Friday 20 October 2023
Business and Trade
Post Office: Additional Funding
I am announcing that the Government intend to provide additional financial support to Post Office Ltd of up to £150 million, plus any contingency that may be required. This funding will enable the company to meet the costs of participating in the Post Office Horizon IT inquiry and of operating compensation schemes for postmasters.
The final level of funding required is currently being finalised. The Government will confirm to the House the outcome of considerations on financing needs at the earliest opportunity following finalisation.
The Government also intend to provide additional funding to help with the development of the replacement for the Horizon IT system and to ensure that the Horizon system is maintained before that replacement is rolled out.
This funding is subject to compliance with subsidy control requirements, including referral to the subsidy advice unit—part of the Competition and Markets Authority—for review under the Subsidy Control Act 2022, and no award of funding will be made until this is completed. The subsidy advice unit should publish a report within 30 working days, in addition to a preliminary assessment being carried out and a subsequent review period where the outcomes of the review are considered.
Minimum Service Levels in Education
Today I am announcing my intention to pursue minimum service levels in education. In the first instance, I will look to proceed through voluntary agreement. I have written to the teaching unions inviting them to discuss minimum service levels proposals in the hope an agreement can be reached on a voluntary basis.
If we cannot reach an agreement, I will use powers within the Strikes (Minimum Service Levels) Act 2023 which allows the Secretary of State to make regulations to set minimum service levels for schools and colleges in the event of strike action. At such a time I will launch a consultation on how minimum service levels could be implemented. This consultation will build on the consultation in higher education announced on 2 October.
The Government remain committed to ensuring that children and young people are not disadvantaged because of any future strike action. This year’s school strikes were part of the biggest outbreak of industrial action in a generation, with far-reaching consequences across the education system. Cumulatively over 25 million school days have been lost over 10 strike days in schools alone. Disruption caused by strike action has only compounded the detrimental impact of the covid pandemic on children’s and young peoples’ learning.
Either through voluntary agreements or legislation we will introduce minimum service levels to protect children and students from disruption to their education during periods of industrial action.
Draft Finance Bill Legislation: VAT and Excise
The Government are committed to taking full advantage of the opportunities available following EU exit to improve the tax system and have made strong progress in removing, replacing and improving retained EU tax law. This includes disapplying direct EU regulations in relation to customs, VAT and excise and introducing a UK tariff and domestic customs regime, including a range of easements and facilitations that were not available under EU rules.
The Government have also introduced a number of other reforms following EU exit, including: revising and modernising the VAT rules for the importation of low-value parcels; changing the rules of duty-free and tax-free shopping; reforming the rules on VAT on cross-border financial services; introducing a zero rate of VAT for women’s period products; expanding the VAT relief for the installation of energy-saving materials and introducing a temporary zero rate; and overhauling the UK’s alcohol duty regime to radically reform the way duty is charged on alcohol, the biggest change in 140 years.
The Government remain committed to embedding this approach and continuing to take advantage of the opportunities provided by EU exit to reform and improve the tax system through the established Finance Bill and tax policy-making process. For example, spring Budget 2023 announced that the Government would continue discussions with interested stakeholders on reform of the VAT rules on fund management and possible reforms to simplify the VAT treatment of financial services, with the aim of reducing inconsistencies and providing businesses with greater clarity and legal certainty. On 18 July 2023, the Government published a consultation on legislative reforms to modernise the legislation that underpins the VAT treatment of certain wholesale commodity transactions. This consultation closed on 12 September 2023 and the Government are now considering the responses.
Building on this progress, and in line with the tax policy-making framework, the Government are publishing draft legislation in relation to retained EU law for VAT and excise ahead of potential inclusion in the next Finance Bill. While the final contents of the next Finance Bill will be a decision for the Chancellor, the draft legislation is being published to seek stakeholder views at this stage. This allows for technical consultation and provides taxpayers with predictability over future tax policy changes.
This legislation clarifies how VAT and excise legislation should be interpreted in the light of changes made by the Retained EU Law (Revocation and Reform) Act 2023 (REUL Act). The REUL Act ends the supremacy and special status afforded to retained EU law in the UK. In relation to VAT and excise, the Government confirm that it will no longer be possible for any part of any UK Act of Parliament or domestic subordinate legislation to be quashed or disapplied on the basis that it was incompatible with EU law. As previously announced, the Government are taking a bespoke approach in relation to UK VAT and excise law so that it continues to be interpreted as Parliament intended, drawing on rights and principles that currently apply in interpreting UK law. This legislation ensures the stability of the VAT and excise regimes and provides legal certainty for business following the changes in the REUL Act taking effect. It mitigates the risk of re-litigating settled interpretation of UK law, protecting billions of pounds of Exchequer revenue—VAT and excise duty from alcohol, tobacco and hydrocarbon oil raise over £200 billion of revenue per year.
The draft legislation is accompanied by a tax information and impact note and an explanatory note. The documentation has been placed in the Libraries of both Houses and can be found at: