Oral Answers to Questions

Debate between Neil O'Brien and Christopher Chope

Tuesday 7th March 2023 Commons Chamber

[Neil O’Brien]

We will be setting out further steps shortly, but there are 6.5% more dentists doing work for the NHS than in 2010 and we have started the reforms with more units of dental activity bands and a minimum UDA.

[Sir Christopher Chope (Christchurch) (Con)]

Does my right hon. Friend accept that about one third of the activity that takes place in GP surgeries could be transferred to pharmacies? What is he doing to promote that policy and deal with the British Medical Association’s reluctance to co-operate?

Future of the NHS

Debate between Neil O'Brien and Christopher Chope

Thursday 23rd February 2023 Commons Chamber

[Neil O’Brien]

I am happy to make that commitment.

[Sir Christopher Chope]

The Minister has not covered the issue of productivity. He has mentioned, quite rightly, that the Government do not have any money. It is our money, taxpayers’ money, so why are the taxpayers not allowed to have access to these issues in the NHS with lack of productivity?

[Neil O’Brien]

I am as keen as my hon. Friend to explore all those different things and I am happy to take them up with him following this debate. Many things I have been talking about in this speech, the new technology we are putting in for GPs and the new ways of working, are crucial not just to getting taxpayers better value for money, but to protecting the NHS in the long term by enabling people to do more. The NHS is an enormous source of pride in this country. It is free at the point of delivery and it always will be, giving high-quality care for all. That remains our enduring commitment to our national health service.

Covid-19: PPE Procurement

Debate between Neil O'Brien and Christopher Chope

Thursday 24th November 2022 Commons Chamber

[Neil O’Brien]

The right hon. Lady asks two main questions, the first of which is what we are doing on PPE Medpro. It has been widely reported that it had an underperforming contract. Let me set out what we do in such cases. The first step is to send a letter before action, which outlines a claim for damages. That is followed by litigation in the event that a satisfactory agreement has not been reached. To answer the right hon. Lady’s question directly, we have not got to the point where a satisfactory agreement has been reached at this stage.

On the high-priority group, let us be clear about what it was and what it was not. Approximately 9,000 people came forward. All Ministers will have had the experience of endless people ringing them up directly to try to help with the huge need that there was at the time. Many of us, as Back Benchers, will have been approached by constituents who were keen to help and needed to be referred somewhere. All that the route did was handle the huge number of contacts coming in to Ministers from people offering to help. Let me be clear that it did not give any kind of successful guarantee of a contract; indeed, 90% of the bids that went through it were not successful. Every single bid that went through the route went through exactly the same eight-stage process as all the other contracts—it looked at the quality, the price and the bona fides of the people offering to produce.

On the point about PPE that has not been useful, I set out in my answer the extraordinary context in which we were operating. There was a global scramble for PPE. People were being gazumped: goods would be taken out of the warehouse if people could turn up with the cash quicker than them. It was an extraordinary situation in which we had to act in a different way. Loads of us will remember standing up in this House and saying to Ministers, “What are you doing to get more? More, quickly!” That was the context in which we were operating.

[Sir Christopher Chope (Christchurch) (Con)]

Does my hon. Friend agree that if we had not wasted billions of pounds of taxpayers’ money on PPE, we would not have to increase taxes as much as we are doing? What has happened to the £122 million that was spent on 25 million gowns supplied by the company referred to earlier? Those gowns were not fit for purpose and were never used.

[Neil O'Brien]

That was the underperforming contract that I referred to in my previous answer, and I set out the process that we go through when we take action on underperforming contracts. There is the initial letter before action, and then a process in which we look to see if a satisfactory agreement can be reached. If not, that leads on to litigation. Of course, there was wasted PPE—my hon. Friend is absolutely correct about that—but I have already set out the context of the global scramble and the huge amount of PPE that was successfully delivered, saving lives and protecting workers in our NHS.

