Class 4 National Insurance Contributions

Mark Durkan Excerpts

Wednesday 15th March 2017 Commons Chamber

[Mr Hammond]

That is the purpose of the report that Matthew Taylor is writing to look at the differences in treatment as the economy changes shape. My hon. Friend is absolutely right that there are examples of employers egregiously forcing employees into bogus self-employment, but there are also much more complex cases—for example, where new digital platforms are allowing people to work in different ways. Are they employees; are they self-employed; are they something else in between? We need to ask those questions because, as the economy changes shape, this will become an increasingly important issue for us to address.

[Mark Durkan (Foyle) (SDLP)]

The Chancellor now accepts that the shape, pace and burden of the change that he announced were going to be problematic, and he makes the case for longer-managed and balanced change. He has told us that he needs to consider the issues in the round, looking at contributions and entitlements. Why cannot that same benchmark extend to the WASPI women, who find themselves victimised by the pace and shape of change? He describes their outstanding grievances merely as residual concerns. If Laura Kuenssberg does a report that points out that the WASPI women’s grievances are much more than residual concerns, will he reconsider?

[Mr Hammond]

As I have said, we have considered the issue of women affected by the pension age changes and we have provided some transitional funding. I am aware that there are people who believe that that is not sufficient and who would like more. I understand that, but the role of Government is always to balance the claims of individuals against the interests of the taxpayer, who has to fund these things in the end, and we think we have got that balance right.

Double Taxation Treaties (Developing Countries) Bill

Mark Durkan Excerpts

2nd reading: House of Commons
Friday 16th December 2016 Commons Chamber

[Roger Mullin]

Funnily enough, I have more than one person in mind. If we were to scour this House I might well find one or two who take that position, but I do not think that today is a day to be mean-spirited about anyone.

[Mark Durkan (Foyle) (SDLP)]

The hon. Gentleman should not invite a voice-activated intervention.

[Roger Mullin]

I can tell this is going incredibly well already.

One thing I wanted to say at the beginning of my speech was that, being who I am, I could have been very disappointed in the raffle, but here I am with 45 minutes or thereabouts to discuss my private Member’s Bill. Most Members would be keen to get a full hearing and a vote, but I know that that is not going to happen with this Bill. However, I could not be prouder than to have my Bill considered following the one that this House has just chosen to accept. [Hon. Members: “Hear, hear.”] I am sure that there are many people who feel the same.

I come back to my experiences in different parts of the developing world. In the agencies I worked with over the years, I came across many people who, although they were devoted to helping alleviate poverty and engage in capacity building and believed in the need for aid—many had worked in this field for many years, including a great friend of mine from Lossiemouth called David Thomson, who has worked in more than 60 countries—they also passionately believed that we would never cure the problem until we liberated those countries so that they could better take care of their own resources.

What do we know about international taxation treaties or double taxation treaties? They are set up for firms, such as UK firms, that operate in a developing country but are headquartered in the UK. They are often called double taxation treaties because nobody wants a company to be taxed twice on the money it earns. So these treaties were set up—in many cases, many years ago—to try to prevent double taxation.

However, over the past 10 to 15 years, what we have seen developing are not treaties that allow companies to be charged in just one place, but treaties that are part of an arrangement that allows too many international and multinational corporations to avoid paying tax in any country. We want to find ways in which we can assist countries in the developing world to take responsibility—to take care of their own taxation system and to invest taxes in their own society as they see fit, thereby building a capability that means they are no longer dependent on traditional aid.

--- Later in debate ---

[Roger Mullin]

That is a wonderful example. Double taxation treaties will benefit people in a wider sense—a cultural sense—although that is not stated in the Bill. If we can achieve fairer tax and fairer trade, along with mutual respect and more cross-pollination between countries than we have today, that, in its own modest way, will contribute to a more peaceful world. Generally, the more people engage with each other, the less likely they are to deal with each other in less than rational ways.

[Mark Durkan (Foyle) (SDLP)]

I commend the work that the hon. Gentleman has done on the Bill, and, of course, the work done by ActionAid. He has referred to fair tax and fair trade. I hope that the Bill will proceed, so that it can be improved in one significant respect. If there are indeed to be the new trade deals with developing countries that we are told there will have to be in the post-Brexit world, they should not take place without new tax treaties. The Bill deals with when such tax treaties are introduced, but it does not insist on their creation. That would be insisted on if new trade deals had to be accompanied by new tax treaties.

--- Later in debate ---

[Jane Ellison]

My hon. Friend is right. The OECD’s BEPS project is really important in addressing some of the issues the hon. Member for Kirkcaldy and Cowdenbeath talked about. The UK has played a leading role in that project and will continue to do so. A large number of countries have come on board with those principles and we will continue to move forward on them.

It is worth restating that the UK became the first G7 country to meet the UN target of spending 0.7% of gross national income on international development. The way in which we tackle the challenges in developing countries is very much in the spirit of what has been discussed in this debate. We understand the idea of helping people to develop capacity and independence so that they are not dependent on aid. At the heart of what DFID and the Government are doing is the idea of strengthening people so that countries can move forward and develop.

We help people to strengthen their economies and reduce their reliance on aid in a range of ways. Last year—I am particularly proud of this because it involves HMRC working closely with DFID—we committed to doubling the funding for tax projects in developing countries through the Addis tax initiative. HMRC has set up a specialist tax capacity-building unit, which deploys staff to developing countries to provide technical tax expertise. It is working closely with DFID on that.

Bilateral tax treaties can play a part. Treaties are important in encouraging private sector activity in a partner country. We know how powerful a force that can be in driving up employment, providing quality goods and services, and raising crucial tax revenues, which finance public services in those countries. We have about 130 treaties with countries across the globe, including several with developing countries, to support and sustain cross-border trade and investment by tackling double taxation and clamping down on cross-border avoidance and evasion.

The treaties are reached through negotiation by experienced officials from HMRC and are highly technical documents. Let me provide assurance on the specific points the hon. Member for Kirkcaldy and Cowdenbeath made about who is involved and the process that goes into those documents. They follow consultation exercises that help to establish appropriate priorities. That process includes the consideration of representations made by UK businesses, NGOs, other Departments including DFID and the UK’s missions based in developing countries. The approach to these treaties is very collaborative and open so that we reach the right priorities that work for both parties. Decisions on the negotiation or renegotiation of a tax treaty are taken on the basis of a range of factors, including the results of HMRC’s periodic review of the tax treaty network and the role of treaties in promoting development. The Government already strive to take wider issues, including development, into account and align our tax treaties with our wider development policies.

