Finance (No. 2) Bill

Debate between Mel Stride and Robert Jenrick

Committee: 1st sitting: House of Commons
Monday 18th December 2017 Commons Chamber

[Robert Jenrick (Newark) (Con)]

In 2010, tax receipts from the financial services sector amounted to about £53 billion; today they amount to £71 billion. We are making the banks and the wider financial services sector pay their fair share, but we do not want a race to the bottom. We want the sector to be competitive, because tens of thousands of well-paid, highly skilled jobs throughout the country—not just in London but in cities like Nottingham, near my constituency—depend on it.

[Mel Stride]

My hon. Friend is entirely right. The additional tax raised from the banks amounts to £9 billion between 2010 and the present time, and a further £25 billion is projected over the current forecast period. Far from taxing the banks less over time—as, no doubt, the Opposition will shortly have us believe we have done—we are securing more tax revenues than we did in the past.

--- Later in debate ---

[Robert Jenrick]

Will the Minister re-emphasise the point he has just made: that the practical effect for our constituents of the move he is making today will make it much more attractive for important British international banks such as HSBC and Standard Chartered, who have a choice of locations in which to be registered—HSBC recently considered whether to move to Hong Kong or even mainland China—to remain in the City of London?

[Mel Stride]

As is so often the case, my hon. Friend has hit an important nail on the head: in terms of improving our competitiveness, it is clearly deeply unattractive to have a situation where UK-domiciled banks are being taxed on their foreign operations whereas foreign banks are not being taxed by us on their foreign operations, but are only being taxed on their operations in the UK. He is right that the future of HSBC, Standard Chartered, Barclays and other banks, who make a huge contribution to our tax-take and our economy, are much more secure if they are not being disadvantaged by being taxed on overseas operations unlike their foreign counterparts. As part of these changes, the schedule also provides for a reduction in the amount on which the levy is chargeable for certain investments a UK bank makes in an overseas subsidiary.

I shall now briefly turn to the amendments tabled by Opposition Members. For the reasons I have described, we believe that a combination of taxing profits and balance-sheets is the most effective and stable basis for raising revenue from the banking sector. The bank payroll tax was intended as a one-off tax; even the last Labour Chancellor pointed out that it could not be repeated without significant tax avoidance. I can assure the House that information about the bank levy will continue to be published as part of the normal Budget cycle. Official statistics are published on the pay-as-you-earn income tax and national insurance contributions, bank levy, bank surcharge, and corporation tax receipts from the banking sector as a whole. The Government have published a detailed tax information and impact note on the proposed changes introduced by part 1 of the schedule. We have also published information about the overall Exchequer impact of the 2015 package of measures for banks, and these figures have been certified by the Office for Budget Responsibility.

Finally, new clause 2 proposes that HM Revenue and Customs should publish a register of tax paid by individual banks under the levy. Taxpayer confidentiality is an essential principle for trust in the tax system, and HMRC does not publish details of the amount of tax paid by any individual business. While this Government continue to consider measures to support transparency over businesses’ tax affairs, we must balance that with maintaining taxpayer confidentiality in order to sustain public confidence in our tax system.

Paradise Papers

Debate between Mel Stride and Robert Jenrick

Monday 6th November 2017 Commons Chamber

[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.

Finance Bill

Debate between Mel Stride and Robert Jenrick

Tuesday 12th September 2017 Commons Chamber

[Mel Stride]

My hon. Friend is entirely right. That is why the Government have been clear through our tax planning and the information that we have been signalling to the marketplace. Certainty for business is extremely important, which is why we have lowered corporation tax and have stuck to that position. We are making considerable progress, and I will take my hon. Friend’s point on board.

In short, the Bill continues our hard work to drive down the tax gap and ensures that we will provide a fair and competitive tax system. The other part of the deal is that those taxes must be paid.

[Robert Jenrick (Newark) (Con)]

On that point, will my right hon. Friend re-emphasise the fact that the tax gaps for large and small companies have fallen by 40% and 50% respectively since we took over from the Labour Government?

[Mel Stride]

My hon. Friend is correct. The tax gap currently stands at 6.5% for all taxes, which is lower than in any year under the previous Labour Government. In fact, the tax gap was 8.3% in 2005-06, so we are the party that has been bearing down on the tax gap.

This Bill introduces significant changes to the clauses in one area that the Government intended to legislate for before the general election. Many businesses of all types and sizes have already gone digital. They do their banking online, pay their bills online, market their products and services online, and buy what they need online. Making tax digital is the natural next step. It will not only make tax administration more convenient for our businesses, but it will reap rewards for the Exchequer. Avoidable tax errors under the current system cost us almost £9 billion in 2014-15. That is more than double the cost of running HMRC and the Treasury combined.

Many Members, including members of the Treasury Committee, as well as business owners, agents and stakeholder groups have had concerns about whether all businesses would be ready for this development. Well, we listened to that feedback, and one of my early decisions as Financial Secretary was to amend the timetable for delivering Making Tax Digital. Digital record keeping will now only be a requirement for businesses with a turnover above the VAT threshold, and they will only have to provide updates on their VAT liabilities.