House of Commons
Tuesday 6 September 2016
The House met at half-past Eleven o’clock
[Mr Speaker in the Chair]
Oral Answers to Questions
The Secretary of State was asked—
Human Rights Act
First, I would like to pay tribute to my hon. Friend’s work on human rights reform as a Minister in this Department. He is a great champion of liberty.
The Government are committed to scrapping the Human Rights Act and introducing a British Bill of Rights.
May I say at the outset that it is an honour to be the first Member to welcome the new Justice Secretary and the new Front-Bench team to their posts? I wish them every success. I also reassure my right hon. Friend, from experience, that being a lawyer is of very limited value in her Department—no offence to the Minister of State.
Britain’s decision to leave the EU will remove the jurisdiction of the Luxembourg Court, which is probably the biggest obstacle to delivering a Bill of Rights. May I welcome my right hon. Friend’s statement on the intention to continue this reform and encourage the Government to proceed to consultation as soon as possible?
This is an important reform; we need to get it right. We will be introducing proposals in due course. We will deliver on this manifesto commitment.
Which convention rights does the Justice Secretary propose to leave out of the Bill of Rights?
I thank the hon. Gentleman for his question, and I remember with fondness our time together on the Justice Committee, where he had many good thoughts to put forward. We will be putting out our proposals in due course, which will discuss these issues in detail, but one of the important points is that we want the ultimate arbiter of those rights to be the Supreme Court of the United Kingdom.
Does the Secretary of State agree that one of the problems with the current set-up is that the code of rights includes many reservations and qualifications that the European Court does not embrace? A British Bill of Rights can ensure that there is proper balance and that the interests of justice are served.
My hon. Friend makes a very good point. It is absolutely the reason we want to pursue a British Bill of Rights to put that in place.
If we are to have the Supreme Court as the ultimate arbiter, does that mean that the Lord Chancellor wants to withdraw from the European convention?
The Prime Minister has been very clear that leaving the European convention on human rights is not something that we are going to pursue.
May I, too, welcome my right hon. Friend to her post and her determination to proceed with a British Bill of Rights? Could I urge her to remember that the cornerstone of the rule of law in this country has always been the sovereignty of Parliament? May I urge her not to listen to those who argue that getting rid of an Act that came 40 years after we signed up to the European convention on human rights somehow or other undermines our position within the treaty.
My hon. Friend is absolutely right: human rights were not invented in 1998 with the Human Rights Act. We have a strong record, as a country, of human rights, dating back to Magna Carta, and the British Bill of Rights is going to be the next step in enshrining those rights in our laws.
May I welcome the Secretary of State to her new role and say that while, of course, it is not a prerequisite for the person in her role to be a lawyer, she will no doubt wish to listen carefully to any legal advice she receives about any proposals to reform the law?
There is almost universal opposition to the repeal of the Human Rights Act in Scotland; this is reflected in the Scottish Parliament and across Scottish civic society. On 11 August, I wrote to the UK Government seeking clarification of their plans for so-called reform of the Human Rights Act, following press reports. I have yet to receive a substantive response. At what stage in her plans will the Secretary of State seek to consult the Scottish Government, and can she confirm that she will listen to and respect their answer?
I have already had a number of legal meetings about this issue, and I am sure I will enjoy working with the legal profession in my role. The Prime Minister has already had a very good meeting with the First Minister of Scotland. I will be meeting the Scottish Justice Minister shortly to discuss a number of issues.
I call Richard Burgon.
Order. I do apologise; I had not realised that the hon. and learned Lady wanted a second bite of herself.
I was rather hoping to have a second bite of Her Majesty’s Government, Mr Speaker.
If the Secretary of State has been having legal meetings about the Human Rights Act, she will have been advised that human rights are not a reserved matter and that therefore the Scottish Parliament must be consulted regarding any legislation with regard to human rights. During the independence referendum, Scotland was told that it was an equal partner in this Union. Does she appreciate that to proceed with repeal of the Human Rights Act across the UK would fly in the face of that promise and exacerbate the democratic deficit that already exists in Scotland, where a Tory Government we did not vote for are planning to take us out of the European Union against our will?
I would point out that this was in the Conservative party manifesto and we secured a majority at the general election. As I said, I will be in touch with the Scottish Justice Minister; I look forward to talking to him about this subject.
I welcome the Secretary of State to her new role. It is good to see a Leeds person at each Dispatch Box. I understand that, like me, she comes from good, left-wing Leeds stock, and I look forward to our exchanges.
At the Secretary of State’s swearing-in ceremony, she quoted with approval the late Lord Bingham. On the Human Rights Act, Lord Bingham said in 2009:
“Which of these rights, I ask, would we wish to discard?”
He went on to say:
“There may be those who would like to live in a country where these rights are not protected, but I am not of their number.”
To give the Secretary of State another chance, because she failed to answer the question asked by my hon. Friend the Member for Kingston upon Hull East (Karl Turner), which of these rights does she wish to discard?
I, too, welcome the hon. Gentleman to the Dispatch Box. It is great to have somebody who is also from Leeds facing me, although I learned the error of my ways after growing up in a left-wing household in that great city.
All I can say is that I believe that everyone is capable of reform, even those on the Opposition Benches. I have not yet given up hope on the shadow Secretary of State for Justice.
The whole purpose of the Bill of Rights is to enhance human rights in this country. We have led the world in human rights since Magna Carta and the Bill of Rights that was published in Wales in 1689, and we will continue to do so.
I thank the Secretary of State for that response, but let me say this:
“We were very clear that we will replace the Human Rights Act, which isn’t working for British people, with a British Bill of Rights that gives the ultimate power to citizens in this country.”
Those were the words of the Secretary of State on the “Today” programme in May 2015. Given that, and in the light of the answer that she has just given, can she explain to the House why she wants to rob the people of Britain of their rights? Will she admit that talk of a so-called Bill of Rights is simply posturing and making concessions to the hard right of the Conservative party?
Human rights were not invented in 1998 with the Human Rights Act. There are major issues with the Human Rights Act and we need to move forward. We need a British Bill of Rights that enshrines our ancient liberties.
Order. We now need to make progress as there are a lot of questions. Progress thus far has been slow, so we can be speeded up by Mr John Mann.
Online Hate Crime
Hate crime is abhorrent and has no place in society. The Government published their plan to tackle hate crime, “Action Against Hate”, in July 2016. This Government believe that the enforcement of criminal legislation has an important role in tackling online hate. We also need deterrence and prevention, which require a broader response, from counter-narrative activity through to effective management from the internet industry.
The last time I asked the Secretary of State a question in here, she invited me to join her on a delegation to China. May I reciprocate and invite her and her Front-Bench colleagues to come to Bassetlaw day in the Jubilee Room, hosted by me and the hon. Member for Newark (Robert Jenrick)?
True Vision, the internet reporting organisation based in the Secretary of State’s offices, is the pride and joy of her Department and the envy of every other Government in the world. Is she going to allow it to disappear into some other Department, or is she going to keep it in her Department?
I thank the hon. Gentleman for his characteristically delivered question. The Secretary of State has, I gather, recently written to him on this matter. The cross-Government hate crime programme is highly regarded by this Government and internationally. I am committed to ensuring that that important work continues.
I welcome my hon. Friend to his post. The Government were right to make posting revenge porn online a crime. Figures released today show that there have been 200 prosecutions for revenge pornography, yet more than 1,000 cases have been reported to the police. Does the Minister agree that, as with other sex-related crimes, anonymity for victims perhaps needs to be carefully considered in cases of revenge pornography?
I thank my right hon. Friend for her question and, indeed, for the work that she and her Select Committee do in this area. Revenge porn is a terrible abuse of trust that can leave victims feeling humiliated and degraded. By making it a specific offence carrying a maximum sentence of two years behind bars, we have sent a clear message that this crime will not be tolerated. On anonymity, I am interested in what she says; if she would like to write to me about that issue, I will consider it.
I welcome the Minister to his post. Has he seen this morning’s comments by the Director of Public Prosecutions that social media is one of the driving forces behind the record high in recorded violent crimes against women and girls? I welcome what the Minister has said about the need for a broader response, so what does he plan to do to safeguard the many specialist services that exist to support women who are suffering online harassment and abuse, many of which are suffering funding cuts?
As I have already said, this crime is deplorable. I suspect that it has always happened and that social media has facilitated it, and that we are now detecting more crime of this kind. I am determined to maintain services that support women and, indeed, men who are subjected to the crime, and I will continue to keep a close eye on that.
What action are the Government taking to combat online anti-Semitic hate crime emanating from extremist groups on campus?
Online anti-Semitic crime, like revenge porn, is an appalling crime that is more easily committed through use of the internet and anonymity. With specific regard to anti-Semitism, the Government, thanks mainly to the fantastic work done by the hon. Member for Bassetlaw (John Mann) and his all-party group, have made significant advances. I will consider my right hon. Friend’s comments on anti-Semitic crime, particularly on campus.
In the last year, assaults have risen by 31% and those on prison staff have risen by 40%. That is totally unacceptable and I am determined to tackle it. Reforming prisons will be possible only if they are made safer places for staff and offenders alike.
As the Secretary of State’s response makes clear, prison safety continues to deteriorate. That significant problem puts both prisoners and staff at risk, but a major issue that must be tackled is the retention of staff. Will she set out exactly what she will do to make that a priority and how she will succeed where her predecessors have failed?
I absolutely agree that the retention of staff is a very important issue. I have been to a number of prisons and seen how brave, fearless and hard-working our prison officers are. They are vital in turning around offenders and getting them the education and skills they need to succeed outside. I am determined to support and work with them, and over the coming months I will lay out more detailed plans.
May I warmly welcome the Secretary of State and her team to their posts? Lawyers do sometimes have their uses, and so do non-lawyers. Her predecessor made prison reform a centrepiece of the agenda and rightly described the deterioration of safety in prisons as terrible. The figures have now got worse. He committed to an action plan to tackle violence in our prisons. Will the Secretary of State reaffirm that, and what specific steps will be taken to deal with what is a ticking time bomb in our criminal justice system, because nothing else has worked?
May I say how pleased I am to have been able to meet the Chairman of the Justice Committee? I take the advice of all my lawyers, but particularly that of the Chairman of the Select Committee, extremely seriously.
This is a critical issue that faces our prisons. We cannot have reform in our prisons if we do not have safe prisons for people to work in. Those two things go hand in hand. I am committed to an agenda of making our prisons safe and places of reform. I will be laying out my plans very shortly on this issue, and I look forward to discussing it more with the Select Committee tomorrow.
Will the Secretary of State look again at statements that were made by her Department recently about the number of prison officers? The Department claims that the number has increased, but it has not. Will she look at the matter again? I believe that she did not take into account staff being regraded or the number of hours that they actually work when she examined the number of officers in the system.
I will, of course, look at those numbers in detail. In fact, I am looking at them at the moment. As well as the number of staff, it is important to consider how staff are deployed and trained, and the powers that governors have to get the best out of staff working in prisons. I am looking at all those aspects, but I agree that staff are absolutely crucial to make our prisons work well.
One of the causes of a lack of safety in prisons has been novel psychoactive substances. Does the Secretary of State agree that the ban on the possession of those substances in prisons should really improve the safety of other prisoners and prison officers, if it is properly enforced?
My hon. Friend is absolutely right that NPS have been a major issue in our prisons. When I visited HMP Norwich last week, I was pleased to see that it was using the new legislation to tackle that issue in the prison, to search people and to catch them out. HMP Norwich has succeeded in reducing the usage of such drugs already. I would like to see that type of programme happening more across our prison estate.
Minister at the Dispatch Box.
Forgive me, Mr Speaker; I think that the summer recess has taken its toll on my memory of parliamentary procedure.
I am determined to ensure that our prisons are places of safety and reform. We need to help offenders to get off drugs, improve their education and get the work skills they need so they are less likely to reoffend when they come out.
I thank the Secretary of State for concentrating. Does she see a connection between the long-term decline in prison officer numbers—they went down 30% between 2010 and 2013, and they are going down again—and this massive increase in assaults on staff, which went up 90% over the last Parliament?
There are many factors driving prison violence and self-harm. I am looking at the evidence about what will work and what steps we can take, but I am determined to tackle this. I am very clear that the current levels of violence are unacceptable.
May I also warmly congratulate the Secretary of State and the new ministerial team on their appointments? Of course we need more prison officers in prisons, but may I urge the Secretary of State and her Ministers to consider the greater use of prisoners as mentors? Wandsworth is leading the way, with 50 mentors providing teaching and education, but that could also be used in employment, for therapeutic purposes and to cut down the use of drugs.
As a Prisons Minister, my hon. Friend did tremendous work in this area; we are very much learning from the work that he carried out in the Department. He makes an important point, and I think we need to look at the overall culture in some of our best prisons. We have exemplary work going on, such as mentoring, and we need to make sure that that is happening right across our prison estate.
The Secretary of State may be aware that the head of the prison service in Northern Ireland recently stood down. Attacks on prison staff are on the rise. Will the Secretary of State ensure that her Department engages actively with the Department of Justice in Northern Ireland to see what lessons can be learned and to try to improve safety in prisons in Northern Ireland?
I have been in touch with the Justice Minister in Northern Ireland, and I look forward to talking to her in due course.
May I, too, congratulate the Secretary of State on her appointment? Is not a large part of the problem the fact that we have so many Victorian prisons? Does she have any plans for a prison rebuilding scheme?
My hon. Friend is absolutely right. We have a big issue with prisons that are out of date and not fit for purpose, which makes it more difficult for our excellent governors and officers to manage them well. I am pleased to say that this summer we were able to close Holloway prison. We have a £1.3 billion building programme. I want new modern prisons to be built in which prisoners will get the education and work they need to succeed in outside life, and to close down some of our most dilapidated and out-of-date prisons.
Victims of Crime
It is crucial that victims of crime are supported as effectively as possible. The victims code was revised in 2015. Victims of all criminal offences are now entitled to support from a wide range of organisations, as well as from criminal justice agencies. The reforms we are making to our courts will significantly improve services for victims and their families—for example, to enable them to give evidence remotely and digitally.
More than 23,000 individual crimes have been reported in Enfield during the past 12 months. For far too long, the victims of these crimes have been forgotten and ignored by the criminal justice system. Given that the Victims’ Commissioner supports the introduction of a law for victims of crime, when will the Government fulfil their election manifesto commitment to bring forward legislation on this issue?
We want to make sure that all vulnerable and intimidated witnesses can give their best evidence in court and feel less anxious. We are committed to making sure that victims of crime get the support they need. We have protected the overall level of funding for victims across the spending review period, and we announced funding of more than £95 million in 2016-17 to fund critical support services. We will bring forward our legislation, as promised, in due course.
Victims of crime want to see the perpetrators of that crime properly punished. Is the Minister happy that prisoners are automatically released halfway through their prison sentence no matter how disruptive they are or how much of a threat they still pose to the public, or does he agree with me that prisoners should serve the sentences handed down by the courts in full?
The purpose of justice and the primary goal of the justice system must be to reduce reoffending. If somebody in prison has been assessed, is deemed not to be a risk to society and has been properly rehabilitated, it is in the best interests of that individual and of society for that person to be released.
Too often the victims of criminal driving and their families are not actually treated as victims of crime, but told that they have been involved in an accident. How can that culture be changed, and when, finally, will we get the review of sentencing for these types of offences?
I do not believe that that is in my purview, but if the hon. Gentleman writes to me I will by all means reply to him on the issue. I agree that victims in such situations need more protection and that the culture needs to change.
One of the best ways to ensure that justice is served is to ensure that victims have the chance to make a victim impact statement to the court, but that does not always happen. What can the Minister do to ensure that it happens in every case?
As I understand it, victims are now getting more of an opportunity to make a victim impact statement because they can do so online. I agree with my hon. Friend that that should be possible.
As has been mentioned, today’s report on violence against women and girls shows an increase in prosecutions. However, victims charities remain concerned about their futures, as was stated by the chair of the Association of Police and Crime Commissioners Supporting Victims Group when asking the Ministry earlier this year to clarify what funding is available to PCCs. The Minister told my hon. Friend the Member for Wigan (Lisa Nandy) that he will be “keeping an eye on this matter”. With respect, keeping an eye on the matter is not good enough. Will the Secretary of State now confirm that victims services will receive the full funding that they require?
The victims services budget has increased significantly from £48 million in 2010-11 to about £95 million in the current financial year. In 2016-17, for example, we have allocated about £7 million to 99 rape support centres to provide therapeutic and practical help to male and female victims of rape and child sexual abuse. I do not recognise the description given by the shadow Secretary of State. The Government are committed to protecting victims, particularly women who have been victims of crime.
Prisons: Mobile Phones
The illicit use of mobile phones in prison undermines security, order and control, and has been linked to many forms of criminality. The Government are determined to take action to stop it.
The connection between technology and radicalisation by the dissemination of extremism in prisons is one of the most critical challenges we face. Will my hon. Friend continue to do everything possible to ensure that prisoners, who already face difficulties re-engaging with society, do not have that difficult task made impossible by those who would use technology such as mobile phones to spread extremist poison?
My hon. Friend will no doubt have seen the Government’s response to the review on extremism. I assure him that we will continue to work tirelessly to ensure that extremist ideologies are not spread by any means, including mobile phones.
There have been reports from Swansea prison of people throwing mobile phones over the wall, which provides anonymity that allows prisoners to indulge in all sorts of criminal activity. What is the Minister doing about that sort of thing?
The hon. Gentleman makes an important point. Every governor I have spoken to in the last six weeks has mentioned the growing problem of illegal mobile phones in prison. I believe that technology is vital to detecting and blocking such phones. That is why, in addition to the range of technologies that have already been deployed across the prison estate, we have held a high-level meeting with mobile network operators and asked them to use their expertise to develop new technological solutions to deny mobile phone signals in prisons. As responsible businesses, I expect those operators to co-operate fully.
