. My fingers are crossed and we will wait to see what happens.

Members would not expect me to be positive about all of the Government’s proposals. I am concerned that there is a lack of evidence for the Government’s desired outcome regarding some of the proposals. Resolution 13, on business investment relief, sends a mixed message. Whereas the Government’s changes under resolutions 24 and 26 intend to make it more difficult for non-doms to benefit from their tax status, resolution 13 will make it easier for them to do so in a way that their next-door neighbour may not. Now, I would be less concerned about that if the Government had provided appropriate evidence to show why the scheme is a good thing. They have made it clear that they want to increase the use of the scheme, but I have not seen any evidence to explain why. They have not shown me that the scheme is working as it was intended to work, nor that it is having a particularly positive impact on the businesses that are receiving funding from it. I understand that 200 to 400 people take part in the scheme every year, which means that a pretty significant amount of legislative effort and time is being put into making a change that enables a very small number of people to make this investment. I would be interested to see more of the Government’s figures.

I am concerned about resolution 41, which deals with errors in taxpayers’ documents. It specifically includes changes that may result in people who seek tax advice getting into trouble for having errors in their documents. The onus is now on an individual to ensure that the person from whom they seek tax advice is suitably qualified, which is rather difficult for people to understand. I have had people come into my surgeries and tell me that they have sought immigration advice from somebody they thought was a solicitor, but who turned out not to be a solicitor. I am concerned that some people who have tried their very best to stay on the right side of the law, to pay the amount of tax that they should pay and to fill in the forms appropriately with the help of an adviser will be caught by the measure accidentally. I would appreciate it if the Government could look at that.

I am interested to see how the Government will play another couple of issues, if they look exactly as they did in the Finance Bill. One is the changes to gaming duty. I understand that the Government are trying not to penalise casinos with the changes to the duty that casinos pay, and that they are trying to change the rules around remote gaming to make it clear how much tax the companies should pay. That is welcome. But when the Government are doing things such as increasing alcohol duty to discourage negative behaviour, it seems strange to me to allow casinos to pay less tax—or not to increase the amount of tax that they pay—because it will achieve the opposite of what the Government are trying to do in encouraging positive behaviour. I will be interested to see how that looks, and we will continue to scrutinise it.

We will also continue to look at the dividend nil rate. The Ways and Means resolution allows the Government to change things in either direction. If the dividend nil rate allowed people to have more dividends before they paid tax, I would be particularly concerned about it; but if it allowed people to have less in dividends before they paid tax, as was the situation in the previous Finance Bill, I would be much more positive about it.

Those are the main proposals that I have concerns about, but I would like to see the detail that the Government will produce. I am pleased that the Minister has made changes to digital reporting, which was in our manifesto. We have particular concerns about the smallest companies, especially those in particularly rural areas, who struggle to get access to the right digital infrastructure. Both Governments have made commitments about digitisation and access to superfast broadband, so having this slightly further down the line makes more sense. I am pleased that the Government listened and made changes, but we will be scrutinising the proposal and making sure that the business community is as happy with it as it can be.

Moving to digital reporting will make the process easier for people, but I reiterate that, as the hon. Member for Coventry South (Mr Cunningham) has said, the closure of tax offices is a concern, even when it comes to Making Tax Digital. Computer systems can be quite black and white, and they often give yes/no answers when the answer should actually be “maybe”. Especially in the initial period, people who are trying to fill in the forms may need to phone the tax office to ask for assistance about what to put in each box. I am not convinced that businesses can access enough support to find out about that.

The Government will expect me to raise the issue of VAT on police and fire services, because such a debate would not be complete without my raising it. We would very much like the Government to bring forward VAT changes for police and fire services in Scotland. They have done so for organisations such as the London Legacy Development Corporation—the legacy body from the Olympic Games—and for Highways England, both of which are national organisations in the same boat as the Scottish police and fire services.

[Luke Graham (Ochil and South Perthshire) (Con)]

On the point about VAT on Police Scotland, does the hon. Lady recognise that the SNP Administration in Edinburgh knew that they would incur VAT charges by centralising the police forces? They knew that would be one of the repercussions before that action was taken.

[Kirsty Blackman]

Such a policy was in the Conservative party manifesto for the Scottish Parliament election that year, so the centralisation of Scottish police and fire services was also supported by the Scottish Conservatives. Yes, we knew that that would be the case, but we do not think it is fair, and we have made the case that it is not fair on numerous occasions. Organisations such as Highways England and London Legacy do not have the same VAT treatment as the Scottish police and fire services, and that is why we are asking for such a change.

I know that this legislation has been cobbled together—it is just the bits that did not get through last time—but none of the changes the Government are making will combat the current increases in inflation, and the Government are not increasing wages so that ordinary people can afford such increases in the cost of living. In Scotland, we are lifting the 1% public sector pay cap, and I very much hope that the UK Government will take the same decision to lift the public sector pay cap in England and that when they do so—if they do so—they will ensure that that is fully funded.

I have one last thing to mention, particularly in relation to tax raising and tax avoidance, which is about customs officers and customs checks. I am slightly concerned that the UK Government are losing out on some of the revenue they could receive because they no longer use customs officers in the way they used to, but instead make them dedicate most of their time at borders to making sure that people are travelling legally rather than to ensuring that goods are being transported legally. I know that some stuff is in place—but not enough. I want the Government to be scrutinised more effectively on this, and for the Government to monitor what happens at ports more effectively to ensure that the appropriate tax is paid on things coming into and going out of the country. Making a change to ensure that they are checked appropriately and are therefore taxed appropriately can only bring in more revenue.

In summary, there are a number of good things in the Ways and Means resolutions, but I have concerns about several of them. I have significant concerns about some resolutions, such as resolution 13 on business investment relief, and I am also pretty concerned about resolution 4 on termination payments, because I have not seen any evidence to show that the issue is as significant as the Government are suggesting. The likelihood is that the SNP will vote against those resolutions if there is a vote. I appreciate that I have used up my time, and I am grateful to hon. Members for listening.

[Luke Graham (Ochil and South Perthshire) (Con)]

I want to build on what my right hon. Friend the Member for Loughborough (Nicky Morgan) said about resolutions 39 and 40 on Making Tax Digital. As the co-founder of a small accounting firm and as MP for Ochil and South Perthshire, it is clear to me that many small businesses had concerns about the initial proposals made before the recess. Although I certainly welcome some of the concessions that have been made, I hope that the Financial Secretary recognises some of the additional cost burdens that the reporting requirements will place on small businesses. The Federation of Small Businesses estimates that they amount to about £2,770.

As I have said, I welcome the Government’s concessions —especially excluding companies with revenues below £85,000, and pushing out the timeline for companies to have to enrol in a digital reporting scheme in future—but may I ask the Government to continue to consult widely with Members of the House and business bodies across the United Kingdom, including in Scotland? In addition, will they look to work with some of the new technology providers and cloud accountancy services providers, which could provide the Government with more efficient and effective ways of getting the information they seek without necessarily requiring a manual reporting submission quarterly?

My second point is about VAT and Police Scotland. In my intervention, I pointed out that it was a result of the actions of the SNP Administration in Edinburgh, but we may have some cross-party agreement on the fact that the outcome for Scotland is less beneficial, so colleagues and I will ask the Government to review the matter as part of the forthcoming Budget process.