Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the Future Regulatory Framework Review, what assessment he has made of the potential merits of increasing the representation of consumers on the financial regulators’ stakeholder panels.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The government believes that it is vital that there are opportunities for interested stakeholders, including consumer groups and firms, to engage with and scrutinise the development of regulatory proposals.
The regulators are required under the Financial Services and Markets Act (FMSA) 2000 to maintain stakeholder panels as part of their general duties to consult. These panels are intended to provide valuable insight, advice and challenge across the regulators’ functions, drawing on the experience and expertise of their respective memberships.
The November 2021 Future Regulatory Framework (FRF) Review consultation proposed a number of measures to enhance the role of the panels and ensure that they represent a diverse range of stakeholders, and that the regulators are transparent about where they have engaged the panels, while maintaining their crucial role as a ‘critical friend’
The Financial Conduct Authority (FCA) currently engages with five independent stakeholder panels. The FCA Consumer Panel specifically represents the interests of consumers. The panel also has the ability to communicate its views to the Prudential Regulation Authority (PRA) on any matter the panel considers relevant.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the effect of the rise in VAT on businesses in the hospitality sector.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The temporary reduced rate of VAT was introduced on 15 July 2020 to support the cash flow and viability of around 150,000 businesses and protect over 2.4 million jobs in the hospitality and tourism sectors. As announced at Spring Budget 2021, the Government extended the 5 per cent temporary reduced rate of VAT for the tourism and hospitality sectors until the end of September 2021. On 1 October 2021, a new reduced rate of 12.5 per cent was introduced for these goods and services to help ease affected businesses back to the standard rate. This relief ended on the 31 March 2022.
The Government has been clear that the reduced rate of VAT for hospitality and tourism was a temporary measure designed to support sectors that have been severely affected by COVID-19. It is appropriate that as restrictions are lifted and demand for goods and services in these sectors increases, the temporary tax reliefs are first reduced, and then removed, in order to rebuild and strengthen the public finances.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what estimate his Department has made of the number of families who will see reductions in their child benefit allowance as a result of rising inflation causing wages to rise and the government freezing the higher rate tax limit.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
Child Benefit is a universal benefit payable to families as a contribution towards the costs of raising a child or children. Entitlement to Child Benefit is dependent on a person making a claim for it, and it is not means-tested.
The High Income Child Benefit Charge (HICBC) is a tax charge which applies to anyone with an income of over £50,000 who gets Child Benefit, or whose partner gets it. The charge increases gradually for those with incomes between £50,000 and £60,000, and is equal to one per cent of a family’s Child Benefit for every extra £100 of income that is over £50,000 each year. Where income exceeds £60,000, the tax charge is equal to the amount payable in Child Benefit. The HICBC threshold is not linked to the Income Tax higher rate threshold.
The Government set the HICBC thresholds at these levels to help target public expenditure in the way it considered most effective. As with all elements of tax policy, the Government keeps this under review as part of the annual Budget process.
HM Revenue and Customs publish annual updates on the numbers of families impacted by HICBC, which can be found at: https://www.gov.uk/government/publications/high-income-child-benefit-charge-data/high-income-child-benefit-charge.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what his planned timetable is for bringing forward legislative proposals on protecting access to cash.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government recognises that cash remains an important part of daily life for millions of people across the UK, and remains committed to legislating to protect access to cash.
From 1 July to 23 September last year, the Government held the Access to Cash Consultation on proposals for new laws to make sure people only need to travel a reasonable distance to pay in or take out cash. The Government’s proposals intend to support the continued use of cash in people’s daily lives and help to enable local businesses to continue accepting cash by ensuring they can access deposit facilities.
The Government received responses to the consultation from a broad range of respondents, including individuals, businesses, and charities. The Government has carefully considered responses to the consultation and will set out next steps in due course.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what modelling his Department has undertaken on the impact of the rise in National Insurance Contributions and the removal of remaining covid-19 Government support schemes on businesses in the hospitality sector.
Answered by Helen Whately - Minister of State (Department of Health and Social Care)
Throughout the pandemic, the Government has worked closely with leaders in the hospitality sector and others to monitor the financial health of the most impacted sectors. This analysis has influenced decisions to provide a comprehensive £400 billion package of support, which provided a lifeline for many restaurants, pubs, and bars. The Government continues to evaluate the impact of these policies and engage with the sector.
Due to Government action and the resilience of business leaders across the industry, there are positive signs that the sector is recovering. Employment in the sector has reached pre-pandemic levels and vacancies are at record levels, which demonstrates that hospitality is back to usual form and creating jobs again.
On 21 February, the Prime Minister announced the government’s plans to live with the virus, paving the way for customers to return to offices and hospitality venues with confidence. As we move into the next phase, Government remains committed to supporting the sector to return to growth, including with a new temporary business rates relief for the retail, hospitality and leisure sectors worth almost £1.7 billion in 2022-23
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what the total cost of the Business Rates relief introduced in March 2020 has been to the Treasury.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
According to the national non-domestic rates data collected by local authorities, the cost of the retail, hospitality, and leisure relief was £11.1 billion in 2020-21, and is expected to be £5.8 billion in 2021-22. This data is published by the Department for Levelling Up, Housing and Communities and can be found here: https://www.gov.uk/government/collections/national-non-domestic-rates-collected-by-councils
This support means that eligible properties paid no business rates for 15 months from 1 April 2020. Additionally, due to the 66 per cent capped relief which took effect on 1 July 2021, over 90 per cent of eligible businesses will see a 75 per cent reduction in their business rates bill across this entire financial year to next April.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the impact on business survival rates of the concurrent ending of the reduced rate of VAT, business rates support and rent protections.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Government has provided around £400 billion of direct support for the economy since the start of the pandemic, which has helped to safeguard jobs, businesses, and public services in every region and nation of the UK. This includes the £1 billion Omicron package announced in December 2021, which was focused on supporting the hospitality, leisure, and cultural sectors.
