Oral Answers to Questions

Michael Tomlinson Excerpts

Tuesday 17th April 2018 Commons Chamber

[Mr Speaker]

The hon. Member for Mid Dorset and North Poole (Michael Tomlinson) can very easily shoehorn in his own inquiry on this question. Question 14 is not dissimilar to 13—have a go on 13, man.

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

rose—

[Mr Speaker]

Well done.

[Michael Tomlinson]

14. That is very kind of you, Mr Speaker. Is it not vital that we reduce our national debt, stop wasting taxpayers’ money on debt interest repayment, and spend it on our public services instead?

[John Glen]

I concur absolutely with my hon. Friend. He might like to know that between 2010 and 2017, we spent £300 billion on debt interest, which is twice the current annual budget of the NHS.

Oral Answers to Questions

Michael Tomlinson Excerpts

Tuesday 16th January 2018 Commons Chamber

[Mr Bob Seely (Isle of Wight) (Con)]

9. What progress is being made on creating jobs and reducing unemployment.

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

12. What progress is being made on creating jobs and reducing unemployment.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

The unemployment rate is now the lowest since 1975, and 3 million more people are in jobs than in 2010. What that means is that they have the ability to use their talents to support their families and to get on in life.

--- Later in debate ---

[Elizabeth Truss]

My hon. Friend has done a fantastic job of championing the Isle of Wight since 2010, and we have seen a 55% reduction in unemployment on the Island. There are many issues that we need to address to ensure that the economy on the Island is competitive and dynamic. The Isle of Wight ferry is a vital service, and we need to ensure that the Competition and Markets Authority has the tools to deal with that. I would be very happy to meet my hon. Friend to talk about what more we can do to boost the Isle of Wight.

[Michael Tomlinson]

I am the chairman of the all-party parliamentary group for youth employment, and each month we track the jobs figures. Will my right hon. Friend update the House on the impact of this very welcome job creation on poverty levels and welfare dependency since 2010?

[Elizabeth Truss]

I congratulate my hon. Friend on his work. Since 2010, we have seen a 40% reduction in youth unemployment. Let us compare that with what happened under the Labour Government when, during an economic boom, youth unemployment rose and those young people were left on the scrapheap rather than joining apprenticeships and getting the training opportunities that they have under this Government.

Paradise Papers

Michael Tomlinson Excerpts

Monday 6th November 2017 Commons Chamber

[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.

Finance Bill

Michael Tomlinson Excerpts

2nd reading: House of Commons
Tuesday 12th September 2017 Commons Chamber

[Michael Tomlinson]

Will the hon. Gentleman give way?

[Jonathan Reynolds]

I feel I have heard quite a lot from the Conservative party, so if the hon. Gentleman will forgive me, I shall proceed.

Today’s proceedings, along with the ways and means discussion last week, have been characterised by deeply held concerns about the state of our economy. There have been many fine and noteworthy contributions in what has been a wide-ranging debate, taking us from Venezuela to the application of the Laffer curve to corporation tax. I feel that Conservative Members will find it quite difficult to cope when I point out that the average rate of corporation tax in OECD countries is 25%, or that in Germany, the strongest economy in Europe, it is between 30% and 33%—and it is even higher in America. The hon. Member for South Thanet (Craig Mackinlay), who is no longer present, even questioned the very basis of taxing companies at all, but it is a reasonably held position that companies benefit from good infrastructure, a skilled workforce and a proven legal system, and it is reasonable to balance the impact of taxation between individuals and corporate entities. I feel duty-bound to point out that the tax gap fell every year between 2005 and 2010—from 8.5% to 7%.

I wish to pay tribute to two particular contributions—

Finance Bill

Michael Tomlinson Excerpts

Tuesday 12th September 2017 Commons Chamber

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

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

Earlier this year, before the general election and in agreement with the Opposition, the Government removed a number of clauses from an earlier Finance Bill to ensure that the House had an opportunity to scrutinise the Bill in more detail. The Government announced their intention to return to the House at the earliest opportunity to legislate for the measures that had been removed, and that is the basis for the Finance Bill that they have now presented to the House. Last week we had a good debate on the resolutions on which this Bill is founded. Today I will be reflecting some of the themes of that debate, as well as setting out again the background of the Bill and its main provisions.

