Finance (No. 3) Bill (Fifth sitting)

Robert Jenrick Excerpts

Tuesday 4th December 2018 Public Bill Committees

[Jonathan Reynolds]

It is lovely to see you again in the chair, Ms Dorries, as we reconvene for this Committee’s second week. It is particularly good to see the Minister still here—I am never quite sure at the minute who will turn up on behalf of the Government.

I speak to Opposition amendments 73, 74 and 78 to clause 32, which focuses on first-year allowances and first-year tax credits. This measure would end the first-year allowance for all products on the technology and energy list and on the water technology list. Before I move on to why the Opposition feel strongly that the Government are wrong to end the first-year allowance, it is important to establish the extent of the allowance, its qualifications and the logic behind its introduction.

Enhanced capital allowances legislation was introduced in 2001 to encourage the use of energy-saving plant and machinery, low-emission cars, natural gas and hydrogen refuelling infrastructure, water conservation plant and machinery construction projects and so on. Under the relief, businesses that pay income or corporation tax can claim 100% of the first-year capital allowance on investment in ECA qualifying items. In addition, adoption of ECA qualifying items improve a project’s building research establishment environmental and assessment method—the BREEAM rating—and contribute to an improved energy performance certification rating.

To qualify, the item acquired must qualify as plant and machinery and satisfy the following criteria: it must not be second hand; the expenditure must have occurred after 1 April 2001; and the plant must either be a listed product or meet the energy saving or water conservation criteria specified by the Carbon Trust. Energy-saving technologies are things such as air-to-air energy recovery, automatic monitoring, boilers including biomass, combined heat and power units, compressed air equipment and so on. Water conservation technologies include efficient showers, taps and toilets, energy-efficient washing machines and more.

The Department for Business, Energy and Industrial Strategy describes enhanced capital allowances as different from standard capital allowances. It estimates that enhanced capital allowances are between 5.5 and 12.5 times greater than ordinary capital allowance relief. This accelerated cost saving further shortens the period of time and builds the business case for investment in energy-efficient equipment.

It is clear that this allowance encourages businesses to mitigate their environmental footprint and is designed to help the UK transition to a green and low-carbon economy. It is therefore disappointing that at a time when, as we have already discussed in this Committee, the United Nations Intergovernmental Panel on Climate Change has warned that climate change is at the point of becoming irreversible, the Government would choose to end such an effective relief.

Despite the positive steps that national Governments are taking all over the world to get citizens to recognise and limit their personal carbon footprint, businesses clearly have a role to play, too. We feel that the best way is to incentivise businesses, making it worth their while to use energy-saving and water-conserving technologies through tax relief. Taking away first-year allowances with little notice would only further alienate business at a time when we all need to do what we can to transition our economy to deal with the realities of climate change.

Although in its policy notes the Treasury suggests that small and medium-sized businesses will be shielded and the vast majority will be able to claim relief under the separate annual investment allowance, it concedes that large businesses will face additional costs and some level of disruption. Similarly, the Chancellor has stated that the revenue saved will be used to fund the industrial energy transformation fund. However, details about the fund remain scant, aside from the fact that it will be targeted at smaller businesses and funded through the end of these first-year allowances.

From the Opposition’s perspective, the change appears to be little more than a rebranding exercise designed to take an effective relief—first-year allowances—away and simply redirect that revenue into the Chancellor’s new fund. It is far from the radical industrial strategy that the UK needs to ensure that businesses and citizens are equipped to deal with climate change and the evolving energy market.

In the Budget, the Chancellor announced a consultation on a new business energy efficiency scheme, yet there appears to be little mention of whether businesses were consulted about ending this vital relief. Opposition amendment 78 would therefore require the Chancellor to report on what consultation has taken place.

The Government’s decision to end first-year allowances for energy-saving and water conservation technologies raises a further question about the effectiveness of this relief. Put simply, it is not broken, so the Government need to explain why they are planning to scrap it. That is certainly the sentiment behind Opposition amendments 74 and 73, which would require the Chancellor to undertake a review of the cost of extending the allowance to the end of this Parliament, and to 2030, respectively.

The reality is that the changes made by the Government in clause 32 appear to be revenue-led. They put the short-term priorities of the Treasury ahead of the UK’s long-term obligation to tackle climate change. Rather than empowering businesses to do their part and invest in energy-saving and water conservation technologies, it appears likely to deter them. We cannot see the logic of that. If the Government are sincere in their desire to create a better-targeted and more effective relief, they need to offer the Committee further details about the supposed industrial energy transformation fund to replace first-year allowances. If the Committee is being asked to endorse that change, let us have all the details first.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is a pleasure to serve under your chairmanship, Ms Dorries. After two days in the reassuring embrace of the Financial Secretary to the Treasury, the Committee has a brief interlude.

Clause 32 will make changes to end, from April 2020, first-year allowances for all products on the energy technology list and the water technology list, including the associated first-year tax credit. The environmental first-year allowances aimed to encourage greater take-up of environmentally friendly technology. Capital expenditure by businesses on plant and machinery normally qualifies for tax relief by way of capital allowances. Environmental first-year allowances allow 100% of the cost of an investment in qualifying plant and machinery to be written off against taxable income in the year of investment, providing a cash-flow benefit. The first-year tax credit provides a tax credit for loss-making businesses that invest in qualifying items.

The first-year allowance was introduced in 2001 for products on the energy technology list, and in 2003 for products on the water technology list. However, the allowances have made the tax system more complex, and there is very limited evidence that they have driven greater uptake of such technologies. A report by the Office of Tax Simplification found significant barriers to accessing the allowances, including the administrative burden of making claims. Government analysis suggests that less than 25% of energy managers would increase investment in energy-saving technology because of the allowances, while fewer than 20% of manufacturers report a positive impact on sales.

[Kirsty Blackman (Aberdeen North) (SNP)]

The Minister makes an interesting case, but it is what I would have expected as part of the report required by amendment 75. Will the Government accept the amendment and provide us with the information in report form, rather than having the Minister stand up here and tell us?

[Robert Jenrick]

I will come to the amendment in a moment, but I hope I will be able to reassure the hon. Lady and the hon. Member for Stalybridge and Hyde that we have already given the matter a great deal of thought and spoken to a number of stakeholders in the sector. Our actions are led by precisely the businesses that benefit from the existing reliefs.

For 99% of businesses, all plant and machinery is already eligible for full relief under the annual investment allowance, so the enhanced capital allowances provide no additional incentive. Smaller businesses such as those to which the hon. Gentleman refers have little if any reason to make use of those reliefs. The Government therefore believe that there are better ways to support energy efficiency.

The changes made by clause 32 will end the first-year allowances and the first-year tax credits from April 2020. In answer to the hon. Gentleman’s question about little notice, there is a significant amount of notice, beginning with the Budget this year, and these first-year tax rates not ending until April 2020. That is the point at which the industrial energy transformation fund will be available. Those rates will still be available until then, which will give businesses the time they need to prepare for change. The Government will look to lay secondary legislation in 2019 and update the lists of eligible technology, so that they can still be used and will be updated to include the most efficient technologies in the meantime. There is no sense in which those measures will fall behind with technological change.

To give some extra detail on some of the flaws with the current first-year allowance for energy technology, we found very low levels of awareness, as I have already described. Manufacturers estimate that less than a quarter of their customers are even aware of the scheme, and it provided little additionality. As I have set out, fewer than 25% of energy managers reported that the scheme influenced their investment decisions, and fewer than 20% of manufacturers reported that, if they did use it, it made a positive impact on their sales and businesses.

Many tax advisers reported to us that their clients decided to make claims after they had chosen to invest in efficient technology, so it did not have the impact that we would have hoped. Small companies are much less likely than larger companies to benefit, and 99% of companies would already be able to make such investments under the annual investment allowance. A 2017 survey by the Federation of Small Businesses found that only a quarter of small business owners were even aware of the scheme.

[Kirsty Blackman]

Is the Minister not making the case for more consultation in advance of any tax changes? Clearly, this tax change did not achieve what the Government thought it would. The consultations and information asked for are even more vital if the Government are making mistakes and not achieving what they had hoped.

[Robert Jenrick]

It is pretty clear from the evidence I have just laid out that the current tax reliefs do not work. We are making the changes required to ensure that smaller businesses, through the increased annual investment allowance, will have the allowance they need to make these investments. We will now work closely with other businesses, through the design of the industrial energy transformation fund, and a full consultation on that will be launched at the beginning of next year. We encourage the hon. Lady, businesses and other members of the Committee to take part in that consultation, as we design the successor fund to these reliefs.

The Government remain committed to increasing environmental efficiency, and the savings from ending first-year allowances and tax credits will be used to fund the industrial energy transformation fund. That fund will help businesses with high energy use to cut their energy bills and reduce their carbon emissions, by supporting investment in energy efficiency and other innovative decarbonisation technologies that may become available in the years ahead. Those could include, for example, investment in carbon capture and storage, or fuel-switching technologies. However, decisions on the scheme design, including eligibility and the technologies that will be supported, will be subject to the consultation with industry that I have just described. Establishing the scheme will fulfil our manifesto commitment to establish an energy efficiency scheme for industry, and that has been widely welcomed, including by groups such as EEF, the manufacturers’ organisation; UK Steel and the Energy Intensive Users Group. Since the Budget, I have spoken to a number of heavy users of energy, including car manufacturers, who all welcome this measure.

[Clive Lewis (Norwich South) (Lab)]

Is the Minister aware that some businesses are concerned that the Government are ending one scheme without having another in place? That causes uncertainty for business at a time when they need more certainty than they have had for a long time.

[Robert Jenrick]

I hear that concern, and that was the reason we chose not to end the scheme immediately. The scheme will end in April 2020. Until then it will continue as it does today, and be regularly updated with new technologies. If a company that makes use of it knows of a new technology that it wants to be part of the scheme, it will be possible for that to be added. The scheme will continue exactly as is until April 2020, by which time the new one will be in place. As a result of this year’s Budget, the annual investment allowance will also go up to £1 million, so additional allowances will be available to those businesses.

Amendments 73 and 74 would require the Government to publish a review of the cost of extending first-year allowances to 2030 and 2022. As set out in the policy costings document that we published alongside the Budget, ending the allowances will save £160 million by 2021-22. As we announced in the Budget, savings from ending the allowances will be invested in an industrial energy transformation fund of up to £315 million. Our primary motivation is finding a better way to help businesses be more energy-efficient—not saving money for the Exchequer, as was suggested—and we believe that our approach makes more efficient use of public funds. We anticipate that the average annual cost of extending first-year allowances would remain at around the same level until 2030. The figures are already known and in the public domain, so I urge the Committee to reject amendments 73 and 74 because the information that they request is already available.

Amendments 75 and 76 would require the Government to publish a review of the impact of clause 32 on the energy and water technology sectors. I hope that I have already provided the Committee with an answer to those points, removing the necessity of such reports. As I have set out, there is little evidence that the first-year allowances lead to a greater uptake of environmental technology, so the Government do not believe that such reports would provide any significant additional information. Furthermore, the Government support business investment in other, more efficient and dynamic ways, through the increase in the annual investment allowance and the creation of the industrial energy transformation fund.

[Jonathan Reynolds]

I am listening carefully to the Minister, but if the increase in the annual investment allowance replaces the first-year allowances or mitigates their loss, it seems that there is no fiscal incentive to invest in energy-efficient or climate change-relevant technology. The Opposition believe that we should try to operate the policy as a fiscal instrument to direct investment into the technologies that we need, but I do not see that described in the Minister’s answer.

[Robert Jenrick]

I have described it; that is the rationale for replacing the first-year allowance with the energy transformation fund. Had we chosen simply to remove the allowances and replace them solely with the increase in the annual investment allowance, the hon. Gentleman would be correct: 99% of businesses could proceed broadly as they do today, but they would not have a specific incentive to choose environmental equipment, plant and machinery or energy efficiency measures. However, by coupling the increase in the annual investment allowance with the transformation fund, we hope to shift the dial in favour of technology that helps the environment.

Amendment 77 would require the Government to review the impact of clause 32 on the UK’s ability to meet its carbon budgets. I assure the Committee that there are already robust requirements to report on progress towards the UK’s emissions reduction targets. When the measures in the Budget and the Bill become law, they will become part of that regime.

The Climate Change Act 2008 provides a world-leading governance framework that ensures that progress towards carbon targets is robustly monitored and reported to Parliament. First, the Government are required to prepare and lay before Parliament an annual statement of emissions that sets out the total greenhouse gases emitted to and removed from the atmosphere across the UK, and the steps taken to calculate the net UK carbon account. Secondly, the independent Committee on Climate Change is required to prepare and lay before Parliament an annual report, to which the Government are required to respond, on the Government’s progress towards meeting the UK’s carbon budgets. I would expect the committee to take the changes made by clause 32 into account in their deliberations. Thirdly, the Government are required to prepare and lay before Parliament a statement that sets out performance against each carbon budget period and the 2050 target.

[Clive Lewis]

I thank the Minister for his patience. As I understand it, having requested an analysis from the Minister responsible for carbon budgets on whether the Government were going to take into account the recent evidence from the Intergovernmental Panel on Climate Change on the 1.5° warming, the fourth and fifth carbon budgets do not currently do that. I have been told that there will be no assessment of the 1.5° warming until after 2030 when the fifth carbon budget concludes. Was the Minister aware of that and will he comment on the fact that that could have a severe impact on our ability to be able to achieve the targets?

[Robert Jenrick]

The IPCC will report in the usual way. It will not necessarily update its methodology, but it will lay before Parliament its usual statement and the Government will have to respond, as they have in every case. The Committee on Climate Change will hold the Government to account for the changes that we make, such as the ones in the Bill. That does not entirely answer the hon. Gentleman’s question on future targets. The mechanisms in place are strong and will ensure monitoring and reporting to Parliament of greenhouse gas emissions and of the Government’s responses. I therefore urge Members to reject amendment 77.

Amendment 78 would require the Government to report on any consultation undertaken on the provisions in clause 32. The Government consult stakeholders on an ongoing basis to inform all their policies. The provisions in clause 32 are no different. This includes, for example, surveys of relevant manufacturers and a call for evidence on helping businesses to improve the way they use energy, which was conducted by the Department for Business, Energy and Industrial Strategy. It would therefore not make sense to report further on the consultation that the Government have already undertaken on first- year allowances. Her Majesty’s Treasury Ministers meet manufacturers regularly, as I have said. I have met automotive manufacturers since the Budget and they welcome the changes.

The legislation was not released in draft because this is a simple abolition and does not constitute a measure that we would consult on normally. The Government stated in the new budget timetable and the tax-making process, which was published last year, that they will generally not consult on straightforward rates, allowances and threshold changes because they do not benefit from that process. I therefore urge Members to reject amendment 78.

The removal of the first-year allowances and associated first-year tax credits will allow the Government more effectively to support businesses to cut their energy bills and reduce carbon emissions. It will enable us to redirect the funds to the industrial energy transformation fund, which has been widely welcomed. I hope Members who are interested will take part in the consultation next year so that we can ensure it meets the requirements of industry and those who care about the environment. I therefore commend this clause to the Committee.

Question put, That the amendment be made.

