Oral Answers to Questions

Mel Stride Excerpts

Tuesday 29th January 2019 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

5. What assessment he has made of the potential effect on consumer prices of new non-tariff barriers in the event that the UK leaves the EU without a deal.

[The Financial Secretary to the Treasury (Mel Stride)]

Last year, the Government published a comprehensive assessment of the impact of our departure from the European Union, covering four different scenarios and looking at the effect on GDP and GDP per capita on exports and imports. That analysis is available on gov.uk.

[Stephen Timms]

The British Retail Consortium estimates that if we leave the EU without a deal, new non-tariff barriers will add on average 29% to the cost of food imports from the EU, on top of new import duties on food. The Chancellor was surely right in his call to business leaders to argue for no deal to be taken off the table. Will he continue to press the Prime Minister to do so?

[Mel Stride]

What we will continue is our extensive planning for the possibility of a no-deal, day-one exit to make sure that our ports are indeed flowing and goods are moving, including food. But the best way to ensure that we have the right conditions for UK consumers is to back the deal that has been negotiated with the European Union.

[Mr Philip Hollobone (Kettering) (Con)]

Will the Minister confirm that, in the event of a no-deal Brexit, we would immediately be able to eliminate VAT on domestic fuel and reduce tariffs on foods imported from outside the European Union to zero?

[Mel Stride]

This country will achieve a range of additional flexibilities when we are outside the European Union. We will, of course, assess them all in due course, taking into account the fiscal costs of some of the measures that my hon. Friend has raised.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

20.   The CBI and many others have warned that leaving the EU with no deal will exacerbate existing regional economic inequalities. The north-west alone is predicted to lose £20 billion a year in a no-deal scenario. That will, of course, impact jobs, not least the 350,000 that are linked to EU exports, 14,000 of which are in my constituency of Oldham East and Saddleworth. So will the Chancellor and the Government as a whole once and for all rule out a no-deal Brexit scenario, which would harm the country as a whole and particularly my constituents and the north?

[Mel Stride]

The simple reality of the situation that Parliament finds itself in is that, in the event that we do not conclude a deal successfully with the European Union, this country may well leave without a deal. I urge the hon. Lady, in order to address the concerns that she has rightly raised in this House, to get behind the deal.

[Charlie Elphicke (Dover) (Con)]

Will the Minister confirm that the Government have no plans for any new non-tariff barriers and call out the British Retail Consortium’s recent “Project Fear” comments? Will he also confirm that it is within the Government’s power, after we leave, to reduce tariff barriers and tariffs on food and clothing?

[Mel Stride]

My hon. Friend raises two issues. On non-tariff barriers, we have made it very clear that we will implement a solution in the event of no deal, for example, that will be as friction-free as possible. But there will be requirements in that scenario for us to handle pre-custom declarations and various checks, which will come with having a border under those circumstances with the EU27. On our tariff policy, we will come to that in due course.

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

Stockpiling by business is at its second highest rate since 1992. The Treasury suggests that new customs paperwork for no deal would cost UK business £13 billion. When will the Minister’s boss, the Chancellor, stop arguing privately against no deal’s staying on the table and publicly take on the scorched-earth fantasists in his own party?

[Mel Stride]

The questions I have just responded to are in a similar vein and all lead back to one conclusion, which is that, if we are to avoid a no-deal scenario, there has, by definition, to be a deal that is agreed with the United Kingdom. We have a very good deal that the Prime Minister has negotiated and will be negotiating further with the European Union. It sees us respecting the outcome of the 2016 referendum but, most importantly, making sure that flows across our borders are as frictionless as possible.

[Patrick Grady (Glasgow North) (SNP)]

6. What discussions he has had with the Secretary of State for Scotland on the economic effect on Scotland of the UK leaving the EU customs union and single market.

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[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

13. If he will take steps to prevent the 2019 loan charge from being applied retrospectively.

[The Financial Secretary to the Treasury (Mel Stride)]

The loan charge is not retrospective. The schemes that were entered into and to which the loan charge relates have always been defective—they never worked, including at the time when they were entered into. That has been evidenced by a number of court cases, including one put before the highest court in the land, the Supreme Court.

