Local Government Finance Act 1988 (Non-Domestic Rating Multipliers) (England) Order 2022
Victoria Atkins Excerpts(1 year, 11 months ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
I beg to move,
That the Committee has considered the Local Government Finance Act 1988 (Non-Domestic Rating Multipliers) (England) Order 2022.
It is a pleasure to serve under your chairmanship, Sir Robert.
This legislation will deliver a tax cut of £9.3 billion over the next five years for businesses. We are protecting businesses, small and large, from inflation by freezing the business rates multiplier for the upcoming year. That means that all businesses will pay 6% less than they would have done had the Government not intervened. We have a duty to our businesses as a Government to ensure a fair and responsive business rates system, while of course raising sufficient revenue to support this country’s vital public services. We have sought to strike that balance each year, and this year will be no different.
From April this year, rateable values will be updated for all non-domestic properties using evidence from April 2021. That means that initial bills will reflect changes in market conditions since 2015. That in turn will ensure a fairer distribution of the tax burden between online and physical retail, something I know that colleagues are particularly concerned about. Large distribution warehouses will see an increase in bills and retail, hospitality and leisure businesses will see decreases. At the same time, we recognise that business rate payers may feel uncertain about the upcoming revaluation, given other pressures driven by the global challenges that the country is facing, including of course rising prices around the world and their impact on our businesses.
At the autumn statement, we announced the steps that we will take next year to provide support through these difficult times, with a package worth £13.6 billion over the next five years.
Mark Garnier (Wyre Forest) (Con)
My hon. Friend has announced very welcome proposals. One of the big arguments about the economy at the moment is that giveways will be inflationary, so creating more liquidity in the economy could create an inflationary pressure. Is my hon. Friend convinced that the money she has announced, rather than going into the wider economy, will be used to invest in businesses to make them more productive?
Victoria Atkins
We are, and what is more, because of how we have increased the multiplier and also the package we announced at the autumn statement, we have been focusing our efforts on those small businesses and the retail, hospitality and leisure industries, because we know that they are finding it very difficult at the moment. That also means that larger distribution warehouses will see an increase in bills, which is a fair response to the massive increase that we have seen in online trading in recent years.
I will not go into detail on the range of measures we intend, but, as I said, we have measures to help the retail, leisure and hospitality sector, which will extend and increase their relief scheme up to a cash cap of £110,000 per business. That means that the typical pub, for example, will see a fall in their rateable value, receiving more than £10,000-worth of support from the business rates package. We have also announced transitional relief in response to many trade representatives, which will help businesses with a fall in their bills next year. And we are providing more than £500 million of support over the next three years through a new “supporting small business” scheme.
The order marks an important step in the Government’s efforts to support businesses, particularly those on our high streets and our retail, hospitality and leisure sector as well. It is an important step in the package of help to ensure that we are supporting those businesses over the next five years with the £9.3 billion tax cut.
Victoria Atkins
I thank the hon. Member for Ealing North for his efforts in describing the origins of the SI. It is always very interesting, because when I take a SI, I take the view that of course hon. Members will have read and considered carefully the document. I like to try to bring those SIs to life, but the hon. Gentleman can always be relied upon to go through the minutiae of a SI. We are extremely grateful to him for that.
I must pick the hon. Gentleman up on a point that he also mentioned in a Westminster Hall debate, namely that we have somehow reneged on a promise about a review. We have reviewed, and we have been able to make the package under consideration today precisely because we worked with businesses and the Valuation Office Agency—an independent, arm’s length body though it is—to make sure that when we drew up that package, we were responding to the needs of the retail, hospitality and leisure sector. We were drawn to help the needs of that sector in particular, even though he knows that at the autumn statement we had very, very difficult circumstances with which we had to deal. I for one am very, very pleased that in what was a very difficult period for the economy—and it remains so—we were able to find the headroom to bring about the £9.3 billion tax cut for local businesses up and down our high streets.
I know from my own constituency the help that businesses rely on, particularly those on the high streets in some of my more rural market towns. Very often the properties there get small business rate relief and that can mean the difference between their being able to stay in business and sadly being unable to do so.
In relation to the hon. Gentleman’s specific question, I am assured that no increase is involved and that it is an aggregate RV change and there is an adjustment in the appeals package.
James Murray
The Minister may have misunderstood my question. I was asking her to clarify how the formula works. I think I understand it, having read the minutiae on which she commented that I pay great attention to, but I just wanted to check that my understanding is correct, because variable B obviously increases in comparison to last year, although business rates are frozen. Could she just explain how that formula works, just so I have clarity that I have understood it correctly?
Victoria Atkins
As I said, we are freezing the multiplier. The Valuation Office Agency conducts the valuations of properties independently, as he will know. We have gone to great trouble since the pandemic to support the VOA in its assessment of properties. In relation to the formula, it is precisely because we are freezing the multiplier that we have the SI.
It is very good of the Opposition to support the SI, and I am confident—
James Murray
I understand the Minister’s point about the freezing of business rates, which is the commitment made by the Chancellor in the autumn statement. My question is about variable B increasing as a result of the order. How does the formula work to maintain a freeze in business rates in that context?
Victoria Atkins
Again, I am very happy to help the hon. Gentleman. The formula reduces the multiplier to affect the increase in rateable value at the revaluation, and then adjusts by about 4% to account for appeals before protecting from inflation. I hope that that level of detail is reassuring to the hon. Gentleman, and that he understands that the full might of the Treasury has worked this out, with the help of the Valuation Office Agency.
Question put and agreed to.
Stamp Duty Land Tax (Reduction) Bill
Victoria Atkins ExcerptsTuesday 10th January 2023
(1 year, 11 months ago)
Commons ChamberRead Full debate Stamp Duty Land Tax (Temporary Relief) Act 2023 View all Stamp Duty Land Tax (Temporary Relief) Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 10 January 2023 - (10 Jan 2023)
The Financial Secretary to the Treasury (Victoria Atkins)
I beg to move amendment 1, page 1, line 2, leave out subsection (1) and insert—
“(1) This section makes modifications of Part 4 of the Finance Act 2003 in relation to any land transaction the effective date of which falls in the period (“the temporary relief period”)—
(a) beginning with 23 September 2022, and
(b) ending with 31 March 2025.”
This amendment provides that the relief from Stamp Duty Land Tax provided for by the Bill is only to apply until 31 March 2025.
The Second Deputy Chairman of Ways and Means (Sir Roger Gale)
With this it will be convenient to discuss the following:
Amendment (a) to amendment 1, after “transaction” insert
“(except in relation to additional dwellings)”.
This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment 15 to leave out subsection (3)).
Amendment (b) to amendment 1, leave out “31 March 2025” and insert “31 March 2028”.
This amendment is intended to extend the temporary relief from Stamp Duty Land Tax so that it expires at or around the time as the frozen thresholds for Income Tax, Inheritance Tax and National Insurance are due to expire.
Government amendments 2 and 3.
Amendment 15, page 1, line 13, leave out subsection (3).
This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment (a) to Gov 1).
Government amendments 4 to 12.
Clause stand part.
Government amendment 13.
Clause 2 stand part.
New clause 1—Comparison of temporary and permanent relief—
“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of the change in Government policy on stamp duty land from—
(a) the Plan for Growth published on 23 September 2022, to
(b) the Autumn Statement published on 17 November 2022.
(2) This review must include—
(a) an assessment of the costs of implementing the change in policy referred to in subsection (1) for the Government, the property industry, and homebuyers;
(b) an assessment of any wider costs and impacts of the change in policy referred to in subsection (1) on the housing market; and
(c) what measures the Government is planning to ease the impact on tax revenues, home purchases and the housing market of the reduction in stamp duty land tax coming to an abrupt end on 31 March 2025.”
This new clause would require the Government to publish a review of the change in Government policy to make the relief in this Bill temporary instead of permanent.
New clause 2—Review: first-home buyers—
“The Chancellor of the Exchequer must conduct a twice-yearly review of the impact of this Act on the number of people buying their first home and must publish a report of this review at six-month intervals.”
This new clause is to ensure that a regular report is made on the impact of the proposed Act on the number of people buying their first home.
New clause 3—Review: second homes in National Parks and Areas of Natural Beauty—
“The Chancellor of the Exchequer must publish an annual report on the impact of this Act on the number of second homes in National Parks and Areas of Natural Beauty.”
This new clause would require that an annual report is published on the impact of the Bill on the number of second or subsequent homes in National Parks and Areas of Natural Beauty.
New clause 4—Review: house prices in rural areas—
“The Chancellor of the Exchequer must publish an annual review of the impact of this Act on house prices in rural areas.”
This new clause would require that an annual review is published on the impact of the Bill on house prices in rural areas.
New clause 6—Review: availability of affordable housing and the private rented sector—
“The Chancellor of the Exchequer must conduct an assessment into, and publish a report on, the impact of this Act on the housing market, including (1) the impact on the availability of affordable housing and (2) the private rented sector.”
This new clause would require the Chancellor of the Exchequer to conduct an assessment into the impact of the Bill on the housing market, including the availability of affordable housing and the private rented sector.
New clause 7—Report on effect of temporary relief—
“(1) The Chancellor of the Exchequer must, three months before expiry of the temporary relief period, publish an assessment of the impacts of the temporary relief provided by this Act.
(2) This assessment must include an assessment of the impacts on—
(a) the volume and value of housing transactions on the housing market,
(b) any wider costs for the Government, property industry, housing market and/or homebuyers, and
(c) tax revenues.
(3) The assessment must make a recommendation as to whether the temporary relief period should expire or whether the House of Commons should consult on extending it or making it permanent.”
This new clause would require the Government to publish an assessment of the impacts of the temporary tax relief and a recommendation before the temporary relief period comes to an end.
Government amendment 14.
Victoria Atkins
It is a pleasure to serve under your chairmanship, Sir Roger.
At the autumn statement, my right hon. Friend the Chancellor set out set out how the Government are dealing with the global economic challenges that we face. The consequences of Putin’s illegal invasion of Ukraine and the covid-19 pandemic mean that we must be fiscally responsible while supporting the economy and encouraging our businesses to grow and our constituents to thrive. We need a balanced approach to support our objectives, which includes helping people get on to and move up the housing ladder—and indeed to downsize.
Victoria Atkins
It is very soon, but because it is my right hon. Friend, I will certainly give way.
Sir Desmond Swayne
My hon. Friend is most generous and kind. Those of us who voted with enthusiasm for the Bill’s Second Reading on the grounds that there was to be a permanent change for the benefit of those people wanting to get on to the housing ladder are somewhat discomfited by the fact that Government amendment 1 will make it merely a temporary measure to assist those who want to do so. We want them to be permanently assisted. Can she reassure me?
Victoria Atkins
I very much understand why my right hon. Friend raises that point. I know he took a great interest in the autumn statement and listened carefully to the submissions and oration of the Chancellor of the Exchequer, my right hon. Friend the Member for South West Surrey (Jeremy Hunt). We had to take some difficult decisions in the course of the autumn statement to ensure that our approach to the economy is fiscally responsible. This is one way in which we hope to stimulate the housing market in the next two years in the difficult economic circumstances we find, but thereafter we are confident that the economy will improve and we will be able to return to the status quo as it was before 23 September. However, the broader picture about reducing the taxation burden on our constituents still stands. Indeed, I hope my right hon. Friend listened with great interest to the Prime Minister’s speech last week in which he made it clear that that is our ultimate goal.
Sir Christopher Chope (Christchurch) (Con)
On 17 October, the new Chancellor of the Exchequer told this House that this particular element of the mini-Budget relating to stamp duty land tax would be retained. It was on that basis that the Bill was introduced in the House. It was only a month later that we had the autumn statement when the Chancellor of the Exchequer went back on what had been said earlier.
Victoria Atkins
Again, my hon. Friend puts his finger on the point as to the very, very fast-moving economic conditions we have faced in the last few months. He will recall the autumn statement and the great detail the Chancellor went into in terms of ensuring that our approach is fiscally responsible. We had to acknowledge and react to the conditions as we found them then. We are confident that the sunset clause in the Bill will enable us to support our constituents. Indeed, it is happening at this very moment in time, because, of course, we brought in the measures as soon as possible immediately after the original announcement. They are helping, for example, first-time buyers get on to the housing ladder.
Barry Gardiner
I am very grateful to the Minister. I listened carefully to what she was saying about global economic circumstances, in particular Russia’s invasion of Ukraine and the effect that that has had on people in this country through their energy bills. She will know that the Government set a target for a 78% reduction in greenhouse gas emissions by 2035. To achieve that, will she consider looking at whether stamp duty might be raised up or put down in accordance with the energy performance certificate ratings of properties, perhaps providing a way for households to benefit financially but ensure that they meet the Government’s target?
Victoria Atkins
That is an interesting suggestion. At first blush, my mind goes immediately to the complexity of such a scheme, particularly given our proudly antique housing stock—certainly in my constituency, with beautiful farmhouses and market town high streets that are many, many hundreds of years old. I therefore think it unlikely—I will be honest with the hon. Gentleman—but he is always welcome to write to me. I will make this point: the Government’s very real progress over the last decade, on drastically cutting our carbon emissions, with the help of industry, homeowners and members of the public, should be acknowledged. Dare I say it, if it is not unparalleled across the world, we are certainly in the top few. What is more, we have tried, through measures such as VAT zero rating on energy-saving materials, to encourage homeowners and others to plug gaps and make their homes more energy efficient. So, I do not think stamp duty is the way to help, but certainly the Government have already put in place measures to try to help us meet our very, very ambitious climate targets.
The last few years have, frankly, been tough on us all and we want to help people take that next step in their lives to buy a new home. The Bill cuts stamp duty land tax for first-time buyers and other homeowners to reduce the upfront cost of moving home. It is because we want to help people as quickly as possible that the rates are already in force, helping our constituents.
The provisions in the Bill apply only to purchases of residential property in England and Northern Ireland, as land transaction taxes have been devolved to Scotland and Wales.
Victoria Atkins
This is precisely why the Government are so committed to levelling up. Although I know how beautiful my hon. Friend’s constituency is, having had the pleasure of visiting it, in my beautiful corner of England, we do not, sadly, have the transport links that other constituencies have. It is precisely this drive for levelling up, which I know Conservative Members are united on, which may help with some of the issues he sets out so eloquently.