I know there are some concerns about the treaties, and some have been alluded to today. Let me be very clear that the UK never ties our wider assistance or investment to such treaties. We cannot impose tax treaties on other states, including developing countries, and we never try to do so. Every tax treaty we negotiate is necessarily a reflection of the interests and priorities of both states as equal partners. That of course will mean some trade-offs. Sometimes developing countries face a trade-off between reducing their tax rates and rights to encourage investment and maintaining those rates and rights and so risking losing investment. That is their judgment to make. Before engaging in a treaty negotiation any country would think about what its priorities are.

[Mark Durkan]

I have noted all that the Minister has said, but she must recognise that there is a concern that some of these treaties work more as double evasion treaties than as double taxation treaties. Beyond the treaties, in the last Parliament, against the grain of what the Government say they are about in the BEPS process, the controlled foreign companies rules were changed unilaterally and at the expense of developing countries’ exchequers.

[Jane Ellison]

There are two things I would say. First, our work on double taxation treaties cannot be seen in isolation from the wider work we have led through the OECD on the BEPS project and a lot of the legislation we have passed. Since just 2015, there have been more than 30 different measures that will come into effect on avoidance and evasion.

My second point, to reiterate what I was saying before I took the hon. Gentleman’s intervention, is that these are mutually agreed treaties. If a country is not comfortable with anything being proposed—not that the UK would propose anything close to what he suggested—the treaty is mutually agreed and it is right that we respect the balance developing countries wish to strike in negotiations as much as we would respect any country’s position. Our network of treaties with developing countries demonstrates that. We have no power to force a developing country to sign a treaty that is against its interests, and would never try to do so. If the UK and a potential treaty partner cannot come to an agreement that satisfies us both, the treaty simply will not go ahead.

I turn to some of the specific issues that the Bill would entail for any Government negotiating such treaties, because while we respect and agree with the thrust of the Bill’s intent, we do not think we could, from a technical point of view, carry out some of the analysis that the Bill suggests.

Let us take, for example, the idea of assessing the impact. Given the long timescales, the complex and shifting interactions with domestic law and the lack of a reliable comparator, we believe it is simply not possible to produce meaningful estimates of the revenue effects of a tax treaty in the sort of timeframe that the hon. Member for Kirkcaldy and Cowdenbeath is suggesting. These are long-term projects with partner countries. Successive Governments have never attempted to produce assessments of the effect on the UK, let alone for a partner country. To attempt to do the latter—to assess the impact for the partner country—would very likely not be welcomed by that country, as it would essentially represent the UK’s uninvited judgment of its tax policies. I entirely endorse his comments about mutual respect. However well intentioned, the idea of our passing judgment on another country’s tax policy runs counter to the key principle of mutual respect.

[Jane Ellison]

I understand the hon. Gentleman’s point, but I still cannot agree with him. He asks how we can show benefits. I repeat that countries enter into these agreements willingly. We have over 130 of them, and there are more in the process of renegotiation, particularly those that are outdated. Countries would not be seeking to renegotiate or enter into that bilateral discussion if they did not feel there was mutual benefit in their doing so.

I have recently signed several such treaties—we have recently exchanged treaties with Colombia and Lesotho—and had the opportunity to talk to countries about why they do it, and it is clear they believe it is to our mutual advantage. Over time, these bilateral relationships must be to our mutual advantage. It is also worth noting that countries can rescind treaties. If countries did not think it to their advantage, they could rescind the treaties. We have not locked countries into these arrangements; they are entered into by mutual agreement, and countries can exit from them.

The Bill also asks us to assess the benefits of foreign direct investment, but again that would be very difficult, if not impossible, on the basis that FDI depends on such a wide range of factors. Investors will consider all sorts of things, including: existing and planned infrastructure; changes to the country’s legal system; political stability—often critical in the developing world; the education level of the workforce; and access to markets. The idea that we could assess in isolation the direct contribution of a tax treaty is impracticable. It would be part of a mix that moves a developing country from poverty to greater wealth; during that journey, all those things, and more, begin to fall into place to produce an environment in which wealth can be created to the benefit of the country because people want to invest there. To analyse one of those things in isolation, however, would be an extremely difficult proposition.

[Mark Durkan]

On the Minister’s point about mutuality and the nature of any treaty discussions, would she agree that when bilateral trade deals are negotiated post-Brexit they should be accompanied by new tax treaties, negotiated at the same time, in the spirit of mutuality she has talked about?

[Jane Ellison]

Brexit is a bit of a red herring in this regard. These agreements are bilateral, and the vast majority are outside the EU, although we have them with EU member countries too. I am happy to respond to the hon. Gentleman with further details, but his point is not directly relevant in the way he suggests.

[Mark Durkan]

rose—

[Jane Ellison]

No, I will not give way again. To be fair to the hon. Member for Kirkcaldy and Cowdenbeath, the promoter of the Bill, I want to deal with a couple of his other points.

Parliamentary scrutiny was mentioned. We have a system whereby tax treaties are subject to parliamentary scrutiny and debate before they can enter into force. That means scrutiny through a Delegated Legislation Committee. There is a gap of several months between signature and debate, which gives hon. Members ample time to acquaint themselves with the contents of a treaty and to inform robust debate. There is also both the power and the precedent for referring treaties to the Floor of the House. That has not been done since 1984, but I would be delighted to discuss any of these on the Floor of the House if Members were moved to bring them forward.

I thank the hon. Gentleman for championing this issue and for the constructive approach he has taken. It has given us the chance to put on the record what I believe is an admirable track record in this country.

I will mention one more thing that might be of interest to the House. The Department for International Development is supporting the OECD’s new “tax inspectors without borders” initiative, which has raised more than $260 million of additional revenue in developing countries to be spent on public services. Again, this is a record we can be proud of across parties.

While we fully support the principles of the Bill, many of its provisions are already in place, and where they are not that is due either to the technical difficulties involved or to the unintended and undesirable consequences that such measures would involve.