Planning (Enforcement) Bill

Debate between Neil O'Brien and Christopher Chope

Friday 19th November 2021 Commons Chamber

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Neil O’Brien)]

What superb speeches we have heard today, and I thank my hon. Friend the Member for Runnymede and Weybridge (Dr Spencer) for his proposals to strengthen the hand of local planning authorities, protect our precious green belt, and crack down on rogue development. He makes an important point that this is not just about protecting our green spaces, but is a basic issue of fairness. As the hon. Member who represents the place where Magna Carta was signed, he is very conscious of fairness and the rule of law. Of course, when Magna Carta was signed, barons tried to drag concessions out of a rather unwilling Executive, but in this case we are entirely in alignment. I am sure hon. Members across the House will have experienced problems similar to those he describes. They are problems we must solve, and I look forward to doing so with my hon. Friend.

While the Government are very sympathetic to the objectives of the Bill, we believe that the changes that we need to enforcement are best developed as part of a package and aligned with our wider planning reforms. As my hon. Friend the Member for Runnymede and Weybridge will know, we are currently reviewing these departmental programmes and engaging with key parties ahead of setting out our proposed way forward.

I believe that hon. Members across the House will agree that the current system does not always serve local communities effectively, which is why we want to modernise the planning system in England, so that it strengthens enforcement and provides better outcomes for local authorities and communities. We want to make it easier for local planning authorities to tackle deliberate unauthorised development and ensure that the retrospective planning process is not abused. At the same time, we want to see retrospective applications used only by those who have genuinely made a mistake.

I know how important it is to make sure that local authorities have the right capabilities to implement these reforms, especially with respect to the planning enforcement regime. The additional £65 million announced by my right hon. Friend the Chancellor in the Budget will enable us to make the upfront investment in skills, digitisation and capability required to make these reforms a success. My hon. Friend proposed the creation of a database of local enforcement registers. While the hon. Member for Brentford and Isleworth (Ruth Cadbury) raised some important questions about this, we are keen, as part of the investment we are making in digitisation, to make sure that more data enforcement is digitally available to be shared among local planning authorities.

My hon. Friend the Member for Runnymede and Weybridge raised a series of really important issues about the potential gaming of the system, and those are exactly the kinds of issues that we are looking to address. To address the point of my hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory), who asked whether sites that had been illegally developed would be considered brownfield as a result, my understanding is that most local planning authorities would not consider them to be brownfield sites as they had not been subject to previous lawful development. There is, of course, some theology around what exactly is brownfield, having been asked before whether Stonehenge is a brownfield site. That is one, perhaps, for the philosophers, but, on that particular point, I hope that I can put the mind of my hon. Friend at ease.

Today, in addition to my hon. Friend the Member for Runnymede and Weybridge, we have heard some really excellent speeches from my hon. Friends the Members for South West Hertfordshire (Mr Mohindra), for North Devon (Selaine Saxby), for Meriden (Saqib Bhatti), for East Surrey (Claire Coutinho), for Hertford and Stortford (Julie Marson), for Bracknell (James Sunderland), for Totnes (Anthony Mangnall) and for Bury North (James Daly). My normally mild-mannered hon. Friend the Member for Meriden was, I think, channelling John Rambo when he said, “We are coming for you”, and we absolutely are. I am not sure what was put in his tea this morning, but he is passionate, and rightly so, because this is a hugely important issue.

We have also had hugely important contributions from my hon. Friends the Members for Christchurch (Sir Christopher Chope), for Wyre Forest (Mark Garnier), for Truro and Falmouth, for Cities of London and Westminster (Nickie Aiken), my right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald) and my hon. Friend the Member for Aberconwy (Robin Millar). We all share the same concerns and we all want to see the same things changing and to fix these unfairnesses. This Government are committed to improving the planning system.

[Sir Christopher Chope]

Does my hon. Friend share the sense of urgency that has been palpable in all the contributions from the Conservative Benches? From what he is saying, it seems as though the Government are in the process of kicking this down the road.