This Bill makes a significant contribution to the public finances through sound policies pursued by a Government who are putting a fair and competitive tax system at the heart of their plans. Those plans have ensured that the economy has grown continuously for more than four years to become 15% larger than it was in 2010. It is an economy that is experiencing record levels of employment, including more women in work than at any time in our history; an economy that has delivered the lowest level of unemployment since the mid-1970s, and the lowest level of youth unemployment since 2001; and an economy that is built on sound money, with the deficit reduced by three quarters to ensure that international investors maintain their faith in us. And indeed they have: foreign direct investment was 40% higher at the end of 2015 than it was in 2010. However, the Government are not complacent—far from it. We know that we must continue to press forward with vigour in supporting new growth and productivity.

Let me now turn to the specific provisions of the Bill, and, in particular, to those that will make our tax system fairer. This is a Bill that abolishes permanent non-dom status. Those who are non-domiciled for tax purposes pay about £9 billion each year in tax and national insurance, which is a huge contribution to our public finances. Lest we forget, it is £1 billion more per year than they paid 10 years ago under the Labour party; more, in fact, than they paid in any year during which the Opposition were last in power. The Government, however, are now putting an end to an unfairness whereby people living in the UK could claim that they were non-doms on a permanent basis. That is something that the Labour party failed to end in 13 years of government. Yes: under Labour, many people who had been living here for over 25 years, clearly settled in the United Kingdom, still technically claimed to be non-doms, and while they did make an important contribution, it was not necessarily a fair one. It is this Government who are changing that.

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

My right hon. Friend has mentioned Labour, and the 13 years of disastrous Labour rule. Is it not ironic that when he commenced his remarks, there was only one Back-Bench spokesperson for the Labour party in the Chamber who was even prepared to contribute to the debate?

[Mel Stride]

I thank my hon. Friend for those observations, which I am sure the House has duly noted.

Let me now deal with termination payments, an issue on which the Opposition divided the House last week. The current rules are unclear and complicated. Some payments are taxed as earnings, some are only taxed above £30,000, and others are completely exempt from tax and national insurance contributions. Although most employers use the current rules as intended, the present system allows some to ignore those rules and deliberately manipulate their payments to minimise their tax by exploiting the differential tax treatment. That is clearly not fair. The Bill makes the rules simpler and fairer by recommending that we exempt the first £30,000 of termination payments from tax, while tightening the rules in respect of what is rightly included within such payments.

In last week’s debate, some Members raised concerns that the Government would be taxing compensation that is paid to employees when it is proved that they have been discriminated against—for example, after an employment tribunal. I am happy to reassure them. All compensation awards caused by proven discrimination against someone in employment will remain completely exempt from tax. All that the Bill does in the way of change is close the obvious loophole that enables an employer to treat part of a termination payment, as opposed to a tribunal award, as an “injury to feelings” in order to benefit from the tax exemption. It is HMRC’s longstanding position that if an employee claims a tax exemption for injury, it must have actually impaired that employee’s ability to work, and the Bill simply reconfirms that position.

Members also raised concerns that the Government intended to reduce the tax-free amount from £30,000. The Bill makes no such provision. If there were ever any desire to reduce the tax-free amount, it would be subject to a statutory instrument and the affirmative procedure, so the House would have to expressly approve any such proposal.

We also need to ensure that the taxation of different ways of working is sustainable, so that we have the funds to invest in the public services on which we all rely. It is therefore important that this tax treatment is fair between different individuals. The Office for Budget Responsibility has highlighted the fiscal risks arising from the growing number of people working through companies. Such individuals can pay themselves in dividends, and, in so doing, can pay significantly less tax than employees and the self-employed, although in many cases their economic activities are broadly the same. Part of the reason for that difference is the entitlement to a £5,000 dividend allowance, which is available in addition to the income tax personal allowance that the Government introduced at £11,500 in April.

Reducing this allowance to £2,000 will help to reduce the differential in tax treatment and help remove some of the working distortions to which I have referred. It will also ensure that support for investors is more effectively targeted: a £2,000 dividend allowance will ensure that around 80% of general investors continue to receive dividend income tax-free. The less well-off will be protected, with those general investors who are affected having investment portfolios worth around £100,000 on average, putting them in the top 10% of wealthiest households in the country. So the Bill will make our tax system fairer in a number of ways.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

I felt for the shadow Minister’s being asked to speak in this debate after many hours of toiling away on a different subject yesterday. He obviously struggled, because he produced his notes for yesterday’s debate and gave us 10 minutes or so as if we were still debating ministerial powers and Parliament’s right to control all secondary regulations. Just to clarify the point that I made to him, and which he tried to muddle: everything is a parliamentary process when it comes to legislating by statutory instrument, because those statutory instruments that are tabled for negative resolution—meaning that they would not normally get a debate or a vote—are an invitation to the Opposition. It is their job to go through them all and decide whether Ministers have made any mistakes, and therefore whether those instruments should be brought before the House for debate and a vote. They are all debateable and voteable if the Opposition do their job, but it is clear that this Opposition do not want to do their job; they want to make synthetic points instead.