The debate has served to highlight a number of things, particularly the role that tax treaties can play in providing certainty and stability for increased investment in developing countries; the importance of our tax treaties being tailored to meet the individual tax policies of our partner countries; and the considerable impact that the success of these treaties can have on sustainable economic development.

Although we do not support the Bill, I would like to thank the hon. Member for Kirkcaldy and Cowdenbeath for securing the space to consider these issues—

Autumn Statement

Mark Durkan Excerpts

Wednesday 23rd November 2016 Commons Chamber

[Mark Durkan (Foyle) (SDLP)]

Having opposed the welfare cap as a search engine for cuts, may I at least acknowledge in passing the projected increases that are allowed in the statement? On devolution, the Chancellor rightly waxed positive about city deals in Scotland and in Wales, as he has on those in England. Will he be more than passive in his encouragement to the Northern Ireland Executive, who have been persistently derelict on these prospects?

[Mr Hammond]

Yes. I am not sure how much influence I will have over the Northern Ireland Executive, but next time I bump into a Member of it, I shall make that very point.

Concentrix

Mark Durkan Excerpts

Wednesday 26th October 2016 Commons Chamber

[Sammy Wilson]

rose—

[Mark Durkan (Foyle) (SDLP)]

rose—

[Jane Ellison]

No. I really must make some progress—you may not indulge me too much more, Mr Speaker, if I give way again—but I will see whether I can take further interventions later.

As hon. Members should be aware, anyone who wishes to challenge any changes made to their tax credits has a right to request a mandatory reconsideration of their case. As of the start of this week, HMRC had received more than 26,000 such requests. Staff have already reviewed and resolved more than three quarters of them, and they are up to date with the Concentrix reviews. As I have said, that means that the cases have been resolved in accordance with the facts; it does not necessarily mean that there was a problem in each case. However, at least such cases have been resolved, and closing the remaining cases will of course be a priority.

That gives the House a sense of the necessary steps being taken to fix the immediate problem: restoring quality customer service, resolving people’s claims and checking that the right decisions have been made. But I know that hon. Members have been worried about people falling into hardship if their claim has been incorrectly withdrawn or reduced due to errors. That has quite rightly been the source of many of the questions we have been asked. I reassure Members that a system is in place to support anyone who contacts HMRC in such circumstances. They will be helped to request a review of the decision taken—the so-called mandatory reconsideration that I have just mentioned. Those in hardship will then receive a payment of £100, normally on the following day, while their review is being handled.

--- Later in debate ---

[Sammy Wilson]

Will the Minister give way?

[Mark Durkan]

Will the Minister give way?

[Jane Ellison]

Not just at the moment—I must make some progress.

Particular individuals in particular circumstances are more prone to error. Over the years that tax credits have been running quite a substantial picture has built up of where error is more likely to exist.

[Sammy Wilson]

Will the Minister give way?

[Mark Durkan]

Will the Minister give way?

--- Later in debate ---

[Mark Durkan (Foyle) (SDLP)]

Like other Members, I pay tribute to the hon. Member for Salford and Eccles (Rebecca Long Bailey) for introducing the debate and setting out her points so cogently, particularly in relation to some of the details of the contract itself, and the opportunities and responsibilities that that contract gave to HMRC to better deal with the problems that did emerge. Both HMRC and the then Financial Secretary, the right hon. Member for South West Hertfordshire (Mr Gauke), must have been aware of those problems, given the number of representations and complaints that were coming through from Members, and the range of questions that were being asked. None of those questions was properly dealt with, and all the complaints were treated fairly dismissively along the lines of young Mr Grace—“You’ve all done very well!” There seemed to be no problem whatever as far as that Minister was concerned. I am glad that, today, the current Financial Secretary to the Treasury is indicating that she will take a more personal interest in how these details are handled in future.

The motion could have been wider. It could have put into its sights the role and rationale of HMRC itself, as well as the responsibilities of Ministers. This debacle happened in the context of a progressive rundown in the capacity and character of HMRC, which then led to it outsourcing bits of work. It is the nature of that work and outsourcing that really raises questions about the mentality in HMRC.

In a written answer yesterday, the Minister confirmed this to me:

“during the course of the contract, HMRC delegated a total caseload of 2,209,500 cases for high risk renewal checks by Concentrix.”

It was HMRC itself that decided that more than 2 million cases could be appraised as high-risk renewals. When Concentrix received those cases, 1,635,676 of them were not the subject of further investigation for fraud or error, which means that it screened out 74% of the caseload that had been identified by HMRC. I ask Members to think about what we would have been dealing with if there had not been that screening. We would have had multiple versions of this problem—the adversity endured by our constituents; and the absurdity in the grievous conjecture that was being used against people.

The high-risk cases referred to Concentrix were placed in three main risk categories, and those three categories were decided by, and designed by, HMRC, not by Concentrix. The first was undeclared partner, which accounted for 1,398,908 cases. The second was work and hours, which accounted for 564,983, and the third was childcare, which amounted for 245,609 cases. Now that this work is returning to HMRC, I hope that Ministers will ensure that there is a change of culture there so that there is no longer such hostility and suspicion towards HMRC’s customers.

[Sammy Wilson]

The incentive for Concentrix was that it got paid only for those cases in which, eventually, it could be shown that there was genuine error or fraud. Does the hon. Gentleman accept that if that incentive does not rest with HMRC, the situation could become even worse, because HMRC will have no incentive to screen out any of those cases?

[Mark Durkan]

The hon. Gentleman raises an important question about future performance. Many of us have had our own difficulties when dealing with HMRC about tax credits. Certainly in my constituency, I have had some particular issues in relation to the plight of cross-border workers, whose position is constantly mishandled by HMRC. At times, it seems that there is no end in sight to the difficulties.

On the hon. Gentleman’s question, I note that payment by results is the outcome after the mandatory reconsideration stage, so some of the arguments about the degree of incentivisation have to be measured against that point. Let us remember that what drove the cut-off of tax credits for most people was the application of the compliance requirement of 30 days. Therefore, officials using the HMRC system and the HMRC standard that was contracted to Concentrix sent letters to people saying, “Unless you return information within 30 days, your benefit will be stopped.” Most of the stops were made because information was supposedly not received within 30 days. That is why many cases were overturned on mandatory reconsideration, because by that stage the information had been provided.

