Duties of Customs

Mel Stride Excerpts

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

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

I beg to move,

That—

(a) provision may be made imposing and regulating a duty of customs chargeable by reference to the importation of goods into the United Kingdom,

(b) provision may be made conferring power to impose and regulate a duty of customs chargeable by reference to the export of goods from the United Kingdom,

(c) other provision may be made in relation to any duty of customs in connection with the withdrawal of the United Kingdom from the European Union, and

(d) provision may be made dealing with subordinate matters incidental to any provision within any of paragraphs (a) to (c).

Since the British people took the decision to leave the European Union in June last year, the Government have taken a number of significant steps to put that decision into action, including triggering article 50, taking forward the European Union (Withdrawal) Bill and, of course, undertaking the extensive consultation and planning that inform our negotiation objectives. The motions before us today represent another essential step in that process. We are here to debate legislation that will allow a new customs regime to be in place by the time the UK leaves the EU and its customs union and, in doing so, allow the UK to respond to the outcome of the negotiations. I do not need to tell the House how important that is.

The Taxation (Cross-border Trade) Bill will pave the way for new domestic legislation that will enable the UK to establish a stand-alone customs regime. It will allow the UK to charge customs duty on goods, including those imported from the EU. It will allow the Government to set out how and in what form customs declarations should be made. It will also give the UK the freedom to vary rates of import duty as necessary, in particular in the case of trade remedies investigations and for developing countries.

[Mike Gapes (Ilford South) (Lab/Co-op)]

The Minister talks about the decisions that the Government have already made. Before they decided to trigger article 50 and begin the process, did they give any consideration to the complications that would be caused in the relationship between Northern Ireland and the Republic of Ireland, which were explained to the Foreign Affairs Committee when we were in Dublin last week?

[Mel Stride]

In exercising article 50, the Government’s consideration was the decision taken by the British people in June last year to leave the European Union. On the hon. Gentleman’s specific point about the Northern Ireland-Ireland border, we are of the same mind as the European Union and the Irish Republic that there should be no return to the hard borders of the past. We are committed to as frictionless a solution as possible for the border between Northern Ireland and the Irish Republic.

[Tom Brake (Carshalton and Wallington) (LD)]

The Minister will be aware that the Irish Prime Minister has called on the UK Government to give a written guarantee that there will be no controls on the border. Is the Minister able to give that guarantee?

[Mel Stride]

We have made it clear on numerous occasions that we have no intention of reverting to the hard borders of the past, and that we will ensure that we fully take into account the unique political and cultural circumstances of Northern Ireland and the Irish Republic.

In addition, the Bill will modify elements of our VAT and excise legislation to ensure that it functions effectively upon our EU exit. In doing so, the Bill will give the UK the power to implement new arrangements that will ensure that trade is as frictionless as possible.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

Has the Minister heard the judgment of the UK Chamber of Shipping, which talks of an “absolute catastrophe” unless issues relating to transport through the ports are resolved? Are the Government taking that seriously?

[Mel Stride]

The hon. Lady raises an extremely important point, particularly in relation to roll-on/roll-off ports. I have been to Dover to meet the port’s chief executive and other staff, and Her Majesty’s Revenue and Customs is closely engaged through various roundtable exercises with all the UK’s ports. We recognise the paramount importance of ensuring that we have fluid trade flows through those ports. The hon. Lady will know that the White Paper set out clearly the sorts of approaches that we will be taking, if necessary, to ensure that those flows are rapid and effective, and that trade is kept moving.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

Following our time together in Committee considering the Bill that became the Finance (No.2) Act 2017, the Minister will know my concern that small businesses in Britain will be saddled with the 13th VAT directive. He has set out that the Government’s intention is that a new directive will come into place before we leave the European Union, so will he clarify whether he expects British businesses to have to deal with all the vagaries of the 13th VAT directive?

[Mel Stride]

As the hon. Lady knows, at the point at which we leave the European Union, we will gain further control over VAT, although that depends on the precise nature of the deal that is negotiated. It might be that we move from acquisition VAT to import VAT depending on where that negotiation lands, which remains to be seen. The general principle is that the Government are entirely committed to ensuring that burdens on businesses are kept to an absolute minimum and that trade flows are maintained.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The Minister will be aware that there were many responses by manufacturing organisations to the White Paper on the Trade Bill. The British Ceramic Confederation, which is based in my constituency, is genuinely concerned about the market and trade remedies that will exist post-exit, particularly for dumped goods such as tiles and tableware, which could undermine the indigenous manufacturing base. Will he clarify what those remedies might look like once we leave the EU? The time between the closure of the consultation on the White Paper and the publication of the Trade Bill was very short, so we cannot really be sure whether those representations were considered.

[Mel Stride]

The bulk of the measures to which the hon. Gentleman refers will be in the Taxation (Cross-border Trade) Bill, including trade remedy measures on dumping, excessive subsidy and safeguarding. He will know that we take those issues extremely seriously. In the event that there is evidence of dumping or the other things to which I have referred, there will be a trade remedies authority, the details of which have already been disclosed to the House in the Trade Bill. That body and the Secretary of State for International Trade will be able to work together to ensure that, when there are problems due to activities such as dumping, we will be able to take appropriate action in the normal manner.

[John Howell (Henley) (Con)]

Will the Minister comment on the extent to which the Bill will allow the VAT and customs system to continue, whatever the outcome of the negotiations? Has enough flexibility been built in to the measure regardless of the outcome?

[Mel Stride]

My hon. Friend raises an important point that goes to the heart of the Bill. This is a framework Bill, so it will allow us to make sure that we can deliver wherever the negotiations land. It does not presuppose any particular outcome from the negotiations; its purpose is to enable the outcome of the negotiations to be put into effect.

[Anna Soubry (Broxtowe) (Con)]

I have made it very clear to people in Broxtowe that I believe in our continuing membership of the customs union and the single market. Can the Minister help me with this? Will the measure be able to cope with all eventualities, including our staying de facto as a member of the customs union through a period of transition? Could we—if everything goes the way I would like—even stay a member of the customs union under this Bill, if that were the will of the Government and the House?

[Mel Stride]

The Bill deals with our leaving the European Union, which means, as a simple matter of law, that we will be leaving the customs union. However, it does indeed allow for a transition period in which there could be a very close customs association with the European Union.

[Mr Chris Leslie (Nottingham East) (Lab/Co-op)]

How?

[Mel Stride]

The Bill will be presented this evening. When the hon. Gentleman reads it tomorrow, he will be more enlightened as to how it can facilitate a period of transition.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

The Minister referred to the Bill’s ability to deliver in all possible circumstances. Is he aware of the report by the Home Affairs Committee and of discussions with HMRC about concerns over its capacity to deal with various customs arrangements? The report says that the Home Office is providing only an extra 300 staff by 2019, yet HMRC says that it needs 5,000 additional staff to cope with a changed customs regime. What assessment has he made of how many new staff are required and what they will cost?

[Mel Stride]

We will be guided by HMRC on the number of staff required, and we are working closely with it on this issue. As the hon. Gentleman will know, Jon Thompson, the head of HMRC, has suggested that between 3,000 and 5,000 staff will be needed in a day one contingency scenario, if that is where we end up, and he and HMRC are in discussions with us about both the timing of the pressing of the buttons on these issues and the costs involved. The hon. Gentleman can rest assured that HMRC will be provided with whatever resources it requires to ensure that we are ready on day one.

[Mr Leslie]

Will the Minister assure us that the Bill, which, of course we do not have but which he is saying we will be able to see—although not until we have debated this paving resolution—will contain arrangements for sanitary and phytosanitary regulatory checks at Dover and the channel tunnel entrance and exit? They are not there at present and if we were going to institute customs checks, we would similarly have to institute those regulatory checks. Has Her Majesty’s Revenue and Customs allowed for that in the budget as well?

[Mel Stride]

The hon. Gentleman makes it sound as though the fact that we do not have the Bill available right now is in some way inappropriate or not right, but he will know that this Bill is a finance Bill—a taxation Bill—and it is coming in under Ways and Means. I will introduce the Bill at the end of this debate, having the opportunity to walk the Floor accordingly and to be admired by many Members on both sides of the House when I do so. He will also be aware that HMRC is involved in our ongoing negotiations on the issues he has raised, and these things will come out of those discussions in the normal manner.

[James Duddridge (Rochford and Southend East) (Con)]

Does the Minister agree that there is some faux misunderstanding of the situation going on here? There is a body of evidence of what life will be like outside the EU: our trade with the rest of the world. This is not a new thing we are doing; it is something we are replicating within the EU that exists in our trade with the rest of the world, which dwarfs what we do within the EU.

[Mel Stride]

My hon. Friend raises an important point: our nation is quite capable of ensuring that wherever the negotiation lands, we will be able to have the resources, talents and wherewithal to go out and make a success of Brexit, getting out and engaging in our future trading arrangements. The important thing is that this Bill does not presuppose any particular outcome, but facilitates whatever outcome we finally arrive at.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Does the Minister agree that it is wrong to say that phytosanitary checks do not happen—or could not happen—at the moment? We experienced such checks clearly in 2001, at the time of the bovine spongiform encephalopathy outbreak. These things are very real and they happen from time to time. It is right that member states should be able to protect public health and animal health, and they are perfectly capable of doing so within the European Union.

[Mel Stride]

My hon. Friend has put the point very clearly and effectively, and nothing in this Bill acts counter to our ability to act in the way he has suggested.

[Damian Collins (Folkestone and Hythe) (Con)]

As the Minister will know, more than 80% of the UK’s freight movement goes through the channel tunnel and the port of Dover. Anything that slows, let alone delays, that processing will cause massive backlogs, and the physical infrastructure is not yet in place to do this. Alongside the Bill he is presenting this evening, does he believe that we need to make sure the resources are there so that whatever is necessary is in place on day one to make sure the physical infrastructure can support cross-channel trade?

[Mel Stride]

My hon. Friend raises a crucial point for ro-ro—roll on, roll off—ports, and these are just the kinds of issue that I discussed with the personnel and the chief executive at Dover when I visited. I have regular discussions with HMRC on these matters, and it in turn has regular roundtable events and a particularly close association with the port of Dover. He is absolutely right to say that we must ensure that trade is fluid and moves quickly across that border. He will have noted the suggestions set out in the White Paper of the pre-lodging of customs declarations away from the port—from Calais, in this instance—and making sure we have the right inventory software in the port so we can match up those goods coming in against those declarations to make sure we keep the flow going.

[Several hon. Members rose—]

[Mel Stride]

If I may, I will finish the point. As to my hon. Friend’s specific question about whether I believe we are ready, let me say that I believe we will be ready. I believe that the customs declaration system—the IT system that is coming into place—will be ready by January 2019, that we will start seeing businesses and traders migrating to that system around August next year, and that we will be in the position we want to be in come day one.

[Tom Brake]

In his meeting with the Port of Dover—I have also met its representatives—what did the chief executive say about how much the extra average processing time per vehicle would need to be for the port to stop functioning?

[Mel Stride]

As the right hon. Gentleman will know, the figure is very low. I think it is a matter of a couple of minutes—if the whole system stopped for more than a couple of minutes we would start to see major problems, which is why we are placing such an extremely high priority on making sure that our ro-ro ports continue to move as effectively as they should.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I thank the Minister for his full responses to the questions on ro-ro. I wish to ask similar questions about our biggest port by value: Heathrow airport. With respect to the IT systems and other processes, will Heathrow be ready for this process?

[Mel Stride]

Yes, absolutely. In the case of Dover, most of the traffic is intra-EU trade, whereas a high proportion of the traffic going into Heathrow is more international than simply the EU, so there is already greater engagement with third-country trading. We are therefore confident that Heathrow will be ready.

[Charlie Elphicke (Dover) (Ind)]

My right hon. Friend is giving a typically powerful and effective exposition on this incredibly complex and detailed matter. Does he agree that it is really important for the channel ports that parking facilities and resilience are built in off the M20 so that whatever eventuality arrives with respect to needing to do checks—whether for animal health or customs purposes—we have the right kind of infrastructure and facilities in place on day one?

[Mel Stride]

I thank my hon. Friend for his intervention and, before I address his specific question, I also thank him for his insights and the fairly powerful lobbying he has quite rightly done on behalf of the Port of Dover and his constituents. On his specific question about infrastructure being ready, we certainly recognise that we need to have infrastructure there and that the port itself would generally not be able to handle a large number of stoppages at any one time. As I say, I have been down to the port to inspect the facilities there, so I certainly appreciate that. That is an issue that is receiving ongoing consideration.

[Mrs Ellman]

Will the Minister tell us what financial provision is going to be made if Operation Stack has to be put into practice on the M20 every week, if not more regularly, when there is a blockage at the port?

[Mel Stride]

Of course, Operation Stack arose not because of a general deficiency in the customs arrangements but because of the specifics of what occurred on the French side of the channel. If that situation occurred again, which I suppose it could do irrespective of the arrangements we have for customs, the Government would clearly make sure that we had sufficient resource to deal with that eventuality. As I have said, though, in terms of the customs arrangements themselves, the resourcing of the facilities and the arrangements that we need to put into place, we are confident that they will be there to keep the traffic moving on day one.

[Damian Collins]

As the Minister will know, this is in the interests of my constituents, as well as those of my hon. Friend the Member for Dover (Charlie Elphicke). Will he confirm, if not from the Dispatch Box then in writing afterwards, that the £250 million allocated by the Government in the autumn statement two years ago for the provision of an Operation Stack relief lorry park on the M20 is still in place? The Department for Transport has unfortunately had to withdraw its plans for that lorry park because of a judicial review, but it intends to go back into the planning process with new plans. My constituents would benefit from knowing that the funds allocated to that project are still there.

--- Later in debate ---

[Mel Stride]

I have taken a rather large number of interventions, so in the interests of making progress I shall do as my hon. Friend suggests and write to him on that specific point.

Working in tandem with the Trade Bill, which was introduced to Parliament earlier this month, this legislation will help to provide the continuity and smooth transition that everybody wishes to see.

Let me be clear to the House that, by virtue of leaving the EU, the UK will also leave its customs union—that is a legal fact. It is also a critical part of allowing the UK to forge a new relationship with new partners around the world. Leaving the EU customs union will allow the UK to negotiate its own trade agreements. Those trade agreements will be based solely around the UK’s national interests and needs. We will also want to ensure that we have an ambitious new customs arrangement with the EU that will allow us to keep trade between the UK and EU member states as free and as frictionless as possible. As the Prime Minister has made clear, although we are leaving the EU, we are not leaving Europe. Having mutually beneficial customs, VAT and excise arrangements is clearly in the interests of businesses on both sides—a resounding message that we have been hearing from the hundreds of businesses that we have consulted on this matter since the referendum.

Crucially, the Government remain firmly committed to avoiding any physical infrastructure at the land border between Ireland and Northern Ireland. We welcome the recognition from our European partners that this is a point of absolute importance, by which I mean their commitment to the Good Friday agreement and their focus on flexible and creative solutions to avoid a hard border. We look forward to making progress on that issue.

To meet those core objectives—establishing an independent international trade policy, ensuring UK-EU trade that is as frictionless as possible and avoiding a hard border on the island of Ireland—the Government have set out two options for our future customs regime. One is a highly streamlined customs arrangement. That approach includes a number of measures to help minimise barriers to trade: negotiating continued access to some facilitations that our traders currently enjoy; introducing innovative new-technology-based solutions to reduce the risk of delays; and simplifying and streamlining the administrative demands on businesses. The other is a new customs partnership. It is an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world, removing a need for the formal customs border between the UK and the EU. Both of those options would take time to put in place. We are clear that “cliff-edge” changes are in no one’s interests. Businesses should have to adjust only once to a new customs relationship. It is for that reason that we are proposing an implementation period, during which businesses and Governments in both the UK and the European Union would have time to adapt. How long that period lasts and the form that it takes will be a matter for the negotiations, and it would of course cover issues beyond customs. However, as the Prime Minister has set out, the duration should be linked to the amount of time required to prepare for our future relationship with the EU. Current evidence points to the need for an implementation period of around two years.

Although the precise nature of the relationship that we will end up with on customs is a subject for the negotiations, there are sensible steps that we can take now to prepare for the future. This Bill is one of those steps, providing, as it does, a framework for a new customs regime. This will allow the Government to give effect to a range of outcomes from the negotiations, including an implementation period. Businesses have called for certainty and continuity, and this Bill will, as far as possible, allow us to replicate the effect of existing EU customs laws. It is only prudent that the Government should prepare for all eventualities, so this Bill will also allow the Government to operate effective customs, VAT and excise regimes even if a deal with the EU is not reached, although, as I have set out, a negotiated settlement is in the interest of all parties. That is exactly what the Government hope and expect to achieve.

Just as with the European Union (Withdrawal) Bill, this Bill is about laying the groundwork for our successful future outside the European Union. Trade is clearly going to be a key part of that. The UK has long been a great trading nation. Today, the UK’s trade with non-EU countries is equivalent to more than half of our exports by value, so getting our customs, VAT and excise arrangements right to support that—as well as continued trade with EU countries—is vital. We need to be able to pursue trade deals with partners across the world, while, at the same time, keeping our trade with the EU as frictionless as possible, and avoiding a hard border between Northern Ireland and Ireland. This Bill is a crucial stepping stone to the new arrangements that will allow us to meet those objectives.

--- Later in debate ---

[Peter Dowd]

My hon. Friend hits the nail on the head. That has been the line that this Government have taken. Power stops at Westminster and it does not go beyond. It is, quite frankly, a sham.

The Government cannot even bring themselves to include in this Ways and Means motion any reference whatever to parliamentary scrutiny; they do not like that. At every opportunity, even if the Government have contempt for this House, we will ensure that they will be forced to explain why they are so frightened of parliamentary scrutiny. At every corner, they will be required to explain in the cold light of day why they seem so reluctant to send Ministers to the Dispatch Box to explain the Government’s rationale.

Now, the Government, in their faux generosity, will claim that they have set aside eight days to debate the withdrawal Bill and other days to discuss Brexit. However, in the withdrawal Bill, they are institutionalising an accretion of powers to the Executive that is quite unheard of in the modern history of this country. [Interruption.] Ministers are huffing and puffing, but that is the reality: the accretion of power to Ministers is absolutely disgraceful.

We have to go back to the second world war to see powers of this magnitude and extent reserved to the Government, and those were dismantled as soon after the war as practical. At least our forebears had good reason in that situation, in so far as there was a national Government—a true coalition—united against one of the most odious regimes. The methods being used to sideline Parliament are quite shocking. History will treat this Government with the contempt they deserve for their feculent attempts to disenfranchise this House.

[Mel Stride]

I have patiently listened to what the hon. Gentleman has had to say. He has referred to the powers in the European Union (Withdrawal) Bill and to the operation, setting-up and independence or otherwise of the TRA. Neither of those items is actually included in this Bill, so what is it in this Bill that he wants to make a point about?

[Peter Dowd]

The right hon. Gentleman misses the point. This is part of the whole pattern and process by which this Government accrue and accrue powers. Government Members do not seem to grasp that concept, but the fact is that the Government continue to pull powers to themselves and do not devolve them to any of the other nations.

