Finance (No. 2) Bill

Debate between Nigel Huddleston and Drew Hendry

Committee stage
Tuesday 21st May 2024 Public Bill Committees

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to serve on this Committee with you in the Chair, Mrs Latham. I am pleased to respond on behalf of the Opposition in the Public Bill Committee stage of the Finance (No. 2) Bill.

As we have heard from the Minister, clause 5 increases the adjusted net income threshold for the high income child benefit charge from £50,000 to £60,000, with effect from the 2024-25 tax year. The clause also amends the rate at which the high income child benefit charge applies to individuals with adjusted net incomes of between £60,000 to £80,000 in a tax year, and contains an administrative easement to prevent backdated child benefit payments from triggering a charge in 2023-24.

As we all know, due to high levels of inflation during the current Parliament, families across the country have felt the impact of threshold freezes, particularly in relation to income tax. Millions of people will be paying income tax for the first time or paying it at higher rates as a result of high inflation and the frozen thresholds. Similarly, the fixed nominal thresholds for the high income child benefit charge mean that more and more people will have been affected by the charge as a result of inflation. The adjustment to the thresholds in this clause will therefore be a welcome step for many families, and brings the number of individuals affected by the high income child benefit charge closer to what Parliament envisaged when the policy was introduced in the Finance Act 2012.

Although we support the measures in the clause and will not oppose them, we would appreciate some clarification from the Minister on one point. In particular, we understand that subsection (2) effectively halves the rate of clawback in the calculation of the charge, so the child benefit is fully withdrawn when the relevant adjusted net income reaches £20,000 above the initial threshold —that is, £80,000. I am grateful to the Chartered Institute of Taxation for pointing out that, because the clawback happens across a wider range of incomes, some individuals will be caught out by higher marginal rates of tax and will therefore likely need to file a self-assessment return. Is the Minister concerned that that will introduce more complexity into the tax system, and if so, what is he doing to communicate these changes so that taxpayers are not caught out?

Finally, we understand that the Government will be moving the assessment of the charge to a household basis from April 2026. I would be grateful if the Minister confirmed when the Government will announce further details about the consultation on that change. Will he also set out the details of what he is doing to consult industry and professional bodies about it?

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

It is a pleasure to serve under your chairmanship, Mrs Latham. We will not be opposing the clause, but I do want to make some comments about this paltry measure, which will help very few people in a cost of living crisis that the Conservative Government are trying to pretend is over and done with—in fact, they are saying that that is the case. That is not the reality for people in their homes across the nations of the UK.

The Minister said that the intention of this provision —I think I am quoting him correctly—was to allow people to “keep as much of their hard-earned money as possible.” That reflects incredibly badly on the way that this Government have conducted themselves by artificially boosting the cost of living through reckless actions such as Brexit and, of course, the mini-Budget. If they wanted to do something that was meaningful to help families, they could have copied the Scottish child payment in Scotland, which has lifted 100,000 children out of poverty. But no: they have decided to do this. They have also decided to keep the two-child limit on universal credit. That should be scrapped, and the Labour party should be joining in calls for that to be scrapped. The rape clause has no place in our society, and this measure will not go far enough to help families.

[Nigel Huddleston]

I thank my opposite numbers for their comments. I respectfully disagree with several of their points, and I will remind my opposite number, the hon. Member for Ealing North—as I do on almost every occasion—of the significant changes to the income tax threshold that the Conservative Government have brought in. It was £6,475 under Labour; it is now £12,570. That is a significant increase and it has taken many people out of paying income tax altogether, which is something we are very proud of.

The hon. Gentleman will be well aware that, as we have discussed on multiple occasions, the reason why taxes are higher than any of us would desire is the level of intervention required to support households and livelihoods during the pandemic and, more recently, the cost of living challenges since the invasion of Ukraine and the energy price shocks in particular. I would make a similar point to the hon. Member for Inverness, Nairn, Badenoch and Strathspey, who also made those points. I remind him that we have made interventions in cost of living support to the tune of about £100 billion. With respect, half a million people will benefit from the changes that we are introducing. HICBC is not a small amount. It is a meaningful amount of money for a large number of people, and it comes on top of the many other support measures that we have introduced.

I thank the hon. Member for Ealing North for pointing out the easements and the fact that there will be automatic backdating. Hopefully, that will be a relief and good news, and be positive for many families. Child benefit is normally backdated by three months, but because of the timing of the implementation, some could overlap two tax years. We are trying to make that simple and bring it into one tax year.

The hon. Gentleman mentioned the increase from £60,000 to £80,000 and the impact on marginal rates. The changes that were announced will reduce the total marginal effective tax rates, which includes income tax, employee national insurance contributions and HICBC, from about 64% to 53% for someone with, for example, two children. That is a good thing.

We recognise that high marginal rates introduce complexity to the tax system, but that needs to be weighed against other considerations when designing tax policy. The Government must ensure sure that they are committed to a fair tax system that supports strong public finances. Individuals will, as the hon. Gentleman pointed out, still be required to submit a self-assessment tax return to declare and pay their HICBC liability. However, the Government announced in July last year that we are taking steps to allow newly liable taxpayers to pay the HICBC through their tax code without the need to register for self-assessment. Further details on this improvement will be shared in due course.

The hon. Gentleman also mentioned the consultation on moving to a household basis. We will announce further details of the consultation in due course and, as with all tax policy, any changes would be considered as part of future fiscal events. The Chancellor announced that the Government will be consulting on moving the HICBC to a system based on household incomes, and that change will be delivered by April 2026. If the hon. Gentleman is patient, we will announce further details on that consultation in due course.