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

[Robert Jenrick]

After that excellent start, I will continue. Clause 33 extends the life of the first-year allowances for electric vehicle charge points until April 2023. In the UK, the continued use of high-emission vehicles creates pollution and increases health issues. This measure was first introduced on 23 November 2016 to support the transition in the UK to cleaner vehicles with zero or ultra-low emissions. The measure allows businesses that invest in charge points to reduce their taxable profits by 100% of the cost of their investment in the year it is made. That provides accelerated tax relief compared with normal capital allowances, and so encourages greater investment in these assets. The allowance is currently due to expire in April 2019. The clause enables the first-year allowance to continue as part of the Government’s ambition for all new cars and vans to be zero emission by 2040.

[Bim Afolami (Hitchin and Harpenden) (Con)]

Yesterday evening, for some light relief, I was going through emails from constituents. One constituent runs a business that installs electric charging points. Will the Minister illustrate for the Committee how he thinks that business will flourish as a result of these measures?

[Robert Jenrick]

The Government have taken two measures, the first of which was in the last Budget. That created an electric charge point investment fund— £200 million of public investment—which is designed to spur an extra £200 million of private investment. A business such as the one my hon. Friend describes could be part of that. The measure could enable the business to partner with the public sector and gain the capital that it needs to develop, and will be able to take advantage of the allowance and invest early. There are now two opportunities for such a business to take advantage of tax reliefs and public investment in order to grow rapidly and enter the market.

[Peter Dowd (Bootle) (Lab)]

I do not deny the Minister’s point per se. Is there any implication that businesses that have chargers could be subject to a rating revaluation, which would put the cost of their business rate up? Perhaps the Minister could clarify that important point.

[Robert Jenrick]

The hon. Gentleman makes a valid point and I will reply—the powers that be will return to me in a moment.

The changes made by clause 33 will extend the current 100% first-year allowance for expenditure incurred on electric charge point equipment for a further four-year period until April 2023. That will encourage the increased use of electric vehicles by supporting the vital development and installation of charging infrastructure for such vehicles, to which drivers will look when deciding whether to buy them.

[Sir Robert Syms (Poole) (Con)]

Will the Minister give way?

[Robert Jenrick]

Perhaps I could reply to the hon. Member for Bootle before taking a further intervention.

[Peter Dowd]

Providing inspiration arrives.

[Robert Jenrick]

Or not, as the case may be. We will have to write to the hon. Gentleman, I am afraid. He has outfoxed our officials.

[Sir Robert Syms]

Is the funding available to businesses also available to local authorities, because many of them put in charging points, or does that not apply to councils?

[Robert Jenrick]

I understand that this would apply only to private businesses. Other interventions help the public sector, such as the charging infrastructure investment fund, which local authorities can become involved in if they wish to develop infrastructure in their area. There were a number of wider measures in the Government’s Road to Zero strategy, including consulting on changes to the planning system to ensure that new business and residential properties, as well as public sector projects such as new council offices, hospitals and so on, are built with the infrastructure in place to support these vehicles.

The allowance will expire on 31 March 2023 for corporation tax purposes and on 5 April 2023 for income tax purposes. This extension is expected to have a negligible impact on the Exchequer. There are no anticipated costs to Her Majesty’s Revenue and Customs and neither will there be any significant economic impact nor any additional ongoing costs for businesses beyond the investment that will be generated.

In conclusion, this extension will incentivise the use of cleaner vehicles by encouraging companies to invest in electric vehicle charge points, giving confidence to drivers to shift away from current combustion propelled options in the knowledge that the further roll-out of charge points will continue and accelerate in the years ahead, and reduce all the damage to the environment and public health that follows. I commend this clause to the Committee.

[Jonathan Reynolds]

Having just passed clause 32, which ended first-year allowances on the basis they were little known about and ineffective, I cannot help but comment how clause 33 extends the first-year allowance for another technology for four years on the basis it will provide the incentives and drive Government policy in that direction. Forgive me for pointing out that there are mixed messages from Ministers on these clauses.

It is disheartening that this is one of the relatively few mentions of environmental issues in the Finance Bill. We were all at Mansion House in June when the Chancellor gave a speech about how we would lead the way on green finance, yet there have been no legislative measures to follow up on that promise. We still lag behind our European counterparts on things such as mandatory climate disclosure laws or sovereign green bonds, but we should welcome any measures we like the look of when we see them.

Transport is a major source of emissions and we agree that we rapidly need to shift away from fossil fuels towards electricity and renewable sources and, to a certain extent, hydrogen for heavier vehicles. Thankfully, electric vehicles are coming through the system quickly and are expected to move rapidly through their cost curves, getting cheaper and cheaper. I have been hugely impressed by the electric vehicles I have experienced. Some estimates have cost parity for purchasing an electric vehicle as soon as 2022, after which buying an electric vehicle will become cheaper than buying a fossil fuel powered car.

The transition to a decarbonised, clean and smart economy will offer the UK many advantages, particularly considering how tech-savvy and early adopting much of the UK population is. The Nissan LEAF is the most-sold electric vehicle in the world. I say with some local pride, as someone born in Sunderland, that Sunderland has been the sole producer in Europe of the Nissan LEAF, creating over 50,000 vehicles. Of course, electric vehicle and hybrid production in the UK has provided a £3 billion trade surplus.

With a growing list of countries setting a date to ban combustion vehicles and modelling showing strong uptake curves, the global move to electric vehicles will be rapid. The first mover advantage to capture supply chains and jobs in this coming market will be considerable.

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[Robert Jenrick]

I hope I can reassure the hon. Gentleman on those points. The first point was about why we would choose to extend this measure at the same time as bringing another to an end. We chose to bring the other one to an end because the evidence was not there to support its continuation. Having given the matter careful analysis, we believed that there was a better way forward.

We are still at a very early stage in the process. It is too early to assess the precise impact of this measure. We know that the total number of electric charge point connections has increased from more than 13,000 in November 2017 to more than 18,000 in October 2018—a 38% increase. Clearly, we would like that to accelerate even further, because that is still a small number across the whole of the country. We believe, anecdotally, that the measure is working and that it has been welcomed by the industry, but it is too early to assess that precisely. We are placing an extension in the Bill to ensure it can continue and to give certainty to the market. We will review this measure in time, as we have done with other measures, to determine its effectiveness. If it is not working correctly, we will take action accordingly.

The hon. Gentleman asked why the Budget did not do more for the environment. Of course, I contest that. The Budget did set out a wide range of measures to help the environment, from the new plastics tax, which will be consulted on and legislated on in the next Finance Bill—we hope it will be one of the world’s first plastic packaging taxes—to the measures already set out in the Finance Bill, such as this one and the vehicle excise duty measure on taxis, which we brought into effect a year early, and which has ensured that cities such as London and Manchester are seeing a great increase in low emission taxis.

We have already spoken about the industrial energy transformation fund, which we hope will put heavy users of energy on a more sustainable path. These things build on recent announcements, whether it is the industrial strategy and its commitment to the environment and to clean growth, or the Road to Zero strategy with respect to electric vehicles. Across Government, we are taking a wide range of measures to support the environment and to help businesses and individuals to cut their energy bills and lower carbon emissions.

The hon. Gentleman asked about the electric vehicle charging infrastructure fund. This was announced at the Budget last year, and we have now progressed the fund. We are in the final stages of selecting a fund manager, and once they are appointed we expect the fund to be formally launched and to start investing in early 2019. I hope to be able to give the hon. Gentleman and others more information on that very shortly so that businesses that wish to participate in it can start to access that £200 million and we can increase public and private investment in charging infrastructure very rapidly.

Small businesses, which the hon. Gentleman raised, will be able to claim under the annual investment allowances, which we have debated on a number of occasions. As I have said before, 99% of businesses will be able to claim under the annual investment allowances, which is a considerable increase as a result of the Budget and will help businesses that want to invest in this area.

On solar, the feed-in tariff scheme has supported over 800,000 small-scale installations, generating enough electricity to power 2 million homes. The scheme has helped to drive down the cost of renewable electricity, including small-scale solar photovoltaic. We therefore think it is right to protect consumers and to review the incentives as costs begin to fall. The Government—and indeed the Government before us—have made significant interventions in this area. With those reassurances, I hope the hon. Gentleman will support the clause.

Question put and agreed to.

Clause 33 accordingly ordered to stand part of the Bill.

Clause 34

Qualifying expenditure: buildings, structures and land

[Jonathan Reynolds]

I beg to move amendment 79, in clause 34, page 19, line 38, at end insert—

“(4) The Chancellor of the Exchequer must lay before the House of Commons a report on any consultation undertaken on the provisions in this section within two months of the passing of this Act.”

This amendment would require the Chancellor of the Exchequer to report on any consultation undertaken on the provisions in this clause.

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[The Chair]

With this it will be convenient to discuss the following:

Amendment 84, in schedule 14, page 260, line 15, leave out sub-paragraph (d).

The provision as drafted allows companies to transfer TTH worth double the value of anticipated decommissioning costs. This reduces the incentive for companies towards efficiencies in decommissioning costs and paves the way for decommissioning-related tax repayments far bigger than the companies are currently acknowledging. This amendment removes that provision.

Amendment 81, in schedule 14, page 261, line 29, at end insert—

“(aa) assessing the impact on employment, skills and the Exchequer from the asset’s production life and planned decommissioning phase, and”

Amendment 89, in schedule 14, page 261, line 42, at end insert—

“(d) includes an assessment of the impact on the Exchequer from the amount spent on directly employed and contracted staff by the seller over the production life of the asset to date; and the impact on the Exchequer from the buyer’s plans for employed and contracted staff up to and including the decommissioning stage.”

This amendment requires a decommissioning security agreement to include an assessment of the impact on the Exchequer from the amount spent on staff, in order for that agreement to be qualifying for the purposes of this Schedule.

Amendment 85, in schedule 14, page 268, line 40, at end insert—

“(aa) the amount spent by the purchaser in post-acquisition periods on new capital investment, major maintenance work, retraining of redundant staff, initiatives to reduce methane emissions or initiatives to introduce carbon-capture techniques into the operations in relation to the relevant TTH assets (‘post-acquisition qualifying investment’)”.

This amendment, and amendments 86 and 87 incentivize capital investment by new purchasers in job creation and emissions reductions. Combined, the amendments limit the TTH which may be claimed to an amount equal to such investment.

Amendment 86, in schedule 14, page 269, line 3 at end insert—

“(c) the amount by which total post-acquisition qualifying investment exceeded the higher of excess decommissioning expenditure and the total TTH amount as calculated for the first activation period under paragraph 35.”

See explanatory statement for Amendment 85.

Amendment 87, in schedule 14, page 269, line 40, at end insert—

“(c) provided that the total activated TTH amount may never exceed the purchaser’s post-acquisition qualifying investment for the relevant TTH assets or TTH oil fields.”

See explanatory statement for Amendment 85.

That schedule 14 be the Fourteenth schedule to the Bill.

Clause 37 stand part.

[Robert Jenrick]

Clause 36 and schedule 14 introduce a transferable tax history—TTH, as it has become known—mechanism, and clause 37 amends the petroleum revenue tax rules for retained decommissioning costs. Both measures will apply to oil and gas companies operating on the UK continental shelf, and to transactions that receive approval from the Oil and Gas Authority or relevant regulator on or after 1 November 2018.

These measures are designed to encourage investment in late-life oil and gas assets that are approaching the point of decommissioning, prolonging the life of the basin and sustaining jobs across the UK, but in particular in north-east Scotland. Decommissioning costs are generally incurred at the end of a field’s productive life, when taxable profits are not being generated. To provide tax relief for those costs, oil and gas companies within the UK’s ring fence tax regime can carry them back against taxable profits generated since 2002. That prevents decommissioning from being performed early for tax purposes, thereby helping to achieve the Government’s goal of maximising economic recovery of oil and gas.

When a new entrant without a history of taxable profits acquires an old field, there is a risk that the decommissioning costs of the field will exceed the taxable profits generated by the new owner, preventing effective tax relief via the traditional carry-back mechanism and leaving the buyer in a worse position than the seller would have been in. That can make old fields unattractive to new entrants and deter much-needed investment in this important industry. That is a growing problem in an ageing basin, but one that we now believe can be resolved by our innovative TTH measure.

The change to the PRT rules addresses the increasingly common scenario of a seller retaining some or all of a decommissioning liability after selling a field. The PRT system currently requires the seller to remain on the relevant production licence to receive tax relief for any retained costs. However, doing so often requires complex tax structuring that serves no particular purpose other than to protect the seller’s tax position.

The changes made by these measures will create the right environment for much-needed new investment in our older fields. They will introduce a TTH mechanism that provides new investors with the certainty that they require about the tax relief they will receive for decommissioning costs. That will allow new deals to proceed, injecting new energy into a basin that still has 10 billion to 20 billion barrels of oil remaining. Initial feedback from the industry has been extremely positive—this change is already well received internationally and is helping new deals to continue.

TTH will allow companies selling oil and gas fields to transfer some of their tax payment history to the buyers of those fields. The buyers will then be able to set the costs of decommissioning the field against the TTH to generate a repayment. It should be noted that that should not be an extra cost to the Exchequer, as the repayment only replaces what would otherwise have been made by the seller. It will level the playing field between sellers and buyers of oil and gas fields, encouraging investment by providing new entrants with certainty on the tax relief available for their decommissioning costs. The new investment into the basin as a result of TTH is expected to increase tax receipts from the sector by £75 million over the scorecard period.

The clause also makes changes to enable petroleum revenue tax relief when a seller retains a decommissioning liability. A tax deduction will now become available to the buyer where the seller subsequently incurs decommissioning expenditure or where the seller contributes to the buyer’s decommissioning costs. That will simplify the way that older oilfields can be sold to new investors and help to prolong their productive lives. Before turning to the amendments, I thank all hon. Members, including the hon. Member for Aberdeen North, who participated in the discussions that led to this important measure, which we believe will help the community around Aberdeen in particular, but also those across the country.

Amendments 81 and 89 seek to amend the definition of a decommissioning security agreement within the TTH legislation in schedule 14. Decommissioning security agreements are specific commercial agreements that provide assurance to partners in a field for which funds will be available for decommissioning. The proposed changes to the definition would make the decommissioning security agreement required for a TTH election incompatible with the industry standard decommissioning security agreement, which, in our opinion, would make TTH elections impracticable and unworkable for the vast majority of our oil and gas fields, which rely on the well-established and respected industry standard agreement. TTH has been carefully designed to leverage estimates of decommissioning costs, which are already used in decommissioning security agreements, taking note of the history of the agreements. The agreements are confidential and, as one might imagine, highly commercially sensitive and are typically shared only between the joint venture partners and HMRC, in accordance with taxpayer confidentiality.

[Kirsty Blackman]

Will the Minister tell us a little bit about the process that the Government went through in creating the Bill, and the work done between the Government and industry to ensure that the legislation works?

--- Later in debate ---

[Robert Jenrick]

Yes, I will turn to that. As the hon. Lady knows—she participated in and attended at least one meeting I held in Aberdeen with the Oil and Gas Authority and stakeholders—we have carried out a great deal of careful consideration and consultation with the industry, because TTH will succeed only if it works for both the buyers and the sellers. Our sole objective is not to raise revenue for the Exchequer but to extend the life of the basin and to create jobs and investment for an important part of the United Kingdom.

The new investment encouraged by TTH will prolong the life of the basin, which has 10 billion to 20 billion more barrels left, helping to protect the hundreds of thousands of jobs I have already mentioned. We believe that the amendments would introduce counterproductive additional requirements and inhibit the use of TTH. I urge the Committee to reject them. They may be well intentioned, but they would be contrary to the objective of the measure.

Amendment 84 would limit the maximum amount of tax history that a seller can transfer under a TTH election. The TTH legislation currently caps the maximum amount of tax history that can be transferred under a TTH election to double the decommissioning cost estimate agreed for a decommissioning security agreement. Decommissioning costs are inherently uncertain and can increase significantly for reasons outside the control of the operator and for reasons that were unknown at the time of the sale. For that reason, they are typically subject to a very large range of accuracy. For fields still years away from decommissioning, the range often includes a 100% cost increase. TTH has been designed to be compatible with this regularly accepted range of estimates and to ensure that the buyer cannot end up in a worse position than the seller.

[Kirsty Blackman]

I agree with the Minister’s point about fluctuations. Does he agree that the cost of hiring boats has fluctuated massively over the past five years? If we had looked at this in 2010, we could not have predicted the fluctuations in just that small but nevertheless incredibly expensive area for oil and gas companies.

[Robert Jenrick]

The hon. Lady speaks from her deep knowledge of this area. It is absolutely right that some costs have fallen, particularly since the fall in the oil price, which has driven significant efficiencies in the sector, but other costs are rising. New technologies are coming on board. Taking on a project that entails such uncertainty while being tied to a single estimate of decommissioning costs, without a wide range as we have allowed in the measure, would be a major disincentive for a buyer coming in to one of these projects.

Let me address the concern inherent in the amendments about disincentivising cost-reduction, or that the measure, in providing such a wide field, would make it unlikely for buyers to try to reduce the cost and therefore would gain higher tax relief as a result. I think the buyer will retain a strong incentive to minimise total costs, as they will be liable for meeting the remainder of the decommissioning costs. The amendment is therefore unnecessarily restrictive and would harm TTH.

Amendments 85, 86 and 87 and schedule 14 would change the TTH activation mechanism to restrict decommissioning tax relief on a field, so that it could not exceed the level of new capital investment made by a purchaser. Decommissioning costs generally occur at the end of a field’s life, when its reserves are exhausted and new capital investment will not result in further economic recovery of oil or gas reserves. For many purchasers it would therefore not be practical to make significant capital investment during the decommissioning process.

Furthermore, requiring the purchaser to match what can be very high decommissioning costs with an equal level of new capital investment could easily bankrupt many of the smaller operators that we want to take part in the industry. The best way to ensure that we get new investment into the industry, to protect jobs and create new ones, and to maximise economic recovery of our natural resources, is to have an effective TTH mechanism. That is exactly what we believe we have achieved, as a result of the deep consultation that we have conducted with industry, which I will explain in a moment. The amendments would make TTH completely unattractive and ineffective. I therefore urge the Committee to reject them.

In answer to the hon. Member for Aberdeen North, I will briefly summarise the steps that we have taken to consult with the industry since TTH was announced at Budget 2017. Even prior to Budget 2017, the topic had been discussed with stakeholders for some time. We have built on numerous discussions held between July and December 2016, by issuing at the time of the Budget a discussion paper on tax issues affecting late-life oil and gas assets. We received 28 detailed responses and then held an expert panel, working with the industry to design the measure. I myself held two meetings in Aberdeen this year with the Oil and Gas Authority and stakeholders. Draft legislation was published over the summer on L-day, for technical consultation with the industry. We received further feedback as a result and much of that has been incorporated into the final legislation. Although there are always ways to take the measure further, we believe we have reached a point where the industry is satisfied and welcomes the steps we have taken.

[Peter Dowd]

Trade unions have argued that more conditions need to be attached to TTH to bring it in line with OGA and maximising economic recovery objectives, and for broader commercial behaviours, which should include minimum compliance with UK employment law—workers being paid and employers paying tax and national insurance. Did that form any part of the discussions with the industry and stakeholders?

[Robert Jenrick]

I do not think we spoke specifically with trade unions but we did speak with a wide range of industry stakeholders. To return to TTH, its purpose is not to give an incentive to industry that it would not ordinarily have. The owner or operator of one of those fields would already be able to take advantage of those tax reliefs to set aside decommissioning costs, but they would be difficult to sell on to a new operator. This measure will make it much easier for new entrants to enter the market, for fields to continue or be developed further, and for jobs to be created that would not ordinarily be created. We believe that this is a win-win for all involved: for the Exchequer, which will make modest additional receipts as a result, for industry, and for all those employed in north-east Scotland—I see the hon. Member for Aberdeen North nodding. I believe this measure will be widely welcomed and well received by all stakeholders in the industry.

The best way to get new investment into our industry is, as I described, to protect jobs and maximise the economic recovery, and we believe that we have reached that point with this measure. The Government take their environmental responsibilities seriously, as we described when debating the previous clause. We have legally binding commitments to reduce greenhouse gas emissions under the Climate Change Act 2008 and the system of carbon budgets it sets out, as well as the Paris agreement that we ratified in November 2016. Nothing in this measure takes away from our efforts elsewhere, but we want the UK oil and gas industry to continue to thrive. It has been through a difficult period following a significant reduction in the price of oil, and that price has fallen once more since the Budget. That industry makes an important contribution to the UK economy, supports more than 280,000 jobs, and provides around half our primary energy needs. To date, it has paid around £330 billion in production taxes. By introducing these changes for late-life oil and gas assets, we hope to encourage new investment in the UK continental shelf, and I commend the clause to the House.

--- Later in debate ---

[Sir Robert Syms]

In my lifetime, the greatest British success story has been the development of North sea oil. As the Minister set out very clearly, billions of pounds of taxation have been generated. Under successive Governments we have had a tax regime that has been balanced against the risk of the investment that companies have had to take. It is therefore perfectly sensible at this stage of the maturity of the oilfields to use tax policy to ensure that the oilfields continue longer and continue to create jobs and to support, as the hon. Member for Aberdeen North said, the worldwide oil services sector based in Aberdeen.

I thank the Minister for what he is doing, which is perfectly sensible. It will generate more tax revenue. I hope we will oppose the amendments because they would make an intended simplification of the tax system more complicated. At the end of the day, we want people to continue to pump oil in the North sea and keep the jobs rolling. The Government’s policy supports that.

[Robert Jenrick]

In the few minutes that remain, I wish to thank the hon. Member for Aberdeen North for her comments and her helpful exposition of the purposes of this policy, which is to create jobs and wealth for the whole country, and particularly for the area that she represents. We would be concerned, as the hon. Lady said, if we created a two-tier system where new entrants—predominantly smaller and often innovative businesses that want to enter the market—had to live up to higher standards than the predominantly larger and more established businesses that they are trying to take on. As she has done, I thank some of the stakeholders who have helped us to develop this policy, including Oil & Gas UK, which has been excellent throughout the preparation of this measure.

Rather like my hon. Friend the Member for Poole, I am surprised by the Labour party’s position in this area. There has been a broad, cross-party consensus throughout my lifetime that North sea oil and gas are of benefit to the United Kingdom and an important asset to the country. Political risk will deter new investment into that field, if international companies that would like to invest in the North sea oil and gas sector believe that the Opposition in the United Kingdom are likely to increase their taxes, make those taxes more complex and disincentivise future investment.

[Clive Lewis]

We would like to put on the record that we are not giving up on North sea oil. Rather, we have an appreciation for the climate emergency that is taking place, and we ask for a reassessment of how we can sustainably recover those assets. That is all we are asking for.

--- Later in debate ---

[Robert Jenrick]

I will briefly answer some of those points. There has been a misunderstanding about the cost of the policy to the Exchequer. We believe, as is set out quite clearly, that over the scorecard period the measure will raise £65 million of revenue for the Exchequer. Because of the nature of the oil and gas industry and oil price fluctuations, that is a difficult assessment to make. However, we see no evidence for the more outlandish estimates in the press of a £3 billion cost to the Exchequer. Neither did the independent OBR, which checked our figures in relation to the measure and agreed that £65 million was an appropriate estimate over the forecast period. We believe that the measure is fiscally responsible because no additional tax relief will be due until the field is decommissioned. That will enable more fields to be developed, and decommissioning costs will be as they always were.

We see no evidence that the measure will disincentivise efficiency savings and productivity increases. As the hon. Member for Aberdeen North said, there is a great incentive on all parties to reduce the cost of decommissioning. The industry has signed up with Government to a target of reducing the costs of decommissioning by 35%. We would like them to go even further in the years ahead, and there is a lot of work going on to achieve that. We believe that the United Kingdom, particularly the area around Aberdeen, could be a world centre for decommissioning, and we are investing in facilities and training in that regard. We would like to work on that with the industry, because we see it as creating knowledge, new technology and jobs, which would then be exported to other fields around the world.

[Kirsty Blackman]

I am really pleased to hear the Government make that commitment in relation to the world centre for decommissioning. We are talking about one of the first oil and gas fields to decommission on a mass scale. It is important that the lessons that we learn from that are used to improve and export the technology.

[Robert Jenrick]

I think I have answered those points. There was a misunderstanding about decommissioning security agreements, which I hope I have answered. Decommissioning security agreements are confidential and commercially sensitive documents. Amendment 89 would not achieve the aim that the hon. Member for Norwich South set out, because such agreements will not be in the public domain. The documents will be received by HMRC, and decommissioning costs are regulated by the Offshore Petroleum Regulator for Environment and Decommissioning.

Finance (No. 3) Bill

Robert Jenrick Excerpts

Committee: 2nd sitting: House of Commons
Tuesday 20th November 2018 Commons Chamber

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I beg to move amendment 16, page 44, line 23, leave out “1 October 2019” and insert “1 April 2019”.

This amendment provides for the increase in the rate of remote gaming duty to take effect from 1 April 2019 instead of 1 October 2019.

[The First Deputy Chairman of Ways and Means (Dame Eleanor Laing)]

With this it will be convenient to discuss the following:

Amendment 11, page 44, line 23, leave out “1 October 2019” and insert “the prescribed date”.

Government amendment 17.

Amendment 12, page 44, line 25, leave out “1 October 2019” and insert “the prescribed date”.

Amendment 13, page 44, line 32, at end insert—

“(4) In this section, ‘the prescribed date’ means the date prescribed in regulations made by statutory instrument by the Secretary of State

(5) The Secretary of State may not make regulations under subsection (4)—

(a) to prescribe a date before 1 October 2019, and

(b) unless regulations under section 236 of the Gambling Act 2005 have been made that amend the definition of sub-category B2 gaming machines so as to define such machines as having a maximum charge for use of no more than £2 with effect from a date no later than 1 April 2019.

(6) In this section, “sub-category B2 gaming machines” has the meaning given in regulation 5(5) of the Categories of Gaming Machine Regulations 2007/2158.”

Clause stand part.

Clause 62 stand part.

That schedule 18 be the Eighteenth schedule to the Bill.

New clause 12—Review of public health effects of gaming provisions—

“(1) The Chancellor of the Exchequer must review the public health effects of the provisions of section 61 of and Schedule 18 to this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) A review under this section must consider—

(a) the effects of those provisions in reducing the negative public health effects of gambling, and

(b) the implications for the public finances of the public health effects of—

(i) those provisions,

(ii) the operation of the law relating to remote gaming duty and gaming duty if those provisions were not given effect.”

This new clause would require a review of the public health effects of gaming provisions.

New clause 13—Report on consultation on certain provisions of this Act (No. 3)—

“(1) No later than two months after the passing of this Act, the Chancellor of the Exchequer must lay before the House of Commons a report on the consultation undertaken on the provisions in subsection (2).

(2) Those provisions are—

(a) section 61, and

(b) Schedule 18.

(3) A report under this section must specify in respect of each provision listed in subsection (2)—

(a) whether a version of the provision was published in draft,

(b) if so, whether changes were made as a result of consultation on the draft,

(c) if not, the reasons why the provision was not published in draft and any consultation which took place on the proposed provision in the absence of such a draft.”

This new clause would require a report on the consultation undertaken on certain provisions of this Act – alongside new clauses 9, 11 and 15.

New clause 16—Review of remote gambling duty—

“(1) The Treasury shall undertake a review of the increase in the rate of remote gambling duty introduced in section (Remote gambling duty (rate)) of this Act.

(2) The review shall consider, in particular, the effects of the rate increase on—

(a) the public revenue,

(b) betting shops, and

(c) gambling related harm.

(3) The Treasury review must include independent advice on the feasibility and impact of bringing forward the date of the increase in remote gaming duty to 1 April 2019.

(4) The Treasury review of the effects of the rate increase in remote gambling duty under subsections (2) and (3) must also take into account any effects of reducing to £2 the maximum stake on B2 machine games with effect from 1 April 2019.

(5) The Chancellor of the Exchequer must lay a copy of a report of the review under this section before the House of Commons no later than 28 days after this Act is passed.”

This new clause requires the Treasury to review the feasibility and impact of bringing forward from October 2019 the implementation of an increase in remote gambling duty, which is linked in paragraph 3.68 of the Budget 2018 Red Book to the implementation of a £2 maximum stake on B2 machine games (fixed-odds betting terminals).

[Robert Jenrick]

As you have just described, Dame Eleanor, we begin today’s consideration of the Finance Bill with clauses 61 and 62 and schedule 18. The parts of the Bill that we are about to discuss concern rates of remote gaming duty and other gaming duty measures. Gambling policy more generally and its related legislation, such as the Gambling Act, are matters for the Department for Digital, Culture, Media and Sport and lie outside the scope of a Finance Bill, but I want to explain both the fiscal measures in this Bill and how they interact with wider important matters, such as fixed-odds betting terminals.

Turning briefly to clause 62 and schedule 18, which deal with changes to gambling duty accounting periods, this Government are committed to reducing administrative burdens on businesses and to making the tax system more effective, efficient and simpler. The changes will bring gaming duty paid by land-based casinos in line with other gambling duties. They will allow casinos to roll forward losses and will remove the requirement to pay duty on account, reducing administration for businesses and for Her Majesty’s Revenue and Customs. The changes are expected to have a negligible impact on the tax take from casinos, which will continue to be subject to a tax structure that ensures that the most successful casinos pay up to 50% of their profit to support public services. That take will total £250 million to the Exchequer in the current financial year.

--- Later in debate ---

[Sir Peter Bottomley (Worthing West) (Con)]

I hope to speak later if possible, but this is a rare example of when parliamentary arithmetic has got the Government to do something that will be good for them and good for the population. I pay tribute to the hon. Member for Swansea East (Carolyn Harris), the chair of the all-party parliamentary group on fixed odds betting terminals, who has led a cross-party group over the years—this is not just about those who have come in lately—to ensure that the arguments are right, as well as the parliamentary arithmetic.

[Robert Jenrick]

I praise my hon. Friend for his role in this matter, and I will come in due course to the hon. Member for Swansea East and other colleagues who have played a decisive role in these events.

In deciding on a date for implementation, the Government were obliged to consider not just those who would have been harmed by FOBTs, but the impact on wider society—the tens of thousands whose livelihoods would be at risk following the new stake. Stakeholder evidence varied considerably, but it was widely acknowledged that there would be a significant impact, whether as a result of the cap in itself or because the decision to change the cap would bring forward wider changes that were already likely to occur in a sector undergoing a great deal of change as a result of new technology. The Government have not wavered from their commitment to set a £2 stake and considered the best way to mitigate the negative impacts of the policy on the individuals and their employers, giving them time to prepare for the impact if possible. Accordingly, my right hon. Friend the Secretary of State for Digital, Culture, Media and Sport published a written statement confirming that a £2 maximum stake will be implemented from April 2019, and we have tabled Government amendment 16 to reflect that.

I will now briefly describe the events leading up to this point. When we announced the decision to reduce the stake, implementation in April 2020 was a date that I discussed with the hon. Member for Swansea East when she came to the Treasury in late spring to talk about the matter. A decision was then taken by the Department for Digital, Culture, Media and Sport to consult informally with stakeholders and it was then proposed in the Budget to bring forward the date to October 2019. The decision was, I believe, intended in good faith to represent a balance between expeditiously bringing an end to the harm caused by FOBTs and enabling those working in the sector to prepare for the implications for them. None the less, it became abundantly clear that a large number of colleagues disagreed and wished to see the stake change implemented sooner, which is exactly what we have done.

I am grateful for the counsel and the campaigning zeal of a number of Members on both sides of the Chamber, including my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), the hon. Member for Inverclyde (Ronnie Cowan) and, of course, the hon. Member for Swansea East, whom I respect and whom I have enjoyed working alongside throughout this process.

I admire my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), who was an outstanding Sports Minister and is a great Member of Parliament. She clearly played a decisive role in the Government’s decision to reduce the stake in the first place and, indeed, to do so expeditiously in April 2019. I have always believed that, in politics as in life, all we have is our reputation, and she chose her principled belief that this change must be implemented as soon as possible over her role in government. I respect that, and I am sure Members on both sides of the Committee do so, too.

[Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I fully accept what the Minister says about the reputation of my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch), but does he agree that these things should not have necessitated her departure when she was doing such a good job? I do not expect the Minister to express an opinion, just that it would have been better otherwise.

[Robert Jenrick]

I clearly hear my right hon. Friend’s point, and I have fairly set out the chain of events that led to this moment. As I said, I enormously respect my hon. Friend the Member for Chatham and Aylesford and her decision. When I was first elected to Parliament, an elderly constituent sent me a quote by John Quincy Adams:

“Always vote for principle, though you may vote alone, and you may cherish the sweetest reflection that your vote is never lost.”

On this occasion, of course, my hon. Friend is not alone, and I am grateful for her work in this area.

Government amendment 17 complements Government amendment 16, both of which relate to amendments 12 and 13. As I have just set out, the Government recognise the strong will of the House that the implementation date for the new maximum stake for fixed odds betting terminals be brought forward to April 2019. The Treasury has been clear throughout the process that we do not seek to use the issue of FOBTs to increase Exchequer revenues, but we do have a responsibility, which I hope Members on both sides of the Committee will recognise, to protect the public finances and to ensure that we have the means to fund our public services. The cost of eliminating the damage caused by FOBTs must not be paid for by our having fewer doctors, fewer teachers and fewer people working in mental healthcare.

[Paul Masterton (East Renfrewshire) (Con)]

I welcome this change. In my constituency there are betting shops sandwiched between pubs and chemists giving out substitution treatments. Does the Minister not agree that the savings to the public purse from preventing people from falling into problematic debt, and preventing highly addicted people from falling into other troubles and needing to rely on the NHS and other services, will be far greater than the tax received from these gambling machines?

[Robert Jenrick]

My hon. Friend makes an important point that has been raised by many others and that I am sure was a significant contributor to the decision of the Department for Digital, Culture, Media and Sport to take this action.

The point I am making is a separate one; that in making the decision to reduce the cap on FOBTs, we want to ensure that the Exchequer can protect its revenues so it can continue to fund public services. To do so, clause 61 increases the rate of remote gaming duty to 21% from 15%, and amendment 17 complements amendment 16 by ensuring that both changes are implemented at the same time in April 2019.

Throughout this process the Treasury has been clear that we want to raise only a commensurate sum of money to protect public services, and that we want to ensure that both the stake change and the change in taxation occur at the same time. That is exactly what we intend to do. This increase applies to anyone who offers online games of chance to UK players, including online roulette, online poker and online slots. This change should ensure that we take decisive action on FOBTs without having to cut services or raise taxes on those outside the gambling sector. To recognise this, I ask the Committee not to press amendments 12 and 13 and to support Government amendment 17.

New clause 12 would require the Chancellor to prepare a report describing the public health effects of the gambling clauses in this Finance Bill, for publication before the House within six months of Royal Assent. The Government take the impact of gambling on individuals’ health seriously, which is why we have listened to Members on both sides of the House and taken the action we have on FOBTs. This summer the Gambling Commission published a well-received paper on how to measure gambling-related harms, setting out how it intends to move forward in such a large and vital area of analysis. I hope that colleagues on both sides of the Committee agree that the Gambling Commission should be left to carry out its important work in this area without the Treasury attempting to carry out its own competing analysis on the very limited effect on public health of a change in accounting periods, which is what the new clause would bring into effect.

[Graham P. Jones (Hyndburn) (Lab)]

I welcome that assessment, but does the Minister accept that the assessment needs to look at the various forms of gambling and that it also needs to consider the amount of gambling advertising presented to people on our television screens?

[Robert Jenrick]

As a parent and as a citizen I am concerned, like the hon. Gentleman is, about the amount of gambling advertising on television and elsewhere, but that is not a matter for the Finance Bill; it is a matter for the Department for Digital, Culture, Media and Sport and for the Gambling Commission.

As I have just described, new clause 12 would achieve only the Treasury producing a very limited analysis of the public health impact of the change in accounting period set out in the Finance Bill. I therefore urge the Committee not to press new clause 12.

New clause 13 proposes a report on the consultation undertaken on the detail of clause 61 on remote gaming duty and of schedule 18 on gaming duty. Although we have had much debate on the content and implications of clause 61, it is in fact very simple: it is a rate change, and the Government would not normally consult on such a change. I reassure the Committee that we have gone over and above the usual convention in such cases. The increase was originally proposed in May 2018, and my officials, alongside the Department for Digital, Culture, Media and Sport, have since worked with interested parties on its detail. We believe we are in a good position.

I fully reassure the Committee that the change made by clause 61 was consulted on last year. In addition, schedule 18 was published as a clause in the draft Finance Bill in July 2018. It has therefore been subject to scrutiny and comment by stakeholders ever since. I hope my comments will reassure the Committee that there is no need for a further report into our consultation on these issues, and I therefore ask that new clause 13 not be pressed.

New clause 16 returns to an issue with which I began this debate. The new clause asks for a review of the feasibility of bringing forward the rise in remote gaming duty in clause 61 to April 2019. As I have tried to reassure right hon. and hon. Members, we have already covered these matters—they were considered before my right hon. Friend the Chancellor tabled amendments 16 and 17, which will bring forward the date to April 2019—and I therefore respectfully ask that new clause 16 not be pressed.

I look forward to listening to the contributions of right hon. and hon. Members to this debate. The Government amendments to these clauses represent the action on FOBTs that the country demanded and for which Members on both sides of the House have campaigned assiduously over many years. The changes will now be delivered as expeditiously as possible and in a fiscally responsible manner that protects public services. I commend these changes to the Committee.

[Clive Lewis (Norwich South) (Lab)]

Well, where to begin? I can sum up the Minister’s speech as, “Nothing to see here.”

Before I move on to the detail of this issue, I want to pay tribute to Members on both sides of the House who forced the Government to bring forward the FOBT stake reduction from October 2019 to April 2019, which will be implemented through the amendment before the Committee. Particular recognition goes to my hon. Friend the Member for Swansea East (Carolyn Harris), who is to be warmly congratulated on her tireless work for social justice, in all its incarnations, and to my hon. Friend the Member for West Bromwich East (Tom Watson), the shadow Secretary of State, who is not in the Chamber, but has spoken about this issue many times from the Dispatch Box.

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[Patricia Gibson]

Absolutely. There is a correlation between multiple social deprivation factors and problem gambling, which is why certain communities have a higher concentration of betting shops housing these machines—the crack cocaine machines of gambling—than there otherwise would be.

I say to the Minister, and I know he is listening, that we absolutely and urgently need a review of the public health effects of gaming provisions. On that basis, I urge the House to support new clause 12—

[Robert Jenrick]

Will the hon. Lady give way?

[Patricia Gibson]

I was about to finish, but obviously I will let the Minister speak.

[Robert Jenrick]

Before the hon. Lady concludes her remarks, may I draw her attention to two things? I am told that Public Health England has been asked by the Department of Health and Social Care to inform and support action on gambling and its related harms as part of its follow-up to the DCMS review of gaming machines and social responsibility. Public Health England is also being commissioned by the Gambling Commission to do an evidence review on problem gaming, which I hope will go some way to answering the questions that she and others have raised today.

On new clause 12, which the hon. Lady raised—other hon. Members have also done so, including my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch)—I am content for the Government to support it, but I would simply say that it is very limited in scope. I would not want to raise expectations that it will achieve all of the goals that the hon. Lady seeks. However, that, allied to Public Health England’s work, will perhaps help to continue the public debate on this matter.

[Patricia Gibson]

I am glad that the Minister has given us that clarification. As he says, I would be more comfortable with a broadbrush approach encompassing lots and lots of factors, such as I those I set out in my speech. However, I have listened to what the Minister has said, and I will certainly give it some thought.

Finance (No. 3) Bill

Robert Jenrick Excerpts

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[The Temporary Chairman (Sir George Howarth)]

With this it will be convenient to discuss the following:

Clauses 69 to 77 stand part.

Amendment 10, in clause 78, page 51, line 32, after “may”, insert—

“(subject to section (Review of expenditure implications of Part 3))”.

Antecedent to new clause 10.

Clause 78 stand part.

Amendment 14, in clause 89, page 66, line 30, at end insert—

“(1A) The Chancellor of the Exchequer must, no later than the date provided for in subsection (1C), lay before the House of Commons a statement of the circumstances (in relation to the outcome of negotiations with the EU) that give rise to the exercise of the power.

(1B) The statement under subsection (1A) must be accompanied by—

(a) an assessment of the fiscal and economic effects of the exercise of those powers and the circumstances giving rise to them;

(b) a comparison of those fiscal and economic effects with the effects if—

(i) a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to, and

(ii) the United Kingdom had remained a member of the European Union;

(c) a statement by the Office for Budget Responsibility on the accuracy and comprehensiveness of the assessment under paragraph (a) and the comparison under paragraph (b).

(1C) The date provided for in this subsection is—

(a) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(1)(b) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(b) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(6)(a) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(c) a date which is no less than seven days before the date on which a Minister of the Crown proposes to make a motion for the purposes of section 13(8)(b)(i) of the European Union Withdrawal Act 2018 and after the passing of this Act, or

(d) the date on which this Act is passed,

whichever is the earliest.”

This amendment requires the first use of the powers intended to modify tax legislation in the event of a no deal Brexit to be accompanied by a statement of the circumstances and a comparative analysis of their impact, accompanied by an OBR assessment.

Amendment 15, page 66, line 30, at end insert—

“(1A) No regulations under this section may be made until the Chancellor of the Exchequer has laid a statement before the House of Commons setting out—

(a) a list of the powers in relevant tax legislation that the Treasury has acquired since June 2016 in connection with the United Kingdom’s withdrawal from the European Union,

(b) a list of the powers in relevant tax legislation the Treasury expects to acquire if—

(i) a withdrawal agreement and a framework for a future relationship with the European Union have been agreed to, or

(ii) the United Kingdom has left the European Union without a negotiated withdrawal agreement.

(c) a description of any powers conferred upon the House of Commons (whether by means of the approval or annulment of statutory instruments or otherwise) in connection with the exercise of the powers set out in subsection (b).”

Amendment 22, page 66, line 30, at end insert—

“(1A) The Chancellor of the Exchequer must, no later than a week after the passing of this Act and before exercising the power in subsection (1), lay before the House of Commons a review of the following matters—

(a) the fiscal and economic effects of the exercise of those powers and of the outcome of negotiations for the United Kingdom’s withdrawal from the European Union giving rise to their exercise;

(b) a comparison of those fiscal and economic effects with the effects if a negotiated withdrawal agreement and a framework for a future relationship with the EU had been agreed to;

(c) any differences in the exercise of those powers in respect of—

(i) Great Britain, and

(ii) Northern Ireland;

(d) any differential effects in relation to the matters specified in paragraphs (a) and (b) in relation between—

(i) Great Britain, and

(ii) Northern Ireland.”

Amendment 7, page 67, line 1, leave out subsection (5) and insert—

“(5) No statutory instrument containing regulations under this section may be made unless a draft has been laid before and approved by a resolution of the House of Commons.”

This amendment would make clause 89 (Minor amendments in consequence of EU withdrawal) subject to affirmative procedure.

Amendment 20, page 67, line 2, at end insert—

“(5A) No regulations may be made under this section unless the United Kingdom has left the European Union without a negotiated withdrawal agreement.”

Amendment 2, page 67, line 13, at end insert—

“(7) This section shall, subject to subsection (8), cease to have effect at the end of the period of two years beginning with the day on which this Act is passed.

(8) The Treasury may by regulations provide that this section shall continue in force for an additional period of up to three years from the end of the period specified in subsection (7).

(9) No regulations may be made under subsection (8) unless a draft has been laid before and approved by a resolution of the House of Commons.”

Clause 89 stand part.

Amendment 8, in clause 90, page 67, line 16, after “may”, insert—

“(subject to subsections (1A) and (1B))”

This amendment is antecedent to Amendment 9.

Amendment 9, page 67, line 18, at end insert—

“(1A) Before proposing to incur expenditure under subsection (1), the Secretary of State must lay before the House of Commons—

(a) a statement of the circumstances (in relation to negotiations relating to the United Kingdom’s withdrawal from the European Union) that give rise to the need for such preparatory expenditure, and

(b) an estimate of the expenditure to be incurred.

(1B) No expenditure may be incurred under subsection (1) unless the House of Commons comes to a resolution that it has considered the statement and estimate under subsection (1A) and approves the proposed expenditure.”

This amendment would require a statement on circumstances (in relation to negotiations) giving rise to the need for, as well as an estimate of the cost of, preparatory expenditure to introduce a charging scheme for greenhouse gas allowances. The amendment would require a Commons resolution before expenditure could be incurred.

Clause 90 stand part.

New clause 10—Review of expenditure implications of Part 3—

“(1) The Chancellor of the Exchequer must review the expenditure implications of commencing Part 3of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.

(2) No regulations may be made by the Commissioners under section 78(1) unless the review under subsection (1) has been laid before the House of Commons.”

This new clause would require a review within 6 months of the expenditure implications of introducing a carbon emissions tax. It would prevent Part 3 coming into effect until such a review had been laid before the House of Commons.

New clause 11—Report on consultation on certain provisions of this Act (No. 2)—

“(1) No later than two months after the passing of this Act, the Chancellor of the Exchequer must lay before the House of Commons a report on the consultation undertaken on the provisions in subsection (2).

(2) Those provisions are—

(a) sections 68 to 78,

(b) section 89, and

(c) section 90.

(3) A report under this section must specify in respect of each provision listed in subsection (2)—

(a) whether a version of the provision was published in draft,

(b) if so, whether changes were made as a result of consultation on the draft,

(c) if not, the reasons why the provision was not published in draft and any consultation which took place on the proposed provision in the absence of such a draft.”

This new clause would require a report on the consultation undertaken on certain provisions of this Act – alongside new clauses 9, 13 and 15.

New clause 17—Review of the carbon emissions tax (No. 2)—

“Within twelve months of the commencement of Part 3 of the Act, the Chancellor of the Exchequer must review the carbon emissions tax to determine—

(a) the effect of the carbon emissions tax on the United Kingdom’s carbon price in the context of non-participation in the European Union emissions trading scheme, and

(b) the effect of the carbon emissions tax on the United Kingdom’s ability to comply with its fourth and fifth carbon budgets.”

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

In these parts of the Bill, we make sensible preparations for our exit from the European Union. While right hon. and hon. Members across the House may well disagree on Brexit, I would hope that all would wish to see us prepare as carefully as possible so that we can maintain the stability of the tax system; provide as much certainty for the taxpayer as possible; in respect of carbon pricing, meet our commitments to the environment; and do all those things in all eventualities, including in the event of no deal, which is clearly not the Government’s preference but remains a possibility.

At Budget, the Government announced essential provisions to ensure that the tax system can continue to function in any outcome.

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

The Minister talks about preparations for no deal. In the OBR’s “Blue Book”, it quoted assessments made by economists who suggested that the economy had already shrunk by between 2% and 2.5% since the referendum, and the Library has suggested that that has cost the UK economy anywhere between £40 billion and £50 billion. Does he agree with that assessment, and what work has been going on in the Treasury to account for it?

--- Later in debate ---

[Robert Jenrick]

What I can tell the hon. Gentleman is that the economy has been growing for eight years—for five years, in every successive quarter. Unemployment is at its lowest rate in my lifetime and employment is at its highest. The British economy is sound and robust, and that is exactly why in the Budget the Chancellor was able to make the tax cuts for 32 million of our citizens and the increased spending on the NHS.

[Neil Gray]

rose—

[Robert Jenrick]

I will not give way again at this stage, but I could come back to the hon. Gentleman later.

The changes that we have outlined in these clauses will, I hope, signal that the UK is committed to maintaining stability and certainty for taxpayers and for businesses across the economy, especially in respect of the environmental tax provisions that I will talk about in a moment. Clauses 69 to 78 will allow the Government to introduce a carbon emissions tax to replace the EU emissions trading scheme—the ETS—in the event of no deal. Clause 90 will allow for essential preparatory expenditure to begin work on a domestic emissions trading scheme in the event that one is required. Clause 89 will introduce a power to make minor technical amendments to UK tax legislation—essential for maintaining the continued effect of the tax system.

Let me turn first to clauses 68 to 78 with respect to the carbon emissions tax. These clauses will take effect only if the UK leaves the European Union in 2019 without a deal. The clauses will give the Government the power to introduce a no-deal carbon emissions tax. The rate for 2019 would be set at £16 per tonne of carbon dioxide equivalent, and the tax would cover the same electricity generators and industrial businesses that currently participate in the EU ETS. The tax would provide the same protections against carbon leakage as the EU ETS. Operators would pay the tax only on emissions of carbon dioxide and other greenhouse gases emitted above an allowance set for each installation in advance of the tax year. This is in line with the EU ETS system of free emissions allowances.

In effect, the carbon emissions tax would seek initially to replicate the effects of the EU ETS as closely as possible, in the event of no agreement. This is important, as I hope hon. Members in all parts of the House will agree, for two reasons: first, because we want to provide certainty for businesses and for the energy industry to enable them to make investment and business decisions with confidence, as the industry has asked us to do; and secondly, because maintaining a carbon price is a key component of meeting our legally binding climate change commitments.

[Dr David Drew (Stroud) (Lab/Co-op)]

Does the Minister accept that now that the Government have greater freedom of operation, this is fairly timid? We have an emissions crisis in this country, as we do across the rest of the world. Why are the Government not being more ambitious in trying to bear down on emissions, as seen in the Intergovernmental Panel on Climate Change report?

[Robert Jenrick]

I appreciate the point the hon. Gentleman makes, but perhaps he has missed the argument I have tried to make, which is that this is not prejudging the later outcome of how we should handle our carbon pricing as we leave the EU; it is trying to ensure that in the unlikely event, which the Government wish to avoid, of a no-deal Brexit we can maintain the system as close as possible to the present one. We chose the price of £16 because that is broadly the same as where the EU’s floating price has been in recent months. Of course the price has floated very widely from as low as £6 to as high as over £20, so making that assessment is not a precise exercise, but we believe that £16 is a reasonable figure to maintain stability, and that seems to have been well received by the industry and environmental groups.

Clause 90 is about preparatory expenditure. Alongside preparing for no deal, the Government are developing long-term alternatives to the EU emissions trading scheme. As set out already in the outline political declaration on the future relationship between the EU and the UK, we are considering options for co-operation on carbon pricing, including, if possible, linking a UK national greenhouse gas emissions trading system with the EU ETS. Clause 90 will allow Departments to begin preparatory expenditure on a UK ETS, which is included in the Bill, to prepare for a linked or unlinked domestic trading scheme. It does not mean, as I said earlier, that a final decision has been made as to which option to implement, but it does ensure that all the options are kept open and we can proceed with the kind of planning that one would expect.

I shall now turn briefly to amendments 8, 9 and 10 and new clause 10 tabled by the SNP. Amendments 8 and 9 propose that the Government must table a statement on the circumstances that require expenditure in the case of clause 90 and an estimate of the expenditure to be incurred and that the House would come to a resolution to approve that expenditure. New clause 10 and amendment 10 would require the Chancellor to review the expenditure implications of the carbon emissions tax and lay a report of that review before the House within six months of the passing of the Bill, and no regulations could be made by the commissioners unless that had taken place.

A statement of circumstances, as required by amendments 8 and 9, is in our opinion unnecessary. We are legislating because the UK is leaving the EU, and as part of that we have to prepare a domestic ETS, as mentioned in the outline political declaration, and for a carbon emissions tax only in the event of no deal.

More importantly, with all these amendments, the Finance Bill is not and has never been the place for detailed questions of expenditure. The Finance Bill is primarily a Bill about tax. Parliament gets other opportunities to review and vote on departmental expenditure, and if that is important to the hon. Member for Aberdeen North (Kirsty Blackman), I suggest that she direct her scrutiny to the estimates process when it arises in due course.

New clause 17 would require the Chancellor to review the carbon emissions tax to determine its effect on the UK carbon price and the UK’s ability to comply with its fourth and fifth carbon budgets. We are confident that the carbon emissions tax would be similarly effective to the EU ETS, and I can assure Members that there are already robust requirements to report on progress towards the UK’s emissions reductions targets. For example, the Climate Change Act 2008 provides a world-leading governance framework that we certainly support. First, it ensures that the Government are required to prepare and lay before Parliament an annual statement of emissions, setting out the total amount of greenhouse gases emitted to, and removed from, the atmosphere across the UK and the steps taken to calculate the net UK carbon accounts. Secondly, the independent Committee on Climate Change is required to prepare and lay before Parliament an annual report on the Government’s progress towards meeting the UK’s carbon budgets, which the Government are required to respond to. Thirdly, the Government are required to prepare and lay before Parliament a statement setting out performance against each carbon budget period and the 2050 target. We believe that, taken together, these are strong existing mechanisms, which are respected and understood, to ensure that we monitor and report to Parliament on greenhouse gas emissions. I therefore urge hon. Members to reject new clause 17.

Let me turn to amendments 2, 7 and 21 to clause 89, which deals with minor amendments in consequence of our EU withdrawal. We need to ensure that the tax system continues to work effectively and that we maintain stability and certainty, including in the event that the UK leaves without a deal. To allow us to do that, clause 89 will allow minor technical amendments to be made to UK tax law to keep it working as it does now and to update it to continue to work with changes made to other areas of law on account of EU exit. Clause 89 will provide the Government with the power to make such minor amendments.

These are, I stress again, minor and technical changes that are absolutely necessary to maintain the continued effect of tax legislation in the unlikely event of no deal. I can reassure the Committee that the power is not being taken to make changes to do anything other than ensure that existing tax legislation continues to have effect in the event of no deal. It will not be used to change tax policy or the tax paid by taxpayers. To reassure the Committee of that, I have placed a list of changes that the Government intend to make under the power in the Library and sent a copy to the shadow Chief Secretary to the Treasury.

[Vicky Ford]

I thank the Minister for reaffirming that it is not the Government’s intention to leave with no deal. It is the intention to leave with a deal. On tax, there seemed to be some confusion over the weekend about the draft withdrawal agreement. Some people seemed to suggest that the UK would be bound into the EU tampon tax for a further five years. Can he confirm that under the withdrawal agreement, VAT on goods sold after the transition period will be subject to rates set by the British Government, not EU law?

[Robert Jenrick]

My hon. Friend, who is always well informed, is correct on both counts.

[Vicky Ford]

I thank my hon. Friend for confirming that from the Dispatch Box. Does he therefore agree that, before jumping to conclusions about what the draft withdrawal agreement says, colleagues should instead look at No. 10’s response to Steerpike’s 40 so-called horrors and at the true facts and answers from the lawyers who negotiated it before coming up with their own concerns?

[Robert Jenrick]

I would obviously advise all right hon. and hon. Members to read the withdrawal agreement, unlike the Leader of the Opposition, and not to rush to conclusions. The document produced by No. 10 to which my hon. Friend refers, which rebuts over 40 suggested flaws in the agreement, was very instructive, and I certainly found it helpful.

To finish on this point, I re-emphasise that I have laid before the House a comprehensive list of the changes that will need to be made to tax legislation. I advise right hon. and hon. Members who are interested to take a look at it. They will see that the changes are indeed minor and technical items that are not, I hope, controversial.

Amendments 14 and 22 would require the Government to publish an economic and fiscal analysis of the effects of our exit from the European Union before using the powers in clause 89. I can reassure the Committee that the Government have already confirmed that before we bring forward the vote on the final deal, we will ensure that Parliament is presented with the appropriate analysis in good time to make an informed decision. The Chancellor set that out in his letter of 23 August to the Chair of the Treasury Committee, a copy of which is in the public domain. He said that that analysis would look at the economic and fiscal effects of leaving the EU.

To provide Members with further detail today, I can confirm that that analysis will bring together evidence from across the Government, insight from external stakeholders and a range of data and analytical tools. The analysis will consider the long-term costs and benefits of moving to new trading relationships with the EU and the rest of the world. Having considered the amendment and spoken to several right hon. and hon. Members, I am happy to confirm that the baseline for this comparison will be the status quo—that is, today’s institutional arrangements with the EU. The analysis will consider a modelled no-deal scenario, or World Trade Organisation terms; a modelled analysis of an FTA scenario; and a modelled analysis of the Government’s proposed deal. Each will be compared against the status quo of the current institutional arrangements within the EU.

Amendment 14 would not require the analysis to be published until after the Bill receives Royal Assent. As a result, the Bill would not be binding on the Government until after the meaningful vote had taken place. I hope that the commitment that the Government have made today and the conversations that I have had with Members from across the House will provide reassurance that we will publish an appropriate analysis—the analysis that right hon. and hon. Members seek—in good time before the meaningful vote.

I turn briefly to the OBR’s role, which is mentioned in amendment 14. The House will know that the OBR’s remit is clearly defined in the Budget Responsibility and National Audit Act 2011, and that the amendment, which asks the OBR to assess our analysis of the effects of a deal, goes beyond its statutory responsibilities. That would set an undesirable precedent, with Parliament being able to commission specific pieces of work from the OBR on an ad hoc basis outside the clear and bounded remit set in the OBR’s charter. That would effectively transform the OBR into a parliamentary budget office, fundamentally changing its purpose and potentially damaging its credibility. Such a decision should be taken only after a full and frank debate on its own merits.

The House will be aware that the Treasury Committee, which is headed by my right hon. Friend the Member for Loughborough (Nicky Morgan), has appointed Sir Stephen Nickell, formerly of the OBR, to provide an independent view of the Government’s analysis. My officials have already had initial conversations with Sir Stephen about the scope and scale of his review, to ensure that we can provide him and his team with the necessary information in due course. I hope that that gives further reassurance to Members that scrutiny, of the nature that they seek, of the Government’s work will be undertaken by the Treasury Committee.

Furthermore, the OBR has already published a detailed review of the approach taken in the analysis provided across Whitehall, comparing it with other academic publications since the referendum. We believe that extending the OBR’s remit, as proposed by amendment 14, would require the OBR to analyse alternatives to Government policy. That would draw the OBR into political debate and expose it to a significant risk to its credibility and that of the UK’s fiscal framework. It remains highly unlikely that the OBR could, in the time available, go beyond the points it has already made in its discussion paper in any assessment of the Government’s analysis, bearing in mind its capacity and modelling today.

As for the effects of the power mentioned in amendment 20, I hope that my previous assurances will reassure right hon. and hon. Members that the Government intend to use the power not to introduce tax policy changes, but merely to secure the continued effective operation of the tax system. I hope that my right hon. and hon. Friends who sought this amendment will see that we have listened and engaged and that the reassurances that I have provided today achieve the amendment’s purpose. I therefore urge them not to proceed with their amendments.

I turn to amendment 15, which calls for the Government to provide a list of powers in relevant tax legislation that the Treasury has acquired since June 2016, or that it expects to acquire, relating to any EU exit scenario. All such powers have been passed as primary legislation. They have been scrutinised by this House and were voted through accordingly. As with all legislation, that which relates to these powers is in the public domain, should anyone wish to examine it. I do not think that it is necessary to reprise this list. I hope that hon. Members will see that amendment 15 is therefore entirely unnecessary, and I encourage them not to proceed with it.

--- Later in debate ---

[Kirsty Blackman]

I rise to speak in favour of SNP amendments 7 to 10 and new clauses 10 and 11. I would also like to mention amendments 14, 15, 22, 20 and 2 and new clause 17, all of which we would be comfortable supporting, if any of them are pushed to the vote.

There has been a lengthy discussion across the Committee on trade deals. People are confusing free trade agreements and trade deals. It is perfectly possible to make arrangements that improve the flow of trade without signing an FTA; they are two very separate things. It is not understood widely enough that any trade agreement between countries involves compromise. Whatever is signed up to between, let’s say, the UK and the USA will involve the UK having to give some things away as well as gaining something.

The consultation on trade deals looked at trade deals with New Zealand and Australia, with the comprehensive and progressive agreement for trans-pacific partnership, and with the US. However, despite the fact that UK Government Members have talked about how important our trade is with countries such as South Korea and how fast it has grown, the Government have not consulted on that and they did not do so because we have those trade deals already, as a member of the EU. That is why our trade has grown so quickly with South Korea.

Thank you for your indulgence, Dame Rosie. I will move now to the actual subject of the debate. Our amendment 7 asks that clause 89 be subject to the affirmative resolution procedure. I appreciate that the Minister has put a list in the Library, and I will take a look at the list of tax changes he proposes to make under the clause, but I am on the Committee that is sifting the statutory instruments the Government are bringing forward, and some of those SIs that the Government think should be taken under the negative procedure should never have been so proposed. Some are fairly dramatic changes to the law—to powers or new institutions, for example—and yet are being put to the statutory instrument sifting Committee as negative instruments.

I hope that the Minister will forgive me, but I do not trust the Government to introduce only measures in the category that we believe should be subject to the negative procedure. I will look carefully at that list, but I will still press amendment 7, because, given my experience of Ministers, I do not yet have the level of comfort that I need.

[Robert Jenrick]

I hope that in due course the hon. Lady will have an opportunity to read the letter that is in the Library and see that these are truly minor technical amendments, changing, for example, a reference to the EU to a reference to the EU and the UK, and a reference to euros to a reference to pounds sterling. I hope that, in due course, she will be comfortable with those minor technical changes.