--- Later in debate ---

[Mel Stride]

We have had a full and good debate this evening on an extremely important matter. I do not think that anybody on either side of the House would suggest that these matters are not of the utmost importance. Perhaps I could run through some of the points raised.

My hon. Friend the Member for Yeovil (Mr Fysh) rightly raised with me, as he has done on many occasions, the importance of HMRC being appropriately resourced. He will know that to date we have provided more than £40 million to HMRC and that we will provide it with such funds and resources as it needs going forward. The hon. Member for Oxford East (Anneliese Dodds) bemoaned the fact that the Government would be able to change duties as a consequence of the Bill through secondary powers without parliamentary scrutiny. I urge her to wait until she sees the Bill and the opportunities in it for the Government to provide that scrutiny.

The hon. Member for Aberdeen North (Kirsty Blackman) said she was not clear what we wanted from these negotiations. We have in our White Paper made clear the direction of travel we foresee in these negotiations. She also raised a point about the customs declaration service computer system, suggesting that we had allowed just three months for testing—that being, I assume, the date between January 2019 and our exit from the European Union. In fact, the full system will be up and running in about August next year, and companies and traders will be migrating to it between August and January 2019.

The hon. Member for Edinburgh South (Ian Murray) says that he wants to stay in the customs union. That is a perfectly reasonable aspiration, but it overlooks the fact that we have voted to leave the European Union, and that we will therefore, of necessity, be leaving the customs union. We want to be able to go out and put together our own trade deals across the world.

My hon. Friend the Member for Gloucester (Richard Graham) said that the amendments closed off options. He is entirely right, but it is worse than that: they introduce options that are deeply unattractive. If we passed the amendments, we could find ourselves in a position whereby we unilaterally offered the same terms to European countries, but did not receive the same duty arrangements in return, which would be hugely to our disadvantage. Moreover, in the absence of a deal, if we offered those arrangements to European countries, we would find that, under the most favoured nation rules, we would have to offer the same duty arrangements to all the other countries with which we were trading, which would of course be an absurdity, and they would not necessarily have to reciprocate.

My right hon. Friend the Member for Broxtowe (Anna Soubry) talked of our jumping off a cliff into no deal. The Government have no intention of going anywhere near any cliffs or jumping off them. We are pushing for a good deal, we are negotiating hard, and I am confident that we will get a deal that is in our interests and also in those of the European Union.

The Bill is an enabling Bill that allows opportunities, whereas the amendment is disabling in the way I have described. I urge the House to reject both amendments, and I commend the motions to the House.

Question put, That the amendment be made.

Childcare Service

Mel Stride Excerpts

Wednesday 15th November 2017 Written Statements

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

This Government are committed to supporting parents with the cost of childcare. We have doubled free childcare to 30 hours a week and introduced Tax-Free Childcare. This support is fairer than the employer voucher scheme, as for the first time it is available to self-employed parents, and all qualifying working parents regardless of their employer. It is better targeted as the support is based on a per child basis, rather than a per parent basis.

The Government opened the childcare service in April of this year—one site where parents can apply for both 30 hours’ free childcare and Tax-Free Childcare through an easy-to-use, single digital application. This avoids the need for parents to provide the same information twice and means that many parents receive an eligibility result in real time.

More than 275,000 parents now have an open childcare account. Of these, over 216,000 parents received an eligibility code for 30 hours’ free childcare in September.

However, HMRC recognise that over the summer some parents did not receive the intended level of service while using the site. While the majority of parents used the childcare service without significant problems, some parents experienced technical issues including delayed decisions about their eligibility for one or both of the schemes. The Government acted quickly to address this, and HMRC and their delivery partners NS&I have now made significant improvements to the service.

Over the coming months, we will gradually open the childcare service to parents of older children, while continuing to make further improvements to the system. This means we can manage the volume of applications going through the service, so parents continue to receive a better experience and prompt eligibility responses when they apply—almost all parents receive a response within five working days, and most get their decision instantly. All eligible parents will be able to apply by the end of March 2018.

On 24 November, we will open the service to parents whose youngest child is under six or who has their 6th birthday on that day. Parents can apply online through the childcare service which can be accessed via the Childcare Choices website: https://www.childcare choices.gov.uk.

Applications for Tax-Free Childcare accounts have been lower than expected. We want to encourage more parents to take up the offer they are entitled to, and now the service has improved, we will undertake activity to raise awareness of Tax-Free Childcare among parents.

Tax-free Childcare is just one part of the support this Government offer for childcare costs. Where eligible, parents are able to access working tax credits which covers 70% of childcare costs or universal credit which increases this support to 85% of costs, 15 free hours of childcare for disadvantaged two-year-olds, 15 free hours for all three and four-year-olds, and an additional 15 hours to working parents of three and four-year-olds. Employer Supported Childcare will also remain open to new entrants until April 2018.

[HCWS247]

Tax Avoidance and Evasion

Mel Stride Excerpts

Tuesday 14th November 2017 Commons Chamber

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

I congratulate the right hon. Member for Barking (Dame Margaret Hodge) on securing this important debate. She has been a vigorous campaigner on these issues over many years, and has certainly been very active in the last week; I responded to an urgent question and there was an Adjournment debate in respect of the Isle of Man last week, and now we have this debate as well.

The right hon. Lady said that tax and tax avoidance was one of those matters that should not divide us. I agree, and it seems to me that in the various iterations of this debate that she and I have held across this Dispatch Box there is a great deal on which we can be united rather than divided; I am thinking not least of the shared view across this House—certainly on my side of the House—that aggressive tax avoidance and evasion are utterly wrong. They are wrong for the reasons that the right hon. Lady has given: those who pay their tax fairly should not be penalised by virtue of the fact that some do not pay their tax fairly.

We also know, as the right hon. Lady pointed out, that tax is necessary to fund our vital public services. It is therefore entirely wrong that those who aggressively evade or avoid tax put pressure on our public services—on our NHS, our doctors and our nurses.

[Catherine West (Hornsey and Wood Green) (Lab)]

Under the last Government, the former Prime Minister David Cameron appointed an anti-corruption tsar. Who is the anti-corruption tsar under the current Government?

[Mel Stride]

I will get back to the hon. Lady on that.

We know that tax is important for our public services, and we know, as the right hon. Member for Barking rightly stressed, that it is important that the Government act, and be seen to act, when we come across aggressive tax avoidance and evasion. As my hon. Friends on this side of the House have eloquently pointed out, we have a very strong track record in that respect. We have raised £160 billion in additional revenues as a consequence of clamping down on tax avoidance, evasion and non-compliance since 2010. We have also brought in £2.8 billion by tracking down those who have sought to inappropriately hide their finances in overseas tax jurisdictions. We have brought in £28.9 billion in additional compliance yield in the last 12 months alone, too.

The right hon. Lady is rightly critical of the performance of the last Labour Government; she raised that this afternoon and raised the same point in last week’s Adjournment debate. The tax gap is the difference between what we could potentially bring in by way of tax and what we actually bring in, and it currently stands at 6%, which is a historical low—a world-beating figure. If the average tax gap today was the same as under the last Labour Government, there would be £45 billion less in our Exchequer—£45 billion not there for those vital public services that the right hon. Lady is keen to discuss.

[Chris Stephens (Glasgow South West) (SNP)]

On the Government’s record, can the Minister confirm that HMRC informed the Public and Commercial Services Union that in 2017 the equivalent of 17,000 years of staff experience is leaving the department? How will that help the Government’s record going forward in dealing with tax evasion and avoidance?

[Mel Stride]

I am pleased that the hon. Gentleman has raised the issue of investment in HMRC, because we have a very good record in that respect. Some £1.8 billion of additional money has been invested in HMRC since 2010, of which £800 million will relate to the period after 2015, bringing in £7.2 billion by 2020-21. We will also be trebling the number of investigations of the wealthy to ensure they are paying their appropriate level of tax, as a direct consequence of all that additional investment.

[Grahame Morris (Easington) (Lab)]

Will the Minister please explain to the House why only 420 HMRC staff are engaged in chasing tax avoiders and evaders, yet 10 times that number of civil servants are engaged in addressing benefit fraud in the Department for Work and Pensions?

[Mel Stride]

I challenge those figures: a far larger number than the hon. Gentleman suggests are engaged in clamping down on tax evasion and avoidance. About 50% of the 2,100 largest corporations in this country are under investigation at any one time—not necessarily because they have done anything wrong, but because they have complex tax affairs. So we are investing in that.

[Chris Stephens]

Can the Minister confirm to the House that he answered a question to me yesterday by saying that 522 employees were in the high net worth unit on 31 March 2017, and that that compares with 4,045 full-time equivalents in DWP chasing social security fraud?

[Mel Stride]

This Government have an exemplary record on the tax take from the wealthiest in this country. The wealthiest 1% pay about 28% of all income tax. Under the last Labour Government that figure was below 24%, so I will not take any lectures from the Opposition parties on this.

[Caroline Flint (Don Valley) (Lab)]

The Minister is right to point out that HMRC does a very good job on the collection of tax in this country, but that does not mean it cannot do better. Does the Minister agree that the tax take is based on what we think should be paid in tax, and it does not deal with the Googles, Amazons, Starbucks and others who hide their tax away and are therefore not computed into the actual tax we should take and therefore the figures for a tax gap?

[Mel Stride]

I am pleased that the right hon. Lady has raised this issue, because the robustness of this tax gap figure is extremely high. The International Monetary Fund says it sets one of the highest standards in the world. The figure is audited and agreed by the National Audit Office and is made public in HMRC’s annual report and accounts.

[Oliver Dowden (Hertsmere) (Con)]

The Minister rightly talks about the need for the wealthiest to pay their fair share. Does he agree that one of the most obscene things under the last Labour Government was the fact that cleaners were having to pay more tax than the hedge-fund owners who employed them? It was a Conservative Government who closed that so-called Mayfair loophole.

[Mel Stride]

My hon. Friend is entirely right. It is this Government, for example, who raised the personal allowance to £11,500, taking 3 million to 4 million of the lowest paid out of tax altogether. It is this Government who brought in the national living wage, and it is this Government who will go on ensuring that those who have the broadest shoulders pay their fair share of tax.

[Tonia Antoniazzi (Gower) (Lab)]

Does the Minister agree that HMRC would serve the Government and the people of the United Kingdom better by challenging those who bend the rules rather than by fining my law-abiding constituent, Sheila, £1,600 for a £135 yearly tax bill, when all that she had failed to do was to press “enter” at the end of the form?

[Mel Stride]

The hon. Lady raises an important point.

There is an assumption on the Opposition Benches that nothing is being done about these various issues. The right hon. Member for Barking referred to an element of the “Panorama” programme on the Panama papers that described income that had been diverted overseas and then loaned back to individuals. That is known as disguised remuneration. She rightly asked what the Government were doing about such practices. Let me point her in the direction of the Finance Bill that has just gone through this House. On the matter of disguised remuneration, individuals will be given until 2019 to clear up those arrangements. Otherwise, they will pay a penalty. It is as simple as that.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

Will the Minister give way?

[Mel Stride]

I want to make just a little more progress, as I am conscious of the time and the shortness of the debate.

In fact, we have brought in 75 measures since 2010 to clamp down on these practices. A further 35 will come in from 2015, raising £18.5 billion by 2020-21. One of the problems is that we have been so active in bringing in so many measures that, unfortunately, not all of them have been noticed. In last week’s debate, the right hon. Member for Barking raised the issue of taking action against those who promote tax avoidance schemes. Once again, she needs only to look at the Finance Bill—all 777 pages of it; it is very technical, and it will probably put her to sleep at night—in which she will find measures to deal with precisely what she was urging us to take action on last week. We have already done it!

[James Duddridge]

I congratulate the Government on the specific changes they have made, but does the Minister agree that the biggest change has been the general anti-abuse rule? That catches a number of these schemes and allows Governments to look not only at tax avoidance, through tax planning, but at what he describes as aggressive avoidance, which therefore becomes evasion, which is illegal.

[Mel Stride]

My hon. Friend is absolutely right. The general anti-avoidance rule has had a significant impact. It was brought in under this Government and it has been very effective. The Opposition profess the importance of all these measures, some of which have already been brought into law while they are calling for them. There is a certain irony in the fact that, when it came to the Third Reading of the Finance Bill that brought these measures in, the Opposition voted against it.

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

The fact remains, though, that there is at least £30 billion of uncollected avoided or evaded tax; that figure could be as high as £120 billion, if we are to believe the Public and Commercial Services Union. Given that tax officers gain a significant tax return to the Treasury against their salaries, would it not be better to invest in tax officers rather than cutting their numbers, and to go after that multi-billion pound tax gap?

[Mel Stride]

Going after the tax gap is exactly what this Government are doing, and we have an exemplary record. We have the lowest tax gap in the entire world. It is the lowest in history—far lower than it was under the last Labour Government. The hon. Gentleman asked a specific question about tax officers. We need to move towards an HMRC that is ready and equipped for the 21st century. That does not mean a large number of scattered offices; it means hub offices with the necessary staff and technical skills to facilitate the transfer of knowledge and understanding in order to move forward.

[Stella Creasy]

rose—

[Mike Amesbury (Weaver Vale) (Lab)]

rose—

[Mel Stride]

I will now make some progress. I am aware that this is just a two-hour debate and that many Members wish to speak.

We have covered the various measures that we have taken, and we have covered the huge investment that we have made in HMRC. Perhaps I can now turn to the international aspects. We all agree that we need to look closely at what is happening in the international sphere. On that, this Government have a record of which we can be proud. Through the OECD, we have been in the vanguard of the base erosion and profit shifting project. We have worked closely with the Crown dependencies and overseas territories.

We have brought in a diverted profits tax, which will raise £1.3 billion by 2019, and common reporting standards to ensure that information is exchanged in relation to around 100 countries. We have introduced a directory of beneficial ownership that is accessible by HMRC, the authority that needs to have that information. All this has happened in the last couple of years, and it is a game changer. Many of the issues arising from the Paradise papers go back very many years, but these measures are in place right now.

I also want to make an important point on transparency. In last week’s debate, I asked the right hon. Member for Barking, in relation to the 13 million files held by the International Consortium of Investigative Journalists, whether she would join me in calling on the ICIJ to release that information to HMRC so that we could go after anyone who, as a consequence of that data release, was thought to be abusing our tax system. Will she support us in that endeavour?

[Dame Margaret Hodge]

The Minister did raise that point last week, and the House should know that it is not in the gift of either The Guardian or “Panorama” to release those papers. They are not able to do that.

[Mel Stride]

What I actually asked was whether the right hon. Lady would join me in calling for the ICIJ to release that information. [Interruption.] That is a slightly different question, and I am happy to give way again if she will tell us, yes or no, whether she will do that. [Interruption.]

[Mr Speaker]

Order. Stop the clock. There is far too much noise in this Chamber. I say gently to the Parliamentary Private Secretary, the hon. Member for Croydon South (Chris Philp): don’t do it! You may think you are being clever, but it does not enhance your reputation as a parliamentarian in the end. Please don’t do it. It is juvenile, the public despise it and I have no patience for it.

[Dame Margaret Hodge]

I will certainly join the Minister in seeking any documentation that HMRC requires to pursue those who are guilty of avoidance or evasion. I would say to him, however, that when I have given papers to HMRC in the past—whether relating to Google or from other whistleblowers—they have just disappeared and no action ever appears to have been taken.

[Mel Stride]

I am grateful to the right hon. Lady. I will take that as a yes—we can work together to try to ensure that that information is provided to HMRC. I see no reason why that should not happen.

[Robert Neill (Bromley and Chislehurst) (Con)]

I very much agree with what my right hon. Friend has said. Before he leaves the international dimension, will he confirm that in recent years—well after many of these papers came to light—the three Crown dependencies and the overseas territory of Gibraltar have fully co-operated with the UK in relation to all tax transparency and OECD measures, and that they have the same tax transparency ratings as the United States, Germany, ourselves and other western democracies?

[Mel Stride]

I am grateful to my hon. Friend for that intervention. In relation to corruption inquiries, for example, we have automatic access to our Crown dependencies and overseas territories as a result of that co-operation.

I recognise how important this issue is to the public, and it is of critical importance to the Government as well. The UK’s tax authority now has more information and more power than ever before to clamp down on avoidance and evasion, because of the actions of this Government. The Government of which the right hon. Lady was a member failed to take those actions. I conclude with the words of the right hon. Lady in last week’s Adjournment debate, when she said

“I have never defended the record of the Labour Government in this area”.—[Official Report, 7 November 2017; Vol. 630, c. 1442.]

That speaks directly to the heart of this issue: an apparent legacy of tax abuses going back many years, framed by the inaction of the Labour party. It speaks to the core of Labour’s approach to the world that the opportunity always lies in criticism and derision, rather than in action and justice. This Government are acting and will continue to leave no stone unturned in the pursuit of those who seek to duck their responsibilities at the expense of us all. Whenever and wherever they are found, this Government will continue to bring the avoiders, the evaders and the non-compliant to book.

[Several hon. Members rose—]

Tax Avoidance and Evasion (Isle of Man)

Mel Stride Excerpts

Tuesday 7th November 2017 Commons Chamber

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

May I begin by congratulating the right hon. Member for Barking (Dame Margaret Hodge) on securing this important debate and on raising these important issues in her speech? She has, of course, been a determined campaigner over many years on these matters, especially as the Chair of the Public Accounts Committee. I am grateful for the opportunity to speak in this debate and to be given the chance to discuss the Government’s approach to tackling tax avoidance and evasion. I will respond to as many of the points that the right hon. Lady raised as I can.

The Government take all allegations of tax avoidance and evasion extremely seriously. If any new allegations come to light, we will treat them with similar seriousness. We have a strong track record of tackling tax avoidance and evasion. By implementing 75 measures since 2010, we have secured £160 billion in additional tax revenues. But more on that later; I will now respond to the points raised by the right hon. Lady.

The right hon. Lady has raised the allegations regarding aircraft importation into the Isle of Man, which were also covered in the BBC’s “Panorama” programme in the last two days. I should first note that the Isle of Man, like all Crown dependencies, is a separate jurisdiction with its own democratically elected Government, under which it is responsible for fiscal matters. However, under the Isle of Man Act 1979, it has agreed to follow VAT rules very similar to the United Kingdom’s.

While the Isle of Man must apply VAT rules similar to the UK’s, the administration of the tax, including tackling avoidance and evasion, is the responsibility of its tax authorities. However, when required, the UK Government are always happy to provide advice and technical assistance to help the Isle of Man counter evasion and avoidance. I welcome the announcement from the Isle of Man Government that they are conducting a review of their procedures on VAT and the importation of aircraft. I also welcome their invitation for Her Majesty’s Treasury to carry out an assessment of these procedures, and I can inform the House that Treasury officials have been in the Isle of Man today, engaged in that important process. That is a responsible and appropriate approach to addressing these allegations and correcting potential non-compliance.

The UK Government will continue to work with the Isle of Man to help it address these issues and take steps to put an end to any evasion or avoidance. Where there are any problems of tax avoidance and evasion, these should be dealt with by us fixing these issues together and not by ending our co-operation with the Isle of Man.