[Neil O’Brien]

I absolutely share the sense of urgency of my hon. Friend, and it is something that we are actively working to solve. Yes, absolutely, the level of interest from hon. Members, particularly on the Conservative Benches, is striking and they are quite right to be provoked and interested in this important subject.

This Government are committed to improving the planning system so that it works more effectively, delivers better outcomes and supports our mission to level up communities right across the country.

Value Added Tax Bill

Debate between Neil O'Brien and Christopher Chope

Friday 8th February 2019 Commons Chamber

[Sir Christopher Chope]

I disagree with my hon. Friend; he is taking a conservative view rather than looking at the dynamic effect on the economy of making tax reductions. My hon. Friend is not yet a Parliamentary Private Secretary in the Treasury and that is why he is able to participate in this debate, but I know that he would very much like to be a Treasury Minister in due course. When we were in opposition and I was a shadow Minister, my hon. Friend was an important adviser in that Ministry. I know that he has a keen interest in the Bill. One of my concerns is that the Treasury is not always on the side of the dear British consumer, and I am putting the case on behalf of the consumer today.

Let us remind ourselves of the history of VAT. When the Labour Government came into office in 1974, they attempted to introduce extra rates of VAT. One way and another, things were changed around, but eventually Denis Healey reduced the higher rate to 12.5% in April 1976. Geoffrey Howe organised an increase in VAT when he was the Conservative Chancellor. He raised the standard rate from 8% to 15% in June 1979, but in so doing abolished the higher rate.

After that, the rate stayed the same until 1991, but was then raised from 15% to 17.5% by Norman Lamont, now Lord Lamont, when he was Chancellor. At the 1992 general election, the Conservatives were elected—unfortunately, I was not among them; I was defeated in that election—on a promise not to extend the scope of VAT. In March 1993, Norman Lamont announced that domestic fuel and power, which had previously been zero-rated, would have VAT levied at 8% from April 1994. My Bill would take us back to the time before 1994 when there was no VAT on domestic fuel and power. That is one the most important parts of my Bill.

This issue is close to my heart, not least because I was present during the by-election campaign in Christchurch in July 1993, when the biggest issue on the doorsteps was the Government’s imposing VAT on fuel, reneging on their manifesto commitments. That by-election saw the largest ever swing against the Conservatives, and a Conservative majority of more than 20,000 was converted into a Liberal Democrat majority of more than 17,000. That was my inheritance when I became the prospective parliamentary candidate. I know that my constituents feel strongly about VAT on domestic fuel and power, and I hope that the Government regret the decision that was taken then, over which they were subsequently not able to have any control. Although the Labour Government eventually reduced the rate to 5%, under European Union rules it is not possible for this sovereign Parliament to reduce VAT below 5% when it has already been set in train. That opportunity will be available to us as soon as we leave the EU.

Another criticism of VAT is that it is regressive because it is paid by all consumers whether they be rich or poor, young or old. The poorest spend a larger proportion of their disposable income on VAT than those who are financially much better off. The Office for National Statistics report has shown that in 2009-10 the poorest 20% spent 8.7% of their gross income on VAT while the richest 20% spent only 4%. That is another reason why reducing or eliminating VAT on various goods and services would be an effective way of creating a dynamic effect in the economy, and would be fair and equitable at the same time.

I have outlined some of the general issues relating to the Bill. It paves the way for sharing and securing for consumers and businesses one of the key benefits of leaving the EU on 29 March, taking back control over indirect tax policy on goods and services.

The first key element of the Bill is to enable the Government to raise the maximum turnover thresholds for exemption from the requirement to register for VAT. That is set out in clause 1. We in the United Kingdom have a registration threshold of £85,000, the highest in the EU. In my submission, it is not high enough. That is why I have put in clause 1 a suggestion that there be a modest initial increase in the threshold to £104,000 and that the threshold for deregistration should be £100,000. The consequence would be that many small businesses would be taken out of VAT and consumers would be saved the cost of VAT on the services provided by them.