Thanks to your excellent guidance, Madam Deputy Speaker, the shadow Minister did come to understand that this is the debate on the Finance Bill. We then moved to the interesting issue of the student debts. A number of my right hon. and hon. Friends quite rightly wanted clarification on whether, were we to accept Labour’s advice, we would need to find provision in the Bill to retire £100 billion of student debt. The poor shadow Minister found that even more difficult than working out which debate he was in. I am sure he knows full well that before the election the Leader of the Opposition made a statement on student debt that was interpreted by two shadow Ministers as categorically offering the end of student debt for all those who have incurred it. Now, after the election, we are told that the Leader of the Opposition did not mean that, although he failed to clarify it at the time.

[Michael Tomlinson]

The Leader of the Opposition’s precise words were:

“I will deal with it.”

Those were his words. The hon. Member for Ilford North (Wes Streeting) wandered into the Chamber, made an intervention and has now left. He should have stayed to hear this. His leader said that he would deal with it and has now gone back on that.

[John Redwood]

My hon. Friend is much tougher than I am and has made it clear that the Leader of the Opposition misled the electors; I was being a little kinder. The right hon. Gentleman used tricksy language, in some ways, but his shadow spokesman did not. More importantly, millions of voters out there heard what my hon. Friend described, believed that Labour was making an honourable offer to get rid of all student debt and voted accordingly. They are now told that they were conned, let down and completely misled.

Public Sector Pay Cap

Michael Tomlinson Excerpts

Wednesday 5th July 2017 Commons Chamber

[Elizabeth Truss]

That is one of the factors that the pay review bodies consider, along with issues such as recruitment and retention and ensuring that the pay settlement is affordable. They have the responsibility of speaking to people like my hon. Friend’s wife who work in the public services, hearing what they have to say, and making a determination. There are different issues in different public services, and I think it wrong to suggest that there is a “one size fits all” solution.

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

The shadow Chancellor mentioned inequality. In fact, income inequality has fallen since 2010, and now the top 1% will pay 27% of all income tax, a higher proportion than was ever paid under Labour. Does that not show that the Labour party tries to talk tough when it comes to inequality, but it is left to the Conservatives to deliver?

[Elizabeth Truss]

The shadow Chancellor does not like facts to get in the way of his rants.

Finance (No. 2) Bill

Michael Tomlinson Excerpts

2nd reading: House of Commons
Tuesday 18th April 2017 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak on this nice, brief and moderate Bill. I suspect the Bill that finally clears the House in the next couple of weeks will be a little thinner. I am not sure that I welcome the change to printing the Finance Bill in one block, rather than two; it feels worse.

My speech will focus on the content of the Bill rather than on trying to start the general election campaign, which does not technically begin until tomorrow, but I am sure I heard the hon. Member for Bootle (Peter Dowd) say that Labour wants tax to be a higher proportion of GDP than the Government currently have it. If that is a Labour manifesto pledge, I suspect it will appear on more leaflets for Conservative candidates than for Labour candidates. The only real way of achieving it is to raise income tax, national insurance or VAT, none of which will be popular with the electorate.

For coherence, I will address the Bill’s measures in order. First, there is a moderate measure that will allow employers to offer their employees up to £500 of pensions advice, and associated advice such as the impact on tax bills, tax-free. Where there are problems with people’s understanding of how the pensions system works, of how much they will have in their retirement and of how much they need to save and how they should save it, any effort we can make to encourage them to take more advice, and get good advice—the earlier, the better—has to be right. I welcome increasing the tax relief from £150 to £500.

Clause 31 addresses interest restrictions for corporates, which will be allowed to claim tax relief on interest only up to 30% of their earnings before interest, taxes, depreciation and amortisation. Before coming to this place, I spent many years advising large corporates on their corporation tax bills. I wrestled with the many efforts that have been taken to get the allowed interest deduction down to a sensible level. There are well over half a dozen different anti-avoidance measures, such as allowable purposes, thin capitalisation rules and the worldwide debt cap. We have had all manner of attempts to get to the right answer, but successive Governments—Conservative, Labour and coalition—saw it as a competitive advantage for the UK to try to attract inward investment from holding companies by having a generous interest deduction.