Let me turn now to some of the specific points the right hon. Lady raised. She referred to the plethora of leaks there have been over the years, and she is quite right. She congratulated The Guardian, among others, on its part in ensuring the dissemination of the information that has come to light. However, there is an important point here, which is that HMRC is determined to follow up any information, from whichever quarter, to ensure we clamp down on tax evasion and non-compliance. Yet despite repeated requests over the last 10 days, The Guardian and the International Consortium of Investigative Journalists have refused to hand over that information. If the right hon. Lady is able to assist in that, as well as congratulating the individuals concerned, that would be of great assistance to the Government and to her endeavours.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

Last night, the chairman of the Cayman Islands stock exchange said that journalists should be imprisoned. Does the Minister not agree that that was outrageous?

[Mel Stride]

I was not actually aware of those comments, but I can say that, from the Government’s perspective, we are certainly not in the business of advocating the locking-up of any journalists.

The second point the right hon. Lady raised was that we were “tinkering at the edges”—I think that was the expression she used—in clamping down on avoidance. Nothing could be further from the facts of the matter. Since 2010, we have brought in £160 billion, as I said, and £2.8 billion of that was from clamping down on those who have sought to hide wealth in overseas jurisdictions. We have one of the lowest tax gaps in the world, and the lowest in our history. She will probably know that if we were to have today the level of tax gap that we saw under the previous Labour Government, we would be about £45 billion worse off as a consequence. That is important money that we need in our Exchequer for the purposes of employing doctors, nurses, teachers and members of the police force, and of keeping our hospitals and all those vital public services that are the hallmark of a civilised society.

The right hon. Lady referred to the Duchy of Lancaster and transparency. The Duchy does of course publish its accounts—it lays them before this House, in fact. There has been no suggestion that I am aware of that any of the Duchy’s activities or investments have been improper or illegal. Of course, the Queen voluntarily pays tax on all the earnings from the Duchy of Lancaster.

The right hon. Lady referred specifically to Bright-House. She is correct in her assertions that it has been fined by the FCA for the kinds of activities that she mentioned. However, those investments were, I understand, primarily made in 2005 under the previous Labour Government rather than under this Government. I believe that the amount invested as at today’s date is something in the order of £3,000 in total.

The right hon. Lady asked why HMRC allowed the Isle of Man situation to happen in respect of VAT and aircraft. Let us see what the investigation yields rather than perhaps jumping to a series of conclusions currently based on—from what I have seen, at least—a couple of television programmes. However, there may well be something there, and we will get to the bottom of it in due course.

The right hon. Lady asked about the sharing agreement in place between the Isle of Man and the United Kingdom in respect of VAT. She is right that there are at the moment ongoing discussions on a new formula. She referred to an automatic uplift in the Isle of Man’s share under that formula—it is a 4.5% uplift—and suggested that it may be overly generous. It will not be in the long run; once all the surveys and research have been carried out, in the event that it is found to be more generous than it should have been, there will be a clawback mechanism within the arrangement. In terms of transparency, once the formula is concluded it will be available within the public domain. On her assertion that this is a one-way subsidy from the United Kingdom to the Isle of Man with regard to VAT, I should say that there have been years when quite the reverse has been the case and there has in fact been a transfer from the Isle of Man to the United Kingdom from which we, and indeed her constituents, have benefited.

The right hon. Lady made a clarion call for us to tackle avoidance schemes and those who enable them. I confess that the Finance Bill that went through this House very recently was not the most entertaining of Bills; it ran to about 775 pages and was highly technical. However, I point her to the provisions within it for ensuring that those who enable tax avoidance will now be subject to sanction and penalty.

I hope that I have covered the majority, at least, of the points that the right hon. Lady raised. I again recognise the sterling work on this issue that she has done over many years, and pay tribute to her for it. I conclude, Mr Speaker, by wishing you a very—

[Wes Streeting (Ilford North) (Lab)]

rose—

[Mel Stride]

I give way to the hon. Gentleman—how could I refuse?

[Wes Streeting]

I am grateful to the right hon. Gentleman; I will now be kinder to him if he is in front of the Treasury Committee.

My right hon. Friend the Member for Barking (Dame Margaret Hodge) raised the long-standing issue of overseas territories and Crown dependencies being required to introduce a public register of beneficial ownership. Will the Minister address that point? Is there not an opportunity in the forthcoming Budget, as Oxfam has called for, to introduce public, country-by-country reporting for all multinational companies operating in the UK? Those are two practical measures on transparency that this Government could take leadership on.

[Mel Stride]

The hon. Gentleman raises two important points, and I will certainly take to the bank his offer to go easy on me when I appear before the Select Committee. His first point was about whether we should create registers of overseas interests in the public domain. What matters is that we give HMRC the tools to do the job. I file a tax return every year, and I have a last will and testament. They are not in the public domain, but HMRC is entitled to look at my tax return and ask me questions about it. What matters is the information available to the relevant tax authorities, and that is why the common reporting standard that we have introduced —in fact, a year earlier than the OECD suggested was required—is so important. Information is transferred between more than 100 countries to make sure that HMRC has the tools to do the job.

Country-by-country reporting is another important issue. Our view is that it is best met on a multilateral basis, so that all countries get involved at the same time. We continue to work with our European partners and others through the OECD in that endeavour.

Finally, for a second time, which is even more delightful than the first, may I wish you, Mr Speaker, and everybody in the House—all the staff, and all who make this extraordinary and wonderful institution work so well—a very happy and productive recess?

Question put and agreed to.

Finance (No. 2) Bill 2017

Mel Stride Excerpts

Tuesday 7th November 2017 Written Statements

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

The Finance (No.2) Bill will be published on Friday 1 December.

Explanatory notes on the Bill will be available in the Vote Office and the Printed Paper Office, and placed in the Libraries of both Houses, on that day.

Copies of the explanatory notes will also be available at: www.gov.uk.

[HCWS233]

Paradise Papers

Mel Stride Excerpts

Monday 6th November 2017 Commons Chamber

[John McDonnell (Hayes and Harlington) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the Government’s actions to curb aggressive tax avoidance schemes in the light of the Paradise papers revelations.

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

The Government believe in a fair tax system where everyone plays by the rules. It is this Government who have taken decisive action to tackle tax avoidance and evasion and to improve the standards of international tax transparency. The UK has secured an additional £160 billion in compliance revenue since 2010—far more than was achieved under the last Labour Government. Under this Government, the UK now has one of the lowest tax gaps in the world. We have provided Her Majesty’s Revenue and Customs with tough new powers. In 2015, HMRC received £800 million in additional funding to go on tackling tax avoidance and evasion.

Let me turn to recent events. Yesterday evening, several international news organisations, led by the International Consortium of Investigative Journalists, reported on an information leak regarding the financial affairs of a large number of individuals. I should remind the House at this stage that Ministers do not intervene in the tax affairs of individuals or businesses, as to do so would be a breach of taxpayer confidentiality. However, I can inform the House that, on 25 October, HMRC requested that the ICIJ, The Guardian and the BBC share the leaked data so that this information can be compared with the vast amounts of data that HMRC already holds due to the initiatives this Government have undertaken. They have yet to respond to this request.

Nevertheless, since these data were retrieved in 2016, the Government have implemented international agreements that have changed the game for those seeking to avoid and evade their taxes. HMRC is already benefiting from the automatic exchange of financial account information through the common reporting standard—an initiative in which the UK has led the world, with over 100 jurisdictions signed up. The Crown dependencies and overseas territories are among those signed up to this initiative, and have been exchanging information with HMRC for over a year. The Crown dependencies and overseas territories have also committed to holding central registers of beneficial ownership information, which the UK authorities are able to access.

It is important to note, and I quote the ICIJ’s disclaimer here:

“There are legitimate uses for offshore companies and trusts”

and the ICIJ does

“not intend to suggest or imply that any people, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly.”

So, notwithstanding the generalised aspersions made by the Opposition, the use of offshore accounts or trusts does not automatically mean dishonesty. But this House should be assured that, under this Government, HMRC will continue to bear down with vigour on any tax avoidance or evasion activity, wherever it may be found.

[John McDonnell]

Unless there is a critically overriding reason, I believe the House will consider it unacceptable that the Chancellor is not here to address the biggest tax scandal of this generation.

The Minister’s response today was the same bluster. He cites a figure for additional tax revenues that cannot be verified from any publically available data. He refers to a tax gap that does not include the likes of Apple, Facebook, Google and others. He boasts of this Government’s efforts to address avoidance, yet last week they voted to protect non-doms in the Finance Bill. Last month, the European Parliament accused this Government of obstructing the fight against tax avoidance evasion and even money laundering. Does he not appreciate the outrage in our community at this tax dodging? Every pound in tax avoided is a pound taken away from our NHS, our children’s education, and care for the elderly and the disabled.

Given that the chairman of the Conservative party and Chancellor of the Duchy of Lancaster is responsible for administering

“the estates and rents of the Duchy of Lancaster”,

has the Chancellor or any Minister discussed these revelations with the Chancellor of the Duchy of Lancaster, the right hon. Member for Derbyshire Dales (Sir Patrick McLoughlin), and will the right hon. Gentleman be apologising to Her Majesty for the embarrassment this episode has caused her?

With regards to Lord Ashcroft, a major funder of the Conservative party who reportedly contributed half a million pounds to the Conservatives in the general election campaign, will the Minister tell the House what information he has had about the domicile status of Lord Ashcroft between 2010 and 2015, and whether Lord Ashcroft was paying taxes on his overseas wealth?

The Chancellor now has an immediate opportunity to tackle tax avoidance. Can he assure the House that in the forthcoming Budget he will adopt Labour’s proposals to remove exemptions from non-doms and secure full transparency of trusts? Will he now also agree to Labour’s proposals to establish an independent public inquiry into tax avoidance? I tell the Government this: if they refuse to act, the next Labour Government will.

[Mel Stride]

The right hon. Gentleman raises the veracity or otherwise of our figures. We have collected £160 billion through clamping down on avoidance, evasion and non-compliance. That is a figure that he will find broken down and indeed published in Her Majesty’s Treasury’s annual report and accounts.

The right hon. Gentleman refers to Lord Ashcroft. As I said in my opening remarks, I am clearly not going to start getting into the individual tax affairs of any particular individual, regardless of their political allegiance or whoever they may be.

The right hon. Gentleman raises non-dom status and non-doms, and the measures that he and his party put forward for the most recent Finance Bill. Can I remind him of two things? It is the Conservative party that has put an end to permanent non-dom status, and it was Labour that sought, by voting against that Bill on Third Reading, to stop that from happening.

[Mr Peter Bone (Wellingborough) (Con)]

There seems to be an extraordinary misunderstanding on the part of the shadow Chancellor about the difference between avoidance and evading. Evading is wholly illegal; avoidance is normal. People who put their money into an ISA are avoiding tax—that is completely legal. There is a moral issue. If you happen to be a political party that spends £1 million a year on rent in a tax-exempt company, that is what people are upset about. It is not avoidance; it is morally wrong avoidance. Is that not what your party does, sir?

[Mr Speaker]

Order. My party does not do anything. As people know, I do not have a party. I am just the leader of the good order and fair play party, or I try to be.

[Mel Stride]

I thank my hon. Friend for his question, which I take to be directed at me, Mr Speaker. It is of course for the Labour party to account for any situation in which its headquarters may or may not be owned by an overseas trust.

[Stewart Hosie (Dundee East) (SNP)]

It may well be that sheltering from our tax authorities sums of money greater than the GDP of many countries is not illegal, but does the Minister agree that that is precisely the problem? Does he also agree that the Paradise papers revelations, and the massive sums involved, now offer no hiding place for those who would deny a public register of beneficial ownership of funds and trusts, as well as businesses?

This tax avoidance is a driver of global inequality that runs to the very top of business, politics, entertainment and the establishment, in many countries, but these papers also shine a light on the hidden ownership of large corporations by foreign state institutions and individuals. To allow the public, customers and small investors to know who is really behind the most trusted of brands, will the Government now throw their weight behind not just local but global transparency on the beneficial ownership of businesses through offshore trusts, funds, and other opaque devices?

[Mel Stride]

The hon. Gentleman will know that this Government have been at the forefront of clamping down on international tax avoidance, evasion and non-compliance through the OECD’s base erosion and profit shifting project, which we have been in the vanguard of, and through the work on common reporting standards that we have been introducing among our Crown dependencies and overseas territories. He will find that we are no slouches when it comes to grappling with the items that he raises.

[Anna Soubry (Broxtowe) (Con)]

Can my right hon. Friend confirm that this country is now leading the world on tackling tax avoidance? How does the action of consecutive Conservative Chancellors compare with the non-action of consecutive Labour Chancellors?

[Mel Stride]

As my right hon. Friend knows, one of the measures of how on top or otherwise the country is of its tax affairs is the tax gap, which is at an historic low of just 6%. Under the last Labour Government in 2005, the tax gap was 8%. If it were at the same level today as it was under Labour, we would be £11.8 billion of tax short—enough to employ every policeman and woman in England and Wales.

[Dame Margaret Hodge (Barking) (Lab)]

The real problem with all the action that has been taken so far is that it has not got to the heart of the issue, which is that we need to have openness and transparency about who owns what company and where, and who owns what trust. There is a very simple action that the Government could take without any legislation, and that would immediately slice through a lot of the problems that we have seen in the Paradise papers, the Panama papers, the Falciani leaks and the Luxembourg leaks. Why will the Government not insist now that our overseas territories—our tax havens—have public registers of beneficial ownership?

[Mel Stride]

As the right hon. Lady knows, there are many good reasons why, for perfectly honest and decent purposes, individuals use trusts. She also knows that we have made a great deal of progress on the common reporting standard across 100 different countries, including those to which she alludes. We are also bringing forward the registers of beneficial ownership across those jurisdictions so that HMRC has the information that it requires.

[Nigel Mills (Amber Valley) (Con)]

Will the Minister use the latest leak as a spur to the publication of certain things for which we have been waiting for a while? The anti-corruption strategy was promised for last December, but it got lost when the then champion stood down at the election. We are still waiting to know whether we will have a public register of the ownership of properties here by overseas companies. Can we move forward with those things, to give people confidence that our regime is robust?

[Mel Stride]

My hon. Friend will know that we are examining several areas. He will also know that in June of this year—very recently—we brought in the money laundering regulations to make sure that banks, lawyers and accountants are properly focused, in real time, on ensuring that corrupt practices are identified and borne down on as appropriate.

[Ms Angela Eagle (Wallasey) (Lab)]

Is not the Minister worried about the tangled web of Russian money that appears to be involved at very high levels, as shown by these leaks? Will he not agree that there is now a great public interest in having transparency of ownership and getting these registers published as soon as possible? Why do not the Government just make an announcement that the overseas territories are going to do that, and get on with it?

[Mel Stride]

As I have already explained to the hon. Lady and the House, the register of beneficial ownership is now an element within these tax jurisdictions. It is accessible by HMRC, which is, after all, the authority that we rely on to bear down on tax avoidance. As to her comments about Russian money, I have no doubt that if HMRC can get the information that it has requested from the BBC, The Guardian and the group of journalists, it will be even better prepared to clamp down on such issues where activity is found to be inappropriate.

[James Duddridge (Rochford and Southend East) (Con)]

When he looks at these issues with the overseas territories and Crown dependencies, may I urge the Minister to bear in mind the states in the US that have worse standards? Standards need to be raised globally, not just in some of these island paradise states.

[Mel Stride]

My hon. Friend is absolutely right. We need to work with our international partners, which is why, as I have said, we have been working closely with the OECD on the base erosion and profit shifting project. We are well ahead of the pack in implementing those recommendations.

[Sir Vince Cable (Twickenham) (LD)]

What sanctions have the Government taken, and what sanctions do they propose to take, in respect of British overseas territories that pursue tax policies that are damaging to Britain?

[Mel Stride]

As the right hon. Gentleman knows, we are engaged in a variety of discussions with our international partners—not least with the European Union, in terms of the so-called blacklist—and we are looking closely at the concerns that they and others have, in order to strike an appropriate balance between protecting services that are very important to those particular jurisdictions and making sure that tax is paid fairly and as it should be.

[Huw Merriman (Bexhill and Battle) (Con)]

Does the Minister agree that this is not just a question of countries such as the Caymans, Bermuda and other territories, but of countries in the European Union such as the Republic of Ireland and the Netherlands, which are regarded as jurisdictions where tax advantages may be set up? Does he also agree that rather than singling out such jurisdictions, we should recognise that in a global environment in which capital is free to move around, the important factor is the effect of the UK tax structure on wealth—something that this Government have definitely got right?

[Mel Stride]

My hon. Friend raises a very important point. To put it simply, it is not just the tax rate in a particular regime that is pertinent to the issues we are discussing—he mentioned the Republic of Ireland, where the rate is just 12.5%—but the other factors we need to look at in coming to such judgments.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

How many more “Panorama” programmes and leaks should we expect until we see full and proper action on tax avoidance and tax evasion in this country? As a starter for 10, may I suggest to the Minister that the Government reinstate the thousands of tax officer posts they have cut in Liverpool and right across the country?

[Mel Stride]

As the hon. Lady will know, this Government have brought in £160 billion in relation to tax avoidance since 2010, including £2.8 billion in respect of individuals attempting to hide funds overseas. She raises the issue of HMRC. As is quite right and proper, it is going through reconstruction and reassignments at the moment, so that we have a series of hubs with a critical mass of individuals in them and the right technology and infrastructure to go after those who, as assessed on a risk basis, are avoiding taxation.

[Helen Whately (Faversham and Mid Kent) (Con)]

I welcome the lead the Government are taking internationally in tackling tax avoidance, because this is clearly not a problem that we can solve on our own in isolation. Will my right hon. Friend advise us what the Government are doing to use transparency to make sure individuals, trusts and companies pay their fair share to the Treasury?

[Mel Stride]

I thank my hon. Friend for her question. As I have pointed out a few times already, we are currently looking at reporting standards. We are also looking at various recommendations coming out of the BEPS regime, some of which were covered in the Finance Bill, to stop flagrant tax avoidance, sometimes on the part of some of the largest corporations in the country. As I mentioned earlier, the Labour party sought to kill that Bill on Third Reading.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

When I asked officials at the Department for International Trade whether tax transparency was required in our trade treaties, they said that this was a novel idea, and it was certainly not included in the text of the Transatlantic Trade and Investment Partnership. It is exactly this kind of secrecy that lets the rich hide billions while the people pay. Will the Minister ensure that we demand and insist on tax transparency in every single trade treaty presented to this House in the future?

[Mel Stride]

As the right hon. Gentleman will know, we are committed to country-by-country reporting, which we will push forward with multilaterally. As for our future trade treaties, they are for the future and for the Department for International Trade.

[Andrew Selous (South West Bedfordshire) (Con)]

Low rates of tax and growing tax revenues depend critically on every penny of tax due being paid. What is the position if someone receives a fee, then sends it to a trust fund in Mauritius only to receive the money back as a loan?

[Mel Stride]

I cannot comment on a specific tax structure put to me in these questions, other than to say that if it falls foul of our very rigorous disguised remuneration arrangements—some of them are being put in place by the latest Finance Bill—the people involved should clearly expect to receive a hand on the shoulder from HMRC.

[Mr Dennis Skinner (Bolsover) (Lab)]

Does not the publication of these papers show us that this Government are more concerned with hounding disabled people applying for PIP and ESA and taking their disabled motors away from them than with concentrating on the real people dodging paying tax who, as revealed in these papers, are close to the Conservative party? Sort it out!