Court Provision: Bury
There is, and there will be, an appropriate level of court provision for the people of Bury.
I warmly welcome my hon. and learned Friend to his new role and thank him for that brief reply. Although court provision might be regarded as adequate now, it is important that it continues to be adequate in the future. I ask the new Lord Chancellor and ministerial team to look again at the proposals for north Manchester and, in particular, at the consequential effects on the police budget, given that the police will be faced with longer journey times when they attend court.
We might be faced with longer questions as well, but we are immensely indebted to the hon. Gentleman nevertheless.
May I start by paying tribute to the work that my hon. Friend has done and the proposals he has made for his local courts? He will know, as a lawyer, that we are investing a huge amount of money—a good £1 billion—to transform our courts and tribunals. Modern technology improves efficiency and means that fewer people need to attend court in person. Excellent facilities are available to the people of Bury and Manchester, which have some of the best courts in the country.
The Minister will know that the proposals across the whole of Greater Manchester are far-reaching and that they are controversial in parts of the city region. Will he explain to the House precisely what was agreed with Greater Manchester combined authority in the memorandum of understanding that his Department signed with it? Does it mean that the combined authority can look again at some of the court closures?
The hon. Gentleman will realise that none of these decisions is taken lightly. It is important to work closely with local government, and that is exactly what has been happening. To give him an impression of the tremendous improvement the court modernisation programme is making, it has been going for four months and 6 million pieces of paper have been avoided as a result.
Yes, 6 million pieces of paper have been avoided by using digital case files. That is a pile of paper as high as the Shard—the largest building in London.
Order. Huntingdon is a splendid part of the world that deserves to be represented effectively by the hon. Gentleman, whom I have known for a quarter of a century, but it is a long way from Bury, to which this question exclusively relates. [Interruption.] Order. The question is about Bury, I say to the young fellow. He can come in later—we look forward to hearing from him.
That information is published by the legal professions. For example, 13% of QCs are women, and 6% declare themselves as coming from a black, Asian and minority ethnic background.
Available data show very limited progress, particularly with only 13% of QCs and only a third of the people practising at the Bar being women. What can the Government do to improve that and rattle up the profession a bit?
We want a justice system that works for everyone and a legal services industry that uses all the talent in our country. I have already had very positive conversations with the Lord Chief Justice, who is keen to improve diversity figures in the judiciary, and I am due to meet the Bar Council shortly to talk specifically about the Bar.
What assessment has my right hon. Friend made of opportunities to increase apprenticeship-based routes into the legal professions and prison services to increase social mobility?
I am a huge fan of apprenticeships. The new apprenticeship levy brings a big opportunity for some of our large legal services firms, and right across the board, to increase the number of apprenticeships. I will certainly be talking to those firms about that over the coming months.
At one London provider of legal education, fees for the academic year ahead are as follows: nearly £11,000 for the graduate diploma in law; more than £15,000 for the legal practice course; and near to £19,000 for the Bar professional training course. That is on top of the cost of university education. Such fees are beyond the reach of many people from ordinary backgrounds. Given that reality, how will the Minister ensure a diverse legal profession?
I have been discussing this matter right across the legal profession. At the younger end we are seeing a lot more diversity; the question is how people progress through the pipeline. I would like more transparency so that we can look at people moving through the system. I have no doubt that the Lord Chief Justice and leading judges want to see more diversity. They are very keen to work with me on this agenda.
Prisons: Mental Health
Prisons must become places of rehabilitation where offenders can change their lives and turn away from crime. Addressing health needs, including mental health, is key to creating a safe and rehabilitative environment for prisoners. We are committed to meeting the mental health needs of prisoners. All prisons have procedures in place to identify, manage and support people with mental health illness.
Will the Minister confirm that governors will have new powers and abilities to run their own mental health and health budgets, and will that include co-commissioning of mental health services with local clinical commissioning groups?
The approach going forward is under consideration at present. Governors have an important part to play in helping to structure healthcare services within their prisons.
Does the Department have a precise figure for the number of people in prison at the moment who have mental health issues? Will my hon. Friend reassure me that prison staff are adequately trained to deal with people who exhibit mental health issues?
Based on a Ministry of Justice survey, 49% of prisoners were assessed as being at risk from anxiety and/or depression and 16% reported symptoms indicative of psychosis. Department of Health figures, however, are somewhat different; north of 90% of prisoners have a mental health problem if substance misuse is included. I am seeking more data on this area. We are committed to meeting the mental health needs of prisoners, which is why all new intake prison officers receive mental health awareness training as part of their entry-level training.
One hundred people have taken their lives in our prisons in the past year. That is the highest level for over 25 years. More than 9,000 people have self-harmed in our prisons. That is an increase of over 25% in the past year alone. The Government should be ashamed: it is a dereliction of their duty of care. I want to know, having listened to the answer from the Government, what they are actually going to do to look after the thousands of prisoners who have serious mental health conditions and are not being looked after.
The aetiology of mental health is pretty complex. The genesis of problems do not just occur over the term of a Parliament. The system in place for mental healthcare and the continuity of care for people before, during and post their stay in prison is clearly not where it should be. I would argue that that has been the case for many decades. I have been asked to look at this matter and will be doing so, but it is a huge and complex area. As a consequence, I am not about to make any commitments at the Dispatch Box.
There is a particular risk for women in prison. Some 30% of women prisoners have had a previous admission for a psychiatric problem before they went into prison. In the past year, 11 women have killed themselves. My impression is that that is because the previous Secretary of State did not focus on the recommendations of the Corston report, which would have ensured a better level of mental health for women in prison. What is this Minister going to do on the Corston report and on women in prison?
I have read the Corston report and it is a good report. It was published in 2007 and it is still relevant today; it has intellectual coherence with the Charlie Taylor report on youth offenders. I will be looking at it and I am personally persuaded by some of the arguments in it, but I see no evidence that the former Secretary of State was not in any way keeping a close eye on the matter.
Prisons: Sexual Offenders
We will always have prison places to fulfil the orders of the courts. Those convicted of sexual offences are just one cohort of a range we manage daily across the estate. In doing so, we will make sure that estate capacity is realigned to meet the demand for places, including for those convicted of sexual offences.
Her Majesty’s prison Lewes in my constituency has seen a huge surge in prisoners either on remand or serving a sentence for sexual offences. This is putting massive pressure not just on staffing but on space and resources. What specific help can the Minister give HMP Lewes?
My hon. Friend makes a very valid point. Those at HMP Lewes who are charged with sexual offences are generally held in separate units that provide suitable accommodation for their offending behaviours. Perhaps I can reassure her that the prison received £153,000 of the Government’s £12 million fund for safety, and that it plans to spend that on staff, focusing on safety and on violence reduction. There is a recruitment drive going on at the moment. Staff are being vetted and a number of staff will be starting imminently.
Surely the Minister understands that, whether it is prisoners who have been tried and convicted for crimes of a sexual nature or prisoners with mental health and other problems, it is the quality of the management of our prisons that must give us all great concern. When my Select Committee looked at education in prisons, we kept coming back to the fact that the culture of the prison comes from the top and is supported by well trained and well educated prison officers.
On this rare occasion, I agree entirely with the hon. Gentleman—the quality of leadership in a prison makes a huge difference to the regime. It makes a huge difference to how staff are inspired and to the rehabilitation of offenders. That is why Government Members are arguing for prison reform to empower governors, give them control of budgets and enable them to get local resources to meet the needs of offenders.
Released Offenders: Employment
Most offenders arrive in prison with very low levels of educational attainment, very high levels of substance misuse and a very poor employment history. I believe that the purpose of modern prisons is to keep the public safe and to tackle each of those issues, so that prisoners have the foundations to secure and hold down a job on release.
I thank my hon. Friend, but I have recently visited prisoners from my constituency who told me that offenders do not have access immediately on their release to national insurance numbers, bank accounts or unemployment benefits. Will the Minister let me know what steps the Government are taking to improve this situation?
I agree with my hon. Friend that if “through the gate services”, as we call them, are to work and to stop reoffending, national insurance numbers, bank accounts and so forth need to be in place. There is a series of programmes in place to tackle this problem, including an offender banking programme, which opens about 5,000 new bank accounts every year.
The Minister has rightly identified the fact that research shows that employment after custody greatly reduces the chances of reoffending, so what work is his Department doing with the Department for Work and Pensions to make sure that offenders not only find work after they leave prison, but stay in work?
As my hon. Friend has rightly identified, tackling the challenge—and it is a challenge—of getting prisoners work when they leave requires a concerted effort across government and locally across the community. Every prisoner has the opportunity to meet a DWP work coach before release, and the work coach’s role is to guide them towards employment. Work coaches can also ensure that prisoners know their national insurance numbers and get the other services they need to be able to make an appropriate transition into the community.
Many prisoners are already on short-term sentences of under nine months and are often in prison for very short periods. Will the Minister give us some advice on how governors will be judged on placing such prisoners into employment when the challenges are very difficult?
Since being appointed to this job, I have met a number of governors, and most of them tell us that they want to be empowered to match resources to the needs of prisoners in their prisons, working with local employers and the whole community. That is what governors want, but this is not the responsibility of governors alone. If we want prisoners to be able to go out and find work, businesses have a role, the community has a role and we all have a role. If prisoners can leave, get jobs and restart their lives for the better, we all benefit.
More than 60% of young people within the justice system have a communications disability, and more than a third of young offenders have speaking and listening skills at the level expected of an 11-year-old. With these skills being fundamental to the ability to hold down a job, will the Minister update us on what assessment the Government have made of speech and language support needs and of how well those needs are being met?
The hon. Lady is obviously right that many prisoners arrive at prison with huge learning difficulties and disadvantages. That is well documented. We need individual programmes tailored to the needs of the prisoner, and the way to do that, as my right hon. Friend the Secretary of State said, is to empower governors to work with probation companies and rehabilitation organisations to deliver those programmes.
I gently say to the Minister that I wrote a little report on this matter in 2008, a copy of which I dare say he will find either on the internet or in the House of Commons Library, if it is of interest to him.
I look forward to reading it.
I am sure he does. We are immensely grateful to him.
Fewer than half of the people entering prison have basic standards of English and maths. This is a huge problem because we know that low levels of education can prevent people from securing jobs on release and leading law-abiding lives.
The Secretary of State is quite right to say that both literacy and numeracy are essential to getting a job. Should we not therefore put more resources into educating prisoners on release so that they are able to get jobs?
My hon. Friend is absolutely right. The fact is that too many people enter our prisons without those skills. We need to use their time in prison to help them to gain the basic skills so that they can succeed outside. We have started measuring prisoners’ skills by testing them as they enter prison. I am keen to see that we measure real progress made during prisoners’ stay in prison and hold governors accountable for that.
Will the Secretary of State confirm that there will be no return to the policy of banning books for prisoners?
I confirm that books are freely available in prison.
I warmly welcome my right hon. Friend to her position. I was delighted to hear the new Secretary of State for Culture, Media and Sport talking about the importance of the arts in prisons. I hope that my right hon. Friend will recognise how the arts can bring prisoners to literacy and teach them a huge range of skills. I hope she will meet the National Criminal Justice Arts Alliance at the earliest opportunity to discuss what the arts can do, particularly in respect of literacy.
May I say what a fantastic job my right hon. Friend has done in championing the arts in every part of our country? His legacy lives on, and it will live on in our prisons.
I think that the right hon. Member for Wantage (Mr Vaizey) is overcome with emotion. What a happy day for the feller!
What discussions will the Secretary of State have with Justice Departments in devolved legislatures throughout the United Kingdom to ensure that best practice is replicated in the improvement of literacy in all UK prisons?
I look forward to meeting my counterparts from all over the United Kingdom and discussing these critical issues, because this is a challenge that we all face.
Order. We are running late, so extreme brevity is now required.
Access to Justice
The Government’s reform programme is intended to deliver a simpler modern justice system that is available to everyone.
East Lancashire, which includes my constituency and up to five other constituencies, has only one legal aid solicitors firm to deal with housing. What is the Minister going to do about that legal advice centre desert?
It is important for legal aid to be available, and it is, in housing cases. It is also available in the most vital cases, in which people’s lives, liberty or homes are at stake. It is available in domestic violence cases, and cases in which children may be taken into care. I am, of course, grateful to the hon. Lady for highlighting the issue, but let us be clear about the fact that legal aid in housing cases is available, as is a national helpline, as well as the services of lawyers throughout the country.
I am proud to take on the role of Lord Chancellor and Justice Secretary, upholding the rule of law and reforming our justice system. I am determined to ensure that our prisons are places of safety and reform where offenders can get off drugs, improve their education, and develop the work skills they need so that they are less likely to reoffend. I pay tribute to our brave prison officers and probation staff.
Over the next couple of months I shall lay out my plans for prison reform, and set out plans to modernise the courts so that we can continue to have a world-leading justice system.
Sir James Munby was asked to undertake a review of the family courts in August 2014. Can the Secretary of State update the House on any progress that has been made in opening up the family courts and ending the secrecy that can lead to injustice?
I am due to meet James Munby next week to discuss that issue in more detail. Some progress has been made in opening up the family courts, but there is, of course, a balance to be struck between highly sensitive issues and opening them up fully. I will look at the issue in more detail.
I am delighted to tell my hon. Friend that this summer the Legal Aid Agency pulled the plug on its contract with Public Interest Lawyers, who will no longer be ambulance-chasing our brave service personnel. Legal aid should support vulnerable people in our society, and should not be used to pursue spurious cases against the armed forces who do so much to serve our country.
May I join colleagues in welcoming the new Justice Secretary and her team to their roles?
The Government created the toxic conditions for the record levels of violence, drug finds and deaths throughout the prison system by reducing the number of prison officers by a third, yet the former Prisons Minister spent much of his time at the Dispatch Box this year telling me quite proudly about his Department’s successful recruitment drive. The Justice Secretary did not seem to have the figures with her earlier when she answered a question from my hon. Friend the Member for Darlington (Jenny Chapman), so I will help her out. Can she explain why we have 421 fewer full-time equivalent front-line prison officers working in our public prisons than we did a year ago?
I fully acknowledge that we do have issues with violence and safety in our prisons. The levels are unacceptable. I am determined to deal with this issue and I will lay out my plans very shortly.
Since the Government’s probation privatisation, concerns have repeatedly been raised about the quality of pre-sentence reports for the courts as a result of arbitrary targets set. The probation inspectorate has this month described that as a persistent problem leading to inappropriate sentences being handed down. Vital safeguarding checks, such as domestic violence checks with police and child protection checks with children’s services, are not taking place prior to sentencing. Will the Justice Secretary today commit to an urgent review so that the public, probation professionals and sentencers can have confidence that when convicted criminals are sentenced, those deciding on them have all the necessary safeguarding evidence available?
Our probation services do vital work and the Minister responsible for prisons and probation is looking very closely at this issue, but I would point out that those now on shorter sentences get much more support thanks to our new probation contracts.
Contributions to topical questions must be brief, whether from the Back Benches or the Front. There is a lot to get through and not much time in which to do so.
I thank my hon. Friend for that question. Some of the problems in society are magnified in our prisons. As the Prime Minister said, if we are going to have a country that works for everyone, prison reform is very much a part of that, including on literacy, training, work in prisons and employment opportunities when people are released.
This is an incredibly important issue. Both the youth justice Minister and I have met Charlie Taylor and we will publish our response this autumn.
English law has had a huge impact, spreading the rule of law around the world. It is the law of choice in over a quarter of jurisdictions, and Brexit gives us even more opportunities to promote this. I will be championing our £25 billion legal services industry as a key part of post-Brexit global Britain.
May I start by welcoming the Justice Committee’s report on court and tribunal fees? We are intending to respond, and we are also going to publish the review of changes to employment tribunal fees in due course. This is an important area and we will do that.
One hundred babies resided in mother and baby units in English prisons in 2015. Prisons do an excellent job in making these environments as pleasant as possible and babies are able to spend time away from the prison with nominated carers. However, knowing the importance of the early years for child development, it is essential that we consider alternative ways of dealing with female offenders, including those with young children and babies and other caring responsibilities.
I thank the hon. Lady for her question, and I will be very interested in looking more at the details of that proposal.
I am grateful to my hon. Friend for raising this issue. He will be pleased to hear that I have had that notice taken down. The response to the consultation stated that the work would go to Stockport and Chesterfield, and that is what is happening.
Further to a previous question, I have many constituents who cannot get access to employment tribunals because the fees introduced during the last Parliament have proved prohibitive. Will the Minister promise to make a statement to the House on the impact of those fees?
As the hon. Gentleman will have heard, we recognise that we need to produce our review—which we are going to publish—and to respond to the Justice Committee’s report. Those documents will be available in the Vote Office, and that will happen in due course. We are committed to doing that.
Effective court administration is a very different matter from retaining inefficient and costly court buildings. The question is whether the closures are going hand in hand with investment, efficiency and the best use of technologies in the surrounding courts—not least in Bury, Mr Speaker.
I was not psychic; I now realise what the hon. Gentleman was driving at earlier. I am glad that he was persistent. Persistence pays.
My hon. Friend is right. We need a programme of transformation that maintains the very high quality of our legal system—I am sure Members would agree that it is one of the best in the world—but we want to make it the most modern as well, and that is what we are doing. We are investing £1 billion, we have saved a Shard-load of paper, as I mentioned earlier, and we are going to do a lot more, so that our courts can benefit from the digital revolution that every other part of society is already benefiting from.
My constituent’s 17-year-old son Shaquan was murdered last year in Brockley. Will the Minister meet me and Sharon, Shaquan’s mother, to discuss the repeated failings in our justice system that mean that his killer is still walking the streets?
I would be very happy to meet the hon. Lady and her constituent, and I am very sorry to hear about that case.
Colin Pitchfork was convicted of raping and murdering two young girls in the 1980s. Will the Minister please assure me and the public of their safety, given that Mr Pitchfork is being moved to an open prison?