It is right to recognise that, in an era when large multinational corporations have been gaming the global tax system to a ridiculous degree, we cannot allow our system to be exploited by excessive interest deductions, especially where they are not real commercial interest costs to the worldwide group. It makes sense for us to get in line with the global consensus that the interest limit should be 30% of EBITDA. The House should approve the measure to provide some scrutiny of the downside impact of how we attract international investment.

How many businesses that employ large numbers of high-skilled people are here for the interest deduction that we effectively allow on profits earned across the world? What impact will that have on where those businesses choose to locate in future? I hope the impact is zero and that, because we are such a great place to do business and employ people, businesses do not come here to chase generous tax deductions, but it will be interesting to see the impact of this policy change.

The rules are complicated, and there are some sensible exemptions for infrastructure investment. We need to encourage private companies to invest in UK infrastructure, and our regime is not all that generous—we do not give tax relief for large amounts of industrial building, which can have a large infrastructure cost. We should reform those rules, too, to make sure that we have a competitive regime so that, if a multinational company is looking to invest in infrastructure, the UK is the place to do it, not somewhere else for tax purposes.

I welcome the deemed domicile rules that the Minister outlined. People out there who try to understand tax cannot understand why rich people can avoid tax because of where their father was born. We have had that strange historical system since the colonial days. It should be absolutely clear that people who are born here should pay all their taxes here, and people who have lived here for a long time should be paying the same taxes. The idea that a person can move and live here for 40 years, or even be born here, and avoid certain taxes is a ridiculous way of exploiting our tax regime, and I welcome the steps to change that.

Clause 71 introduces the soft drinks levy, about which I have raised concerns in previous debates. I welcome taxes on unhealthy activities, and we have lots of taxes on alcohol and tobacco for sensible reasons. We have an obesity crisis, and it is perfectly right to consider taxes on unhealthy foods and drinks. A sugar tax makes sense, but when a consumer sees a product they want to buy in a supermarket they should be able to see something that says, “This product is so unhealthy for you that it is taxed, so you will pay more for it.” That is how to get behavioural change. Someone walking down the aisles of a major supermarket should think, “A can of full-sugar cola is 10p dearer than Diet Coke because it is unhealthy, so I will buy the Diet Coke.” That should also apply to ridiculously sized portions of cake, to sweets that are very bad for you and to all those other unhealthy things that we eat. We should try to structure a sales tax on unhealthy products to get the behavioural change we want.

There are many reasons why the Government have chosen to go down the route of targeting a particular product, but there is a real danger that the market for cola is so complicated that the consumer might not know that the charge even exists. I happened to be in a supermarket over the weekend looking at the varying prices of cola. I am quoting Tesco because it is my nearest supermarket—I should declare an interest because my wife works there—and I can buy a 2-litre bottle of Tesco own-brand cola for 55p, a 2-litre bottle of Pepsi for £1.25 or a 2-litre bottle of Coke for £1.66, or two for £2.50. We are adding 18p a litre, so how a consumer will know from the varying prices, never mind all the promotions, which of those colas is the bad one and which one they should be avoiding is not entirely clear. Looking at the prices for smaller quantities, a 600-mililitre bottle of Pepsi is 99p, which is about the same as a 2-litre bottle.

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

My hon. Friend is making a cogent argument, but does he not welcome the targeted nature of the fund? The levy will go to the Department for Education to help all our children in all our constituencies to have healthier lifestyles. Does he welcome that, even if he has concerns about other aspects?

[Nigel Mills]

I welcome more funding to help children to be healthy and more funding for sports. I especially welcome the fact that the largest employer in my constituency, Thorntons, as part of the Ferrero group, gives big funding to school sports. More funding for healthy activities for children has to be a good thing. I am a little nervous about hypothecating taxes for individual spending, because there is a real risk that it would lead to a complicated tax system. It is a little like giving with one hand and taking away with the other. I welcome the fact that we are raising such spending, although I would not want to link it directly to a tax.

Corporate Tax Base

Michael Tomlinson Excerpts

Tuesday 20th December 2016 General Committees

[The Chair]

Good morning, everybody. I know that you are all old hands at this, but I will just remind you of the format. We have up to two and a half hours. I will start by calling a member of the European Scrutiny Committee, which referred the documents for debate. Then the Minister will make a statement, which will be followed by questions, and we then can have a debate, if Members wish. I call Mr Michael Tomlinson.