[Mel Stride]

The hon. Gentleman overlooks a simple fact: this country has one of the most progressive tax systems in the world, with the wealthiest 1% of income tax payers paying no less than 28% of all income tax. As I mentioned earlier, £2.8 billion has been raised from the wealthy who may have been trying to avoid paying their tax. That is a far stronger record than that of the Labour party.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does my right hon. Friend agree that by far the biggest threat to UK tax revenues is the run on the pound and the flight of capital predicted by the Labour party should it ever get into government?

--- Later in debate ---

[Mel Stride]

My hon. Friend is absolutely right. One measure that the Opposition have said a future Labour Government would take is to stick the corporation tax rate up to 26%, which would do nothing to create jobs, nothing to create wealth, nothing to improve our economy and, most importantly, nothing to raise the vital taxes that we need to support our vital public services.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Given what the Paradise papers reveal about the industrial scale of tax dodging, together with the shaming fact that some of the UK’s overseas territories and Crown dependencies are the largest tax havens and secrecy jurisdictions in the world, will the Government drop their morally indefensible blocking of the development of a credible and meaningful EU blacklist of tax havens?

[Mel Stride]

The hon. Lady is simply wrong. The discussions on the blacklist at the European Union are ongoing and the United Kingdom Government have done nothing to attempt to block them. We are firmly and deeply engaged in them and expect them to conclude by the end of this year.

[Matt Warman (Boston and Skegness) (Con)]

In a world of increasingly global businesses, it is the reality—whether the Labour party likes it or not—that we have to tackle this issue on a global scale. Is that not why it was right that David Cameron used the G7 as a crucial method to tackle it and why it is right that we continue to take an international approach?

[Mel Stride]

My hon. Friend is absolutely right. We seek to move forward on the basis of unity with our overseas partners. That is why we have played such a full role with the OECD.

[Mr David Lammy (Tottenham) (Lab)]

Like me, two thirds of British taxpayers are taxed at source through PAYE. They just cannot understand why anyone would want to put money into a small island like Bermuda, the Cayman Islands or Jersey. The Minister says that there are legitimate reasons for doing so. Will he educate me: what are the legitimate reasons?

[Mel Stride]

As the right hon. Gentleman knows, there are many reasons why individuals use trusts. It may be that I want a trust for my children and I do not want it to be known publicly exactly how that trust will operate, for reasons of confidentiality. People may use overseas trusts because they are looking at dollar-denominated trading and need a jurisdiction in which that occurs. There is a whole variety of reasons. The idea that every time the word “trust” is mentioned it suggests something grubby or illegal is plain wrong.

[James Cartlidge (South Suffolk) (Con)]

With the tax gap at a record low and corporation tax in this country among the lowest in the industrial world, does it not confirm that we have achieved the key balance of a tax system that is both competitive and fair?

[Mel Stride]

My hon. Friend is correct. We have brought the corporation tax rate down from 28% to 19%, and it will go down further to 17%. The consequence is that we are raising twice as much corporation tax as we did in 2010.

[Bambos Charalambous (Enfield, Southgate) (Lab)]

Will the Minister confirm what justification there was for voting against Labour’s amendments to the Finance Bill last week that sought to curb the number of individuals claiming non-dom status and improve transparency with regards to offshore trusts?

[Mel Stride]

If the hon. Gentleman is referring to the trust arrangements for those who become deemed domiciled as a consequence of this Government deciding to put an end to permanent non-dom status—something that his party never did in its 13 years in office—he will know that all is not quite as the Labour party presents it. Any funds coming out of such trusts will, when they are remitted, fall due to tax by the deemed domiciled individual exactly as they would for any other UK citizen.

[Alex Burghart (Brentwood and Ongar) (Con)]

Is it not the case that, with the Criminal Finances Act 2017, the Government have created a new criminal offence for firms that do not stop staff facilitating tax evasion?

[Mel Stride]

My hon. Friend is absolutely right. That is just another example of the 35 additional measures the Government are taking between now and the end of this Parliament to ensure we clamp down on tax avoidance, evasion and non-compliance.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

After nearly a decade of austerity, and with living standards facing their biggest squeeze in nearly a century, the public will, quite rightly, be outraged by the most recent revelations. The Treasury cannot run with both the foxes and the hounds on this, so will it back either the ordinary working people or the super-rich? Which will it be?

[Mel Stride]

The hon. Member talks about our having to live within our means, and it is, of course, right that we do that. He talks about the amount of money we need to bring in. What has been most unhelpful is that the previous Labour Government were so ineffective at bringing in tax, the tax gap became so high they cost our country over £40 billion. If they had had the same average level of tax gap in their last seven years in office as we have had in our seven years, we would be about £45 billion better off.

[Kelly Tolhurst (Rochester and Strood) (Con)]

Does my right hon. Friend agree that the Opposition are being disingenuous? They had 13 years and did nothing. They voted against measures to close loops, confirming that only this Government will act to tackle avoidance.

[Mel Stride]

My hon. Friend is absolutely right. We hear a lot of talk from the Opposition, but I am afraid that the results of what they did—or, rather, what they did not do—when they had their turn in office speak for themselves.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Does the Minister not recognise that it is obscene that rich people should seek to get even richer by salting away their billions in offshore bank accounts, while working people suffer the longest stagnation of wages for 150 years?

--- Later in debate ---

[Mel Stride]

The hon. Member will know that the wealthy of this country pay their fair share. The 1% most wealthy income tax payers pay 28% of all income tax. What was the figure under the previous Labour Government? It was below 24%, so I will take no lectures from him.

[Kevin Foster (Torbay) (Con)]

When I sat on the Public Accounts Committee, we used to hear about mechanisms such as the “double Irish” and the “Dutch sandwich”, neither of which are UK jurisdictions. Does the Minister agree that measures such as the diverted profit tax will help to put to an end to some of the tricks that can be used to move profits from this jurisdiction into lower tax jurisdictions?

[Mel Stride]

My hon. Friend is absolutely right. The diverted profits tax works every day of the week. It works where HMRC has to step in and sort out the companies that fall foul of it, but it works even better than that: it prevents and deters many, many companies from behaving in an inappropriate fashion.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

The Minister says that HMRC is now seeking to investigate this matter. Ahead of the Budget, when I suspect the Government may wish to make some public spending commitments, will the Minister commit to a moratorium while this matter is being investigated on any public contracts going to companies that have offshore trusts?

[Mel Stride]

I am not going to get into the business of providing moratoriums on any particular matter at the Dispatch Box, tempting though the hon. Lady’s suggestion may be. That is not a path I am going to go down.

[Rebecca Pow (Taunton Deane) (Con)]

I want to highlight the new criminal offence we have created for firms that do not stop their staff facilitating tax evasion. For the first time, under the Criminal Finances Act 2017, companies will be held criminally liable if they fail to stop their employees facilitating tax evasion. Does my right hon. Friend agree that this truly demonstrates that the Government take tax avoidance extremely seriously, and, indeed, have done more than our colleagues on the Opposition Benches have ever done?

[Mel Stride]

My hon. Friend is absolutely right. This is but one further example of making companies criminally responsible where their employees try to facilitate tax avoidance. That is the right way to go and is just another measure the Government have brought in.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Does the Minister accept that the scale of aggressive avoidance exposed by these revelations shows that the general anti-abuse rule introduced in 2013 is not working and that what we need is general anti-avoidance legislation so that there is no room for doubt and no room for manoeuvre?

[Mel Stride]

The hon. Gentleman talks about the amount revealed by these disclosures, and I assume he is centring his remarks on the half-hour television programme last night. The reality is that we do not yet know exactly the extent of what will be revealed, which is why HMRC has asked those with the data to make it available—so that we can use it to get on with the job of cracking down on those who might not have behaved as they should.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

The Minister has confirmed that we have one of the lowest tax gaps in the world, yet the Labour party still complains. How does today’s position compare to the one we inherited in 2010?

[Mel Stride]

My hon. Friend is right to point out the difference. The tax gap today is 6%, which is about the lowest in the world and the lowest in the history of our country. As I said earlier, if we had had the same average tax gap as Labour during its term in office, we would be more than £40 billion out of pocket—less money, as the shadow Chancellor put it, for the nurses, the doctors, the paramedics, the police, the Army and the others in our public services.

[Catherine West (Hornsey and Wood Green) (Lab)]

There are some things we do know, however: some large accounting firms are being investigated for poor practice that assists and colludes in tax avoidance and evasion. Will the Minister clarify what will be done to clamp down on those who collude with those who do not want to do the right thing?

[Mel Stride]

The Finance Bill, which has just gone through the House, contains important provisions to clamp down on those who enable tax avoidance—the category of individual and company to which the hon. Lady refers—and those are some pretty stiff penalties.

[Robert Jenrick (Newark) (Con)]

Will my right hon. Friend confirm my understanding that the profits of the Duchy of Lancaster are used exclusively for official purposes, that its investment board is at arm’s length from the Government and that if anyone wants to question who was overseeing the investment board at the time of any suspicious transactions, they should go and see the Labour Ministers at the time?

[Mel Stride]

The accounts of the Duchy of Lancaster are readily available, transparent and audited in the normal fashion, and there has been no suggestion to date, as far as I am aware and certainly not in the television programme last night, of any mischief related to any aspect of its dealings.

[Chris Stephens (Glasgow South West) (SNP)]

Will the Minister confirm that according to the latest figures available there are 420 employees in HMRC’s high net worth unit and 3,765 employees in the Department for Work and Pensions chasing social security fraud? Does he agree with many of us in the House—if those figures are correct—that if the same resources were applied to tax evasion we would have billions of pounds more for our vital public services?

[Mel Stride]

I can confirm that in 2015 an additional £800 million was made available to HMRC for the purposes of bearing down on tax avoidance and evasion, and that that is expected by 2021-22 to bring in more than £7 billion in additional revenue.

[Nigel Huddleston (Mid Worcestershire) (Con)]

My constituents are rightly angry about tax evasion and avoidance, but they are also angry about the avoidance of action, as exemplified under the last Labour Government, who talked tough but did very little. Will the Minister remind me how many times this Government have acted and how many more times they are likely to act?

[Mel Stride]

My hon. Friend is right. We know how much we have brought in through clamping down on avoidance and evasion: £160 billion since 2010. We also know that we have about the lowest tax gap in the world and that it is far lower than it was under the last Labour Government. Those figures speak for themselves.

[Jenny Chapman (Darlington) (Lab)]

Further to the Minister’s response to my right hon. Friend the Member for Tottenham (Mr Lammy), will he explain why he thinks people saving for their children’s future would need to make use of accounts in Bermuda and the British Virgin Islands, when my constituents seem to manage it with the use of local building societies?

[Mel Stride]

I think that if the hon. Lady checks my answer to the question from her right hon. Friend in Hansard, she will see that that was not the totality of my response, and that I also referred to dollar-denominated trading and the complexities thereof. She may then be able to answer her own question.

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

According to the Government’s assessment, how many UK citizens and how many UK-registered companies have these offshore accounts, and how much money has the UK, as represented by those two entities, got salted away in them?

[Mel Stride]

As the hon. Gentleman will know, those are not figures that I have at my fingertips. As he will also know, confidential arrangements are rightly in place in many of the structures to which he refers; indeed, he, and perhaps even the headquarters of his party, might even be held within one of those arrangements. Of necessity, that particular information is not fully available.

[David Hanson (Delyn) (Lab)]

Will the Minister clarify his understanding of the position in respect of non-doms donating to political parties in the UK? In the interests of transparency, will he arrange for all parties to publish lists of non-doms who have donated to their parties?

[Mel Stride]

As the right hon. Gentleman will know, there are requirements relating to transparency and donations to political parties, and the Government have put an end to permanent non-dom status.

[Thelma Walker (Colne Valley) (Lab)]

My constituents in the Colne and Holme valleys pay their tax in the usual way. Can the Minister explain to them why their public services are being cut while the rich are using tax havens to avoid paying their fair share?

[Mel Stride]

The hon. Lady may know from my earlier comments that the wealthiest 1% in the country pay 28% of all income tax. She should also be aware that in 2010, during her party’s time in office, the proportion was only about 23%. Ours is the party that is standing up for the poorest and the least well off in our society, and as part of that process we have taken almost 4 million of the lowest-paid out of tax altogether.

[Jim Shannon (Strangford) (DUP)]

Will the Minister, and the Government, consider writing a letter to all those mentioned in the Paradise papers news leaks, gently reminding them of not only their financial obligations but their moral obligations to all citizens of the United Kingdom of Great Britain and Northern Ireland?

[Mel Stride]

I totally agree with the hon. Gentleman that everyone has a moral obligation to pay their fair and legally due share of tax, and when it is found as a consequence of these disclosures that some have failed to do so, HMRC will be on their case.

[Karin Smyth (Bristol South) (Lab)]

Last year my right hon. Friend the Member for Don Valley (Caroline Flint) led work in the Public Accounts Committee, and called for country-by-country reporting in an amendment to the Finance Bill, to which I think the Minister has alluded. The Government can now lead the way throughout the world in implementing that provision, while still pursuing multilateral provisions.

[Mel Stride]

The Government are leading the way in exactly that endeavour. As I said earlier, a very important point to note is that we have a multilateral approach to this issue, and we are working hard at delivering on it.

[Nic Dakin (Scunthorpe) (Lab)]

Most people have not heard of dollar-denominated trading, but they look at this matter and see one rule for the rich and powerful and another for the weak and vulnerable. Surely the way to lance this boil is to provide full transparency, which means making information publicly available rather than people having to ask about British overseas territories.

[Mel Stride]

I have explained about the transparency that we need. We need to ensure that HMRC obtains the information that it requires to satisfy itself that the dealings in those territories are being carried out appropriately, and that is exactly the position that we are working towards at present.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

Last week I met some of the representatives of our overseas territories. A number of them said that their governance was not working for them, and that they had little say in defence and foreign affairs. Is there not a win-win here? Could we not give our overseas territories representation in this place, and then enforce tax and public transparency in those territories? Taxation with representation, all equal under the law: surely that is a clarion call for all of us here today.

[Mel Stride]

I hope the hon. Gentleman will forgive me if I do not start to opine on the constitutional settlement we have with our overseas territories and Crown dependencies, but I will make one important point that relates to the issue he has raised: we must not forget that they do not have representation in our Parliament, and we therefore have particular responsibilities in listening to them and co-operating with them, rather than, as he perhaps suggests, coercing them.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Will the Minister arrange for full details of the merits of sending money offshore to be published, so that my constituents in Hull, many of whom are low-paid but pay their taxes, can see whether it would be appropriate for them to go offshore?

[Mel Stride]

The most important message for the hon. Lady’s constituents is the merits of getting on top of tax avoidance, evasion and non-compliance, which is exactly what this Government have done, and which is in turn raising the vital taxes for our public services so we can have the kind of public services that are a hallmark of a civilised society.

[Grahame Morris (Easington) (Lab)]

We probably need a time-out for a fact check on the £6 billion tax gap figure that the Minister is consistently quoting. May I refer him to the private Member’s Bill promoted by the former right hon. Member Michael Meacher, which set out detailed plans for a general principle on tax avoidance? We can get around a rule, but we cannot get around a principle; that seems to me to be a solid and sensible way forward.

[Mel Stride]

The hon. Gentleman referred to a £6 billion tax gap, but the figure is not £6 billion; it is 6% of all tax that should be collected. On his suggestion that there should be a general principle or general rule, there is already a general anti-avoidance rule for exactly the purpose to which the hon. Gentleman has alluded.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

Over 100,000 properties in the UK, worth over £122 billion, are owned by overseas-registered UK companies in the British Virgin Islands and the Channel Islands, and that represents a conservatively estimated £2 billion in tax avoidance a year, enough to close the benefits fraud gap in one fell swoop. That is just a conservative estimate, however, and a third of the properties in the Land Registry do not even have property transaction data. Does the Minister agree that now is an opportune moment to grip the Land Registry and ensure it has compulsory registration of land and property in the UK, with the full structure of ownership and their value, so we can understand the full scale of the exploitation of UK land and property for tax avoidance purposes?

[Mel Stride]

This Government have brought far more property into the scope of taxation than the hon. Gentleman’s party ever did in 13 years in office, so I will not take any lectures on that point from him. [Interruption.]

[Mr Speaker]

Order. I would not want the hon. Member for Eltham to get uber-excited; I call Mr Clive Efford.

[Clive Efford (Eltham) (Lab)]

Thank you, Mr Speaker.

The Minister has set out the reasons why the eye-wateringly rich would benefit from a tax haven, but how would my average taxpayer in Eltham benefit from a tax haven and why should they tolerate this in overseas British territories?

[Mel Stride]

The hon. Gentleman characterises those involved in overseas trusts as eye-wateringly rich, but I do not think all of them are; there are many pension funds, and there will be many who rely on those pension funds to live, and many of them might, indeed, live in his constituency. I think this general characterisation of it all being about super-wealthy people and all being about tax dodgers and so forth is rather crude, and, frankly, not worthy of the Opposition.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

Some 130,000 UK companies have not completed their persons with significant control registers, and not one of them has been fined. If we cannot get our own house in order, how can we credibly ask others to act on transparency?

[Mel Stride]

I am happy to look into the specific point the hon. Gentleman has raised and will come back to him on it.

HMRC Closures

Mel Stride Excerpts

Thursday 2nd November 2017 Westminster Hall

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship, Mr Davies. Where do we begin with this situation? It is an absolute dog’s dinner. The Minister has inherited a number of dogs’ dinners since coming into post and I almost feel sorry for him.

My hon. Friend the Member for Bradford East (Imran Hussain) talked about the need for human intervention, but I think we need divine intervention. St Matthew is the patron saint of tax collectors, and he will have to be prayed to an awful lot for this particular mess to be put right. We all sit up when somebody talks about modernisation, because we know what it means: job cuts and closures of this, that and the other. And this is a classic case of modernisation.

I met senior HMRC officers to discuss the criteria used for the decisions. I declare an interest: HMRC is a significant presence in my constituency and well over 2,000 of my constituents work there. Members will, therefore, forgive me if I spend a little time on Bootle, because it is an exemplar of the problems facing other places.

The officers told me that one of the criteria is that offices need to be near a city centre, but Liverpool city centre is closer to my constituency of Bootle than it is to parts of Liverpool itself. They also said that they need to be near a university, but the situation is exactly the same: Liverpool University and Liverpool John Moores University are closer to Bootle than they are to the proposed new Liverpool site. The officers talked about transport and infrastructure access, but the HMRC offices in Bootle are literally surrounded by stations, including a railway station. In fact, a bus station right next to my office is literally a minute’s walk from the HMRC offices in the Triad building and the new St John’s House.

We were told that we needed to maintain staff retention, but the turnover at HMRC in my constituency is negligible. They are high-skilled, high-performing, loyal staff, so that criterion does not apply. There has been no impact assessment. Nipping back to the transport situation, no assessment was made of the transport links. Mersey Travel, the Cheshire transport authority and the Welsh transport authority were not contacted, even though they will also be affected by the proposals. The way in which this has been dealt with has been an absolute dog’s dinner.

