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Amendment of the Law

Volume 515: debated on Wednesday 15 September 2010

I beg to move,


(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting a supply, acquisition or importation,

(b) for refunding an amount of tax,

(c) for any relief, other than a relief that—

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

The resolution and the others on the Order Paper enable the House to embark on its third Finance Bill of the calendar year. As Members will be aware, the general election and the need for an emergency Budget meant constrained timetables in legislating for tax measures this year. We have the opportunity in this Bill to examine the technical measures that will benefit from the intense debates Upstairs that I know so many of my colleagues enjoy. I will look forward to seeing many of them on the Benches with me.

The first Finance Bill introduced by this Government legislated for the key measures in our emergency Budget. The Government needed to take quick and decisive action to reassure the country and the markets that we would not allow debt to spiral out of control. However, there remain a number of minor and technical measures that we inherited from the previous Government, which must be legislated for before 2011. The resolutions before us today form the foundation for such a Bill.

It is perhaps worth pointing out that, alongside the Budget, I set out a proposed new approach to tax policy making that we have been discussing with interested parties over the summer. As part of this new approach to making tax policy, the Government are committed to being more transparent and to improving the scrutiny of tax legislation. As a first step towards that, we published all the legislation that will be included in the Bill in draft for consultation on 12 July. Representative bodies described that as a “welcome move” and the consultation has received more than 40 comments, leading to a number of technical changes to the legislation. That approach provides additional scrutiny, which we believe is essential in demonstrating that the Government are genuinely listening to how the tax system can be improved.

Detailed examination of the Bill is for another day, but I want briefly to explain some of what is before us. The Bill will provide for improved treatment of company distributions and ease restrictions on research and development tax credits. It will relieve carers of unnecessary tax and assist trusts to help victims of asbestos exposure. Although small in nature, the Bill will introduce important measures to ensure better compliance with a better tax system.

In conclusion, the Bill on which the resolutions are based will take forward many necessary changes in the tax system that make a difference to the broader public. The Government are making these changes responsibly, having consulted on all the legislation. I hope it will find support among Members on both sides of the House.

I am grateful to the Minister for his explanation and I agree with the welcome, to which he drew attention, for the consultation on and publication online of the proposed measures before the summer break.

There is still no good reason for this year’s post-election finance legislation being split into two Bills other than the Government’s wanting to get key measures on to the statute book before all the Government Members realised fully what was going on—before, for example, they had the change to read the Institute for Fiscal Studies’ Budget assessment, published last month, which stated that the Budget was “clearly regressive”, or the analysis published by the TUC just a few days ago, which underlined the same point.

We are committed in the debates that will follow to holding the Government to account on fairness and to scrutinising closely the quality of the legislation that the Government propose, which I hope will reflect the benefit of the consultation to which the Minister referred. The Opposition will be busy once the Bill is in front of us, both on the Floor of the House and in Committee, but we have no reason to oppose the resolutions and we are happy for them to proceed.

Let me go back over the last three Finance Bills that have become Acts. In 2009, we had 127 clauses and 61 schedules—the normal Finance Bill that we have all spent many pleasurable months Upstairs considering. The first Finance Act of 2010 had 70 clauses and 20 schedules, and then we had the very brief Finance (No. 2) Act 2010, which had 11 clauses and five schedules. The Minister tells us today that there is a requirement for a third Finance Bill this year to cover 18 areas—he described them as minor technical measures. It might well be that they are measures that are time-limited to some extent and must be considered. However, my difficulty is that there will be two full years between 2009 and 2011 before we get a full Finance Bill. That Bill is important in terms of scrutiny because it consolidates and brings together all the tax and duty measures in a single Bill and gives Parliament the opportunity to consider in the round the comprehensive impact of all these measures together rather than doing so piecemeal, which is what is being done here, notwithstanding the technical reasons behind that.

