Oral Answers to Questions

Mel Stride Excerpts

Tuesday 9th April 2019 Commons Chamber

[Stephen McPartland (Stevenage) (Con)]

6. What progress he has made on reducing the total amount of tax that people pay.

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

This Government have made very significant progress in reducing the burden of taxation on the low paid, including by recently increasing the personal allowance to £12,500—thus taking 1.7 million of the lowest paid out of tax all together since 2017.[Official Report, 11 April 2019, Vol. 658, c. 5MC.]

[Stephen McPartland]

What the Treasury gives with one hand, local authorities are taking away with the other, with relentless rises in council tax, and parking charges and fees affecting households up and down the country. What are we actually doing to help families, instead of paying them lip service?

[Mel Stride]

My hon. Friend makes the important point that there are many costs and taxes that bear down on the lowest paid. That is why, in addition to increasing the personal allowance, the Conservatives have introduced the national living wage, which has gone up well above the rate of inflation this April. We have frozen fuel duty for nine years in a row, which has saved the average car driver £1,000 cumulatively. We should also not forget that 28% of all income tax is paid by just the highest 1% of earners.

[Thangam Debbonaire (Bristol West) (Lab)]

The Minister can say anything he likes, obviously. In fact, he knows that the tax system is skewed in favour of richer people. The poorest 10% pay 42% of their income in taxes, whereas the richest pay 34%. Does he have any plans to achieve greater parity, particularly in VAT?

[Mel Stride]

I am surprised that the hon. Lady should mention the level of tax paid by the most wealthy, because under this Government, as I have just stated, the highest-earning 1% pay a full 28% of all income tax. Under the last Labour Government, that figure was substantially lower at around 24%.

[Charlie Elphicke (Dover) (Con)]

Does the Minister agree that taxes could be lower if spending was better controlled, yet this House provides no scrutiny of spending whatsoever? The supply and appropriation Bill that he presented just over a month ago was not debated or voted on. Is it not time that, like other Parliaments, we had a Budget committee and a parliamentary Budget office to scrutinise spending and hold Government properly to account?

[Mel Stride]

My right hon. Friend the Chief Secretary has just appeared before the Procedure Committee to address just the issue that my hon. Friend raises.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Given that our social care system is breaking, causing indignity, poverty and hardship to millions of people in their old age, might it be time to consider increasing fair taxes, so that we can live in a civilised society that looks after its most vulnerable people?

[Mel Stride]

As the hon. Gentleman may know, £400 million went into social care just at the last Budget. It is the mission of this Government to get taxes as low as possible so that we have a strong economy. Our record is good: we have about the highest level of employment in this country’s history, more women are in work than at any time in our history, and we have halved unemployment since the mid-1970s. All of that is about creating the wealth and the money to make sure that we can afford the public services that the public expect.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

7. What recent assessment he has made of the effect of his fiscal policy on living standards.

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[Greg Hands (Chelsea and Fulham) (Con)]

9. Whether he plans to reform stamp duty land tax.

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

The Government have made substantial progress in reforming the stamp duty regime. At autumn statement 2014, SDLT was cut for 98% of those people due to pay it.

[Greg Hands]

Since we last spoke about this, the spring statement showed a further decline in receipts of an additional £2.7 billion over the scorecard. That was not due to changes in Wales and the welcome first-time buyer reforms, which were already in the October Budget numbers. What are the Government going to do to reform the system, protect revenue, grow social mobility, allow the elderly to downsize and get Britain moving again?

[Mel Stride]

The year-on-year changes to the level of receipts from SDLT have reduced recently, but that is due largely to the fact that we have put a great deal of relief into first-time buyers’ relief, which is already helping 240,000 first-time buyers get on to the housing ladder.

[Alison McGovern (Wirral South) (Lab)]

However the Minister dresses it up on stamp duty land tax and other issues where the wealthy have seen their taxes cut, the impact on our economy is clear. Will he explain why stamp duty land tax reform is a priority rather than addressing the fact that in our country today one third of all families with a child under five are in poverty?

[Mel Stride]

It is most certainly not our priority to reduce SDLT for the very wealthy. In fact, the current levels—12% plus 3% if it is an additional dwelling—are high. I can also inform the hon. Lady that the amount we raised through stamp duty land tax in 2017-18 was twice the amount raised back in 2010-11.

[Christian Matheson (City of Chester) (Lab)]

10. What representations he has received on the introduction of the 2019 loan charge.

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

The loan charge was announced at Budget 2016 and was subject to public consultation. We have received representations, including from campaigners and the wider public. Disguised remuneration schemes pay loans in place of ordinary remuneration, with the sole purpose of avoiding income tax and national insurance.

[Christian Matheson]

I fully support measures to close loopholes for disguised remuneration, but not when they affect my constituents retrospectively. If the loans were illegal at the time my constituents took them out, why is it now necessary to introduce the loan charge?

[Mel Stride]

It is important that the House fully understands how disguised remuneration works. If, instead of paying an employee their earnings in the normal way, an employer pays them by way of a loan via an offshore trust in a low or no-tax jurisdiction—with no intention of ever repaying the loan and simply to avoid national insurance or income tax—that is wrong. As for the matter of retrospection, that model has never, ever complied with our tax code. The loans to which I refer are persisting today, not retrospectively. That is why it is right—and only fair on those taxpayers who pay the correct amounts at the right time, and on our vital public services, which rely on that money—that we collect it.

[Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)]

11. What further steps his Department is taking to regulate lending to small businesses.

--- Later in debate ---

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

T9. May I appeal to Her Majesty’s Revenue and Customs to show some humanity to loan charge victims? They have been coming to me in tears, and we know that, nationally, some have committed suicide. Children are suffering because of tax arrangements made years ago. Will the Government please pause these punitive retrospective charges, and go after the providers with the same vigour with which they are going after the little people?

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

It is indeed incumbent on HMRC to take its duty of care towards customers—particularly vulnerable customers —very seriously, and I am confident that it does just that. There is a dedicated helpline for those who have been affected by the loan charge, and a vulnerable customers team provides one-to-one support. We recently announced that we would extend the needs enhanced support service to those who are subject to open investigations of their tax returns.

The hon. Lady mentioned promoters. My right hon. Friend the Chancellor has already mentioned that more than 100 investigations of companies that promote tax avoidance are currently taking place. Other litigations in respect of offences relating to the disclosure of tax avoidance schemes have resulted in wins for HMRC. In the Hyrax case, which was concluded recently, it was found that the promoter was not behaving appropriately, and about £40 million worth of tax is likely to be recouped as a consequence.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Will we continue to invest in the northern powerhouse, and, in particular, will we fully fund the Transport for the North plan for a TransPennine rail upgrade?

[Toby Perkins (Chesterfield) (Lab)]

T10.     I welcome what the Chancellor said to my hon. Friend the Member for Wakefield (Mary Creagh) a few minutes ago about investigations into the promoters of some of the disguised remuneration schemes, but that will not do many of the victims much good. A business in Chesterfield is facing bankruptcy because of the charge. How might his review actually help the people who have wrongly taken advantage of this advice?

[Mel Stride]

It is largely companies that fall due to the loan charge, rather than individuals—of the 6,000 cases currently being settled, 85% by value relate to companies. HMRC has always been clear that appropriate payment arrangements will be in place to ensure that those outstanding amounts of tax, which after all have been avoided, aggressively and in a contrived way, can be settled sensibly.

[Greg Hands (Chelsea and Fulham) (Con)]

What priority will the Chief Secretary to the Treasury give to reducing the tax burden in the coming spending review?