Sir Christopher Chope
I am grateful to the Minister for that intervention. It comes down to how we define, “levelling up”. The point I am trying to make is that, if somebody is buying an average house in Christchurch, or in her constituency of Louth and Horncastle, it should not make any difference in terms of taxation whether the house is going to cost £405,000 or £200,000. Why should the person buying a house in Christchurch who wants to become a teacher or an NHS employee in the area not only have the burden of having the higher house price—she has referred to some of those issues—but have to pay £10,000 in SDLT for the privilege of moving into the Christchurch constituency to purchase an average-priced house? I do not see any justice in that at all. In levelling up, we should be putting those two categories of person on the same level when it comes to their liability for paying transaction taxes.
My hon. Friend the Member for South Thanet made the suggestion, which I have also made, that we should scrap SDLT. If we want to have a transaction tax, we should introduce one based on, for example, the size of a property, because that would be neutral; it would really be levelling up across the country. Obviously, it would be more popular with some people than with others, but it would certainly be very popular with my constituents and it would meet the criterion of levelling up.
Selaine Saxby (North Devon) (Con)
When this Bill was previously before the House, on 24 October last year—indeed, on the day we last changed Prime Minister, so it was under a different Treasury Minister—I asked the Treasury to analyse the potential harms caused by excessive second home ownership and holiday lets. I thank the Minister for her ongoing engagement on this issue, as well as the rest of the Treasury team. I have spoken to them on numerous occasions about the many complex taxation issues causing an imbalance in our housing market in constituencies such as mine, which I hope we can take steps to address in the coming months.
We know that when stamp duty was last reduced post pandemic, it generated a surge in short-term holiday lets and second home purchases. Indeed, 25% of purchases in my North Devon constituency during that period attracted the higher rate of stamp duty as an additional dwelling. However, we have no information on what proportion might have been long-term buy-to-let landlords. Alongside the many challenges in our North Devon housing market, we have seen a 67% decline in private rentals, with a surge in section 21s enabling landlords to take advantage of the tax inequalities between long and short-term rentals.
We desperately need to find a way to encourage buy-to-let landlords. The complexity of paying the 3% levy for an additional dwelling is, in many ways, a distraction from a Bill designed to help first-time buyers in particular on to the housing ladder. The removal of stamp duty saves thousands for anyone buying their first home—up to £425,000 at this time. When the numbers are fully analysed, in this legislation the maximum benefit to somebody buying an additional dwelling is just £2,500. We need to be just a bit realistic about whether that will be a large enough sum to motivate a change in behaviour in people who are buying additional properties—their second, third or fourth home.
For more than two years now, I have stood up in this House and asked for steps to be taken to tackle the housing crisis in North Devon. The Levelling-up and Regeneration Bill has now been amended to reflect the concerns of constituencies such as mine. Indeed, it is good to see Conservative-run councils in Devon and Cornwall taking steps to adopt measures in that Bill to double council tax on second homeowners. It is disappointing that Lib Dem-run North Devon Council has not taken such steps, but I remain optimistic that it will.
I very much hope that the paper I have submitted to the Treasury on behalf of Conservative colleagues—it includes many suggested changes to the tax system to tackle the imbalances between long and short-term rentals, and to continue making it easier for local families to buy and rent in places where they grew up or where there are huge numbers of job vacancies for them—will pave the way to looking more closely into the matter. I hope that the Treasury team’s door will remain open to MPs to meet and tackle this issue.
Victoria Atkins
May I place on the record my personal appreciation of the intensive work that my hon. Friend has put into this issue on behalf of her constituents and the wider south-west? Many south-western MPs are concerned about this issue, including—dare I say it—hon. Members from the Whips Office, who cannot stand up and speak. I am extremely alive to the issues that she raises. I wonder whether she would do me the favour of coming to see me at the Treasury over the coming months so that we can discuss further the issues in her constituency and the interesting ideas she has put forward.
Selaine Saxby
Nothing would give me more pleasure than to go back and speak with the Minister about these matters. We all worry about why the NHS is struggling to recruit. I can quite definitively tell people here today that the public sector struggles to recruit in North Devon because of the housing crisis.
We on the Conservative Benches are keen to tackle this issue. Yesterday’s cross-party drop-in session was hugely helpful. We heard from the officials behind the legislation, as well as from the Minister. It is just a shame that Opposition Members did not turn up—not one of them. They have tabled a number of amendments to the Bill, but do we really need to put reviews into legislation? One cannot help but wonder whether such amendments are politically motivated rather than aimed at delivering real change to constituencies that urgently need their housing markets to be rebalanced.
Victoria Atkins
It is a pleasure to rise after the stirring final sentence of my hon. Friend the Member for South Cambridgeshire (Anthony Browne). I thank Members around the Chamber for a really interesting and constructive discussion that has sometimes veered, dare I say it, into almost a philosophical debate about the very existence of stamp duty, markets, supply and demand and principles of economics. It has been a fascinating debate, and I thank all Members, particularly my hon. Friends the Members for Christchurch (Sir Christopher Chope), for South Thanet (Craig Mackinlay) and for South Cambridgeshire, for putting forward their long-considered thinking on this particular tax. In the interests of frankness, I have to manage expectations and say at the Dispatch Box that we have no plans to abolish stamp duty land tax, precisely because it raises billions of pounds a year, but I suspect that will not stop my hon. Friends.
My hon. Friend the Member for Christchurch asked a specific question about a flat rate of 1%. I had hoped to be able to answer it in this debate, but I am not able to, so I undertake to write to him. He and others across the Committee raised the very important issue of housing supply. This affects affordability in all our constituencies, including areas that have popular tourist destinations such as the constituencies of the hon. Member for Westmorland and Lonsdale (Tim Farron) and my hon. Friend the Member for Christchurch, and also city centres. That is why, as part of our work over the last 12 years, since spring 2010 more than 800 households have been helped to purchase a home through Government-backed schemes including Help to Buy and the right to buy. We operate a range of relevant schemes that make home ownership more affordable, including the lifetime ISA, and those are important precisely for the reason that has been argued so cogently by Members: the housing market has at times raced ahead of local incomes and affordability.
Colleagues across the House raised the issue of building new properties, which has been a subject of debate when considering other pieces of legislation before the House. I hope Members will be pleased to hear that in 2019-20, almost 243,000 additional dwellings were delivered—that is a net figure—which was the highest in nearly 30 years, and the Government are on track to meet their commitment to deliver 1 million additional homes across this Parliament. Colleagues also raised the very important issue of the supply of new affordable housing, which is a priority for the Government. In the spending review of 2021, we confirmed £11.5 billion of funding for the affordable homes programme from 2021-22, which is the largest cash investment in affordable housing for a decade, providing up to 180,000 new homes across England.
My hon. Friend the Member for South Thanet brought his expertise as a chartered accountant into the Chamber; he is on another matter of House business and apologises for not being able to be here now. He raised the issue of retirement downsizing. The point I will make—and I hope to repeat it to him in person—is that the measures set out in the Bill will also help those who are looking to downsize. If someone is moving from a property in, say, the second tranche of tax down to one that is zero-rated, they of course will be able to benefit from that. It will reduce the stamp duty charge for movers by up to £2,500.
My hon. Friend the Member for South Cambridgeshire came up with a great many ideas, which I know he will continue to raise with me through his chairmanship of the Conservative Back-Bench Treasury committee. I take his point about other taxes being involved in the average purchase of a home, such as, we hope, when people are able to buy furniture and make the changes we all want to make when we purchase our next home. I hope that measures such as the energy-saving materials VAT exemption will help in some of those instances. However, I appreciate his point about the lever that stamp duty can apply.
Before I move on to the Opposition amendment, I want to reiterate that the Bill as it stands will mean that 43% of transactions—our constituents buying their homes—will not involve stamp duty. It will also mean that 98% of first-time buyers in several regions will pay no stamp duty. Again, I hope that addresses some of the issues raised.
The hon. Member for Erith and Thamesmead (Abena Oppong-Asare) urges us to support Opposition amendment (a). To put it into context, there were about 1,025,000 residential transactions in the year 2020-21, of which around 237,000 related to additional property transactions, which includes not just second homes but buy-to-let properties. I will come in a moment to the significance of the rental market in this debate. As my hon. Friend the Member for North Devon (Selaine Saxby) set out so starkly, there are real issues in the housing and rental markets in particular parts of the country, and we want a national tax to help across England and Northern Ireland.
The Opposition amendment would remove purchases of additional property from the scope of the Bill and the temporary cut to stamp duty land tax, which we argue would have an impact on rental supply and, in turn, tenants. Through the 3% surcharge in the Bill, we are ensuring that those who purchase additional homes—in other words, both landlords and those purchasing second homes—will still pay stamp duty. Those buyers are not exempt from stamp duty; they will all continue to pay stamp duty, because the 3% surcharge will continue to apply to all of them. As I described, a sliver of properties within the £125,000 to £250,000 price range are affected. Even with that sliver, the maximum saving possible for those purchasing additional properties is £2,500.
I want to put this amendment into the context of the private rental sector. The 4.4 million households in the rental sector remain a vital part of the housing market. Renting is the long-term housing reality for many. While we would very much like renting to be a stepping stone to people buying their own homes, we have to understand that, in certain parts of the country, the markets are so hot that for many people, including those people we would love to encourage to be first-time buyers, renting their home is the reality. We must therefore ensure that the measures we take do not imperil or endanger that market, particularly when households are struggling with the cost of living. Further constraints on rental supply will mean higher costs for tenants. My hon. Friend the Member for North Devon set out the significant impact on and decline in the long-term rental market in her constituency. We understand from Zoopla data that rental prices in the country increased in August by nearly 12% year on year. We argue that accepting this amendment would make that situation worse.
We understand the impact of second homes on some of our most popular tourist destinations, such as the south-west. In fact, we are taking practical measures to address that.
Through the Levelling-up and Regeneration Bill, we are setting a new council tax premium on second homes of up to 100% and strengthening the existing premium on empty homes of up to 300%. That means that someone with a second home could face an additional council tax bill of nearly £4,000.
Tim Farron
To follow up on that, is it not right to say that people who have second homes pay additional council tax only if those homes are empty and unfurnished, so a very small percentage of those who have second homes will be affected? Does the Minister understand the evidence that the 2020 stamp duty cut fuelled a second home boom? On that basis, why has she done nothing to listen to rural communities such as mine about that and to mitigate it in some way by accepting my amendment or that of the Opposition?
Victoria Atkins
If I have understood the hon. Gentleman correctly, he has misunderstood the measures in the Bill, which introduces a premium on second homes of up to 100% and a strengthening of the existing premium on empty homes. I appreciate his point about empty homes, if people are moving or returning to their second homes, but that is not the scenario everywhere—indeed, in my constituency, I can think of examples where that is not the case. We are trying to use practical measures so that local communities can decide how to deal with it through council tax.
I was talking about complexity. We want to ensure that the system is as simple as possible for taxpayers, which is why we have the consistency of rate bands between the standard rate and the rate for additional dwellings.
Amendment (b), which was tabled by my hon. Friend the Member for Christchurch, seeks to extend the period from 31 March 2025 to 31 March 2028. It is important that the Government maintain a commitment to fiscal responsibility and that requires difficult decisions, as I have set out. The Chancellor was clear about that in the autumn statement, and I hope that the ministerial team have been clear about that when we have spoken at the Dispatch Box. The Government will continue to take difficult decisions to get the public finances on a sound footing and to get debt falling in the medium term.
We therefore announced that the stamp duty cut will end in March 2025 as part of that commitment. It will remain in place until then to support the property market through what we all acknowledge are difficult times. We believe that we have struck the right balance between ensuring support for the jobs and businesses associated with the housing market and the Exchequer cost.
The remaining amendments tabled by hon. Members on both sides of the Committee refer to reports and reviews, if I may summarise them in that way. As my hon. Friend the Member for South Cambridgeshire reiterated, it is a fundamental principle that we are loth to include reporting and reviewing requirements in primary legislation. In any event, we do not believe it to be necessary, because the Government already publish a wealth of data on those matters. For example, HMRC publishes data on property transactions and stamp duty land tax receipts, including data on the use of first-time buyers’ relief. To help hon. Members to understand what that means for our constituents who are first-time buyers, the Bill will mean that they can access up to £8,750 in relief. It is a great shame that Opposition Members propose to vote against that relief.
The Department for Levelling Up, Housing and Communities also publishes the English housing survey. Data on property prices, including at a local level, is published through the Land Registry. The Government published a summary of the measure’s impacts, including on the Exchequer, in November’s autumn statement. I hope that hon. Members who have asked for that data and those reviews will look at that wealth of information and draw their own conclusions.
I thank hon. Members for this debate, which I very much welcome, but I commend the Bill to the Committee. I particularly commend the Government amendments to enable first-time buyers in our constituencies to get on to the housing ladder, and to help other constituents move up the housing ladder and continue to thrive in our country in the next couple of years.
The First Deputy Chairman of Ways and Means (Mr Nigel Evans)
Before I put the Question, I should just say that I am anticipating three votes: two in Committee and one on Third Reading. The first vote will last for 10 minutes and the two subsequent ones will last for eight minutes each, so if I were you I really would not go anywhere after voting in the first Division.
Amendment proposed to amendment 1: (a), after “transaction” insert
“(except in relation to additional dwellings)”.—(Abena Oppong-Asare.)
This amendment is intended to remove the relief from stamp duty land tax for second homes (see Amendment 15 to leave out subsection (3)).
Question put, That the amendment be made.
Oral Answers to Questions
Victoria Atkins Excerpts(1 year, 11 months ago)
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Mr Virendra Sharma (Ealing, Southall) (Lab)
The Financial Secretary to the Treasury (Victoria Atkins)
Merry Christmas to you, Mr Speaker, to all the House staff, to the Members in the Chamber, and to our parliamentary staff, who do such a good job for us all year round—[Interruption.] And to the Doorkeepers—thank you very much.
It is right that everyone contributes to sustainable public finances in a fair way. The autumn statement tax reforms mean that those with the broadest shoulders contribute the most. We are also implementing the OECD pillar two reforms so that multinational corporations pay their fair share of tax, and we are introducing measures to address tax avoidance and evasion to ensure that people pay the right amount at the right time.
Mr Sharma
Does the Minister think it is fair that landlords and those on high incomes earned through trading stocks and shares pay less tax than those paid a salary?
