Finance Bill

Robert Jenrick Excerpts

Tuesday 12th September 2017 Commons Chamber

[Mel Stride]

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

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

[Robert Jenrick (Newark) (Con)]

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

[Mel Stride]

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

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

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

--- Later in debate ---

[Robert Jenrick]

Being young at heart, my hon. Friend subscribes to NME, so will he re-emphasise the exact words of the Leader of the Opposition: “I will sort it”? What could be clearer than “I will sort it”?

[Charlie Elphicke]

My hon. Friend is absolutely right. The Leader of the Opposition’s words were, “I will sort it.” I will give way to the hon. Member for High Peak (Ruth George) for a third time, if she wants to make yet another valiant intervention, to explain what “I will sort it” means. I am sure she is able to explain that away, too. I think it is very clear.

--- Later in debate ---

[Robert Jenrick (Newark) (Con)]

It is a pleasure to speak in the finance debate today on an important set of measures that will take the economy and the public finances forward in the right direction. Like other Members who have spoken today, I wish that the Finance Bill were shorter, given the relatively small number of measures, and that the effort that had begun under the last Chancellor, George Osborne, with the Office of Tax Simplification could continue and bear fruit. Budgets are becoming too complicated and too long, and the tax code ever longer, leaving small and medium-sized businesses struggling to cope with compliance. Even our largest companies spend far too much time in their board meetings discussing compliance and far too little time on innovation and how to move forward.

I am inspired by Paul Ryan in the United States, who suggested creating a tax return on a postcard for 95% of American citizens, and I would like us to move in that direction. In truth, no Chancellor since Nigel Lawson has taken tax simplification seriously. He was the last Chancellor to say that one in, one out should be our policy for creating new taxes. Perhaps that is something that we could take forward as we gain complete control over our own laws as we leave the European Union.

There are three points that I wish to make. First, following on from my hon. Friend the Member for Harborough (Neil O'Brien), I would like to say a few words about our record on tax evasion and avoidance. There is a lot of misinformation about, and much needs to be said about how successful the Government’s record really has been in this area. There has been a breakdown of trust. This is a question of trust, and the antidote to mistrust is not moralising or phoney outrage, but credible action, and that is what the Government have set out to do since 2010.

When we came to power in 2010, the tax gap was rising in almost every area, particularly in corporate taxes. Today, in almost every area, it has fallen dramatically. Corporate taxes for large companies have fallen by 50%, and for small companies by 40%. In house ownership, stamp duty has fallen by 40%. These are significant achievements. They have been hard won by measures such as the ones in this Budget—I am talking about complex measures produced by Treasury officials who have gone to a great deal of trouble to work out how these falls can be achieved in a way that would simply never have happened under the last Labour Government. We have elevated the issue internationally—from David Cameron raising it and making it the centrepiece of the G8 summit to other opportunities—so that the UK is perceived internationally as a world leader in the area.

When the all-party parliamentary corporate governance group brought Leo Strine, the chief secretary of the Supreme Court of Delaware—the jurisdiction in which 90% of US companies are registered—to speak in the House of Commons, he said that there is no way that the state of Delaware would implement any of the major measures that we have. He particularly mentioned the most significant achievement: the creation of the world’s first public beneficial register of ownership. That was a significant step forward. There were legitimate arguments against it, including the invasion of privacy, but the Government took it forward none the less. It is a real achievement, which, like the state of Delaware, no other country—certainly not our major international competitors—is looking to implement. We have the general anti-avoidance legislation. We were also the leaders in the base erosion and profit shifting project under the previous Chancellor, as we are under the current one.

The results are stark, with major decreases in the tax gap of up to 50%. Had the tax gap continued on the trajectory left by the last Labour Government, it would be £47 billion and the public purse would be £11 billion the poorer. Instead, it is at its lowest ever level and is one of the lowest in the world. The way in which we report the tax gap is certainly one of the most transparent and best documented of any major country. That is a tribute to HMRC, the Treasury and successive Chancellors. We should be proud of that record and not spread misinformation that things are getting worse. As we now see internationally, the UK truly is leading the world as a result of these changes.

My second brief point is a more direct one about the Labour party and its approach not just to the Finance Bill, but more generally. The Labour party is asking the public to worship a false god. Labour says that taxing our businesses and entrepreneurs much more will result in a higher tax yield. That is not true. The richest 1% of this country pay 27% of all the income tax collected. The richest 5% pay 45%. Until the eve of Gordon Brown’s defeat in 2010, even he resisted raising the top rate of tax. He knew about getting our richest and most successful businesses and entrepreneurs to shoulder the greatest share of the burden, which they did—their share of tax rose under Labour as it has under the Conservatives—but it was precisely his hunger for more tax to spend and more money for the Treasury that led him to refuse to raise the top rate of income tax and to increase corporation taxes further.