A point was made about communication. There have already been significant communications on the changes to HICBC. There has been a lot of online and offline activity from His Majesty’s Revenue and Customs, various Government Departments and others. The campaign to raise awareness also includes working with, for example, parenting platforms such as Bounty and Emma’s Diary, and issuing emails through third party partners, including childcare providers. The hon. Gentleman raised an important point about not just making the changes, but ensuring that everybody is aware of them, so that everybody who is intended to benefit is able to.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6

Reduction in higher CGT rate for residential property gains to 24%

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Drew Hendry]

I briefly want to endorse the comments about these sectors requiring support. It is good to see some support for the sectors here, but we would like to see more in the future.

[Nigel Huddleston]

I do not have much more to add, other than to point out the strength of our creative industries in all four nations of the United Kingdom, which I am glad has been recognised across the Committee today. It is an incredible strength, and I am therefore pleased to hear today the very obvious cross-party agreement on continuing support for this vital sector.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clauses 17 and 18 ordered to stand part of the Bill.

Clause 20

Collective investment schemes: co-ownership schemes

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Tulip Siddiq]

The Opposition support the changes that will assist with compliance checks by making online applications equivalent to paper applications. Has the Minister considered adding the online application as a service to the agent services accounts so that an agent can prepare and submit the claim on behalf of their client?

We also support the provisions for modifying the application of VAT for terminal markets, as that will allow for further reforms such as bringing trades in carbon credits within the scope of the Value Added Tax (Terminal Markets) Order. We feel that is a vital and necessary step in developing this important market.

We support the changes to legislation that governs the interaction between late payment interest and repayment interest for VAT. Has the Minister given any thought to reinstating HMRC’s ability not to charge interest on VAT errors where the supplier did not charge VAT, with no loss to the Exchequer because the customer could claim in full?

[Drew Hendry]

On clause 23’s minor VAT amendments, there is very little to disagree with. VAT should be paid where it is due, and HMRC should pay interest where it should pay interest. That is to be welcomed.

However, on Second Reading I pointed out the paucity of thought and imagination that had gone into providing real help for people across the nations of the UK, and the kinds of thing that the Government could have done but have not. The clause title, “Minor VAT amendments”, just highlights the problem with the entire Bill. The Government could have taken some action to deal with the issues for people in hospitality by cutting VAT and doing something meaningful for tourism, but no: they have chosen to make these minor adjustments. They could have used VAT as a mechanism for helping our high streets to create economic zones that could boost life back into vital high streets and centres. Instead, they have taken to tinkering with the VAT rules.

My question to the Minister is why there is such a lack of ambition in his Government. Is it that this is a fag-end Government in a fag-end Parliament that has run out of ideas, or is it just that they do not care?

[Nigel Huddleston]

The hon. Member for Inverness, Nairn, Badenoch and Strathspey has been charming until this point, and now he goes back to this. I know him very well; I am sure he does not mean it. First, he knows as well as anybody in this House that everybody who comes into Parliament cares: they care about their constituents and they care about the country. We are motivated to come here because we want to make the country a better place for our children and grandchildren.

I know that the hon. Gentleman occasionally gets rather vocal on some of these points, but I politely request that he be a little bit careful with some of his comments. I would never criticise the motivation, incentives or purposes of any colleague in this place. I may fundamentally disagree with some of their policies, but I will not disagree with their motivations. In saying things like “People don’t care” or “The Government don’t care,” I am afraid he is straightforwardly wrong.

[Drew Hendry]

I am very fond of the Minister, as he knows. We often have these back and forths, and I often have to rise to my feet to correct what he has said. I did not make any assertion about any individual; I was talking about his Government. I was very explicit about that. I just want to make that clear.

[Nigel Huddleston]

Yet again, I appreciate the hon. Gentleman’s trying to clarify, but I am a member of the Government and therefore I am afraid that I do take offence, direct or indirect. But that is a side point to the matters under discussion.

The hon. Gentleman is making fair and valid points about the support that has been given, but I repeat that this Government, like every Government around the world, have had incredibly difficult circumstances to deal with. I do not think that there is any doubt whatever that the support measures that we have put in place to support lives and livelihoods have been incredible and stack up pretty well when compared internationally. That includes cost of living support, as I have mentioned.

I know that the hon. Gentleman is a huge supporter of the tourism, hospitality and leisure industry. We have spoken about that many times, and I know that it is particularly important to Scotland, where it is a disproportionately larger share of the economy than in England, for example, although it is important and large across every single constituency in the UK—and I do mean every single constituency. But the hon. Gentleman is being a little bit rich, because he knows as well as I do that there are other measures beyond VAT to support the hospitality and leisure industry. Of course, in England we have extended the 75% business rates reduction to the retail, hospitality and leisure sector, but that has not been done in Scotland, nor has it been done to its full extent in Wales.

[Drew Hendry]

I am grateful to the Minister for allowing a bit of back and forth on this. It is generous of him to do so. He fails to mention that in Scotland, 100,000 businesses are lifted out of business rates altogether through the small business bonus scheme. The record in Scotland shows that we are supporting businesses, and those businesses are very prevalent in the tourism sector.

[Nigel Huddleston]

I acknowledge the efforts made by the Scottish Government to support various sectors, but as I say, on that particular item, the hon. Gentleman will know as well as I do that it is a key ask of the industry in Scotland for the Scottish Government to follow suit with England and elsewhere.

The hon. Member for Hampstead and Kilburn raised several points. Some were slightly out of the scope of the specific measures under discussion, including IT systems and other considerations, but I take on board what she says, as does HMRC, because there is a constant need to review and assess the scope of IT systems and so on. We do so on a regular basis; I spend a lot of time talking to HMRC about this, so I can assure the hon. Lady that the points that she raised are constantly under consideration. I will probably leave it at that.

Question put and agreed to.

Clause 23 accordingly ordered to stand part of the Bill.

Clause 24

Collective money purchase arrangements

Question proposed, That the clause stand part of the Bill.