Victoria Atkins
I do hope that the hon. Gentleman noted the announcements by my right hon. Friend the Chancellor in the autumn statement in relation to dividends and corporation tax allowances. We want to ensure, where we can, that unearned income is roughly comparable to earned income. That is precisely why the principle running through the autumn statement was that those with the broadest shoulders should bear the greatest burden.
Alan Mak (Havant) (Con)
I welcome the Edinburgh reforms, which help to make our financial services sector more competitive. I urge my hon. Friend to adopt the same approach to R&D tax reliefs and capital allowances, so that our world-class entrepreneurs, start-ups and small and medium-sized enterprises can benefit from the same advantages.
Victoria Atkins
We all have campaigns to which we devote a great deal of time and for which we build a reputation. My hon. Friend has had a reputation for campaigning on and highlighting the fourth industrial revolution since he was elected in 2015, so I am not surprised that he asked that question. I am delighted to say that we very much support innovation and the critical work of our entrepreneurs, start-ups and SMEs, which is why we are setting the annual investment allowance permanently at £1 million from 1 April, and reviewing the research and development tax reliefs to ensure that, while we are rebalancing the rates of relief out of fairness to the taxpayer, we are also targeting that relief at the knowledge-intensive and innovation-intensive businesses that we all care so much about.
Andrew Gwynne (Denton and Reddish) (Lab)
For a bit of Christmas cheer, I agree with the Minister for once as she says that she wants those with the broadest shoulders to pay the most in the tax system. Why, then, did the Chancellor pick the pockets of hard-working people in the autumn statement through stealth taxes, such as freezing tax allowances, rather than tackling non-doms, which could have brought in £3.2 billion to the Exchequer?
Victoria Atkins
I feel a little slighted, because the hon. Gentleman and I agree on an awful lot behind the scenes—I wish him a very merry Christmas. On non-doms, we know that they paid £7.9 billion in UK taxes last year, which is a significant sum of money. The Chancellor has been clear that when we look at those rules, we have to bear in mind that they pay a significant sum of money in their UK taxes that obviously contributes towards the public services that we all care so much about.
Rachel Maclean (Redditch) (Con)
The success of our fantastic town deal in Redditch, which is thanks to record-breaking investment from the Government, relies on our amazing SMEs, who tell me that they need to compete against the online giants. What more can the Minister do to ensure that our businesses play a full part in our vision for the future, so that we can continue to unlock Redditch?
Victoria Atkins
My hon. Friend has done so much for her constituency through her campaigns, including by securing the investment that her local hospital needs. In relation to her high streets and small businesses, she is right that we are the Government of small business. That is why, although we had to make some difficult decisions in the autumn statement, we were determined to protect our precious high streets and small businesses, particularly in the retail, hospitality and leisure sectors, through the business rates support package, which totalled £13.6 billion.
James Murray (Ealing North) (Lab/Co-op)
I echo the consensus about the importance of a merry Christmas. In the last month, I have asked Treasury Ministers three simple questions: whether the Chancellor has considered abolishing non-dom status; whether the Prime Minister was consulted about doing so; and whether, when the current Prime Minister was Chancellor, he recused himself from discussions on the matter. I have asked those questions four separate times, but four times Treasury Ministers have refused to answer or even acknowledge them. Once might be an oversight and twice might be careless, but three times seems deliberate and four times feels like stonewalling. Will the Minister finally show that they have nothing to hide by answering my questions today?
Victoria Atkins
I am pleased that the hon. Gentleman is entering into the spirit of pantomime season with his questions. We have been clear that non-doms paid £7.9 billion in UK taxes last year—a number that he does not seem able to accept—which is a significant sum of money. Although we keep the scheme under review, as I have said many times—perhaps he is choosing not to hear it—we must recognise their contribution in UK taxes, because that £7.9 billion helps to pay for the services that we all care so much about.
James Murray
Well, that was the fifth time; I wonder what people will make of that.
We believe that to be trusted and effective, the tax system must be fair, yet while millions of working people and businesses across Britain are paying the highest tax burden in decades, those who use tax havens are playing by different rules. Those who benefit from tax havens are undercutting responsible businesses, undermining our public services and breaking the basic principle that we must all play by the same rules. Will the Minister agree that creating a fair tax system must involve challenging tax havens and those who avoid paying their fair share?
Victoria Atkins
I ought to declare an interest at this point: I used to prosecute tax fraudsters for HMRC before I came to this place. I very much agree with the hon. Gentleman and put my money where my mouth is when it comes to tackling those fraudsters.
On the income tax take, the top 10% by way of income paid 36% of all tax in 2020-21. We are proud of the fact that our distributional analysis for the autumn statement shows that decisions made at that fiscal event are progressive: the lowest income households will receive the largest benefit in cash terms and as a percentage of income, and will on average be net beneficiaries of decisions made on tax, welfare and amendments to the energy price guarantee.
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
Elliot Colburn (Carshalton and Wallington) (Con)
The Financial Secretary to the Treasury (Victoria Atkins)
The Government have announced cost of living support worth £26 billion in 2023-24. More than 8 million of the most vulnerable households across the UK will continue to be supported through to next winter via additional cost of living payments. In my hon. Friend’s constituency, that equates to 11,600 households who will be eligible for £650 of extra support this year through the means-tested benefits cost of living payment. I urge all colleagues across the House to look at the help for households website—helpforhouseholds.campaign.gov.uk —which can signpost people to the various funds and ways in which they can get support.
Duncan Baker (North Norfolk) (Con)
Victoria Atkins
I welcome my hon. Friend’s strong support for his local economy and the small businesses that play such a vital part in his constituency. The VAT registration threshold, at £85,000, is more than twice as high as the EU and OECD averages, which keeps 3.2 million small businesses out of VAT—the majority of businesses in this country. I hope my hon. Friend will welcome the fact that since the start of the pandemic more than £35 billion has been provided to the tourism, leisure and hospitality sectors in grants, loans and tax breaks. As a Government, we recognise their incredible value and how important they are to the wellbeing of our constituencies.
Mary Glindon (North Tyneside) (Lab)
Dr Rupa Huq (Ealing Central and Acton) (Ind)
I am sure that like me, Mr Speaker, you long for the days of cool Britannia under a Labour Government. Touring musicians and performers are now hamstrung with restrictions and red tape because of the Government’s botched Brexit deal. We need a Christmas miracle, don’t we? When will the Government accept that this as a problem, and what are they doing about it?
Victoria Atkins
I hope that, in the spirit of Christmas cheer, the hon. Lady will accept that the trade and co-operation agreement is the world’s biggest zero-tariff, zero-quota trade deal. It provides a strong base for UK businesses to trade with the EU. We continue to support businesses trading with the EU, as well as helping them seize new opportunities with fast-growing economies around the world through our free trade agreements.
Richard Fuller (North East Bedfordshire) (Con)
The Chancellor was absolutely right in Edinburgh to include environmental, social and governance ratings agencies within the regulatory perimeter. But will he ensure that in the guidance, ESG objectives are consistent with the long-term actuarial goals of pension funds, to ensure that money is available in 20 or 30 years’ time, when people wish to retire?
Ian Paisley (North Antrim) (DUP)
God’s richest blessings to you in this Christmas season, Mr Speaker.
My constituent, who owns a small business, paid VAT on goods that they had ordered and brought back to Northern Ireland, only to receive a second VAT bill from the Republic of Ireland because of the Northern Ireland protocol. That makes doing business totally unaffordable. A previous Prime Minister said that businesses could tear these documents up. Can my constituent tear these documents up?
Victoria Atkins
For the majority of businesses trading in Northern Ireland, VAT continues to be accounted for in much the same way as when they trade in the rest of the UK. We are confident that the implementation of the Northern Ireland protocol for VAT mitigates the risk of double taxation in Northern Ireland. We know of one example and HM Revenue and Customs is working with that business to see what more can be done, but I am happy to take up the hon. Gentleman’s question outside the Chamber.
Alicia Kearns (Rutland and Melton) (Con)
Merry Christmas, Mr Speaker.
Rural poverty is devastating, but it is often hidden by the relative affluence of surrounding rural areas. To ensure that councils have the funding that they need to support those who are living in rural poverty, will the Chancellor and his officials meet me to discuss putting social mobility into funding formulas alongside deprivation, to get councils what they need and to end rural poverty?
Sir Robert Buckland (South Swindon) (Con)
Does the Chancellor agree that investor confidence in the United Kingdom will be increased only if we bring forward the overdue reforms to the law of corporate criminal liability? If so, will he and the Treasury support further amendments to the Economic Crime and Corporate Transparency Bill, including those that would implement the Law Commission’s recommendations to create further “failure to prevent” offences?
Victoria Atkins
My right hon. and learned Friend is one of the people who knows most about corporate criminal liability. I would be happy to take his question away and discuss it with him, because it is critical that the justice system addresses not just individuals who have criminal liability, but companies; indeed, I have prosecuted many companies across a range of offences. We understand that they can commit crimes too, so I am very happy to take his question away.
Mike Amesbury (Weaver Vale) (Lab)
Will Treasury Ministers work with Transport Ministers to give Avanti West Coast’s customers an early Christmas present by removing the contract from it, putting it into public ownership and saving the taxpayer an absolute fortune?
Business Rates and Levelling Up
Victoria Atkins Excerpts(2 years ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
It is a pleasure to serve under your chairmanship, Mr Mundell, and I congratulate my hon. Friend the Member for Waveney (Peter Aldous) on securing this important debate. I am delighted that on our side of the House we have so much of the English coastline represented—I include myself in that, proud as I am to represent the Lincolnshire coastline.
I am also delighted to be joined by the hon. Member for Strangford (Jim Shannon). I had many a happy time sailing in the famous Strangford lough in my childhood, and I know how important tourism and hospitality is to his constituency. I thank him for sharing his Northern Irish perspective, as he always does.
I hope colleagues are aware that the Government announced a significant support package for business rates in the autumn statement, and I welcome the opportunity to set that out. I also welcome the opportunity to discuss the substantial reforms to which we have already committed, which will make the business rates system fairer and more responsive to changes in the market. We have heard the concerns expressed about the status quo not just by hon. Members today, but by businesses in previous years. I will address some of those concerns and emphasise our keenness to make changes where appropriate.
Forgive me if first I go back to basics. The importance of business rates to public finances is perhaps lost in the understandable concerns raised about the impact on constituency businesses. Taxes on commercial property remain an important part of a fair and balanced business taxation system. Most advanced economies, including most OECD members, have a business property tax. Business rates raise over £20 billion a year in England alone. That money goes to fund vital public services—a priority that the Chancellor emphasised again and again in the autumn statement. Put simply, we do not believe that there is an alternative with widespread support that would raise sufficient revenue to replace business rates. For those reasons, we do not consider there is merit in a radical overhaul or abolition of business rates, but we have delivered meaningful change to improve the system and have continued to conduct several reviews on the issue. Those reviews reaffirmed the importance of business rates and concluded that they have several key advantages over other taxes. They are relatively easy to collect and hard to avoid, with a collection rate of around 98%, making them a vital and stable source of funding for local services.
My hon. Friend the Member for Waveney suggested that the current tax rate discourages investment in new spaces and expansion of existing spaces, but there is little evidence of structural issues in property investment in the UK. As he would expect, we keep a close eye on that. We have the highest share of investment going to non-residential buildings of any member of the G7. We recognise the valuable role that businesses play in our economy and we have taken action to support them through the business rates system.
Kevin Foster
I find the Minister’s response interesting. She talks about the investment in commercial property—for example, we are seeing £140 million of investment in Torbay hotels. The issue is not so much the overall level of investment in commercial property, but the specific locations. We might have 34 million seafront hotels in Paignton, but in the town centre, which was once the main focus for the collection of business rates, we are struggling to get anywhere. Does she think there might be a link?
Victoria Atkins
Goodness me, I would not pretend to have an intimate knowledge of the economics of Torbay. My hon. Friend knows his constituency extremely well, but the realistic fact is that businesses in his high street have to pay taxes of some sort. That is why we have tried to mould the business rate support package to help the businesses that need it the most, which we recognise are those in the retail, hospitality and leisure industry. I will come on to that particular support, which is a very generous package that I hope will be of great benefit to businesses in his constituency.
We have a duty to ensure that the business rates system is fair and responsive, while raising sufficient revenue to support the public services that I have already talked about. Since 2017, when the Government doubled the 100% small business rate relief rateable value threshold from £6,000 to £12,000, a third of properties in England have paid no business rates whatever. In my own constituency, I know of many properties in my market towns that pay no business rates precisely because of that protection and they are, I hope, thriving as best they can as a result.
The Government provided £16 billion in business rates relief for the retail, hospitality and leisure sectors during the pandemic because it was such a difficult time for them when the economy was essentially closed down. That was an unprecedented level of support for the high street, on which so many communities depend. From my own constituency, I know how vital that support was in keeping businesses’ heads above water during the lockdowns. The Government also provided a £1.5 billion covid additional relief fund for businesses that were affected by the pandemic but which were not eligible for other reliefs. Local authorities, due to their knowledge of their local areas, were responsible for designing and establishing those schemes. Progress has been in line with our expectations, and final distribution data will be published on gov.uk shortly.
As the Chancellor stated in the autumn statement last month, it is an important principle that revaluations should reflect market values. Hon. Members have emphasised that point during the debate. The 2023 revaluation will therefore go ahead. From April 2023, all rateable values will be updated for all non-domestic properties, with evidence from April 2021. This will mean initial bills will reflect changes in market conditions since 2015, and will ensure a fairer distribution of the tax burden between online and physical retail.
The hon. Member for Strangford asked me why the Government have not introduced an online sales tax. He will know that we launched a consultation on the issue earlier this year. We received many responses, which will shortly be published, but it is fair to say that there was not unanimity. Indeed, there was not even agreement—I would not put it as highly as that—as to what such a tax should look like, because many of even the smallest businesses on the high streets of our constituencies now have some form of online presence. It may not be the main part of their business—that may be the shop—but, understandably and laudably in the 21st century, they are trying to diversify by having an online business.
Nobody could quite see how we could differentiate between the enormous multinationals that we are all keen to ensure pay taxes and those microbusinesses that my hon. Friend the Member for Waveney described so well. That is why in the autumn statement the Chancellor decided against an online sales tax, with the important caveat that the changes we are making to business rates, including with the revaluations, will mean that the distribution warehouses, which supply the multinationals that we are all keen to ensure pay their proper taxes, will see significant rises in their bills while we also protect the shops and microbusinesses to which he referred.