My hon. Friend will be aware that the transfer of prisoners from one prison to another is based on a careful assessment of the risks involved. I am sure that that will have taken place in this case, but I would be happy to discuss the matter with him in more detail if he wants to do so.
Does the Secretary of State accept that the Human Rights Act 1998 is an indispensable part of the Good Friday agreement and that, whatever the plans are for elsewhere, the Government, as a co-guarantor of the agreement, are obligated to retain the Act in Northern Ireland?
The UK has led the world in human rights, from Magna Carta to habeas corpus, and the Government are committed to bringing forward a British Bill of Rights further to build on those ancient protections. The Prime Minister has already met Nicola Sturgeon to make sure that the UK works together—[Hon. Members: “This is about Northern Ireland.”] As the Secretary of State said, we intend to meet all those across the United Kingdom who have concerns about this.
Over the summer I visited the job club at North Sea Camp prison in my constituency, which was set up at the behest of prisoners there. Does the Minister agree that some of the best examples of rehabilitation are to be found in category D prisons? Will he come and see that prison so that we can learn about what really good rehabilitation can do for prisoners’ life chances across the wider prison estate?
Spreading best practice is obviously essential, particularly for rehabilitation. I welcome the opportunity to visit my hon. Friend’s constituency to see the excellent work that is being done by the job club.
Half an hour ago, the Secretary of State said that when the Human Rights Act is repealed it will be replaced with a new British Bill of Rights that will include additional human rights. What additional human rights will there be?
I said that we will enhance human rights in this country, and we will bring forward our proposals in due course.
With proactive cross-Government work, we have seen a 41% increase in disability hate crime prosecutions. Will the Secretary of State keep that as a priority?
I absolutely agree with that.
I received assurances from the Government that the post-implementation review of tribunal fees would be published late last year. Nine months on and after thousands more discrimination cases, we are still waiting. Why has it taken so long for the Government to get a move on and publish the review? Will the Government follow the Scottish Government by abolishing tribunal fees completely—that is Scotland, not Northern Ireland?
As the hon. Lady says, it is right that the review should be published. It will be published in due course with the reply to the Select Committee. We welcome the report and the discussion, so I thank her for her question.
Will a Minister confirm that this ministerial team will continue the good work of its predecessor in considering how prisoners’ family ties can be strengthened to improve rehabilitation and reduce recidivism?
My hon. Friend has a long-standing interest in this matter, as does the former Prisons Minister. We are determined to pursue this important part of rehabilitation.
I am sorry to disappoint some colleagues but, as usual, demand has exceeded supply.
(Urgent Question): To ask the Secretary of State if he will make a statement on safety at Sellafield.
Ensuring high standards of nuclear safety and security will always be a top priority for the Government. On Sellafield, I can assure the House that there is no safety risk to site staff or the public, and it is wrong to suggest otherwise.
As the hon. Gentleman knows more than anyone, Sellafield is a uniquely challenging site that contains the legacy of the UK’s earliest nuclear programmes, when nuclear waste was dumped with no plan for how it would be disposed of safely. The Government have been turning that around in order to clean up Sellafield as safely, cost-effectively and quickly as possible, which is an enormously complex task.
We have a strong regulatory system and all operators are answerable to an independent regulator. The Office for Nuclear Regulation is satisfied—it has confirmed that again this morning—that Sellafield is safe. The regulation of facilities is the ONR’s top priority with a team of around 50 inspectors deployed. The ONR requires the site to improve continuously. The ONR has confirmed that none of the issues raised in the “Panorama” programme is new. The ONR operates transparently. The issues facing Sellafield have been reported to Parliament in the ONR’s annual report and accounts, in which the ONR concluded that important progress has been made.
I thank the Minister for his response. The safety and security of Sellafield are the most important considerations for everyone working at the site. Safety is non-negotiable. As a former third-generation Sellafield worker, I know that the Sellafield workforce are acutely aware of its responsibilities towards the entire community and the country as a whole. As such, I welcome the interest of journalists and politicians—anyone and everyone—in the work undertaken at Sellafield. Visibility and accountability for that work should be welcomed. I would like to see more of it and I would like to see that done in a robust and responsible way. That is why the work of the National Audit Office and the Public Accounts Committee is so important.
As the Minister pointed out, the truth is that Sellafield is a unique site, hosting a unique and complex set of engineering challenges that have arisen over decades—arguably the most difficult engineering challenges anywhere in the world. Sellafield is a publicly owned site. The work of the Nuclear Decommissioning Authority, Sellafield Ltd and the rest of the supply chain is undertaken in the national interest using public money. Will the Minister commit today to long-term, predictable budgeting for Sellafield so that greater benefits can be gained and economies of scale achieved at the site? Public accountability for the work should not only be welcomed, but insisted upon, so it is vital that the NDA is allocated the resources necessary to discharge its responsibilities to our nation and my community.
In addition, it is essential that the industry regulator has the resources it requires to regulate effectively and efficiently. Will the Minister commit to providing the regulator with the resources it says it needs? I note that the regulator told “Panorama” that it was happy with progress being made at Sellafield. Will he ask the regulator to respond to the allegations made by the programme on a point-by-point basis? Does he agree, as I do, that the NDA was right to change the operating model at Sellafield and to replace Nuclear Management Partners? Does he also agree that the workforce should be commended for the work done in progressing the clean-up mission to date?
Crucially, in welcoming the renewed focus that “Panorama” has given to the work under way at Sellafield, will the Minister commit his Department to working with me, my community and the Sellafield workforce to acknowledge Sellafield as a national asset? The globally unique engineering challenges at Sellafield, accompanied with a truly world-class, highly skilled workforce, provide enormous opportunities for my community and the UK to become the global centre of excellence for the nuclear industry. Meeting the challenges of Sellafield places us in a unique position to meet the challenges facing the nuclear industry around the world, and we must utilise these skills. This should be worth billions to the UK economy. Alongside the development of the Moorside power station, my community should become one of the fastest growing economies anywhere in the UK. Will the Minister and his Department work with me, the local workforce and the local supply chain to make this a reality?
I thank the hon. Gentleman for his response, and I agree with him 100% about the non-negotiability of nuclear safety. There can be no disagreement on that, and I am glad that he recognises the progress being made all the time at Sellafield. I wish to place on record the Government’s appreciation for the difficult work done by the many people who work there. We have the most regulated and safest nuclear industry in the world. I do not want to encourage any sense of complacency about that, but it is a fact. Any nuclear power station in the UK must comply with our stringent nuclear safety laws, which are overseen by a robust industry regulator. We lead the world with our skills and expertise in this area.
The hon. Gentleman mentioned the regulator, which is clearly a massively important part of this landscape of protecting the public. As I said in my opening statement, the regulator has said very clearly that it is satisfied that Sellafield is safe, and it has repeated that again to our officials today. As he knows, the NDA has put out a detailed rebuttal of all the points made in the “Panorama” documentary, which I have watched; I think they were all rebutted robustly in the programme. As he knows, none of those points is new. Funding is incredibly important and it is done on a very significant scale; as he knows, it costs £2 billion a year to clean up Sellafield safely.
The hon. Gentleman asked me whether we agreed with the change in the operating model and, yes, of course, we do; it is generally recognised that that is a much better way of working. As I have said, I am assured that the regulator is doing its job, that progress is being made and that Sellafield is safe, and I wholly accept his offer to work closely with him to make sure that that is more widely understood and appreciated.
Only last week, I was at Hinkley Point B seeing the very high safety standards the nuclear industry practises. Does the Minister agree that being able to have an open and sensible discussion about nuclear safety issues is a key part of keeping our industry safe? Does he also agree that we have one of the most effective regulation systems in the world, which has meant that we have had many decades of safe, clean power generated? Sellafield plays a key part in that in this country.
I thank my hon. Friend for that positive and constructive intervention. This is a massively important issue on which no Government can show any complacency, but I believe that we have set up a proper framework and a robust system of transparency and accountability. Considerable progress continues to be made, but the safety record continues to be an impressive one, which is why countries all around the world come to see how we do it.
Yesterday evening’s television report on Sellafield was profoundly disturbing, and my hon. Friend the Member for Copeland (Mr Reed) was absolutely right to request this urgent question—I thank you, Mr Speaker, for granting it. My hon. Friend expressed his concerns at the revelations and referred to the importance of the storage and reprocessing facility for his constituency. Of course, the House must raise such concerns on behalf of the country.
I want to focus on a number of questions on which I believe the Minister should give the House either further information or reassurance, and preferably both. On minimum staffing levels, will he confirm that as recently as five days ago a formal notice was sent to the management, raising the unions’ concern about critical manning levels and the ability to comply with the appropriate procedures and practices when minimum staffing levels are not met?
Will the Minister also say whether he agrees with Dr Rex Strong, the head of nuclear safety, who said in last night’s programme that not meeting the minimum safety standards or staffing levels did not mean that there was a safety risk?
In 2013, the manager of the site, Nuclear Management Partners, produced its somewhat ironically entitled excellence plan, cataloguing the safety problems and the critical nature of the infrastructure with respect to both electricity and water supply on the site. Why did the Government not insist that further resources—staffing and, of course, financial resources—be invested in the site to clean it up at that point? The Minister will know that expenditure in 2012-13 was £7,348 million, with £3,157 million from the Department of Energy and Climate Change itself. The year following that report, the figure had fallen to £5,345 million. Will he explain why, after such a damning report, the resources going into the site decreased? Will he also confirm that the cost estimates for the clean-up of the site have increased at an annual estimate from £25.2 million to £47.9 million?
The programme also cited problems with alarms, and it was said that these were turned off repeatedly, without checking. Will the Minister confirm that that practice is no longer in force? Finally, will he confirm that he has absolute confidence in Dr Rex Strong as head of nuclear safety at Sellafield and John Clarke, the chief executive of the Nuclear Decommissioning Authority?
Again, I thank the hon. Gentleman for a constructive response, which reflects the cross-party concern to get this absolutely right with no equivocation. Issues were raised in the programme about minimum safety levels. I think they were responded to adequately in the programme. We were reassured that the NDA always has enough people on duty to maintain the site safely, and if the work cannot be done safely it will not get it done. I think the programme and the response to it have reassured us on that front.
As I said in my opening statement, cleaning up Sellafield safely costs £2 billion a year, and maintaining the NDA’s overall annual spend on cleaning up the UK’s nuclear sites at some £3 billion reflects the continuing importance that the Government place on cleaning up the civil nuclear legacy and Sellafield.
The hon. Gentleman asked about the reaction to the number of alarms raised—another issue raised in the programme. Those alarms, as he knows, are not unusual, given the types of material that people are working with and do not necessarily mean that there is a safety issue. However, we are reassured that staff are briefed never to be complacent and always react to alarms if they are serious, which is a point that was made in rebuttals in the programme.
On levels of confidence, yes, we do have confidence in the NDA. We also have a great deal of confidence in the independent regulator, which has made it quite clear that, as far as it is concerned, the programme does not raise any new issues and that Sellafield is safe.
Does the Minister agree that it is essential that the BBC give the same prominence to the regulator’s response as it has to the original claims made?
“Panorama” has historically served an extremely useful function in this country by shining a spotlight on some extremely important issues and throwing up some extremely challenging questions, and this programme was no exception to that rule. As we have discussed before, it is important that we have proper transparency and proper accountability on such a fundamental matter. Having watched the programme, I thought there was adequate balance in it, in the sense that the issues were raised and space was given for what I thought was adequate rebuttal of them in the rebuttals published by the NDA and the regulator, and the confirmation made to us about their view that nothing has changed in their perception of Sellafield. That is a matter of record and it is up to the BBC whether it continues to extend the balance shown in the programme and reflect that reality.
I welcome the opportunity to address the matter, and I congratulate the hon. Member for Copeland (Mr Reed) on successfully tabling his question. The issue is an important one and our prime concern on the Scottish National party Benches, as it is across the House, is the safety of staff and of the communities around Sellafield. The harsh lesson of incidents at nuclear power plants is that where safety is concerned, there can be no shortcuts in any circumstances. The Minister said that there would be no complacency on the Government’s part. What assurances has he sought that the issues identified in the BBC “Panorama” programme, particularly those related to staffing levels, will not be repeated at the Sellafield site?
The issue of a permanent storage facility for the high level toxic legacy that we have has caused some consternation over the years. What progress has been made in identifying a safe and secure deep geological storage facility? We know that the economic costs in the nuclear industry are high, but the cost of allaying security and safety concerns is astronomical. If the price is too high to pay, will we scrap the nuclear obsession with Hinkley? What assurances can the Minister give us that there will no repercussions or attempted retribution for the whistleblower?
On the last point, I can reassure the hon. Gentleman. Whistleblowers always have a role to play. They are part of the landscape of accountability and transparency, and anyone watching that programme will have reached their own view on the motivations of those individuals. It is not an issue for Government. The hon. Gentleman sought assurances that issues would not be repeated. The critical thing, as we have discussed, is this House’s confidence that the architecture of transparency and accountability in the process, the role of the regulator and the way in which the regulator reports to this House is sufficiently robust. I have not heard any comments suggesting that the House does not have confidence in that process.
The hon. Gentleman is right to say that we are dealing with an unsatisfactory legacy of the past, when things were not thought through properly and were poorly designed. Now, when we look at new nuclear, we see that the process has changed. The decommissioning process is negotiated up front. The hon. Gentleman is right that permanent long-term solutions must be found. When we are clearer about that, we will make announcements at the appropriate time.
I welcome my hon. Friend to his new post. Given his new role in the Department, when does he expect to visit Sellafield to see it for himself?
I am delighted that my hon. Friend makes that point. It is a measure of the importance that the Government—effectively, a new Administration—attach to the issue that last week Sellafield was visited by not one Minister but two: Baroness Neville-Rolfe, who leads on energy in the Department, and, I am delighted to say, the Chief Secretary to the Treasury. That is significant in itself.
I thank my hon. Friend and neighbour the Member for Copeland (Mr Reed) for bringing this important matter before the House. I have many constituents who work at Sellafield and they have been in touch with me, as has the local Prospect union, because they are concerned about what the “Panorama” programme said about safe staffing levels. Those staff are committed to the highest standards of safety. They are a huge asset to our nuclear industry and they feel undermined by what was said in the programme. Can the Minister reassure my constituents and others working at Sellafield that there will be continued investment to fund the programmes and skills training there and show that the staff there are truly valued for the work that they do?
I am grateful to the hon. Lady for giving me the opportunity to reaffirm again the Government’s appreciation for the extremely challenging and incredibly important work that is done by people on the site. It is deeply impressive that, given the complexity of the site and the legacy—this is really difficult stuff—Sellafield’s safety record over the past three years is the best that it has ever been. I quite understand why residents and people working at the site may have been upset and disturbed by the programme last night, but I hope that my statement and corroborating statements from other Members have reassured them that as far as the Government are concerned—not least because the independent regulator attaches enormous importance to Sellafield, as reflected in the resources committed to monitoring the site on a very proactive basis—Sellafield is safe.
I appreciate that the Minister has a duty to offer reassurance, but I have to warn him that the content and tone of what we have heard today come dangerously close to complacency. The people who have been responsible for the historical errors of judgment and underinvestment are still involved in the industry today. These words will be heard with concern in the north of Scotland, where we are seeing nuclear waste shipped out from the former Dounreay plant. Will the Minister have the risk assessment for that operation scrutinised independently of the people who were responsible for making the plans?
The right hon. Gentleman is an experienced Member of Parliament so I take seriously his warning about tripping over a boundary into complacency. I said at the start that I was determined not to do that. What I am trying to do is reflect genuine empathy with people who live close to the site and who work on the site, who will have been unsettled by the programme last night, which raised nothing new and which, I am keen to stress, in the eyes of the regulator does not change its position in relation to the safety of Sellafield.
The right hon. Gentleman will forgive me if I give some priority to that. He knows the reality of the situation at Sellafield, which is that as a legacy of the cold war, vast amounts of nuclear waste, dumped with no plan for how it would be disposed of safely, languished for decades without anyone properly tackling the problem. The priority for us is to do what we are doing now, which is to continue working to turn that round and clean up Sellafield as safely, cost-effectively and quickly as possible.
Given what the Minister says about transparency, accountability and the paramount importance of safety in the nuclear industry, and given the Prime Minister’s clear concerns about security and the more widespread concerns about the economics, can the hon. Gentleman give us an assurance that the Government will come back to this House before making a final decision on Hinkley C?
I understand the right hon. Gentleman’s point. I have nothing to add to the public statements about the process of reviewing the Hinkley decision, which will look at all aspects of that deal, and we will make suitable announcements when we are ready.
My constituency is directly across the Irish sea from Sellafield. I have visited Sellafield twice. My constituents contacted me last night. Like me, they watched that programme and were deeply unsettled by it. Given the catalogue of safety hazards that were highlighted last night, and also those that have been documented since Sellafield, and prior to that Windscale, were opened, and the history of both recorded and unrecorded discharges of radioactive waste into the Irish sea, will the Minister commit to working directly with the Nuclear Decommissioning Authority to ensure that an accelerated programme of decommissioning is put in place which will protect communities on both sides of the Irish sea and also ensure the safety of the staff there?
I understand the point that the hon. Lady makes on behalf of her constituents. That reinforces the point that I was trying to make earlier about the importance of this statement to try to give some reassurance to all communities that may be affected. I hope that I have done so. As I said, we have confidence in the NDA. We monitor its work closely in terms of both value for money and pace.
The Minister has talked a number of times about cleaning up Sellafield as “cost-effectively” as possible, yet it was only when the Public Accounts Committee in the last Parliament looked closely at the issue that the Government moved to remove Nuclear Management Partners, the American consortium that was running Sellafield. Will he now undertake, as the new Minister, not only to visit, but to make sure that, in all the complex engineering work on this very complex site—I think three of the top 10 engineering challenges internationally are at Sellafield—the difficulty does not overblow the challenge of benchmarking engineering projects in similar fields, so that we get good value for money for the taxpayer while carrying out the important clean-up?