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

It is a great pleasure to serve under your chairmanship, Mr Hanson. I am far from being an old hand; this is my first time addressing such a Committee as a member of the European Scrutiny Committee. It might help the Committee if I took a few minutes to explain the background to the documents and the reasons why the European Scrutiny Committee has recommended them for debate.

As the European Scrutiny Committee’s report says, member states have a particularly strong interest in direct taxation, as it not only governs the revenue available to them but is inextricably linked to their social and other policy choices. The EU can only act on tax if member states unanimously agree to that. In the past, the European Commission has made plain its hopes of introducing harmonisation of direct taxation for companies, in particular by establishing a common consolidated corporate tax base, or, to use its wonderful acronym, CCCTB.

In 2011, the Commission sought, with a proposed Council directive, to introduce a CCCTB, which would have provided for a single set of harmonised rules for calculating the tax base for the taxable profits of companies resident in member states. It would also have allowed companies to opt into the CCCTB or continue to operate within their own national tax system. The latter would have allowed groups of companies to calculate their total EU-wide consolidated profit for tax purposes, provided for that profit to be allocated to the companies making up the group on the basis of an apportionment formula composed of sales, payroll, number of employees and assets in each member state, and provided that member states would then tax the profit apportioned to the companies at their own corporate tax rate.

This House and seven other national Parliament Chambers issued reasoned opinions to the Presidents of the Council, the European Parliament and the Commission stating that the proposal failed to comply with the principle of subsidiarity. The Commission has formally withdrawn the proposal and replaced it with the two proposed Council directives before us. One would introduce, as a first step, a common corporate tax base, or CCTB, with application from 1 January 2019, and the other would introduce, as a second step, a CCCTB, with application from 1 January 2021. I see you are following very closely, Mr Hanson—a wise move. Although the two proposals would largely repeat the content of the original proposal, the system would be mandatory for companies in large groups, while for others it would be voluntary.

The European Scrutiny Committee has kept the documents under scrutiny, pending developments in the negotiation. In its report published on Friday 9 December, the Committee recommended that the House issue a reasoned opinion for the reasons set out in the draft opinion annexed to the report, which I will summarise briefly. First, the Commission has not provided evidence that circumstances have changed since the rejection of the previous proposal, which was acknowledged to have adverse effects on investment, employment and GDP. Secondly, the tax base is an essential element of member states’ tax sovereignty. Thirdly, the fairness of the tax system is a matter for which member states are responsible, and for which they are accountable to their own people. Fourthly, regulation at EU level would be too cumbersome to react to changes. Finally, the tax avoidance that the measures seek to address goes wider than the EU and is best tackled at OECD level.

The European Scrutiny Committee is very disappointed that the Government did not schedule this Committee meeting and the subsequent “forthwith” motion in time for the House to resolve the issue and meet the deadline for sending a reasoned opinion by 3 January 2017. However, the motion notes with regret that that is at least in part owing to the inflexibility of the eight-week deadline set by the institutions. This year, it ends over the Christmas period, when the House rightly is not sitting. The motion therefore instructs the Clerk of the House to forward the motion and reasoned opinion by way of political dialogue after the deadline for reasoned opinion has officially passed. The purpose of this debate is to discuss whether the Commission’s proposals comply with the principle of subsidiarity, and whether the reasoned opinion proposed by the European Scrutiny Committee is appropriate.

[The Chair]

I am grateful to the hon. Gentleman for his introductory comments. I call the Minister to make an opening statement. I remind Members that it is a statement; there are questions after it, and no interruptions during it.

Small Charitable Donations and Childcare Payments Bill

Michael Tomlinson Excerpts

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

[James Duddridge]

I thank my hon. Friend for that; perhaps he will take this as a complaint from a humble member of the public. If he joined me in trying to get from Fenchurch Street station to Tower Hill in the morning, on the way to the House of Commons, he would see not only the appalling works and the way people are funnelled through, but that the number of charities operating there creates a physical boundary between the two stations, which is a real problem for commuters who otherwise would donate. There are quite a few instances when I have felt less positive about charities, which I am naturally passionate about. I thank my hon. Friend for highlighting the work. Perhaps I could review what has been done while I was looking at other things since 2006, and also perhaps invite him for a cup of coffee on the corner of Fenchurch Street to meet some of my constituents coming into London and encountering the problem.