My hon. Friend the Member for Wrexham (Ian C. Lucas)—he apologises for not being here—has written to the Chancellor, because the issue affects his north Wales constituency, which is virtually on the border. The letter mentions the proposed closure of the Wrexham HMRC office, which will result in the loss of 350 jobs, as part of the proposal to centralise Wales staff in Cardiff. It states:

“I am incredulous that the Government is continuing to propose a policy course of moving staff away from the regions to centralised city centre locations and it seems to me that the new political environment created by Brexit allows us to pursue a new regional policy by maintaining jobs in, for example, Wrexham, the largest town in North Wales.”

That is a very good point.

I apologise for only mentioning this now, but I am pleased that the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) has brought this issue to our attention again. How many times have we discussed this matter without ever receiving any proper answers from the Government? Interventions from my hon. Friends the Members for Coventry South (Mr Cunningham) and for Bradford East made a compelling case for why it needs—at the very least—to be looked at.

My hon. Friend the Member for Oldham West and Royton (Jim McMahon) graciously shared with us his experience of the heart-rending closure process in his constituency. I thank him for bringing that to our attention, because, if the proposals go ahead, that will be the future for communities right across the country, including mine. Thousands of people who work in my constituency will be moved to the iconic but very expensive India Buildings—car parking is at an absolute premium—in Liverpool. Why do they have to move three miles up the road when it is going to cost more money? There will be a net cost to the taxpayer in my constituency—but not, apparently, to the so-called national envelope—as a result of those offices being moved. That is dreadful.

Colleagues have made those points time after time, but let us hear what other people are saying. In a report on professional bodies, Accountancy Live noted:

“HMRC reorganisation risks pushing tax authority to breaking point. Tax advisers and professional bodies are sceptical about…HMRC’s plans to close 137 offices”.

Those are not our words, but those of professionals who work on these issues every single day.

The Institute of Chartered Accountants in England and Wales said it was staggered by the argument that HMRC will actually be adequate to provide any sort of service to 5 million or 6 million taxpayers in the London area, notwithstanding what reconfigurations may be made to the service. The word “disastrous” has been used and I agree that the situation is and will be disastrous. I ask the Government to take a step back and reconsider.

On Mapeley, something does not smell right, to be frank, about the deal for the India Buildings—to which HMRC will be moving—prior to HMRC’s involvement. People are coming to me all the time about that, so I am going to have to look in much more detail at the proposal. I have no doubt that in due course I will have to either come back here or write to the Chancellor, although I hope that I will not have to do so.

Opposition Members have raised the social and economic impact, but I do not think that any Government Members have done so, with the exception of the hon. Member for Ochil and South Perthshire (Luke Graham), whom I thank. It is symptomatic of the debate that only one Conservative Member is in attendance. Others do not appear to be in the least bit interested in the impact that the proposal will have on whole swathes of the nation, including Scotland, as the hon. Member for Glasgow South West (Chris Stephens) has said, and Wales, which will have one office. There will be 10 or 11 offices in the rest of the country and possibly one in Northern Ireland.

This is a pretty grim situation. To add insult to injury, some of these deals were signed de facto during purdah. If a Labour Government had done that, there would have been absolute screeching from the press, the media and the Conservatives about how we were trying to tie the hands of a subsequent Government. We would have been pilloried for it and—do you know what?—rightly so.

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

The issue of making decisions during purdah has already been raised. It is right and proper that those decisions were made because, as the hon. Gentleman will know, under the appropriate arrangements, the Government should never act such as to incur costs through delay. Furthermore, those decisions were signed off in entirely the right manner by the Cabinet Office.

--- Later in debate ---

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

May I say what a pleasure it is to serve under your chairmanship, Mr Davies? I know this is an important subject to you, so if I hear any stifled gurgling or funny sounds, I will put them down to your general condition, rather than to you expressing an opinion on the matter at hand.

I thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) for securing this very important debate. We are talking about very important matters—people’s jobs and local communities. Of course, the overarching matter we are talking about is the efficient collection of tax. We all know why that is extremely important.

Before I get into the specifics of the plans we have been discussing, perhaps I could make some general points that will be useful. HMRC’s work is fundamental to that of the Government. It provides the funds for the public services on which we all rely. Every pound we raise through taxation is another pound we have to support our nurses in the NHS, keep our police force functioning effectively and support our armed forces. In other words, HMRC is not engaged in some kind of theoretical exercise. One of the most important functions Government have is to bring in the money to support public services. Taxpayers expect and demand that the money be spent responsibly, with good reason.

I think all Members here would agree that it is vital that HMRC can deliver value for money and maximise the tax it collects, relative to the tax due. It follows from that that we must have a tax authority that is fit for the modern age. I make no apologies for using that expression.

[Peter Dowd]

I do not think anybody disagrees with the Minister on the collection of tax, but that is all the more reason for the Government to get their facts right about the places where tax will effectively be collected from, and to not revise the costs time after time. This has now cost an additional £600 million. Is it not incumbent on the Government to get those figures right before they come to Parliament and wave these proposals through?

[Mel Stride]

A number of Members in the debate raised the costs mentioned in the National Audit Office report, the Public Accounts Committee report and so on. Certainly, the business plan has gone through various iterations, but where we are is quite clear: the total investment over the next 10 years will be £552 million. The NAO has disputed some of our figures, and the Government’s view is that the NAO has looked at those figures on a different basis—for example, over a 10-year period, whereas we were initially looking at figures over five years.

We have some cost avoidance of £75 million per annum from 2021 through getting out of the private finance initiative arrangement—which, incidentally, we entered into in 2001, which was of course under a Labour Government. On top of that, we will have £300 million-worth of savings over the next 10 years, and we will have annual cost savings of £74 million in 2025-26 compared with 2015-16, rising to around £90 million from 2026-27. The savings are ongoing and will be long standing.[Official Report, 27 November 2017, Vol. 632, c. 2MC.]

[Grahame Morris (Easington) (Lab)]

On value for money, I happen to agree with a number of points made about the opportunity here to rebalance the economy, but I do not understand how it can be any more cost-effective to relocate these major tax offices to very expensive city centre locations. The issue of future-proofing was raised by the hon. Member for Glasgow South West (Chris Stephens). The Government have signed, through HMRC, a number of long-term leases on large offices in Croydon and Bristol without break clauses. Clearly it is essential that the capacity of HMRC to collect taxes is not impeded, but is it in our long-term interest to sign such long contracts for very expensive city offices?

[Mel Stride]

The hon. Gentleman makes two points. One is a general point about the economic sense, or otherwise, of locating the services in larger hubs. The arguments on that are, broadly, extremely strong. They are that we can have larger groups of people and more collaborative working and can ensure that the infrastructure and technology are there. HRMC operates very differently today from how it operated some decades ago. We take a risk-based approach to chasing down tax that should be paid and is not being paid. That involves a lot of data and analysis. Frankly, the idea—if anyone here is entertaining it—that for the last few years people have been able to walk into their local tax office or have appointments there is just not correct. We need centres of excellence that can work in the manner that I have described.

The hon. Member for Easington (Grahame Morris) raises the issue of long-term leases, and he is right to say that in some cases there are no break clauses. I make three points on that. First, we get a much more competitive rate if that is the basis on which we enter into a lease. Secondly, that of course does not mean that leases cannot be broken at some future point by way of negotiation. That is quite typical in the commercial property market. Thirdly, we have flexibility within those leases, such that other Government Departments and employees would be able to use the buildings as well. There are therefore at least three very good reasons why that approach has been taken.

Let me now make some progress. We need a tax system that offers digital services in an age in which people increasingly expect and rely on them, that makes use of technological developments to deliver as efficient a service as possible, and that is suited to the dynamic and fast economy of today.

[Graham Stringer in the Chair]

I hope that the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East would agree that just dispersing employees across a wide area is not an efficient way to run any organisation, let alone one with responsibility to the taxpayer.

[Jim McMahon]

I am not sure whether the Minister’s tactic is to talk at length about matters on which there is agreement. There is agreement on the move to digital services, the need for those to be fit for purpose, and the need to take as much tax as possible to fund decent public services, but the majority of today’s debate has been about the financial assessments of the deals done and the decisions on the locations of the head office and the regional hubs. I would appreciate it if the Minister would focus on that, because as far as I can see, the evidence base to support those decisions is at best very weak.

[Mel Stride]

The hon. Gentleman is right: much of the debate has focused on the matters to which he refers. I am not seeking to avoid those other elements of the debate at all and was coming on to them, but I shall deal with them now, as he has raised them. HMRC has had eight very sensible criteria by which to judge where to locate the new hubs. He will know that we are looking at sustainable large sites, with the capacity to hold all HMRC’s requirements for the region in a single building. The talent pipeline, which has been mentioned, is extremely important.

[Stuart C. McDonald]

Everyone in the Chamber is in favour of much of the approach to digitalisation of the tax process, but does not that process itself undermine the case for saying that everyone has to be in one location? The fact that everything is being done digitally means that folk can stay in the offices that they are in currently and we can get on with it.

[Mel Stride]

I do not accept that point. We could take it to its logical conclusion and assume that everyone could work from home, and we could then have a very disparate workforce. There may be some attractions to that, but there is huge value in bringing people together in a single building, where there is a critical mass of individuals: collaborative working and the sharing of experience and ideas can take place, meetings can be held, and the technology is all in one place. I would have thought the hon. Gentleman would recognise that. Let us face it: if we went back to 2005, we might be debating whether we should shrink the number of offices from 600, which is what it was at that point. There will always be arguments about whether we should do things and the local impacts and so on, but this overarching direction of travel, it seems to me, has to be right.

[Chris Stephens]

Could I ask the Minister two questions, then? First, on the criteria for where to locate the offices, was a social-economic impact assessment made for the towns and cities whose HMRC offices are closing? Secondly, given that he has mentioned homeworking, can he confirm whether the Department has published the information from the homeworking pilot in Wick?

[Mel Stride]

On the latter point—the specific query— I will have to get back to the hon. Gentleman, but on the general point about impacts, HMRC has looked extremely closely not just across the eight criteria, which I was working my way through, but at the impact on the individuals working at the existing offices. I know for a fact that that has gone right down to literally every single employee, plotting where those people live, and working out travel-to-work times and so on.

[Chris Stephens]

rose—

[Mel Stride]

Could I just make one other point? The relocation does not necessarily mean that all the employees who worked at the previous office, for want of a better expression, will no longer be working for HMRC. Many of them—about 90%—will either work through to retirement at that office or migrate to working at the new hub.

[Chris Stephens]

I thank the Minister for giving way again. Can he confirm whether the Department will publish an economic impact analysis of staff moves? If people based in, for example, Inverness or Wick will be working in Glasgow or Edinburgh, I would think it would be very difficult for them to travel to their work every day.

[Mel Stride]

We are not publishing the kind of impact assessment that the hon. Gentleman suggests, but my point is that it is not the case that HMRC has not very carefully looked at those individuals who will be affected—at where they live, the travelling issues and so on—to ensure that it is as helpful as it possibly can be to all the employees in those circumstances. We heard in the debate about providing assistance with travel costs, for example. There is also relocation assistance. All that is being very carefully looked at and engaged with by HMRC.

[Jim McMahon]

Is the Minister seriously suggesting that Manchester city centre, 7 miles away from Oldham town centre, meets the criteria relating to the talent pool, throughput of staff and the economic case any better than Oldham town centre would have done? If it does, why do the Government refuse to publish the internal documents that would make the case?

[Mel Stride]

The hon. Gentleman will appreciate that I have not come here prepared with all the precise details of exactly how that decision was arrived at, but I am confident that HMRC has, with due diligence and in a very objective and dispassionate—no, objective—way, looked at which locations meet the eight criteria, and made a balanced decision at the end of that. I am very confident that it has come to the right conclusions.

[Jim McMahon]

On that basis, can the Minister confirm today that the Department will release that location assessment?

[Mel Stride]

No. I am not going to commit to bringing forward all sorts of reports and things that various hon. Members may or may not call for. I understand why the hon. Gentleman may call for those things, but I can reassure him that we have published the criteria on which the decisions were made. They are in the public domain. There are eight criteria, and they are very clearly available.

[Imran Hussain]

Does the Minister agree that one of the most important areas that needs an assessment in these processes is the economic impact on those areas where the regional hub is not based? That information, in my view, is vital when we are looking at the holistic picture. Does the Minister accept that that information is important, and was it obtained in every instance?

[Mel Stride]

That prompts the question of what the overarching purpose of HMRC is: to provide customer service efficiently to those who need access to it, and, at the end of the day, to bring in tax. We have a tremendous record, and it has a tremendous record, of doing exactly that. The main thrust of these decisions has ultimately to be about having a 21st-century organisation for a changing environment, and that means the kind of model that this process is driving towards.

[Peter Dowd]

The Minister has referred to the eight criteria on numerous occasions. I am trying to get my head around this question: when the criteria for the move are not fulfilled, what are the criteria used to override those criteria?

[Mel Stride]

The criteria are there to allow a balanced judgment across the eight criteria as to where the best place is for the regional hubs. That is exactly the approach that HMRC has taken. I fully appreciate that there are Members here who are very unhappy with the fact that there may be some closures in their constituency, but that does not necessarily mean that the criteria are being inappropriately exercised.

[Dr Cameron]

The Minister’s colleagues in Departments such as the Department for International Development feel that East Kilbride in my constituency is an excellent place to have a hub and digital and new services, and has a great talent pool. How does this make sense, because there is surely a contradiction? We do not fit the eight criteria, but for other Departments reaching out and doing excellent work in East Kilbride in the modern age, we meet all the criteria. It simply does not make sense. Why is it more fitting to be in Glasgow than in East Kilbride?

[Mel Stride]

As the hon. Lady knows, a transition office will be kept in East Kilbride; it would certainly not have been there had many of the strengths to which she alluded not been present in the local community. On balance, it has been decided that it is better to go to Glasgow with a hub than to have a similar arrangement in her constituency, but that is not to suggest that there is not a great talent pool in her constituency. It simply means that on balance, under the eight criteria that we reviewed, the best solution we have come to is Glasgow.

[Dr Williams]

We do not doubt that an assessment has been made. We simply want to see for ourselves that objective assessment. Perhaps we can learn what our talents need to look like, so that we can meet future objective criteria.

[Mel Stride]

The hon. Gentleman has asked precisely the same question that the hon. Member for Bootle (Peter Dowd) asked, so I have already dealt with that.

[John Grogan]

The Minister is being extraordinarily generous in giving way. Is he not at all concerned about crowding out private sector investment in some of the big cities? To follow on from the powerful speech of my hon. Friend the Member for Oldham West and Royton (Jim McMahon), is the Minister not in danger of putting himself on the side of big city United Kingdom and ignoring smaller towns and cities? Is that not a bad political move to make?

[Mel Stride]

The hon. Gentleman raises the issue of crowding out private sector investment, but I am primarily concerned about the possibility of crowding out tax collection. If we do not have hubs that are fit for the 21st century, that are bristling with new technology, talent, and well-qualified, well-trained individuals working collaboratively from those units, we will be less effective at bringing the money in.

The tax gap was mentioned; it stands at 6%, a record low. Under Labour in 2005 it was around 8%. If it was 8% today, we would have £11.8 billion less coming into the Treasury, which is enough to pay for all the police forces in England and Wales, so these things matter. I understand why Members here are vexed about their constituency—I totally get it—but we cannot allow that to trump the really important job of bringing our tax collection into the 21st century, and making sure that it is effective, so that we keep our public services going.

[Chris Stephens]

Can the Minister explain how closing HMRC offices, with a lack of local knowledge, helps to bridge the tax gap? I am genuinely confused, so perhaps he can explain.

[Mel Stride]

The corollary to that argument is that we might better close the tax gap by opening another several hundred offices. I do not think anyone would argue with that. It does not necessarily follow that more offices mean more tax collected. I think quite the reverse, as I have explained. We need centres of excellence with a critical mass of people who are well trained and where there is good access to the labour market and the skills that we need; where people work collaboratively and all the technology is right; and where they operate, as we do in this country, a risk-based approach to clamping down on tax avoidance, which involves a lot of data and analysis from the centre. That is much better done from a well-resourced organisation of critical mass than by a larger number of smaller offices, many of which operate in a manner that is more manual, for example, than computer-driven, and that needs to be changed.

[Imran Hussain]

The Minister is being very kind with his time today. He talks about the need for regional hubs and centres of excellence, which we all accept. The argument is not about collecting tax and whether we should have centres of excellence and the best facilities, but about where they should be located. That is the point we are making. In my case, an office based in Bradford would be considerably cheaper. Is the Minister saying that Bradford cannot provide a centre of excellence?

[Mel Stride]

The answer is similar to the one I gave the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) a moment ago. Nobody is suggesting that Bradford is not a superb location in many different ways for many different business activities—absolutely not. I do not have the figures to hand, but I would probably agree with the hon. Gentleman that in terms of office space, the cost per square foot is probably less in Bradford than in Leeds. However, we have a series of criteria, and the overarching objective of those criteria is to collect tax and to have access to the best available within the region—the best talent pool and the best digital and physical connectivity. On balance, the decision is that Leeds fits that bill better than Bradford, but that is not for a moment to suggest that Bradford is not a wonderful place to run businesses.

[Chris Stephens]

The Minister is being more than generous. Can he confirm that there are currently 400 employees in the high net worth unit dealing with tax evasion? Does HMRC intend to increase or reduce that figure over the coming years?

[Mel Stride]

It depends. The hon. Gentleman’s question begs another question, which is what exactly he means by the high net worth individuals he refers to.

[Chris Stephens]

It is a specific department.

[Mel Stride]

If it is a specific department—I am sure it is—I am happy to get back to him on that point. I will move to another point relating to what the hon. Gentleman said earlier in his speech. When he talked about clamping down on tax avoidance, he very much started to drift into—understandably so—complex tax avoidance. He mentioned the Cayman Islands. I do not think he mentioned trusts specifically, but I suspect that would be a part of the mix of his thinking, which is exactly my point. If we are going to start targeting that kind of tax avoidance, it is far better to be in a well-resourced hub, the nature of which I have described already, rather than to have myriad other offices around the place. That is the nature of the tax challenge, so we have to have a configuration that is appropriate to meet it.

[Jim McMahon]

I thank the Minister for giving way. According to my time, we have an hour and 10 minutes of interventions if Members have questions to ask. The Minister is being generous with his time. Let us stop this dance that we are taking part in here. The truth is that no assessment was made of the suitability of sites for the relocation. Oldham was not considered as a site for the relocation, but Manchester was. That is the truth. If I am wrong, simply publish the assessment of sites that shows that Oldham was considered at the same time as Manchester. Ultimately, it is not protected under any of the exemptions in the freedom of information legislation. Let us cut out the time delay that would be initiated by our making that request under the Freedom of Information Act 2000 and let us have it here today.

--- Later in debate ---

[Mel Stride]

That is the third time that basic question has been asked, and I am not going to give a different answer from the one I gave first. Perhaps I could make a little progress.

HMRC will move to new regional centres, which will serve each and every region and nation in the United Kingdom. The first of them opened in Croydon in July, and has been designed specifically to help staff work together and change the way HMRC operates. The building is modern and is located in the heart of the community; it is a modern, environmentally friendly workplace. The other centres will open over the coming four years and have been designed with the future needs of HMRC and the taxpayer in mind. In addition, HMRC will keep open a limited number of transitional sites, as I have suggested, for several years, to help retain key staff during the period of transition, as well as five specialist sites for work that cannot be done elsewhere, such as the site at Dover.