I take this opportunity to congratulate the hon. Lady on the extremely effective way she has chaired that Committee. The point she makes about the role of the PAC in this is really important in terms of reinforcing the framework of transparency and accountability around this incredibly complex process. This process carries a huge bill for the taxpayer, so it is absolutely imperative for a Government of any colour to drive it forward in as responsible and cost-effective a way as possible, with value for money being a prime consideration, but I take on board her suggestion very seriously.
The UK Government’s entire nuclear policy, from Trident to Hinkley, is nothing short of appalling. If any of these allegations by the BBC are found to be true, it will surely be another in a long list of reasons to move away from this nuclear obsession. Does the Minister not concede that he should consider taking a leaf out of the Scottish Government’s book and ban the creation of new nuclear power stations to minimise the amount of waste going to Sellafield?
The nuclear industry is normally a highly regulated sector. Has the Minister considered how his Department can work with Sellafield to ensure that there is faster implementation of safety measures and that the issue of storage—a very clear problem—is addressed as quickly and as safely as possible to ensure the smooth running of this vital plant?
In principle, yes.
Order. I am grateful to the Minister and to colleagues.
Savings (Government Contributions) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Chancellor of the Exchequer, supported by the Prime Minister, Mr David Gauke, Jane Ellison, Gavin Barwell, Simon Kirby, Richard Harrington and Mr Rob Wilson, presented a Bill to make provision for, and in connection with, government bonuses in respect of additions to savings accounts and other investment plans.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 59) with explanatory notes (Bill 59-EN).
Parental Bereavement Leave (Statutory Entitlement)
Motion for leave to bring in a Bill (Standing Order No. 23)
I beg to move,
That leave be given to bring in a Bill to make provision for statutory entitlement to leave of absence from employment for bereaved parents and for connected purposes.
I seek leave to introduce a Bill to amend the Employment Rights Act 1996 to give parents who have suffered the loss of a child a statutory right to two weeks’ paid leave. May I start by paying tribute to the former Member for Glasgow South, who campaigned for this change, and to the many hon. and right hon. Members across the House who support this campaign?
Every Member of the House will agree that there can be few more distressing life events than the loss of a child. Yet, with up to 5,000 children dying every year, many thousands of parents go through this personal tragedy. As the House is aware, my wife and I lost our son, who was stillborn full term, in October 2014, and I was entitled to two weeks off work, protected by statute under the paternity rules. As it happened, I had a very understanding employer, so my legal rights did not come into question. However, it was comforting to know that I was entitled to two weeks off work by law—that I could take that time as needed to come to terms with the incredible loss. I know how valuable it was to spend precious time with my wife coming to terms with what had just happened, registering the death, making the arrangements for the funeral and preparing to say goodbye.
I cannot begin to understand what it would feel like to lose a child at seven months or at two, five, 10 or 15 years old. The grief must be unbearable, and my heart goes out to any parent who has had to go through this most terrible of life events. Yet, why should those parents not have the same protection in law as those who lose a baby through stillbirth or in the first few days and months of life? In such situations, a bereaved mother and father are entitled to full maternity and paternity leave, but if someone loses a child or an older baby—nothing. Surely that cannot be right.
At present, there is no statutory right to take time off on compassionate or bereavement grounds. However, all employees have the right to take immediate time off for dependants; in effect, that is a legal right to take time off unpaid to take the necessary action. Yet, there is no set limit on how many days can be taken as leave and a rather vague definition of a reasonable amount of time. Further, there is no statutory right to be paid during this reasonable amount of time. The reference to taking action distinguishes this form of leave from bereavement or compassionate leave. The type of action contemplated by the relevant provision is arranging and attending a funeral, registering the death and so on; it does not provide a right to leave to cope with the emotional reaction to the child’s death. An employee’s right to bereavement leave is therefore not protected by law in this respect, and the duty to show compassion is left entirely to the employer’s better judgment.
To be clear, most employers are excellent; they act with compassion and kindness, offering their bereaved staff the time they need to come to terms with their loss. However, some do not, and they behave in a manner that falls well short of what we would expect of them. Of course, we expect employers to act with sensitivity and flexibility in situations like this. Yet, given the countless examples of organisations acting without sensitivity and with utter inflexibility, surely it is time for the Government to act.
I am certainly alive to the pressures on businesses at the moment—especially small businesses—and I am loth to introduce any additional regulatory burden. However, given the relatively and thankfully small number of bereaved parents annually, the cost to business would be small. There is also an argument that such a proposal is beneficial to business. Most employers already go out of their way to treat their staff with compassion and often give them fully paid leave. This change would allow them to recover some of the cost of doing so.
So how much would this cost? It is difficult to say, because it would largely come down to the eligibility criteria, but research conducted by the House of Commons Library suggests that the cost could be as little as £2 million per year. However, the reality is that every bereaved parent is different; some will want to take time off, and others will want to get straight back to work. In the same way, not everyone takes their full maternity or paternity rights. The issue, however, is that they have the choice and protection by law.
Some will come at this from a religious perspective. In Hinduism, for example, when a death occurs, relatives are required to observe a 13-day mourning period after cremation. In Judaism, family members are required to stay at home for seven days of mourning after a death.
Statutory bereavement leave is a common right across Europe and in many countries across the world. While the exact conditions vary in terms of total time off and whether said leave is paid or unpaid, it is remarkable that one can argue that Albania or Bosnia and Herzegovina have better worker rights in this area than us. My proposal would give UK workers some of the best bereavement rights in the world in terms of the length of leave possible. While other countries, such as Israel, offer leave with full salary, longer leave at a lower statutory rate is a good starting point.
This is also a popular idea. The 2014 report “Life After Death” from the National Bereavement Alliance and the National Council for Palliative Care quoted research from ComRes, which showed that 81% of people agreed that there should be a legal right to receive paid bereavement leave. The Government e-petition calling for bereavement leave for parents, organised by campaigner Lucy Herd, has over 25,000 signatures, and a Change.org petition has over 165,000 signatures. The campaign also has the support of many organisations, including Child Bereavement UK, the Lullaby Trust, Working Families, Cruse Bereavement Care, Dying Matters—the list goes on.
I fully appreciate the concerns the Government and other Members of the House may have over such a Bill. It will not be perfect. There will always be sincere disagreements over the length of time given and the eligibility criteria. However, let us not make the perfect the enemy of the good. This Bill would be an important first step, giving thousands of bereaved parents up and down the country the opportunity to come to terms with their grief without feeling the pressure of having to return to work. I commend the Bill to the House.
Question put and agreed to.
That Will Quince, Johnny Mercer, Frank Field, Dr Sarah Wollaston, Stewart Malcolm McDonald, Suella Fernandes, Wes Streeting, James Cartlidge, Greg Mulholland, Mike Wood, James Cleverly and Stella Creasy present the Bill.
Will Quince accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 28 October, and to be printed (Bill 60).
[2nd Allocated Day]
Further consideration of Bill, as amended in the Committee and the Public Bill Committee.
New Clause 14
Entrepreneur’s Relief: value for money
‘(1) The Chancellor of the Exchequer shall, within six months of the passing of this Act, publish a report giving HM Treasury’s assessment of the value for money provided by Entrepreneur’s Relief.
(2) The report shall have particular reference to—
(a) the cost to the Exchequer of the Relief;
(b) the number of individuals who have benefited from the Relief;
(c) the average tax deduction received by an individual as a result of the Relief; and
(d) the number of new business start-ups since introduction of the Relief.”—(Rebecca Long Bailey.)
Brought up, and read the First time.
I beg to move, That the clause be read a Second time.
With this it will be convenient to discuss the following:
Amendment 174, page 167, line 40, leave out clause 82.
Government amendments 149 to 151.
Amendment 175, in schedule 14, page 481, line 36, at end insert—
‘(12) Section 169Z makes provision about the expiration of this Chapter.”
Amendment 176, page 499, line 15, at end insert—
“169VZ Expiration of Chapter 5 provisions
(1) The provisions of this Chapter shall remain in force until six years after their commencement and shall then expire, unless continued in force by an order under subsection (2).
(2) The Secretary of State may by order made by statutory instrument provide—
(a) that all or any of those provisions which are in force shall continue in force for a period not exceeding 12 months from the coming into operation of the order; or
(b) that all or any of those provisions which are for the time being in force shall cease to be in force.
(3) No order shall be made under subsection (2) unless—
(a) a draft of the order has been laid before and approved by a resolution of both Houses of Parliament,
(b) the Secretary of State has commissioned a review of the operation of Investor’s Relief and laid the report of the review before both Houses of Parliament.”
I shall speak to new clause 14 and amendments 174 to 176. Amendment 174 would remove clause 82 from the Finance Bill, thereby preventing the proposed cut to the rate of capital gains tax. The cut will reduce the basic rate of capital gains tax from 18% to 10%, and the rate on most gains made by individuals, trustees and personal representatives from 28% to 20%. Gains on residential property and carried interest will still be charged at the higher rate.
I do not want to go over old ground, but I must emphasise the Labour party’s opposition to this reduction in the rate of CGT. I thank my colleagues from other parties for joining us in our opposition. At a time when our public services are stretched to breaking point, the NHS is on its knees, our education sector is over-stretched, housing is in a state of complete crisis, people across the UK are being forced to use food banks, some mothers are going hungry because they cannot afford to feed their children and themselves, and the wider economy is in desperate need of direct investment in skills, infrastructure and industry, it seems frankly absurd to give a tax break of £2.7 billion to the richest people in our society.
Let us not forget that this CGT giveaway hails from a Budget that also planned to take away billions in welfare payments from the most vulnerable people in need of state support. The Government seemed quite happy at the time of the Budget for 300,000 disabled people to lose more than £3,000 a year in their personal independence payments. In stark contrast, our own research has found that the CGT-cutting measures of the Finance Bill amount to a tax giveaway to 200,000 people of about £3,000 a year on average. I am pleased to say that due to Labour’s opposition and the support of some Members from other parties, the worst has not yet happened in relation to PIP, but that still does not justify this policy decision in the Bill. Labour party research shows that just 0.3% of the population will benefit, with those taxpayers likely to benefit to the largest degree being in London and the south-east. If the Government do not accept our evidence, perhaps they will listen to the Resolution Foundation, which said that the CGT cut was
“focused on those on higher incomes—unsurprisingly because in general better off households are the ones making capital gains in the first place.”
The hon. Lady makes a compelling case. One of the major challenges we face in the UK is geographical and individual wealth polarisation. Based on what she says about where the likely beneficiaries of this tax system would be, what does she think that the policy will do to tackle the great challenge of wealth polarisation that we face?
I certainly do not think that it will address the issue that the hon. Gentleman raises—quite the opposite, in fact.
The Prime Minister herself made the following commitment to the British public on the steps of Downing Street:
“The government I lead will be driven not by the interests of the privileged few, but by yours.”
Going back on this policy today would be a good place to start.
Does the hon. Lady acknowledge that, even after this cut, CGT rates in this country will still be higher than they were for the majority of time under the previous Labour Government?
I note the hon. Gentleman’s point and thank him for making it.
If I could see some real benefit to the wider economy or society in these proposals, or if times were good for everybody, perhaps I could understand the Government’s rationale for making such cuts to capital gains tax, but as things stand these proposals are not driven by the interests of the nation as a whole, but to be enjoyed only by the privileged few. I urge all hon. Members to vote with us to remove these cuts from the Bill because the provision simply has unfairness at its very core.
Speaking of policies for the privileged few, new clause 14 would require the Chancellor to publish a report giving the Treasury’s assessment of the value for money provided by entrepreneurs’ relief. When entrepreneurs’ relief was discussed in the Committee of the whole House earlier this year, the then Minister said:
“officials have for some time been developing a detailed research programme designed to identify taxpayers’ motivations for using entrepreneurs’ relief, and I expect the results to be published at some point in 2017.”—[Official Report, 28 June 2016; Vol. 612, c. 236.]
It would seem opportune, then, for the Financial Secretary to accept our provision tying her down to a deadline, given that the Department is already conducting some of the research needed. The Government do not have the best track record of publishing documents when they say they will, so a deadline enshrined in legislation would help. To help the Government in this endeavour, we have listed particular reference points. The report would specifically consider the cost of the relief, the number of individuals who have benefited from it, the average tax deduction received by an individual and the number of new business start-ups since the relief was introduced.
Analysis by Tax Research UK shows that 3,000 people benefited by about £600,000 each from entrepreneurs’ relief in 2013-14, at a total cost of almost £2 billion to the Treasury. Unfortunately, the most up-to-date figures for 2014-15 are not yet available, but I suspect that similar analysis will show the same results. As I said in my remarks about clause 82, this amounts to a large sum going into the hands of the very few, and it certainly seems like an inefficient use of public funds. Of course, Labour Members are in favour of supporting entrepreneurialism wherever we find it and we want businesses to grow and flourish in the UK. However, is simply offering a massive tax break years down the line when a business is sold the best way to achieve that? Should not the Government be providing support to entrepreneurs in the early stages of their business development? How on earth could an entrepreneur know if he or she wants to sell their business further down the line, when it is only starting off, so as to factor in the benefits of this tax relief? Let us see some evidence today. I hope that the Minster will commit to taking my comments on board.
The same principle goes for investors’ relief, which is the subject of amendments 175 and 176. Those amendments would introduce a sunset clause whereby the relief would expire in six years’ time. To extend it, the Government would have to introduce secondary legislation, but in order to do so a review of investors’ relief would need to be laid before the House. When we debated a similar amendment in the Committee of the whole House, which would have brought the relief to a close after five years, the then Minister stated that the first set of data would not be available until 2020-21. We have therefore helpfully amended our amendment to suit the Government’s timetable. I hope that the Financial Secretary will now commit to this sunset provision. Without wanting to repeat the remarks I made in the earlier debate, I think that requiring a review of the scheme’s efficacy would represent good practice—for all reliefs, indeed, not just this one.
Too often, tax reliefs are provided with the admirable aim of incentivising a certain type of behaviour, but there is no analysis—published analysis, I should say—of whether the policy is achieving the desired aim. That means that the limited resources that the Government keep telling us about might be diverted away from our public services, or limits could be put on our capital spending, for reliefs that might not even be working. I will not press amendments 175 and 176 to a vote, but I really hope that the Minister will address the merits of including such provisions when future tax reliefs are introduced.
I will touch briefly on Government amendments 149 to 151, which will ensure that the upper rates of capital gains tax will apply to carried interest gains. In short, carried interest gains refer to the profits paid to investment fund managers from the fund that are classified as capital gains rather than income for tax purposes. We support the amendments.
I am sure that all hon. Members are aware of the 38 Degrees campaign on the Mayfair tax loophole, which filled up our inboxes over the weekend. I will briefly reiterate the Labour party’s position. Clause 37 provides for a tapered system of income taxation on carried interest gains received in respect of investments that are held by a fund for less than three years. As the Minister explained in Committee:
“If the average holding period is less than 36 months, the payment will be subject to income tax. If the period is more than 40 months, the payment will be subject to capital gains tax.”––[Official Report, Finance Public Bill Committee, 30 June 2016; c. 42.]
The Labour party supports that provision, but we would have liked all carried interest to be subject to income tax. We tabled an amendment in Committee that would have removed the taper completely, thereby ensuring that all carried interest was treated at 100%—in other words, taxed as if it were income. Unfortunately, the Government did not support us, but none the less we still support the steps they have taken towards closing the so-called Mayfair tax loophole.
I will press amendment 174 to a vote, because the Labour party cannot and will not agree to a measure that benefits so few by so much. We will divide the House to prevent the unfair cut to capital gains tax from going ahead.
I know that when I mention the word “investor” in this House, some Opposition Members get a little a bit excited: their pupils dilate, their pulses quicken and their minds race with images of plutocrats rolling the dice of financial speculation. The reality, however, is a little different. I have spent my own career investing in businesses, and in this country private equity-backed businesses now account for almost 1 million people in employment. The latest research shows that in the run-up to the last crisis, those companies’ sales, investment in research and development, and, indeed, exports grew at a faster rate than the national average.
Furthermore, I am sure that everyone in the House would welcome more money for charities, more research funds for scientists, more scholarships for students who need them and lower insurance premiums, and that is indeed what the private equity industry delivers. The funds that private equity companies manage benefit all of us through university endowments, charitable foundations, pension funds and the floats of insurance companies. When the private equity industry does well, the pensioner, the scientific researcher and the scholar from a disadvantaged background all benefit.
This is a Finance Bill from a Government who value their investors and will not demonise an industry, and who know that no contribution, however great, should be allowed to skew the scales of social justice. The clauses that involve changes to carried interest will ensure that the rewards that investment managers receive for their efforts are taxed not only correctly, but fairly. The clauses will introduce a 40-month holding period to ensure that capital gains tax treatment is reserved for genuinely long-term investments, as it should be. I know that Members on both sides of the House support the welcome change to remove the base cost shift loophole, which allowed costs to be advantageously offset against gains. The Bill will also consolidate Government action on disguised fee income that was introduced in the last Finance Bill and ensure that fund managers are paying income tax when appropriate. All in all, the measures will raise in the order of £200 million in the next financial year.
Those new arrangements are not only fair for British taxpayers and society; they will also ensure that we remain competitive internationally. Our general treatment of carried interest, which has been the subject of much debate in this House and various Committees, is actually in line with the treatment carried out in the United States, Germany, Australia and France. All those countries agree with the notion that carried interest is capital in nature and should be treated as such. If we look across Europe, we will see that our rate for carried interest will sit in the middle of those for comparable countries: it will be a little bit above that in Switzerland and Germany, and a little bit below that in France.
The clauses reflecting changes to capital gains tax will ensure that the UK remains a pro-enterprise, pro-growth nation. Small and medium-sized businesses of the kinds that I used to invest in account for more than half of private sector employment in the UK. They are responsible for three quarters of all jobs created since 2008, yet I know from first hand that small and medium-sized British enterprises still struggle to attract enough equity capital to grow. Adjusted for GDP, the size of the UK’s venture capital market is a seventh of that of the United States. Just 3% of British companies manage to expand from three employees up to 10, which is half the rate in America.