Finance (No. 2) Bill (Except clauses 1 to 4, 12 and 13, and 19)

Debate between Nigel Huddleston and Drew Hendry

Tuesday 21st May 2024 Public Bill Committees

[James Murray (Ealing North) (Lab/Co-op)]

It is a pleasure to serve on this Committee with you in the Chair, Mrs Latham. I am pleased to respond on behalf of the Opposition in the Public Bill Committee stage of the Finance (No. 2) Bill.

As we have heard from the Minister, clause 5 increases the adjusted net income threshold for the high income child benefit charge from £50,000 to £60,000, with effect from the 2024-25 tax year. The clause also amends the rate at which the high income child benefit charge applies to individuals with adjusted net incomes of between £60,000 to £80,000 in a tax year, and contains an administrative easement to prevent backdated child benefit payments from triggering a charge in 2023-24.

As we all know, due to high levels of inflation during the current Parliament, families across the country have felt the impact of threshold freezes, particularly in relation to income tax. Millions of people will be paying income tax for the first time or paying it at higher rates as a result of high inflation and the frozen thresholds. Similarly, the fixed nominal thresholds for the high income child benefit charge mean that more and more people will have been affected by the charge as a result of inflation. The adjustment to the thresholds in this clause will therefore be a welcome step for many families, and brings the number of individuals affected by the high income child benefit charge closer to what Parliament envisaged when the policy was introduced in the Finance Act 2012.

Although we support the measures in the clause and will not oppose them, we would appreciate some clarification from the Minister on one point. In particular, we understand that subsection (2) effectively halves the rate of clawback in the calculation of the charge, so the child benefit is fully withdrawn when the relevant adjusted net income reaches £20,000 above the initial threshold —that is, £80,000. I am grateful to the Chartered Institute of Taxation for pointing out that, because the clawback happens across a wider range of incomes, some individuals will be caught out by higher marginal rates of tax and will therefore likely need to file a self-assessment return. Is the Minister concerned that that will introduce more complexity into the tax system, and if so, what is he doing to communicate these changes so that taxpayers are not caught out?

Finally, we understand that the Government will be moving the assessment of the charge to a household basis from April 2026. I would be grateful if the Minister confirmed when the Government will announce further details about the consultation on that change. Will he also set out the details of what he is doing to consult industry and professional bodies about it?

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

It is a pleasure to serve under your chairmanship, Mrs Latham. We will not be opposing the clause, but I do want to make some comments about this paltry measure, which will help very few people in a cost of living crisis that the Conservative Government are trying to pretend is over and done with—in fact, they are saying that that is the case. That is not the reality for people in their homes across the nations of the UK.

The Minister said that the intention of this provision —I think I am quoting him correctly—was to allow people to “keep as much of their hard-earned money as possible.” That reflects incredibly badly on the way that this Government have conducted themselves by artificially boosting the cost of living through reckless actions such as Brexit and, of course, the mini-Budget. If they wanted to do something that was meaningful to help families, they could have copied the Scottish child payment in Scotland, which has lifted 100,000 children out of poverty. But no: they have decided to do this. They have also decided to keep the two-child limit on universal credit. That should be scrapped, and the Labour party should be joining in calls for that to be scrapped. The rape clause has no place in our society, and this measure will not go far enough to help families.

[Nigel Huddleston]

I thank my opposite numbers for their comments. I respectfully disagree with several of their points, and I will remind my opposite number, the hon. Member for Ealing North—as I do on almost every occasion—of the significant changes to the income tax threshold that the Conservative Government have brought in. It was £6,475 under Labour; it is now £12,570. That is a significant increase and it has taken many people out of paying income tax altogether, which is something we are very proud of.

The hon. Gentleman will be well aware that, as we have discussed on multiple occasions, the reason why taxes are higher than any of us would desire is the level of intervention required to support households and livelihoods during the pandemic and, more recently, the cost of living challenges since the invasion of Ukraine and the energy price shocks in particular. I would make a similar point to the hon. Member for Inverness, Nairn, Badenoch and Strathspey, who also made those points. I remind him that we have made interventions in cost of living support to the tune of about £100 billion. With respect, half a million people will benefit from the changes that we are introducing. HICBC is not a small amount. It is a meaningful amount of money for a large number of people, and it comes on top of the many other support measures that we have introduced.

I thank the hon. Member for Ealing North for pointing out the easements and the fact that there will be automatic backdating. Hopefully, that will be a relief and good news, and be positive for many families. Child benefit is normally backdated by three months, but because of the timing of the implementation, some could overlap two tax years. We are trying to make that simple and bring it into one tax year.

The hon. Gentleman mentioned the increase from £60,000 to £80,000 and the impact on marginal rates. The changes that were announced will reduce the total marginal effective tax rates, which includes income tax, employee national insurance contributions and HICBC, from about 64% to 53% for someone with, for example, two children. That is a good thing.

We recognise that high marginal rates introduce complexity to the tax system, but that needs to be weighed against other considerations when designing tax policy. The Government must ensure sure that they are committed to a fair tax system that supports strong public finances. Individuals will, as the hon. Gentleman pointed out, still be required to submit a self-assessment tax return to declare and pay their HICBC liability. However, the Government announced in July last year that we are taking steps to allow newly liable taxpayers to pay the HICBC through their tax code without the need to register for self-assessment. Further details on this improvement will be shared in due course.

The hon. Gentleman also mentioned the consultation on moving to a household basis. We will announce further details of the consultation in due course and, as with all tax policy, any changes would be considered as part of future fiscal events. The Chancellor announced that the Government will be consulting on moving the HICBC to a system based on household incomes, and that change will be delivered by April 2026. If the hon. Gentleman is patient, we will announce further details on that consultation in due course.