That raises questions for us as legislators in the House. Where does the 30-day rule come from? It was introduced in the Tax Credits Act 2002. We have here a gross misapplication by HMRC of the terms of that Act, especially in terms of the high-risk renewal regime, the high-risk change of circumstances regime and the annual declaration. The Minister did not address the fact that thousands of people had their tax credits stopped this summer by HMRC directly. That had nothing to do with Concentrix. HMRC was terminating benefits because people had not returned their annual declaration on time. Compliance grounds were being used directly against people by HMRC. When those people were cut off in August—45,000 of them in the week beginning 8 August—they naturally assumed that that cut-off was being implemented by Concentrix. They were ringing Concentrix and we as MPs were ringing Concentrix, but it was actually HMRC that had implemented the cut-off, although some of those cases might have previously been referred to Concentrix. We had the daft anomaly of HMRC handing work to Concentrix, saying “Investigate these people as high-risk renewal claims,” while, at the same time, it decided to go against those same people on compliance grounds for annual declarations. It is no wonder that confusion, hardship and hurt was caused, and there are fundamental questions for HMRC as well.

I hope that the Minister will look at this again. She says that lessons will be learned. I hope that this will not be like Brexit means Brexit; “lessons will be learned” should mean that lessons will be learned. We hope that those lessons will be learned within HMRC itself, and that they will include looking at whether there has been particular misuse of provisions of the 2002 Act.

Regulation 32 of the Tax Credits (Claims and Notifications) Regulations 2002 states that the period of notice given for a person to submit information or evidence

“shall not be less than 30 days after the date of the notice.”

The period does not have to be 30 days—that is the minimum—but who decided that it should be 30 days? HMRC took that decision, and it passed that on to Concentrix, saying that that statute set out how the system works and how it had to proceed.

Did Ministers sign off on the 30-day period? Were they notified that those were the terms that HMRC was operating? Were they notified that those were the terms that Concentrix was operating? If we know that the 30-day cut-off was responsible—the Minister has said this herself—will it be reviewed? There is the question of whether we, as Parliament, need to review that, because some of these flaws are sourced in the legislation itself and its over-rigorous application by HMRC.

Many people have voiced their criticisms of Concentrix and its performance, and have spoken about their difficulties getting through to it. By means of this debate, we need to get through to HMRC, which is where the core responsibility lies. A culture change is needed there, and I welcome the Minister’s commitment to keep an eye on that in the future.

--- Later in debate ---

[Simon Kirby]

I will not commit to that. The hon. Lady’s points will be picked up by the NAO. Not all the information was duff, but there are clearly lessons to learn from the exercise.

The hon. Member for Foyle (Mark Durkan) talked about the 30-day cut-off. Tax credit regulations require a claimant to be given a minimum of 30 days to respond to a request for information. The hon. Member for Dundee West (Chris Law) mentioned training. I assure him that Concentrix staff are trained in the same way as HMRC staff.

The hon. Member for Garston and Halewood (Maria Eagle) asked about unresolved cases. I am not sure whether the Financial Secretary was in the Chamber to hear that, but if the hon. Lady writes to my hon. Friend, she will, I am sure, do her very best to help to resolve those cases. The hon. Lady also asked about the significance of August. August was a particularly busy time.

[Mark Durkan]

The Financial Secretary told me in a written answer yesterday that between 1 August and 31 August, HMRC automatically stopped 365,483 tax credits—in just that one month—as a direct result of customers failing to comply with the requirements of the annual renewal process. How many stoppages were made by Concentrix and how many were made directly by HMRC itself?

[Simon Kirby]

I am happy to commit to look carefully at that matter and to get back to the hon. Gentleman.

I clarify that hardship payments are effectively tax credits brought forward. Compensation, however, is not offset against tax credits and is a separate payment. That is an important distinction to make.

The hon. Member for Ochil and South Perthshire (Ms Ahmed-Sheikh) mentioned the timeline. It is important to understand the timeline, and she makes valuable points about how we can ease the customer journey and introduce new measures. That is work in progress, and I do not think there is a lot of disagreement about some of her more sensible suggestions.

In response to the hon. Member for Bootle, I would say that a lot of issues have been raised in the debate. They will be looked at very carefully by the National Audit Office. We are giving careful consideration to the balance of the contract with Concentrix to make sure that nothing else goes wrong. This is about making sure that the most vulnerable people who need help get it, and that we move forward and learn from the exercise.

Although we recognise that the service provided was simply not good enough, it was right to review people’s claims for tax credits. That must go hand in hand with quality customer service that minimises distress and disruption to the people involved. Concentrix fell short of providing that standard of service in recent times, and, as a result, a large number of people were caused undue distress and worry. We have taken immediate action to restore a fast, fair and efficient service to anyone claiming tax credits. We will take further action in the days and months ahead. We will look at what went wrong, and at the NAO report, and learn from those lessons. We want to ensure that we provide the kind of quality tax and benefits service that the British public deserve.

Question put and agreed to.

Resolved,

That this House notes that Concentrix has not fully met the performance standards set out in its contract with the HM Revenue and Customs to correct tax credit claims, and welcomes the announcement that the services performed by Concentrix will be brought back in-house to HMRC next year; and calls on the Government to conduct a comprehensive investigation into the performance of Concentrix under its contract with HMRC, which includes a consideration of the potential effect on other HMRC services, take urgent action to compensate people who have erroneously had tax credits withdrawn by the company, and in doing so mitigate any adverse effect or reduction in service for claimants.

Sale of Annuities

Mark Durkan Excerpts

Wednesday 19th October 2016 Commons Chamber

[Simon Kirby]

It is fair to say that the Chancellor of the Exchequer at the time was not in possession of all the information following the consultation. It was our intent, clearly, at the time to listen carefully to not only the industry but consumer groups, which we have done extensively. It is worth saying that we remain absolutely committed to all the other pension freedoms that we are introducing. This is a sensible way forward, and I hope the hon. Gentleman welcomes it.

[Mark Durkan (Foyle) (SDLP)]

This pop-up policy, which has now been popped down again, came from a Government who had a long-term economic plan, yet this policy has not survived very long. As has been indicated, the policy was a response to the bubbling sense of scandal that was there because people were stuck with meagre and marginal annuities, and it was a chance to give them something different. If the Minister is convinced that he is avoiding the new scandal that would have happened, of people ending up mis-selling their annuities, what is he doing about the original scandal of the meagre annuities that people are trapped in, which this policy was designed to respond to?