We only have to look back within my lifetime to see the wealth creation unleashed when Nigel Lawson reduced the top rate to 40%. The Government then profited by taking a smaller slice of a much greater pie. The system that the Conservatives left to Labour in 1997 was more progressive and redistributive than the system that we inherited back in 1979 from Callaghan and Healey. In 1978-79, the top 1% of the population paid 11% of taxes, and the top 5% paid 25%. When we left office in 1997, the top 1% paid 21% of income tax—almost twice as much—and the top 5% paid 40%. The lowest 50% of the population saw the amount of tax they paid in that era fall from 20% to 11%. Lower tax rates mean higher tax yields. Higher taxes on the better off or on business for purely political reasons will not lead to a fairer tax system, even by the left’s own definition.

This is the paradox: to get people and businesses to pay a higher share of tax, we usually have to lower their tax rate, and so it has been with corporation tax in our experience in the last seven years. UK corporation tax receipts have surged to a record high during the last financial year, as the main rate has fallen from 30% in 2008 to 19% today. By reducing the rate and by having a Government with a credible economic policy, we have shown that the UK is open for business, and we have attracted international businesses from around the world that wish to open their headquarters and move a greater share of their operations here. Now, with heightened uncertainty over Brexit and a possible net outflow of businesses and investment, we need this policy more than ever.

Higher taxes on companies and individuals and their homes, as proposed under a Labour Government, will mean lower tax receipts and less redistribution.

[Sir Hugo Swire (East Devon) (Con)]

Does my hon. Friend agree that, at a time where there is uncertainty in the business community, not least because of Brexit, talking about raising corporation tax and taxation generally, as the Opposition are doing, is a mammoth disincentive for companies thinking of relocating and growing their business here at this dangerous time?

[Robert Jenrick]

My right hon. Friend makes exactly the point I have been advancing: not only is the approach the Opposition are taking counterintuitive, because the evidence suggests that higher corporation tax will yield less money for our public services and fewer opportunities to redistribute taxes to the most vulnerable in society, but it will send a signal that Britain is no longer open for business, which is exactly the opposite signal from the one we want to be sending to the world at this time. The point is that that is being done by the Labour party, against the evidence and for purely party political, ideological reasons.

Margaret Thatcher once said that the left would

“rather that the poor were poorer, provided that the rich were less rich.”—[Official Report, 22 November 1990; Vol. 181, c. 448.]

Today’s Labour Members would rather that there was less money for public services, less wealth and less opportunity, so long as they could claim that they were punishing the wealthy from the comfort of their Islington townhouses.

The public should be under no illusions: the Labour party’s economic plans will not bring in the tax receipts it claims they will, will not fund the commitments it claims to make, including on tuition fees, and will pose a real risk to public services. The only tax receipts that we can be certain will increase under a Labour Government led by the right hon. Member for Islington North (Jeremy Corbyn) will be the air passenger duties levied on the businessmen and women—the entrepreneurs and innovators —stampeding to leave the country after the next general election.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

Does my hon. Friend agree that every time Labour has tried tax, borrow, spend, they have left government with the country poorer and with people earning less—the wealthy and those on lower incomes? They just do not know how to run the economy.

[Robert Jenrick]

I could not agree more with my right hon. and learned Friend.

The evidence I have tried to bring forward shows that under Conservative Governments—both from 1979 to 1997, and from 2010 to the present day—the money spent on public services increased dramatically while those Governments have been able to take more tax receipts from the wealthiest in society by applying a sensible, credible economic policy and not. purely ideologically, seeking to increase taxes on the rich and our business community, which is counterproductive for everybody concerned.

In closing, I want to make a simple point about Brexit and the state of the economy. The only way Brexit can be a success is if Britain charts a course towards economic liberalism. Our survival and our success outside the European Union entail Britain becoming more competitive. We must open up markets. We must find ways of building competitive advantages, of reducing and deregulating wherever possible, of getting inward investment into the country and of embracing free trade. That means encouraging enterprise above all else.

[Sir Hugo Swire]

My hon. Friend is making some extremely good points, but the one thing he has not mentioned, which we have to address as a matter of urgency, is productivity.

[Robert Jenrick]

I quite agree. Productivity is the great challenge for us. Part of making sure we are a productive society is making ourselves the most competitive society we can be. That means being willing to embrace free enterprise, to reward success, and to lower corporation taxes––perhaps even our personal taxes as well. Doing that will require the most careful management of the public finances. It will mean real, continued effort to live within our means so that our children and grandchildren can continue to deregulate, to drive competitive advantages and to have lower taxes for their companies and businesses, unshackled from the incredible burden of paying off our national debt.

We will be somewhat more exposed to the world and to globalisation when we leave the European Union—less shielded from those economic forces—so we will need to lean into the free market to secure our future. That will mean a close regard to our competitiveness and the way that we are perceived by the rest of the world. It will mean a managed but liberal immigration policy that seeks to attract the most highly skilled people that we need—a focus on who they are and the skills they bring, not necessarily on how many—and a tone that welcomes people into this country rather than repelling them.