Jim Shannon
That is a very helpful response, as always; I expected nothing less. I will take the Minister’s point of view out of Hansard and give it to some microbusinesses in my constituency that have asked me these questions. I understand there is a wish for this revaluation to happen, and I understand the difficulties and complexities the Government face to get it over the line. If I could come back to the Minister directly with some thoughts, maybe we could see if we could review it in a positive way.
Victoria Atkins
Of course. I am always delighted to hear from the hon. Gentleman. He will appreciate that there are many other factors; for example, click and collect was a stumbling block for many in the consultation. I look forward to his future correspondence.
The support package that we have introduced means that the revaluation will go some way to addressing the imbalance between online and offline retailers. On average, large distribution warehouses will see an increase in bills of about 27%, and bricks and mortar retailers will see decreases of about 20%. We recognise that business rates payers may feel uncertain about the upcoming revaluation, given other pressures the country is facing that are driven by global challenges.
Rising prices around the world, made worse by Russia’s illegal invasion of Ukraine, have hit businesses hard. In the autumn statement we announced the steps that we will take next year to provide support through these difficult times. We will deliver a business rates support package worth £13.6 billion over the next five years. That will protect businesses from facing large bill increases because of high inflation and rateable value increases following the revaluation.
My hon. Friend the Member for Waveney urged the Treasury to cut the UBR to the 1990 level of 35p, showing the trade-offs that the Government must make. Doing so would cost £9 billion a year, which would be a significant potential loss to the public revenue. We have thus taken the steps we have through the support package to protect ratepayers from high inflation, and we are instead freezing the tax rate for three consecutive years at a cost of £14.5 billion.
My hon. Friend the Member for Torbay (Kevin Foster) described the vibrant hospitality sector in his constituency. We are extending and increasing the retail, hospitality and leisure relief scheme from 50% to 75%, up to a cash cap of £110,000 per business. Pubs and the holiday parks he referenced are included.
Peter Aldous
I am conscious that I will have the opportunity to respond at the end of the debate, but I want to pick up now on one specific point that the Minister has mentioned. She said that the Treasury had carried out an assessment and if we were to go back to the UBR of just over 30p from when this system was introduced in 1990, that would cost an extra £9 billion. Did that assessment take into account a situation in which we had annual revaluations as well? If we had annual revaluations, that sort of margin would be much lower and we would fairly redistribute the burden of business rates across the UK.
Victoria Atkins
I will come back to that point, and particularly the detail on annual revaluations, because I think there is some sympathy with my hon. Friend’s point of view.
The retail, hospitality and leisure relief scheme is the largest business rates one-year relief we have provided in 30 years, so I encourage colleagues to ensure that their local businesses know that the Conservative Government are delivering for those businesses. It will support about 230,000 properties—not just on high streets, but beyond high streets, as my hon. Friend the Member for Torbay emphasised. Therefore, although I understand the point made by my hon. Friend the Member for Waveney regarding the temporary nature of these interventions, permanent changes have been announced and will provide support for affected businesses.
We will deliver on a key ask by trade bodies such as the CBI, the Federation of Small Businesses and the British Retail Consortium by permanently removing downward caps from transitional relief, which previously restricted falls in bills. Removing those caps permanently means ratepayers seeing decreases in their rateable value will experience a full drop in their bills next year.
Taken together, the revaluation and the support package have updated bills to reflect market conditions. Those facing bill increases will see them phased in through transitional relief, and the small businesses that make up our high streets will be protected through targeted support. The multiplier freeze will protect all ratepayers against double-digit inflation.
Colleagues were keen to emphasise the important role that pubs play in our communities. As a proud Member of Parliament for many excellent pubs in my constituency, I understand their concerns. It might help colleagues if I lay out the forms of help that pubs will receive through the support package. As a result of the package of support, pubs’ bills have fallen by about 30%. All pubs will benefit from the multiplier freeze, and pubs with falling rateable values will benefit from the removal of the downward cap that I just described. They will also be eligible for the 75% retail, hospitality and leisure discount. Of course, small pubs that have a rateable value of below £12,000 pay no rates at all.
Would my hon. Friend the Member for St Ives (Derek Thomas) be kind enough to write to me about his dry dock example? That business will receive some form of help through the overall package.
Let me turn to business rates reforms. We understand and listen to the concerns of those running businesses, and keep the operation of all tax policy under review. In the 2021 autumn Budget, we announced the outcome of the business rates review, and will shortly bring forward legislation to deliver those reforms. A core element of that package is more frequent revaluations, moving to revaluations every three years instead of every five; my hon. Friend the Member for Waveney is smiling at me. That represents significant reform, and will ensure that the system is more responsive to changing market conditions.
To enable those reforms, we are also introducing some administrative measures, including a new information duty on ratepayers to ensure the VOA has sufficient data to accurately update rateable values every three years, and to help reduce the number of appeals and the time taken to resolve them. The changes will also unlock opportunities for further improvements to the system in future, such as even more frequent revaluations. We understand the merits of annual revaluations, but we need the change to three years to settle in a little bit, because even moving to three years represents significant operational complexity, but we very much understand the wish for annual revaluations.
My hon. Friend the Member for Waveney mentioned the wish for increased transparency by the VOA, which I understand. I sympathise with the issues that ratepayers are facing through the “check, challenge, appeal” process. The Government are keen to address those issues by delivering on the commitments made in the business rates review. Accordingly, there is already a plan in place that is providing ratepayers with better access to improved information about how valuations are carried out. I urge my hon. Friend to pass to me any information he or others may have about the unscrupulous agents he described; I am most concerned about that, and will be very interested in that information, because I am looking at the role of agents across all aspects of tax policy. A lot of agents provide a very good service to their customers, but we must weed out those who are unscrupulous or even worse.
In the longer term, we expect ratepayers to be able to access fuller analysis of the evidence used to set the rateable value of a property, which I hope will in turn restore confidence in that system. We keep all business rates reliefs under review, as the system of reliefs plays a vital role in ensuring the overall sustainability and fairness of tax. The Government ensure that reliefs are as easy as possible for ratepayers to navigate, with several being automatically applied by local authorities, such as transitional relief, supporting small business relief, and empty property relief. Comprehensive guidance on reliefs is available on gov.uk.
Through the review—which I encourage the hon. Member for Ealing North (James Murray) to read; perhaps he has not realised that we have done it—we have committed to several measures to modernise and digitalise the business rates system, including further investment in the Valuation Office Agency to enable it to upgrade its IT infrastructure and digital capabilities. The review recommitted to the digitalising business rates reform programme, which will match business rates data with central HMRC tax data to provide a better oversight of the rates system, more precise targeting of reliefs, and more effective compliance.
At the very beginning of the autumn statement, the Chancellor told the House that he had three key priorities:
“stability, growth and public services.”—[Official Report, 17 November 2022; Vol. 722, c. 844.]
We understand that the issue of business rates cuts across all three of those priorities because of the impact it has on our high streets and the money it raises for our vital public services.
As ever, this is about balance. We acted at the autumn statement to support business and we will deliver on the reforms announced at the 2021 business rates review through upcoming legislation. We will continue to listen to the arguments, but we will also continue to make the decisions we think are in the interests of the country as a whole. I thank hon. Members for their contributions and look forward to engaging with them all to ensure that this continues to be a system that serves us all.
NHS Workforce
Victoria Atkins Excerpts(2 years ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
It is a genuine pleasure to close this debate on behalf of the Government. I start by placing on the record my thanks to the extraordinary staff of the national health service, on whom this country relies day in, day out. As the Chancellor told this House less than three weeks ago,
“The service we depend on more than any other is the NHS.”—[Official Report, 17 November 2022; Vol. 722, c. 849.]
Indeed, the NHS is one of the reasons why I took the decision to put myself forward for public office. The national health service diagnosed my type 1 diabetes at the age of three, and I have been genuinely moved and supported by the NHS ever since then. It is thanks to the NHS that I am standing at this Dispatch Box.
Maintaining the service relies, above all, on the foundations of a strong economy, which was exactly the purpose of the autumn statement. We acknowledge that there are specific issues that need tackling, and the Chancellor—himself a former Health Secretary—was frank in seeking to address them. Members may recall that we debated the pressures facing the economy, and the No. 1 issue facing the economy at the moment is inflation. It is precisely because inflation is at a generational high that the prices of everything our constituents buy and rely on have gone up, including, of course, food and heating. That hurts everyone, but it hurts the poorest the most. That is why, in the autumn statement, we laid out a plan to tackle inflation, to grow the economy and to protect public services.
One of the most effective measures according to the Office for Budget Responsibility was the introduction of the energy price guarantee coupled with payments for the most vulnerable in society. Again, should any colleagues need help with their constituents, they can direct their constituents to help on the Government website helpforhouseholds.campaign.gov.uk. The OBR said that our plan has helped to dull inflation by a couple of points and to protect 70,000 jobs, and that it has ensured that this recession is shallower than it would otherwise have been. There was some discussion during the debate about growth. I gently remind the House that we had the third highest rate of growth in the G7 from 2010 to 2022.
I turn now to the important subject of the NHS workforce. The hon. Member for Wirral West (Margaret Greenwood) rightly acknowledged that this extraordinary organisation has just been through the worst public health crisis we have ever seen—I think she put it extremely well. I hope that we are all able to discuss this in a measured way that does not need to fall into ideological argument when we acknowledge the impact that that extraordinary event has had on our workforce. Members from across the House referenced the exhaustion that NHS staff feel and the impact it has had on waiting lists.
Margaret Greenwood
I also pointed out that the crisis predates the pandemic. I would be grateful if the Minister acknowledged that, too.
Victoria Atkins
Forgive me. Perhaps the hon. Lady misunderstood me; I was trying to be collegiate in referencing what she had said about covid. We do know, of course, that there have been pressures on the workforce and on the NHS throughout its decades of history. Every generation has the new challenge of ensuring that the NHS meets the hopes, needs and expectations of our constituents.
In opening the debate, my right hon. Friend the Secretary of State for Health and Social Care set out our plans for the NHS and explained that we are taking specific steps on issues such as workforce shortages. We will have an independently verified plan for the number of doctors, nurses and other professionals that we will need in five, 10 and 15 years’ time, taking full account of the need for better retention and productivity improvements. That will build on what are already significant statistics. Between September 2019 and August 2022, the NHS had more than 14,000 more hospital doctors and more than 29,000 more nurses and health visitors.
Richard Burgon
The Minister spoke a few moments ago about the importance of approaching this issue in measured tones, so this is an important opportunity for her to say that her ministerial colleague was wrong to attempt in the media to associate our NHS staff with Vladimir Putin’s horrific invasion of Ukraine. I think it is really important that she rights that wrong by correcting that, please.
Victoria Atkins
I have not seen it myself but, from descriptions I have heard, I am not quite sure that is what he was trying to—[Interruption.] Members ask why I have not watched it. I was actually getting ready for a birthday party for my 10-year-old. We are allowed lives outside this place.
For those who have commented on workforce figures over the past decade, between May 2010 and August 2022, 36,000 more hospital doctors and 38,000 more nurses and health visitors were recruited. We are also asking the NHS, like all public services, to tackle productivity and inefficiency. My hon. Friend the Member for Peterborough (Paul Bristow) emphasised the importance of that and brought his experience to the debate.
To help colleagues, the initial findings by Patricia Hewitt, the former Labour Health Secretary, will be delivered to the Department within three weeks, which shows the pace of work that Ms Hewitt and others are taking on this important project. In addition, we are boosting NHS funding by £3.3 billion next year and by another £3.3 billion the year after that, helping to ensure that the NHS can take rapid action to improve urgent and emergency care and to get elective performance back to pre-pandemic levels.
Victoria Atkins
I will just make a little progress, if I may. Amanda Pritchard, the chief executive of the NHS, has said that this should
“provide sufficient funding for the NHS to fulfil its key priorities”
and shows that the Government are serious about their commitment to prioritise the NHS.
The hon. Member for Coventry North East (Colleen Fletcher) and my hon. Friend the Member for Peterborough emphasised the role that pharmacies can play, and I hope we can discuss ways that different services can be delivered differently over the NHS in the coming months and years. My hon. Friend the Member for Winchester (Steve Brine), who chairs the Health and Social Care Committee, made the sound point that prevention is part of productivity.
Overall, the NHS resource budget in England is expected to increase to £165.9 billion in 2024-25, up from £123.7 billion in 2019-20. Our determination to deal with the covid backlogs has seen the NHS already hit its first milestone in terms of waits of over two years, and it will go further, eliminating waits of over 18 months by April next year, over 15 months by March 2024, and over 12 months by March 2025. My right hon. Friend the Secretary of State compared that with the figures in Labour-run Wales, and noted that a fifth of the population there is waiting for care and remarked on the curious anomaly that Wales stopped publishing its workforce vacancy rates in 2011.
Victoria Atkins
The hon. Gentleman raises a serious point. I do not have the answer to hand, but I will ensure that the relevant Health Minister writes to him, because I understand why he raises it.
There has been a great deal of discussion about nurses’ pay, and we are extremely regretful and very much hoping that accommodations and agreements can be found. To put into context recent pay rises, more than 1 million staff including nurses have benefited from a pay rise of at least £1,400 backdated to April this year. That is on top of the 3% pay rise they received last year. My hon. Friend the Member for Winchester asked an interesting question: does Labour support or oppose the independent pay review bodies, which set the recommendations that have been accepted?
Victoria Atkins
I will not, because I have to finish.
Turning to non-doms, I must congratulate the shadow Minister, the hon. Member for Ealing North (James Murray), on his florid use of language in relation to my advocacy efforts in the Finance Bill debates. I hope that I am able to answer his question in a moment. The motion deals with non-dom taxpayers. As I have said repeatedly—and I hope at some point it will get through—non-dom residents who live in the UK have to pay UK taxes on their UK income and gains, just like everybody else. That raised £7.9 billion last year, and non-doms have invested £6 billion.
The area over which there is disagreement is the rules relating to foreign income, and the Opposition ask whether this is the answer. I have listened with great interest to how the sum they have put in their motion is apparently going to answer all sorts of economic difficulties, particularly during consideration of the Finance Bill, and I am not sure it will quite add up. Interestingly, it was a Conservative Government who reformed non-dom laws to end the ability to claim this status permanently, and I note that the non-dom status survived during 13 years of Labour government. In any event, the Chancellor said very frankly in evidence to the Treasury Committee last week that he has asked officials to look at it.