Finance (No. 3) Bill

Robert Jenrick Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I thank all right hon. and hon. Members across the House who have contributed to this wide-ranging debate. The shadow Chief Secretary to the Treasury managed the unusual feat of opening the debate without mentioning a single measure in the Finance Bill, although he did brandish a very thin pamphlet, which we were told contained all the answers to the Labour party’s spending commitments. A number of important issues have been raised across the House tonight, and I will do my best in the time available—and as swiftly as possible—to respond to as many as I can.

Two weeks ago, the Chancellor was able to present a Budget that followed five years of economic growth, with the deficit cut by four fifths, the lowest levels of unemployment, the highest levels of employment in my lifetime, real wages rising and real wages rising fastest among the lowest paid. It was a Budget in which, as a result of responsible management of the public finances—meeting the serious challenges we inherited in 2010 in a serious way—we were able to invest the highest levels in our economic infrastructure for more than 40 years, including £460 million more a week than the last Labour Government for our roads, railways and broadband. The Budget increased funding to the NHS by £20.5 billion a year in real terms; froze fuel, beer and spirits duty once again as a result of sustained lobbying and support from Members on the Government Benches, including my friends from Scotland; and—above all—provided a tax cut for 32 million people.

My hon. Friends the Members for Croydon South (Chris Philp) and for Cheltenham (Alex Chalk) and many other Government Members welcomed our action to support the high street and to enable town centres to adapt and evolve to new circumstances and continue to be the cornerstones of thriving communities. That action includes a reduction in business rates for 30% of smaller retailers, investment in transformation and infrastructure through the £675 million future high streets fund, and planning reforms to make it easier, cheaper and quicker to create businesses and work places in town centres and to create homes—planning reforms that are now, it seems, opposed by the Labour party.

My hon. Friend the Member for Croydon South made an interesting suggestion about the seed enterprise investment scheme. In the Budget, we reaffirmed our commitment to the world-class incentives we have as a country to encourage investment, promote wealth creation and make this country the best place in the world to be an entrepreneur, such as continuing entrepreneurs’ relief and continuing EIS and SEIS, as my hon. Friend suggested.

My hon. Friend the Member for Dover (Charlie Elphicke) and many other Government Members welcomed our sustained commitment to reducing corporation tax again—now to 17%—and noted that our decision to reduce it from 28% had not, as was suggested, reduced receipts to the Treasury, but had in fact increased them by 55%. My hon. Friend the Member for Gordon (Colin Clark) made the case, as he regularly does, that we want to grow the economy and support the people out there who are creating small businesses. This Budget and this Finance Bill are for them.

[Alan Brown]

I thank the Minister for giving way. If reducing corporation tax brings in more money, why has the Red Book never shown that, and why is the Treasury not able to provide any modelling that shows an increase in revenues from that reduction?

[Robert Jenrick]

I think I have already explained that the facts speak for themselves. Receipts from the reduction in corporation tax have increased by over 50%. That measure was opposed by the SNP and the Labour party.

My hon. Friend the Member for Solihull (Julian Knight) represents many people who work in the automotive sector, which we want to support. He asked about vehicle excise duty. In this Bill, as he knows, we are legislating to increase support for low-emission taxis and have brought that measure forward by a year. We have also increased support for electric charge points, to help the further roll-out of electric vehicles, as other hon. Members across the House have suggested. As I discussed last week with the chief executive of Jaguar Land Rover, who supported this strongly, we intend to review the consequences of the new worldwide harmonised light vehicle test procedure on vehicle excise duty and report back in the spring.

The right hon. Member for Twickenham (Sir Vince Cable) spoke of the need to incentivise further business investment, particularly at this important moment in the Brexit negotiations. I am sure he will welcome the increase in the annual investment allowance from £200,000 to £1 million, which will encourage businesses across the country, including manufacturers, to invest in new plant, new machinery and digital technology and raise their productivity, as well as the new structures and buildings allowance, which started on Budget day.

The Budget laid out a whole range of measures—exactly the ways forward that the right hon. Gentleman suggested—to increase productivity, which is the only sustainable way to improve living standards in this country, including the largest ever investment in our strategic road network and investment in our skills base, including the introduction of T-levels, encouraging apprenticeships and the national retraining partnership.

[Theresa Villiers (Chipping Barnet) (Con)]

I very much welcome the money in the Budget for repairing potholes. Does the Minister agree that it is vital that our great capital city gets its fair share of that funding?

[Robert Jenrick]

I certainly do. Some Opposition Members were snobby about potholes, but those of us in the real world know that potholes matter. They affect people’s working lives, and we want to fix that problem. In answer to my right hon. Friend, Barnet will shortly be receiving £690,0000 for potholes.

The hon. Member for Aberdeen North (Kirsty Blackman) and many others welcomed the transferable tax history, which we announced in the Budget and which she advocated. She was strongly supported by our Scottish Conservative colleagues. The oil and gas industry is a national economic asset and one that we want to support. It supports 280,000 jobs across the Union, but particularly in north-east Scotland. In the Budget, the Chancellor reaffirmed our commitment to strong, competitive and predictable taxation, so that the industry—which is, as the hon. Lady said, still fragile—can continue to strengthen in the years ahead.

Many of my hon. Friends, including my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), welcomed the introduction of the increase in the personal allowance and the increase in the higher-rate threshold—a tax cut for 32 million people, more than 1.5 million more working people taken out of tax altogether and achieving an increase in the personal allowance by more than 90% since 2010, which is a promise made in our manifesto and a promise delivered in the Budget.

My hon. Friend the Member for Walsall North (Eddie Hughes), as well as quoting Tiberius—I am yet to know whether Tiberius is quoted in No. 11; perhaps the Chancellor will invite my hon. Friend round for a cup of tea—was absolutely right to say that the Bill takes forward the measures in the last Budget to create a stamp duty relief for first-time buyers in other properties and extend it to those in shared ownership. That encourages and increases the dream of home ownership to a new generation.

As the Financial Secretary said at the beginning of the debate, the Bill also makes a number of changes to make our tax system fairer, and many Members across the House welcomed the new digital services tax. Some asked why we do not go further and faster, but let us remember that we will be the first major economy to create a tax of this nature. We are genuinely leading the international community and we hope to lead a multinational agreement, but the UK, under the leadership of the Chancellor, will lead the way. With those measures and others in the Bill, we will continue to close the tax gap, which is at its lowest ever and lower than in any year of the last Labour Government.

The hon. Member for Wakefield (Mary Creagh), at the beginning of the debate, and other hon. Members later, asked what action we are taking to support the environment and on climate change. One such measure, of course, is our proposed plastics packaging tax—again, leading the world by creating an innovative tax that encourages the producers of plastic packaging to take responsibility and change their packaging, and building on great Conservative environmental taxes of the past, such as the landfill tax created by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke).

My hon. Friends the Members for West Aberdeenshire and Kincardine (Andrew Bowie) and for Moray (Douglas Ross), among others, said very clearly—this is an important dividing line in British politics—that we are excited about the future of this country, and want to support and invest in science and technology and in research and development to drive the economy forward. From the Labour party, we heard no ideas as to how to grow the economy. We heard about more spending and higher taxes, but nothing about how to create wealth and make our country more prosperous. We heard only ideas that we know have failed in the past.

Let us be clear: a vote against the Bill tonight would be a vote against enabling investment and new jobs in the north-east of Scotland and a vote against the transferable tax history, which the hon. Member for Aberdeen North says she has campaigned for and advocated over many years. It would be a vote against further investment in manufacturing to raise productivity, which Opposition Members have said should be a national priority, and a vote against the increase in the annual investment allowance. It would be a vote against extending the stamp duty land tax relief for first-time buyers to those who want to live in shared-ownership properties, something advocated by my hon. Friend the Member for Walsall North. A year ago, the Opposition voted against our first policy in this area. Today, we know that more than 120,000 people across the country have benefited from that stamp duty relief. Surely the Labour party will not make the same mistake again.

Anyone who votes against the Finance Bill tonight will be voting against further actions to close the tax gap and to make it harder to evade and avoid taxation, and against making our tax system fairer. It would be a vote against a tax cut for 32 million people, and a vote against taking more than 1.5 million of our fellow citizens out of income tax altogether.

The Bill will make the UK more competitive, more innovative and more entrepreneurial. It will deliver lower taxes and put more money into the pockets of our British working public. It will make our economy and our country stronger, and I commend it to the House.

Question put, That the amendment be made.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 6th November 2018 Commons Chamber

[Lee Rowley (North East Derbyshire) (Con)]

5. What steps he is taking to increase productivity in the economy.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The Budget set out the next steps in our plan to raise productivity and to grow the economy. That included increasing the national productivity investment fund to more than £37 billion to fund the largest sustained investment in our national infrastructure since the 1970s.

[Lee Rowley]

With that very increase in infrastructure funding to £37 billion, what opportunities are there in places such as North East Derbyshire to invest in regeneration and communities?

[Robert Jenrick]

The plans set out in the Budget were designed exactly for parts of the country such as my hon. Friend’s constituency. The £28.8 billion national roads fund will provide the largest ever investment in our strategic roads, and more money for potholes and pinch points. The future high streets fund will enable small towns across the country, including in the midlands, to be transformed and become thriving communities once more.

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

How does the announcement in the Budget that non-NHS capital funding will actually fall in the coming years help the country’s productivity?

[Robert Jenrick]

The Budget announced the largest increase in capital spend in our economic infrastructure since the 1970s. Under this Government, investment in our economic infrastructure will be £460 million a week higher than under the last Labour Government.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

The Chancellor has announced that he will be improving productivity by stopping inefficient public sector contracting—basically, abolishing the use of the private finance initiative and private finance 2. Can more be done to reduce the £240 billion bill to our country left by the Labour party?

[Robert Jenrick]

Yes. We are ending the scandal of PFI that was created by the last Labour Government. Eighty-six per cent. of PFI contracts were signed by the last Labour Government—91% by value. In addition to retiring PFI we are creating a crack team, beginning in the Department of Health and Social Care, to look back at some of those old contracts and to clean out the stable left by the last Labour Government.

[John Cryer (Leyton and Wanstead) (Lab)]

This Government and their coalition predecessors have overseen the longest slump in wages in living memory. What effect has that had on productivity?

[Robert Jenrick]

The hon. Gentleman may not be aware of this, but real wages are rising. The Government believe that the best way to support working people across the country is to get them into work. Employment is now at its highest level in my lifetime, with 3 million more jobs created and 1 million fewer people on the dole.

[Neil O’Brien (Harborough) (Con)]

6. What plans he has to raise additional tax revenues from multinational digital businesses.

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[Steve Double (St Austell and Newquay) (Con)]

12. What steps he is taking to provide funding for infrastructure in the South West.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Plymouth and the West of England Combined Authority will benefit from the £2.5 billion transforming cities fund extended in the Budget. Cornwall will receive £79 million towards the A30 St Austell link road, which my hon. Friend campaigned for.

[Steve Double]

I thank the Minister for that answer, but Cornwall relies on its only mainline rail link through south Devon, and it is well documented that it is very vulnerable to adverse weather. The Budget Red Book contained a reference to improving that rail link, but some in the south-west have doubted the Government’s commitment to it. Can the Minister confirm that the Government are committed to improving that railway, and that we now need Network Rail to get on with it?

[Robert Jenrick]

Protecting the line at Dawlish is a national priority. South-west Conservative MPs, including my hon. Friend, pressed that upon the Chancellor and me, and we restated our commitment in the Budget to finding a permanent solution that delivers super-resilience at Dawlish.

[John Grogan (Keighley) (Lab)]

13. What recent discussions he has had with the Secretary of State for Housing, Communities and Local Government on the proposed One Yorkshire devolution deal.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I have regular conversations with my counterparts in the Ministry of Housing, Communities and Local Government, including on the One Yorkshire proposals. We have said that we will respond to any proposals that we receive in good faith, assuming that they are able to provide for economic growth in a clearly defined economic geography.

[John Grogan]

Does the Minister agree that the detailed economic case for One Yorkshire devolution, presented to the Treasury and to other Ministries by no fewer than 18 Yorkshire councils, many of them Conservative, is worthy of detailed discussion between the Government and local authorities, as specified in the legislation?

[Robert Jenrick]

The hon. Gentleman and I have discussed this matter. I have met stakeholders from the region on a number of occasions, including Councillor Judith Blake from Leeds. We have said that to progress this matter we want to see the Sheffield city region become fully functioning and the Mayor, who is now elected, able to conduct his duties. We think that is a reasonable way forward, so that local people in that area are not let down.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

15. What recent assessment he has made of trends in the level of public funding for renewable energy since 2010.

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[Alex Norris (Nottingham North) (Lab/Co-op)]

T3. There were over 9,000 words in the Chancellor’s Budget speech, but not one mention of Nottingham or the east midlands. In the east midlands, we have multiple investable schemes that will drive growth in our region. When will the Treasury back the east midlands?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The hon. Gentleman obviously missed the Chancellor’s speech at the Conservative party conference, in which he announced the creation of a special area of economic activity at Toton, just south of Nottingham, which we expect to become one of the UK’s leading areas of economic growth. We also announced in the Budget an increase in the transforming cities fund, which will directly benefit Nottingham.

[Craig Tracey (North Warwickshire) (Con)]

T5. I welcome the announcement in last week’s Budget of investment in our high streets, which will be particularly welcome in Bedworth in my constituency. I had meetings with local businesses recently on this very issue, and particularly on their frustrations at the lack of ambition of the local borough council. Can the Minister advise how local councils such as Nuneaton and Bedworth can best take advantage of this excellent opportunity?

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[Alex Chalk (Cheltenham) (Con)]

Motorists want to see the earliest possible end to the traffic misery on the A417 caused by the air balloon pinch point. Does my hon. Friend recognise that the Budget, through its extra firepower for roads, provides the best possible platform for such a vital scheme?

[Robert Jenrick]

I have met my hon. Friend and his Gloucestershire colleagues to discuss this matter. It was with strategic roads and roundabouts, such as the air balloon roundabout, in mind that we made the largest ever investment in our strategic road network. Decisions on specific roads will be made next year.

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

I welcome HMRC’s rather belated decision to return tax wrongly paid by the Roadchef employee benefit trust. It is clearly now necessary to honour previously made commitments in respect of tax implications for beneficiaries. Did HMRC use its discretion to make that payout, and, if so, on what basis?

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[Julian Knight (Solihull) (Con)]

Thank you, Mr Speaker.

This morning, the European Automobile Manufacturers Association released research demonstrating that all 270 new-generation diesel vehicles tested to date are below the emissions threshold on the road. In the light of this, will the Treasury team meet me and other colleagues to discuss how we can construct a road tax system that promotes clean diesel over old diesel and protects 9,000 jobs in my constituency?

[Robert Jenrick]

I would be very happy to meet my hon. Friend, who I know is a champion for Jaguar Land Rover. I hope it will reassure him to know that I will discuss these issues with the chief executive of that company later today.

[Chris Bryant (Rhondda) (Lab)]

If we took every single person who has suffered a major traumatic brain injury—for instance, from a car crash—from needing four people in order to be able to wash, clothe and look after themselves to needing just one, and thereby leading a more independent life, we could save the taxpayers £5 billion a year. May I meet with the Chancellor to explain all this?

