Finance Bill

Victoria Atkins Excerpts

Committee stage & 3rd reading
Wednesday 30th November 2022 Commons Chamber

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

Draft Social Security (Class 2 National Insurance Contributions Increase of Threshold) Regulations 2022

Victoria Atkins Excerpts

Tuesday 29th November 2022 General Committees

[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.

--- Later in debate ---

[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]

This is not in scope.

[The Chair]

Not in scope.

--- Later in debate ---

[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.

--- Later in debate ---

[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—

[James Murray]

Will the Minister give way?

[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 Excerpts

2nd reading
Monday 28th November 2022 Commons Chamber

[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.

[Matt Western]

Will the Minister give way?

[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

Tuesday 22nd November 2022 Commons Chamber

[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%.

[Carla Lockhart (Upper Bann) (DUP)]

rose—

[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.

[Jonathan Gullis]

rose—

[Carla Lockhart]

rose—

[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]

rose—

[Victoria Atkins]

I give way to the hon. Lady.

[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%.

Oral Answers to Questions

Victoria Atkins Excerpts

Tuesday 15th November 2022 Commons Chamber

[The Financial Secretary to the Treasury (Victoria Atkins)]

I thank the hon. Lady for her question. The Government received about £143 billion in the last financial year from value added tax, which helps to pay for the services that we all care about, such as the national health service, so strict restrictions have been placed on the goods that can be exempted from VAT. I understand her concerns, however, and I would be happy to meet her to discuss what other forms of support we can provide. For example, we can commend Tesco, which has taken the decision not to charge VAT on its products.

[Greg Smith (Buckingham) (Con)]

The noble Lord Berkeley in the other place has estimated that scrapping HS2 would save the British taxpayer £147 billion—more pessimistic estimates have the saving at £100 billion. With a day of difficult decisions coming up on Thursday, surely scrapping HS2 is an easy one?

Public Sector Pay: Proposed Strike Action

Victoria Atkins Excerpts

Tuesday 1st November 2022 Westminster Hall

[The Financial Secretary to the Treasury (Victoria Atkins)]

It is a pleasure to serve under your chairmanship, Sir Edward. I congratulate the hon. Member for Cynon Valley (Beth Winter) on securing the debate. I will try to do her the courtesy of sitting down a couple of minutes before the end of the debate so that she can sum up.

I thank all Members for their contributions. I agree with every single contribution that has emphasised how important and valued our public sector workers, such as nurses, police officers, prison officers and teachers, are to our country. They are a source of great pride to us all, as the hon. Member for Rhondda (Chris Bryant) so eloquently said. I also agree that they deserve to be paid fairly, especially at a time when the cost of living has been rising. We understand the importance of recruiting and retaining the very best people in our public services, but we have to take care to ensure that we are responsible with the finite resource of taxpayers’ money—our money, which we and tens of millions of other people throughout the country pay—and consider the consequences of decisions that are taken in Whitehall.

In his statement in Downing Street, the Prime Minister was clear that economic stability and confidence are at the heart of this Government’s agenda. That is why he is so focused on tackling inflation. We have already heard about the difficult impact that inflation has had on day-to-day essentials, such as the cost of food, heating our homes and getting to and from school and work. They have all become more expensive, which means our wages and our salaries do not go as far as they used to. Sadly, wage inflation, particularly in the tight labour market that we have here in the United Kingdom—by the way, we should be proud that we have such a high employment rate—adds to the cycle of rising prices. That is the conundrum that we face.

On help with the cost of living, I must emphasise, not least because our constituents are listening, that a great deal of help has already been announced, including the energy price guarantee and the energy bill relief scheme. Our most vulnerable households will receive £1,200 of support this year through those measures, the council tax rebate and a one-off payment of £650 in cash for those on means-tested benefits. There are also other measures, but I am conscious of the time and I want to get to the meat of the topic.

[Chris Bryant]

Does the Minister agree that one of the most shameful things we have seen over the last few years is nurses going to food banks run by their own hospitals because their pay is not enough for them to survive?

[Victoria Atkins]

In his speech, the hon. Gentleman spoke about the rising cost of food. The pressures of international events, such as the war in Ukraine and its impact on grain supplies, which we know about from the coverage on our televisions, and on pesticides and agricultural tools, including those that farmers in my constituency need to help to feed our country, all play a part in that. The help we have provided, including the measures regarding wages, which I hope to get to in a moment, is vital and we need to keep the situation under constant review.