We have the workforce strategy, which will be delivered. NHS England has done considerable work, and we hope that it will report as soon as possible. It has been a real pleasure for me to be able to praise the NHS and thank its extraordinary staff. What the NHS needs is a Government making the right decisions for the economy, so that we can actually afford a world-class health service. That is what this Government are determined to deliver.
Question put.
Finance Bill
Victoria Atkins ExcerptsWednesday 30th November 2022
(2 years ago)
Commons ChamberRead Full debate Finance Act 2023 View all Finance Act 2023 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 30 November 2022 - (30 Nov 2022)
The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)
With this it will be convenient to discuss the following:
Amendment 4, in clause 2, page 3, line 3, at end insert—
“(3) The Chancellor of the Exchequer must lay before the House of Commons reports setting out—
(a) an assessment of the revenue that is generated by the energy (oil and gas) profits levy in the period to which the report relates,
(b) an assessment of the revenue that would have been generated in the period to which the report relates if the investment allowance had not been in effect, and
(c) the names of companies that have made use of the investment allowance and the revenue that would have been generated by them during the period to which the report relates if the investment allowance had not been in effect.
(4) The first report under subsection (3) shall be laid as soon as practicable after the 1 January 2023, in respect of the period 26 May 2022 to 1 January 2023.
(5) Subsequent reports under this section shall be laid every three months thereafter, and in respect of the period since the last report.”
This amendment would require the Government to produce an assessment of how much revenue would be generated by the Energy Profits Levy if the relief for investment expenditure had not been in effect, and to produce a quarterly report assessing how much revenue has been forgone because of the investment expenditure relief.
Clause 2 stand part.
Amendment 3, in clause 3, page 3, line 14, at end insert—
“(3) The Chancellor of the Exchequer must, within six months of this section coming into force, lay before the House of Commons an assessment of the revenue that would have been generated if, in section 1 of the Energy (Oil and Gas) Profits Levy Act 2022 (charge to tax), in subsection (3) (which sets out the accounting periods by reference to which the tax is charged), in paragraph (a), for ‘26 May 2022’, there had been substituted ‘6 October 2021’.”
This amendment would require the Government to produce an assessment of how much revenue would be generated by the Energy Profits Levy if it had been introduced on 6th October 2021.
Clauses 3 and 4 stand part.
Amendment 2, in clause 5, page 4, line 6, at end insert—
“(5) HMRC must contact every individual affected by the provisions of this section to inform them whether, as a result of the provisions of this section—
(a) they have become liable to pay the basic rate of income tax (when they were not previously so liable);
(b) they have become liable to pay the higher rate of income tax (when they were not previously so liable); and
(c) how much additional income tax they will pay as a result of the change.”
This amendment would require HMRC to contact every individual who become liable to pay standard tax or move from standard to higher rate, and how much additional tax they will have to pay as a result.
Clauses 5 to 9 stand part.
Amendment 5, in clause 10, page 7, line 23, at end insert—
“(8) The Chancellor of the Exchequer must, within six month of this section coming into force, and quarterly thereafter, lay before the House of Commons an assessment of the impact of the changes in this section on—
(a) the Secretary of State’s ability to meet the duty set out in section 1 of the Climate Change Act 2008,
(b) air pollution in the United Kingdom, and
(c) the provision of electric vehicle infrastructure and public transport in the United Kingdom.”
This amendment would require the Chancellor to produce quarterly assessments of the impact of the removal of VED exemption for electrically propelled vehicles on the UK’s climate change duties, air pollution and EV infrastructure and public transport.
Clauses 10 to 12 stand part.
New clause 1—Assessment of the impact of the investment allowance—
“(1) The Chancellor of the Exchequer must, within six months of this Act coming into force, publish an assessment of—
(a) the revenue that the energy (oil and gas) profits levy will yield,
(b) the revenue that the energy (oil and gas) profits levy would yield if the investment allowance did not have effect in respect of investment expenditure, and
(c) the revenue that the energy (oil and gas) profits levy would yield if the investment allowance did not have effect in respect of expenditure on decarbonisation by oil and gas companies.
(2) The assessment must cover the whole period that the levy is in effect and also assess the revenue in each tax year.
(3) The assessment must include an evaluation of the impact of the investment allowance on the United Kingdom’s ability to meet its climate commitments, including—
(a) the target for 2050 set out in section 1 of the Climate Change Act 2008,
(b) applicable carbon budgets made pursuant to section 4 of the Climate Change Act 2008, and
(c) the commitment given by the government of the United Kingdom in the Glasgow Climate Pact to pursue policies to limit global warming to 1.5 degrees Celsius.”
This new clause would require the Government to publish an assessment of the impact of the investment allowance on revenue raised by the Energy (Oil and Gas) Profits Levy, including investment by oil and gas companies in UK oil and gas extraction and upstream decarbonisation. The assessment should also cover the impact of the investment allowance on the UK’s ability to meet its domestic and international climate targets.
New clause 2—Review of revenue from the Energy (Oil and Gas) Profits Levy—
“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of the revenue estimated to be generated from the Energy (Oil and Gas) Profit Levy in each of the financial years 2021-22 to 2027-28.
(2) In addition to an evaluation of the revenue forecast to be raised by the Levy, the assessment must include an evaluation showing the estimated revenue that would have been raised if each of the following had been the case—
(a) the qualifying accounting period specified in section 1(3) of the Energy (Oil and Gas) Profits Levy Act 2022 had begun on 3 January 2022,
(b) the rate of the levy had been increased to 38% under this Act, and
(c) the amount of additional investment expenditure had been reduced to 0% by this Act.”
This new clause would require the Chancellor of the Exchequer to publish an assessment of estimated revenue from the energy (oil and gas) profit levy in financial years 2021-22 to 2027-28, and set out how these figures would be affected if levy were backdated to 3 January 2022, and if the rate of levy was increased to 38%, and the amount of additional investment expenditure reduced to 0%, by this Act.
New clause 3—Research and Development tax relief policy—
“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of research and development tax relief for small or medium-sized enterprises.
(2) The assessment must include the Chancellor’s assessment of the effectiveness of R&D tax reliefs and plans he has to further reform of R&D tax reliefs.”
This new clause would require the Government to publish an assessment of their view on the effectiveness of R&D tax reliefs for small and medium-sized enterprises and their intentions for any further reform.
New clause 4—Research and Development tax relief fraud and waste—
“(1) The Chancellor of the Exchequer must, within three months of this Act receiving Royal Assent, publish an assessment of research and development tax relief for small or medium-sized enterprises.
(2) This assessment must include the following, in respect of each tax year since 2018–19—
(a) an evaluation of the amount of money that has been incorrectly deducted as a qualifying cost, or incorrectly paid as a tax credit, as a result of—
(i) fraud, and
(ii) error,
(b) set out, in relation to sums incorrectly deducted as a qualifying cost, or incorrectly paid as a tax credit—
(i) how many investigations have taken place,
(ii) how many prosecutions have been brought,
(iii) how many prosecutions have resulted in a conviction, and
(iv) how much money has been reclaimed.”
This new clause would require the Government to publish a statement on error and fraud in the SME R&D tax reliefs, including details of what actions they have taken in response.
New clause 5—Assessment of the impact of changes to the basic rate limit and personal allowance for tax years 2026-27 and 2027-28—
“The Chancellor of the Exchequer must, within three months of this Act coming into force, publish an assessment of the expected impact on an average earner of the provisions of section 5 (Basic rate limit and personal allowance for tax years 2026–27 and 2027–28).”
This new clause will require the Chancellor of the Exchequer to publish an assessment of the impact on average earners of the decision to freeze the basic rate limit and personal allowances for tax years 2026/27 and 2027/28.
New clause 6—Impact assessment of measures in the Act—
“(1) The Chancellor of the Exchequer must, within three months of this Act coming into force, publish an assessment of the impact of the provisions of this Act.
(2) This assessment must consider the effects of the provisions of the Act on—
(a) different regions and nations of the United Kingdom,
(b) people with different protected characteristics under the Equality Act 2010, and
(c) people with a range of different incomes.”
This new clause will require the Chancellor of the Exchequer to publish an assessment of the impact of the measures in this Act on people in different parts of the United Kingdom, and on groups of people with different protected characteristics and incomes.
New clause 7—Assessment of the impact of measures in the Act on growth—
“(1) The Chancellor of the Exchequer must, within three months of this Act coming into force, publish an assessment of the impact of provisions of this Act on economic growth.
(2) This assessment must consider the forecast impact of measures in this Act on growth of—
(a) the UK economy as whole,
(b) the economy of different regions and nations on the UK, and
(c) average incomes in the UK.”
This new clause will require the Chancellor of the Exchequer to publish an assessment of the impact of measures in this Act on growth in the UK economy, as well as its impact on growth in different regions and nations of the UK, and its impact on growth of average incomes.
New clause 9—Assessment of investment relief on compliance with the climate change target for 2050—
“The Chancellor of the Exchequer must, within six months of this section coming into force, and quarterly thereafter, lay before the House of Commons an assessment of the impact of the effect of the relief for investment expenditure provided in sections 1 and 2 of the Energy (Oil and Gas) Profits Levy Act 2022 on—
(a) the Secretary of State’s ability to meet the duty set out in section 1 of the Climate Change Act 2008, and
(b) the additional quantity of carbon dioxide that will be generated in the United Kingdom.”
This new clause would require the Chancellor to produce an assessment of the impact of the relief for investment expenditure in relation to the Energy Profits Levy on the Secretary of State’s ability to meet the target of ensuring that the net UK carbon account for the year 2050 is at least 100% lower than the 1990 baseline. And produce a report each quarter detailing how much additional CO2 has been produced because of the investment expenditure relief.
New clause 10—Review of effect on small businesses—
“(1) The Chancellor of the Exchequer must lay before Parliament within six months of the passing of this Act a review of the impact of the measures contained in this Act on small businesses.
(2) The review must consider in particular the impact of those measures on the ability of small businesses to—
(a) meet their energy bills,
(b) minimise their debt,
(c) pay their rent,
(d) remain solvent, and
(e) employ staff.
(3) The review must include an assessment of the number of small businesses which will become liable to register for VAT as a result of the measures contained in this Act.
(4) In this section, ‘small businesses’ means any business which has average headcount of staff of less than 50 in the tax year 2022-23.”
This new clause would require the Government to produce an impact assessment of the effect of the Act on small businesses.
The Financial Secretary to the Treasury (Victoria Atkins)
It is a pleasure to represent the Government in this important Committee. At the autumn statement, my right hon. Friend the Chancellor set out the significant economic challenges that we face and our plan to ensure that we have economic stability, encourage growth and protect our public services. Securing fiscal sustainability in a responsible and balanced way inevitably requires some difficult decisions. We do not shy away from that, but we have sought to ensure that the heaviest burden falls on those with the broadest shoulders.
The Bill’s first three clauses relate to the energy profits levy. Clause 1 increases the rate of the levy and addresses consequential technical matters. It will ensure that oil and gas companies benefiting from extraordinary profits due to exceptionally high prices will continue to pay their fair share of tax. As hon. Members will know, the Government introduced the levy in May this year as a temporary surcharge on the extraordinary profits being made on the oil and gas sector, driven by global circumstances.
Sir Robert Syms (Poole) (Con)
Will the Minister define “extraordinary”—not necessarily now, but during the debate?
Victoria Atkins
I will happily do so. My hon. Friend will know the definition of “extraordinary” in relation to the electricity generators levy. We will come to the profits levy in due course.
The Government are raising the rate of the levy from 25% to 35% from 1 January next year, bringing the headline tax rate for the sector to 75%. That is because commodity prices—particularly gas—are expected to remain above their long-term average for the foreseeable future. However, the Government want the oil and gas sector to reinvest its profits to support the economy, jobs and the UK’s energy security, which is why the levy has an investment allowance that means that businesses overall get a 91p tax saving for every pound that they invest, providing them with an additional, immediate incentive to invest.
Clause 2 makes changes to the rate of the investment allowance within the levy to ensure that the total tax relief remains broadly the same following the increase in rate to 35%. Specifically, the clause reduces the rate of the investment allowance from 80% to 29%, effective, again, from 1 January next year. That will maintain the overall cumulative value of investment reliefs, which means that a company investing £100 will be able to claim £91.40 back in tax relief. To be clear, the investment allowance will remain at 80% for investment expenditure on upstream decarbonisation, so that we continue to support the transition to low-carbon electricity production. That will be legislated for in the spring Finance Bill, following further detailed technical work and consultation with interested parties.
Caroline Lucas (Brighton, Pavilion) (Green)
The Minister will know that oil and gas companies are raking in obscene levels of profit. Why does she think it is reasonable to give incentives—through taxpayers’ money—to companies that are already raking in huge profits at a time when a cost of living crisis is driving so many families into real hardship?
Victoria Atkins
Certainly. I hope the hon. Lady will agree that we all want to see more decarbonisation, which is precisely why we have set the net zero landmark achievement for 2050, as she knows. In relation to energy security, we have to be realistic about where we are. Much as some campaigners would like it, we cannot stop using oil tomorrow. We have to find reasonable and methodical ways of decarbonising, which is precisely what the investment allowances aim to do, while encouraging different businesses, and indeed those businesses, to invest in carbon-free and low-carbon forms of energy production.
Clause 3 will extend the levy so that it ends on 31 March 2028 rather than in 2025. Although the levy remains a temporary measure, the change simply reflects the fact that global factors are now expected to keep commodity prices, particularly gas prices, elevated for longer than was first anticipated. At the same time, the Government recognise that certainty is key for oil and gas investments. There will therefore no longer be an early phase-out of the levy ahead of the new March 2028 end date, according to prices.
Together, the changes introduced in clauses 1 to 3 will raise approximately £20 billion over the next six years. The total revenue now expected from the levy is just over £40 billion over the same period.
Clause 4 relates to rates of research and development tax credits. The changes it makes will ensure that taxpayers’ money is spent as effectively as possible. Despite the UK spending the most in the OECD on R&D tax reliefs, the current system does not provide good enough value for taxpayers. The cash value of the scheme that looks after small and medium-sized enterprises is currently three times that of the research and development expenditure credit. The corporation rate change due from April next year will make the issue worse by incentivising less R&D per £1 of taxpayer support. Sadly, the SME scheme’s generosity has also made it a target for fraud.