A point was made about communication. There have already been significant communications on the changes to HICBC. There has been a lot of online and offline activity from His Majesty’s Revenue and Customs, various Government Departments and others. The campaign to raise awareness also includes working with, for example, parenting platforms such as Bounty and Emma’s Diary, and issuing emails through third party partners, including childcare providers. The hon. Gentleman raised an important point about not just making the changes, but ensuring that everybody is aware of them, so that everybody who is intended to benefit is able to.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6

Reduction in higher CGT rate for residential property gains to 24%

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Drew Hendry]

I briefly want to endorse the comments about these sectors requiring support. It is good to see some support for the sectors here, but we would like to see more in the future.

[Nigel Huddleston]

I do not have much more to add, other than to point out the strength of our creative industries in all four nations of the United Kingdom, which I am glad has been recognised across the Committee today. It is an incredible strength, and I am therefore pleased to hear today the very obvious cross-party agreement on continuing support for this vital sector.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clauses 17 and 18 ordered to stand part of the Bill.

Clause 20

Collective investment schemes: co-ownership schemes

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Tulip Siddiq]

The Opposition support the changes that will assist with compliance checks by making online applications equivalent to paper applications. Has the Minister considered adding the online application as a service to the agent services accounts so that an agent can prepare and submit the claim on behalf of their client?

We also support the provisions for modifying the application of VAT for terminal markets, as that will allow for further reforms such as bringing trades in carbon credits within the scope of the Value Added Tax (Terminal Markets) Order. We feel that is a vital and necessary step in developing this important market.

We support the changes to legislation that governs the interaction between late payment interest and repayment interest for VAT. Has the Minister given any thought to reinstating HMRC’s ability not to charge interest on VAT errors where the supplier did not charge VAT, with no loss to the Exchequer because the customer could claim in full?

[Drew Hendry]

On clause 23’s minor VAT amendments, there is very little to disagree with. VAT should be paid where it is due, and HMRC should pay interest where it should pay interest. That is to be welcomed.

However, on Second Reading I pointed out the paucity of thought and imagination that had gone into providing real help for people across the nations of the UK, and the kinds of thing that the Government could have done but have not. The clause title, “Minor VAT amendments”, just highlights the problem with the entire Bill. The Government could have taken some action to deal with the issues for people in hospitality by cutting VAT and doing something meaningful for tourism, but no: they have chosen to make these minor adjustments. They could have used VAT as a mechanism for helping our high streets to create economic zones that could boost life back into vital high streets and centres. Instead, they have taken to tinkering with the VAT rules.

My question to the Minister is why there is such a lack of ambition in his Government. Is it that this is a fag-end Government in a fag-end Parliament that has run out of ideas, or is it just that they do not care?

[Nigel Huddleston]

The hon. Member for Inverness, Nairn, Badenoch and Strathspey has been charming until this point, and now he goes back to this. I know him very well; I am sure he does not mean it. First, he knows as well as anybody in this House that everybody who comes into Parliament cares: they care about their constituents and they care about the country. We are motivated to come here because we want to make the country a better place for our children and grandchildren.

I know that the hon. Gentleman occasionally gets rather vocal on some of these points, but I politely request that he be a little bit careful with some of his comments. I would never criticise the motivation, incentives or purposes of any colleague in this place. I may fundamentally disagree with some of their policies, but I will not disagree with their motivations. In saying things like “People don’t care” or “The Government don’t care,” I am afraid he is straightforwardly wrong.

[Drew Hendry]

I am very fond of the Minister, as he knows. We often have these back and forths, and I often have to rise to my feet to correct what he has said. I did not make any assertion about any individual; I was talking about his Government. I was very explicit about that. I just want to make that clear.

[Nigel Huddleston]

Yet again, I appreciate the hon. Gentleman’s trying to clarify, but I am a member of the Government and therefore I am afraid that I do take offence, direct or indirect. But that is a side point to the matters under discussion.

The hon. Gentleman is making fair and valid points about the support that has been given, but I repeat that this Government, like every Government around the world, have had incredibly difficult circumstances to deal with. I do not think that there is any doubt whatever that the support measures that we have put in place to support lives and livelihoods have been incredible and stack up pretty well when compared internationally. That includes cost of living support, as I have mentioned.

I know that the hon. Gentleman is a huge supporter of the tourism, hospitality and leisure industry. We have spoken about that many times, and I know that it is particularly important to Scotland, where it is a disproportionately larger share of the economy than in England, for example, although it is important and large across every single constituency in the UK—and I do mean every single constituency. But the hon. Gentleman is being a little bit rich, because he knows as well as I do that there are other measures beyond VAT to support the hospitality and leisure industry. Of course, in England we have extended the 75% business rates reduction to the retail, hospitality and leisure sector, but that has not been done in Scotland, nor has it been done to its full extent in Wales.

[Drew Hendry]

I am grateful to the Minister for allowing a bit of back and forth on this. It is generous of him to do so. He fails to mention that in Scotland, 100,000 businesses are lifted out of business rates altogether through the small business bonus scheme. The record in Scotland shows that we are supporting businesses, and those businesses are very prevalent in the tourism sector.

[Nigel Huddleston]

I acknowledge the efforts made by the Scottish Government to support various sectors, but as I say, on that particular item, the hon. Gentleman will know as well as I do that it is a key ask of the industry in Scotland for the Scottish Government to follow suit with England and elsewhere.

The hon. Member for Hampstead and Kilburn raised several points. Some were slightly out of the scope of the specific measures under discussion, including IT systems and other considerations, but I take on board what she says, as does HMRC, because there is a constant need to review and assess the scope of IT systems and so on. We do so on a regular basis; I spend a lot of time talking to HMRC about this, so I can assure the hon. Lady that the points that she raised are constantly under consideration. I will probably leave it at that.

Question put and agreed to.

Clause 23 accordingly ordered to stand part of the Bill.

Clause 24

Collective money purchase arrangements

Question proposed, That the clause stand part of the Bill.