[Simon Kirby]

The hon. Gentleman is right in as far as that certainly was the intention of the policy. There is a long-term plan, because I am concerned about the long-term financial wellbeing of these older and vulnerable people, and it is important that they get the right deal and make the right decisions. That is why this suggestion, which is only one of many, is not appropriate to carry forward. It is not a pop-up policy; we have listened carefully, and we have made the right decision.

Concentrix: Tax Credit Claimants

Mark Durkan Excerpts

Tuesday 18th October 2016 Westminster Hall

[Mark Durkan (Foyle) (SDLP)]

I share Members’ frustrations about dealing with Concentrix in the constituency cases that come to us, but our frustration is nothing compared to the distress and desperation caused to many constituents. Let us be clear: as the right hon. Member for Slough (Fiona Mactaggart) indicated, we need to look closer to Parliament when asking some of our questions. The fact is that the contract was conceived by HMRC in a spirit of suspicion and hostility towards its customers. It said that it wanted to handle the high-risk renewal cases in this way, and it intimated to Concentrix that it was disappointed that Concentrix had screened out 80% of the cases referred to it as likely to be high risk and did not pursue them further. Perhaps that is one of the reasons why HMRC is taking the contract back. It perhaps feels that it could make a hotter and heavier pursuit than even Concentrix could.

The right hon. Lady also touched on the significant spike in August, when even more calls to Concentrix were waiting and even more call queues could not be dealt with. That came from HMRC’s direct move to remove 45,000 people from tax credits. Some of those people were supposedly under investigation by Concentrix as high-risk renewals, but HMRC moved against them because of the annual declaration process. We have two separate processes going on, and the one thing in common is the victim: the claimant. Did Ministers know that HMRC was striking off people when they were going through the high-risk renewal claim?

The other issue I want the Minister to address is the law. The right hon. Lady raised the question of the burden of proof, but Concentrix insists that HMRC is saying that the 30-day cut-off on non-compliance is absolute and in statute. Do we need to change that law?

--- Later in debate ---

[Simon Kirby]

None of us in this Chamber wants anyone not to receive money that they are entitled to, especially if they are parents with young, vulnerable children. It is up to all of us to help our constituents and ensure we once again provide a fast and efficient service to everyone.

Let me turn to some of the issues that were raised. I do not have a lot of time, so hon. Members will have to bear with me. I acknowledge the points made by many hon. Members about the contract. HMRC will be undertaking a lessons-learned exercise, and it will share those lessons across the Government. It is clear that they will help to inform other contracts in the future.

[Mark Durkan]

In that lessons-learned exercise, will HMRC look at the question of the so-called high-risk renewal scheme, which is at the very heart of all the troubles that our constituents have suffered?

[Simon Kirby]

There will be a number of reviews, and all lessons learned will be looked at in an open-minded manner. We will consider all elements of what has gone wrong and try to ensure that the mistakes, which have clearly happened, are not repeated.

I have talked about how the data are given to Concentrix. It is up to Concentrix to choose who to contact from those data. The £100 hardship payment is important. It is available to everyone, not just through the MPs’ hotline. It is not necessarily a one-off payment; future payments can be made if there is a delay in the decision. I encourage people in hardship to apply for it, because it is there to help people while we sort out this mess.

The hon. Member for Foyle (Mark Durkan) talked about the 30-day cut-off period. I can tell him that most customers have been able to provide the information required within 30 days. There was a question about money being clawed back from Concentrix. Concentrix is not paid for wrong decisions, and payment is reduced where it fails to meet performance standards. That is still happening. At the end of the day, it is paid to do a job, and if it does not do the job, it is not paid for it. I have noted the comments about letters being lost.

In conclusion, I thank everyone here. This has been a short debate, and it would have been nice to have more time for contributions. I am here to listen, and I have listened very carefully.

Small Charitable Donations and Childcare Payments Bill

Mark Durkan Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons
Tuesday 11th October 2016 Commons Chamber

[Jane Ellison]

I have already mentioned HMRC’s outreach work, which I will certainly be encouraging. More promotional opportunities are planned, and I know that the Minister for Civil Society will say more about that at the end of the debate. It is a fair point and we want to make it easier, but obviously there are people who just do not know about this and still perceive barriers, so everything we can do to challenge that is welcome. We are extremely keen to hear thoughts from across the House on how we can do that, so we are always listening. I am very happy to put those suggestions to HMRC, and I know that my ministerial colleague will be happy to consider that in his Department as well.

Let me clarify the anomaly and how we are addressing it. The anomaly in the original legislation allows some charities to claim more than others, based only on how they are structured. The Government welcome the supportive and constructive approach adopted by the Church of England, the Roman Catholic Church and other religious groups during the recent consultation on the change.

The Bill also considerably relaxes the rules on where charities can receive donations that are still eligible for the gift aid small donations scheme. Currently, the scheme’s so-called community buildings rules mean that charities can claim top-up payments only on donations received during charitable activities that take place within the community building. However, we know that many local charities, although based in community buildings, carry out most of their activities in the local community, away from the building itself, which means they are unable to benefit fully from the small donations scheme. The Bill therefore relaxes the rules to allow charities based in community buildings to claim top-up payments on donations received outside the building but within the local community area. Colleagues will be delighted to know that, among the many small, local civil society groups, the scouts and guides, the air and sea cadets and other local uniformed groups, in particular, will benefit significantly from this change and will be able to receive the support they deserve for the vital work they carry out in our communities.

Taken together, this package of reforms has the potential to provide a real boost to many charities, particularly the up to 9,000 new charities that apply for recognition by HMRC each year. Based on provisional estimates, these changes are expected to benefit charities by £15 million a year, a significant increase that underlines the Government’s commitment to supporting a greater number of charities and a greater number of donations. The final figures will be certified by the independent Office for Budget Responsibility as part of this year’s autumn statement.