I am delighted that my hon. Friend the Exchequer Secretary to the Treasury is on the Front Bench to answer this debate. I have been perplexed about Government policy on VAT thresholds. Currently the threshold is £85,000 and that was due to be the situation until March 2020, but under EU law it is open to the Government to increase the thresholds every year in real terms. That has traditionally been what has happened. However, the present Government, for reasons that I hope my hon. Friend will be able to explain, have decided to freeze the threshold until the end of March 2022. The consequence, apart from giving some extra money to the Treasury through what is effectively a stealth tax, is that many more small businesses will be caught up in VAT registration.

The current threshold means that 3.5 million businesses do not have to account for VAT, which is half of all businesses in the United Kingdom. We know how important small business is. It provides half of all the private sector jobs and accounts for more than a third of our national income. Why would it not be sensible for the Government’s policy to be to increase the VAT threshold to the maximum that is allowable under EU law rather than freeze the threshold, thereby making it difficult to increase it in the future by a significant amount?

The Government issued a consultation paper on the VAT threshold and called for evidence following a paper the Chancellor commissioned from the Office of Tax Simplification, and that consultation made it clear that the threshold cost the Exchequer £2.1 billion in 2017-18—the cost has not risen since because the threshold has not been increasing as it was before that date.

Following the OTS paper, the Government consulted on whether to increase or reduce the threshold. A table annexed to the call for evidence showed that the £81,000 threshold in 2014-15 had deterred 50% of sole proprietor and partnership businesses from increasing their economic activity for fear of passing the threshold. What a ridiculous artificial constraint on enterprise! Surely, we should be encouraging businesses to expand, not introducing measures that deter that activity.

The consultation concentrated on the large number of businesses just below the threshold and on what could be done to reduce the cliff edge and smooth the transition for businesses registering for VAT. Following the consultation, the Government concluded that nothing had been decided—in that respect, it was not an unusual process of public consultation. Paragraph 4.35 of the paper that summarised the responses reads:

“Many responses committed to the view that an increase to the threshold would make it much easier for newly-registered businesses to cope with the administrative and financial implications of registration. For example, if the threshold were to be raised to £100,000, businesses would likely be able to afford the cost of professional advice to cope with the administrative burden, while also being more able to absorb the cost of VAT. One representative body felt that the administrative burden would only be taken out of the equation if the threshold was much higher. The UK is currently unable to increase the level of its VAT registration threshold in real terms, under EU law, but there may be scope to review this in the future.”

It will come as no surprise to the Minister to learn that I took the figure of £100,000 in my Bill from that paragraph. I have not gone as far as the OTS suggested in its original paper, but I could see the merit, if the Bill ever gets into Committee, of raising the threshold to something like £500,000. Then we would be talking only about really substantial businesses having to pay VAT, which would significantly reduce the burden on business and encourage entrepreneurial activity in our enterprise society.

[Neil O’Brien (Harborough) (Con)]

What estimate has my hon. Friend made of the cost to the Exchequer of increasing the threshold to that level?

[Sir Christopher Chope]

The estimate made is not mine but comes from the OTS paper:

“Raising the threshold significantly, for example to £500,000, would potentially impact around 800,000 businesses. Of those, between 400,000 and 600,000 businesses might choose to deregister, while 200,000–400,000 might choose to remain…registered. This would simplify the tax obligations for businesses that chose to deregister, reduce VAT-related competitive distortions between registered and unregistered small businesses, and reduce the administrative burden on those businesses. However, raising the threshold to such a high level would cut the funds available for public services by between £3bn and £6bn a year.”

My hon. Friend will be conscious, however, that those figures are much lower than the £39 billion figure that is on the lips of most members of the public, if not Members of this House, as we prepare to leave the EU on 29 March, when we will have the opportunity to save ourselves £39 billion.