That requires something of everybody in this House. It requires from the Conservative party a tone on immigration that shows to the world that we are open and welcoming to the best and the brightest and an approach that embraces economic liberalism, not the interventionism that we have strayed into in recent months and years. For the Labour party, it means recognising that heirloom hard-left policies will not cut it in that environment. Labour’s refusal to accept that Britain’s future lies in economic liberalism will not work. It will set Britain up to fail, and to fail badly.

Ways and Means

Robert Jenrick Excerpts

Ways and Means resolution: House of Commons
Wednesday 6th September 2017 Commons Chamber

[Mr Kevan Jones (North Durham) (Lab)]

I begin by welcoming you to the Chair, Madam Deputy Speaker. I know that you were in the Chair before the recess, but it is the first time that I have had the honour of speaking when you are in the Chair and I wish you all the best in the coming years.

I would like to speak rubbish—[Interruption.] Somebody asks, “What’s new?” I could not possibly comment on my contributions in the Chamber. I actually want to talk about landfill tax and why it has not been included in the resolutions. It is a serious matter, and the Financial Secretary alluded to the reason for its omission. I want to put some of my concerns on record.

In the 2016 Budget and after consultation last summer, provisions were earmarked to be included in the 2017 Finance Bill through secondary legislation to amend taxable disposal for landfill tax purposes. The Financial Secretary explained that many things had been disrupted because of the general election. We cannot change that and I accept that certain matters were taken out of the Budget in the wash-up, which is standard practice. However, the measure on landfill tax was not. It was included until last week. The Financial Secretary said that the consultation on landfill tax will be included, but will now be published in September.

I will explain why landfill tax is so important in the context of the tax avoidance and fraud agenda that the Government say they wish to progress. I am not making party political points: the position is not all the fault of the current Conservative Government; it is as a result of the way in which successive Governments have implemented landfill tax. However, there are things that we can and must do, because the problem is not just that people do not pay the tax that they should to the Exchequer; it is that, in some areas, avoidance funds organised crime and leads to huge costs for local authorities and the taxpayer in cleaning up some of the issues.

The Government estimate in a 2014-15 report that some £150 million a year is not being paid in landfill tax. The Environmental Services Association reckons that the figure is nearly £1 billion a year. From my work in looking at the sector, £150 million seems a conservative figure. If we take HMRC’s figure, that represents 12% of lost revenue, which is on a par with tobacco and alcohol tax avoidance. One would think that it was easier to track landfill tax avoidance than alcohol and tobacco tax avoidance—so it should be. I accept that issues affect tobacco and alcohol sales that sometimes make it difficult to claim tax. However, with landfill tax, we are talking about large consignments of domestic and commercial waste, and its destination should not be hard to track.

The system was introduced as an environmental measure. The policy that Labour and Conservative Governments have pursued to try to reduce the amount of rubbish going to landfill and increase recycling is right. I will come on to the policy in Scotland, which creates a problem in England. The Scots are now dumping their rubbish in England to avoid the SNP Government’s so-called PR stunt in introducing 100% recycling, which we all know is impossible.

At present there are two rates of landfill tax: the standard rate of £84.40, which is due to rise to £88.95 in the 2018 Budget, and the lower rate of £2.65, which is due to rise to £2.80 in 2018. Successive Governments have, I think rightly, increased landfill tax over time—to generate revenue, obviously, but also to try to encourage people to recycle more. There is nothing wrong with that, and I do not criticise it at all; the problem lies in how the tax is avoided. It is paid by those who collect and dispose of waste. Some operators own not just the collection system, but the hole in the ground where the waste will go. That leads to clear cases of fraud, in which what actually goes into the ground is not declared to HMRC or to anyone.

Another issue is the type of tax that landfill operators pay. Some claim that tax on inert waste should be paid at the lower rate and pay that rate, although the tax should, in fact, be paid at the higher rate. What has made the situation worse is the mistake that was made in 2015, when the Government basically gave the industry a licence to print money by making it responsible for determining what type of waste was involved by means of something called the loss on ignition test. If a pile of rubbish, or a sample of rubbish, has a loss on ignition of 10% or less, it is classified as being subject to the £2.65 rate; otherwise, it will be subject to the full standard rate. There is thus a clear incentive for operators to declare waste to be subject to the lower rate, which means that the tax avoidance amounts to a little over £80 per tonne.

I am told that, in most areas where that is going on, if inspectors are looking around, operators will have a sample box of rubbish. In the majority of cases, what actually goes into the landfill site could be anything, and the higher rate of tax that the operator should be paying is being completely avoided because HMRC has extracted itself from the process and left the decision to the industry. It may be said that the aim is to attack red tape, which would be fine if the people concerned were responsible and law-abiding.