When I hear about changes to capital gains tax rates, I think about how they will benefit all those small businesses, helping them get the capital they need to grow and to increase investment and employment. Indeed, investors’ relief and the other changes to capital gains tax included in the Bill will build on the success of the seed enterprise investment scheme, the enterprise investment scheme, the funding for lending scheme and the British Business Bank, all of which are providing British companies with the capital that is necessary for growth.
The changes will ensure that Britain remains a competitive prospect for investment without compromising Government revenue. The hon. Member for Salford and Eccles (Rebecca Long Bailey) mentioned the state of our finances and the need for revenue. I am sure that she welcomes the fact that the Office for Budget Responsibility projects that capital gains receipts will top £7 billion this year and increase to £9 billion next year, which is higher than in any other year in the past decade and a half. Rather than being a sweet deal for the rich, our capital gains tax rate actually sits in the middle of the OECD league tables of capital gains tax rates. Ten countries have rates of 0%, and our rate of 20% will sit two points above the average.
As we contemplate leaving the European Union, it will be vital that Britain’s economy remains dynamic, open and competitive to attract the investment we need and maximise the opportunities afforded to us. The clauses relating to capital gains tax and carried interest will ensure that the UK does exactly that, and I will support them later today.
I want to speak to the Labour party’s new clause 14 and amendment 174, which, as has been ably pointed out by the hon. Member for Salford and Eccles (Rebecca Long Bailey), would remove clause 82 and the increased nil-rate band for inheritance tax.
I will focus first on the entrepreneurs’ relief proposed by new clause 14, which makes a key point about the lack of Government transparency. When UK Governments of all colours introduce a tax change, they often do not return with the evidence to show that the policy has worked. They will implement the policy and say that it is wonderful, but they will not bring back the proof. The Minister was asked yesterday how many companies have benefited from the loan guarantee fund in relation to oil and gas, but she was unable to provide a detailed answer. I do not know whether she just did not have the answer at her fingertips or whether the Government have not actually sat down and worked it out. If Governments are going to make grand claims about what they are doing and how good their policies are, they really need to bring back their work and show it to us.
It is important, particularly in relation to entrepreneurial relief, to point out that the last thing we want is an economy where there are quick-fire gains. One of the criticisms of the tax treatment in the area of private equity and venture capital is that there have been too many incentives for people to sell out too quickly.
The corollary of that surely must be that if an entrepreneurs’ relief is designed to encourage entrepreneurs to hang on to their businesses in the longer term, it is difficult for the Treasury to bring back, in a shortish period of time, figures that suggest that a scheme has been a success. We have to look at the general tenor of an economy such as the UK. To that extent, I think that positive changes are being proposed, but I do not think that it is realistic or fair to expect the Treasury to come back in double-quick time and say, “This has been a great success.”
To be fair, the new clause does not ask the Treasury to come back in such a short time; it asks for a six-month review period. Instead of just saying that they will not do a review, the Government could quite easily say, “We will do a review, but we will do it in 18 months.” I would find that acceptable. I would like to see how the schemes are working. I am not necessarily saying that any of them are particularly bad, but the Government need to come back with their workings and tell us how those things are performing.
The UK tax system is incredibly, massively complicated, and there are tax reliefs and taxes for all sorts of things. I am not convinced that the majority of them are working as they were intended to, particularly those put in place 20 or 25 years ago. The whole thing needs looking at, and considering individual things is a sensible place to start. The new clause is about Government transparency, and anything we can to do increase Government transparency around tax reliefs, in particular, is great. It would be very good if the Government considered this for some point in the future, even if not exactly in the terms suggested.
The other thing I want to talk about is inheritance tax. The Conservative manifesto said that the party intended to
“take the family home out of tax for all but the richest”.
As I mentioned in Committee, I have a real issue with regarding £1 million homes, or homes that are worth close to £1 million, as normal family homes and not the preserve of the very richest. In Scotland, the average sale price in 2015 for a detached house was £238,000. In Edinburgh, which is at the higher end of the market in terms of price, the detached average sale price was £382,778. Those are detached homes—not family homes, necessarily—so they are specifically at the higher end of the market. In the most expensive place in Scotland to buy, we are looking at homes costing £382,778.
I have been looking at what someone could get for £1 million. In Orkney—fair enough, it is probably not the best example—they could get a six-bedroom home with an attached three-bedroom lodge and a guest wing for less than £1 million. Nobody would call that a normal family home. In Ayr, they could get a 10-bedroom detached category B listed mansion for less than £1 million. Also in Ayr, they could get a six-bedroom home, which seems relatively modest, in these terms, with a swimming pool for under £1 million. None of those could be classed as normal family homes. They are, in the main, homes that have been inherited—[Interruption.] Very few people will have just picked up these homes.
The other thing that the Conservatives said in their manifesto was, essentially, “You have worked hard for your money; we would like you to keep it.” The vast majority of the homes in question will not be first-generation owned. They will have been sold by the second or third generation because they have been owned by the family for a long time. They are not, by any stretch of the imagination, normal family homes. Even in the centre of Edinburgh someone could manage to get an eight-bedroom, detached, very large house for £1 million, and that is the most expensive place in Scotland to buy a home.
The problem—this applies to a huge amount of the Conservative manifesto—is that the Conservatives think that what happens in the south-east of England is normal for the rest of the UK. It is not normal for the rest of the UK. I know that the south-east is where the majority of the population are based, but some thought needs to be given to this. Members will expect me to say this as a Scottish National party politician who supports independence, but if decisions were made closer to home, they would be more appropriate for people in Scotland.
I appreciate that my constituency is hardly typical as far as these matters are concerned —nor, indeed, is the Minister’s constituency on the other side of the river—but the logic of what the hon. Lady is saying is that we should move towards a regionalised tax system. I guess that she would quite like it to be a nationalised system, with the nation beginning on the other side of Hadrian’s Wall, but does she not recognise that the Barnett formula gives particular incentives to the nations of the United Kingdom, rather than to London and the south-east? I can understand the irritation that she feels about the fact that perhaps too much thinking is done for London and the south-east, but £1 million buys virtually nothing not only in my constituency but in many of the 73 constituencies in London, as well as those in the home counties. Short of regionalising our tax system, surely this is, at least, a sensible step forward to ensuring that those who have been able to bring up a family in a home are not forced to sell the home when a relative dies.
The right hon. Gentleman makes a good point. Perhaps we need to think about having differential policies across the UK, and possibly further devolution. That would be fantastic, and if he wants to support us in that cause, he is welcome to join us at any time.
This policy highlights a major difference between the south-east of England and the rest of the UK. The problem with Government being so far from people who are outside London is that policies are made for the benefit of the majority of the population—the people who live around here. That is really unfortunate for people in the north of England and in Wales, because the policies made by the national Government do not make sense for us.
Will the hon. Lady give way?
I will not take another intervention; I am sorry. I just want to mention briefly the Prime Minister’s statement that she will take “bold action” on tax. We have a big problem—we will still have a big problem after the changes that will be made by the Finance Bill, including the tax changes that we discussed yesterday—with the lack of parity and fairness in tax. Nurses, carers and people who work in all sorts of professions pay 20% tax. I acknowledge that the personal allowance has been raised, and that is very much appreciated, but those people pay the tax that is due on the majority of their income.
There are still too many loopholes in the rest of the system. I understand the point that was made about carried interest, and we need to see how that works going forward. I would love to see the Government’s working on that, and whether the policy has the effects that the Government intend. However, unearned income is still taxed at different rates from earned income. I understand the point that was made about private equity supporting our economy and supporting some of our community organisations, for example. However, the people in question are not paying the level of tax that they should be paying to the Government, so the Government do not have the funds to disburse that they should have to disburse.
We need to do something a bit more radical than tinkering around the edges. We need to look at making changes that actually bring about parity. We need to look at ensuring that the people who are making the megabucks in the City of London pay at least as much tax, and as high a percentage of tax, as our nurses and carers pay.
I will speak briefly in favour of amendment 151 on carried interest. In my time as a Member of Parliament, I have sometimes been critical of elements of the tax regime that applies in the private equity and venture capital world. It seems to me that the generous tax regime, although it has been justified to support entrepreneurs, has often been misused by those in the industry—inadvertently; I am not suggesting that anything untoward or nefarious has taken place. I believe that many in the private equity field have, particularly in good times, in effect been financiers rather than risk takers. As such, it would surely be more equitable for their rewards to be treated more like income than capital gains. That has been at the heart of the whole debate about carried interest.
The Government have been aware of this issue. Let us give them some credit for that. To some extent, we are trying to play catch-up on it. Inevitably, there has been controversy about the treatment of private equity firms’ carried interest, which is levied as a capital gain, rather than as income. There was a time—pre-2010—when the difference between those two things was rather greater than it is today. That may be because capital gains tax has been raised, but the starkness of the problem is to some extent less pronounced now than it was during the time of the last Labour Administration in the noughties.
It is clear that the Treasury is doing the right thing in trying to provide a more favourable regime that is intended to reward genuine entrepreneurs. In principle, that must mean that where carried interest looks like income, it should be treated as such for taxation purposes. That is what we are slowly doing with amendment 151.
Has the OECD not recommended that all carried interest should be treated as income?
It has, but there is a distinction between different elements of carried interest, and we are trying to get to the bottom of that. To be brutally honest, in the longer term I would be much happier to have a regime in which we treated capital gains and income identically. There would not then be any sense in trying to arbitrage one way or the other. In many ways, perhaps inadvertently, the coalition began to move in that direction.
I am sorry that I was not in the Chamber to hear the whole speech of my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), but he is absolutely right. Private equity has had a bad rap because of certain high-profile concerns—partly because of the misuse of tax to allow huge amounts of debt on to balance sheets—but a large number of businesses in each and every one of our 650 constituencies in the UK benefit from having private equity investors. Many jobs now exist because of the private equity investment that has come into play, particularly in growing businesses that will make a real difference in the future. The Government have broadly got this right, although I am sure we will have to come back and look at it again.
I would make one point to the hon. Member for Aberdeen North (Kirsty Blackman). It is not about inheritance tax—we have had our joust on that—but on a more fundamental point, on which I think she is absolutely right: the more complicated a tax code, the more the door is open to tax avoidance of all descriptions. We very urgently need to begin to simplify our tax code. We will add yet more pages to it today. A lot of them are to apply Elastoplast in ways that we can all support for individual reasons, but we need to get back to the principles of a much simpler tax system.
I believe that one of the impacts of leaving the European Union will be not a race to the bottom in lowering tax, but a much simpler tax system. This is a wake-up call for all of us in the House—obviously, particularly for those in the Treasury—to have a much simpler tax code. Such a code will be readily understandable and supported by all our constituents, which is one of the issues we face. It will also say to those bringing in much of the inward investment that will come to the UK from across the globe that we have a simple tax code, which will not be tinkered with in successive Finance Bills because it is very straightforward, and they will be able to work on that basis. I know that may be wishful thinking—going back many years, most Chancellors have talked about having a simpler tax code—but this now needs to be looked at urgently. Urgent attention must be paid to getting simplicity. If we do not do so, we will all very much pay the price.
I entirely echo the right hon. Gentleman’s comments about simplification. I may attempt to catch your eye, Madam Deputy Speaker, to address the House on that issue later. However, I caution him against linking that to Brexit, because almost all the complications, of which there are many in what we now call the tax code, are due to domestic legislation and are nothing to do with the European Union. Brexit may afford us an opportunity to start at the bottom on various areas of Government policy and endeavour, but leaving the EU will not provide such an opportunity in this case.
Obviously, the hon. Gentleman does not know me, or indeed the Minister, well enough to know that we are both very much on the pro-European wing of our party. I was not in any way blaming the EU. I was simply trying to make the point that, in looking to get a new set of trade arrangements with dozens of countries across the globe, we should not rush headlong into making lower corporation tax the incentive for companies. One of the big factors for them will be the sense that there is a simpler and more straightforward tax code in the United Kingdom, and that will make us open for business in the way that we have traditionally been open for business during the past 200 to 300 years.
The Floor of the House of Commons is not the place on which to make such a policy, but I very much hope that we will keep this very firmly in mind. There is now an urgent case for having a more straightforward tax system, even if it is one that only says what we are aiming to achieve. It will obviously be difficult to unravel tax benefits created in the past. I accept that it will be difficult to unravel all the reliefs, not least because entrepreneurs in the future, like those in the past, will want to rely on them in making investment decisions.
The right hon. Gentleman is making some very important points about simplification and its impact in ensuring that measures work in the way intended. Does he agree that simplification and clarification of the objectives of reliefs would go a long way to making sure that small enterprises or first-time entrepreneurs could understand and gain greater access to the available reliefs, which may be intended for them but are perhaps used by others with greater experience?
I am sure there is a lot of truth in that. I was a businessman before I entered the House. It was a relatively straightforward business, based in the City of London, in the service industry, so there were not a huge number of reliefs available, although it may well be that 20 years of additional pages of the tax code have made it even more bloody complicated than it was for those working in and setting up businesses in the 1990s. I agree with the hon. Lady. Again, getting rid of reliefs and making the system more straightforward is the right way forward. Rather than having a whole lot of reliefs to recommend to would-be entrepreneurs, let us try to cut down the whole thicket.
Madam Deputy Speaker, I have spoken for long enough. I almost veered off the subject, but had I done so, I am sure you would have been the first to stand up and say so. I very much hope that amendment 151, among others, will be supported. It is definitely a move in the right direction, although I am sure we will have to come back to the issue of carried interest in the future.
I am grateful for the opportunity to speak in this debate, which was opened by my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey), on the new clause and amendments relating to capital gains tax. I will speak particularly about new clause 14, on “Entrepreneur’s Relief: value for money”, amendment 174, which would remove the capital gains tax cut, and amendments 175 and 176 on the investors’ relief sunset clause. Labour’s main issue of contention with the Government is the reduction of capital gains tax, the reasons for which have been well outlined. I want to highlight the very serious issue of value for money in public finances, and to continue to make our call for the Government to look at the way in which we scrutinise and review tax reliefs.
As we have argued since the Budget, the Finance Bill is inadequate if we are to rise to the challenges we face and to work towards a very strong economy in which we can all feel and believe that prosperity is shared by all. At a very tough time for the public finances, the Government have chosen to prioritise a corporation tax cut and a capital gains tax cut. Certainly while working on the Finance Bill, including as shadow Chief Secretary, I have had several conversations with business figures who quite openly said that they did not necessarily expect a corporation tax cut while other issues that are so important for their business success—investment in skills, housing, infrastructure and superfast broadband, and ensuring that we get the productivity shifts this country so desperately needs—require great attention. To purport that there is a simplistic link between a capital gains tax cut and a strong enterprise and investment culture is therefore not very honest, because it has not been proven that the cut is either necessary or sufficient to achieve that outcome, which we do indeed want.
Let us not forget that at the last Budget, the OBR took all the Chancellor’s measures into account and still downgraded the business investment forecasts. The latest figures from the Office for National Statistics estimate that business investment decreased by 0.8% between the second quarter of 2015 and the second quarter of 2016. Therefore, it continues to be a concern that the Government’s economic strategy does not take into account the wider needs of businesses beyond tax cuts.
It is the context of squeezed public services and lack of investment that leads me to raise the issue of tax reliefs, particularly those pertaining to capital gains tax, and the way in which we understand the needs of businesses. Tax reliefs are an important part of our tax system and have been needed for a variety of reasons, many of them extremely valid. However, after six years of this Government’s failure on the economy, in so many ways, with many people feeling the brunt of the cuts and with our public services under considerable strain, every penny of public spending should be going on much needed investment in our schools and hospitals and on supporting the most vulnerable. The figures got even worse this summer, with more than a third of children leaving school without the equivalent of five good GCSEs, and schools in my constituency tell me that they are giving out money every day to help parents buy school uniforms and shoes. We therefore need to justify every penny that is spent by the Exchequer.
That also has to apply to every penny that is not collected. Tax reliefs are effectively tax forgone. I firmly believe that we need to apply just as much scrutiny to relief as we do to expenditure. That is not to say that I am opposed to tax reliefs to incentivise good and positive business behaviours—far from it. For me, providing behavioural incentives to achieve economic and social goals is a central part of the role of Government, but they must use effective judgment that is based on the interests of fairness and prosperity. A Government who are working in strategic partnership with business and industry in the interests of the economy and society will actively consider such measures.
However, there is a serious paucity of scrutiny of whether and to what extent various tax reliefs are achieving those goals and whether they remain value for money for the taxpayer. The HMRC website lists 405 tax reliefs in the UK, but in reality there are many more. The Office of Tax Simplification has identified 1,140 tax reliefs. Of the 405 tax reliefs listed by HMRC, 102 cost more than £50 million, 84 cost under £50 million and there are 219 for which HMRC does not provide cost data.
Does my hon. Friend agree that of all those reliefs, the biggest scandal is tax relief on pension contributions, which costs more than £30 billion a year in forgone revenue and principally goes to the most well-off? For years, the Department for Work and Pensions has had no evidence that that tax relief produces a change in behaviour that results in more people making pension contributions. We are, in effect, handing out a lot of money mostly, but not entirely, to a lot of rich people to get them to do something, when there is no evidence that it does so.
My hon. Friend makes an important point. The conundrum of how we fund, finance and incentivise pension savings needs to be thought about much more holistically. He highlights an example of incentives that reach not the majority, but a minority. We must keep that under review.
The Public Accounts Committee took forward the work of the National Audit Office on these issues and took evidence. Its report found that some reliefs
“costing some £100 billion a year, are designed to deliver a policy objective that could be met instead through spending programmes”,
which would be more rigorous and more auditable. The report states that
“HM Treasury and…HMRC do not keep track of those tax reliefs intended to influence behaviour. They do not adequately report to Parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money.”