Finance (No. 2) Bill

Debate between Nigel Huddleston and Drew Hendry

Committee of the whole House
Wednesday 8th May 2024 Commons Chamber

[Drew Hendry]

Just to be clear, I was saying that the Tories have been hollowed out by the extremists on the right wing within their Government, not that we have an extremist right-wing Government—that is, of course, for people out there to make their mind up about.

[Nigel Huddleston]

I think the hon. Gentleman just dug even deeper there. As I say, I like him but I do not always like what he says. On income tax, I do not think that everybody in Scotland would share his enthusiasm for the Scottish tax system, given that the thresholds and rates are higher, to the tune of up to 5%.

Turning to my opposite number, the hon. Member for Ealing North (James Murray), I will try to avoid the déjà vu all over again—we seem to have the same debate again and again. Yet again we have heard a Labour party spokesman constantly talking Britain down, as if we are in some declinist environment of failure upon failure. That is not a characterisation of the UK, its economy or our constituents that I recognise. I wish he had greater optimism and enthusiasm, and could support the UK economy and the workers to a greater degree. After all, the UK is doing incredibly well.

The hon. Member for Ealing North was right to recognise that all of our constituents are facing extraordinarily difficult times, but he is wrong to believe that is something unique to the UK economy; it is as a result of the pandemic and the cost of living challenges, which have had an impact right the way around the world. Given the extraordinary circumstances that the whole developed world has found itself in, what is extraordinary is how the UK has performed so well. I wish he would recognise the great optimism and the potential future of the UK economy.

For example, the International Monetary Fund has forecast that this country will grow faster than Germany, France, Italy and Japan over the next few years to 2028-29. The hon. Gentleman should also recognise that since the Conservatives came to power in 2010, the UK economy has generated an average of 800 jobs per day. Since Brexit, the UK has gone up the global export league tables, from seventh to fourth. We are the second largest exporter of services in the world and have reached record levels of service exports recently. We have overtaken France to become the eighth largest manufacturer in the world. We have the third largest tech economy, after the United States and China. We have the largest film, TV and creative industries sector in Europe, and one of the world’s leading biotech and life sciences industries—again, it is the largest in Europe.

We are leading the world in renewables, with the first, second, third and fourth biggest offshore wind farms in the world. I could go on, but I will not detain the Committee too much longer, Dame Eleanor. If the hon. Gentleman could recognise just one or a few of those success stories, he might have greater confidence in the UK economy and be able to talk it up. Anybody aspiring to be in government must champion the UK around the world, instead of talking us down. Otherwise, the impact they would have on investment in the UK economy is appalling.

Let me deal with the scaremongering in what the hon. Member for Ealing North and others have been declaring in the past few days about national insurance and the impact on pensions—I found that behaviour deplorable. It could be complete scaremongering because, as we have said, he is not aware of how NI impacts health and pensions. The amount of money spent on pensions is about £130 billion. Welfare spending is £260 billion. NHS spending is £160 billion. That is far higher than the total amount paid for by NI. So to try to suggest some direct correlation and say that reducing NI puts pensions at risk all of a sudden is either economically utterly incompetent or it is sheer scaremongering—neither are particularly attractive attributes in somebody aspiring to be in government. I therefore hope that he will have the decency to take that back. As I said, this scaremongering of pensioners, from the whole Opposition Front Bench, is despicable, although we can perhaps expect it from the Opposition.

Moreover, it is utterly hypocritical, because when we had the NI debate not so long ago, the Opposition spokespeople, the Opposition Front Benchers and the Leader of the Opposition said that they supported our NI cuts, but when it came to a vote they did not. That should make the British people ask: why would the Opposition say one thing and do another. First, I should say that is not a surprise to me, but could it also be that at some future point they might hope to be in a situation where they could reverse that decision and say, “We did not actually vote for it, after all”? Again, they should be straight with the British public.

I thank hon. Members for their contributions—some more than others. The debates will continue, but I hope that I have explained why we do not accept the new clauses. I ask that the clauses we have put forward should stand part of the Bill.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 4 ordered to stand part of the Bill.

New Clause 1

Review of impact of section 2

“(1) The Chancellor of the Exchequer must, within three months of this Act being passed, publish a review of the expected impact of section 2 of this Act.

(2) The review must include analysis setting out the number of individual taxpayers facing a marginal tax rate in the tax year 2024-25 of—

(a) the basic rate of 20%, and

(b) the higher rate of 40%.

(3) For comparative purposes, the review must take account of—

(a) equivalent actual figures to those in subsection (2)(a) and (b) for the tax years 2021-22, 2022-23 and 2023-24, and

(b) equivalent projected figures to those in subsection (2)(a) and (b) for the tax years 2025-26, 2026-27 and 2027-28.”—(James Murray.)

This new clause requires a review of how many people will be liable to pay income tax at 20% and 40%, and would compare figures for the current tax year with those for the three preceding and three subsequent tax years.

Brought up, and read the First time.

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

HMRC Self-Assessment Helpline

Debate between Nigel Huddleston and Drew Hendry

Wednesday 20th March 2024 Commons Chamber

[Mr Speaker]

I call the SNP spokesperson.

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

This is absolute chaos. The proposal to permanently close the self-assessment helpline for half the year was truly half-baked and irresponsible, as were the planned restrictions to the VAT helpline. The reversal is welcome, but the fact that the announcement was made at all highlights the disconnect at the heart of HMRC’s customer operations. As the Federation of Small Businesses has pointed out,

“customer service levels are at an all-time low”—

a view backed up by the Public Accounts Committee. At a time when the Chancellor’s policies are fiscally dragging more people into PAYE, the proposal was typically tone deaf to people’s needs.

Fran Heathcote of the PCS union has said that

“the combination of low-pay and micro-management”

is “rife across the whole” of HMRC’s customer service department. The Minister said that HMRC is a non-ministerial Department, but we know that it has been told what to do by the Chancellor overnight. When did the Government get notice of the announcement? Was it a reaction to the Chancellor’s decision to cut HMRC’s budget by £1.6 billion next year? Will he now ensure that the cut is reversed and order HMRC to recruit more customer service staff, and will he now instruct HMRC to make the reversal permanent?