The hon. Member for Cynon Valley raised many questions about tax. I reassure her that the top 5% of earners are projected to pay half of all income tax in the next financial year. Income tax provides the largest form of income that the Government have. The top 1% of earners are projected to pay more than 28% of that amount, which is right because those with the broadest shoulders should bear the most.

[David Linden]

rose—

--- Later in debate ---

[Victoria Atkins]

I will make a little progress, if I may.

Pay settlements need to be affordable for our economy and avoid driving the wage-price spiral I have referred to. We know that parts of the private sector are unable to match current rates of consumer price inflation, so there would be an impact if we went down that route with the public sector. We have to protect the economy over the long term by not leaving the next generation—our children and grandchildren—with spiralling debt. We are a country that funds our promises and pays our debt.

[David Linden]

rose—

[Victoria Atkins]

I am going to make some progress. I will allow the hon. Gentleman to intervene in a moment.

Members will know that there are different processes for different parts of the public sector. Indeed, the devolved Administrations play a vital role in relation to some of the critical professions that we have just spoken about. In Wales, decisions on pay for teachers, doctors, nurses and other NHS staff are made by the Welsh Government, so I trust that the hon. Member for Cynon Valley will have discussions with the Welsh Administration in relation to those sectors.

In Scotland, decisions on teachers, police, prison officers, local government workers and workers for the devolved Administration are not made by the UK Government. Although health is devolved to Scotland, doctors, dentists and NHS “Agenda for Change” staff are nonetheless covered by the pay review bodies that report in England, which I will deal with in a moment.

[David Linden]

Will the Minister give way?

[Victoria Atkins]

I will do briefly, because I have three minutes left.

[David Linden]

The Minister is talking about those with the broadest shoulders bearing the weight of this financial crisis; will she encourage His Majesty the King to pay inheritance tax on his earnings from the Duchy of Lancaster?

[Victoria Atkins]

We keep all taxes under review. The hon. Gentleman will know that there is a statement coming in two weeks’ time. I am not going to comment on any decisions in relation to taxes, as it would be improper to do so, but I hope that he and the hon. Member for Glasgow South West (Chris Stephens) will speak to their SNP counterparts in their own Administration to ensure that they do as they have encouraged in this debate in relation to matters that are devolved.

[Chris Stephens]

rose—

[Victoria Atkins]

I am going to move on to the independent pay review bodies, because they play a really important role for some sectors and the pay that they receive.

Pay for many local government workers is agreed between the Local Government Association and trade unions, without direct involvement from the Treasury. Departments determine pay awards for many civil servants within the parameters set by the Government, but pay for most frontline public sector workforces, including nurses, teachers, police officers and armed forces, is set through the relevant independent pay review body. It will take evidence from the Government but also, importantly, from trade unions and wider independent research.

When I was prisons Minister, I had a gruelling session in which I was cross-examined by the prisons pay review body. I was delighted to accept the overwhelming majority of its recommendations when they came forth, with the only exception being the recommendation about the most senior prison officers, working on the principle that those with the broadest shoulders will be able to play their part in this endeavour.

On the point made by the hon. Member for Easington (Grahame Morris), working conditions for the public sector must focus on pay but also, importantly, on how people feel treated and how they feel in their workplace. That was something I tried to engender as prisons Minister, and I hope we will be able to build a real narrative about how our people are valued.

I am conscious of the time, so I shall address one or two of the pay increases that the independent pay review bodies have been able to deal with. Nurses at all NHS pay bands will receive at least a £1,400 increase, and all teachers will receive a minimum 5% increase to their pay, which will help early-career teachers to reach the Government’s commitment on starting salaries of £30,000. There are many other statistics that I could mention.

My final point is that we are disappointed that some public sector unions are considering strike action over pay. We want unions to engage not just with the Government, but with the pay review bodies and the devolved Administrations, in the processes that will run this year. We all know about—indeed, Members have been good enough to talk about it—the impact that strikes have on hard-working families, but I very much hope that we all understand just how vital these workers are. I will finish there to give the hon. Member for Cynon Valley time to sum up.

Ways and Means

Victoria Atkins Excerpts

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

[Peter Dowd]

My hon. Friend is absolutely right. The proposals for reorganisation will do nothing to help that—they are in a chaotic state.