I have no particular problem with the measures that are to be debated—I think that some of them will be sensible—but I am looking for some confirmation before I make a final determination on this measure that when we get to 2011 there will again be a full, comprehensive Finance Bill so that we can see all the tax, duty and other financial measures in a single Bill for proper detailed consideration Upstairs over the months it normally takes. I hope that the Minister can give us some assurance that once we have got past this limited No. 3 Finance Bill, future Finance Bills will not be delivered in this way and will once again be full and comprehensive.

I want to make a couple of specific points about the motion. Although I accept that the Minister has said that the Finance Bill will be quite narrow in scope, there are a couple of provisions in the motion that suggest that there could be an opportunity for the Treasury to introduce a series of other measures. The Minister, as is the practice now, tried to set out the context in which the Finance Bill would be set, and obviously the Opposition completely disagree with the Government’s approach.

It is quite clear that a strong dollop of dogma has been introduced into the Government’s financial strategies. Rather than sensibly and prudently address the deficit, the Government are going far further, far faster than is necessary, which is having a dilatory impact on the economy at large. However, that is a debate for another day.

The specific element of the motion that I want to address is item No. 6, the “Collection of income tax on payments”. Senior officials from the Minister’s Department have been giving evidence to the Treasury Committee this morning about the significant concern that has been expressed by many of our constituents about problems with the pay-as-you-earn system in collecting income tax that is owed, perhaps when miscalculations were made. Some reports suggest that 1.4 million people owe about £2 billion, which is an average of £1,400 each.

There is significant concern across the country and I am glad that the permanent secretary and his colleagues have given a concession today about the interest elements being waived, in part, when sums above £2,000 are owed. That prompted me to look carefully at some of the regulations that the Minister has introduced, and I noticed that he laid statutory instrument No. 1879—the Taxes and Duties (Interest Rate) Regulations 2010—which sets out that an individual who owes money to Revenue and Customs has to pay interest on it at 3.5%, but if HMRC owes money to an individual it will pay only the absolute, basic minimum, which I think is 0.5%. That disparity is controversial and many people find it difficult to understand why, in all fairness, there is not a two-way street. I wanted to use this opportunity to highlight this issue; I have prayed against that statutory instrument and I hope that we will find time to debate it.

In general, will the Minister iterate an apology from his Department about what has been happening with the PAYE arrangements? Will he also undertake that concessions will be given on the interest owed on any sums to try to make it a little easier for those who face an unexpected bill to bear that cost?

With the leave of the House, let me respond briefly to the points that have been made. First, the hon. Member for Dundee East (Stewart Hosie) asked whether this Bill sets a precedent for future Finance Bills. The intention is to return to the usual one annual Finance Bill; that is probably enough for most Members of the House—even him. As I outlined earlier, the Bill is needed because of the general election and to take decisive action on the deficit.

In response to the comments of the shadow Minister, I should say that it was important that the Government took decisive action and implemented the measures. Indeed, one reason for the fall in long-term interest rates in recent months might be that the Government have been determined to take decisive action and have demonstrated that by passing legislation to enable us to do so. It is right that we should take further time this year to go through some of the technical measures, and that is exactly what we will do with the Bill.

The hon. Member for Nottingham East (Chris Leslie) asked about the interest regime, the provisions for HMRC in relation to the late payment of tax due and the interest that applies when HMRC owes money. He will know that the provisions in the resolutions and in the Finance Bill are intended very much to tidy up and bring consistency to some areas. The overall interest structure and a unified interest rate was introduced in the Finance Act 2009, which the right hon. Member for East Ham (Stephen Timms) might have taken us through, and we are not departing from what was in that.

The hon. Gentleman is right about the comments of senior HMRC officials at the Treasury Committee this morning regarding the regime for those who have underpaid tax of more than £2,000. HMRC has said throughout that a sympathetic approach would be taken in matters of hardship, but what has been announced today is the intention to make sure that everyone has an opportunity to pay off the underpaid amount without interest or penalties being applied. I am sure that will be welcomed by Members on both sides of the House.

Having responded to the specific points that have been raised in this very short debate, I am grateful that the motions have the support of the House.

Question put and agreed to.

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)).