[Mr Carmichael]

Her Majesty’s Revenue and Customs is allowed to go back to 1999 to look at tax records. Records that it can look at include those in otherwise closed years. If that is not retrospective, I do not know what it is. What word would the Minister use to describe the loan charge to my constituent, who tells me that he started a business working in the oil and gas industry, living in Orkney but working across the globe, doing everything the Government would want him do? How does he now find himself facing bankruptcy, before his 29th birthday?

[Mel Stride]

An important principle lies at the heart of the whole debate around the loan charge, which is that individuals should pay the tax that is due. If they enter into arrangements that basically mean they disguise income as a loan that they have no intention of ultimately repaying—money that is, more often than not, routed via low or no-tax jurisdictions overseas, via a trust, then brought back into the United Kingdom by way of payment—the Government believe that that is wrong, and the tax should be paid.

[Andrea Jenkyns (Morley and Outwood) (Con)]

What assessment has the Chancellor made concerning an immediate suspension of the loan charge and all settlement discussions within an appropriate period, to allow the loan charge review to be properly conducted and any recommendations to alter the legislation to be implemented?

[Mel Stride]

My hon. Friend will know that the loan charge was brought into effect in 2016. It allowed three years for individuals to clean up the loans—if they were loans, they could be refinanced on a proper, commercial basis—or to come to an arrangement with HMRC. The most important message that I can give from the Dispatch Box today to those involved in these schemes is to get out of avoidance, to get in touch with HMRC and to settle their affairs. They will have a sympathetic and proportionate hearing.

[Wera Hobhouse (Bath) (LD)]

14. What recent discussions he has had with the Secretary of State for Education on the adequacy of funding for adult education.

--- Later in debate ---

[Mrs Pauline Latham (Mid Derbyshire) (Con)]

T8. What is the Minister’s estimate of new start-ups in the creative industries and of their contribution to the economy?

[The Financial Secretary to the Treasury (Mel Stride)]

I thank my hon. Friend for that question. The creative industries are vital to our country. This Government have provided an array of very important tax reliefs to that sector—they were valued at £850 million in 2017-18. We will continue to support the sector.

[Janet Daby (Lewisham East) (Lab)]

T5.   Constituents such as mine are facing large retrospective bills because of the loan charge. What plans does HMRC have to litigate against those who have disguised remuneration arrangements since 2016?

[Mel Stride]

As the hon. Lady may know, the way the loan charge works is that those who have been involved in this form of tax avoidance have until April to settle their affairs, in which case no penalty will be applied at all. We have also said that those earning £50,000 or less will automatically qualify for a five-year minimum repayment term. My message, as always in these circumstances, is that those who are involved in these schemes should come forward, speak to HMRC and sensibly sort out their arrangements.

[Stephen Kerr (Stirling) (Con)]

T10. Forecasting has had a bad rap recently from some people. Will the Chancellor therefore join me in welcoming a report from Commerce Bank that found that economic forecasting is more accurate now than it has been for most of the past 30 years?

--- Later in debate ---

[Nigel Huddleston (Mid Worcestershire) (Con)]

Average wages in my constituency are below the national average, with many people earning the living wage. Tax rates really matter to them, so is that not precisely why we Conservatives voted for a tax cut for 32 million people, by contrast with the Opposition? Will we continue to be truly the party for working people?

[Mel Stride]

We are truly the party for working people, as my hon. Friend states, unlike the Labour party. We are the party that raised the personal allowance to £12,500 one year ahead of our manifesto commitment to do so, taking well over 4 million of the lowest paid out of tax altogether. We are also the party of the national living wage, which will go up by 4.9% this April and be of great benefit to the very lowest paid in our country.

[Neil Gray (Airdrie and Shotts) (SNP)]

We knew that shifting the BBC licence fee concession to the BBC has always been folly, but we now know from the BBC’s consultation that the £745 million cost is likely to mean either a reduction in output, pensioners losing the concession, or both. Will the UK Government finally reverse this ridiculous decision and bring the concession back to the Government?