[Victoria Atkins (Louth and Horncastle) (Con)]

I urge caution on the hon. Gentleman before he throws around wild accusations about the Government supporting tax dodgers. For what it is worth, in my previous life I used to prosecute massive tax fraudsters. I am very happy with the fact that I have helped fraud prosecutors to put a lot of nasty people into prison, so I take great offence at the hon. Gentleman’s attempt to cast all Conservative MPs in that way. The best way to deal with tax evasion and tax dodging is not to throw empty words across the Chamber but to work with the Government to reduce and stop something that we all want to see the end of: tax dodgers not paying their dues.

[Peter Dowd]

I hope the hon. Lady will be busier in her job.

I find it baffling that, at a time when the Government are introducing some of the most complex plans to make tax digital, and while there is so much uncertainty about how taxation and customs will work post-Brexit, they are choosing to fire HMRC staff rather than hire them. To put it simply, were the Government truly serious about wanting to close the tax gap, which costs the UK taxpayer a minimum of £36 billion every year, they would give it the resources it so desperately needs. Given the thousands of accountants and lawyers across the world whose sole occupation is to advise and enable tax avoidance, it will never be a fair fight.

The sieve-like measures on non-doms which I have mentioned are perforated even further by the plan to loosen the rules on business investment relief. That measure will allow non-doms to remit funds into the UK without paying the usual taxes. There is little evidence that such relief has been effective in encouraging greater investment in business, so expanding it is only a giveaway to non-doms. If any of us wish to invest, we have to pay the appropriate taxes. There should not be different rules for a privileged few, which maintains the Government’s view that the UK can only ever be attractive as a tax haven. The Government’s race to the bottom begins in earnest and enthusiastically.

Economy and Jobs

Victoria Atkins Excerpts

Thursday 29th June 2017 Commons Chamber

[Kirsty Blackman]

Absolutely. I think we will see increasing problems with that, and I shall come on to that later.

During the election campaign, the UK Government seemed unclear about the causes of poverty, so let me enlighten them: poverty is caused by people not having enough money.

[Victoria Atkins (Louth and Horncastle) (Con)]

If the hon. Lady is against consumer debt, which we all agree we are worried about, why is she so comfortable with public sector debt?

[Kirsty Blackman]

They are totally different things, and I am surprised that I have even been asked that question. The level of consumer debt is a massive problem for the economy, because people are going to be hit when this bubble bursts—that is what we saw happen in 2008.

Finance (No. 2) Bill

Victoria Atkins Excerpts

2nd reading: House of Commons
Tuesday 18th April 2017 Commons Chamber

[Peter Dowd]

I referred earlier to the money—£70 billion, I believe—that the Government have given away to corporations. That would be a start, and I would welcome the hon. Gentleman’s support for my proposal in the next Parliament.

We have seen £4.6 billion cut from the budget for social care, which is linked to, and on a continuum with, the NHS. The Chancellor has pledged to return only £2 billion over the next three years—£1 billion for the year 2017-18 and £500 million a year for the two following years—which is half what the King’s Fund has estimated that the social care sector needs not for next year, but today. That is another Conservative broken promise. Missed targets are pushing the NHS and social care into further crisis. The Government are behaving like an ostrich in that regard, and the situation is coming back to bite them.

I turn to small and medium-sized businesses, which contribute more to the British economy than they have ever done. SMEs are forecast to contribute £217 billion to the UK economy by 2020, but the Finance Bill does little to address the concerns of many business owners. The business rate system continues to be rigged in favour of giveaways for big corporations at the expense of SMEs. How can it be right for the business rates bills of a leading supermarket’s biggest stores to fall by £105 million, while independent shopkeepers struggle with a cliff-edge hike in their rates? That is a fact today. The system needs to be fairer and weighted more in favour of SMEs, which is why a Labour Government would bring in a package of reforms to ease the burden of business rates. Rising business rates and rising inflation are creating a perfect storm for SMEs. Small business inflation has risen to its highest point in eight years, with basic costs soaring by 3.2% last year. SMEs’ costs are predicted to go up by £6.8 billion by the end of this year. All that is happening while the Conservatives continue to look the other way in complete denial.