Now that we have returned to Plan A, and as individuals and businesses learn to live with Covid-19, it is right that this exceptional support comes to an end as planned. This is vital for a strong economy and to help rebuild the public finances. However, support is being withdrawn gradually, so that businesses can plan and adjust over time. For example, the rate of VAT for hospitality and tourism businesses was increased gradually to its current level of 12.5 per cent in October 2021 before reverting to its pre-pandemic level of 20 per cent as planned in March 2022.
The Government is aware that the high street faces long-term challenges and is committed to supporting the businesses that make our high streets and town centres successful. While the Government has provided unprecedented business rates support worth £16 billion to businesses in the retail, hospitality, and leisure sectors throughout the pandemic, it is right that we move back towards pre-pandemic levels of support now that restrictions have ended.
At Autumn Budget 2021, the Government announced a new temporary business rates relief set at 50 per cent up to a maximum of £110,000 per business for the retail, hospitality, and leisure sectors worth almost £1.7 billion in 2022-23. This will support the businesses that make our high streets and town centres successful to evolve and adapt to changing consumer demands until the next revaluation.
The multiplier will be frozen in 2022-23, a tax cut worth £4.6 billion over the next 5 years. This will support all ratepayers, large and small, meaning bills are 3 per cent lower than without the freeze.
On the topic of rent protections, following mandated closures during the Covid-19 pandemic, the Government introduced an eviction moratorium and related protection measures to protect businesses from eviction and insolvency. As a result, some businesses have accrued rental debts, estimated at a total of £1.5 billion as of March 2022, creating the risk of insolvencies and job losses, should these debts not be resolved through sustainable repayment plans. Many landlords and tenants have come to voluntary agreements on this rental debt. Where these agreements have not been reached, the Government is passing legislation this Spring to support the orderly resolution of these debts, including a set of principles for negotiation and a binding-arbitration backstop. This builds on a Code of Practice for commercial property relationships published by Government in November 2021, and sets out a clear path for both landlords and tenants to move from dispute to resolution.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the impact on businesses of the concurrent ending of the reduced rate of VAT, business rates support and rent protections.
Answered by Lucy Frazer - Secretary of State for Culture, Media and Sport
The Government has provided around £400 billion of direct support for the economy since the start of the pandemic, which has helped to safeguard jobs, businesses, and public services in every region and nation of the UK. This includes the £1 billion Omicron package announced in December 2021, which was focused on supporting the hospitality, leisure, and cultural sectors.
Now that we have returned to Plan A, and as individuals and businesses learn to live with Covid-19, it is right that this exceptional support comes to an end as planned. This is vital for a strong economy and to help rebuild the public finances. However, support is being withdrawn gradually, so that businesses can plan and adjust over time. For example, the rate of VAT for hospitality and tourism businesses was increased gradually to its current level of 12.5 per cent in October 2021 before reverting to its pre-pandemic level of 20 per cent as planned in March 2022.
The Government is aware that the high street faces long-term challenges and is committed to supporting the businesses that make our high streets and town centres successful. While the Government has provided unprecedented business rates support worth £16 billion to businesses in the retail, hospitality, and leisure sectors throughout the pandemic, it is right that we move back towards pre-pandemic levels of support now that restrictions have ended.
At Autumn Budget 2021, the Government announced a new temporary business rates relief set at 50 per cent up to a maximum of £110,000 per business for the retail, hospitality, and leisure sectors worth almost £1.7 billion in 2022-23. This will support the businesses that make our high streets and town centres successful to evolve and adapt to changing consumer demands until the next revaluation.
The multiplier will be frozen in 2022-23, a tax cut worth £4.6 billion over the next 5 years. This will support all ratepayers, large and small, meaning bills are 3 per cent lower than without the freeze.
On the topic of rent protections, following mandated closures during the Covid-19 pandemic, the Government introduced an eviction moratorium and related protection measures to protect businesses from eviction and insolvency. As a result, some businesses have accrued rental debts, estimated at a total of £1.5 billion as of March 2022, creating the risk of insolvencies and job losses, should these debts not be resolved through sustainable repayment plans. Many landlords and tenants have come to voluntary agreements on this rental debt. Where these agreements have not been reached, the Government is passing legislation this Spring to support the orderly resolution of these debts, including a set of principles for negotiation and a binding-arbitration backstop. This builds on a Code of Practice for commercial property relationships published by Government in November 2021, and sets out a clear path for both landlords and tenants to move from dispute to resolution.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment he has made of the potential effect of the increase in national insurance contributions in 2022 on inflation.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
In its October Economic and Fiscal Outlook (EFO), the independent Office for Budget Responsibility (OBR) set out its assessment of the economic impact of government policies announced at the Budget and Spending Review. This includes the increase in National Insurance contributions, which the OBR notes has a small impact on inflation and results in prices being 0.1 per cent higher from 2023-24 onwards.
Asked by: Seema Malhotra (Labour (Co-op) - Feltham and Heston)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent assessment his Department has made of the potential effect of rising levels of inflation on small businesses.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
Inflation has recently increased in many global economies, including the UK, pushed up by higher energy prices and global supply and demand imbalances.
We continue to monitor businesses’ ability to absorb rising costs and raise prices, which is easier at times of high demand (as is the case now).
Where cost pressures become more difficult to absorb for small businesses, there continues to be Covid-related business support available, such as guaranteed lending, tax reductions and grants.