Let me put it on record that I am not accusing everyone in the industry of this practice. Some are clearly behaving correctly. However, there are a great many rogues, and, in some cases, not rogues but criminals, who have become involved in the practice because they see it as a good way of doing two things: making easy cash, and laundering money through what is a very high-volume business, given the amount of cash that goes through it. I shall say more about that shortly, but giving the responsibility to landfill operators, with no checks, is basically saying, “You decide what tax you pay.”

Another aspect that concerns me, and should concern everyone, is the issue of what is going into landfill sites. What is being classed as inert waste, or as waste that will not catch fire or is not dangerous, is paid for at a certain tax rate. That is declared as going into landfill sites, but what is in fact going in could be very different. I have a simple question: what records do people check? Again, it is very much a matter of self-regulation: the operators fill them in, and a toothless tiger of an organisation called the Environment Agency does spot checks on them. I have been told that one operator deliberately sent in the previous year’s returns and they were just accepted. That is what this comes down to: a lack of co-ordination in the way the HMRC and other Government agencies are tackling the problem.

The other way of avoiding tax entirely is for someone to buy a hole in the ground, to set themselves up as a landfill tax operator and to go around advertising their wares by asking for tenders from organisations, and when the process gets to the weighbridge to determine the amount, to bypass it and just put the waste straight in—paying no tax at all, not even the lower rate. There are quite a few examples of that happening, but again there are no HMRC checks. I will come on to some proposals that I hope the Minister will consider.

[Robert Jenrick (Newark) (Con)]

The hon. Gentleman is making a valuable contribution. I want to emphasise a point he made at the beginning of his remarks: the rise of serious organised crime from this tax. In Nottinghamshire—which I know he knows very well, as a son of Worksop—there have been large-scale frauds where huge rubbish dumps have been put on private property, often with the agreement of the owner, who of course denies it to the police, and the Environment Agency provides absolutely no prosecutions. A number have fallen down; multimillion pound prosecutions have collapsed. It is becoming one of the easiest ways to conduct serious organised crime in this country.

[Mr Jones]

The problem is not only that the hon. Gentleman’s constituents have to live next door to those illegal dumps, but that there is the expense of clearing them up, which falls back on the taxpayer.

There is another widespread scam. This morning I tried to find the figure for the number of fires at waste transfer stations, but I could not. For the uninitiated, I will explain. Having been a chair of public health in Newcastle, I could bore on about waste: when waste is being transferred, it usually does not go straight to the actual site, but goes first to a waste transfer station where it is either sorted or graded into different things. The number of fires that occur at waste transfer stations is out of all proportion to the probability of that happening. The reason for that is that once there is just a pile of ash, there is nothing to dispose of. That is the problem, and, again, organised crime is involved in that.

We have had some instances in County Durham of the point raised by the hon. Member for Newark (Robert Jenrick). There are frauds such as those he describes—to be fair to Durham police, they have cracked down on some of the individuals concerned—but there are some people who have bought into this business. If we look back at what they did or how they got their money, we find serious questions about whether they should be allowed anywhere near the waste industry.

We all know why, for example, in the 1970s the mafia got control of waste in New York: because there is money to be made in it. It is the same in this country, but unfortunately we are not taking the robust approach needed to address that.

One of the issues is about who is responsible for that. The hon. Gentleman mentioned the Environment Agency. It is a good organisation in one respect; it is full of some very good and committed people, but they do not have the killer instinct to be enforcers. The agency needs to have a certain mindset and to take robust action, rather than just looking at the odd illegal site. It needs to closely monitor some of the existing organisations. Without that mindset and enforcement, this will never succeed.

This is also a matter that falls between the Environment Agency and HMRC. I give credit to Durham police for taking a lead in trying to get people together and for saying, “Look, wait a minute. We know that the people behind this are involved in x, y and z, which has mostly nothing to do with rubbish. It is to do with other serious organised crime.” The police have worked with HMRC and others and tried to concentrate on these issues.

I have a concern about HMRC’s approach to this problem, and the Minister might want to reflect on it. I shall not go into details because the case is ongoing, but when I raised one particular matter with HMRC, I was told that no enforcement action would be taken because the fraud was not worth more than £20 million a year. That seems like a lot of money to me. Another case that is ongoing at the moment involves fraud totalling £78 million a year. I wonder whether these decisions are the result of a lack of resources. I have spoken to a lot of the investigators in HMRC and I pay tribute to them for the work they do. Some of the people they are dealing with are very dangerous, and it is a complex matter to put these cases together. What we need in this country is a joined-up approach by HMRC, the Environment Agency and the police. I had a meeting earlier this year with the Minister for Security, the right hon. Member for Wyre and Preston North (Mr Wallace), to discuss where all this money goes. The amounts being generated are huge, and I have seen evidence that it is going into the drugs trade or other illicit organisations. That has an impact on society.