So far I have talked about the changes that will further support our charities. Let me turn briefly to the tax-free childcare aspects of the Bill, which will help us ensure that it is easier for hard-pressed parents to receive the support they need. In the previous Parliament we legislated to introduce tax-free childcare. That will provide up to £2,000 of Government support for childcare costs per child a year, which parents can use with any childcare provider they choose. The idea is that they can simply apply online to open an account for each child, and that for every £8 a parent pays in, we will pay in an additional £2. The system will be trialled later this year and then gradually rolled out to parents from early next year.

During our user testing of the system to date, we have found a couple of minor technical issues that we need to resolve in order to make it as straightforward as possible for parents. The Bill therefore makes two minor technical amendments to ensure that the scheme operates as intended. The first technical change relates to the duty of parents to confirm that they remain eligible to receive tax-free childcare each quarter. The Bill will allow greater flexibility over when parents are asked to make this confirmation. It will mean that once a quarter parents can confirm their eligibility for all their children at the same time, rather than having to do it separately for each child if they registered them at different times.

The second technical change will mean that parents can use a standard online form if they want to query a decision. That will make the process much more straightforward and convenient. We still want to ensure that everyone can ask for a review, so anyone who would struggle to get online will still be able to raise their queries in other ways.

[Mark Durkan (Foyle) (SDLP)]

Can the Minister confirm that what she has said is that credits will be available for each child, and that there will not be a two-child limit, as is proposed for working families tax credits? Can she compare the regime that will be offered under this Bill, which has shown great consideration to parents, with what would be the case for families on working families tax credits?

[Jane Ellison]

I might have to come back to the hon. Gentleman on the latter point about the comparison, because it is not really within the scope of the Bill. I can confirm that we are proposing only two changes—everything else is unchanged from the original legislation, and we are not proposing that there should be any other changes in the Bill.

As I said at the outset, the changes made through the Bill are relatively minor and technical, but they are important, whether they are making it easier for more of our charities to claim extra funding to support the fantastic work they do up and down the land in our constituencies, or whether they are making sure that hard-working parents can access tax-free childcare in the most simple and efficient way possible when it is introduced. The Small Charitable Donations and Childcare Payments Bill delivers against both those objectives, and I therefore commend it to the House.

--- Later in debate ---

[Mark Durkan (Foyle) (SDLP)]

It is a pleasure to follow the hon. Member for Taunton Deane (Rebecca Pow), who rightly says that there are practical and positive measures in the Bill that we should welcome. However, I believe that the Bill could have gone forward and been even more practical and positive and offered even more flexibility.

As the hon. Member for Clwyd South (Susan Elan Jones) said earlier, she and I served on the Committee that considered the Small Charitable Donations Bill back in 2012. Indeed, the point about euros emerged as a reassurance to me, as I represent a border constituency in Northern Ireland. I pointed out that when a number of charities in my constituency raise money, whether with bucket collections or other ways such as church events, they find euros in their collections, and I asked whether they would have to sift them out or whether they could honestly declare them. In fairness, the then Minister, now the Secretary of State for Communities and Local Government, came forward with the clarification that that money could certainly all be counted.

The hon. Member for Clwyd South is right to say in that context that, when the 2012 Bill was being considered, the refusal to allow donations in the form of cheques or contactless or various other foreseeable electronic payments was odd. I wonder whether even now the Minister will consider allowing, in Committee, an enabling clause giving Ministers the power to permit payment by cheques and so on in future, so that these measures would not have to come back before the House. As the hon. Member for Amber Valley (Nigel Mills) said, he made that point in the Committee on the 2012 Bill.

In the Small Charitable Donations Act 2012, the Treasury was given significant powers to change things by order; it was given the power to change the connected charities amount, the community buildings amount, the remaining amount, and the capped total. It could amend the gift aid matching rule, abolish it, and reinstate it, if previously abolished, with or without amendment; it could even, by order, amend the meaning of “eligible charity”, and the limit on the value of individual donations. Sensibly, the Treasury was given the power to make significant working changes to the scheme by order. It seems strange that in this further bit of primary legislation there is not similar flexibility around, say, the use of cheques. That flexibility could be introduced in Committee.

I had the unusual experience of arriving in the 2012 Bill Committee to find that the Government had tabled an amendment to take up a point that I made on Second Reading. The penalty provisions stipulated that a charity that had suffered a penalty from HMRC would be barred from the scheme for a period, but there was no provision for an appeal against or possible overturn of the penalty, and where the penalty had been imposed but subsequently reviewed and set aside there was no provision to say that the period of barring would no longer apply. Sensibly, the Government listened. That proved to me that sometimes, when it comes to small Bills, the Government have a flexible ear and will listen to points made on Second Reading; in the case of small Bills, they can handily concede points, and indeed take the initiative and leapfrog Committee Members in making sensible amendments.

The Minister was right to say that some sensible working adjustments are made in the Bill, but they are all ones that were advocated by members of the 2012 Public Bill Committee—not just by members of the Opposition, or by me, but in many cases by Conservative members of the Committee. Members were teasing out the implications with practical ideas. Many of us were concerned that the Small Charitable Donations Bill was in danger of tilting into becoming the petty conditions Bill, given the number of different traditions, trips and traps that people could get into. I still wonder whether the Government could be a bit more generous or expansive in how they take the Bill forward. After all, it is clear that the whole matching requirement issue still causes charities problems. We should listen to charities as we take the Bill forward.

[Susan Elan Jones]

Does my hon. Friend remember that among the examples of charities that the small charitable donations scheme could help were small ones such as talking newspapers? We were very aware that if their admin staff were overburdened, they might not be able to claim what they should rightly claim.

[Mark Durkan]

Yes, the hon. Lady is exactly right. Members in all parts of the Committee raised many pertinent, practical examples of charities that we would want to be ready beneficiaries of the scheme, but that would be prohibited from taking part in it.

At the time, perhaps because this was a first move in this direction, the Minister took a narrow and highly precautionary approach, but smaller charities have not claimed the amount of small donations relief under the 2012 Act that the then Chancellor said they would; when he announced the scheme, he said that it would be £100 million. The indications to date are £25 million a year with an uplift of perhaps £15 million, going by what the Minister has said about the Bill, but we are still talking about something well short of what was promised to the charitable sector when the concept was introduced. Our challenge is how to get closer to the £100 million. We have to look at the things that are standing in the way. I acknowledge that the Government, in the consultation and in the Bill, have moved to address some of the difficulties on community buildings, but there are still some issues on the question of connected charities. The matching requirement, however, is still there, and I wonder whether the Minister can tell us whether or not are examples of fraud in the gift aid small donations scheme in the past three years. Are there any indications of whether matching requirements would have prevented fraud, or simply prevented access to the scheme?