The clause will therefore rebalance the generosity between RDEC and the SME scheme, specifically by increasing the RDEC rate from 13% to 20%, decreasing the SME enhanced deduction from 130% to 86%, and decreasing the SME credit rate from 14.5% to 10%. The changes that the clause will introduce are also a step towards a possible simplified single RDEC-like scheme for all.
Despite raising revenue, this reform is forecast to leave the level of R&D investment in the economy unchanged. More broadly, the Government have recommitted to increasing R&D spending to £20 billion by 2024-25. Ahead of the spring Budget, we will work with industry to understand whether further support is necessary for R&D-intensive SMEs. I know that is the point that most concerns several colleagues; I suspect that we will hear more about it in due course.
Clauses 5 and 6 relate to income tax thresholds. As the autumn statement sets out, the path to fiscal sustainability requires us to ask everyone to contribute a little more towards our public finances, but we are doing so in a fair way: those with more are being asked to contribute more.
Clause 5 will set the personal allowance at £12,570 and the basic rate limit at £37,700 for 2026-27 and 2027-28. Those thresholds, which have already been fixed at the current levels until April 2026, will be maintained for a further two years until April 2028. I hope hon. Members will note that the personal allowance is still the most generous tax-free personal allowance of any G7 country. Thanks to previous significant real-terms increases, it will still be more than £2,000 higher by April 2028 than if it had been uprated by inflation since 2010, with an estimated 1.6 million more people taken out of paying tax. Approximately 30% of people do not pay tax as a result of the personal allowance. I hope Government Members are proud that we have achieved that.
This Government also enacted the largest ever increase to a personal tax starting threshold in July this year by raising the national insurance starting threshold to £12,570, ensuring that some of the lowest earners do not pay any tax. That means that in 2028 someone on the average salary of £28,000 will still pay almost £900 less in tax than if tax thresholds had gone up with inflation since 2010. The income tax higher rate threshold is still high enough to protect the vast majority of people from paying the higher rate of income tax; approximately 80% of taxpayers pay tax at the basic rate.
Clause 6 will deal with those at the higher end of the income scale, to ensure that our return to sustainable public finances happens in a fair way. It will lower the additional rate threshold from £150,000 to £125,140 from April next year, meaning that income above that level will be taxed at 45%. Only the top 2% of taxpayers will be affected by this measure, which is expected to raise £800 million per year by 2024-25, with the vast majority of revenue—more than 80%—coming from those who earn more than £150,000.
Sir Robert Syms
My hon. Friend is no doubt aware that, because some higher rate taxpayers lose their personal allowance, the marginal rate between about £100,000 and £120,000 can be as high as 60%. Has any thought been given to whether we should smooth that out, particularly if we are lowering the rate when you hit 45p? I think it would make for a better tax system. The artificial level needs to be dealt with, perhaps by ensuring that the withdrawal of the personal allowance happens over a wider income band.
Victoria Atkins
A great deal of thought went into the matter at the Treasury ahead of the autumn statement. The reason for our approach is that there are significant difficulties with the alternatives. I do not think that anyone would want a cliff edge at £100,000 where someone who earned £1 over that amount would suddenly lose the entirety of their personal allowance. We have tried in the past to taper it, although I appreciate that that has led to the situation that my hon. Friend describes. We have brought the 45p rate down to £125,000 precisely because that is the end of the taper rate for the personal allowance. We have tried to make things a little simpler; I will happily admit that the tax system is very complicated, but we have tried to simplify that part of it. I do accept my hon. Friend’s point about the marginal tax relief rate, which we genuinely continue to consider because we want to be fair to those who, through hard work, contribute as much to the tax system as they do.
On clause 6, I was saying that the vast majority of revenue—more than 80%—will come from those who earn more than £150,000. We say that the UK remains an attractive place to work and do business. The threshold is still comparable to those of other countries with a similar top marginal rate of tax, but in the circumstances we are in, it is fair that those who earn more contribute more.
Clauses 7 to 9 deal with other allowances. Clause 7 will reduce the tax-free allowance for dividend income from £2,000 to £1,000 in April 2023, and to £500 from April 2024. That will raise more than £3 billion by April 2028 and will make the tax system fairer by bringing the treatment of investment income closer in line with that of earned income. Keeping the dividend allowance at £500 will still ensure that people are not taxed on low levels of dividend income, because the combination of the personal allowance and the dividend allowance will mean that approximately 25% of people with taxable dividend income will continue to pay no dividend tax, even once the measure has come into effect. People will still be able to receive tax-free dividend income from investments made through their individual savings accounts, in which taxpayers can invest £20,000 each year.
Clause 8 makes changes to the capital gains tax annual exempt amount, or AEA. The AEA is the total amount of capital gains that an individual may make free of capital gains tax each year, and is currently set at £12,300. For the tax year 2023-24, the rate will be £6,000 for individuals; it will then be reduced to £3,000 from 2024 onwards. The clause also abolishes the annual uprating of the AEA in line with the consumer prices index, and fixes the capital gains tax reporting proceeds limit at £50,000. Reforming the system to reduce the value of the capital gains tax-free allowance supports strong public finances, and makes the system fairer by bringing the treatment of capital gains closer into line with that of income while still ensuring that individuals are not taxed on low levels of capital gains.
Geraint Davies (Swansea West) (Lab/Co-op)
May I ask a simple question? Why has capital gains tax not been brought completely into line with income tax? I know that it is converging, but are there any plans for it to converge further, for equity’s sake—in terms of working and investment?
Victoria Atkins
We acknowledge that there may be people who receive very small amounts of capital gains—through historic investments in shares, for example—but for some there is also an element of risk taking, perhaps when they are starting their own businesses. We want to reflect that, but we are mindful of the need for a closer relationship between the two systems, which is why we have tried to achieve a fair balance between those who earn their incomes through paid employment or self-employment and those who obtain theirs through dividends and capital gains.
Clause 9 maintains the current levels of inheritance tax thresholds for two years longer than previously planned, until 2028. Despite these changes, qualifying estates will still be able to pass on up to half a million pounds tax free, and the estates of surviving spouses and civil partners will still be able to pass on up to £1 million tax free. More than 93% of estates will continue to have no tax inheritance liability in each of the next five years; only 6% are expected to have a liability in 2022-23, and it will still only be 6.6% in 2027-28.
Let me now turn to the clauses relating to the taxation of electric vehicles. The transition to EVs continues apace, with new electric car registrations increasing by 76% between 2020 and 2021. Given the OBR’s forecast that 50% of all new vehicles will be electric by 2025, it is right that we seek to bring those vehicles into the motoring tax system.
Matt Rodda (Reading East) (Lab)
Can the Minister update the Committee on what research is being carried out by her colleagues in Government on the future impact of this measure? There has been a healthy take-up of electric vehicles so far, but she has not mentioned the future.
Victoria Atkins
I shall come to that in a moment, but we have been committed since 2020 to supporting the transition to electric vehicles; in fact, we have committed ourselves to £2.5 billion of support. We are giving the industry certainty about the scale of its ambitions through the zero-emission vehicle mandate. We will continue to incentivise low-emission vehicles through the company car tax, to which I am about to refer. We already publish data on air pollution, electric charging infrastructure and vehicle registrations by fuel type. That information will be available for the House to scrutinise—and, indeed, available to anyone who is interested—over the coming years.
Clause 10 will equalise the vehicle excise duty treatment of electric, petrol and diesel vehicles from April 2025, applying to both new and existing electric vehicles. The VED system will continue to support the transition to electric vehicles through favourable first-year VED rates for the lowest-emission vehicles, and owners of new zero-emission cars registered on or after 1 April 2025 will be liable to the lowest first-year VED rate, which is currently £10 a year. From the second year of registration onwards they will move to the standard rate, which is currently £165 a year. The expensive car supplement exemption for electric vehicles is also due to end in 2025. Eligible new vehicles, which are currently those with a list price exceeding £40,000, will therefore also be liable for the supplement. Those changes will raise more than £1.5 billion a year by 2028.
However, we continue to provide, and want to provide, appropriate incentives for the transition to electric cars. Clause 11—here I come to the point raised by the hon. Member for Reading East (Matt Rodda)—therefore makes changes to secure long-term certainty on company car tax rates, which have been effective in incentivising the take-up of low and zero-emission vehicles. According to figures from the British Vehicle Rental and Leasing Association, about 60% of electric vehicles on UK roads are company-registered. We have tried to ensure that that continues by increasing the appropriate rates up to 2028, and in a modest fashion. These rates are used for the purpose of calculating the taxable benefit of a company car, and we are setting them out now to provide certainty about the tax incentives available for the transition to electric vehicles. This measure supports the continued take-up of lower-emission vehicles and, therefore, our broader commitments on climate change and air quality.
Matt Rodda
I thank the Minister for her extensive description of the current policy, but it still appears that the Government are not yet planning to assess the likely decline in the take-up of electric vehicles as a result of the tax changes. Will she please write to me to clarify the position?
Victoria Atkins
I will happily write to the hon. Gentleman, who I know takes a close interest in this issue, but I must challenge the assumption that the measure will lead to a decline in the take-up of electric vehicles. This is an example of the Government’s boosting interest in electric vehicles at quite a delicate stage in their development. I say that as a proud early adopter of an electric vehicle—and even a few years ago, the number of charging points was far lower than it is now.
Of course there is much more to be done over the coming years, but I think the public will begin to gain even more confidence in the range of electric vehicles, especially as companies are able to improve their range and we build an infrastructure of charging points around the United Kingdom. That in itself will help to encourage take-up, along with, of course, the bold commitment to prohibiting the sale of new petrol and diesel cars in 2030. We wanted very much to encourage this in its early days, but we think we have now reached a stage at which the 7 million or so electric vehicles on the road should be contributing their piece towards keeping the road network in the state that we would expect.
Geraint Davies
Is the Treasury looking into the possibility of higher taxes on SUVs? These much larger vehicles consume more petrol and diesel, but also take up more parking space and kill more children and other pedestrians. They also stick out in the road and obstruct cyclists. The number of SUVs is increasing enormously. Is there any reason for the fact that the Minister did not look into that higher taxation, perhaps some political reason? It would clearly be a good environmental and economic initiative.
Victoria Atkins
We introduced the expensive car supplement some time ago, and a great many of the cars that the hon. Gentleman has described would fall into that category, particularly if they were bought new. Notwithstanding his assertion, there is no ideological reason for this. We are very conscious of the pressures on the majority of road users, and although, as the hon. Gentleman fairly pointed out, the use of SUVs has increased, that certainly does not mean that everyone who buys a third-hand or fourth-hand SUV is among the wealthiest in society. So we have tried to balance the rights and interests of those who are already paying car tax and also of those driving electric vehicles, who we think, after a certain period of time, should be contributing more towards the tax system than they do at the moment.
As I was saying, clause 11 deals with company car tax rates in order to provide businesses with the certainty they need to plan in relation to vehicle provision. Finally, clause 12 simply sets out the short title of the Bill in the usual manner for such legislation. I hope that hon. Members will not have anything to say about that, but I look forward to any comments on clause 12. I have stuck to the Bill itself because I want to listen to those hon. Members who have kindly put down amendments, which will be debated now. I will attempt to answer some of those challenges, questions and points as I wind up the Committee stage of the Bill in due course.
The First Deputy Chairman of Ways and Means (Dame Rosie Winterton)
I call the shadow Minister.
Victoria Atkins
I thank my hon. Friend for the constructive and eloquent way in which he has represented the interests of his constituents and those critical businesses in his constituency. I genuinely take this matter very seriously. In addition to a wider roundtable meeting that I am having next week with a broader range of sectors that may be affected by this, I wonder whether it would meet with his approval if we could have a meeting before Christmas specifically with the life sciences industry to try to ensure that we continue to see the thriving industry he has described, while also bringing about these much-needed changes to the R&D tax reliefs.
Anthony Browne
I thank the Minister for that positive and constructive response. I would be absolutely delighted, and I know that the industry would be delighted, to sit down with her urgently in the next few weeks to go through the different options.
My last comment on the R&D tax credits is on evaluation. Various people have mentioned in this debate and on Second Reading the effectiveness of those and whether they lead to more research and development. Clearly, we do not want to give good taxpayers’ money to businesses if they do not end up doing what we want them to do, which is doing more research and development. New clause 3 asks for evaluations. There are various published evaluations by His Majesty’s Revenue and Customs and other bodies already about this, but I would just caution against reading too much into the headlines, because the evaluations I have read combined the whole spectrum of businesses that claim research and development tax credits, including the fraudsters, the chancers and the people who are just doing stuff they would do anyway and trying to get a tax credit for it, and all the knowledge-intensive companies in life sciences and other sectors that are doing the valuable research we want to encourage.
I would caution the Government to base any policy on an evaluation of how the tax credit is spent on the businesses that they want to encourage, as opposed to the fraudsters and the chancers that they do not. Any change to the regime needs to try to separate and distinguish between those two branches. As a result of the constructive approach taken by the Government, who I know want to sort this out, I do not think new clause 3 is necessary and therefore I will not be supporting it. I do support the Finance Bill, however, and commend it to the Committee.
Caroline Lucas
I certainly agree with the hon. Gentleman. If I had to make a suggestion about where the Government should look next, it would be the distribution network operators—the companies that run the grids. There has been no spotlight on them at all even though they are making massive profits right now.
The hole at the heart of the windfall tax has led Shell—the UK’s fourth largest oil and gas producer—to pay no windfall tax or, indeed, any normal oil and gas tax at all. Indeed, oil and gas companies, which have made frankly grotesque profits, will still be able to claim £91.40 in tax relief for every £100 invested in oil and gas infrastructure. What is more, from January 1 a company spending £100 on upstream decarbonisation—which essentially translates as reducing emissions from the process of extracting oil and gas that goes on to be burned—will now be eligible for £109 relief. In other words, the taxpayer is actually paying the oil companies, which are already raking in massive profits—not the other way around.