We are debating the “Small Charitable Donations” Bill, but I am not quite sure what “small” is. A Southend charity set up by Charles Latham and Howard Briggs has looked to provide a capital amount that could be used to provide small loans to micro-opportunities—non-charities but, in some cases, registered charities as well. That developed from a level of £60,000 or £80,000 to become a £1 million or £2 million fund. Even at that level, it considers itself small and has to do all its fund management via the Essex fund. My constituency predecessor, Sir Teddy Taylor, is involved in that fund. It deals with small charities, but I am not sure that it would be helped by the definition of small charities in the Bill.

I am generally a believer in small being beautiful—my wife is very petite—and in relation to charities, the closer the charity stays to an individual cause, the better. The shovels example is, I think, great. Southend’s charity that wants to do some something for targeted HIV/AIDS patients within a certain age category is another fabulous example. There are, however, some bigger charities—I am not going to name them; they do good work—that have somewhat lost their way. These are the ones that we see on the back pages of The Guardian, in case any of my hon. Friends sully themselves with such things—they are very good for the fireplace. We can often find a job with such a charity paying significantly more than an MP’s salary—shock, horror. This could be running a charity, or doing a junior, second-tier director job, but, as I say, small is beautiful and the more we can help small charities with the sort of provisions in the Bill, the better. At the moment, there is a flight for merging charities, meaning that charities get much bigger. When they do, I fear they move too far away from their communities. We should encourage those charities to stay small but numerous.

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

My hon. Friend is making an amusing but serious point. If I am fortunate enough to catch your eye, Mr Deputy Speaker, I, too, will mention some charities in my constituency. When it comes to small charities, does my hon. Friend agree that many of them are struggling at the moment, and that the measures in the Bill will give them boost, especially if we help to publicise them?

[James Duddridge]

I entirely agree with my hon. Friend that some charities are struggling and that there is a constant shift in funding. I remind Southend charities not to believe all the doom and gloom that was talked pre-Brexit. We are still growing strongly; we are the strongest-growing economy in the G7. Rather than squirreling away money for the rainy day that might come, we should encourage people to spend, enjoy and donate some of that money to charities. The Bill’s measures should allow more of such money to come back to charities.

In common with previous speakers, I should like to mention a charity with which I was involved, although I did not start it up. I was appointed by a charity known as the Bulldog Trust, which is based just down the road from here. Its website said that it was a philanthropy organisation. I thought that it was no good for me because I do not have any significant cash to give to it—it would certainly be a £20 donation from me rather than a £20 million donation—but what this charity does is to link up people who have a skill and want to use it within a charitable organisation. That sent me to the Grow Movement, which at that time was a charity operating in Uganda, Rwanda and Malawi.

I mention that example because I am a little unclear about what happens when a charity such as the Grow Movement is UK based but international. Of the trustees, I think I was the only one domiciled in the UK; it has an international virtual board. We need to make sure that small sums, wherever they might come from, can go to such organisations. At one time it was inconceivable that someone would send a few quid from France or the United States, but now, because of the way the internet is set up, when we purchase something we are quite often asked to “click here” to enable an extra £2 to go to a charity. I urge the Minister to review the position and ensure that charities like the Grow Movement can benefit from this and future legislation.

--- Later in debate ---

[James Duddridge]

Another point is that charitable giving then begins to be inculcated in young people in particular. Their small donations, to both small and big charities, bring them into the system. Certainly, when I see someone under the age of 16 collecting for poppies or Help for Heroes, I feel that the future of the country is in safe hands.

I intervened on the Minister to ask about deeming all donations tax-free. I am sympathetic to Her Majesty’s Opposition’s points about complexity. The points have been made well today, just as they were three years ago, as Opposition Front-Bench Members pointed out. The sooner we can get through all this complexity and decide that the basic rate of tax should come back from all moneys en bloc that are given to charities in small amounts, the better. I will say more about how we define “small amounts” later.

I shall turn now to the specifics of the Bill. Clause 2 deals with the meaning of the term “small donation”, and subsection (3) refers to the United Kingdom. However, clause 6, which deals with the extent of the Bill, refers to England and Wales, Scotland and Northern Ireland. Forgive me if I am being stupid, Mr Deputy Speaker, but I think that they amount to the same thing. I would be grateful if that provision could be amended, if only as a tidying-up exercise, or if the difference could be explained.

[Michael Tomlinson]

Before my hon. Friend moves on from the question of cash amounts, does he agree that £20 is a sensible figure? Opting for a larger amount could involve a risk of fraud or misuse, but £20 is still a substantial enough amount to make a significant difference.