[Nigel Huddleston]

As I outlined a few moments ago, I think we can all appreciate that in order to serve customers, and particularly those who most need support, we need to ensure that those who do not need to go online have alternative channels—by the way, the customer service levels are higher in online channels—and the use of the app, which I encourage all individuals to use. Those who can go online will find a very effective and efficient service, so this is absolutely the right strategy and one that I completely and utterly support. We have also previously had a trial closure of the lines, and the report released yesterday showed that it worked quite well.

The hon. Gentleman also asked about redeployment. HMRC is proactive in notifying people who, for example, do not need to provide a self-assessment form. I think more than 1 million people were notified last year that they did not need to do so. Following other changes in Government policy, we have also communicated that those on high incomes—up to £150,000, for example—but do not have complex tax affairs do not need to provide a self-assessment return. There is a broad package going on here to enhance and improve customer service, but we recognise that many people like and would prefer a telephone service.

National Insurance Contributions (Reduction in Rates) (No.2) Bill

Debate between Nigel Huddleston and Drew Hendry

2nd reading
Wednesday 13th March 2024 Commons Chamber

[The Financial Secretary to the Treasury (Nigel Huddleston)]

I thank all right hon. and hon. Members for their contributions. I think it would be fair to say that a range of perspectives have been presented, but most of us—certainly on the Government Benches—agree that this is an important piece of legislation. It will deliver tax cuts that make the tax system fairer, while rewarding and incentivising work, and growing the economy in a sustainable way. The national insurance cuts are an important part of that, and they are policy.

I want to respond to the confusion of the hon. Member for Hampstead and Kilburn (Tulip Siddiq), which is understandable given that we have heard promises, policies, aspirations and ambitions from the Labour party in relation to the £28 billion. Let me be clear: it is my party’s ambition to eliminate national insurance. I know that Labour Members do not understand what the word “ambition” means and that it is difficult, but it is an ambition. That is the difference.

I will briefly reiterate the Bill’s main measures and what they seek to achieve. First, the Bill builds on the cuts to national insurance announced in the autumn statement by reducing the main rate of class 1 employee NICs from 10% to 8%. That change will come into effect from 6 April 2024, with employees benefiting from April onwards as employers make the changes to their payroll systems. Secondly, the Bill reduces the self-employed class 4 main rate of NICs from 8% to 6% from 6 April. That follows on from the one percentage point reduction to the main rate of class 4 NICs from 9% to 8% announced in the autumn statement 2023.

Now that inflation is falling and the economy is improving, as we saw in this morning’s figures, which I am sure the Opposition welcome, we can responsibly return some money to taxpayers, but it is important to do so in a way that supports work and grows a sustainable economy for the future. A UK employee can already earn more money before paying income tax and social security contributions than an employee in any other G7 country, and thanks to the NICs cuts in the autumn statement and the spring Budget and above-inflation increases to thresholds since 2010, an average worker on £35,400 in 2024-25 will pay over £1,500 less in personal taxes than they would have done if the thresholds had just increased in line with inflation. As my hon. Friend the Member for St Austell and Newquay (Steve Double) pointed out very well, in contrast to the comments of the hon. Member for Hampstead and Kilburn, we have reduced the amount of tax paid by increasing the threshold from £6,500 to more than £12,500 over the period in which we have been in office. Labour opposed many of those threshold increases.

My hon. Friend the Member for St Austell and Newquay also made the important point that the measures we have taken in recent fiscal events have been focused on helping 29 million workers. Some 27 million employees will benefit from an average £900 saving in national insurance, but of course, we also care deeply about pensioners. Those on the full basic pension will receive an extra £700 in April and those on the full new state pension will receive an extra £900, so 12 million pensioners will also benefit from the significant increases that we will provide through the triple lock. Of course, it is perfectly fair that workers also get some advantage—they will be receiving the benefits I have outlined. The Government are cutting taxes in a responsible way, and have taken difficult but responsible decisions to restore the public finances in the wake of global crises.

[Drew Hendry]

The Minister has used the word “responsible” a number of times. As has been pointed out by many organisations, not least the Institute for Fiscal Studies and the OBR, there will be substantial cuts to public services. With many English councils already in special measures—effective bankruptcy—where does the Minister see those cuts falling? How will they filter through to the public, and what will be the effect on public sector jobs?

[Nigel Huddleston]

As the hon. Member will be aware and as the Chancellor outlined, based on current spending assumptions, total departmental spending will still be £86 billion higher in real terms by 2028-29 than at the start of this Parliament. If he was listening to the debates earlier this week, he will be aware that we will increase spending in real terms by 1% during the forecast period.

The hon. Member and others have raised points about fairness and making sure that we look after the most vulnerable in society, which is of course something we are committed to. Distributional analysis published alongside the spring Budget shows that the typical household at any income decile will see a net benefit in 2024-25 as a result of Government decisions made in the autumn statement—and, indeed, from the autumn statement 2022 onwards—and that low-income households will see the largest benefit as a percentage of income.

We have mentioned many times our commitment to the national living wage. It will soon increase by 9.8% to £11.44, which is expected to benefit around 2.7 million workers. It is important to stress that from April, a full-time national living wage worker’s take-home pay will be 35% greater in real terms than it was in 2010, due to successive increases in the national living wage and changes to personal tax rates and thresholds.

To respond to a few other comments made by right hon. and hon. Members, my right hon. Friends the Members for Witham (Priti Patel) and for Wokingham (John Redwood) both gave excellent speeches, in which they not only championed workers—including the self-employed—but highlighted the fact that we have to operate in a particular context. As has been mentioned many times today, we are in a difficult financial situation because of a global pandemic that hit the global economy, which was followed by the invasion of Ukraine and the significant impact it had on inflation around the world.