The locations of the regional centres were selected with a number of criteria in mind, such as cost and wider facilities for HMRC staff. They ensure that HMRC has a presence in every region of the UK. The programme will, as I have indicated, deliver savings for the taxpayer of about £300 million up to 2025, plus annual cash savings rising to more than £90 million by 2028. HMRC has structured support in place to help its staff during the move. For example, it will support staff in moving, by helping with additional travel costs for up to five years after the move. It is working with other Departments to identify opportunities for those unable to move to regional centres. The Department has already supported about 100 people into new roles in 2016-17 and 2017-18. However, we need to remember that the vast majority of HMRC employees are within reasonable daily travel distance from a regional centre, specialist site or transitional site. The locations of regional centres were chosen with the whereabouts of existing staff in mind.

[Dr Paul Williams]

The Minister said that the vast majority of people who will transfer are within reasonable distance of one of the new sites. Is there a definition of a reasonable distance, in terms of travel time?

[Mel Stride]

I shall get back to the hon. Gentleman on precisely what that means. I suspect it is a travel-to-work time, but it will probably vary depending on location.

[Chris Stephens]

Can the Minister confirm that the original criterion for reasonable travel distance that was used, and that was put to the trade union and staff, was 100 miles?

[Mel Stride]

I shall give the hon. Gentleman the same answer I gave to the hon. Member for Stockton South (Dr Williams); I am certainly happy to look into it—although I have now had some divine inspiration, and I believe that the criterion is an hour’s travel time. St Matthew has come to my aid.

Let us not lose sight of the bigger picture. As I have said, the programme is underpinned by the aim of making HMRC a more efficient and effective tax authority. I want to dwell briefly on our record in that area, because what we are doing is part of a broader drive to transform HMRC that has been going on for some years. Its performance has been improving considerably. I have already mentioned that the tax gap is the lowest in our history; it is also one of the lowest tax gaps in the world.

The hon. Member for Bootle bemoaned the Mapeley PFI deal. As I said, it was a Labour Government who put us into that deal, but he is right that there will be considerable savings from not having to continue with the deal, as a consequence of pursuing the current programme.

HMRC has improved customer service. Almost all its business customers now choose to deal with it online, and more than eight out of 10 self-assessment returns come in digitally.

[Dr Cameron]

I thank the Minister for giving way; he is being generous in that regard, at least. Are the cost savings on the Mapeley deal based on current expenditure on that deal or on renegotiation with the organisation?

[Mel Stride]

The cost savings are for an investment of £552 million over 10 years. Firstly, they arise through the avoidance of future costs that would be incurred in the event of our not going ahead with the programme. Those would be the costs of the PFI deal, were we to continue with it. That cost is £75 million per annum—obviously from 2021, when the contract for strategic transfer of the estate to the private sector comes to an end. There is a cost saving of £300 million in the 10 years to 2025. That gives an annual cash saving, as compared with 2016-17, of £74 million in 2025-26, rising to about £90 million in 2026-27.[Official Report, 27 November 2017, Vol. 632, c. 2MC.]

[Chris Stephens]

On cost savings, can the Minister provide an explanation of why, during purdah, a contract was signed in relation to an office in Edinburgh, which was the most expensive office to rent not just in Edinburgh but in Scotland? How does that lead to cost savings?

[Mel Stride]

As the hon. Gentleman knows, the criteria applied in taking the decision were not simply about cost. As to his assertion that the decision that has been taken is an exceptionally high-cost option, I cannot comment, because I do not have access to that level of detail at this precise moment; but the decisions are taken in the round, using eight different criteria, of which cost is but one. As I have repeatedly stated, the overarching objective must be the effective and efficient collection of tax, which provides all the funding for our public services. That is the basis on which the decisions are taken.

HMRC is now open to take calls from customers and engage in webchats seven days a week, so people can contact the Department at times to suit them. This year, more than 987,000 tax credit customers renewed online using the digital service. It would simply not be possible to continue to drive improvements without transforming the offices from which HMRC staff work.

The changes are an integral part of HMRC’s transformation into a smaller, more highly-skilled organisation—one that has modern digital services and a data-driven compliance operation, which will deliver more for the taxpayer, at lower cost.

[Peter Dowd]

Will the Minister give way?

[Mel Stride]

This must be about my 30th intervention; I am delighted to give way to the shadow Minister.

[Peter Dowd]

The Minister is being incredibly generous with his time. The question of the criteria goes to the heart of the matter, Mr Stringer; incidentally, I welcome you to the Chair, and am delighted to see you. The Minister persists with the issue of the criteria, one of which is the ability to get to a particular site via transport mechanisms and infrastructure. The problem, however, is that in many situations there has not even been an assessment of how the particular criterion applies to particular sites. I understand what the Minister says—the criteria exist. They may do, but does he agree that if they are not applied, that shoots a hole through the whole process?

[Graham Stringer (in the Chair)]

Order. We have just over an hour left, but I remind hon. Members that interventions should be short and to the point.

[Mel Stride]

Thank you, Mr Stringer. I should agree with the hon. Member for Bootle if the premise of his assertion were true. In reality there has been an assessment. Of course, in each and every case, HMRC looked at the criteria and applied them to the various options in the various regions, and came to a conclusion as a result of the assessment. That is the logical and sensible way in which such matters move.

[Jim McMahon]

On a point of order, Mr Stringer. The Minister has said a number of times that an assessment has been made of the various sites and location options. If it transpired that the assessment had not been carried out, what remedy would the House have?

[Peter Dowd]

rose—

[Mel Stride]

I give way to the hon. Gentleman.

[Peter Dowd]

I shall write to the Minister about this; but the bottom line is that when I asked senior officers about the criterion on transport access, I asked them if they had spoken to the transport authorities for the areas affected, and they told me they had not. It is an important point. If an assessment relating to the transport authorities was not done—if the officers did a desktop assessment—that is not proper consideration of the criterion.

[Mel Stride]

We can go round and round this for some time, but HMRC has a very clear set of criteria. It has looked extremely carefully. As I explained earlier, when it comes to travel distances to work and journey times it has mapped every single employee within its employ, to make sure that that aspect of that particular decision is taken as rigorously and robustly as possible. I am afraid I do not recognise the hon. Gentleman’s suggestion that this is somehow just a case of putting a finger in the air and a pin in a map. It has been well thought through.

To conclude, raising taxes is vital to our public services.

[Chris Stephens]

It is a pleasure to see you in the Chair, Mr Stringer. The Minister has not yet mentioned the minimum wage compliance, which was mentioned in the debate. Does he have some words to say about that?

[Mel Stride]

It is the duty of HMRC to ensure the minimum wage is adhered to and that it is rigorous and robust in its approach to that. It does not hesitate to go after those who break the law and do not pay the minimum wage. It has the ability to go after those companies or individuals for back tax and penalties, and it does that with vigour. I would argue that under a more modern system with large numbers of people working collaboratively in the way I have described, it would be even more effective in doing that.

I think we have given this matter a good, broad and wide airing. I am grateful to all hon. Members for their contributions. I take all the issues raised seriously, even though we disagree on a number of matters, and I am particularly grateful for what is probably a record number of interventions in a Westminster Hall debate.

Finance Bill

Mel Stride Excerpts

Tuesday 31st October 2017 Commons Chamber

[Peter Dowd]

The problem is that that has been a persistent argument for years, but there does not actually appear to be any evidence to back up such an assertion.

I understand that HMRC is responding to EU directives on money laundering and has started the process of registering new trusts and that those already operating must provide additional information by 31 January 2018. However, HMRC has also confirmed that it will not penalise anyone as long as they register before 5 December 2017. The rules state that all trusts with UK tax liabilities must be registered, but the process is conveniently silent about trusts registered in Crown dependencies and overseas territories. The information provided to HMRC will not be made publicly available.

The Minister and Government Members have made much of the claim that the Conservative party has been clamping down on tax avoidance. In fact, that was considered such a priority in the general election that the Prime Minister—at her most imperious, at that stage—gave the subject a grand total of eight lines in the Conservative party manifesto. However, after seven years in power, the Government’s record is still there to see. The measures in the Bill are another example of how the Government wish to be seen to be doing something, but in fact their proposals are artificial and will amount to little while the exemption for offshore trusts remains intact.

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

On bearing down on tax avoidance, evasion and non-compliance, does the hon. Gentleman recognise that we have brought in £160 billion since 2010 by clamping down on avoidance? It was announced just last week that the tax gap—the difference between what we should be bringing in and what we are bringing in—is now at just 6%, which is much lower than it was in any year under the previous Labour Government.

[Peter Dowd]

I am pleased that the Minister raises that point because we will no doubt have another debate about it in the future. I have an interesting assertion that I shall make when we debate the tax gap, but that is for another day. I am happy to debate that subject with the Minister in due course.

[Peter Dowd]

This does not actually include the multinationals, but I was trying to make the point that I am happy to return to that point in another debate, if the Government so wish.

[Mel Stride]

The hon. Gentleman is being extremely generous in giving way. On this very important question, does he not recognise that the tax gap is currently 6%? In 2005, under the previous Labour Government, it was about 8%. If the tax gap was 8% today, we would be bringing in £11.8 billion less in tax, which is the equivalent of the funding for every single police officer in England and Wales. The tax gap really does matter, so I think that the hon. Gentleman should address the questions that are being put to him.

[Peter Dowd]

The tax gap fell in every year between 2005 and 2010. The Minister brings my attention to his record, but I am bringing his attention to Labour’s record. As I have said, if we want to have a debate about the tax gap, we can do that. I am more than happy to do so, as are my colleagues, but as I have said many times, this is also about trying to look forward. We can all talk about our record—how good or bad it might have been—but let us move on and try to deal with the issues we are facing, not those we used to face.

--- Later in debate ---

[Peter Dowd]

If we had a review and identified areas of non-compliance, I suspect we would bring in far more money than that review would cost. That is why we have reviews. Again, I am sure that the hon. and learned Lady will support the new clause.

The Government’s opposition to any action to crack down on offshore trusts is not new. In 2013, while G8 leaders attempted to push forward new measures to deal with tax evasion, the previous Prime Minister was busy undermining them by writing personal letters to the President of the European Council, Herman Van Rompuy, begging him to stop the inclusion of offshore trusts. By contrast, the last Labour Prime Minister, Gordon Brown, to his credit, spent his last year in office attempting to get world leaders to agree to strict measures on offshore tax havens. That is all the more reason for a review, so let us have that review. I am speaking directly to our proposal. As I have said, if there is nothing to be fearful of, let us have the review.

Our opposition to the exemption of offshore trusts from these measures is well noted. We have been calling for the exemption’s removal since March. I called for its removal in the debate on the Ways and Means resolutions for this Bill, on Second Reading and in the Public Bill Committee, as the Minister knows, and I now call for its removal once again. I am happy to give the Minister an opportunity to reconsider, because the British public are no fools. They are more educated than ever about what an offshore trust is and what it is used for.

[Mel Stride]

The hon. Gentleman is being exceptionally generous in letting us intervene so many times. To bottom out one point that came up in Committee, even though he may feel that our proposals are imperfect, does he accept that we have made more progress than any previous Government and that we are going further than before in raising fair taxes from non-doms?

[Peter Dowd]

I recognise any progress that anybody makes. If the Government have brought about progress, that is fine—I think it is wonderful—but I think there should be more progress. Under the stewardship of the Minister, I am convinced that we will have even more progress on this matter.

While the Minister might be able to use arcane rules of the House to prevent the Opposition from removing the offshore trusts exemption and introducing a public register, he cannot hide from the fact that his Government have a pretty poor record in this area. The heart of our disagreement with the Government is simple: it is about whether all UK citizens are to be treated equally in the eyes of the law and for the purposes of taxation. Throughout the passage of the Bill, it has been clear that the Government are actively content to ensure that we have a tax system that favours a wealthy few at the expense of the many.

The Government could act to close this tax avoidance measure. They could act to send a message to those who want to dodge taxes that the UK will not tolerate it. They could send a message to those who do not avoid their taxes that the Government are on their side. They could even send a message of support to hard-pressed public services by taking up the suggestion of the right hon. Member for West Dorset (Sir Oliver Letwin) and hypothecating any taxes raised by clamping down on the dodgers.

--- Later in debate ---

[John Redwood]

I entirely agree. I pointed out at the beginning that Labour in office was probably more gentle on this group of people than the Conservative party in office has been. I think Labour came to that judgment for good reasons. Labour Members disagree with their previous Governments, but they will discover that that is the luxury of opposition and that Governments are responsible for sustaining as well as growing the revenues. It is very easy to get rid of revenue by annoying people and companies. It is far more difficult to systematically build up a good tax base by promoting economic growth.

[Mel Stride]

Does my right hon. Friend agree that when the Opposition refer to non-doms as tax dodgers, they are referring not just to the super wealthy, but to many tens of thousands of individuals who come over here who do not have overseas assets on which to draw, who make a contribution to our economy and who pay all their taxes in the normal manner in this country?

[John Redwood]

Yes, it is very offensive language to call people tax dodgers. If they willingly come to our country, make a big investment in our country, spend a lot of their money in our country and pay all legal dues that this Parliament requires of them, I do not think calling them tax dodgers is wise, friendly or helpful. That is why I began my remarks by asking the hon. Member for Bootle (Peter Dowd) if he could draw a distinction between a non-dom who came here, paid all legal taxes but was, in his terms, dodging taxes on wealth legally held elsewhere, and a Labour MP who deliberately puts their savings money into an ISA or the pension fund to avoid paying tax. It seems to me that they are very comparable and I do not regard either as tax dodgers.

I do not think my Labour colleagues are tax dodgers because they take advantage of the savings breaks that both Conservative and Labour Governments offer UK taxpayers. Similarly, I do not regard a rich person from abroad who pays all legal dues here with no questions over their tax affairs as a tax dodger. I think they are a welcome contributor to greater growth and prosperity in our country, and we could think of a nicer way to sum them up.

I urge the House to resist the blandishments of the Labour party in opposition, to remember the stance of the Labour party in government, which was rather wiser, and to unite behind what I hope my colleague on the Front Bench will be saying, which is that we welcome talent, industry, enterprise and money into this country and that we want to have a fair basis for taxation that does not deter them from coming.

--- Later in debate ---

[Alex Burghart]

I entirely agree with my hon. Friend. It is crucial, perhaps now more than ever, that this country is entirely open to money, to investment and to good business practice from around the world. It is incumbent on the Government to ensure that they create an environment that will bring jobs and investment into his constituency and mine, and indeed into all parts of our country. I also want to voice my wholehearted support for Government amendment 17—a fine amendment if ever there was one—which sets the Treasury record straight, as ever it should be.

[Mel Stride]

I begin by thanking the hon. Member for Bootle (Peter Dowd) for his interesting and informative contribution. Alas, I am going to have to disappoint him and say that I will urge the House to reject new clause 1, but I thank him most sincerely for the generosity with which he gave way to the wave upon wave of Government Members who wanted to challenge him—it was a veritable intervention-fest. My hon. Friend the Member for Braintree (James Cleverly) mentioned the “The Morecambe & Wise Show” but in the hon. Gentleman’s case, I was reminded more of the 1980s show “Game for a Laugh”—[Interruption.] Perhaps that was unkind, but we had some fun along the way.

--- Later in debate ---

[Anna Soubry]

Does my right hon. Friend agree that an important point to make about non-doms is that the idea that they are all multimillionaires, if not billionaires, is an absolute fallacy? Many non-doms quite properly have that status, but the idea that they are fat cats or rich people with oodles of money who are up to dodgy dealings is an absolute myth. Many of them are actually of modest means, but invariably those of more substantial means are great entrepreneurs and we need them in our country arguably more than ever before.

[Mel Stride]

My right hon. Friend is entirely right and pre-empts the point that I was about to make, which is that it is quite wrong of the Opposition to castigate all non-domiciled individuals in this country and to characterise them as tax dodgers. In fact, the hon. Member for Bootle made the point that there are over 100,000 non-doms in the United Kingdom. The vast majority of them do not have lots of overseas assets or may have no overseas assets; they are not opening up trusts and putting assets in them. They simply come over here, sometimes for a couple of years or so, to work and contribute to our economy.

[Geraint Davies (Swansea West) (Lab/Co-op)]

What the Minister says is true so far as it goes, but I recently met representatives of Man, with which the Minister will be familiar. At £100 billion, Man runs the biggest hedge fund across Europe. They want robust, predictable and understandable regulation to provide certainty for investors, rather than slackness that allows people to creep through holes and exploit loopholes. They want to know where they are. They do not necessarily want a race to the bottom; they just want a reliable system for investing over the long term.

[Mel Stride]

Certainty for the future is precisely what the proposals deliver, and they were extensively consulted on for a couple of years before coming into effect. We are providing exactly the certainty that the hon. Gentleman wants.

As is characteristic of the hon. Member for Aberdeen North (Kirsty Blackman), she made some fairly thoughtful comments about the importance of ensuring that the tax code is not overly-complicated. She will be aware of the work that we are doing with the Office of Tax Simplification. I was grateful for her at least partial welcome for some of our anti-avoidance measures which, as many Members rightly pointed out this afternoon, have brought in £160 billion since 2010.

My hon. Friend the Member for Braintree referred to the Bill as “gargantuan.” Having spent what feels like most of my life reading every syllable of it, I think that is a rather polite description of this colossus of a Bill, which has 760-odd pages. He mentioned Morecambe and Wise, and it was a nice touch to characterise the way in which the Opposition play the same old tunes. For the Government, of course, the tune is “Bring Me Sunshine”. We believe in an economy that works for everybody; we believe in bright, sunny uplands; we believe in possibilities, we believe in the future; and, above all, while I am a Treasury Minister, we believe in fair taxation.

My hon. Friend was also right to mention the £160 billion. He particularly stressed the importance of getting away from the corrosive message of always beating up those who are an apparently easy target. We need to talk our country up, not do our country down.

[Geraint Davies]

Does the Minister understand the deep concern about the need for transparency, legitimacy and fair returns in the aftermath of the Panama papers? What specific actions have the Government taken, or are they just saying, “Oh, well. It doesn’t matter. We’ll just get on as normal.”?

[Mel Stride]

We are right in the vanguard, as the hon. Gentleman knows. The OECD’s initiative to address base erosion and profit shifting has, among other things, brought in the transfer of information between countries on the very issues he raises. We are no slouch when it comes to addressing such issues.

My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) also talked about tax avoidance. He confessed to the “novelty” of listening to the hon. Member for Bootle, which is perhaps a little harsh as I often learn a lot from listening to him. My hon. Friend also talked about the importance of attracting the best people to our country from all walks of life, and he is right.

My hon. Friend the Member for Brentwood and Ongar (Alex Burghart) made an important point about the setting up of trusts. The trusts of those who become deemed domiciled under the Bill will have to have been in place before that particular moment in time. It is worth stressing that taxation falls due, in the normal manner, only when income in taken out of a trust. My hon. Friend also got us tangled up in a debate about the Beatles and Ringo Starr, but then my hon. Friend the Member for Walsall North (Eddie Hughes) told us that it was Jasper Carrott all along, and we are grateful to him for that.