[James Duddridge]

I do not know how to say this gently—no, I do not think that that is a sensible amount. I understand what my hon. Friend is saying, but I think that that is an arbitrary amount. Why not choose £10 or £25? Is it because we have £20 notes but not £25 notes? I worry when I see legislation that cites numbers but makes no provision whatever to take account of inflation. Would such an amount be uprated annually? If that is the case, we would end up with odd numbers in subsequent years. Alternatively, should we let things drift and conduct a review every five years, and then put the amount up by 25%? I would like the figure to be set an awful lot higher.

[Michael Tomlinson]

I am grateful to my hon. Friend for being patient about this point. Can he not see that the amount could be reviewed over a number of years? In fact, it has been reviewed in that way in the past, and there will doubtless be opportunities for it to be reviewed again in the future, if not by this place, perhaps through an order to be dealt with by the Minister. Would that not be a sensible approach?

--- Later in debate ---

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

It is a great pleasure to follow my hon. Friend the Member for North East Hampshire (Mr Jayawardena), who made some excellent points with his customary eloquence. I agree with what he said.

Today’s debate gives me an opportunity to showcase one or two examples of charitable works in Dorset that go particularly well. I will start by mentioning Wimborne rotary club and its yearly Great Santa fun run. Picture, Madam Deputy Speaker, 100 men, women and children running around the local point-to-point course dressed up as Father Christmas the week before Christmas. It sounds fun and of course it is. Gone are the heady days when we aimed to win the competition—merely completing the course is a prize in itself these days. Each year, the run raises several thousand pounds for charities and good causes.

Back in 2013, when the Small Charitable Donations Act came into force, my wife was the parish church treasurer and gift aid administrator, so I know how welcome were the changes that simplified and reduced bureaucracy, as people no longer had to fill out complicated forms to secure gift aid on gifts of £20 or less.

[Kevin Foster (Torbay) (Con)]

My hon. Friend is giving an excellent speech. Does he agree that the key point to remember is that churches are not just places of worship on a Sunday but living, breathing parts of the community? For example, the Living Room initiative at St Mary Magdalene church in my constituency provides tea, coffee and bacon sandwiches for many people who have nowhere else to go.

[Michael Tomlinson]

I could not agree more with my hon. Friend, who makes an excellent point. The Bill will help all groups—not just church groups, but many others—in reclaiming gift aid and slimming down bureaucracy. I warmly welcome the Bill’s aim of further reducing bureaucracy by, for example, getting rid of the two-year rule. That will help new charities enormously and will encourage those thinking of setting up charities to do so.

[Maggie Throup (Erewash) (Con)]

My hon. Friend makes an important point about cutting bureaucracy and time. Often, small charities rely on volunteers, whose time is far better spent out there promoting the charity rather than dealing with paperwork and red tape. The Bill will be very welcome in his constituency, as I am sure he will explain.

[Michael Tomlinson]

I am grateful for my hon. Friend’s timely intervention and will come to exactly that point in one or two moments.

My hon. Friend the Member for Taunton Deane (Rebecca Pow) mentioned sport. As a keen sportsman, I warmly welcome the fact that the policy will be open and available for amateur sports clubs. That is very much a step in the right direction.

I want to mention one charity in my constituency, Waggy Tails Rescue. It does not rival the Minister’s Battersea Dogs and Cats Home, but it does play an important part in the constituency of Mid Dorset and North Poole as a dog rescue charity that re-homes dogs in east Dorset and west Hampshire. I had the pleasure of visiting it in the recent past and it explained the difficulties of being a small charity and facing the bureaucracy that can be involved. As my hon. Friend the Member for Erewash (Maggie Throup) mentioned, such charities have few if any professional staff, and therefore the more time they can spend undertaking charitable works rather than carrying out bureaucratic office functions, the better.

One concern or criticism is whether enough awareness has been raised. I suspect that each of us as Members of Parliament can play our own part in raising the profile and awareness of the scheme.

I warmly welcome the childcare payments measure. This has not been mentioned during the debate, but the Bill will open the scheme up to parents who are self-employed. As someone who was self-employed, I often felt left out of tax schemes in the past. The measure will be warmly welcomed by those in the community who are self-employed, but perhaps I could invite the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Reading East (Mr Wilson), to say how he will raise awareness so that all families who are eligible can take up that excellent scheme.

Finance Bill

Michael Tomlinson Excerpts

Tuesday 6th September 2016 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I rise to support amendment 141, which is in my name and those of my hon. and right hon. Friends. I am extremely grateful to Mr Speaker for selecting my amendment, and I would also like to place on the record my thanks to the Public Bill Office, whose advice and help on the matter have been greatly appreciated by me and my office.