[Victoria Atkins (Louth and Horncastle) (Con)]

In that spirit, does the hon. Gentleman welcome the additional £20 million to £25 million a year to support some businesses that will no longer receive small business rate relief after the revaluation?

[Peter Dowd]

Of course I welcome that figure, but the hon. Lady has to ask herself whether businesses should have been put in that position in the first place. That is the fact of the matter. It is too little, too late. I accept the £20 million figure, which is fine. Small businesses need all the support that they can get, because we are talking about people’s jobs and about businesses that people have worked hard to grow and nurture, and there is a danger that they will go out of business as a result of Government policies.

--- Later in debate ---

[Victoria Atkins]

Does the hon. Lady accept, in the spirit of this part of her speech, that the introduction of the national living wage and its increase this very month to £7.50 help exactly the people whom she is talking about, and that raising the threshold at which we start to pay income tax must help as well?

[Kirsty Blackman]

I absolutely agree that things such as the national living wage—it is not a living wage, however; it is an increase in the minimum wage, and no calculation is done as to whether people can live on it—and the increase in the personal allowance have been positive for people at the bottom of the pile, in particular. However, the reduction in tax credits more than balances things out in many cases. People are losing more as a result of the changes to tax credits, for example, than they are gaining from the changes to the personal allowance and the minimum wage. I absolutely agree that those things are positive, but people are still feeling that their household budgets are squeezed by the cost of food going up in recent weeks, for example, which is set to increase, particularly for imported food.

A few people have mentioned intergenerational fairness, which is a real issue for me that I have spoken about a lot, and there has been a lot of stuff in the news this week about millennials. I am one of the 39 millennial MPs—I am 31 this year and was born in 1986—and many of my peers are worse off than their parents’ generation was in terms of the wages that they can expect to receive at a younger age and their access to property, whether through property ownership or through rents as a proportion of their income. This is purely anecdotal, but many people at my age are thinking about putting off having children because they cannot afford a secure home. For a Government looking forward to a future tax take, that is a real issue for a few years down the line. Many people have spoken about that, although we do not yet have the statistics for how the numbers will look.

The hon. Member for North West Hampshire (Kit Malthouse) talked about the gig economy, and I get that the Government need to find a different way to tax it due to the avoidance of normal tax routes. However, we need to find a different way to ensure that young people who find themselves working in the gig economy have a measure of stability in their lives and can continue to be able to pay money that they owe, such as rent, in order to finance what is a reasonable lifestyle, rather than a particularly comfortable one.

On austerity, I have mentioned the changes that the Government have made for those at the very bottom of the pile who need to claim benefits—not just out-of-work benefits, but tax credits and so on, which encourage people into work. According to what we hear from those who come into our constituency offices, the Government’s changes to the Motability cars scheme have made it more difficult for people to access work, because their vehicle has been taken away, which has an impact on the Government’s tax take and will increase the amount of benefits that will need to be paid to some people.

Moving from the general context to some of the specific issues in the Finance Bill and the things on which we want the Government to be aware of our views, I will start off with the police and fire services. My hon. Friend the Member for Dundee East (Stewart Hosie) mentioned the VAT on police and fire services in Scotland. We have raised this matter on many occasions and will not stop raising it, because the Government do not have a principled position. They cannot say that they are treating Scotland fairly when they have allowed VAT exemptions for Highways England and the London Legacy Development Corporation, which is a UK-wide organisation. The Government cannot stand on the moral high ground, because they have allowed those exemptions. We ask again that the UK Government change the VAT treatment of the Scottish police and fire services. I imagine that they will say no, but we are asking again and will not stop asking until a UK Government of whatever colour change the VAT treatment.

We also want to raise the issue of Scotch whisky, as people may imagine. The above-inflation increase in Scotch whisky taxation is a real issue for our whisky producers. International trading is slightly more uncertain than it has previously been due to Brexit, so whisky trading with European markets could be less easy than in the past, and the same could be said for countries that the EU has free trade arrangements with. Whisky is a high-value product. It creates a huge number of jobs in Scotland. It generates taxation for the UK Government at levels that are not pennies. The UK Government need to think seriously about how they are treating Scotch whisky, and if this Bill goes its full course, we will table an amendment stating that we do not want this above-inflation increase in taxation.

My hon. Friends the Members for East Lothian and for Dundee East both mentioned insurance premium tax, so I will not rehash the arguments too much, but it is being levied largely on people who purchase insurance who are just trying to do the right thing by getting insurance. They are trying to create a safety net for themselves, and the Government should be applauding that, not taxing it. The problem is that the tax has increased dramatically even over the two years that I have been an MP. The Government need to think carefully about whether insurance is a sensible place to tax people when it forms part of a behaviour that we want to encourage.

Colleagues on both sides of the House have talked about their support for the soft drinks levy and positive changes relating to childhood obesity, mentioning the studies that have been done on whether it will make it a difference. The Health Committee suggested that it is important for milk-based drinks to be included and, having looked at the Government’s rationale, their statements on milk-based drinks and the Health Committee’s report, I do not see a good reason for them to be excluded—some milk-based drinks have the same proportion of sugar as their non-milk-based counterparts. If the Bill were to run its full course, we would table amendments suggesting that the loophole should be closed. We generally support the measure, but the loophole should not be left open. If we are creating such a tax in primary legislation, we should do it properly. There is no good reason for milk-based drinks to be excluded at the moment.

There has been a lack of consultation on Making Tax Digital and the changes to self-employment, and the UK Government have had to change their position on a number of things. They have had to slow down the roll-out of Making Tax Digital and change their position on national insurance for the self-employed. Partly because the consultation done in advance is not good enough, they do not properly understand the implications of what they are doing before they do it and, therefore, have to row back on it. Real change is needed.

Some Conservative Members have mentioned the proposed changes to things such as the taxation of self-employment. I get that the UK Government are trying to equalise self-employment and employment, but those in employment get the benefits of holiday pay, maternity leave, sick pay and all those things. If there is to be a massive change to the treatment of self-employment, it must be looked at in its entirety. The changes must be made within that context, rather than the tinkering around the edges that we get in Budgets with a general movement towards a general idea.

The Government should make no changes to this for the next few years while they do a comprehensive survey and work out what self-employment looks like now, in 2017-18. The kind of people who are self-employed certainly did not look the same 10 or 15 years ago—the number of women in self-employment is much higher than in previous years—and we need to make sure that the goalposts are not moved for them. The tinkering needs to stop. If the Government are to make changes, they should make them in one go after a proper consultation. They should make a reasonable change in one move.

Talking about a lack of consultation moves me on nicely to oil and gas. I was frustrated with the UK Government’s spring Budget because they announced exactly the same thing as they announced last year on the transfer of late-life assets. The Minister is shaking her head, but the transfer of late-life assets was announced in last year’s spring Budget. This year the Government have announced exactly the same thing about making it easier to transfer late-life assets, but now they will have a group of experts look at it. Why did they not do that last year? I am frustrated that this has not happened quickly enough. I would have liked it to happen more quickly, but I am pleased that the UK Government are doing it. We have been asking for it for a long time and it is a positive move, but they need to move a bit quicker.

We are seeing platforms move towards decommissioning as fields move towards the end of their useful life. Getting oil out of those fields will not be a priority for the big players, but if a new entrant were to come in and take on an asset, it would get as much oil or gas out of it as possible. We need to encourage such behaviour. If the UK Government do not do that, they will have less tax income in future, so it is key for everyone that it happens.

Let me move on to other matters relating to oil and gas—the UK Government will not be surprised to hear us calling for these because we have called for them before and we will keep doing so in the hope that they might actually happen. We want changes on exploration. Although the moves the Government have made on seismic surveys have been hugely positive and very much welcomed—we really appreciate them—we need to make it easier and more cost-effective for companies to explore. We need more exploration allowances. A huge amount of oil is still under the North sea, and the UK Government could receive a huge amount of revenue from the extraction of these minerals. They need to take action now to secure those future levels of taxation.

So there are a few things the UK Government can do. Exploration is really important, as are small pools. I have lost my notes on this, but I believe there is the equivalent of 3.4 billion barrels of oil in small pools in the North sea. There are more than 360 pools with less than 50 million barrels of oil where extraction is not yet taking place. Those pools are treated in the same way for tax purposes as all the other pools, but we could do some fairly simple things to make them much more economically viable. We could remove the supplementary charge on small pools, which would reduce the taxation level from 40% to 30%. That would make it much more likely that we get anything at all from some of those pools.

We could change the taxation level for those small pools so that it is equivalent to the level for onshore oil and gas extraction. The Government obviously think that that level is reasonable for onshore extraction, so it should also be reasonable for these areas where the technology is new. Extracting from a small pool is different from extracting from the bigger areas—those we have previously extracted from—and people are going to have to innovate to do this. The tax system needs to recognise that this is more difficult to do and that we are not talking about the bigger pumping that we saw previously. This is a different situation and the UK Government will not get any tax take from these pools if they do not do something about it.

I have two more things to say about oil and gas—Members would expect an Aberdeen MP to talk about oil and gas! Some Conservative Members were talking about private capital, and companies and businesses not having enough access to capital investment. We have been calling on the UK Government to be more positive about oil and gas supply chain companies so that they can get increased investment. There is a huge, positive future for oil and gas companies, particularly in the supply chain. The North sea is the gold standard for things related to supply chain extraction and the services that we provide; I am told that you cannot go to Houston without hearing an Aberdonian accent, because of the number people, as well as the skills and expertise, that we have exported. Even in these times of reduced revenues coming from the oil and gas that they are extracting, those companies still need to be innovating, in order to get the more difficult oil and gas out. They need capital financing to do that, and the UK Government need to do what they can to make sure that those companies are linked with the right people and that, for example, banks are not cancelling overdrafts at a moment’s notice. Those changes need to be made.

My hon. Friend the Member for Aberdeen South (Callum McCaig) and I recently had a meeting with the London Stock Exchange Group, when we invited it to Aberdeen to talk to companies about its ELITE programme, which trains companies in accessing capital financing. Although it was a hugely positive meeting, not enough of these companies knew about such schemes or where they could go to get finance. There is a real issue to address and the UK Government need to do what they can to be positive, particularly in relation to the oil and gas supply chain, so that we can secure that future in Aberdeen and the UK more widely.

On that note, the other thing the SNP were going to table an amendment on—we still will if we have the opportunity—was UK content. Decommissioning is coming through in a bigger way. It is not by any means the end of exploration and other things in the North sea, but we are going to see more decommissioning in the coming years. A huge number of people are concerned that not enough of the decommissioning tenders are going to UK companies. Currently, not enough of the tenders for other things relating to oil and gas are going to UK companies, either. We would like the UK Government to take action to see what they can do to ensure that, wherever they can be, companies are incentivised to use UK suppliers and UK content. That would be hugely positive for jobs, including high-value jobs, in the UK.

It is important that the UK Government think about oil and gas and keep it front and centre, because it certainly was not enough of a priority in the industrial strategy and the leaked documents on Brexit priorities. Given the amount of revenue the UK Treasury has received from the oil and gas industry and the amount of future revenue, we need to ensure that the industry is listened to and that as much as possible is done to make sure that the UK Government can take the maximum amount of taxation.

On tax collection and avoidance, a 2014 Credit Suisse report on the success of small countries mentioned the fact that for large countries corporate tax collection as a percentage of GDP is significantly smaller than for small countries. That is partly an issue of size, but this is a real problem that will continue to come through for the UK Government. Over the past couple of days we have seen news reports about Border Force officials being stretched as it is and not being able to take action on immigration. Well, Border Force staff also deal with some of the customs issues. If we do not have an appropriate customs service in place, we will not be able to ensure that we collect the right amount from whatever tariffs we have in place. That will be another tax loss for the UK Government, so wherever they need to upskill, they should upskill. Frontline staff will have to ensure that tax is collected in the new scenarios where currently we are not having to do nearly as much tax collection.

I appreciate the opportunity to speak in this debate. As I have said several times, we do not know what is going to happen with the rest of the Bill, but I think I have made as clear as I can the SNP’s position on the things that we consider to be most important.

[Victoria Atkins (Louth and Horncastle) (Con)]

So much has already been said in this debate that I am going to attempt to be short and, I hope, concise in my remarks. I am aided by the fact that a little time ago I got an A-level in economics, and I hope I will be able to explain my views on the Bill in language of which my economics teacher would be proud.

It is particularly appropriate that we are discussing the Finance Bill because, of course, the Prime Minister today made a momentous statement announcing the next general election. It is only right that we are talking about the economy and finances of this great country, because a strong economy is vital to achieve all that we care about. In my constituency, Louth and Horncastle, a strong economy means jobs and successful firms creating prosperity, and from that, taxes flow. Of course, taxes pay for everything that we care about, from the national health service to defence, in which I have a particular interest because RAF Coningsby is in my constituency. They also pay for schools, and I am sure that we all in this House are united in our wish to ensure that the young generation are educated properly and fully so that we can make a success of not only Brexit but the future. I was particularly pleased today to see the Prime Minister emphasising not only her plans for Europe but the future beyond Brexit.