[Neil O’Brien]

I congratulate my hon. Friend on introducing the Bill to discuss this important issue and this potentially big simplification, but am I right that the £6 billion price tag is roughly equivalent to half the budget for the entire police force of England? This is a substantial sum. Beyond the £39 billion, does he have an suggestions for how to raise enough money to make good the hole?

[Sir Christopher Chope]

I do. It is a mistake to look at these issues without considering the dynamic behavioural effects flowing from changes in the regulatory environment. We are all agreed—certainly the Treasury and the Chancellor have expressed concern about it—that the country is suffering from a crisis in productivity, and it is clear from the OTS reports and the consultation that people in the engine room of our economy find VAT to be very burdensome and that it adversely affects their productivity. The problem of productivity centres around this bunching issue. Why are we inhibiting businesses from expanding and becoming more economically productive by imposing an artificial threshold? To an extent, it has been imposed on us by the EU, but we can break free on 29 March. I hope my hon. Friend will take a dynamic perspective and not just look at the straight line figures produced by the Treasury.

--- Later in debate ---

[Sir Christopher Chope]

My hon. Friend makes a brilliant point. This used to be at the heart of Conservative thinking and policy making on the Treasury Bench. It was that dynamic thinking that was behind past decisions to significantly reduce the top rates of tax. I hope we can rediscover that much more dynamic approach to the behavioural consequences of high taxes and artificial thresholds.

[Neil O’Brien]

I thank my hon. Friend for being so generous in giving way again. I think he is wrong to say that it is not the approach of our Front Benchers to think in dynamic terms: the Treasury has produced a wonderful paper showing that a third of the cuts in corporation tax are made up for by dynamic gains. Active work is being done on this; it is a Conservative belief. However, I would only ask my hon. Friend what proportion of the £4 billion or £6 billion loss to the Exchequer that he is talking about does he think might be made up for by dynamic effects? I agree that there are dynamic effects and I agree that this is a wonderful simplification; I just caution him that another Conservative principle is sound money and not running a huge £150 billion a year deficit like Labour did.

[Sir Christopher Chope]

Obviously, we are all united in wanting to be fiscally and financially prudent, and, going back to the intervention of my hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), having looked at the evidence that came forward on this issue, I was horrified to see that, for example, if some cafés in tourist resorts think they are going to exceed the VAT threshold in a particular quarter they will close down for a week or two. What contribution does that make to the UK economy? How ridiculous is that, with the consequence that people are not being employed in those cafés and so on? I agree it is desirable that more work be done on this, and that in a sense is the purpose of today’s debate: to try to get people to think about the radical ways in which we could change VAT now that we are going to have the freedom to do it. VAT is the third largest tax in this country; it generates £120 billion or thereabouts. Surely we should now be looking at our ability to examine the best way in which that tax on goods and services can be applied so that it delivers the best productivity results and does not lead to the distortions we have been speaking about.

There is a problem with the Treasury approach to a lot of this. It produces a document setting out the cost of reliefs. It says that not having VAT on food—having zero rating on food—costs the Exchequer some £18 billion a year. We should look at that not in the context of saying, “We can’t afford to lose £18 billion,” but in the context of saying, “Why should we be charging people who want to go off and buy some food £18 billion?” The mere fact that the Treasury continues to draw up estimated costs of principal tax reliefs shows that it is looking at this from the wrong end of the telescope. The Treasury also says the reduced rate for domestic fuel and power is costing the Exchequer £4.85 billion. What an extraordinary approach that is, as it implies that the Treasury might be minded to put domestic fuel and power VAT back up to 20%. This gives me the feeling that the mindset in the Treasury needs a lot of alteration and that at the moment it is far too negative and unimaginative on a lot of these issues.