Freeports

Robert Jenrick Excerpts

Thursday 11th October 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is a pleasure to respond to the debate. Like my hon. Friend the Member for North East Derbyshire (Lee Rowley), I represent one of the most landlocked constituencies in the country, although the River Trent is still tidal when it reaches Newark, so perhaps there is potential for a freeport in Newark one day.

I thank my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) and the right hon. Member for Birkenhead (Frank Field), who sadly could not be with us, for raising an important issue. This issue interests me a great deal. I engaged with it before I became a Minister, when I was involved in a proposal for a freeport around East Midlands airport, and in my business career before being elected to Parliament, when I visited and engaged with freeports in Geneva and Shanghai. I have seen both the advantages and the disadvantages of some of the freeports around the world.

I support the goals that underpin many of the arguments we have heard: increasing global trade at a pivotal moment for our country’s future; increasing economic development in all parts of the United Kingdom and inward investment in those parts that have seen less of it in recent years; supporting manufacturing and particularly advanced manufacturing that takes advantage of the new technologies that are transforming the way we produce products—we want to ensure the UK is at the heart of those new processes; and seeking new free market approaches to growing our economy. Those are a good thing in themselves and send positive signals about our country, our openness and our willingness to create a business-friendly environment for investment. We have had a positive debate along all those lines.

I reassure Members that the Treasury has engaged actively with stakeholders on this topic. We have already heard that my right hon. Friend the Chief Secretary to the Treasury visited my hon. Friend the Member for Cleethorpes (Martin Vickers) in Immingham. She and I also visited the Tees Valley Mayor in the constituency of the hon. Member for Redcar (Anna Turley) to hear the proposals there, and we later met my hon. Friend the Member for Middlesbrough South and East Cleveland.

I held a roundtable at the Treasury earlier this year with the ports sector and the Minister with responsibility for ports. I listened to people’s ideas and enthusiasm about freeports and invited them to gather their thoughts and come back to us with substantive proposals, and I committed to giving those proposals the consideration they deserve. I remain keen to receive such proposals and to see what we might be able to achieve together.

Let me begin along the same lines as my hon. Friend the Member for Middlesbrough South and East Cleveland. There seem to be two principal advantages to a freeport—the first on the customs side, and the second around the regulatory changes and supply-side reforms that could flow alongside that. Let me dwell for a moment on the customs aspect, which is perhaps the most important from the Treasury’s perspective and in the current debates about Brexit.

As we heard, it is already possible for a private operator to apply to become a free zone. We have ensured that that will still be possible after we leave the European Union, under any scenario. The hon. Member for Redcar asked whether, under the current legislation, she would be able to apply for one with respect to Teesside and the South Tees Development Corporation. Yes, that is possible under the law as it is today, and as it will be in any scenario after we leave the European Union, but she or other stakeholders would need to come to us with substantive proposals. That is how people would expect the Treasury to behave when making important long-term decisions about the tax system—they would not expect us simply to act on a whim.

The Treasury will continue to have the power to designate free zones under the Customs and Excise Management Act 1979 and the Taxation (Cross-border Trade) Act 2018, which I appreciate everyone is familiar with and which will enable HMRC to set requirements for goods within free zones. Whether to apply for designation as a free zone will continue to be a commercial decision for the private operators of a port—in discussion with HMRC and the Treasury, clearly—and we are open to applications.

I want to be very clear as we discuss the customs benefits that most, if not all, of the customs benefits of a free zone are available today. We heard about the two most significant facilitations that we as a country provide for business in this respect—customs warehousing and inward processing relief. Those allow imported goods to be stored and to undergo value-adding processes, with duty being paid only when the goods are released into free circulation, or never if they are re-exported elsewhere in the world. I will explain that in more detail in a moment.

Those benefits are not limited to particular locations, so they do not provide the region-specific targeted boost that certain hon. Members present would like. However, they are available to any business anywhere in the country, which is an important freedom in itself. More than 8,500 companies across the United Kingdom benefit from customs facilitations every year and are able to pass those benefits down through their supply chain, potentially to smaller businesses. Those benefits will continue regardless of the outcome of our negotiations with the EU and our exit from the EU next year.

Let me use Liverpool as an example—I hope the right hon. Member for Birkenhead reads the report of the debate when he emerges in the coming days. Liverpool was one of the five areas of the UK with a free zone under the EU scheme, which we heard about from my hon. Friend the Member for Middlesbrough South and East Cleveland. As we heard, those zones were not redesignated in 2012, partly due to concerns about customs assurance around the type of free zone. Much though many of us would like to support free zones, it must be said that there was very little negative reaction to that. We understand that many of the companies that operated in those free zones now benefit in almost exactly the same way as they did before from customs facilitations the UK already offers. We have not received substantive proposals to revisit that.

Let me return to the example of Liverpool. Today, a manufacturer in Liverpool is able to gain all the benefits of a free zone without being constrained to locating within the free zone site. Setting aside large sites such as the south Tees site, some sites, including the one in Liverpool, are quite constrained and do not have the ability to become vast sites such as the one in Dubai we heard about.

If there was a ship manufacturer, for instance, in Liverpool or Birkenhead, materials for its vessels could be imported and stored in a customs warehouse somewhere in the Liverpool area, or anywhere else in the country, without duties being paid on them. The manufacturer or its supply chain could then use those materials in the manufacturing process under inward processing relief, and the finished ships could be exported without any UK customs duty ever having to be paid. That avoids the distortions and perverse geographical outcomes that would undoubtedly arise with free zones, where a manufacturer or its supply chain would feel the need to locate on the same site, although I appreciate that would be beneficial to those locations, some of which require urgent inward investment.

The UK’s current customs facilitations offer broadly the same benefits that attract businesses to free zones in other developed countries, such as the United States. For example, two thirds of goods imported to US foreign trade zones are brought in to enjoy the same tariff-free manufacturing benefits offered by inward processing relief. The other third are stored in those zones, gaining the same cash-flow benefits offered by customs warehousing. From a customs perspective, the UK model compares favourably with the model in the United States—arguably more so because it does not force or encourage a company to locate in a particular place, but gives it the freedom to operate and trade wherever it wishes throughout the United Kingdom.

However, as Members would expect, we want to ensure we have an even more business-friendly environment, particularly as we leave the European Union. I am sure there are ways we can improve those customs arrangements, and we are actively engaged in identifying how we might do that now or post Brexit. We are open to suggestions from hon. Members, such as my hon. Friend the Member for Middlesbrough South and East Cleveland, who is very engaged with this issue. We are also actively engaged with people in some communities, including the Tees Valley Mayor and the hon. Member for Redcar, about how we might make those arrangements place-specific. That certainly could be taken forward.

As my hon. Friend said, if one agrees that the customs benefits are more limited because we have a fairly favourable customs arrangement—I have already described that—the wider question is how we can improve supply-side reforms and the business-friendly environment in the whole country or in particular places. In that regard, I draw Members’ attention to a couple of things on which we are focusing heavily.

Like many of those who have contributed to the debate, I want to see supply-side reforms to boost growth and support business. With the Chancellor and Chief Secretary, I have been highly engaged in efforts to increase productivity and regional growth in that way.

As the hon. Member for Redcar said, we should exercise caution because we do not want to propose ideas, whether in a freeport or another setting, that would lower environmental standards or indeed workers’ rights. We have been clear that we see leaving the European Union as an opportunity to not only protect those rights but enhance them. No proposals should be at the expense of the environment, workers’ rights or other things in our regulatory framework that we are proud of as a country and want to see continued or enhanced.

We are, however, highly engaged in how we can increase economic growth in particular places, either because they require it more than others, having received less investment in recent years, or because there is a significant national economic opportunity for growth that requires Government support. In that regard, we have made a number of interventions that build on a long history, to which my hon. Friend the Member for Middlesbrough South and East Cleveland referred, going back to the 1980s and the Thatcher revolution. They include locally led or mayoral development corporations—that power is available to the Mayor of Tees Valley. They also include enterprise zones, which the Government have expanded since 2010, creating many more in different combinations, including those linked to universities, which provide particular opportunities to help universities orientate themselves towards the local and regional economy, commercialise research and development, and help start-ups to scale up and achieve their potential. In some cases, those approaches have had the benefits that my hon. Friend described. Again, we are open to further conversations on how we might deliver them.

Development corporations empower places to overcome local barriers to growth and have provided a sharper commercial focus to large-scale Government investments to help develop local areas. In the Tees Valley, the first mayoral development corporation outside of London has been set up by the excellent local Mayor, Ben Houchen, whom I met only yesterday to discuss his future proposals.

At the Conservative party conference, we announced funding to boost growth and development in the east midlands between Nottingham and Leicester, creating a new locally led delivery model—potentially a development corporation—around Toton. Again, that is an area of significant economic potential, and we want to use the levers available to us in central Government, working closely with local leadership and the business community, to take that forward at pace. The funding will support the area to move on with those announced proposals.

We are supporting local businesses particularly through enterprise zones—since 2012, we have established a further 48 of them—in all regions of the United Kingdom, including most of those represented here today, and certainly in the Tees Valley. In those zones, businesses benefit from tax and regulatory incentives. We have piloted other models, including, at the Budget last year, an east midlands-focused manufacturing zone to provide a more business-friendly environment for manufacturing businesses.

We are open to further conversations in that regard. We want to see more locally led models and development corporations and, as my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) said, more Canary Wharf-style opportunities to transform local areas and drive the economy forward at pace, with a particular focus on planning, where there is growing consensus for further liberalisation. There may be great opportunities to do so in these places if there is strong support from the local community, Mayors and the locally elected democratic leadership of councils.

As I told the ports when I met them earlier in the year, and as was said in the conversations the Chief Secretary has had with others, we believe there may be opportunities for some levers to be pulled with respect to ports. If they wish to take advantage of opportunities for locally led development corporations or those with a central Government component, we are happy to discuss that and see that moved forward as fast as possible.

We want to see further business-friendly customs arrangements put in place. Proposals for freeports would need to prove that they will genuinely attract inward investment into the United Kingdom and not simply displace growth that might have happened in other parts of the country. It must be an additive policy that makes the country more prosperous and does not simply move jobs and investment from other parts of the United Kingdom.

We are aware of the risks of free zones we see around the world relating to money laundering and other illicit activities—I saw that when I visited freeports, particularly with respect to the art market, which I worked in before being elected. We take note of the G7’s Financial Action Task Force. There are important questions that need to be explored and understood, and we must be sure that we overcome those risks before going further.

I thank my hon. Friend the Member for Middlesbrough South and East Cleveland for raising an important issue. Personally, I am highly engaged in it, along with the Chief Secretary. We want to see substantive proposals brought forward for us to consider, which can inform the debate and answer some of the questions that I and other Members have raised. How would free zones genuinely be additive and drive forward the prosperity of the whole United Kingdom? How can we overcome some of the disadvantages in terms of criminality and illicit trade that we have seen around the world? From a customs perspective, how would a freeport add something to our business-friendly customs environment that we do not have already, bearing in mind the analysis and comments I have laid out? How can that play a part in our wider strategy to use devices such as development corporations or enterprise zones to help areas seize economic opportunities, liberalise planning, build a business-friendly vision and attract business leadership to take forward their communities and economies?

This is an interesting and exciting opportunity worthy of further thought and consideration. I look forward to working with colleagues on both sides of the Chamber on it in the future.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 11th September 2018 Commons Chamber

[Ben Bradley (Mansfield) (Con)]

5. What steps he is taking to invest in infrastructure in the east midlands.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Over the course of this Parliament, long-term investment in our infrastructure will reach levels not sustained since the 1970s. In the east midlands, for example, we are investing from the national productivity investment fund to reduce congestion. We are investing £125 million this year on local road maintenance, and we announced this summer £780 million for a series of works to upgrade the east coast main line.

[Ben Bradley]

As my near neighbour in Nottinghamshire, the Minister will be aware of the Robin Hood line that runs through my constituency from Nottingham. Proposals to extend the line across Warsop in the north of my constituency have now appeared in various Budgets. The Transport Secretary has ensured that the new franchisee will have to consider the business case for that extension. Can the Minister confirm that the Treasury will support it financially if that business case comes forward?

[Robert Jenrick]

My hon. Friend and my hon. Friend the Member for Sherwood (Mark Spencer) have been campaigning on this for several years, and we recognise its potential to unlock economic opportunities in Mansfield and Ollerton. Within the east midlands franchise, we have included a requirement that the operator should come to the Secretary of State for Transport within a year with a business case for extending passenger services to my hon. Friend’s communities. The Department for Transport and the Treasury will consider that business case very carefully.

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

Does the Minister accept that crucial investment from the European Investment Bank and the European regional development fund recently underpinned the midlands engine investment fund and that a hard Brexit risks pulling the rug from underneath many critical investment projects? He knows in his heart that a “cake and eat it” Brexit is a pure delusion and that his European Research Group colleagues still cannot explain how it would work. Would it not be better if we just let the public sort this out and have a say with a people’s vote?

[Robert Jenrick]

The public have already had a say, and in the east midlands, which we are discussing, the public were very clear that they want to leave the European Union. Infrastructure investment will be substantially higher over the course of this Parliament than it was under the last Labour Government—25% higher in the east midlands and 40% higher in Yorkshire and the Humber. The primary reason for that is this Government’s responsible management of the public finances.

[Sir Patrick McLoughlin (Derbyshire Dales) (Con)]

Will my hon. Friend take the time to point out where some of this infrastructure spend is going? At the moment, Derby station is being remodelled—£200 million —and the M1 is being upgraded to a smart motorway. This is massive investment for the long-term future of the east midlands.

[Robert Jenrick]

My right hon. Friend is absolutely right. Of course he was the Secretary of State for Transport who led many of these important investments. In the east midlands, we are investing in the smart motorway, in the upgrade to the east coast main line, in Derby bus station and in new green buses in Nottingham. The list continues, and only because of this Government’s management of the public finances, which is keeping the economy growing.

[Helen Goodman (Bishop Auckland) (Lab)]

rose—

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[Mr Gary Streeter (South West Devon) (Con)]

6. If he will provide additional resources to the Department for Digital, Culture, Media and Sport to support the Mayflower 400-year anniversary celebrations.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

We recognise that the Mayflower commemorations are an important moment for this country to celebrate our tied history with the United States and the unending quest for religious freedom and toleration. The Government gave £0.5 million to the Mayflower 400 project in the 2015 spending review, and we will continue to support it in the years to come.

[Mr Streeter]

Given the significance of the voyage of the Mayflower—in historical terms, it was one of the planet’s most influential journeys and it helped to found our democracy and freedom—will the Minister respond positively to the letter he has received from the all-party parliamentary group on the Mayflower pilgrims requesting that we have sufficient resources to celebrate this amazing event in a spectacular fashion?

[Robert Jenrick]

At the suggestion of my hon. Friend and of my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), I met Charles Hackett, the chief executive of the Mayflower 400 project. We had a productive meeting, and we are considering the materials that the project left with us. I advise my hon. Friend the Member for South West Devon (Mr Streeter) and the organisers of Mayflower 400 to continue working with the Department for Digital, Culture, Media and Sport and the Treasury as they continue to formulate their plans, which will benefit not just Plymouth but Boston, Bassetlaw and communities across the country.