I hope that the amendment will find agreement on both sides of the House, and I hope that the Government will not oppose it. The amendment would establish a very small tax exemption for residual cash balances that remain in an employee share incentive plan when an employee leaves such a plan. A residual cash balance is a sum of money, insufficient on its own to buy a single share that month, which would usually be carried over to the next month but which has to be refunded if an employee leaves the scheme. I propose that that balance, capped at a maximum of £10, would instead be donated to charity. That would have the added advantage of reducing costly and burdensome processing by company payroll departments.

Share incentive plans are a good and tax-efficient way to save for the future, and many employees take them up. I believe we should encourage employee share ownership. When an employee leaves a share investment plan, there is commonly a cash residual amount remaining in the account; often, it is just a few pence or a few pounds. When the employee chooses to leave the plan—that is mandatory if the participant leaves the company’s employment—the cash residual can no longer be carried forward. Under the current system, any remaining cash held in the plan when the employee leaves the plan is required to be processed, via the employer’s payroll, to apply national insurance contributions and income tax via PAYE and to pay the net balance to the employee. This process typically costs between £2 and £9, but provides little benefit to the individual receiving such a small amount.

Furthermore, the benefit to the Exchequer is far less than the total cost to companies of administering these payments, with companies paying almost twice as much to process the payments as the Treasury actually receives. To put that into numbers for the ease of Members in the Chamber, it is estimated that the administration costs for companies are between £400,000 and £500,000, while the benefit to the Treasury is just £200,000. If amendment 141 was accepted, charities and good causes would benefit by about £360,000, on top of the savings that companies would make.

There is a precedent for such a change. There are already examples of situations in which HMRC has agreed to individual exemptions to share incentive plan providers, which are currently based on specific requests assessed case by case. There is an appetite for this change among share investment plan providers and HMRC. Amendment 141 would be only a very small change to this Bill compared with what it covers, but it is one that could bring benefits both to companies and to charities and good causes, while at the same time supporting share investment plans by removing a costly and bureaucratic part of the system. The amendment would also help to simplify the tax system and encourage more charitable giving, both of which are stated priorities for this Government and would be priorities for any Government.

I was very pleased and heartened yesterday when the Government accepted amendment 145 in the name of my right hon. Friend the Member for Don Valley (Caroline Flint). I sincerely hope that the Minister will accept this amendment and that we can achieve the same result today. If she does not say she will accept it, I will seek to divide the House, but I can genuinely see no reason why the Government would not want the amendment to be agreed to.

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

It is a great pleasure to follow the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). I rise to support new clause 3, to which I have added my name. I, too, agree with everything said by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes). I cannot promise to be quite as brief as my hon. Friend the Member for Congleton (Fiona Bruce), because I wish to add one or two remarks of my own.

The fundamental problem is that family breakdown costs a staggering £47 billion per annum, according to the latest figures. Quite apart from the consequential social dislocation and pain that it causes, it is also undermining the British economy. Of huge importance is the fact that most breakdowns do not arise from divorce, but from the ending of relationships in which the couples concerned have not made to each other the public, exclusive and legal commitment that is marriage. Where they do make such a commitment, their relationships —not surprisingly—are far more likely to be stable.

In this context, there remains a massive public policy imperative to ask whether we are doing anything to make marriage less accessible than in other similarly developed countries. We are unusual in this country in having failed until recently to recognise marriage in our income tax system. The solution initially proposed was for a full transferable allowance, but in the event a transferable allowance of only 10% was enacted. A statistic that has already been mentioned but bears repeating is that the tax burden on one-earner married couples with two children on the average wage is 25% greater than the OECD average. The allowance is not making marriage more accessible in a meaningful way. In this context, it is no surprise that the take-up of the allowance has been so low, although the Minister welcomed the fact that the figure is moving in the right direction.

In going forward, two things could be done. First, if it is not possible in the short term to have a full transferable allowance, we should at least ensure that some married families on the basic rate receive a meaningful transferable allowance. Given that the research is so clear that child development is greatly enhanced by the presence of both mother and father in the family home and given the fact that the public policy benefits of marriage are so well developed, a full transferable allowance for married couples with children under five might be a good place to start.

Secondly, perhaps in the slightly longer term we could work towards the full transferable allowance for married couples generally. Of course that would not be cheap, but it would be considerably cheaper than the current cost of £47 billion. It would promote choice by removing obstacles to marriage. As has been pointed out, it is very much about promoting the life chances agenda. I look forward to the Minister saying one or two more words about this matter in her closing remarks.