There are some things that could be done. As I have said, we need to adopt a joined-up approach—dare I say the Eliot Ness approach—and take a robust line on this. As the hon. Member for Newark has just said, the people who have to pay for the clear-up are the taxpayers. In many cases, that involves local authorities that are already under a lot of pressure. We need to adopt a hard-headed approach, and the Minister needs to look at the figure of £150 million. I think that the figure is way more than that.

Self-certification and the loss on ignition test just need to be binned. I know that there are pressures, and people have talked about cuts in HMRC—[Interruption.] Oh, there is more yet, don’t worry! The hon. Member for Chelmsford (Vicky Ford) is looking exasperated. What is needed is one single rate for landfill, whatever it is. That test is not enforceable; every shipment going into a landfill site would have to be tested. People have talked about leaving this up to the industry, and I am not besmirching the reputation or integrity of any particular party, but it is open to anyone who wants to do so to abuse the system. I therefore think that those tests need binning, and that we need one single rate.

People ask whether landfill sites could be monitored. Yes, we have the technology. I have raised the matter with the Minister’s policy people and asked whether we could have a system similar to those at weighbridges and slaughterhouses in which cameras can record how many vehicles are going into a site. In one case that I have examined, the owner was clearly not paying the landfill tax despite the fact that a ridiculous number of vehicles were going into the site. If we had people in Revenue and Customs checking these things, I think it would pay back very quickly.

The other thing is the checking of sites. The Environment Agency has responsibility for most of the checks, but I do not get the sense from HMRC that there is robust enforcement even when questions are asked. The right hon. Member for Loughborough (Nicky Morgan) raised the issue of retrospection. Can I suggest to the Minister, if he wants to get some back tax in, how he might do it? Once a landfill operator has finished with a site, it puts a cap on it, and that is the end of it. I have been told of an operator in the north-east that has done that, and I know from evidence I have seen that it did not pay the right tax. The question was raised with the Environment Agency and HMRC of how to make sure the right tax is paid. The easiest thing is to put a borehole through and check what is actually in there. If we did that on a few sites, I think we would find that what incurs the lower rates is not what is there. That is an important point.

In policy terms, as I have said to the Minister’s policy officer, we need to make the producers of the waste responsible for where it goes. At the rates that some waste collection organisations advertise, they could not possibly make a profit if they were paying landfill tax. The problem is that because local government and others are being squeezed, many local government organisations have got into bed with these operators because they charge the lowest rates, but they can do that only because they are either not paying landfill tax or paying it at the incorrect rate. The onus should be on large organisations to take responsibility for what happens to their waste; their responsibility should not end once the waste operator has taken it away. The rates being paid by quite a few public bodies in the north-east of England make one wonder how these organisations can be making any money, if they are paying landfill tax.

Operators are also making claims that are completely unachievable, such as 100% or 98% recycling of commercial waste, which is not possible. If that is the case and they are collecting at a certain price, what is happening to the 10% or 15% they cannot recycle? Its collection would be completely uneconomic if they were paying landfill tax. If HMRC had its eyes open and looked at some adverts, it would be thinking, “Wait a minute. There’s something wrong here.”

Public Sector Pay Cap

Robert Jenrick Excerpts

Wednesday 5th July 2017 Commons Chamber

[Elizabeth Truss]

As with people who are under the purview of the pay review bodies, we need to ensure that we retain and recruit the best possible civil servants. At the same time, we need to ensure that that is affordable for the public purse.

[Robert Jenrick (Newark) (Con)]

As the shadow Chancellor knows perfectly well, the former Prime Minister did not say that it was selfish for dedicated public sector workers to ask for a pay rise. He argued—I would agree—that it is selfish and immoral for politicians to offer benefits to the voters of today to be paid for by the voters of tomorrow. Does my right hon. Friend agree that, for her children and mine, it is important to balance fair treatment of the public sector with handing on a strong country not saddled by excess debt?

[Elizabeth Truss]

My hon. Friend makes an excellent point. We need to ensure that our public finances are properly sustainable, so that we can fund those public services in future, and so that we do not burden the next generation.

Economy and Jobs

Robert Jenrick Excerpts

Thursday 29th June 2017 Commons Chamber

[Mr Hammond]

I say to the hon. Lady: please read the letter that my right hon. Friend the Minister for Women and Equalities has sent out. We will be giving additional funding to her Department so that she can make a grant to the external organisations that will provide those services. I think that the hon. Lady will be satisfied when she has read the letter and understood the details. If she is not, I will be happy to meet her.

[Robert Jenrick (Newark) (Con)]

Will the Chancellor make one further clarification, because there seemed to be some misinformation during the general election campaign? On tax avoidance, which Government have passed more than 50 measures, taken the base erosion and profit shifting process forward, published one of the world’s first public registers of beneficial ownership and reduced the tax gap to the lowest level in living memory? And which previous Government did precisely nothing?