The Government plan to make real-terms cuts to Departments that have already been starved of funding. They talk about “sacrifices” and “difficult decisions”, as the Chancellor has. Charities warn of a humanitarian crisis, and new research published this weekend shows that almost 200,000 additional young families will be pushed into fuel poverty come April when the energy price guarantee rises to £3,000. In that context, how can the Government possibly justify a situation in which taxpayers are supporting oil and gas companies, whose profits have absolutely ballooned, to fulfil obligations that they can perfectly well afford to pay for themselves.
It is also worth comparing this tax with the one on low-carbon electricity generators, which will be subject to a windfall tax of 45% for revenues above £75 per MWh, yet will not be eligible for investment relief at all. That leads to a ludicrous situation whereby companies will get a bigger tax break for building a wind turbine to power an oil rig than for building one that generates power for the energy grid. I simply cannot see how that is defensible in any shape or form.
The autumn statement should have been the moment where the Chancellor launched a transformation of our economy, powered by abundant renewable energy and with good green jobs. Instead, we had continued support for a costly and slow nuclear white elephant, and for the fossil fuels choking our planet. The so-called investment allowance—it is better termed “obscene subsidy”—is, frankly, a disgrace that fails to tax oil and gas companies properly and comes at huge cost to the public purse. Indeed, it has been estimated that if Rosebank—the UKs largest undeveloped oilfield—is developed, its owners would effectively receive more than £500 million in taxpayer subsidies.
To put that figure into context, it would be enough to extend free school meals to every child whose family receives universal credit, to pay the annual salaries of more than 14,000 nurses, or to build one new medium-sized hospital. Choosing between genuinely improving our society or subsidising a climate-wrecking project—Rosebank, in this case, which would produce more emissions than 28 low-income countries combined—should not be a difficult choice.
Make no mistake, it is a subsidy—including, it would appear, according to the Government’s own definition in the Subsidy Control Act 2022. I am sure the Government will deny that, but perhaps they will be more inclined to take note of the Institute for Fiscal Studies, which has stated that the investment allowance
“means that North Sea investment will be massively subsidised”,
through which loss-making investments could be rendered commercial.
Put simply, my new clause would require the Government to publish an assessment of the impact of the investment allowance on revenue raised by the windfall tax. The Government estimate that the oil and gas sector will pay around £80 billion in tax over the next six years, but it is essential that we have greater transparency on how much revenue will be forgone. That revenue could help to finance a real retrofit revolution to upgrade the UK’s leaky homes so that we get off gas for good.
Of course, I welcome the £6 billion investment in energy efficiency from 2025, but that will be of little comfort to households that are struggling to heat their homes right now. Crucially, my amendment would also require the Government’s assessment to cover the impact of the investment allowance on the UK’s ability to meet its domestic and international climate targets. The Glasgow climate pact, which the UK presided over, includes the commitment to pursue efforts to limit global heating to 1.5°C degrees, but the UN has made it clear that Governments plan to produce more than double the amount of fossil fuels in 2030 than would be consistent with staying below that critical threshold. I am aware that a number of amendments seek that kind of assessment of the investment allowance, and I welcome them, but I believe mine goes further because it would require the assessment to consider the impact on the 1.5° target, in addition to net zero and the UK’s carbon budgets.
It is no longer acceptable for the Government to look at its policies in isolation from our planet’s shared carbon budget. Not only does oil and gas extracted in the UK add to global emissions regardless of where it is burned, but, as the Committee on Climate Change has acknowledged, further extraction
“will support a larger global market overall”—
I remind hon. Members that that global market already has more oil and gas planned than we can possibly burn in keeping below 1.5°, and that is before we start extracting more. I therefore urge the Government not only to accept my new clause but to scrap the investment allowance once and for all, for the sake of our climate and the lives of so many people who are struggling with the cost of living crisis.
Victoria Atkins
I thank hon. Members for their thoughtful contributions to today’s Committee of the whole House. I will take a few moments to set out our views on the proposed amendments and the reasons why we will not support them.
I will deal first with amendments 3 and 4 and new clauses 1, 2 and 9, which relate to the energy profits levy clauses in the Bill. Starting with the amendments, my hon. Friend the Member for Poole (Sir Robert Syms) asked how “extraordinary” profits are defined, and we have not had a chance to draw that out in the course of the debate so far. The definition for the energy profits levy applies only to the profits that companies make from producing oil and gas in the UK and on the UK continental shelf. That is why we see reports in the newspaper about certain companies not contributing to the levy this year. I am not allowed to speak about individual taxpayers, but we have had to specifically focus it on UK business because we are raising taxes for the UK Treasury. That is how we are defining it.
My hon. Friend expressed concern, it is fair to say, about what will happen with the levy if prices go down, as we sincerely hope they will. Through this difficult announcement in the autumn statement, we are expanding the time in which the levy will operate until March 2028. We have done that to provide companies with certainty, because the latest OBR autumn statement price expectations for oil and gas across the forecast horizon exceed average predictions when the levy was first introduced. Commodity prices, particularly for gas, are expected to remain above their long-term average for the foreseeable future, but we will continue to keep the levy under review, as we do with all forms of taxation, while it is in place.
Moving on to amendment 3, the Government reject the premise that the levy should have been in place earlier. In the early months of this year, three significant things changed: first, there was a new war driven by Putin in Ukraine, which introduced significant instability to global energy markets; secondly, inflation was considerably higher than was previously expected; and thirdly, the Government had concrete information on the autumn and winter energy price cap. We therefore introduced the levy in response to these fast-moving conditions.
I welcome to her place the hon. Member for North Shropshire (Helen Morgan), whom I have not had the pleasure of seeing across the Chamber, if she can look up from her phone. Just to give a little context to the statistics, before covid the British economy spent £40 billion a year on energy costs. Today, the annual figure is closer to £200 billion. That means the British economy has to pay an additional £160 billion a year on energy. That is like withstanding a pressure equivalent to an entire second NHS. That is why we have had to make many of these very difficult decisions in the autumn statement, but in particular we introduced the energy profits levy and are now increasing it because of this difficult financial situation.
Amendment 4 and new clause 1 would require the Government to report on how much additional revenue would have been generated without the investment allowance. We have always been clear that we want to see significant investment from the sector to help protect our energy security. The North sea will continue to be a foundation of our energy security, so it is right that we continue to encourage investment in oil and gas. The levy will raise substantial revenues following the changes introduced by this Bill—more than £40 billion over the next six years. That takes into account the tax relief available through the investment allowance. Figures on the amount of tax raised through the levy will be published periodically, in line with other taxes, and His Majesty’s Revenue and Customs also publishes data on the costs of reliefs, and that is likely to include the investment allowance once data is available.
Although it is important to note that many companies already publish tax data through voluntary transparency schemes, the Government respect the commercial confidentiality of taxpayers. Companies within scope of the levy will be reporting information on their taxable profits in their tax returns. New clause 1 also refers to the impact of the investment allowance on the UK’s climate commitments, as does new clause 9. Supporting our domestic oil and gas sector to boost energy independence is not incompatible with these commitments, as we will need these fuels for decades to come as we transition to clean energy.
Our domestically produced gas generates lower emissions than imported seaborne liquefied natural gas, so supporting home-grown hydrocarbons helps to reduce emissions overall. When the upstream industry has reduced its overall emissions by 11% since 2018, it would not make sense to remove support towards further progress. The industry has agreed with the Government’s stretching targets towards 2030, and the investment allowance will provide additional relief to support that.
Victoria Atkins
I beg to move, That the Bill be now read the Third time.
The House has had a great number of opportunities over the last two weeks to debate the autumn statement and the Finance Bill that underpins it. We had extensive and comprehensive questions to the Chancellor when he delivered the autumn statement, and we then had two days of debate on the measures in the statement. We had Second Reading on Monday and Committee of the whole House today. I humbly submit that the House probably does not need to hear any more from me about the Bill.
I will quickly summarise the autumn statement. My right hon. Friend the Chancellor was honest about the difficult decisions this Government will need to take to tackle the cost of living crisis and rebuild our economy. The Finance Bill takes forward important tax measures to help stabilise the public finances, to provide certainty to markets and businesses, and to support growth. We are legislating rapidly on this small number of measures because we are serious about fiscal sustainability, which is essential for stability and growth.
I take a moment to thank colleagues on both sides of the House for their scrutiny of this small but important Bill on Second Reading and in Committee. I also put on record my thanks to the Bill team in the Treasury, to the policy and legal officials across the Treasury, HMRC and the Office of the Parliamentary Counsel and, of course, to my private office—every Minister knows the important role our private offices play in supporting the passage of any Bill.
I commend the Bill to the House.
United States - Brazil Double Taxation Convention
Victoria Atkins Excerpts(2 years ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
A double taxation convention with Brazil was signed in Brazil on 29 November. The text of the convention is available on the HM Revenue and Customs pages of the www.gov.uk website and will be deposited in the Libraries of both Houses. The text of the convention will be scheduled to a draft Order in Council and laid before the House of Commons in due course.
[HCWS399]
Draft Social Security (Class 2 National Insurance Contributions Increase of Threshold) Regulations 2022
Victoria Atkins Excerpts(2 years ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
I beg to move,
That the Committee has considered the draft Social Security (Class 2 National Insurance Contributions Increase of Threshold) Regulations 2022.
It is a pleasure to serve under your chairmanship, Mrs Cummins. You suit that seat very well, if I may say so.
The Government’s priority for taxation is to be fair by following two broad principles: first, we ask those with more to contribute more, and secondly, we avoid the tax rises that most damage growth. The measure we are discussing today delivers the final element of Government’s ultimate ambition to align the national insurance contributions thresholds with the personal allowance for income tax. In other words, nobody pays tax wbelow £12,570. This latest and last change benefits around 500,000 self-employed people.
The National Insurance Contributions (Increase of Thresholds) Act 2022 increases the point at which class 1 NICs and class 4 NICs are paid to align with the personal allowance for income tax. The measure will also increase the point at which the self- employed pay class 2 NICs, so that it aligns with the personal allowance. In practice, this measure means that no one will pay a penny of income tax or NICs on their first £12,570 of income.
The measure goes further, and through class 2 NICs—the mechanism by which the self-employed become entitled to certain contributory benefits such as the state pension and statutory maternity pay—we will maintain the point at which the self-employed gain access to those benefits through the small profits threshold. That means that individuals will benefit from the increased threshold for paying class 2 NICs without losing their entitlement to contributory benefits. That will apply retrospectively from the start of the 2022-23 tax year, and will be delivered by the annual self-assessment process for the vast majority of customers following the end of the tax year.
The measure is the fulfilment of the Government’s obligation to increase the point at which the self-employed pay class 2 NICs and, importantly, it allows people to keep more of what they earn. I therefore seek approval of the regulations.
James Murray
Absolutely, Mrs Cummins. I am simply asking the Minister to compare her comments on the regulations in front of us with what she said last night. She may choose to address that in her response.
Victoria Atkins
I am extremely grateful to the shadow Minister for his comments. As he knows, none of his questions are within the scope of the regulations. I will be very happy—[Interruption.]
The Chair
May I gently remind everyone that some of the hon. Gentleman’s questions are in scope? If they were not, I would have said. But do feel free to write to the shadow Minister.
Victoria Atkins
Yes.
I am helpfully reminded that the Office for Budget Responsibility produced updated forecasts for the autumn statement, including on all previous measures. Any broader debates about the autumn statement should be dealt with tomorrow in the Finance Bill Committee.
James Murray
You have been very clear in your guidance, Mrs Cummins, about what is within and without scope. The points that I referenced about the tax information and impact note were referred to in the explanatory memorandum to the regulations. I therefore followed your judgment, Mrs Cummins, that they were within scope. If the Minister is not entirely clear of my argument, she can either consult Hansard or speak to me after the Committee rises.
Victoria Atkins
I have been assured that we produced updated forecasts, as I have already said, for the autumn statement. On the details about TIIMs, I will happily speak to him after the Committee, or write to him and put a copy of my response in the Library. We are in danger of encroaching on the Finance Bill, however, and—
Victoria Atkins
I have already said to the shadow Minister that I will write to him on outstanding matters. I have taken that approach because we will be going through an awful lot of this tomorrow in the Committee stage of the Finance Bill.
Question put and agreed.
Finance Bill
Victoria Atkins ExcerptsMonday 28th November 2022
(2 years ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
Let me start by echoing the condolences expressed by the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) during what are very difficult times in her constituency. We send, obviously, our sincerest wishes to the families and friends of those two young men, and hope that the rest of the community, who must be finding this a very worrying time, manage to get through it as well.
I thank Members on both sides of the House for their contributions to the debate. My hon. Friend the Member for Eastleigh (Paul Holmes) said that the one wish of his constituents was for “boring leadership”, setting a challenge that I will try to face up to in my speech.
The Chancellor set out our economic plan to deal with the financial headwinds that we face now and in the coming months, and the next step in that plan is this Bill. We are taking these changes forward rapidly now because we are serious about fiscal sustainability, economic stability and growth. Before I talk about our plan, however, I will correct some “facts” that were given during the debate.
The Labour Front Benchers and the hon. Member for Warwick and Leamington (Matt Western) criticised our growth record, but, as my hon. Friend the Member for North East Bedfordshire (Richard Fuller) reminded us, over the last 12 years we have experienced the third highest growth in the G7, behind only the United States and Canada. That is some record of growth, but, oddly enough, it was absent from the speeches made by Opposition Members. The OBR has said that higher energy prices explain the majority of the downward revision in cumulative growth since March. It has confirmed that the recession is shallower, inflation is reduced, and about 70,000 jobs are protected as a result of our decisions.
Victoria Atkins
I will in a moment.
My hon. Friend the Member for Darlington (Peter Gibson) emphasised the importance of growth and levelling up. In his own constituency, he has seen the positive effects of what the Government have done. Only last week the Prime Minister visited the Darlington Economic Campus, along with the Exchequer Secretary. My hon. Friend the Member for Ipswich (Tom Hunt), and others, emphasised the importance of further education and, in particular, education for those with special educational needs. By 2024-25, £3.8 billion will have been invested in skills—and, of course, there is the Barber review, about which we have heard today.
My hon. Friend the Member for West Bromwich West (Shaun Bailey) outlined his admiration for the fact that, even in these difficult economic times, we are still protecting public services by investing billions of pounds in the health service and in education. We will continue to emphasise these facts as we move on with this work.
This Bill is part of our plan to deal with the international pressures caused by the invasion of Ukraine, inflation and the hangover from the pandemic. The changes to the energy profits levy will ensure that the oil and gas companies experiencing extraordinary profits pay their fair share of tax.