Nothing has really changed since the report was published last year. That is why Labour continues to raise this issue during the passage of the Finance Bill.
We need to question the efficacy of tax reliefs such as capital gains tax relief and entrepreneurs’ qualifying business disposals, or entrepreneurs’ relief. There are clear reasons for entrepreneurs’ relief and it can be argued that it incentivises investment, but does it make a great enough difference to be worth £3 billion a year to the Exchequer? I do not claim to have all the answers, but we do need evidence to prove that it makes that difference and the Government need to be challenged to justify this and other reliefs.
In Committee of the whole House, the then Financial Secretary to the Treasury defended entrepreneurs’ relief and, as usual, did so without evidence, saying:
“of course, as with all tax reliefs, it is entirely appropriate that the Government keep it under review to ensure that it is well targeted and not open to abuse”.—[Official Report, 28 June 2016; Vol. 612, c. 245.]
I challenge the Government to say when they will do that. New clause 14 would make the Government and all of us turn those warm words into action.
Furthermore, the Finance Bill introduces a new relief, investors’ relief, which extends the low rate of capital gains tax to investors in an unlimited trading company for at least three years. In principle, I support the idea of a relief that is intended to incentivise investment and to support access to capital for businesses, particularly at an early stage in a business’s life cycle, if we can provide evidence that it will help turn those with initial ideas into the successful job creators and innovators of the future. That is extremely important in creating the economy of the future, with all the opportunities that new technology and other initiatives can bring.
However, it concerns me that this could end up being yet another tax relief that is introduced for a good reason, but then left to mushroom into a relief that is extremely expensive and difficult to remove. We need a mechanism to ensure that there is time to review whether it is achieving the desired effect, whether the costs are aligned to those that are forecast and whether it constitutes value for money. For that reason, I support the sunset clause for the relief in Labour’s amendment 176, which would ensure that after a number of years, when we have the evidence on which to base our conclusions, those questions will not go unanswered.
I call on the House and the new Treasury Ministers to take seriously our scrutiny of tax reliefs and to support the Opposition amendments, which would put in place proper mechanisms for reviewing the reliefs and ensure that they remain targeted at supporting businesses, while showing evidence of value for money.
I will start by outlining the Government amendments in the group before responding to some of the points that have been made by hon. Members in what has been a thoughtful debate. As a new Treasury Minister, I have found a number of the speeches good food for thought as I look forward to a series of meetings into the autumn.
On Government amendments 149 to 151, the Finance Bill provides an incentive for people to invest in companies by reducing the main rates of capital gains tax from 18% to 10% and 28% to 20% on most gains made by individuals, trustees and personal representatives. We announced at the Budget that the 28% and 18% rates would continue to apply for carried interest. That is justified by the fact that carried interest is a performance-related award that is hybrid in nature, with characteristics that distinguish it from most other types of capital gain, as was alluded to by some hon. Members. We recently learned that it is possible to create an investment fund structure generating carried interest that, under clause 82 as it stands, would be taxed at 20% or 10%. That would clearly be unfair and contrary to policy. The amendments therefore ensure that the continuing 28% and 18% rates apply to all forms of carried interest.
I welcome the support of my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) for the general approach that we are taking in a number of measures in the Bill and in particular for his comments on this matter and the knowledge of it that he brings to the House. I also welcome the support of the Opposition Front-Bench team for the amendments, which we feel strike a sensible balance.
Labour’s amendment 174 would delete clause 82 in its entirety. The lower rates of capital gains tax introduced by the clause make it more attractive for people to invest in companies, helping those companies access the capital they need to grow and create jobs. The changes are part of this Government’s efforts to ensure that our tax system is competitive—never more important than now, as we head into a new future outside the EU—and encourages investment, which will help drive our economy forward into that new future. At 28%, our higher rate of capital gains tax was among the highest in the developed world. We do not want high tax rates to deter investment.
The Minister says that the measures will drive investment. What evidence is there for that?
That point has been made repeatedly. Contributions from those critical of the policy often miss the way in which measures interact. We are trying to create a climate that encourages investment. A number of international studies have indicated that low rates of CGT support equity investment in firms and promote higher-quality investment in start-ups. That is an important source of innovation and growth. The evidence is there. The measures are part of a package that is trying to create a climate that makes our country attractive to invest in and enables domestic investors to invest in company growth. At the same time, as we have stressed and as other measures in the Bill stress, taxes must be fair and must be paid; the hon. Gentleman took part in a good debate last night about some of those measures.
A number of external bodies have expressed support for clause 82—that also goes to the hon. Gentleman’s point. The CBI and the Institute of Economic Affairs have both welcomed the cuts as a means of encouraging entrepreneurship and growth, and, as I have said, there is a body of evidence, not least internationally, to indicate that lower rates support equity investment in firms and promote higher-quality investment in start-ups. Again, I welcome the support of and international perspective given by my hon. Friend the Member for Richmond (Yorks) on this subject.
The changes made by clause 82 are about encouraging investment where we want businesses to expand. As I have said, they are very much a part of a general pro-business agenda, but we have also been clear that we want fair and competitive taxes and that taxes must be paid. We addressed that in a good debate last night, when there was a good degree of cross-party consensus.
The hon. Member for Salford and Eccles (Rebecca Long Bailey) mentioned the geographical distribution of the CGT cut. HMRC publishes national statistics on CGT each year that include a breakdown of its payers by geographical distribution, so there is transparency on that. It is also worth saying that it has been estimated that up to 130,000 individuals will pay lower taxes as a direct result of these changes to CGT, including 50,000 basic rate taxpayers.
The hon. Member for Feltham and Heston (Seema Malhotra) made a typically thoughtful speech, not just on CGT but on her general thoughts on tax reliefs and how we review them, as well as on tax simplification. Again, I felt that she did not perhaps entirely address the interaction between the various measures—they cannot be seen in isolation. The other issues she mentioned are hugely important; for example, the investment in skills, but I did not think she was fair about what the Government have done on that agenda, which has resulted in record levels of apprenticeships. She is right to say that there are other issues such as that one, but these measures are part of a general package and are not the whole picture.
Amendments 175 and 176 were also tabled by the Opposition. In the 2016 Budget we announced the introduction of investors’ relief, benefiting long-term investors in unlisted companies. As has been explained, the amendments seek to end that new relief after a period of six years, with the option of an additional 12-month extension if agreed by both Houses, and ask the Chancellor to lay a review of the operation of the relief before both Houses.
The amendments are unnecessary as the Government keep all tax policy under review in line with normal tax policy making practice. The hon. Member for Aberdeen North (Kirsty Blackman) again, I thought, did not really give credit to the interaction of different measures nor to the wider point that, given that the Government are bringing the measures forward to stimulate economic growth, there is absolutely no incentive for us not to keep a very close eye on them and review them at regular intervals. We do so all the time because we want measures to work—we want our measures to stimulate economic activity, and we do not in any way want them not to work. Indeed, there are a number of measures in the Bill to correct things that have been done in the past, where we feel that an improvement could make something work better.
We feel that there would be limited merit in conducting a review within six years as the first data on the uptake of the relief in its first year of operation will not be available to HMRC until 2021. Amendments 175 and 176 are neither needed nor useful, and we ask the Opposition not to press them to a vote.
New clause 14, again tabled by the Opposition, proposes that the Chancellor publish, within six months of the passing of the Bill, a report of the Treasury’s assessment of the value for money provided by entrepreneurs’ relief. As I have just said, the Government keep all tax policy under review because we want it to do what we have set out as the intention behind it, namely to stimulate economic activity and to make investment in business attractive to people. That review includes entrepreneurs’ relief, as demonstrated by recent action taken to ensure that the relief is effective, well targeted and not open to abuse. We will continue to act, where appropriate.
My predecessor as Financial Secretary has already informed the House of this, but it is worth reiterating, as it is germane to this point, that HMRC officials have commissioned an in-depth survey of taxpayers’ reasons for using entrepreneurs’ relief and its effects on behaviour. We expect the results of that survey, which will be published at some point in 2017, to inform future changes to the relief. I hope that that gives Members some comfort that the relief is being looked at very closely.
In our wider debate, some general points were made about the Budget being tilted towards the south-east of England. A number of points could be made in rebuttal, not least the debate we had last night, which touched on support for the oil and gas sector in Scotland. More generally, some interesting points were made about having a simpler tax system. In the next part of our debate on the Bill, there will be an opportunity to discuss the Office of Tax Simplification, but as this point came up during the current debate it is worth noting that the Bill puts the OTS on a statutory footing. Around half of the OTS’s 400 or so recommendations to date have already been taken on board. I again take on board the point made by my right hon. Friend the Member for Cities of London and Westminster (Mark Field). I feel sure that this a topic that we will return to over the coming months and years.
I thank all Members who have spoken in the debate.
I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Reduction in rate of capital gains tax
Amendment proposed: 174, page 167, line 40, leave out clause 82.—(Rebecca Long Bailey.)
6 September 2016
The House divided:
Question accordingly negatived.View Details
Reduction in rate of capital gains tax
Amendments made: 149, page 167, line 42, leave out “(11)” and insert “(11A)”.
Amendment 150, page 168, leave out line 14 and insert—
“(c) carried interest gains (see subsections (12) and (13)).”
Amendment 151, page 169, line 4, at end insert—
‘(11A) After subsection (11) insert—
(12) In subsection (2A)(c) “carried interest gains” means—
(a) gains treated as accruing under section 103KA(2) or (3), and
(b) gains accruing to an individual as a result of carried interest arising to the individual where—
(i) the individual performs investment management services directly or indirectly in respect of an investment scheme under arrangements not involving a partnership,
(ii) the carried interest arises to the individual under the arrangements, and
(iii) the carried interest does not constitute a co-investment repayment or return.
(13) For the purposes of subsection (12)(b)—
(a) “carried interest”, in relation to any arrangements, has the same meaning as in section 809EZB of ITA 2007 (see sections 809EZC and 809EZD of that Act);
(b) carried interest “arises” to an individual if it arises to him or her for the purposes of Chapter 5E of Part 13 of ITA 2007;
(c) “arrangements”, “investment management services” and “investment scheme” have the same meanings as in that Chapter (see sections 809EZA(6) and 809EZE of that Act);
(d) “co-investment repayment or return” has the same meaning as in section 103KA.”—(Jane Ellison.)
New Clause 9
Tax treatment of supplementary welfare payments: Northern Ireland
‘(1) In this section “supplementary welfare payment” means a payment made under regulations under—
(a) Article 135(1)(a) of the Welfare Reform (Northern Ireland) Order 2015 (S.I. 2015/2006 (N.I. 1)) (“the Order”) (discretionary support),
(b) Article 137 of the Order (payments to persons suffering financial disadvantage), or
(c) any provision (including future provision) of the Order which enables provision to be made for payments to persons who suffer financial disadvantage as a result of relevant housing benefit changes.
(2) In subsection (1)(c) “relevant housing benefit changes” means changes to social security benefits consisting of or including changes contained in the Housing Benefit (Amendment) Regulations (Northern Ireland) 2016 (S.R. (N.I.) 2016 No. 258).
(3) The Treasury may by regulations amend any provision of Chapters 1 to 5 of Part 10 of ITEPA 2003 so as to—
(a) provide that no liability to income tax arises on supplementary welfare payments of a specified description;
(b) impose a charge to income tax under Part 10 of ITEPA 2003 on payments of a specified description made under regulations under Article 137 of the Order (payments to persons suffering financial disadvantage).
(4) The regulations may make—
(a) different provision for different cases;
(b) incidental or supplementary provision;
(c) consequential provision (which may include provision amending any provision made by or under the Income Tax Acts).
(5) Regulations made before 6 April 2017 may, so far as relating to the tax year 2016-17, have effect in relation to times before they are made.
(6) Regulations under this section are to be made by statutory instrument.
(7) A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of the House of Commons.
(8) In section 655(2) of ITEPA 2003 (other provisions about the taxation of social security payments) after the entry relating to section 782 of ITTOIA 2005 insert “;
section (Tax treatment of supplementary welfare payments: Northern Ireland) of FA 2016 (tax treatment of supplementary welfare payments: Northern Ireland).””
section (Tax treatment of supplementary welfare payments: Northern Ireland) of FA 2016 (tax treatment of supplementary welfare payments: Northern Ireland).””
Brought up, and read the First time.
I beg to move, That the clause be read a Second time.
With this it will be convenient to discuss the following:
New Clause 2
Review of the impact of the duty regime for high-strength cider
‘(1) The Chancellor of the Exchequer must carry out a review of the impact of the rate of duty charged on sparkling cider of a strength exceeding 5.5%, and lay the report of the review before both Houses of Parliament within 12 months of this Act receiving Royal Assent.
(2) The review must address (though need not be limited to) the impact of the duty regime on tax revenues and on the consumption of alcohol.”
New Clause 3
Review of the operation of the transferable tax allowance for married couples and civil partners
‘(1) The Chancellor of the Exchequer must carry out a review of the operation of the transferable tax allowance for married couples and civil partners under Chapter 3A of Part 3 of the Income Tax Act 2007 and lay the report of the review before both Houses of Parliament within 12 months of this Act receiving Royal Assent.
(2) The review must address (though need not be limited to)—
(a) levels of take-up of the allowance;
(b) the impact of the allowance on individuals with children aged five years or under;
(c) the impact of the allowance on low-income households; and
(d) ways in which the allowance could be changed to target low-income families with young children.”
New Clause 6
VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service
The Chancellor of the Exchequer must commission a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service, including but not limited to an analysis of the impact on the financial position of Police Scotland and the Scottish Fire and Rescue Service arising from their VAT treatment and an estimate of the change to their financial position were they eligible for a refund of VAT under section 33 of the VAT Act 1994, and must publish the report of the review within six months of the passing of this Act.”
New Clause 8
Review of changes to tax on dividend income
‘(1) The Chancellor of the Exchequer must commission a review of how the changes to the tax on dividend income implemented by this Act affect directors of micro-business companies, to include—
(a) the impacts across the distribution of such directors’ net income;
(b) the impact on company failure rates; and
(c) options for amending the law to minimise the impact on such directors who are on low incomes.
(2) The Chancellor must lay a report of the review before both Houses of Parliament within six months of the passing of this Act.”
New Clause 15
VAT on Installation of Energy Saving Materials
‘(1) No order shall be made under the Value Added Tax Act 1994 which would have the effect of raising the rate of VAT on installation of energy saving materials, or any individual category thereof.
(2) No order shall be made under the Value Added Tax Act 1994 to vary Schedule 7A of that Act by deleting or varying any description of supply within Group 2 (Installation of Energy Saving Materials).
(3) “Installation of energy saving materials” has the meaning given in Schedule 7A of the Value Added Tax Act 1994.””
New Clause 16
Review of impact of tax measures on intergenerational fairness
‘(1) Within six months of the passage of this Act the Secretary of State must lay before Parliament a report assessing the impact of —
(a) Sections 1 to 3,
(b) Sections 19 to 22,
(c) Section 82,
(d) Sections 92 to 96, and
(e) Section 140
on the burden of taxation by age demographic.
(2) A report under this section must include an analysis of the proportion of taxation paid by working age people under the age of 35.”
New Clause 18
Impact of section 24 of Finance (No 2) Act 2015 on availability of affordable housing
The Chancellor of the Exchequer must commission a review of the impact of changes relating to income tax made by Section 24 of the Finance Act 2015 on the availability of affordable housing, and lay the report of the review before both Houses of Parliament within six months of the passing of this Act.”
New Clause 19
Distributional analysis of the impact of taxation measures
‘(1) The Chancellor of the Exchequer must review the impact of the measures introduced by this Act on households at different levels of income, and lay before each House of Parliament the report of that review within six months of this Act coming into force.
(2) The Chancellor of the Exchequer must review the impact of government fiscal measures on households at different levels of income at least once in each calendar year, and lay before each House of Parliament a report on each review.”
Government amendments 132 to 134, 146 to 148 and 135.
Amendment 179, clause 99, page 185, line 20, at end insert—
“(c) “earning” do not include any amounts that constitute qualifying bonus payments within the meaning of section 312B of the Income Tax (Earnings and Pensions) Act 2003.”
Government amendment 138.
Amendment 141, schedule 3, page 337, line 1, at end insert—
“Provision for small amounts of partnership share money repayable to employees to be exempt from tax if instead applied charitably
10 In section 503 of ITEPA 2003 (charge on partnership share money paid over to employee), after “paragraph 55(3) (partnership share money paid over on withdrawal from partnership share agreement),” insert—
“paragraph 55(3A)(a) or (b)(i) (partnership share money paid over on withdrawal from partnership share agreement),”
11 (1) In Schedule 2 to ITEPA 2003 (share incentive plans), Part 6 (partnership shares) is amended as follows.
(2) In paragraph 55 (withdrawal from partnership share agreement)—
(a) in sub-paragraph (3) after “as soon as practicable” insert—
“, unless the plan includes provision authorised by sub-paragraph (3A)”
(b) after sub-paragraph (3) insert—
“(3A) The plan may provide that, where an employee withdraws from a partnership share agreement—
(a) if the employee does not agree to an arrangement in accordance with sub-paragraph (b), any partnership share money held on behalf of the employee is to be paid over to the employee as soon as practicable, and
(b) with the employee’s agreement—
(i) if the partnership share money held on behalf of the employee exceeds a threshold amount of not more than £ 10 specified in the plan, the full amount must be paid over to the employee as soon as practicable, and
(ii) if the partnership share money held on behalf of the employee is equal to or less than the threshold amount referred to in sub-paragraph (b)(i), as soon as reasonably practicable, the full amount must either—
(3B) Partnership share money paid over to a charity or accumulated for that purpose under sub-paragraph (3A)(b) shall not count as employment income by reason of section 503.
(3C) While the plan includes any provision authorised by sub-paragraph (3A), the company and trustees shall make available to participants and qualifying employees at least annually an account of the total amount of partnership share money that would have been returned to employees were it not for that provision and of the related charitable donations made.