The question, as my right hon. Friend the Member for Wokingham pointed out, is how much higher taxes would be if Labour had been in charge. Throughout the pandemic, the Government received a lot of support from Members on both sides of the Chamber. That was completely right, but many Members were calling for even greater intervention and even longer lockdowns, which would potentially have done immense damage to the economy.

Some hon. Members raised the contributory principle. In our ambition for further reductions in national insurance, we will make sure that the future tax system has the right mechanism for establishing entitlement to contributory benefits, including the state pension. My right hon. Friend also mentioned the rise in the VAT threshold, which is really important. It will go from £85,000 to £90,000, which means that 28,000 fewer small businesses will be registered for VAT. My hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) highlighted this Government’s record on jobs in creating 800 jobs a day and in significantly reducing youth unemployment, of which we can all be proud.

My hon. Friend the Member for Aberconwy (Robin Millar), who raised many important points in his speech, pointed out the rather irresponsible scaremongering we have heard today from those on the Labour Front Bench relating to spending on pensions and the NHS. The Opposition should be well aware, especially if they wish to form a Government, that the money raised by NICs does not determine the amount going to the NHS and state pensions. We have announced increasing funding to the NHS and we are uprating state pensions by 8.5% this year, as I have mentioned. We on these Benches can tolerate a decent debate—we are fairly robust— but we will not tolerate irresponsible scaremongering, especially when targeted at the most vulnerable in society, purely to try to take political advantage from making up policies that do not exist. I hope that at some point the Opposition will either get some economic competence or apologise for that.

This really important Bill delivers tax cuts for over 29 million working people. A yearly saving of over £450 for the average worker will result from this Bill alone. Taken together with the cuts to NICs at the autumn statement, it will be worth over £900 per year for the average worker. This will benefit households throughout the United Kingdom and in every single constituency represented in this place. However, here we are again, and in nearly three hours of debate, we have heard nothing but doom and gloom from the Opposition. How disappointed they must have been this morning to hear that the economy has grown. While I am not pretending for one minute that everything is perfect—as I have said, our constituents and the country have been through a very challenging time—it is important to recognise, welcome and applaud success, especially if a party wants to lead a country, champion trade abroad and attract investment. What a terrible advert for the UK we have heard from the Opposition today, who are completely lacking in confidence and ambition for our economy and our workers.

The national insurance cuts we are debating reward work and will provide a further boost to the economy. We are turning a corner, and the plan is working. While we want to put more money back into people’s pockets, the Opposition want to take more out, and while we take every opportunity to talk the country up, they take every opportunity to talk Britain down. The choice is very clear: a plan for growth and a brighter future with the Conservatives, or no hope, no clue and no plan with the Opposition. I commend the Bill to the House.

Oral Answers to Questions

Debate between Nigel Huddleston and Drew Hendry

Tuesday 6th February 2024 Commons Chamber

[Mr Speaker]

We go back to Scotland: I call the SNP spokesperson.

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

Contrary to what the Minister said, OECD forecasts show that the UK will have the lowest growth in the G20 and the highest inflation in the G7. Ministers like to pretend that there is no real cost of living crisis, but there is one, and it is biting hard. How long will Ministers—and their Labour counterparts—continue to peddle the fantasy that Brexit is somehow good for the Scottish people?

[Nigel Huddleston]

I am afraid that the thing that would most impoverish the people of Scotland is separation from the UK. After 16 years of SNP rule—longer than the Conservatives’ in England—GDP per head in Scotland is lower, productivity is falling, employment is lower and inactivity is higher. That is not exactly a proud record.

[Drew Hendry]

The Minister talks about GDP. The Office for Budget Responsibility forecast that GDP in the UK will be 4% lower in the long term due to Brexit. Meanwhile, independent Ireland in the EU is booming with a giant fiscal surplus. Given that the Tories, Labour and the Lib Dems are all now champions of Brexit, is it not the case that the only way for Scotland to rejoin the EU is through becoming an independent country?

[Nigel Huddleston]

The hon. Gentleman knows that the IMF has forecast us greater growth than France, Italy and Germany over the next few years. If he is so enthusiastic about supporting growth, including helping businesses across the United Kingdom, perhaps Scottish National party Members could have joined us in the voting Lobby last night instead of voting against, for example, full expensing and investment in research and development. They voted against that—how on earth is that in the interests of their constituents?

National Insurance Contributions (Reduction in Rates) Bill

Debate between Nigel Huddleston and Drew Hendry

Committee of the whole House
Thursday 30th November 2023 Commons Chamber

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

Before I come to my point, may I add my own condolences and those of my party to the family and friends of the former Chancellor, Alistair Darling? Clearly, we were on very different sides of the fence, particularly on independence, which was heavily contested nine years ago, but he was a towering intellect and a very important figure in Scottish public life. As I say, we pass on our condolences to his family and friends.

My question is also on the operation of clause 1. HMRC has stated to the Treasury Committee that it is unable to cope with inquiries either in writing or by phone at the moment, and that it is under severe pressure. I, too, would like to know how the clause will be given effect by 6 January, and what measures the Government are taking to ensure that that happens.

[Nigel Huddleston]

I thank hon. Members for their questions. I can assure them that HMRC is engaging with industry and providing relevant guidance to support it to deliver the changes on time. We expect the majority of companies to be able to do so, particularly in this era, when many of the changes can be made on various systems. The Government are confident that the majority of software developers will be able to make changes to their payroll software in time for the 6 January deadline.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clauses 2 to 5 ordered to stand part of the Bill.