[Mr Speaker]

For the edification of those observing our proceedings, I can advise that the hon. Member for Huddersfield (Mr Sheerman) has just been chuntering at me that his grandmother had a link with the Mayflower, about which I think we are to be enlightened.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Some Members may think that I was on the Mayflower, although as a young man I did emigrate to the United States. Some of my ancestors, the Sheermans, could have been on the Mayflower—[Interruption.] Just hold it for a moment. This is the 400-year anniversary. Is it not time that we celebrated migration and the talent, the genius, the innovation and the ideas that we in this country and America get from migration? Should we not use this quadricentenary to celebrate migration across the world?

[Robert Jenrick]

The hon. Gentleman is testing my knowledge of the pilgrim fathers, but of course they were inspired by William Bradford, who came from Yorkshire, I believe. He was the one who said that from small things great things can emerge, and that it takes just one small candle to light a thousand, which was the way that the whole pilgrim fathers’ enterprise was summed up. So I want to see the commemorations take place in Yorkshire, as well as in Plymouth and the rest of the country.

[Martin Vickers (Cleethorpes) (Con)]

I urge the Minister not to forget Immingham in my constituency, which also played a major part in where the pilgrim fathers sailed from. Will he ensure that Immingham is a major player in any celebrations?

[Robert Jenrick]

I have tried to list all the places where the pilgrim fathers came from. I was not aware that some came from Immingham as well, but I am sure that that will be included in the celebrations.

[Helen Goodman (Bishop Auckland) (Lab)]

Discussion of DDCMS support for the Mayflower celebrations raises the problem that DDCMS regional funding is deeply unfair, with far more in London. Indeed, that is the pattern on infrastructure, which the Minister was talking about before. So to what extent does the Minister believe that unfair patterns of Government spending are the cause of the fact that household income in the north-east is only £15,000 per year, whereas in London it is £27,000?

[Robert Jenrick]

As the hon. Lady will be aware, the Arts Council has a formula to distribute funding across the country. We believe, like she does, that it is important that all communities in this country can have access to culture and heritage. It is for that reason and others that we funded the Great Exhibition of the North, which has been a huge success; and of course the Chancellor, in his Budget two years ago, supported the huge economic and cultural opportunity of restoring Wentworth Woodhouse, near to the hon. Lady’s constituency.

[Vicky Foxcroft (Lewisham, Deptford) (Lab)]

8. Whether he has made an assessment of the adequacy of his Department's cross-departmental guidance on the contracting out of public services as a result of recent disturbances in prisons.

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[Vicky Ford (Chelmsford) (Con)]

This summer, we saw the devastation of the collapse of an elevated roadway in Italy. In Chelmsford, the main route into the city is over the Army and Navy flyover, which is now 40 years old. I am not suggesting that it is on the brink of an Italian disaster, but it will need replacing. What funds might be available to assist?

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

My hon. Friend and I met earlier in the summer to discuss the flyover, and she raised concerns then. I appreciate that it has been closed, owing to safety concerns, over the summer. Funding is available through Essex County Council, and of course through her local enterprise partnership, which has received almost £600 million over the spending period.

[Tonia Antoniazzi (Gower) (Lab)]

T6. The Chancellor will be aware of Macmillan Cancer Support’s long campaign to introduce a duty of care on financial services providers to ensure that vulnerable customers get the support they need to stop financial problems escalating. The Financial Conduct Authority has now published a discussion paper on the introduction of a duty of care. Will the Chancellor commit to meeting Macmillan to discuss the consultation after it closes on 2 November?

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

The Chancellor has been an outspoken advocate of a fairer distribution of regional spending. Has he read the letter that we sent him in late July? Will he commit to the Transport for the North strategic investment priorities in his forthcoming Budget?

[Robert Jenrick]

I know that my right hon. Friend the Chancellor has my hon. Friend’s letter. Over this Parliament, we will spend more central Government funding per capita on transport in the north than in, for example, London or the south-east. We will consider carefully the business case for Northern Powerhouse Rail when we receive it from Transport for the North later in the year.

[Laura Smith (Crewe and Nantwich) (Lab)]

This is further to the points raised by my hon. Friends the Members for Ilford North (Wes Streeting) and for Weaver Vale (Mike Amesbury). In the light of the National Audit Office’s recent comments that there are signs that police forces are struggling to deliver effective services and that the Government do not know whether the police system is financially sustainable, what real reassurance can the Chancellor give me that police forces will be given a real increase in funding, so that they can cope with growing demand?

National Insurance Contributions

Robert Jenrick Excerpts

Thursday 6th September 2018 Written Statements

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The Government are announcing today that they will not proceed with the abolition of class 2 national insurance contributions (NICs) during this Parliament.

This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue, and further options for addressing any unintended consequences.

A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the state pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this Parliament, given the negative impacts it could have on some of the lowest earning in our society.

Furthermore, it has become clear that, to the extent that the Government could address these concerns, the options identified introduce greater complexity to the tax system, undermining the original objective of the policy.

The Government remain committed to simplifying the tax system for the self-employed, and will keep this issue under review in the context of the wider tax system and the sustainability of the public finances.

The Government still intend to legislate for reforms to the NICs treatment of termination payments and income from sporting testimonials, which were set out in the draft NICs Bill published on 5 December 2016. These are important changes to ensure the NICs treatment is consistent with the treatment of income tax in previous Finance Acts. We will set out further details in due course.

[HCWS944]

Office for Budget Responsibility

Robert Jenrick Excerpts

Tuesday 24th July 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

It is a pleasure to serve under your chairmanship, Mr Gray, and I thank my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) for securing the debate. There are few issues on which I would like to end the parliamentary term more than the remit of the Office for Budget Responsibility. As we have heard from Members on both sides of the House, there is widespread agreement that the credibility of our fiscal framework matters and that the quality of our national debate on economics is extremely important—not just to the economy and the country, but to the sustainability of our democracy.

The Government are proud to have established the Office for Budget Responsibility in 2010. On behalf of the Treasury, I thank—as my hon. Friend did—its staff, its first chairman, Sir Alan Budd, and of course Robert Chote, who has taken the organisation forward since. Were he listening to the debate, as I am sure he is, he would take heart from the fact that hon. Members on both sides of the House have praised the organisation that he leads and agreed that it has managed, in a relatively short time, to establish itself as a credible and independent organisation. I hope that that continues in the years ahead under his leadership and that of whoever succeeds him.

We created the OBR in the context of the fiscal disaster that was the last Labour Government, as part of our mission to restore credibility to the public finances. Since 2010, we have gone a long way to turn things around, reducing the deficit by three quarters and reaching the point where our debt will begin to fall this year, but I do not begin to claim that we have reached the end of the story.

There is a great deal more to do, and, as we heard eloquently from my hon. Friend the Member for North East Derbyshire (Lee Rowley), we are still paying, as a country, £50 billion a year in interest payments. That fact alone demonstrates the importance of the OBR and of improving the quality of economic debate in this country. As my hon. Friend rightly pointed out, all democracies in the west have suffered in recent years from politicians over-promising at election times and at other moments. We need to ensure that we have fiscal credibility as a country to sustain our democracy.

We created the OBR specifically as an independent institution responsible for examining the sustainability of the public finances and ensuring that the UK maintain its credibility—something that was clearly in doubt back in 2010.

[Anneliese Dodds]

May I briefly ask whether the British economy was growing when Labour left office?

[Robert Jenrick]

The British economy had just suffered a severe recession, and we inherited the largest peacetime deficit since the end of the second world war. Nothing exemplifies the situation with the public finances more than the note that was left on the desk in the Treasury office down the road saying that there was no money left.

The OBR produces the official economic and fiscal forecasts for the UK. It does not cost Government policies, but scrutinises and certifies costings initially prepared by the Treasury and other Departments to estimate their impact. That is an important point, to which I will return in a few moments. The OBR also provides detailed public reports, including the fiscal risk report every two years, which we have heard about, and the fiscal sustainability report, which was published last week and which keeps us at the frontier of fiscal management internationally and demonstrates our commitment to fiscal transparency and accountability. I am pleased that, as we heard in the debate, Scotland has followed suit and, since 2014, the role of the Scottish Fiscal Commission has been strengthening. That institution is in its relative infancy, but it appears to be building credibility and working to help keep Scottish finances in check.

The OBR has won international acclaim. Earlier this year, Kevin Page, in a paper for the Centre for Economic Policy Research, said:

“The OBR’s commitment to transparency is likely the gold standard in the IFI community.”

He added:

“The OBR deserves to be considered a leader among”

independent fiscal institutions

“for the transparency of its work and the credibility it derives”,

as we have heard from hon. Members. Protecting that credibility should be as much a priority for Parliament as it is for Government.

Since 2010, there have been a number of calls to expand the OBR’s remit, including proposals, as we have heard today, to report on distributional analysis, performance against child poverty targets, environmental matters and living standards. Each has merits, and deserves discussion and further thought. The OBR was deliberately set up to report on the sustainability of the public finances, and to date that is where we have let the matter settle. Asking the OBR to expand into areas beyond its core expertise and experience carries with it risks to its credibility. We need to consider that carefully before taking any such steps.

The OBR has also been called on to produce costings of policy proposals for Opposition parties. Again, we have heard about that today, and it has been raised by successive shadow Chancellors, including Ed Balls before the 2015 general election. Respected institutions such as the Institute for Fiscal Studies already perform that function well, and we should bear that in mind as we consider such proposals. As we heard from my hon. Friend the Member for Ochil and South Perthshire, the IFS recently exposed the folly of some of Labour’s proposed tax increases.

[Anneliese Dodds]

indicated dissent.

--- Later in debate ---

[Robert Jenrick]

The hon. Lady shakes her head, but the IFS said that those would lead to taxes being raised to their highest in peacetime history. The IFS also questioned whether they would raise as much as the shadow Chancellor claimed, and said that they would hit working families hardest. We do not always need to rely on the OBR to twist the knife, as the IFS has certainly done so repeatedly.

[Anneliese Dodds]

May I respectfully ask how exactly the IFS was able to analyse the Conservative party’s policies, when there was no indication in its manifesto of how any of them would be funded? It appears slightly peculiar to pick on the small number of criticisms made by the IFS of some elements of Labour’s assumptions when no information whatever was provided by the Minister’s party.

[Robert Jenrick]

I would not characterise the IFS’s criticisms of the Labour party’s manifesto as “small”. They were pretty fundamental; the remarks I have just described speak for themselves. The IFS did analyse the policies of the Conservative party in the lead-up to the last manifesto, but let us stick to the question before us today, and apologies to you, Mr Gray, for deviating from it.

A number of arguments have been made today for widening the remit of the OBR. Over previous years, such arguments have been looked at in some detail. Back in 2014, Robert Chote wrote in response to Andrew Tyrie, now Lord Tyrie, who at the time was Chair of the Treasury Committee, setting out his views on the matter. He said that, while some of those arguments undoubtedly had merit and deserved proper consideration by the Government and by Parliament, it was important that we consider

“the significant practical issues that would need to be addressed”.

Let me briefly set out some of those, which we would all need to consider.

My hon. Friend the Member for Ochil and South Perthshire referred to the US Congressional Budget Office. That is a good comparison, although the US system varies from our ours in a number of ways—in particular, Congressmen, Congresswomen and Senators have a much greater ability than Members of the House to initiate legislation that carries with it significant financial implications. However, it is worth considering the remit of the CBO, and its capacity.

The CBO undertakes analytical work in-house and has around 235 members of staff, with an annual budget of around $50 million. In comparison, the Office for Budget Responsibility has just 27 members of staff and costs us around £2.5 million. The OBR is clearly dwarfed in comparison. Although that is not in itself a reason not to proceed, we would have to consider the financial consequences of doing so.

The CBO is required by law to produce cost estimates for nearly every Bill approved by a full budget committee of either the House or the Senate, and produced 740 such formal costings last year, so a significant amount of work would be required. It is worth pointing out that the CBO does not—this is perhaps a more relevant comparison for some of the issues we have discussed this morning—evaluate the costings of candidates for Congress, or indeed of presidential candidates. Clearly, to increase the remit of the OBR would require it to have a significantly larger operation.

Undertaking Opposition costings as part of the parliamentary process would have important implications for the OBR and departmental resources in all Departments, including the Treasury, but the greatest impact would be felt were it to be involved in manifesto costings. The time that the OBR and Departments needed to produce costings would pose very particular difficulties during general elections, some of which are unplanned. It is difficult to see how parties could be afforded the customary flexibility in developing their manifestos until a relatively late stage in the election process, to reflect the public debate in the run-up to the election. Instead, they might have to submit detailed proposals two or three months ahead of a general election. Of course, we could consider that, but we would have to consider carefully the implications for the general election process and the way we have traditionally approached that.

The policies in scope for OBR costings also differ in type from the policies that have dominated the political debate. The detailed costing process at fiscal events covers only tax and welfare policies, which are clearly very important and a significant element of general elections, but are not all the issues reflected in a general election or all the policies in manifestos.

The other point to note is that the OBR does not produce the work in-house. It relies on detailed data produced for it by Departments, including the Treasury, which are then submitted to the OBR for scrutiny and analysis. As the hon. Member for Aberdeen North (Kirsty Blackman) said, the quality of the information is extremely important. Civil servants in Departments would be required to work through political parties’ manifestos and then provide high-quality approved data to the OBR, with which it could do its usual costings.

[Kirsty Blackman]

I do not think that the problems the Minister raises are insurmountable; they could be overcome. A concern that I perhaps should have mentioned in my speech is how the OBR decides which policies it will look at, and which it will not. It could be accused of bias if it looked only at Labour party policies, for example, and not very many Conservative party polices. If the OBR were to be expanded, I would like to see a public consultation on what its expanded remit should be and which policies it should therefore look at.

[Robert Jenrick]

Were the OBR to see its remit extended, that would be a matter for Parliament. It would be debated extensively within Parliament.

To finish my point on civil servants, there is an important matter of principle here. Civil servants would have to undertake detailed costings and provide data on Opposition policies—we should all acknowledge that that would represent a significant constitutional development for the UK. We would have to be willing to do that in the knowledge of its consequences.

To answer other points raised in the debate, the OBR does, to some extent, look at the effectiveness of policies. For example, it re-costs policies at each fiscal event, and it looks again at tax policies that arose in previous fiscal events at each subsequent Budget. It does not evaluate the individual effectiveness of the policy, but evaluates only its fiscal consequences, although the National Audit Office and the Public Accounts Committee, as well as Select Committees, have the ability to do that—and do so, very well.

The hon. Member for Oxford East (Anneliese Dodds) raised a point about the OBR’s remit with regard to the environment. The Government are interested in how we can ensure that the Treasury takes account of climate change and other important factors. One example of our action is commissioning Professor Dieter Helm to carry out an important review for us and to take forward the idea, still in its infancy, of how we as a country could create natural capital accounts. We are very keen to work that through in the coming years.

This has been a helpful debate. It is important for Parliament to review the OBR at this moment. We have conducted two internal reviews in the Treasury, both of which concluded that the remit is sufficient. We do not intend to change it at present, but it has been helpful to hear views from a number of Members and we will of course give careful consideration to those views in the future.

Infrastructure (Financial Assistance) Act 2012: Annual Report

Robert Jenrick Excerpts

Thursday 19th July 2018 Written Statements

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

The annual report to Parliament under the Infrastructure (Financial Assistance) Act 2012 for the period 1 April 2017 to 31 March 2018 has today been laid before Parliament.

The report is prepared in line with the requirements set out in the Infrastructure (Financial Assistance) Act 2012 that the Government report annually to Parliament on the financial assistance given under the Act.

Copies are available in the Vote Office and the Printed Paper Office.

[HCWS895]