[Mr Hammond]

My hon. Friend makes a good point. The shadow Chancellor likes to talk about tax avoidance, but the Labour Government did nothing to deal with it—[Interruption.] Well, let me phrase it differently for the right hon. Member for East Ham (Stephen Timms), who takes offence at that. He was a member of that Government, and they left £150 billion on the table. That is how much we have taken through clamping down on tax avoidance and evasion—[Interruption.] And before the shadow Chancellor stands up, I will tell him—he did not know the answer—that under the last Labour Government, the main rate of capital gains tax was 18%. Under this Conservative Government, it is 20%, with a 28% rate on residential property and hedge fund managers.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 18th April 2017 Commons Chamber

[Jane Ellison]

The question was about what meetings had taken place, and I plead guilty to answering it as asked. If the hon. Lady wants details, she can look at the many measures that have been put through since 2010, and, indeed, already in this Parliament. In fact, if she sticks around for the Second Reading of the Finance Bill, she will hear about even more things that the Government have planned to crack down on avoidance and evasion across the spectrum.

[Robert Jenrick (Newark) (Con)]

Had the tax gap continued on the trajectory left by the last Labour Government, it would be £47 billion, and the public purse would be £11 billion poorer. Instead, as a result of the policies of this Government, the tax gap is at £6 billion, which is its lowest level ever. Does my hon. Friend agree that talk is the best that some parties can offer on tax evasion and avoidance, and that it takes a Conservative Government to get something done about those problems?

[Jane Ellison]

That is exactly right, and this is something that we have taken extremely seriously. The UK’s tax gap is one of the lowest in the world, and it is certainly one of the most transparent and best documented. Since 2010, Her Majesty’s Revenue and Customs has secured £140 billion in additional tax revenue as a result of tackling avoidance, evasion and non-compliance. As I have said, the Government are ambitious to do more.

Class 4 National Insurance Contributions

Robert Jenrick Excerpts

Wednesday 15th March 2017 Commons Chamber

[Mr Hammond]

I think I have made my position quite clear. I have distinguished between the two issues. On the substance of the issue, it is absolutely right to address the discrepancy, which is no longer justified by the difference in access to benefits. However, it is also right that we accept the wider interpretation of the manifesto commitment that my hon. Friends have expressed to me. That is why we have said that we will continue to review the issue in the round and will come back to Parliament with our decisions arising from the review, but we will not increase national insurance contributions in this Parliament.

[Robert Jenrick (Newark) (Con)]

My constituents, almost a quarter of whom are self-employed, will welcome the decision today, but they also find it extraordinary when they read in the papers that the chief executive of their local hospital trust is paid £400,000 a year through a personal service company—a practice, incidentally, that got completely out of control under the last Labour Government. Will my right hon. Friend the Chancellor continue to tackle those issues, particularly in the public sector?

[Mr Hammond]

I empathise enormously with the self-employed of my hon. Friend’s constituency. He will know that I once lived among them. I sympathise with the point he has raised about public sector employees using personal service companies, but he will know that we have legislated so that, from next April, public sector engagers of people who use personal service companies will be responsible for deducting the tax and national insurance contributions that those people would be paying if they were employed directly as employees.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 28th February 2017 Commons Chamber

[Mr Hammond]

I do not recognise the numbers the hon. Lady has given the House, but I will look at them and write to her accordingly.

[Robert Jenrick (Newark) (Con)]

Estate agents report that the number of transactions of so-called “prime properties” in London and elsewhere fell by 50% last year and that at the beginning of this year the situation is even worse than it was the year before. If it were proven that tax revenues had fallen as a result of policy, would the Chancellor be willing to review and change it?

[Jane Ellison]

As we have mentioned, it is not really clear that there is a consensus on what the data are saying. However, as with all taxes, we keep this one constantly under review.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 17th January 2017 Commons Chamber

[Mr Hammond]

Yes. The Bank of England makes regular assessments of the impact of changes in interest rates—that is a central part of the modelling work that it does. The hon. Gentleman is absolutely right that one of the drivers of the relatively high household debt levels in this country is our housing model, with relatively high percentages of home ownership.

[Robert Jenrick (Newark) (Con)]

The Governor of the Bank of England has identified that two of the most serious challenges to the economy today are levels of household debt and the falling pound. Both of those are made worse by the widespread belief among the general public that interest rates are not going to go up. What more can the Government and the Governor of the Bank of England do to signal to the public that interest rates will rise, and not fall, in the near future?

[Mr Hammond]

That is not a matter for the Government, because, as my hon. Friend knows very well, interest rates are a matter for the Monetary Policy Committee of the Bank of England, and it is up to the Governor and individual members of the Monetary Policy Committee to signal as they see fit.

Oral Answers to Questions

Robert Jenrick Excerpts

Tuesday 25th October 2016 Commons Chamber

[Simon Kirby]

The hon. Gentleman makes a fair point, but we should wait until we receive the FCA report before we proceed.