New Clause 1

Review of effects of Act

“(1) The Treasury must lay before the House of Commons on the day on which this Act is passed a report which sets out forecasts of—

(a) the changes to the amount of national insurance contributions deducted from the annual income of a full-time worker earning the national living wage as a result of the measures in this Act over the period 2023/24 to 2027/28, and

(b) a comparison with the changes to the amount of national insurance contributions deducted from the annual income of a full-time worker earning the national living wage as a result of the thresholds for payment of national insurance remaining frozen over the period 2023/24 to 2027/28, rather than rising in line with CPI.

(2) The report in subsection (1) should also set out the costs to (i) businesses, and (ii) government , of implementing the changes in this Act, and compare them to the costs of—

(a) implementing a 1.25% point increase in national insurance contributions in April 2022, and

(b) implementing the reversal of the increase in paragraph(a) in November 2022.”—(James Murray.)

This new clause would require a review of the effects of the Bill if enacted over the period 2023/24 to 2027/28, on someone earning the national living wage, compared with the effect of national insurance thresholds being frozen, and a comparison of the expected implementation costs of this Bill with those of implementing and repealing the Health and Social Care Levy Act 2021.

Brought up, and read the First time.

Trade (Australia and New Zealand) Bill

Debate between Nigel Huddleston and Drew Hendry

Report stage
Monday 12th December 2022 Commons Chamber

[Nigel Huddleston]

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

Our deals with Australia and New Zealand are the first trade agreements in almost 50 years that the UK has negotiated from scratch. Members from across the House have rightly been eager to engage with the Bill, and I thank them all for continuing to do so. I also thank Members who sat on the Public Bill Committee for their work in scrutinising the Bill, and in particular my right hon. Friend the Member for The Wrekin (Mark Pritchard) and the hon. Member for Halton (Derek Twigg) for their expertise in chairing the Committee.

Members have rightly shown a great interest in the Bill, and I would like to use this opportunity to give the House further assurances. First, Members expressed concerns about the opportunities that the devolved Administrations have had to shape the Bill. I can assure the House that our procurement teams have consistently held roundtables with their counterparts from the devolved Administrations. During negotiations with Australia and New Zealand, they discussed the text of procurement chapters. Discussions on the Bill, and the changes in procurement regulations that it creates, have regularly taken place. Indeed, during negotiations, ministerial and official level engagement on these free trade agreements totals hundreds of hours. That includes 25 meetings with the Australia FTA chief negotiator, specific discussions at the ministerial forum for trade, and senior official conversations on policy content. My officials continue to work closely with their counterparts at the devolved Administrations to address the concerns raised regarding the powers in the Bill. I myself have also had constructive conversations with Ministers from the devolved Administrations. The Government remain committed not to using the concurrent power in the Bill without first consulting the devolved Administrations. I want to stress to the House that the powers are the most logical and efficient way of making minor, technical changes to our procurement regulations.

On Report, we discussed how the Government are committed to providing, for each agreement, a monitoring report every two years, and an evaluation within five years of entry into force. The reports will assess the entirety of the agreements and not limit themselves to the procurement chapters alone.

I would like to say a couple more thank yous: first, to the Bill team at the Department for International Trade—James Copeland, Donald Selmani, Jack Collins, Alex Garcia-Pineiro and Catherine Ajani—as well as the other officials who make up my fantastic team. I would like to thank the parliamentarians who have taken part in this and other debates on the legislation, and of course the International Trade Select Committee, as well as the wonderful staff here in the House.

I also want to thank the Opposition spokespeople for the constructive way in which they have approached scrutiny of the Bill. It was remiss of me earlier not to welcome the new SNP spokesperson, the hon. Member for Gordon (Richard Thomson) to his role, and I do so now. I also thank his predecessor, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). Who knows, but perhaps under the new leadership we may actually get the SNP to vote in favour of a trade deal. [Interruption.] Indeed, I suspected that may be the case.

[Drew Hendry]

Will the Minister also extend the hope that the Government may accept one of the SNP amendments one of these days?

[Nigel Huddleston]

The key thing is that we estimate that these deals will considerably boost the UK economy and all nations. Businesses in every single constituency will be able to grasp new opportunities from this Bill. It will therefore benefit the whole of the country, and I hope that just perhaps it will get the support of the whole House. I am delighted to commend this Bill to the House.

Oral Answers to Questions

Debate between Nigel Huddleston and Drew Hendry

Thursday 3rd November 2022 Commons Chamber

[Mr Speaker]

I am going to make an even bigger point: we are not reading out phone books as answers.

I call the Scottish National party spokesperson, Drew Hendry.

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

I welcome the Minister to his places—I think that is the right thing to say.

It is vital that, for a change, we get a chance to actually scrutinise proposed deals before they become real. India has no detailed plan, for example, to cut emissions, and 70% of its economy is powered by coal. Cabinet Office emails have shown that the former Trade Secretary and Prime Minister decided to

“drop both of the climate asks”

from the UK-Australia agreement to get it “over the line”, even though Australia has a history of coal pollution. Given that the current Prime Minister had to be shamed into attending COP27, does that mean that no legally binding demands will be made in the UK-India discussions?

[Nigel Huddleston]

Again, I disagree with that characterisation —respectfully, because I am looking forward to a constructive relationship with the Scottish National party, Opposition Members and the devolved Administrations on trade deals. Let us be very clear: we will not sign any deals that are not in the UK’s interests.

[Drew Hendry]

The Minister did not answer the question. The UK has rolled over 35 EU agreements and signed trade deals with Australia and New Zealand, yet they have included no realistically enforceable measure to plug the climate change gaps that we have pointed out in all of them from the start. The New Zealand text cannot be enforced and climate has been dropped altogether from the Australia deal. There are gleeful reports from India that there will be no more than warm words on climate change. Why is real action on the climate emergency ignored in every deal that this place brings forward?

[Nigel Huddleston]

The hon. Member mentions “every deal that this place brings forward”, and again, it would be nice if we actually got support from Opposition Members at some point. He will know that our friends, colleagues and trading partners in Australia, in particular, given the situation they face, are as concerned about climate challenges as we are.