I begin my response to the hon. Member for Bootle by reminding the House of the significant changes that the Bill introduces to the way in which non-domiciled people are treated in the United Kingdom for tax purposes. The new rules that the Government are introducing fundamentally change the way non-doms pay tax in the UK by ending permanent non-dom status. Under the Bill, non-doms who have been resident in the UK for 15 of the last 20 years will no longer be treated as non-domiciled by the tax authorities. Instead, they will pay tax in the same way as everyone else, bringing £1.6 billion in much-needed extra revenue for our public services.

To maintain fairness and to keep our tax system competitive, the Bill protects non-residents’ trusts from being wholly introduced to the UK tax system. New clause 1 would impose an obligation on HMRC to review the operation of those protections for non-resident trusts. The review would consider the cost of the protections and the effects they have on taxpayer behaviour, including the effect of removing the protections. Although I understand the intention behind the new clause, I do not think it is necessary to legislate for such a review to take place. HMRC and Her Majesty’s Treasury have hundreds of officials monitoring the tax system and assessing the risks, which is right and proper given the Government’s responsibility to ensure that the tax system delivers value for money for the UK taxpayer.

There is a more fundamental case against the new clause—a case about fairness and unintended consequences. The trusts that the Bill seeks to protect are those created before an individual is deemed to be UK domiciled. Many of these complex trust structures will have been set up long before the individual even thought about moving to the United Kingdom and will not have been set up to comply with the UK’s tax rules. In the circumstances, it is not unreasonable that the new domicile rules are introduced in a way that protects trusts from unintended consequences. It would be unfair to ask a non-dom to pay tax on money they never intended to bring into contact with the British tax system in that way.

[Geraint Davies]

Is the Minister saying it is fair for someone to tax plan to leave the country, make a load of money and hide it in various places where tax is not charged before coming back to live in the British environment, where they always wanted to live, and avoid all that tax?

[Mel Stride]

I am not saying that at all. What I am saying is that, where a non-dom has a family trust or some other perfectly legitimate arrangement—they might not have been to this country at all when the trust or arrangement was set up—and is subsequently deemed to be domiciled in this country, it is not unreasonable that the contents of that trust should be protected, with the important caveat that tax is due to the UK tax authorities as soon as income is taken out of the trust.

[Geraint Davies]

In terms of tax planning, a merchant banker or whatever in their twenties could plan to leave Britain for a number of years, make a lot of money and protect that money in a tax haven before coming back and receiving all the benefits—sending their kids to public school and all the rest of it—without paying tax in Britain.

[Mel Stride]

I think I have answered that question. It is probably time to move on.

Even with these protections in place, non-doms who become deemed UK domiciled will be protected from tax, as I have said, only on income and gains that remain in the trust. Any moneys withdrawn or benefits provided will lead to a tax charge on the individual. This is a fair system that has been carefully considered and consulted on since it was announced more than two years ago. It is simply unnecessary to introduce legislation to place additional bureaucracy and additional reporting burdens on HMRC, which already scrutinises non-doms’ compliance with the UK tax regime.

Government amendment 17 will remove and correct a minor inaccuracy in schedule 8 to ensure that the policy is delivered as intended. The change applies to part 4 of the schedule, on the cleansing of mixed funds. For the purpose of these rules, a qualifying individual is one who was not born in the United Kingdom and whose domicile of origin is not in the United Kingdom. The amendment simply corrects the Bill by replacing “or” with “and” when defining a qualifying individual. I therefore urge the House to accept the amendment.

These reforms have been carefully drawn up to ensure that we get the right balance between protecting the public finances, remaining internationally competitive and showing how much we value the contribution of non-doms in the UK. I therefore urge the House to reject new clause 1.

[Peter Dowd]

I thank the hon. Member for Brentwood and Ongar (Alex Burghart) for referring to Plutarch, a Greek citizen who became a Roman citizen—but not a non-dom in that country. Our new clause would require a review to be undertaken on the effects of

“the provisions for the protection of overseas trusts in relation to deemed domicile.”

Like Queen Gertrude in “Hamlet”, Conservative Members protest too much. Why can we not have a review? That is all the new clause asks for: a review. What is wrong with a review?

Question put, That the clause be read a Second time.

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[Anneliese Dodds]

Labour’s amendments on redundancy payments focus, first, on ensuring that there is proper democratic scrutiny of any attempt to reduce the £30,000 threshold for the taxation of termination payments, rather than the power to do so residing merely in regulations and, secondly, on ensuring that injured feelings are included in, rather than removed from, the definition of injury for the purpose of tax-excluded payments.

It is frustrating to be back in the Chamber to debate these issues again, with, again, no indication from the Government of any change in their position. The discussions in the Bill’s previous stages, including in Committee, detailed many ways in which provisions against aggressive tax avoidance and evasion could be tightened. Yet, rather than heed those reasonable suggestions for the removal of loopholes, the Government seem keen to target those made redundant as a potential source of revenue.

The changes in clause 5 are occurring in the context of the Government being determined to rush headlong into reducing corporation tax rates, despite the Institute for Fiscal Studies and others being clear that there is no automatic link between lowering rates and increasing revenue. In fact, I would hazard to suggest that in this case the opposite might be true. The Government’s previous cuts to corporation tax have manifestly not increased business investment.

The changes in the clause are also occurring when, as we have discussed, many loopholes have been retained for non-doms and, furthermore, while new measures for corporations exempt some of those firms that appear to have the most labyrinthine business arrangements, designed for tax purposes—not least some public infrastructure companies.

One might, then, wonder exactly why the Government have decided to stick to their guns and focus tax increases on those who are made redundant, which is effectively the idea that the provisions in the clause promote. We have been told by the Minister repeatedly that there are no immediate plans to reduce the threshold beyond which termination payments are taxable. If that is the case, why create the power to reduce it?

[Mel Stride]

rose—

[Anneliese Dodds]

If I may finish, I will be more than happy to take an intervention.

To use an appropriate analogy on Halloween, I would not have bought a pumpkin last weekend if I expected it to sit on the shelf when I brought it home. I would have bought it because I expected to carve it, although not very artistically, for my children. I would not purchase something if I did not think I was going to use it, so why are we spending valuable parliamentary time debating a measure that will never be used?

[Mel Stride]

I simply wish to point out that, as I think the hon. Lady will know, the statutory instrument on changing the £30,000 threshold would have to be passed by the House under the affirmative procedure. It would be an affirmative SI, so it would have to be voted on by the House.

[Anneliese Dodds]

The Minister’s point exemplifies exactly what I anticipated might happen. I was just about to say that the second line of defence from the Government, after proclaiming that they would abstain from using the powers that they are so keen to give themselves, is that, in any case, they would have to bring any change to the House for a vote. Indeed, that is what has occurred just now. We are all aware of the difference between passing a measure through the ordinary legislative procedure, with the amount of scrutiny that that receives, and passing a measure through the type of approach that the Minister has mentioned just now. I regret that this appears to be part of a piece, with a broader trend to exempt new policies from the parliamentary scrutiny that they deserve and that the British public have rightly come to expect from its elected representatives.

Arrangements for those facing redundancy are not, and should not be, a matter of purely technocratic interest. The Government’s failure to raise the tax-free threshold for statutory redundancy pay has meant that it has already lost much of its original real value. That perhaps explains why, when the Government consulted on this issue, there was no conclusive evidence in the consultation either of widespread abuse in this area or of a clamour for a reduction in the threshold.

We are also asking the Government to reconsider their plans on injury to feelings payments as part of termination payments.

--- Later in debate ---

[Anneliese Dodds]

I am grateful to the hon. Lady for her comments, but I must tell her that the consultation on the measure did not reveal widespread evidence of such manipulation of the rules. It was quite clear in that regard. Indeed, when advice was sought about appropriate measures in this area in the future, a range of different views came from stakeholders and consultees about the way forward. She is right to say that we are not talking about these changes affecting everyone who is made redundant. They apply to a minority of people, but it could be people who have had a very difficult time and who really rely on that redundancy payment for sustaining some kind of quality of life into the future. It is absolutely important that we have a proper debate about, and parliamentary scrutiny of, any changes, which is exactly what our amendments are intended to do.

I was talking about the new plans for injury to feelings payments as part of termination payments. I noted that there were many claims from the Government on this topic on First and Second Readings of the Bill, not least that payments allotted via tribunals would not be affected by these measures, but it is not the case that employment tribunals can decide whether payments are subject to tax or otherwise. That is not within their power. Yes, in some cases, some types of employment tribunal award are “grossed up” to take account of the tax that will be due, but that is very different from deciding whether an award is in and of itself taxable, which seemed to be implied in some of the previous debates on this issue.

In addition, the measures proposed in the Bill would cover the far more common payments made directly by an employer to settle discrimination complaints as part of a redundancy or other dismissal.

[Mel Stride]

The hon. Lady asserts that those awards made by tribunals are not necessarily non-taxable, but those made for discrimination, for example, are completely non-taxable.

[Anneliese Dodds]

If we are talking about payments made for discrimination in the context of a redundancy payment, yes, they are. That is our exact point, which is why we are discussing this matter about injury to feelings. We have had some comments in this House which appear to misunderstand the nature of injury to feelings payments. In some cases, these have been trivialised, almost suggesting that these payments are made because an employees’ nose has been put out of joint rather than something potentially more serious. But “injury to feelings” is a substantive legal category. Where there is genuine evidence of misuse of this category, that should be stamped out, but we have not been provided with such evidence as part of our deliberations on the Bill. Injury to feelings is related directly to discrimination experienced by a person because of their characteristics as an individual—their age, gender, sexual orientation, disability status or ethnicity. This should be taken seriously and it should not be a focus for penalising individuals, as is the case under these proposals. Again, as my hon. Friend suggested, this appears to be part of a piece, with more general measures watering down the protection to individuals suffering from discrimination at work, whether or not they take that discrimination to a tribunal. Clearly, tribunal fees have been struck down because of their discriminatory impact. Now measures are popping up that water down individuals’ protections in other ways.

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[Ellie Reeves]

I will make some progress.

It seems curious that the Government want to make it a priority to enshrine it in statute that compensation for injury to feelings awards connected to the termination of employment should be taxed as earnings. This is yet another example of how the Government, rather than going after the big corporations that are avoiding tax, would penalise those who have been unlawfully discriminated against at work.

When we last debated the Bill in Committee on 11 October, it was suggested by Government Members that injury to feelings was some sort of new concept that Labour was trying to introduce to create a tax loophole. Yet injury to feelings is a well-established head of damage, enshrined in the Equality Act 2010 and in the various pieces of anti-discrimination legislation that preceded it, including the Sex Discrimination Act 1975. Guidance on the level of awards was given in the case of Vento some years ago, and it has just been upgraded. The highest award is £42,000 for the most serious acts of discrimination, which usually involves a course of conduct over many years, and the lowest award is £800—usually for a one-off comment. That is established legal principle.

Under these proposals, however, such awards would be taxed as a matter of routine when the £30,000 threshold is exceeded. Not only does that seem inherently unfair to victims of discrimination, but in practical terms it will lead to all sorts of litigation and drafting issues about whether an award is in connection with the termination or a previous act of discrimination unconnected to the termination. For example, a woman is subjected to sexual harassment at work over a sustained period. She subsequently tells her employer she is pregnant and is dismissed as a result. She pursues a claim for sexual harassment, unfair dismissal and maternity discrimination. She is awarded £30,000 for loss of earnings, which takes her up to the tax-free threshold. She is awarded another £10,000 for injury to feelings. Who determines what part of the award is for the harassment, which is unconnected to the termination of her employment and therefore not taxable, and what part is in relation to the pregnancy-related dismissal and therefore taxable?

Moreover, because personal injury claims will be exempt from tax but injury to feelings will not be, we are likely to see more employment tribunal claims pleading personal injury—for example, psychiatric damage—which will inevitably lead to complex medical evidence and longer hearings. With strains already on the employment tribunal system and on HMRC, that is surely not the route we should be going down. Or is this just the start of a slippery slope, with the Government ultimately wanting to tax all injury to feelings awards and all personal injury awards?

For those reasons, I urge the Government to accept our amendments and to go after the real tax avoiders, not hard-working individuals who have been treated unlawfully at work.

[Mel Stride]

Following our vigorous and constructive debate during the Committee of the whole House last month, I welcome the opportunity to reiterate the importance of the changes we are making to the taxation of termination payments today. In doing so, I thank the hon. Members for Oxford East (Anneliese Dodds), for Lewisham West and Penge (Ellie Reeves) and for Aberdeen North (Kirsty Blackman) and acknowledge their contributions.

Before I respond to some of the detailed points raised, let me begin by briefly reiterating the objectives of the changes we are making. As I have outlined previously, the current rules on the taxation of termination payments can be unclear and complicated. Unfortunately, this complexity has led to a small minority of individuals and employers—particularly those with the most generous pay-offs—seeking to manipulate the rules to avoid paying the tax that is owed. They do so by characterising large pay-offs as termination payments rather than earnings, so that they qualify for the £30,000 tax exemption and an unlimited employee national insurance contributions exemption. As Members on both sides of the House have agreed, this situation is clearly unfair for the vast majority of employees, who are unable to manipulate their payments in this way. The purpose of this clause is to tighten and clarify the tax treatment of termination payments to make the rules fairer and prevent manipulation.

As we have heard, amendments 1 and 2 would remove the power to reduce the £30,000 tax exemption threshold for termination payments by regulations. As I have said several times in this House, the Government have no intention of reducing this tax-free amount, despite the best efforts of Labour Members to suggest otherwise. Let me assure the House again: any reduction in the threshold would be subject to a statutory instrument and the affirmative procedure, so the House would have to approve any such proposal. The House rejected this amendment in Committee of the whole House, and I urge it to do so again.

Amendment 3 would exempt from taxation all termination payments for injured feelings. As the House heard earlier this month, this amendment would present further opportunities for those seeking to manipulate the system by opening a large loophole for payments to be routinely reclassified on account of an injury to feelings, without any medical evidence, simply to pay no tax. This is hard to prove or disprove, and it would be very difficult for HMRC to regulate. In any case, payments for injured feelings will of course continue to qualify for the £30,000 tax exemption like any other normal termination payment. The House wisely rejected this amendment earlier this month, and I urge it to do so again.

The changes being made by clause 5 are a fair and proportionate way to close a loophole in the rules that has unfortunately been open to manipulation in the past. The Government have repeatedly shown that many of the concerns raised by Labour Members are unfounded —and, frankly, give the appearance, at least, of misconstruing an important tax avoidance measure as some kind of attack on those losing their jobs. This politicking is unworthy of the Opposition. I have heard no new arguments or evidence today to convince me of the need to reconsider this clause. I therefore urge the House to reject the amendment.

Question put, That the amendment be made.

--- Later in debate ---

Too often, the Government have exercised a sloppy approach to policymaking, with disasters such as universal credit a direct result of ignoring the evidence available from pathfinder schemes and the testimony of stakeholders. Britain’s small businesses cannot afford a similar disaster in the implementation of Making Tax Digital. We therefore ask the House to listen to us and to the warnings of independent experts outside this building, and support this pragmatic and sensible package of amendments today.

[Mel Stride]

Government amendments 12 to 16 fix a small technical error that could otherwise result in an outcome that was not intended. They will ensure that landlords who stop renting out a property and move in rather than sell it are not unintentionally disadvantaged when using the cash basis.

I now turn to the Opposition’s amendments. New clause 4 requires the Chancellor to review the impact of the provisions on households at different levels of income, the impact on people with protected characteristics, and regional impacts. The Treasury considers carefully the impacts of its decisions on individuals and groups with protected characteristics in line with both its legal obligations and its strong commitment to promoting fairness. The Government have published distributional analysis of measures contained in the Finance Bill in the “impact on households” document which accompanied spring Budget 2017. The Treasury and HMRC also published tax information and impact notes for individual tax measures that include an assessment of expected equalities impacts. I therefore urge the House to reject new clause 4.

The Bill includes provisions for the introduction of Making Tax Digital programme. The tax gap resulting from errant carelessness currently stands at £9.4 billion. The Government’s plans for Making Tax Digital aim to address the tax gap and provide a more modern digital service that will help businesses to get their tax right. However, as discussed in Committee, it is also important to do this in a way that works for business. My announcement of 13 July allows a small business more time through a phased implementation of Making Tax Digital. This change has been widely welcomed and stakeholders are now working hard to prepare for MTD.

Opposition Members have, as we have heard, proposed amendments that would make three changes to the implementation of Making Tax Digital. First, they propose that the programme should be delayed until 2022 at the earliest. As I have said, I have already made changes to the timetable of Making Tax Digital, so that businesses have longer to prepare. Secondly, Opposition Members are seeking to prevent mandatory quarterly updates for VAT under MTD. Most businesses paying VAT already report quarterly. Businesses that are mandated to use MTD for VAT will not be required to provide updates to HMRC more frequently than they do currently, or to provide any more information. Finally, the Opposition have pressed for a report on the suitability of software at least 90 days before MTD for income tax is mandated. The Government are already committed to ensuring that a full range of software is available for MTD and that these have been tested thoroughly. I therefore urge the House to reject the amendments tabled on these clauses.

[Nigel Mills (Amber Valley) (Con)]

At a Public Accounts Committee sitting last week on the future customs border and the software upgrade for that, the permanent secretary appeared to suggest that Making Tax Digital was the highest priority IT programme for Her Majesty’s Revenue and Customs. Would the Minister agree with that, or does he think that we should prioritise making sure that our systems can cope with the many changes that may come about through Brexit?

[Mel Stride]

Of course there are a number of HMRC-led IT programmes; Making Tax Digital is but one of them. A new system for customs, the customs declaration service system, will replace CHIEF—the customs handling of import and export freight system—and that has very high priority. We are on target for full roll-out in January 2019; we will begin the CDS pilot in August next year. I am satisfied that the balance is correct at the moment.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Has the Minister spoken to his colleagues in the Department for Work and Pensions, who are embarking on a £13 billion IT contract for universal credit, on the lessons to be learned and the impact on people who are trying to use a system that is evidently not fit for purpose?

[Mel Stride]

As that programme relates to DWP, the question would be best directed in that direction, but I assure the hon. Gentleman that, to the extent that the Treasury and HMRC impinge on the programme, it is for us a very high priority.

I turn to new clause 2, which, although not debated, was tabled by the hon. Member for Walthamstow (Stella Creasy). I would like to deal with it, because I know that from her perspective it was a very important new clause. I understand why she suggests extending the rules on the taxation of capital gains from commercial property disposals by UK taxpayers with a foreign domicile, but I fear that the new clause and the discussion it has prompted have fallen foul of the complexity inherent in this area. I would like to clarify some of the issues.

First, contrary to the new clause, it is residence and not domicile that determines whether the disposal of an asset in the UK is within the charge of capital gains tax. UK residents, including non-doms, will always be liable for CGT on the profits from selling UK land, whether that land is residential or commercial. Also, it does not appear that the change that the hon. Lady proposes would apply to foreign companies owning UK commercial property, as domicile does not apply to companies.