(3D) The Treasury may by order amend sub-paragraph (3A)(b)(i) by substituting for any amount for the time being specified there an amount specified in the order.””
Government amendment 139.
Amendment 180, schedule 25, page 642, line 2, at end insert—
‘(4A) The Chancellor of the Exchequer may not appoint the Chair of the OTS without the consent of the Treasury Committee of the House of Commons.
(4B) The Chancellor of the Exchequer may not appoint the Tax Director of the OTS without the consent of the Treasury Committee of the House of Commons.”
Amendment 181, page 642, line 40, at end insert—
‘(2A) The Chancellor of the Exchequer may not terminate the appointment of the Chair of the OTS without the consent of the Treasury Committee of the House of Commons.
(2B) The Chancellor of the Exchequer may not terminate the appointment of the Tax Director of the OTS without the consent of the Treasury Committee of the House of Commons.”
Amendment 182, page 643, line 3, at end insert—
“References to Treasury Committee
5A (1) Any reference in this Schedule to the Treasury Committee of the House of Commons—
(a) if the name of that Committee is changed, is to be treated as a reference to that Committee by its new name, and
(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which those functions are exercisable.
(2) Any question arising under sub-paragraph (1) is to be determined by the Speaker of the House of Commons.”
In this final debate, there is an array of amendments and new clauses to consider across a wide range of subjects. I am sure that we will cover a great deal of ground.
Let me first outline briefly the Government amendments, starting with Government new clause 9. To ensure fairness in the tax system, new clause 9 allows for the exemption from income tax of supplementary benefit payments funded by the Northern Ireland Executive. Government amendments 132 to 134 deal with disguised remuneration and Government amendment 139 deals with aqua methanol. Amendments 132 to 134 change the date for withdrawing a relief on returns arising from disguised remuneration for those who have not settled tax due to 1 April 2017, while amendment 139 changes the date on which the new aqua methanol duty rate comes into force to 14 November.
Government amendments 135, 146 to 148 and 138 concern venture capital trusts, the lifetime allowance and dividends respectively. They make changes to ensure that these policies work as intended.
Let me deal with the new clauses and amendments tabled by the Opposition. New clause 15, tabled by the hon. Member for Salford and Eccles (Rebecca Long Bailey) and her colleagues is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials. Since 2001, the UK has applied the 5% reduced rate of VAT to the installation of 11 different types of energy-saving materials. That reduced rate remains in place and is unchanged. The European Court of Justice ruled last year that the UK had interpreted VAT law too broadly. Following that judgment, the Government published a consultation on this particularly complex issue, and we are considering the responses. While this new clause is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials, the tax lock legislated for by this Government already achieves the same effect. Indeed, it goes further.
Will the Minister confirm that, now we are leaving the EU, we would have no intention of raising VAT to that rate? I hope that we will scrap it altogether.
As the Secretary of State for Exiting the EU said yesterday in his responses to the lengthy statement, those are all matters that will be looked at. He confirmed that he is indeed looking at it, as is the Treasury.
We feel that the tax lock goes further by preventing the use of secondary legislation to vary the scope of any reduced or zero rate. In effect, the new clause would serve no purpose except to duplicate existing legislation.
New clause 3 on the marriage allowance would place a legal requirement on the Government to carry out a review. Although I am sympathetic and have discussed the concerns of my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and others who support the new clause, I hope to be able to show that such a report is unnecessary and to address some of these concerns.
Let me reiterate that the Government remain committed to recognising marriage in the tax system and to ensuring that the marriage allowance is delivered successfully. As hon. Members will be aware, take-up of this policy was initially lower than expected, but the Government have taken decisive action to change that. In spring this year, HMRC ran a successful marketing campaign to help raise awareness among eligible families, and the results were quite dramatic. Daily applications increased by a factor of seven between November 2015 and March 2016. Next month, HMRC will receive its 1 millionth successful marriage allowance application.
We are going even further. HMRC will launch a more ambitious campaign to raise awareness next month to help to continue the momentum. The Government have also assessed the distributional impact of the policy, which I know is a matter of interest to my hon. Friend the Member for Enfield, Southgate. We found that a quarter of those who will benefit are households with children, and most of the benefit from the marriage allowance will go to those in the bottom half of the income distribution scale. I understand that my hon. Friend will want to make more points about this issue in his contribution. I will seek to respond, briefly if I can, at the end.
My hon. Friend has also tabled new clause 2, which proposes a review of the impact of the rate of duty charged on sparkling cider of an alcohol strength exceeding 5.5%. The concerns that he raises—he has raised them before—are important, and the Government will continue to tackle alcohol problems as a driver of crime and support people to stay healthy, building on the alcohol strategy of 2012. The Government are aware that some ciders can be associated with alcohol harm and we have already taken action. Since 2010, for example, we have required drinks to contain a minimum of 35% apple or pear juice to be defined as cider, which is designed to increase the cost of the cheap white ciders.
From my previous role as a public health Minister, I am obviously aware of the concerns about alcohol harm. Further changes to alcohol policy would need sufficiently to target cheap drinks associated with these harms, without of course penalising responsible drinkers. The Treasury is always willing to consider any evidence about how these products should be taxed. Although I do not think a legislative requirement for a review is necessary, I look forward to hearing my hon. Friend’s contribution to the debate.
Amendments 180 to 182 deal with the Office of Tax Simplification. The amendments, tabled by the hon. Member for Ilford North (Wes Streeting), would require appointments to or dismissals from the position of the OTS chair to be subject to the consent of the Treasury Select Committee. The OTS provides the Chancellor with independent advice on simplifying the tax system. As I alluded to in the last part of the previous debate, to ensure that the OTS continues its important work, the Government are putting it on a permanent statutory footing and increasing its powers. I am grateful to my right hon. Friend the Member for Chichester (Mr Tyrie), the hon. Member for Ilford North, whom I see in his place, and other members of the Treasury Select Committee for their commitment to safeguarding the independence of bodies within government and to increasing their transparency. The Government’s view is that there is a balance between ensuring that there is robust scrutiny and doing so in a way that is proportionate to the function of the OTS.
Having considered the representations of my right hon. Friend the Member for Chichester and the hon. Member for Ilford North, the Government will ensure that the Treasury Committee is able to hold hearings with future OTS chair candidates before their appointments are formalised, and to put appointments to a vote in the House. We believe that those arrangements should be a permanent method of appointment of future OTS chairs. I do not think there is any justification for going further and legislating for a power of veto, which is what the amendments would do. I hope that members of the Treasury Committee will welcome the arrangements that I have outlined, and I invite them not to press their amendments.
I am grateful to the Minister for what she has said about the proposals. I am pleased that it has been possible to work out a compromise which I think is very reasonable all round, and which builds on the arrangements made by the former Chancellor for the appointments of the chairman and chief executive of the Financial Conduct Authority earlier in the year. I see no reason why this should not form the basis for a permanent arrangement to ensure that we get the best possible candidate into the OTS, supported by Parliament, in future years.
I thank the Chairman of the Treasury Committee for his indication of support for these arrangements. As he says, we have set out a procedure for the future. I have written to him, and the Chancellor will write to him as well, to confirm that for the record.
New clause 8, tabled by members of the Scottish National party, would require the Government to review the way in which the changes in dividend tax will affect directors of microbusinesses. First, we feel that it would be impossible to deliver such a review, because information from the self-assessment process will not be available until 2018. Secondly and more fundamentally, the dividend tax changes cannot be viewed in isolation, as I pointed out in the previous debate. Small company directors will have benefited from various recent tax changes made by the Government, including cuts in corporation tax and business rates—with more to come into effect in the spring of 2017—and the introduction of the employment allowance, which has made a considerable difference to business people in my constituency to whom I have spoken and, I know, to those in other constituencies. We think that these matters must be looked at in the round, and we therefore do not feel that we can accept the new clause.
New clause 18 proposes another review, on the impact of section 24 of the summer Finance Act 2015 on affordable housing. Again, we feel that that is unnecessary. The changes made by section 24 are being implemented in a gradual and proportionate way. Only one in five landlords is expected to pay more tax, and we do not expect the changes to have a large impact on either house prices or rent levels owing to the small overall proportion of the housing market that is affected. It is worth noting that the Office for Budget Responsibility has endorsed that assessment.
I gather from my predecessors that the subject of new clause 6, which asks the Treasury to conduct
“a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service”,
has arisen a number of times in the past, and I am afraid that I cannot add very much to the responses that SNP Members have heard before in the context of this and previous Finance Bills. The Treasury made it clear to the Scottish Government that the proposed changes would result in a loss of eligibility for VAT refunds. They chose to go ahead, which was their legitimate right, but there can be no expectation that we will review the issue, given that the consequences were clear beforehand.
If the United Kingdom opts for non-membership of the single market following Brexit, the UK Government—the Treasury—will be able to initiate all sorts of proposals relating to VAT, one of which may well be to devolve it to the devolved Administrations. The Scotland Act 2016 currently assigns responsibility for 50% of VAT receipts, but if the UK Government decided on the non-membership option, it would be possible to go further. Is the Treasury considering that?
As a number of Ministers have made clear in the House, we need to consider a huge range of issues as we proceed, but, as I have said, we are clear about the matter for the present. No doubt the hon. Gentleman will raise his point again during debates about our future outside the European Union.
New clause 16, tabled by Liberal Democrat Members, would require the Government to publish a review. I do not think that any Liberal Democrat Members are present, so I shall speak briefly before moving on swiftly to deal with new clauses and amendments tabled by members of other parties who are present.
The Government already undertake equality assessments of all new measures, which includes considering age as a protected characteristic. I am sure the whole House welcomes the fact that the Prime Minister has now launched an unprecedented audit of public services to reveal—among other things—racial disparities, and to look at the way in which public services serve people throughout the country. The Treasury will, of course, play its part in the audit, and no doubt some of these issues can be considered as part of that important exercise.
New clause 19 would require the Government to review the impact of measures in the Bill on different levels of income. In every Budget and autumn statement since 2010, the Treasury has published distributional analyses showing the impact of Government policy on the share of tax paid and spending received across household income distribution. Since 2010, the Government have published far more distributional analyses than their predecessors. As the Prime Minister has made clear on many occasions since taking office, we are determined to make Britain a country that works for everyone, and our policy choices and actions stand as proof of our commitment. The Government have received representations on this matter, not just from Opposition Members but from my right hon. Friend the Member for Chichester, on behalf of his Committee. We will consider the appropriate format of documents to be published at future fiscal events at a time closer to the date of the autumn statement.
When does the Minister think the autumn statement will be delivered?
The Chancellor will make that clear in due course.
As the Minister knows, the issue of distributional analysis is of great importance to the Committee. The previous Chancellor accepted it in 2010, but resiled from it in 2015, to the Committee’s considerable concern. On the understanding that the Chancellor really is considering reinstating the arrangements that had been in operation for the preceding five years, I would not be minded to vote for new clause 19. Am I to understand from what the Minister has said that a serious reconsideration is taking place, and that she or the Chancellor will return to the House in due course to inform us of their conclusions?
Treasury Ministers and the Chancellor take points made by my right hon. Friend and his Committee members very seriously. As I said earlier and as has been confirmed in an exchange of letters between my right hon. Friend and the Chancellor, we will consider the issue at future fiscal events closer to the date of the autumn statement. I may be able to write to my right hon. Friend with further information, but that is what I am able to say at the moment.
I thank the Minister for giving way. She is being most generous.
Yesterday, in an intervention on the speech of one of the Minister’s colleagues, I asked when we were likely to expect the very important autumn statement. The response was “some time in November, maybe December.” Can the Minister confirm that that is indeed the case?
As I have said, the date will be confirmed in due course, but I think it reasonable to assume that the window of opportunity to which the hon. Gentleman has referred is broadly correct.
I shall speak briefly—as, again, there is no Liberal Democrat presence in the Chamber—about amendment 179, which deals with the apprenticeship levy. This would exclude qualifying bonus payments to employees of employee-owned businesses from being considered as part of the employer’s pay bill when calculating the levy. To ensure the levy is as simple and fair as possible, the Government have decided to use the existing definition of earnings—those used for employers national insurance contributions. This avoids unnecessary complication. This point about avoiding complication was made repeatedly to us during the consultation. We feel the amendment would add complication and therefore we urge the House to reject it.
Lastly, Labour amendment 141 on employee share schemes proposes a tax exemption for residual cash amounts remaining in share incentive plans when they are donated to charity. While we appreciate the proposal is made with the best of intentions, we are concerned the change would, again, add complexity and the amendment lacks details. We would need further development and evidence of this idea before giving it further consideration.
I will end there, but I may look to respond briefly at the end if there are any further points I can add that would assist the House. I look forward to the debate.
I am disappointed by the Minister’s concluding remarks on amendment 141, which is in my name and those of my hon. Friends. She says the amendment lacks detail. We are talking about simplification today and I will go on to address the House on that issue, but this amendment covers more than an A4 page, so there is quite a lot of it. It might be the wrong detail—I freely accept that I am not an accountant—but I cannot get my head around the concept that it lacks detail. So I am disappointed and urge her to reconsider.
I am pleased at the movement from the Government on amendment 180. It will not surprise SNP Members to know that I want to touch briefly, as the Minister did, on new clause 6. Frankly, they have made their bed and they should lie in it. They were warned that this would be the financial effect, and having an inquiry into the financial effect of something they knew was going to happen and has happened—it may be an adverse financial effect—is what you get with devolution; you make your decisions and you live with them. They should not be looking indirectly through this mechanism for yet another bung from the English taxpayer when they are already getting shed loads of money under the Barnett formula. I support the Barnett formula and the Union, but sometimes people can push their luck a bit and I think that is what is happening here since they knew in advance what would happen.
I want to make some brief remarks on the question of evidence-based decision making and the difficulties we have in that regard as policymakers and legislators in this House. That applies particularly to financial matters. Although the House of Lords scrutinises Finance Bills, it does not vote upon them for good historical reasons. It cannot, therefore, amend the Finance Bill and we have to get it right here.
Oppositions cannot table amendments to put up taxes and it has become commonplace in recent years to table amendments to express concern and call for a review. That has been the mechanism used by those who take issue with a particular course of action, or lack of a course of action rather than moving amendments to abolish something, as the Liberal Democrats extraordinarily did yesterday with their amendment to abolish corporation tax, which, as the Minister said, would cost £43 billion a year. In this group, new clauses 3, 6, 8, 16, 17, 18 and 19 all call for a review, as did new clause 14 and amendment 176 which were debated previously. It is the flavour of the day.
This highlights a problem that the Minister addressed in her concluding remarks in the previous debate. We have at the moment an economy with extraordinarily good unemployment figures, and I praise the Government for that. That figure has come down, and we have had 2.5 million more jobs in the past six years. That is great, but it has been bought on a sea of debt, with the deficit going up 60% under a Government who said that they were imposing austerity in order to bring public finances under control. They are still not under control.
We have a mounting deficit. We have crumbling infrastructure and services, where we are storing up problems for the future. Prosaically, if we drive around lots of towns in England—I do not know about Scotland, Wales and Northern Ireland, but I suspect the situation may be the same—we see crumbling roads because local authorities are cutting back on filling in potholes. That is a short-term saving but it leads to longer term costs. It is an example of what is happening throughout the economy. We have also had six years of stagnating and falling wages. However, the interactions between the Government’s economic measures that have led to the negatives—I have delineated only some of them—and the positive of employment being up by 2.5 million are unclear to many of us, and I think are unclear to economists.
The Minister referred in the earlier debate to a package of measures, and she quite properly mentioned the interaction of different measures. These things make it difficult when one is considering economic policy. On the disaggregation of various measures, it is difficult to know whether one measure or package of measures or what cocktail of measures is effective or ineffective. The Minister said that the Government review tax breaks and tax reliefs all the time and that all policies are under review. That is good. What we are saying in some of these amendments and new clauses, and have been saying repeatedly in opposition, is: “Make that public”.
I also repeat to the Minister something I said yesterday. There is a question mark as to how much some of these measures and policies are kept under review. The question mark comes from the National Audit Office in a report of about two years ago, which, in round terms, said that there are five different’ types of measures which could broadly be called tax relief, and it delineated them. It then said that it could count about 1,200 such tax reliefs and that it could find evidence that only about 300 of them were being monitored by the Government for efficacy.
The Minister may well believe and be told that these reviews are going on all the time—there are some reviews and she has referred to several of them today. However, I have to tell her from a somewhat, but not very, different angle that that is not what the NAO found two years ago. I urge her to go back to Her Majesty’s Revenue and Customs and the Treasury and find out what is going on with this.
Sadly, in the Labour leadership campaign we have seen from various commentators the emergence of the post-factual world. I am in favour of evidence-based policy making. That does not mean we reach a cosy consensus, which is sometimes what those who are post-factual think is what we inevitably end up with. I will give the House a simple example. If a suburban road has a 30 mph speed limit and a survey finds that 60% of cars are going above 40 mph, the policy that one could make as a result of that could vary between putting in speed humps, putting in chicanes, using radar guns or even raising the speed limit to 40 mph. Those are the policy implications that we as politicians from our differing perspectives might draw from such a common set of facts. Trying as much as one can—it is not always possible—to have a common set of facts is important for evidence-based policy making, and I do not think that the Government, as legislators, have enough information. Therefore, we cannot be sure that the measures we pass in this House have any likelihood of doing what they are intended to do.
Earlier today I gave the example of tax relief on pension contributions; perhaps the worst example is £30 billion a year spent trying to do something when there is no evidence that it does what we want it to do. It might be that from that fact—I take it as a fact because the House of Commons Library cannot find any real evidence that behaviour is changed by that massive tax relief—one could draw different conclusions. One could say one must try harder to advertise it, and we should be doing it anyway because it is a good thing. At the other end of the spectrum, one could say it should be abolished entirely, and in the middle one could say, “Well, we should tinker round the edges and get tax relief at the higher rate—the 40% rate—down.” But we should try to start with a common basis, even though we will not always be able to do so, and many of the new clauses and amendments are seeking to flush out that information. That is a step towards the situation I wish to see—it is adverted to in amendment 180, which refers to the Office of Tax Simplification—in which we as a society and as a legislature look seriously at tax simplification.