[Robert Jenrick (Newark) (Con)]

Mr Speaker, you will have seen the latest Office for National Statistics survey that found that Newark is the happiest place in mainland Britain. However, what is testing the people of Newark is the appalling state of their local roads. Will the Chancellor do another favour for Newark, and in his autumn statement bring forward the new Newark northern bypass?

[Mr Philip Hammond]

As a former resident of my hon. Friend’s constituency, I am delighted to acknowledge that it is the happiest place in Britain. Certainly some of my happiest times and memories are of living there. As I said earlier, we are currently in the process of receiving submissions from hon. Members across the House, and I would be very happy to receive a written submission from my hon. Friend.

Savings (Government Contributions) Bill

Robert Jenrick Excerpts

2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons
Monday 17th October 2016 Commons Chamber

[Robert Jenrick (Newark) (Con)]

It is a pleasure to speak briefly on Second Reading and to support two schemes that are an excellent part of what should be a wider strategy to tackle a fundamental and chronic lack of saving in all age groups and all income levels in our country. I want to say a few words about the schemes themselves and then about the scale of the problem and what more the Government might like to do in the years to come to address a chronic issue that should trouble us all, particularly the Treasury.

The problem is greater than many of us like to imagine; the state of saving in this country is worse than we like to kid ourselves. I remember going to visit my grandparents when I was a child and seeing on their mantelpiece a jam jar in which they used to put sixpences to save up for things such as a holiday to Blackpool and for rainy days, should things have got worse. Back then, I think they were the only people on their street who did that and who could afford the coach to Blackpool once a year. I think that my grandmother would put half a crown in a box just below the sofa, to save up for something or other every year, such as a new chair or stool for the house.

That seems like another country and another age—something that could never happen nowadays, when we are all so much richer and have so much greater access to spending. Of course, the statistics—we have heard some of them already—show that that is not the case at all.

Those experiences come from a time before the rise of hire purchase, credit cards, overdrafts and mortgages, all of which, although they have brought with them problems and difficulties that we have to cope with, have created a safety net of sorts against the real fragility that previous generations used to feel, going back as long as anyone can remember. The historian in me thinks of medieval, Georgian and Victorian times, when people used to feel that they were living fragile lives because they could fall from what were then called respectable lives into abject poverty purely as a result of ill fate, including illness, losing a job and having an unscrupulous landlord.

We like to think that those things could not happen today, but, of course, they can, and the statistics that we have heard from both Front Benchers show that very clearly. A quarter of households have less than £1,100 in their total financial assets, and debts of more than £3,500. One in 10 of us has available savings—rainy day money in the jam jar on the mantelpiece—of less than £100. That means less than £100 if someone happens to lose their job, if their company goes bust or if they were in the private rented sector and had an unscrupulous landlord. That should make us all very worried indeed.

Even beyond the poorest in society—those who should be very concerned about short-term saving—there is a crisis in long-term saving, and it looks more and more like an impending disaster for the country. We are all—rich and poor, young and old alike—simply not saving anything like enough.

The latest Deloitte survey shows that, by 2050, the retirement savings gap—the difference between what people will save and what they need to save, if they want to have a reasonable standard of life in retirement—will be £350 billion, which is an increase of £32 billion from five years ago, despite the many measures introduced by the previous Administration and the coalition. On average, each of us has to put away an extra £10,000 every year to avoid what we could think of as a miserable old age. Even people on middle and higher earnings—including all of us in this Chamber—would probably struggle to do that, if we want to pay our mortgages, bring up our children and enjoy a reasonable standard of living in the interim years.

One reason for that, among others, is that we are living much longer. Not only will future Governments struggle to maintain current levels of state pension payment, but we are spending longer in retirement and the cost of retirement income has risen. The latest BlackRock survey calculated that for a 70-year-old male to buy £1 of retirement income via an annuity would have cost £6 in 1970, but today it would cost £12. The cost of retiring is rising dramatically. We all know this, but it is worth underlining that we need a fundamental change in our cultural attitudes towards money and saving.

[George Kerevan (East Lothian) (SNP)]

Many of us in the Scottish National party would agree with everything that the hon. Gentleman has said so far. However, the argument against the lifetime ISA is that far from encouraging extra saving, it diverts existing savings from pensions into housing and stokes up the housing market. It does not actually resolve the problem that he has described so eloquently.

[Robert Jenrick]

I am interested in the point that the hon. Gentleman makes, and I will say more about the lifetime ISA in a moment. The point of it is that many of us in our 20s and 30s—I am just about in that category—are more preoccupied with getting on the housing ladder than we are with looking out for our retirement, and that is a major worry for the Government and for future Governments. The lifetime ISA is flexible, however, because it enables people to spend money in the early years to try to get on the housing ladder, and later to convert the product into something else with a view to retirement. The hon. Gentleman raises a major problem, and we need to look at many solutions; this, I am afraid, is only one.