The changes to R&D tax relief ensure that the taxpayer gets better value for money as we continue to support the valuable research and development needed for long-term growth while cracking down on error and fraud. The changes to personal tax ensure that, although we are asking everyone to contribute a little more towards sustainable public finances, we do so in a fair way with the better-off shouldering a greater burden. The changes to the taxation of electric vehicles ensure that all motorists pay a fairer tax contribution while continuing to provide generous incentives to support EV uptake.
What is Labour’s plan? The one thing I heard seems to centre on non-doms. The problem with Labour’s plan is that the maths does not add up. Labour says its plan will save £3 billion but, in the last year, non-doms paid nearly £8 billion in income tax, corporation tax, capital gains tax and national insurance. What is more, they have invested £6 billion in investment schemes since 2012, which is precisely why we are taking a careful and considered approach. Indeed, the Chancellor told the Treasury Committee last week that we will continue to look at such schemes. But an interesting fact is that, in 2017, we were the Government who ended permanent non-dom status, which Labour did not manage to do in 13 years.
The energy profits levy and the electricity generator levy will raise £55 billion over the next six years from companies that should not and could not have expected such enormous profits—caused by the barbaric war in Ukraine—when they were putting their business plans in place one or two years ago. The investment allowance remains at its current value to allow companies to claim around £91 of tax relief for every £100 of investment. Again, Labour was against this but, as my hon. Friend the Member for Waveney (Peter Aldous) set out very cogently, businesses have to be able to invest, as that is how we will ensure our energy security over the coming years.
The same is true of R&D tax relief. My hon. Friend the Member for Amber Valley (Nigel Mills) reminded us of his experience as a trainee accountant, and my hon. Friend the Member for West Bromwich West wants an industrial revolution in the Black Country. I would like one in the east midlands, too. We aim to ensure that we get more bang for our buck from this tax relief by focusing the money where it will bring about the most profit.
My hon. Friend the Member for South Cambridgeshire (Anthony Browne) is proud of the life science superpower that is his constituency. We are listening, and we will consult on a single scheme design ahead of the Budget next spring. Of course, I will be delighted to meet him and others—I am already in the process of organising that meeting—to discuss how we can support smaller businesses.
My hon. Friend the Member for North East Bedfordshire asked whether tax credits are being paid more quickly. He knows we had to take extraordinary steps in response to a suspected criminal attack on the R&D tax credit scheme earlier this year. The necessary implementation of additional checks created a small backlog of claims, but this backlog has been cleared. We are now processing 80% of claims within 40 days, and we want to improve that figure even more.
Many Members talked about personal tax thresholds. We have tried to balance the needs of the country as a whole with the need to protect the most vulnerable. That is why those with the broadest shoulders carry the most weight, which is the fairest approach. The personal allowance will still be £2,150 higher in April 2028 than it would have been had it been uprated by inflation since 2010.
Finally, my hon. Friend the Member for Bracknell (James Sunderland) expressed concern about the electric vehicle measures. I drive an electric vehicle, and I think it is right that those who drive an electric vehicle on the roads should now contribute towards the upkeep of those roads. We should see that as a success of our plans to encourage more people to drive electric. We have 7 million electric vehicles on our roads, and we have every reason to believe the number will continue to increase, so it is right that electric vehicle drivers contribute towards the upkeep of the roads.
As my hon. Friend the Exchequer Secretary said at the beginning of this debate, the UK is facing challenging headwinds. That means that difficult decisions need to be taken to support the public finances, providing stability and certainty to markets, and providing the foundation for future growth. This Finance Bill will help to deliver those and, importantly, it will do so in a fair way, with the heaviest burden falling on those with the broadest shoulders. It forms an essential part of our plan for the economy, so I commend it to the House.
Question put, That the amendment be made.
Energy (oil and gas) profits levy
Victoria Atkins Excerpts(2 years ago)
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The Financial Secretary to the Treasury (Victoria Atkins)
It is a pleasure to be at the Dispatch Box to respond to the many powerful and passionate contributions made by my right hon. and hon. Friends and the sometimes incorrect contributions made by other hon. Members, and it is a genuine privilege to wind up on behalf of the Government in support of the autumn statement. We have discussed and debated many aspects of the autumn statement. We have heard some passionate and clear analyses of the situation in our constituencies as well as nationally and internationally, and of the state of the economy at home and around the world.
The autumn statement sets out our ambitions for stability, growth and public services. We say that it is a balanced plan: on the one hand, it will strengthen our public finances, bring down inflation and protect jobs, and on the other hand, it will protect standards in schools, cut NHS waiting times, fund social care, cap energy bills and support those on benefits. We have been frank, however, that that has been difficult. We as a Government are prepared to take those decisions in the country’s best interests. There is no question but that these are challenging times, but neither the origins nor the impacts are unique to this country.
To correct some Opposition Members, the independent Office for Budget Responsibility has said that the fall in living standards is almost entirely driven by rising world prices. We can see the evidence in the international figures. Inflation is high here, but it is higher in Germany, the Netherlands and Italy. My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) explained the terrible impacts that inflation can have and my hon. Friend the Member for Wantage (David Johnston) made the critical point that inflation hurts the poorest the most. That is precisely why the Government’s No. 1 priority is to tackle inflation.
Interest rates have risen here, but they have risen more quickly in the United States, Canada and New Zealand. My hon. Friend the Member for Newbury (Laura Farris) reminded the House that the Governor of the Bank of the England gave evidence to the Treasury Committee this week and said that the disruption in the mortgage market caused by the mini-Budget had subsided—indeed, that it subsided in mid to late October. I am grateful to her for that reminder.
Growth forecasts have fallen here, but they have also fallen elsewhere in the world, including falling further in Germany. The OBR says that higher energy prices explain the majority of the downward revision in cumulative growth since March. Governments do not have the luxury of choosing the context in which they must operate. Indeed, the IMF expects one third of the world’s economy to be in recession this year and next. The job is to understand what we face, address those issues deliberately and responsibly on behalf of the communities we serve and then deliver that action, and that is exactly what we are doing.
Simon Hoare (North Dorset) (Con)
Does the Minister agree with me that the measures set out in the statement and under discussion over these last few days will mean that, when the international economy and our own start to improve, we will be in a far better place to reap the benefits of that global economic improvement than if we were just to sit here, twiddle our thumbs and pretend that everything was okay?
Victoria Atkins
My hon. Friend is absolutely right. Indeed, the OBR—the independent OBR—again confirms that because of our plans the recession is shallower, and inflation is reduced because of these very difficult decisions we have taken. Unemployment is also lower, with about 70,000 jobs protected as a result of our decisions.
Drew Hendry
The Minister is very keen to lay inflationary pressures globally, but how does she explain the OECD figures showing that, for market interest rates, the UK is at the very top of the tree?
Victoria Atkins
As the Governor of the Bank of England has explained, disruption in the markets has subsided, and the impact of that has flushed through the system. I would emphasise to the hon. Member the evidence we are seeing in other countries. I do not shy away from that; I offer it as an example of the pressures we are all facing internationally. It is precisely that international picture that the Government are addressing.
The hon. Member for Bradford East (Imran Hussain) laid down in, if I may say so, a rather loud speech that there was no help for his constituents with the cost of living. It was passionate, I am told. It is fair to say that my hon. Friend the Member for Southend West (Anna Firth) expressed astonishment at his passion, and my hon. Friend the Member for Bolsover (Mark Fletcher) said that some Opposition Members were living in a different galaxy.
On a serious note, I do want to help colleagues across the House understand the help that is available, because I know that hon. Members will be responding to their constituents’ worries. Any constituent who is on benefits or paid pensions will have them increased by 10.1%. Any constituent on means-tested benefits will have a one-off payment of £900. Any constituent on pension credit will have a one-off payment of £300 on top of their winter payment, and those who are living with disabilities will have a one-off payment of £150. Any constituent on the national living wage will see an increase to their salary, with the hourly rate going up to £10.42. Every single one of our constituents will see help through the energy price guarantee, which is worth on average £900 this year and will be worth £500 next year, and it helps to lower inflation by 2%.
Victoria Atkins
I will give way, but there is even more to come.
What is more—and his is an important point in relation to the very moving cases we have heard in the House today—the most vulnerable households will be able to secure help through the household support scheme, to which we have added a further £1 billion precisely to help those who are in trouble. I know that hon. Members from Northern Ireland are most concerned about people living off-grid. We have doubled the one-off payment that will be given to people living off the grid, and that payment will be given in the winter. Finally, if anyone is in any doubt as to the help they can give their constituents, they should please look at the “Help for Households” website, which sets this all out very clearly.
I am now going to race through some of the changes that we have had to make to taxes. We have tried to be fair and compassionate in these difficult times, meaning that those with the broadest shoulders bear the heaviest weights, and we have wanted to avoid tax rises that most damage growth. On personal taxes, we have reduced the threshold at which the 45p rate becomes payable from £150,000 to £125,140, which means that those earning £150,000 will pay just over £1,200 more in tax each year. We are maintaining the income tax personal allowance and thresholds, which is a difficult but necessary decision, but even after these freezes, we will still have the most generous set of tax-free allowances of any G7 country.
On business taxes, we are raising corporation tax to 25p precisely because, as has been said, we want the largest companies to bear their responsibility. Even at the increased rate of 25%, it will still be the lowest rate of corporation tax in the G7. We have frozen the employer national insurance contribution threshold until April 2028, but 40% of businesses will still pay no NICs at all. The VAT registration threshold will stay which, incidentally, is almost twice as high as EU and OECD averages.
Victoria Atkins
Let me move on to business rates, and then I will come to my hon. Friend and the hon. Lady. We know how important business rates are for our high streets, pubs, shops, and local hospitality businesses. That is why with the revaluation that is needed, we have none the less got a package of nearly £14 billion-worth of help, so that nearly two thirds of properties will not pay a penny next year, and thousands of pubs, restaurants and small high-street shops will benefit.
Jonathan Gullis
The Minister is talking about taxation. I am seriously concerned that the Government have enabled council tax to go up by 5%. In Stoke-on-Trent a 1% rise brings in merely £900,000, which is the second lowest of any local authority in England, and it simply will not cover the black hole that inflation has brought. Will the Government look at areas such as Stoke-on-Trent and give additional help? If they do not, we will end up in the situation that Croydon Council has just announced: the third time it has gone bankrupt.
Victoria Atkins
I thank my hon. Friend. For anyone who missed it, I think he just said that Croydon Council has gone bankrupt for a third time, which is worrying, given that it is, I think, a Labour council. He mentioned the council tax referendums, and we chose that course precisely because we want to address the very real issue of social care. We have ensured that we are balancing those pressures with grants from central Government, and I will come to that in a little more detail in a moment.
Labour’s answer to these difficult sets of international and domestic problems seems, as has been pointed out, to be non-doms. Labour says that scrapping non-doms will apparently earn £3 billion in savings. Well, here are some facts. Non-domiciled taxpayers were liable to pay £7.9 billion in UK income tax, capital gains tax, and national insurance contributions in the tax year ending 2021. Non-doms have invested more than £6 billion in the UK since 2012, using the business investment relief scheme. In other words, non-doms are paying rates of tax that far outstrip the savings that Labour would make, and it is a very one-dimensional answer to a difficult problem.
Carla Lockhart
Persistence has worked. I am sure the Minister will welcome the increase from £100 to £200 for the heating oil payment in Northern Ireland, and that it will go to all households. However, for weeks now £400 has been dangled in front of the people of Northern Ireland for the energy support payment. Can she assure my hard-pressed constituents that they will get their £400, and can she say when they will get it?
Victoria Atkins
I have been nudged by the Whips, so would the hon. Lady allow me to write to her? I know how complicated it is in Northern Ireland.
I could talk about growth. Interestingly, Conservative Members were talking about growth and about how we can ensure the future of our economy for our children and grandchildren. I am extremely grateful to my right hon. Friends the Members for Aldridge-Brownhills (Wendy Morton), for North West Hampshire (Kit Malthouse), for Epsom and Ewell (Chris Grayling), and for North Somerset (Dr Fox), and to my hon. Friends the Members for Bolsover (Mark Fletcher), for Newcastle-under-Lyme (Aaron Bell), for Stoke-on-Trent North (Jonathan Gullis), and for Stoke-on-Trent South (Jack Brereton). They all emphasised how vital growth is if we are to get through these difficult issues and build a good and rich economy for us all.
We announced in the autumn statement some interesting and important measures, including safeguarding capital investment over the next five years, so that we have the largest investment in public works for more than four decades. Of course, innovation and education will be critical, which is why, next year and the year after, we will invest an extra £2.3 billion a year in schools.
On health, because we know how important it is to each and every one of our constituents, despite the very difficult times that we are in, we are providing £6.6 billion to the NHS over the next two years. We will be providing an estimated 200,000 more social care packages for the elderly and most vulnerable in our society, because we are increasing funding in these very difficult times.
We have had to take tough decisions now to lay the foundations for our economy for the next generation. We will not pass on our debts to our children and grandchildren, but we will provide education, skills and prosperity in the industries of the future. We are facing tough times, but we will rise again with a thriving economy, high employment and a bright, responsible economic future for us all. I commend the statement, but it also commends itself to the House.
Mr Deputy Speaker (Mr Nigel Evans)
The amazing influence of the Whips—sometimes.
Question put and agreed to.
Resolved,
That—
(a) provision may be made increasing the rate at which energy (oil and gas) profits levy is charged to 35%,
(b) provision may be made reducing the percentage in section 2(3) of the Energy (Oil and Gas) Profits Levy Act 2022 (amount of additional investment expenditure) to 29%, and
(c) (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision may be made for and in connection with extending the period for which the levy has effect until 31 March 2028.
The Deputy Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).
2. Amount of corporation tax relief for expenditure on research and development
Resolved,
That (notwithstanding anything to the contrary in the practice of the House relating to the matters that may be included in Finance Bills) provision may be made—
(a) increasing the percentage in section 104M(3) of the Corporation Tax Act 2009 to 20%, Friday 18 November 2022 OP No.73: Part 2 A. Calendar of Business 11
(b) reducing the percentage in section 1044(8) of that Act to 86%,
(c) reducing the percentages in sections 1045(7) and 1055(2)(b) of that Act to 186%, and
(d) reducing the percentage in section 1058(1)(a) of that Act to 10%.