These elements of confusion mean that it is far from clear that the review proposed would work. I remind the hon. Lady that this Government in 2015 started taxing non-residents on their gains from UK real estate—something that previous Governments had ducked. Those changes give a sense of the amount of revenue that an extension of them to the commercial property market would raise. The Office for Budget Responsibility certified that the 2015 changes will raise £40 million this financial year and £70 million in the next. That gives a more realistic sense of the order of magnitude of the amount that this change could raise than the figures suggested in previous debates.

The hon. Lady has also suggested that taxpayers are designating residential property as commercial property to avoid paying the residential charge. Let me be clear: if residential property is being designated as commercial property, that is a matter of tax avoidance or evasion, not of the scope of CGT. HMRC has not seen any evidence of this practice.

The hon. Lady has provoked a good debate on this issue. Although I urge the House to reject new clause 2, which confuses too many of the issues at stake, I recognise that a number of points in this area are worth consideration, and we will certainly continue to look closely at the issue of non-residence and CGT on commercial property.

New clause 3 seeks to commit the Government to carrying out and publishing a review of the tax treatment of income provided through third parties, in particular in relation to sports image rights. Image rights payments have long been taxable. There have been cases where employers have tried to inflate payments for image rights and to reduce salaries accordingly, to deliver a tax saving to both employers and employees. I thank my hon. Friend the Member for Dover (Charlie Elphicke), whom I see in his place, for the insights, advice and support that he has given me on this issue.

The courts have ruled that genuine image rights payments to an employee are not taxable as earnings. It is therefore for HMRC to ensure that image rights payments are genuine and taxed in the right way. At spring Budget 2017, this Government committed HMRC to publishing clear guidelines for employers who make image rights payments for the use of an employee’s image, and HMRC has done that. HMRC undertakes extensive compliance activity to ensure that employers play by the rules and image rights payments are taxed in the right way. The new clause is not necessary, so I urge the House to reject it.

New clause 5 asks for a review of the conditions of registration for third country goods fulfilment businesses. The review would also need to consider the case for imposing either joint and several liability or direct liability on third country goods fulfilment businesses for the unpaid VAT of their overseas clients.

The Government are proud of their record in tackling online VAT fraud, a complex international problem. The UK has led the way with a package of measures that Government first announced at Budget 2016. It includes the fulfilment house due diligence scheme provided for in the Bill and powers for HMRC to hold online marketplaces jointly and severally liable for the unpaid VAT of overseas traders.

The Government have already undertaken extensive consultation on the scheme in the past 18 months. I assure hon. Members that we will continue to monitor the impact of the legislation. I therefore urge the House to reject new clause 5.

[Nigel Mills]

I commend to the Minister the better solution to this issue: making the online marketplaces themselves liable for the VAT on sales outside the EU. In the Public Accounts Committee, Amazon thought that that was a better solution and it would be happy to implement it. The EU wants to do it. The Government have consulted on split payment. Is it not time to push ahead to ensure that we get all the revenue we deserve and need?

[Mel Stride]

My hon. Friend rightly raises one of the approaches that could be deployed to ensure that VAT is paid: the split payment system, whereby the platform itself is responsible for collecting the VAT and passing it on. That is certainly something, along with other measures, that we are considering.

It has been a pleasure debating this group of amendments. I hope that hon. Members are satisfied on the points we have discussed and I urge the House to reject the amendments and new clauses tabled by Opposition Members.

[Kirsty Blackman]

I think we are all slightly bamboozled by the order in which this part of the debate has happened. None the less, I am thankful for the opportunity to speak.

We have raised concerns about Making Tax Digital and we will carry on doing so because we have issues with the way in which some of these things are being implemented. I appreciate the fact that in Committee the Minister took the time to answer questions about lack of internet access. I am still not 100% clear about the position for those people who have only intermittent access to the internet. I understand what he was saying about those people being able to make a case to HMRC about why they cannot, through the Making Tax Digital scheme, do quarterly reporting. However, I am still not convinced that the language on that was robust enough to protect any of my constituents who, because of their internet connection, are unable, for example, to reasonably undertake the quarterly reporting that is being asked of them. If he is able to come back on that and clarify the position, I will be grateful. The point he made in Committee was useful, but possibly not strong enough in that regard.

The other issues we have about Making Tax Digital concern those people who are in particularly rural areas and who therefore struggle with lack of access to technology and the internet and with doing the quarterly reporting. There are also people who do not have access to HMRC offices in the way they used to. We have raised all those concerns. I have said that I am pleased that the Government have changed the way and the order in which the implementation is going to happen. The SNP is not against Making Tax Digital and quarterly reporting, but we have concerns and we want to ensure that our constituents and businesses in our constituency are protected.

On that note, we said in our manifesto this year that we would support the phased introduction of Making Tax Digital. I want to be clear that we will not, therefore, support Labour’s amendment 11, which is the tack that we also took in Committee. We would not want to vote against something that is a manifesto commitment.

New clause 2 is on commercial property and non-doms. The statements that I made earlier about the issue of non-doms and about the concerns regarding the complexity of the tax code and possible loopholes in relation to that, apply exactly in this regard. I am pleased that the new clause has been tabled by the Labour party, including the hon. Member for Walthamstow (Stella Creasy), I think. I say that quietly in the hope that I have got the constituency right. I am pleased that this has been put forward. Constituents have got in touch with me and several of my colleagues about this. The Scottish National party has previously raised concerns about the taxation of non-domiciles, and we will continue to do so, in particular around some of the loopholes. We will support new clause 2—many of the constituents who wrote to me will be delighted about that—and I am pleased that this matter is on the table and being debated today.

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[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Minister.

[Mel Stride]

It is pleasure to appear before you for my second appearance, Madam Deputy Speaker.

To pick up quickly on a point made by the hon. Member for Aberdeen North (Kirsty Blackman), digital exclusion is covered in clause 62, which provides that the digital exclusion condition is met if

“for any reason (including age, disability or location) it is not reasonably practicable for the person or partner to use electronic communications or to keep electronic records.”

That is the test, and the Bill contains powers to allow HMRC’s commissioners to bring in further grounds for exclusion as the measure is rolled out and we see how it operates.

I see that the hon. Member for Walthamstow (Stella Creasy) has been on her phone and has already tweeted that I have rejected her advances in this debate, but I am now at the Dispatch Box trying to make my points. She makes her points powerfully and raises an important issue, as I signalled earlier, but she has to accept that new clause 2 would not actually do what she would intend it to do. It confuses non-doms with residents, which is the critical distinction, and would classify companies as being non-domiciled, which they cannot technically be. This is a complicated area about which we had an extended debate in Committee, but I have made it clear that we will continue to consider it. We take on board the general thrust of what the hon. Lady wants to achieve.

[Stella Creasy]

I make it clear that I am not making advances to the Minister; I am making arguments to him. Let me ask him one simple question: if this is so complicated—if it seems that the UK Treasury cannot do it—why can most other countries operate without a loophole?

[Mel Stride]

I have already conceded that point. We are looking at this, which rather trumps any questions about why we are not. We are considering it very seriously, and I said earlier that we are looking closely at the issue of non-residents and capital gains tax on commercial property.

[Jim McMahon]

I am pleased to hear that the Government are looking at this important issue, and I congratulate my hon. Friend the Member for Walthamstow (Stella Creasy) on her significant work. When will the Government publish their findings?

[Mel Stride]

It is not a question of publishing information on every area we look into, but I have made it clear that we are seriously considering the issues that have been raised. I have also made it clear that new clause 2 would not do what the hon. Member for Walthamstow describes.

[Stella Creasy]

Will the Minister give way?

[Mel Stride]

I will give way one last time. We went through this at considerable length in Committee.

[Stella Creasy]

I disagree with the words “at considerable length.” I am grateful to the Minister for trying to explain what I am attempting to do. For the avoidance of doubt, the Opposition are asking that British taxpayers and businesses who are paying this charge know exactly what other companies are getting off paying. He tried to mention something from the Office for Budget Responsibility and he clearly has some figures in his head for how much the loophole is potentially costing the British taxpayer. Will he repeat loudly and clearly what he thinks the number is and where he got his evidence?

[Mel Stride]

As I have said, we are looking at this and we will continue to do so. I have carefully considered the points raised by the hon. Lady both on Report and in Committee, and I think I have a clear understanding, as she does, of what she wishes to achieve.

New clause 2 would not do what the hon. Lady intends. I hope that she will take some comfort from my assurances about our looking at this matter and that she will not press the new clause to a Division. Whether or not she does, I urge the House to reject the Opposition amendments and new clauses.

[Jonathan Reynolds]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 62

Digital reporting and record-keeping for VAT

Amendment proposed: 11, page 79, line 19, at end insert—

‘(6A) Regulations under sub-paragraph (5) may not impose mandatory requirements for businesses to generate quarterly updates.”—(Jonathan Reynolds.)

This amendment provides that any system for quarterly updates to be generated must not be mandatory.

Question put, That the amendment be made.

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[Mel Stride]

I beg to move, That the Bill be now read the Third time.

The work of HMRC, though typically not seen as the most glamorous aspect of government, is arguably the most important. If we do not collect tax, we cannot pay for our public services. Every time a new loophole opens up in the tax code, that is another school we cannot afford or another nurse we cannot employ. That is why since 2010 we have significantly improved HMRC’s ability to fight tax avoidance and evasion, and we have raised £160 billion in so doing. That is a far stronger record than in the 13 years during which Labour was in government, but the work is never over.

In this Finance Bill, we are going further than ever to make sure that people pay their fair share. First, we are tackling disguised remuneration schemes by introducing new charges on those artificial loans. Secondly, we are updating the rules on how large companies account for the cost of interest, bringing to an end excessive interest expenses claims. Finally, we are giving HMRC the greater powers it needs to punish avoidance enablers effectively. Taken together, the changes will advance our fight against aggressive tax avoidance.

Alongside our avoidance and evasion work, the Government are committed to making the tax system fairer as a whole. In the Bill, we are bringing to an end permanent non-dom status. There can and should be no denying that non-doms have made a great contribution to our prosperity, but permanent non-dom status can be unfair to UK-domiciled citizens. From now on, with the abolition of non-dom status, those who have lived in the UK for years will pay UK tax in the same way as everybody else does.

The Government recognise that we need to move with the times, and part of that is our work on making tax digital. Every year, the Exchequer loses more than £8 billion in avoidable errors. By making tax digital and easing communications between HMRC, businesses and the self-employed, that loss will be significantly reduced. To help businesses to adjust, we will go forward with a gradual process, as I set out in my written statement. We are confident that the timetable is the right one.

I would like to take a moment to thank Members on both sides of the House for their scrutiny of the Bill on Second Reading and in Committee. The debate has been broad and thorough, and I am particularly grateful to the Labour and Scottish National party Front Benchers for the courtesy and consideration that they have shown me and for their contributions to the debate.

I would like to make one or two final observations. It is, of course, the duty of the Opposition to oppose, to scrutinise and to hold the Government to account, and there has been much good, positive scrutiny from the Opposition—some of it of the highest quality—during proceedings on the Bill. But it is, surely, also the duty of the Opposition to do so responsibly and without taking us too far from the facts or too deep into the politics. Where that occurs—for example, with the branding of all non-doms as tax dodgers, when many are far from wealthy and always pay their tax in the UK—it corrodes this country’s competitiveness and our reputation for fair play. If our clamping down on tax abuse around termination payments—typically for those who receive the largest payments of all—is presented as punishing those who have lost their jobs, it just frightens people. That approach is wrong. The Government stand squarely behind positively supporting our economy and all who work in it, and we always will. I commend the Bill to the House.

Oral Answers to Questions

Mel Stride Excerpts

Tuesday 24th October 2017 Commons Chamber

[Sir Edward Leigh (Gainsborough) (Con)]

5. What steps he is taking to reduce tax-related bureaucracy for small and medium-sized enterprises in the east midlands.

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

The Government are committed to reducing the administrative burdens for small and medium-sized enterprises, including in the east midlands. That is why we delivered £272 million of net reductions in administrative burdens between 2011 and 2015, and why we continue to reduce unnecessary interaction with the tax system.

[Sir Edward Leigh]

We still have one of the longest tax codes in the world. I know that the Treasury is under constant pressure to bung extra pieces of money to particular interest groups, but may I suggest to the Minister that he sticks to his last on the Treasury Bench and argues the case for less taxation, simpler taxation and less debt? That is the best service we can give to the young and to businesses.

[Mel Stride]

My hon. Friend raises an important point about complexity, which is why we continue to work with the Office for Tax Simplification to ensure that our tax code is as simple as it can be. But there is no doubt that, in upholding our exemplary record of clamping down on avoidance, evasion and non-compliance— £160 billion of revenue from 2010 to 2015—we make no apologies for having a tax code that works to support our public services.

[Alison McGovern (Wirral South) (Lab)]

Some 130,000 small and medium-sized businesses that export to Europe currently do not have to deal with any bureaucracy at our border to do so, but they could face such bureaucracy if the Minister’s colleagues have their way. Does the Minister think that that will be good or less good for British business?

[Mel Stride]

As the hon. Lady knows, we are in the middle of negotiations with our European partners. I am confident that, as the Prime Minister has expressed at every turn, we will secure a good deal for this country. In the context of our borders, that will mean that the situation will be as frictionless as possible, which will be good for trade, our country and our economy.

[Stephen Kerr (Stirling) (Con)]

Does the Minister agree that the Labour party’s plans to raise corporation tax would harm small and medium-sized businesses—

[Jim Shannon (Strangford) (DUP)]

Across the whole United Kingdom, and not just in the east midlands, small and medium-sized businesses have created not hundreds but thousands of jobs. Small and medium-sized businesses in my constituency tell me that they are over-regulated and that bureaucracy restricts their ability to employ more people. What is the Minister doing to address that?

[Mel Stride]

The hon. Gentleman is absolutely right about the critical importance of small and medium-sized enterprises. We have more than 5 million small businesses in our country, and they are right at the heart of generating the wealth that generates the taxes that support the public services we all wish to see thriving. I have already explained that we are working closely with the Office of Tax Simplification to make sure that, wherever possible, the Government get out of the way of business, rather than standing in its way.

[Mr Shailesh Vara (North West Cambridgeshire) (Con)]

6. What progress he has made on closing the gender pay gap in the public sector.

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[Alex Chalk (Cheltenham) (Con)]

12. What recent progress he has made on reducing the level of corporate tax evasion.

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

Since 2010, HMRC has secured more than £53 billion from big businesses alone in additional tax revenue from tackling tax evasion, avoidance and non-compliance, and we have made it an offence for a corporate to fail to prevent the facilitation of tax evasion by its employees. Corporation tax revenues were £55.3 billion in 2016-17, their highest level on record.

[Alex Chalk]

Keeping up the pressure on multinationals to pay their fair share of tax is vital. Will my right hon. Friend join me in welcoming the additional £160 billion in tax revenue collected by HMRC since 2010 as a result of tackling avoidance and evasion, thus making the UK’s tax gap one of the lowest in the world?

[Mel Stride]

My hon. Friend is absolutely right—we have collected £160 billion since 2010, far more than was raised during the 13 years under the Labour party. The latest figures show that our tax gap overall is now at 6.5%, better than any year under Labour, where in 2005-06, for example, it was as high as 8.3%.

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

Successive cuts to British corporation tax have manifestly not led to greater business investment, and according to the Institute for Fiscal Studies they are not responsible for the rise in receipts since 2010. So, with huge pressures on our public finances, will the Chancellor delay his proposed cuts to corporation tax?

[Mel Stride]

I am surprised that the hon. Lady should raise the issue of corporation tax, because we have brought corporation tax down from 28% in 2010 to 19% and we have further plans to reduce it further, to 17%, and yet the hon. Lady’s party wishes to inflate those rates of tax to 26%, which would destroy jobs, destroy wealth, destroy growth and lower the amount of tax that we can collect to support those vital public services that we all wish to see thrive.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

One way that companies avoid tax is, of course, by employing people illegally. We still have too many illegal jobs in our economy in sectors such as construction. So will my hon. Friend and his colleagues resist those calls that are floating around to place new and additional burdens on legitimate work, and instead redouble their efforts at enforcement through HMRC to root out illegal work in our economy?

[Mel Stride]

My right hon. Friend is absolutely right. As the Minister responsible for strategic oversight of tax, I am always concerned to ensure that the measures that we put in place are proportionate, and do not carry extra burdens for those who are rightly carrying on their business and running their companies in exactly the correct fashion.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Intergovernmental co-operation is vital if we are to combat international corporate tax evasion. In February this year Treasury Ministers withdrew from a meeting with the EU PANA Committee, which was set up to investigate issues and prioritise reform. What sort of message does the Secretary of State think that sends to corporate tax evaders?

[Mel Stride]

International co-operation with other countries is an area where we have an exemplary record. We have co-operated with the OECD on the base erosion and profit shifting project—many of the recommendations are actually going through the House at this precise moment, in the latest Finance Bill—and, of course, we have common country reporting; we were leading that move in around 2012.

[Mr Speaker]

Finally, Royston Smith.

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[Damien Moore (Southport) (Con)]

T4. What estimate has been made of the effect on unemployment of the reduction in the corporation tax rate?

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

As I said earlier, we have cut corporation tax dramatically and as a consequence we raise 50% more in corporation tax today than we did in 2010.

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

T2. The Chancellor will be aware that the Office for National Statistics has revised downwards the UK positive net international investment position from £470 billion to minus £20 billion. What further shocks of this magnitude does he expect as a result of his Government’s handling of the EU negotiations?

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[Joanna Cherry (Edinburgh South West) (SNP)]

T3. The Scottish National party has repeatedly asked the Government to take action to enable Scotland’s police and fire rescue service to reclaim VAT in the same way as they have done for national bodies such as Highways England. If that action can be taken for Highways England, why not for Police Scotland and the fire and rescue service in Scotland? Will Ministers commit to doing that in the next Budget?

[Mel Stride]

As the hon. and learned Lady will know, when the Scottish Government decided to restructure their police and fire services, they went into that decision with their eyes wide open—they knew what the VAT consequences would be—so it is down to the SNP to ask those questions of itself.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

T6. When is the Treasury likely to give the sign-off to phase 2b of HS2, which you will know, Mr Speaker, runs through Cheshire?

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[Patrick Grady (Glasgow North) (SNP)]

Given that support for a single Scottish police force was in the 2011 Scottish Tory manifesto, can we assume that the Government think that the £280 million VAT fee is a price worth paying, or will they finally see sense and scrap the VAT on Scotland’s fire and police services?

[Mel Stride]

The hon. Gentleman’s colleague, the hon. and learned Member for Edinburgh South West (Joanna Cherry), asked exactly the same question, and I shall give exactly the same answer. When the Scottish Parliament and Government made that decision, they knew that structuring the police and fire services in the way that they chose would lead to the VAT outcome that they should have expected all along.

[Jeremy Lefroy (Stafford) (Con)]

What does the Chancellor believe we need to do to improve productivity, which is rightly one of his three priorities?

Double Taxation Convention (UK and Ukraine)

Mel Stride Excerpts

Tuesday 24th October 2017 Written Statements

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

A protocol to the 1993 double taxation convention with Ukraine was signed on 9 October 2017. The text of the protocol has been deposited in the Libraries of both Houses and has been made available on HM Revenue and Customs’ pages of the gov.uk website. The text will be scheduled to a draft Order in Council and laid before the House of Commons in due course.

[HCWS195]