The right hon. Member for Cities of London and Westminster (Mark Field) referred to this earlier today. He also referred to it yesterday in the context of corporation tax, and asked whether we ought to consider substituting that tax with a turnover tax, given all the avoidance that goes on. Depending on how it were done, that could be simpler. I agree with him that we ought to have that debate. My hon. Friend the Member for Feltham and Heston (Seema Malhotra) also made an excellent speech earlier today on evidence-based policy and getting the relevant information.
This ties in to the question of simplification because we need the evidence to achieve that. For example, many of the small business tax reliefs generally sound very good, and they might indeed be good; I do not know, because we do not have the evidence. I have been in small and medium-sized businesses, and in my experience those who make the decisions are often unaware of that part of the tax regime until they come to speak to their accountant at the end of the year. So the tax relief has not in fact altered the behaviour of that business during that first year, although it might do so in years two and three. My experience of being in and interacting with small businesses, although not huge, tells me that they are often too busy trying to run their business to say, “There is a tax relief for this and a way of doing that, and we were going to do this in sales but now we are going to do that instead.” They are too busy pursuing the goals that they have set themselves to be bothered about that, so let us have some simplification.
Many Members, although not all, talk about tax simplification. When the former Chancellor of the Exchequer, the right hon. Member for Tatton (Mr Osborne), was in opposition and my party was in government, I remember hearing him speak in Finance Bill Committees—six of which I served on—and repeatedly referring to the tax code. He was the first to use that Americanisation, as I remember. This was seven or eight years ago, and he said that according to Tolley’s tax guide, as it then was, the tax code ran to about 1,000 pages. At the latest count, it is about 1,500 pages. We have had no simplification; we have gone the other way.
One of the reasons for that is that Governments have understandably not had the guts to say, “If you have simplification, it will lead on occasion to things being rough and ready and you will lose the nuances.” As a lawyer, I can say that on occasions that is right. We see this most graphically in the area in which I practise, that of employment tribunals. When they were introduced as industrial tribunals decades ago, they were supposed to be the people’s access to justice. They were supposed to be simple, rough and ready, but what did we get? We got layers of complexity and precedents.
Additionally, we now see the awful situation of people being unable to afford to go to a tribunal since the Government brought in fees. The court fees introduced by the last Government for a full employment tribunal hearing can amount to £2,000. Also, the complexity now means that people need legal representation, but they cannot get legal aid and, generally—certainly in England and Wales; I do not know about Scotland—they cannot get a so-called no win, no fee agreement. So access to justice is reduced because of the complexity. It is very difficult for a lay person in England and Wales to access an employment tribunal without access to specialist legal advice, which generally costs money because of the legal aid regime.
One solution would be to make legal aid available for employment tribunals. Another would be to make the tribunals less complex, but that would lead to rough and ready justice. The same would apply to the tax measures in this country. I urge the Government to consider monitoring and getting evidence on the 1,200 or so tax reliefs and on the distributional analysis to which some of the new clauses refer. I also urge them to take the bull by the horns and have the guts—I salute them for having had the guts to take measures on tax avoidance—to go for a simplification that would help business, even if it occasionally resulted in a somewhat rough and ready system.
In the absence of the Government showing any willingness to take the bull by the horns on tax simplification, how can we get them to part with the information that they say they have on the continual review on tax reliefs? I have not been an MP for very long, but it strikes me that there is a failure in the system if we are not seeing the transparency that we need. If the Government are actually doing these reviews but not providing their working to the Committees or to Opposition MPs, that strikes me as a failure in the system. How can we get them to part with that information?
I quite agree with the hon. Lady. Sadly, I am unlikely ever to be a Minister, but I am hoping that the Minister will stand up this afternoon and say, “The hon. Member for Aberdeen North has made a jolly good point.” She has said that the Government keep all policies under review all the time, so let us have the transparency. I salute what the Government did for transparency yesterday in accepting amendment 145, tabled by my right hon. Friend the Member for Don Valley (Caroline Flint). I urge them to go that bit further today by publishing the evidence that they have and by marshalling more evidence and disclosing it. They must have the courage to seriously go for simplification, which would be better for business and employment in this country, even though there would be a cost to be borne by society in the form of less nuanced decision making and systems becoming more monochromatic and rough and ready. Some of that would of course rebound on Members of the House, because we would get constituents writing to us saying, “I have a particularly nuanced situation here, and you guys have made all these laws that are a bit monochromatic and do not help me.” We have to have the guts to say that that is a price worth paying, and as legislators we should be prepared to do so.
I had hoped to clear up my point in an earlier intervention on the Minister, but I fear that I was not happy with her answer so I shall try again and extend my case a little on the important matter of VAT on energy-saving materials. That is the principal issue at stake in new clause 15. As I was trying to explain to the Minister, many of us feel that it would be quite wrong to increase VAT on energy-saving materials, given that the House decided to choose the lowest rate that we are allowed to impose under European Union law. A case was then lost in the European Court, and the Government have wisely been undertaking a very long consultation into how they might implement this ill-conceived and unwanted judgment. The longer they consider it, the better, and the sooner we get out of the European Union, the sooner we can bring the whole charade to a happy end.
To many of us, this illustrates exactly what was wrong with our membership of the European Union, and this is something that we can offer to our constituents as we come out. They voted to leave and to take back control of their laws. That includes their laws over taxes. During the campaign, we on the leave side made a great deal of how we wanted to scrap VAT on energy-saving materials. Like many people in this House, we believe that we could do much more to save and conserve energy and to raise fuel efficiency, and if we did not tax those materials, perhaps they would be a bit cheaper for people. That would send a clear message that this was something that we believed in.
I urge the Minister to go as far as she can in saying that this Government have absolutely no wish to put up VAT on energy-saving materials, and that they would not do so if they were completely free to make their own tax decisions. I would love her to go a bit further—this might be asking quite a lot—and say that once we are free of the European Union requirements, we will be scrapping VAT on energy-saving materials altogether. It is not a huge money-spinner for the Government, and its abolition would send a very good message. It would particularly help people struggling in fuel poverty, who find energy-saving materials expensive. The extra VAT on them is far from helpful.
The Minister suggested to me that the Brexit Secretary was dealing with this matter, but I can assure her that he is not. He made a clear statement on these matters in the House yesterday and wisely told us—I repeat this for the benefit of those who did not hear him—that it is his role to advise and work with the Prime Minister to get our powers back. His job is to ensure that this House and all of us can once again settle the United Kingdom’s taxes without having to accept the European Union’s judgments and overrides. However, it will be for Treasury Ministers and the wider Cabinet to recommend how we use those wider and new powers and to bring to the House their proposals once they are free to do so.
I hope that we trigger article 50 as soon as possible. This is another reason why we should not rush to impose higher, crippling taxes on energy saving, because it is something we want to encourage. It is another incentive for us to get on with actually leaving the Union. A bigger cash incentive that is relevant to Budget matters in this Finance Bill is that we would soon be able to get back the £10 billion a year. Remember that every month we delay getting out of the European Union we have to raise another £850 million through a Finance Bill such as this to send away and not get back. I urge the Minister to take the matter seriously and to say that this Government have absolutely no intention of increasing VAT on energy-saving materials unless they are legally forced to do so. Will she confirm my view that the sooner we are out, the sooner we can have a rational policy on this most important matter?
I rise to address amendments 180 to 182 and new clause 19, tabled in my name and those of my hon. and right hon. Friends. As a relatively new Member, I want to place on the record my enormous thanks to the staff of the Public Bill Office, who over the course of the summer assisted in the production of not only these amendments, but more than 30 amendments to the Higher Education and Research Bill. I have been busy, but I have been keeping them busy. As a new Member, I have perhaps been slightly more demanding, so I am grateful for their time and support.
As the Minister acknowledged in her opening remarks, amendments 180 to 182 arose from concerns reflected right across the Treasury Committee about the nature of appointments to the most senior offices and the dismissal of post holders. The Office of Tax Simplification has an important public duty. Many of us want the tax code to be simplified, but we know that constraints are inevitable because the tax system is as complicated as life and will therefore always have a degree of complexity. However, we also know—particularly those of us with a large number of small and medium-sized businesses in our constituencies—that the more complicated the tax code, the more complicated it is for businesses to understand what it is they should and should not be paying. Companies with the means to get a great deal of expensive advice on how to make enormous savings are at a great advantage.
During the course of yesterday’s Finance Bill debate, my right hon. Friend the Member for Don Valley (Caroline Flint) spoke about the widespread practice of aggressive tax avoidance by multinational corporations. If the tax code were simpler and clearer, that sort of aggressive avoidance would be harder. That is why there is such parliamentary interest in the work of the OTS and a determination to ensure that Government appointments to the most senior posts have an appropriate degree of parliamentary oversight—primarily, but not exclusively, through the Treasury Committee.
I welcome the Minister’s constructive approach and the agreement she made with the Chair of the Treasury Committee, the right hon. Member for Chichester (Mr Tyrie), who does a sterling job of batting for all members of the Committee and on behalf of both sides of the House. This is a good example of how the Government and the Select Committee system can work together effectively to reach the right outcome. I do not intend to press amendments 180 to 182 to a vote this afternoon, because we have received sufficient assurances from the Minister and I look forward to that process continuing under successive Governments.
Turning to new clause 19, even newer Members of the House are familiar with the regular display and theatre of the Budget. In this modern age, there is an inevitable degree of briefing, counter-briefing and misleading in the run-up to the event in order to misdirect the Opposition and to enable the Government to be fleet of foot on the day and to save the best headlines for the Budget. On the day itself, we have the routine announcements about the business that needs to be conducted in any Budget and then, of course, we get the inevitable rabbit out of the hat. Once the smoke has cleared and the mirrors have been packed away, the real analysis begins of the consequences of each Budget item for the people whom we are sent here to represent. Even members of Select Committees or Bill Committees, who follow the scrutiny of Bills closely, know that trying to penetrate the real impact of a Finance Bill or any fiscal event is a significant challenge.
I must say that that challenge has been made more difficult by the decision of the previous Chancellor, the right hon. Member for Tatton (Mr Osborne), to move away from his commendable practice of publishing alongside the Budget the distributional analysis of the impact of tax, welfare and public spending changes. The first question that all hon. Members face when presented with a Budget is about the impact on our constituents. Those of us who are committed to social justice are more interested in the impact on the poorer household than the wealthier household. In fact, the right hon. Member for Tatton described the analysis as the
“most comprehensive and robust assessment available”.
That is why it was so disappointing that he decided to abandon that practice following the general election. The move was condemned at the time by a wide range of anti-poverty charities as a serious mistake. We could spend a lot of time debating why the previous Chancellor chose to abandon that practice at that particular moment, and we could have our usual exchanges about the priorities of Conservative Governments and Labour Governments, but with the appointment of a new Prime Minister and a new Chancellor I hope that we can instead debate the merits of the principle which we believe any Government, whatever their priorities and political shade, should follow.
The Chair of the Treasury Committee wrote to the Chancellor to express concern that at last year’s summer Budget the Treasury
“replaced its previously excellent budget distributional analysis series with a manifestly deficient substitute.”
Since her elevation, the Prime Minister has made great fanfare of the commitment she made outside No. 10 Downing Street to lead a Government who work
“not for a privileged few, but for every one of us.”
I would dearly love to have a debate with the Government about the means by which we achieve social justice and about whether it is a good thing in and of itself, but I certainly agree with the Chairman of the Treasury Committee that a
“high level of transparency about the effects of tax and welfare policy on households across the income distribution would seem to be a logical, perhaps essential starting point.”
That is what motivated the tabling of new clause 19.
It is important that all Governments are clear and transparent about a Budget’s effects to enable proper parliamentary and public scrutiny of decisions—as happens in the Chamber, in Select Committees and in conversations around kitchen tables up and down the country. Knowing that the analysis is being produced and seeing it form as the Budget is prepared helps to concentrate the minds of Ministers and civil servants. It asks the question and gives the Chancellor, before he or she stands at the Dispatch Box to announce their Budget, an opportunity to reflect on the Budget in its entirety.
Successive Governments and Chancellors have once or twice fallen foul of public opinion by realising that the Budget as a whole is not necessarily as great as they thought it was when each part was being considered. Having the analysis in place as the Budget is prepared will not only aid public and parliamentary scrutiny, but enable Ministers to make the right judgment about how Budgets should be balanced. The Opposition believe, particularly when difficult judgments are to be made about tax and welfare changes and public spending, that the books should never be balanced on the backs of the poorest. I hope that we can find agreement in that area with the new Chancellor and Prime Minister, particularly given her stated aims, but whoever occupies the highest offices of this land, we can surely agree that parliamentary scrutiny is vital.
We should also agree that, as the Treasury has the evidence to hand and we are not asking it to do additional work—the analysis already exists—simply requesting that it be put in the public domain is not too much to ask. I welcome the fact that this afternoon the Minister has left the door open and says that this area will be considered by Ministers. On that basis, I accept that Ministers, the Chancellor and the Treasury will consider it. I assure the Minister and the Chancellor that we will return to this issue, through the Select Committee and at future fiscal events, if a change is not made. On the basis that the Government have an open mind and open ears on this issue, I am prepared not to press new clause 19 to a vote.
It is a pleasure to take part in this stage of our consideration of the Finance Bill. I was interested to hear the carefully constructed arguments of the hon. Member for Ilford North (Wes Streeting). Let me pick up on the point he made about wanting to see social justice from this and future Budgets, and to see it at the heart of the Government’s agenda, as was made clear on the steps of No. 10 by the new Prime Minister. He also talked about the impact on the poorest households, which is the focus of new clauses 2 and 3 and the reviews that they propose. As ever, it was also interesting to hear from the hon. Member for Wolverhampton South West (Rob Marris), and to listen to his thesis on post-factual analysis, be it on the Labour leadership contest or on this Bill. He mentioned roads, so perhaps he should come down to Enfield and give us a post-factual analysis of the cycle lanes that are planned in my borough to see whether we should continue with that expensive proposal, given the need for best value.
Let me return to the matters at hand. First, I wish to speak to new clause 2, which stands in my name and those of my hon. Friends the Members for Congleton (Fiona Bruce) and for Totnes (Dr Wollaston). Sadly, the latter cannot be here as she is leading her Health Committee on a visit, although she would want to be here to support this new clause. I hope and expect that across the House there is support for the principles of wanting to carry out a proper review of the impact of the duty regime, particularly in relation to high-strength cider, although I very much welcome the Minister’s comments. She will know all too clearly from her previous role in public health of the impact of alcohol and high-strength alcohol in particular, including cider, on the poorest and those most in need of our attention. I welcome the hint that a wider, more coherent view of the relationship between alcohol duties and harm could be taken, which was mooted by the previous Prime Minister but seemed to get kicked into the long grass—it has never returned. The Minister will be well aware of the permutations and the different interests across Government in relation to that review and its final outcome. The previous Prime Minister was talking about minimum alcohol pricing in terms of when not if, but this has now gone back to an if. I look forward in future Budgets and future consideration to a wider review and factual analysis of the relationships to harm and the impact on behaviour, particularly among the poorest.
New clause 2 hones in on an area that is about not just health harms, although that is the core of the argument, but an anomaly in our treatment of cider and of beer.
I was a “remainer”, so at the risk of sounding like the right hon. Member for Wokingham (John Redwood), may I ask the hon. Gentleman whether he agrees that this is one area where, as a small silver lining, leaving the European Union may assist, because the rates of excise duties, the definitions and so on are related to our membership of the EU? For example, I am thinking of the way in which wine is treated, because of the Italian, Spanish and French wine industries. If and when we leave the EU, we will have more flexibility in this regard.
I welcome reluctant converts to the cause of Brexit, whenever they come. That is a silver lining among many. I see this very much as sunshine, rather than silver linings. At the heart of it all, this is about our taking back control over a duty that has an impact on the most vulnerable, and we have already had arguments about VAT. I look forward to hearing the Scottish Members’ support for the same silver lining, because they have been battling to ensure that their proposal for minimum unit pricing is not subject to court and European Court interference. They, too, would perhaps welcome that silver lining; I look forward to their joining the hon. Gentleman in what he has just said.
As much as anything else, new clause 2 is about dealing with an anomaly to do with high-strength ciders. In the recess, hon. Members may have enjoyed ciders of all varieties. They may have popped their corks and had some sparkling cider, which is a substitute, perhaps a poor one, for champagne. They need have no fear about this, because the essence of my proposed review is very much about the nasty stuff. I doubt many hon. Members will have partaken in it, although they may have done. I am talking about people going down to their local office licence to get a large bottle or can of white cider, which is not particularly sparkling or pleasant. However, it attracts under-age drinkers and, in particular, dependent drinkers—
It has never seen an apple!
It has never seen an apple. The Minister intimated that the same is true of pears. We need to look at the fact that white cider attracts the lowest duty per unit of alcohol of any product while representing the cheapest way to consume alcohol and get drunk, and to enable addicts to continue their dependency. Three-litre bottles of high-strength ciders are available for just £3.50; people can get completely wasted on £3.50, but they would struggle to buy a bottle of some mainstream ciders for that. As a result, these products are causing disproportionate levels of harm, which is closely associated with dependent, street and under-age drinking. The Government are rightly emphasising and prioritising tackling street homelessness and putting funds into preventing homelessness. My hon. Friend the Member for Harrow East (Bob Blackman) has introduced the very helpful Homelessness Reduction Bill. We hope that, with cross-party support, he will be navigating its safe passage through this House on 28 October and all hon. Friends will attend to that.
Let me make a wider point about future Budgets, as connected to that is the need to examine the impact of duty and the evidence that price has a particular impact on behaviour.