There needs to be a fundamental change in all our attitudes. We should not purely seek instant gratification; we, as individuals, and the Government must promote ways in which to defer gratification through saving, in contrast to our present, quite corrosive, consumer attitude.

I warmly welcome the lifetime ISA. It is an extremely popular product and there has been a lot of interest in it. I do not represent a particularly wealthy constituency— the average wage is just below the national average—but many of my constituents have said to me that they would like to take up the lifetime ISA. Clearly, offering a 25% top-up as well as the usual tax advantages of an ISA gives us all a strong incentive to save. ISAs are popular, as we know from the millions of people who have taken them up over the years. Contrary to some of the comments that we have heard today and comments in the press, ISAs are simple. We all understand them, and they are part of our saving culture.

I welcomed the news in April that the limit would be raised on the standard ISA from £15,000 to £20,000 a year. That might sound like a great deal of money to many people, but as the problem of insufficient saving affects all income levels, it is an important measure. This is an exciting development for those of us—particularly the younger generation—who will not benefit from generous final salary pension schemes. Although the scheme is not intended to take over from pensions, it creates more flexibility in the sector. Under the previous Chancellor, we saw that across a whole range of issues to do with pensions, flexibility is key.

The lifetime ISA will help younger people to save for a deposit, which is, as we all know, the primary preoccupation of every young person with more than a basic level of income. If this vehicle allows us to help any of them to get on to the housing ladder and then to convert to a product that will help them to save for the rest of their working lives, it will be very useful.

Help to Save explicitly does the same job for those on very low incomes. I appreciate that there are many people, including many in my own constituency, for whom saving seems like another country; it is extremely difficult for them to do. But the alternative is to do nothing and to accept that we live in a country where people cannot save in that jam jar, and where the Government cannot create mechanisms to incentivise them to do so and top up what they have saved. The 50% contribution rate is clearly a great incentive, which we should all appreciate and welcome.

Rather as the IFS has said, it would be helpful for the Government to do more work on understanding which groups are the most critical in terms of saving, and to develop more products that specifically target the core group that we are most worried about—the people who have only £100 or £1000 in the bank as a rainy day fund. That is a very worrying state of affairs.

What else should I raise? One area we should look at is savings interest tax. I am in favour of simple and bold tax reforms that will not complicate the already far too complicated tax code even further, but send everyone in society the extremely clear message that the Government believe we need to save more and will back that up with action. I would strongly welcome a further move to take more people out of paying savings interest tax. The announcement in April, creating a £1,000 threshold for those on the basic rate and a £500 threshold for higher rate taxpayers—was excellent, and we should look at more changes, not least because current levels of interest rates are so pitifully low that the Government are receiving very little, and rapidly declining, tax revenues from savings income. In 2013-14, the income to the Treasury was £2.8 billion, but it is estimated to be £1.1 billion this year and to continue to decline further. Those are obviously large sums, but what would create a greater incentive and give a stronger signal than to say that we will no longer charge tax on savings interest?

My last point is simply to reiterate the one made in debates in recent weeks, which is that interest rates are too low in this country. That has had a very corrosive impact on pensioners and anyone trying to save in this country, on the gap between the rich and the poor, and on the wider economy. I, like many others, was delighted to hear the Prime Minister imply in her speech in Birmingham that she would like to take action on this matter.

[Mr Gareth Thomas]

The hon. Gentleman is making a very powerful application to serve on the Public Bill Committee. Given his point about low interest rates, does he not share the concern of many outside the House—indeed, it is a concern of mine—about the fact that the qualifying period to get the Government’s bonus payment under the Help to Save scheme is two years, rather than just 12 months? Would not a shorter period be a further and more sensible incentive to get people saving more quickly?

[Robert Jenrick]

I listened to the hon. Gentleman’s intervention earlier, and I would be interested to hear the Minister’s views on that. We want to create as many incentives as possible for everybody—from the rich to the poor, from the young to the old—to save because, as I hope I have made the principal point of my remarks, this country is facing a crisis and we all need to take responsibility for it.

On interest rates, the Bank of England now needs to take action. I did not believe there was any real cause to lower interest rates earlier this summer. It misread the initial signals after the referendum and acted too soon. We have already seen that the consequences of the referendum, at least in the short term, will not be as severe as it imagined. I hope the Bank of England—of course, it is independent—does not reduce interest rates further, and that we can now move away from the policy of quantitative easing as soon as possible for many reasons, but particularly for the sake of pensioners and savers.

I want the Government to create a long-term strategy on saving that tries to change the culture in this country towards looking to the future and putting money aside. The Government need to back that in many ways, some of which will involve extremely difficult decisions. One of those decisions will, of course, be to continue to raise the state pension age to protect the triple lock, which I would like to happen as soon as possible. The two schemes we are considering today are excellent. I fully support them, and I hope that they will be the first of many from the new Administration.