We want to know why the ministerial team are content with arriving at an amount that is only half the amount of support originally intended—in fact, it is less than half. I therefore hope that Ministers are prepared to continue to listen to hon. Members who serve on the Bill Committee and to the charitable sector so that we can improve the scheme and make it much more effective for all the causes and examples that hon. Members have discussed, including that and so on.

As well as amending the Small Charitable Donations Act 2012 the Bill amends the Childcare Payments Act 2014. In an intervention I said that the Minister rightly presented the childcare payments scheme under the Bill—with the original Act as the source—as applying to each child. However, the Government are inconsistent, because the childcare element of universal credit is restricted to two children. Working tax credit rules apply to two children, but childcare payments under the 2014 Act are not restricted to two children. What is the reason for the Government’s cognitive dissonance? Why are there different rules on support for different families? The Minister explained how the provisions in the Bill ensure that changes can be met more responsibly by the system, but will Ministers consider the difference in experience and bureaucratic contact for parents accessing childcare payments under the Bill and the original Act and for parents who apply for the childcare element of universal credit? Under the childcare payments scheme, it is a bankable allowance, but it is not a bankable allowance for people on universal credit. They have to spend the money first, then claim it back within a short time. There is an unfair difference in treatment. Some parents are treated more generously and supportively in the way in which the system relates to them and engages with them than others, which is wrong. As legislators, we should try to ensure a more consistent approach to the principle of childcare in all the important and positive forms that it takes.

That is not to say that the childcare payments provided for are not positive and practical; I just wish that the universal credit childcare element could be made more comparable and, similarly, that if the Government see fit not to visit a two-child rule on the childcare payments system, they will abandon the idea of having such a rule for working family tax credit as well.

Tax Credits: Concentrix

Mark Durkan Excerpts

Wednesday 14th September 2016 Commons Chamber

[Jane Ellison]

I am sorry to hear that the hon. Gentleman had that difficult experience. I cannot agree with his general point about there being no role for the private sector in this regard. I refer again to the amount of money that has been saved for the taxpayer. There is a lot of error and fraud in the system, and it is important that we bear down on that. We do not want money to go to people for whom it is not appropriate, in particular in relation to the nature of people’s households. Much of the fraud does rest in that area. As he highlights, this is a particularly difficult and sensitive area to investigate, but we need to continue to investigate it because the amount of fraud in the area of tax credits is considerable.

[Mark Durkan (Foyle) (SDLP)]

We can all share the stories of our constituents’ anguish and the frustration for our offices in dealing with this debacle, but we should remember that HMRC is itself not an innocent agent. It designed the contract. It put customer hostility and suspicion into the contract, and into the standards of performance and practice. It was, of course, HMRC that provided the names targeted by Concentrix. This has happened against a backdrop of the Government persistently running down the capacity and character of HMRC. Will some of those bigger policy misguidances also be looked at, as well as the enjoyment we are all having today in scapegoating Concentrix itself?

[Jane Ellison]

I return to the answer I gave a moment ago. We need to continue to bear down on fraud in the system. There is a considerable amount of error and fraud. I am afraid it would be naive to think that all of this is error. There is fraud in the system and there is a lot of error, which the original design of tax credits makes easier. We need to continue to bear down on fraud, but clearly we need to do that in a way that does not make it difficult to assist the most vulnerable.

Finance Bill

Mark Durkan Excerpts

Tuesday 6th September 2016 Commons Chamber

[Mark Durkan (Foyle) (SDLP)]

I have a couple of questions about Government new clause 9, which relates specifically to Northern Ireland and the tax treatment of supplementary welfare payments that might be made there, but before I come on to that I want to acknowledge some of the other amendments before us.

The hon. Members for Stalybridge and Hyde (Jonathan Reynolds) and for Wolverhampton South West (Rob Marris) spoke persuasively about amendment 141. The question that arises is: why would the Government and Parliament not do what is proposed in that amendment?

Similarly, on new clause 19, which was tabled by the hon. Member for Ilford North (Wes Streeting), it is hugely important that this Parliament is in the business of making sure that there is transparency in our debates. Yesterday, the emphasis was on making sure that there was transparency in the tax affairs of companies. We as a Parliament should insist that we show full transparency in our intent on tax policy and taxation measures.

New clause 19 would take us back to having transparency on the anticipated impact of taxation on families and households of different incomes. There would also be an analysis later in the year of what the impact of particular tax policies and the cumulative impact of various tax policies had been. Surely that is what we should all be in the business of doing when we go through the complicated and confusing exercise of having the various stages of Budget debates here. One thing we all value is knowing what the impact of what we are talking about will be.

I was in this House when a Labour Government adopted a misguided Budget measure in respect of the 10p tax band. A number of Labour Members raised the alarm and said that there would be an adverse impact on people of low income. The Government briefed heavily that that was nonsense and people were marched through the Lobbies. Similarly, we had the recent experience of the proposed changes to working tax credit. People were celebrating the changes and thought they were wonderful, having believed the Chancellor’s spin. Thankfully, not only Opposition Members but Conservative Members raised real and practical concerns about what the impact would be.

Why would it be wrong to follow new clause 19 and ensure that in all our Budget deliberations in future there is an effort to have a properly appraised impact assessment for taxation measures? That would allow us to answer not the question that is usually asked immediately after a Budget, which is what credit particular MPs or Ministers should get for what measures—that is not really what a Budget is about—but that of who gets the benefit in terms of fairness, social equity and the efficiency of economic impact that that induces. For those reasons, I fully support new clause 19.

Similarly, many hon. Members have made the case for new clause 15. Many of them have made the straightforward point that it would be almost perverse for the Government to refuse a new clause that would preclude an increase in VAT on the installation of energy-saving materials. I know the Government will say that it is otiose because they have no intention of increasing it, but over the past few years, we have experienced the Government adopting a series of perverse measures that have confounded the underlying policy commitments in respect of the green economy, renewables and energy efficiency. Given that the Government have introduced so many measures that have had a perverse effect on that sector and an adverse impact on households, it makes sense to have the belt and braces of new clause 15. I cannot see what is wrong with that.