Our inability to increase the threshold or meaningfully alter the design of VAT without the unanimous agreement of all other member states is a big problem. It has not stopped the EU Commission of course publishing proposals to cap the thresholds at €85,000 from July 2022 and establishing a new EU-wide threshold of €100,000. That is another example of the statist expansionist agenda of the European Union about which the British people spoke so strongly in the referendum just over two years ago.

The EU Commission is proposing changes that will affect tourism, construction, accommodation, food, traders, professional and scientific and IT service providers and so on, and we could still be faced with an €85,000 VAT threshold if we do not leave the EU on 29 March. If we stay in the EU under some transitional arrangements without knowing what the final outcome will be, throughout that period we will be subject to EU laws relating to VAT. Bearing in mind that the VAT thresholds across the rest of the EU are often only about €20,000 rather than €85,000, we could find the law being changed against us because we would not have a veto. We would be outside the EU so we would not be able to veto this, but we could find that our VAT law was made even more restrictive than at present, although many of our constituents will have thought that we had actually left the EU and got rid of this gross interference in our lives.

I mentioned earlier the compliance costs for VAT. One survey cited by the Treasury found that for UK small and medium-sized enterprises over 40% of all financial costs of tax compliance and 50% of time costs are due to VAT, and that statistic has been confirmed by the Federation of Small Businesses. VAT is particularly unattractive to businesses providing business-to-consumer activities, because they tend to be more labour-intensive, and labour of course is not subject to VAT. We must also think about the impact of VAT on consumers and the cost of living.

I hope I have been able to make a strong case in relation to clause 1, and I shall now turn to clause 2. It sets out the second element of the Bill, which is to make provision for the exemption of certain goods and services from liability to VAT and for connected purposes. The goods and services that are subject to VAT are set out in the Value Added Tax Act 1994 and clause 2 would ensure that domestic fuel or power in group 17, fitness items in group 18, goods subject to excise duties in group 19, insulating materials for home improvement in group 20, repairs and improvements to historic buildings in group 21 and women’s sanitary products in group 22 would all be exempt from VAT, rather than being subject to VAT as they are at present.

--- Later in debate ---

[Sir Christopher Chope]

I am glad that my hon. Friend made that intervention, because if he looks at clause 4, he will see that I am saying that the Treasury may by regulations define “fitness equipment”. If and when the Bill gets on the statute book, he should engage in discussions with the Treasury about what he believes to be the best definition of fitness equipment, so that the measure achieves the objective that I just articulated and does not enable people to avoid paying VAT.

[Neil O’Brien]

Given that lawyers spent several decades arguing over whether a teacake was a type of biscuit, I caution my hon. Friend that allowing the Treasury to define “fitness equipment” and other general terms has the potential to be a bean feast for lawyers.

[Sir Christopher Chope]

The problem with the teacake or the Jaffa Cake case—

[Neil O’Brien]

That is a separate case.

[Sir Christopher Chope]

Yes, but the problem is that all that was subject to decisions by the European Court of Justice. Can my hon. Friend think of anything more ridiculous? If the matter had been under the control of our domestic laws set by Parliament, we would have been able to amend a finance Bill to redefine something, and the situation could have been changed overnight. However, because this all comes under the complex regime in the European Union, all of which is subject to the European Court of Justice, lawyers who specialise in this area can have a field day. The volume of law on VAT is vast, and surely there is a case for keeping it much simpler and well defined.

It would also be useful to have more transparency over what is subject to VAT. Supermarkets do not currently provide VAT receipts, so people do not know whether the digestive biscuits or the Jaffa Cakes that they just bought were or were not subject to VAT. However, there are various blogs that enable people to discover the best value items to purchase that are not subject to VAT but are quite similar to other products that are subject to VAT.

Speaking of transparency, clause 2(2)(c) would exempt from VAT goods that are already subject to excise duties, because I strongly believe that we should not have double taxation. Why should somebody who is paying duty on petrol then also have to pay VAT on that duty?