Oral Answers to Questions
Debate between Seema Malhotra and Jane Ellison(7 years, 9 months ago)
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Jane Ellison
I am extremely well aware of the points my hon. Friend makes, not least, as I say, because of the role I last held in government. We look carefully at all these things, particularly the issue of white cider.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Finance Bill
Debate between Seema Malhotra and Jane Ellison(8 years, 2 months ago)
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Seema Malhotra
My hon. Friend makes an important point. The conundrum of how we fund, finance and incentivise pension savings needs to be thought about much more holistically. He highlights an example of incentives that reach not the majority, but a minority. We must keep that under review.
The Public Accounts Committee took forward the work of the National Audit Office on these issues and took evidence. Its report found that some reliefs
“costing some £100 billion a year, are designed to deliver a policy objective that could be met instead through spending programmes”,
which would be more rigorous and more auditable. The report states that
“HM Treasury and…HMRC do not keep track of those tax reliefs intended to influence behaviour. They do not adequately report to Parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money.”
Nothing has really changed since the report was published last year. That is why Labour continues to raise this issue during the passage of the Finance Bill.
We need to question the efficacy of tax reliefs such as capital gains tax relief and entrepreneurs’ qualifying business disposals, or entrepreneurs’ relief. There are clear reasons for entrepreneurs’ relief and it can be argued that it incentivises investment, but does it make a great enough difference to be worth £3 billion a year to the Exchequer? I do not claim to have all the answers, but we do need evidence to prove that it makes that difference and the Government need to be challenged to justify this and other reliefs.
In Committee of the whole House, the then Financial Secretary to the Treasury defended entrepreneurs’ relief and, as usual, did so without evidence, saying:
“of course, as with all tax reliefs, it is entirely appropriate that the Government keep it under review to ensure that it is well targeted and not open to abuse”.—[Official Report, 28 June 2016; Vol. 612, c. 245.]
I challenge the Government to say when they will do that. New clause 14 would make the Government and all of us turn those warm words into action.
Furthermore, the Finance Bill introduces a new relief, investors’ relief, which extends the low rate of capital gains tax to investors in an unlimited trading company for at least three years. In principle, I support the idea of a relief that is intended to incentivise investment and to support access to capital for businesses, particularly at an early stage in a business’s life cycle, if we can provide evidence that it will help turn those with initial ideas into the successful job creators and innovators of the future. That is extremely important in creating the economy of the future, with all the opportunities that new technology and other initiatives can bring.
However, it concerns me that this could end up being yet another tax relief that is introduced for a good reason, but then left to mushroom into a relief that is extremely expensive and difficult to remove. We need a mechanism to ensure that there is time to review whether it is achieving the desired effect, whether the costs are aligned to those that are forecast and whether it constitutes value for money. For that reason, I support the sunset clause for the relief in Labour’s amendment 176, which would ensure that after a number of years, when we have the evidence on which to base our conclusions, those questions will not go unanswered.
I call on the House and the new Treasury Ministers to take seriously our scrutiny of tax reliefs and to support the Opposition amendments, which would put in place proper mechanisms for reviewing the reliefs and ensure that they remain targeted at supporting businesses, while showing evidence of value for money.
The Financial Secretary to the Treasury (Jane Ellison)
I will start by outlining the Government amendments in the group before responding to some of the points that have been made by hon. Members in what has been a thoughtful debate. As a new Treasury Minister, I have found a number of the speeches good food for thought as I look forward to a series of meetings into the autumn.
On Government amendments 149 to 151, the Finance Bill provides an incentive for people to invest in companies by reducing the main rates of capital gains tax from 18% to 10% and 28% to 20% on most gains made by individuals, trustees and personal representatives. We announced at the Budget that the 28% and 18% rates would continue to apply for carried interest. That is justified by the fact that carried interest is a performance-related award that is hybrid in nature, with characteristics that distinguish it from most other types of capital gain, as was alluded to by some hon. Members. We recently learned that it is possible to create an investment fund structure generating carried interest that, under clause 82 as it stands, would be taxed at 20% or 10%. That would clearly be unfair and contrary to policy. The amendments therefore ensure that the continuing 28% and 18% rates apply to all forms of carried interest.
Somalia
Debate between Seema Malhotra and Jane Ellison(12 years, 9 months ago)
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Jane Ellison
When those mechanisms are established, can we make it clear that we want to engage both men and women from the community? Too often when we talk about community engagement, we do not mean men and women equally.
Seema Malhotra
The hon. Lady will probably be aware of my commitment to the engagement of women in all aspects of political and public life, and I totally concur with her comments.
On the situation of Somaliland, I simply want to add to comments made so eloquently by Members on both sides of the House. Somaliland will be represented in its own right at the conference. Will the Government continue to acknowledge the separate and successful development achieved by Somalilanders, who have turned Somaliland into a beacon of democracy in Africa? There is a fear among Somalilanders that Somaliland could be dragged into the quagmire of the south-central region. We want a secure and democratic south and the continuation of a secure and democratic Somaliland, so that Somalis can together decide their future.
Finally, will the Minister further highlight developing systems and livelihoods, which is one of the themes of the conference? I extend that request to the powerful comments made on economic development by the hon. Member for Cheltenham (Martin Horwood) and my hon. Friend the Member for Leicester South (Jonathan Ashworth). To what extent will access to education and jobs be part of the agenda at the conference? How can we help to develop an environment in which young Somali men, who might otherwise be more vulnerable and who might be drawn into terrorism, have an alternative and a new hope for themselves and their families? Creating an alternative life so that the next generation can live peacefully would surely be a tremendous legacy for the conference, and one of which we would all be proud. I am grateful to the House to have had the opportunity to make this contribution.