I also note in passing—and at the risk of another voice-activated intervention—that when the right hon. Member for Wokingham (John Redwood) sought to contradict the Financial Secretary’s earlier comments, he cited what he thought was a point of clarity in the Brexit Secretary’s performance yesterday. He is the first Member to have offered me any point of clarity from that performance, which I thought demonstrated the new Secretary of State’s wish to be the first Minister to fulfil the new Government policy on environmental sensitivity, given that he treated us to more than two hours of cosmetics without a single microbead of substance.

The lead measure in this group, new clause 9, refers specifically to Northern Ireland. It deals with the ability there will be for the Northern Ireland Assembly to make additional supplementary payments as mitigation measures to offset some of the impact of the welfare reform measures now being imposed by direct rule from this House, courtesy of the so-called “Fresh Start” agreement. My party expressed our misgivings about and opposition to that overall arrangement, with regard to direct rule powers and the imposition of the effects of welfare reform legislation on Northern Ireland. However, we have long canvassed for mitigation and supplementary payments, and established that case with the Department for Work and Pensions early in 2012.

The one concern people will have about new clause 9 is with the language used. Although in the new clause the Government clearly provide for the Treasury to ensure that

“no liability to income tax arises on supplementary welfare payments of a specified description”

they also allow the Treasury to make regulations to

“impose a charge to income tax under Part 10 of ITEPA 2003 on payments of a specified description”.

The power is there to make sure that the Treasury does not activate a tax liability on supplementary payments that have been discussed and voted through by the Assembly but there also seems to be a power to subject some of those payments to tax.

I wonder why the Treasury feels the need to have that reserve power to impose a tax liability on such payments. We should remember that those payments will be made out of the Executive’s own resources in the devolved budget, because they come out of the departmental expenditure limit for the Assembly. The payments will not come under annually managed expenditure.

Why is that power there? Many people will be concerned that the Treasury will attempt to insinuate itself into any debate among Executive or Assembly parties about what measures they should adopt in mitigation of welfare reform by saying that it may subject some of those measures to a tax clawback. That is clear from subsection (3) of the new clause, and also from looking at subsection (4), which will permit the Treasury’s regulations to

“make…different provision for different cases…incidental or supplementary provision”

or “consequential provision”. That differential raises the question of why we want to reserve the power to impose tax on measures that the Executive or Assembly seek to bring forward and why the Treasury should be able to do so differently on a case-by-case basis, as that will give rise to arguments about inequity and capricious performance. The suspicion is that the Treasury sought to answer the stand-off on welfare reform in the Northern Ireland Assembly. The Assembly would not discharge the karaoke legislation it was being asked to pass in relation to welfare reform. The Treasury intervened by saying, “If you don’t pass it, we will effectively tax your devolved budget to the tune of what we estimate you would be overspending on welfare.” The Treasury insinuated itself into what should have been a debate for the devolved Assembly.

The danger is that now, even in the area of the mitigating powers—the supplementary payments the Assembly will be able to offer, as provided for in the “Fresh Start” agreement—the Treasury could, in the language of the new clause, insinuate itself in the choices and consideration undertaken by the Executive and Assembly. The Treasury’s past form shows that it has not resisted the temptation to insinuate itself. I therefore want assurance from the Financial Secretary that this language will not be there to give the Treasury the right to interfere in the choices that may be made by Ministers and Committees in the Assembly in respect of the supplementary payments they would be allowed to bring forward.

[Jim Shannon (Strangford) (DUP)]

I commend all hon. Members who have made very valuable contributions, in particular the hon. Member for Enfield, Southgate (Mr Burrowes). He is no longer in his place, but I would like to speak to his presentation on new clause 3. He set out clearly where we stand.

I want to put on record again the consistent support of the Democratic Unionist party for the provision of the transferable allowance for married couples. I remember the hon. Member for Congleton (Fiona Bruce) and I taking some verbal attacks in this Chamber—mostly from the Opposition Benches, I have to say—for our stance on this issue, but we persevered and the Government persevered. I thank the Government for bringing in the provision in their previous term. I had hoped there would have been some indication that the Government could support new clause 3. I understand, after talking to the hon. Member for Enfield, Southgate, that he will not press it to a Division. If that is the case, we have to abide by that.

The sadness for me is that the Government have, until today, chosen to invest the lion’s share of their resources in their other income tax policy of raising the personal allowance. It is undoubtedly true that that policy helps poorer families, but it is very badly targeted. If I may say so in a respectful way, it seems to be targeted at those who can well afford it, as against those who cannot. I have to put on record that I have some concerns about that. The Institute for Fiscal Studies has demonstrated that 75% of the benefit—and now, as the allowance is being raised from £10,000 to £12,500, even more than 75% of the benefit—goes to those in the top half of the income distribution. That is what the available statistics and charts indicate and I have to say they are very stark. They indicate an imbalance in the system that, as the hon. Gentleman clearly stated, is a concern.

Oral Answers to Questions

Mark Durkan Excerpts

Tuesday 19th July 2016 Commons Chamber

[The Chief Secretary to the Treasury (Mr David Gauke)]

I am grateful to my hon. Friend for his question. On the particular proposal he sets out, he is a strong champion for his constituents. If he will forgive me, in my new position of trying to control the purse strings all such matters have to be looked at. As I have made very clear, however, the Government are committed to improving transport infrastructure throughout the country, including in Sussex.

[Mark Durkan (Foyle) (SDLP)]

T4. I voice my compliments to the new Front-Bench team and my acknowledgement of the old. The prospect of moving to an ultra-low corporation tax rate has already been aired. That, of course, has huge implications for the revenues of developing countries. Will the Chancellor undertake to carry out and publish a spill-over analysis of the effect of UK tax rates and rules on developing countries, as the Governments of Ireland and Netherlands have done?

[Mr Gauke]

The position of the UK Government on corporation tax and the impact on developing countries is very clear. We believe in taxing the profits of economic activity that occur here, and that is as far as it goes. Over the last six years, we have consistently helped to build up tax capacity in developing countries and provided support to their revenue authorities so that they might be better able to collect the taxes that are due. The international system is moving towards helping those countries as well.