But—there is always a but—we must still continue to get public spending under control. There is no magic money tree, no matter how often Opposition Members would like to pretend there is. We have, sadly, a debt of nearly £1.7 trillion, which equates to almost £62,000 for every household in the country. We are spending more money on debt interest than on defence and policing combined, which is why we must learn to live within our means.

I have to say that, having spent several hours in the Chamber listening to erudite colleagues, I was a little concerned when, in answer to how much money Labour planned to borrow after the next election, the shadow Chief Secretary to the Treasury said something along the lines of—I hope I am not misquoting him—“We will borrow less than the Conservatives.” I did not hear any detailed financial planning. I will look forward to that in the coming weeks.

One of the best ways to ensure that this country succeeds and is prosperous is to make it the best place in the world in which to do business. That is precisely why we are cutting corporation tax, which was 28% under Labour, to 20% today, falling to 17% in a couple of years’ time.

[Jonathan Reynolds]

There is no magic money tree.

[Victoria Atkins]

Indeed. I hesitate to rely on my A-level economics, but companies employ people who pay taxes, and companies themselves pay taxes—not just corporation tax, but VAT, payroll tax and business rates. This is all about giving businesses the best chance of succeeding.

[Jonathan Reynolds]

indicated assent.

[Victoria Atkins]

I am glad to see that the hon. Gentleman agrees with me.

One of the most important things about any tax system is not just that it should help to pay for the things that we care about, but that it should be fair. In my previous career, I prosecuted tax fraudsters for a living. I am delighted to say that the main offence that we used to prosecute such people was cheating the public revenue, because if they commit tax fraud, they are a cheat. I look forward to helping the Government not just in the Finance Bill, but in the Criminal Finances Bill, to ensure that tax fraudsters feel the full force of the law.

Looking beyond Brexit, the reason I welcome this Finance Bill is that it places a very great emphasis on helping working families with the cost of living. I intervened on the hon. Member for Aberdeen North (Kirsty Blackman) to say that we have raised the national living wage in April to £7.50, which means an income boost of more than £500 for a full-time worker this year. The personal allowance will rise for the seventh year in a row, benefiting 29 million people, which means that a basic rate taxpayer will pay a full £1,000 less in income tax than they did in 2010 under Labour.

I also welcome this Bill for the help that it gives local authorities for adult social services—I am talking about an additional £2 billion of funding over the next three years—and the extra £100 million it provides in 2017-18 for capital investment for accident and emergency departments in England. I also welcome the £320 million to extend the free schools programme. The fact that the Prime Minister has called an election today shows that the Conservatives are the true Government of the United Kingdom. I know that the Scottish National party will welcome the fact that, under this Bill, Scotland will get more money, as will the Welsh Government and the Northern Ireland Executive. I welcome this Bill and I look forward to the campaign on the principles therein.

Oral Answers to Questions

Victoria Atkins Excerpts

Tuesday 17th January 2017 Commons Chamber

[Mr Hammond]

Those are two of the criteria that we have set: there should be value for money for the taxpayer; and the bank’s focus for future operations should be retained and protected. We are reviewing the sale process as it goes forward, and we will make sure that those outcomes are protected.

[Victoria Atkins (Louth and Horncastle) (Con)]

T2. The latest fiscal sustainability report was published by the Office for Budget Responsibility just over an hour ago. Knowing what a quick reader my right hon. Friend is, what assessment has he made of the implications for the long-term health of the public finances?

[Mr Hammond]

I am not only a quick reader, but able to read the report while also answering questions in the House.

The OBR’s report shows that, under certain circumstances, the UK public finances will come under increasing pressure over the next 50 years. As I said earlier, this creates a catalyst for a discussion, which we need to have, about how we maintain the sustainability of our crucial public services, given the pressures, including demographic pressures, that they will face. I believe that the report serves a useful purpose. Given that the point 50 years out is sufficiently far away, I hope that we will be able to have a mature, cross-party discussion about how we address these issues in the long term.