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House of Commons Hansard
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Commons Chamber
28 June 2016
Volume 612

House of Commons

Tuesday 28 June 2016

The House met at half-past Eleven o’clock

Prayers

[Mr Speaker in the Chair]

Oral Answers to Questions

Business, Innovation and Skills

The Secretary of State was asked—

Industry Innovation

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1. What steps he is taking to support innovation in industry. [905533]

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We want to make the UK the best place in Europe to innovate, to patent new ideas and to grow new businesses. That is why we are creating a supportive business environment—for example, with research and development tax credits and through Innovate UK.

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The UK’s position as the world leader in offshore renewables is underpinned by industry and academics from across the European Union working together on innovation projects, and by funding from the European Investment Bank and other European or collaborative research and development funds. Can the Secretary of State give me an assurance that our No.1 position will not be put at risk by Brexit?

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The UK is the world’s largest offshore wind market today, and it will still be the largest by the end of the decade, with 10 GW expected to be installed. Despite the decision to leave the European Union, I am confident that we can still co-operate on science and research, as many countries outside the European Union do with their EU counterparts. I believe that that will ensure that this sector remains very strong.

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Innovation and research are inextricably linked. Yesterday, when I asked the Prime Minister about the impact on our research institutions of the decision to leave the European Union, he assured me that existing contracts would be honoured. However, researchers are applying for funding on a daily basis. What support can be put in place to deal with the uncertainty that exists today, tomorrow and next week?

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As the hon. Gentleman knows, there will be no change immediately; the current structures will stay in place for at least two years. Of course companies are concerned about what will replace them, and that is exactly what we are working on now with many researchers, businesses and others. The Minister for Universities and Science is taking this very seriously and he has already been speaking to a number of stakeholders.

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A vital component of innovation in business is a superfast broadband connection. Would the Secretary of State consider extending the excellent satellite voucher scheme to allow the pooling of vouchers to enable the establishment of community schemes such as fixed-point wireless?

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I will certainly discuss that with the Secretary of State for Culture, Media and Sport. I was pleased to have introduced that scheme in my previous role as Culture Secretary, and it has been making progress. My hon. Friend would perhaps also like to know that infrastructure will be absolutely key to the new national innovation plan, which will be published shortly.

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Mr Speaker, you will know well, because you were with me, that I met representatives of the textiles industry and the university in my constituency last Friday. They are absolutely appalled by the decision to leave the European Union. Surely we need more than the rather calm words we have heard this morning. There should be an emergency package to deal with the real concerns of the great exporters and innovators of this country.

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Of course there will be a number of companies, whether in textiles or other sectors, that will have concerns, particularly about the short term. That is why my colleagues and I are already in touch with a number of companies and businesses around the country. This afternoon, for example, I will be holding a round table with businesses representing every sector of the economy, and we will be following up on precisely those issues.

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The innovation that British industry now needs is a range of innovative trade deals with the world’s super-economies outside the European Union, and we need to act on this now rather than waiting to start until after our exit. What steps is my right hon. Friend taking to supercharge the trade unit within his Department to get crack trade officials working on these agreements straightaway?

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My hon. Friend is absolutely right. With this decision, there are of course short-term challenges, but he highlights the fact that there are also medium and long-term opportunities, one of which is trade. The Department had already thought about that in case the decision went in favour of Brexit. I am pleased that we did that preparatory work and we will now be putting it to use.

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Scotland, which voted to remain in the European Union, has secured around £120 million from Horizon 2020, the biggest EU research and innovation programme. Participation in EU research and innovation programmes has enhanced our scientific and business reputation, so what are the Minister and his Department going to do to ensure that similar funding and support options are available post-Brexit?

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The hon. Lady may be interested to know that several countries that are not in the European Union are part of research and science collaboration programmes—Israel, for example—so if we choose to do so, it is perfectly possible to continue working with our EU partners on science and research.

Late Payment

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2. What steps he is taking to tackle late payment of suppliers by businesses. [905534]

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I am implementing a package of measures to support a cultural change to tackle late payment, including the small business commissioner, the duty for large businesses to report on payment practices, and support for the voluntary prompt payment code.

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I thank the Secretary of State for his answer and welcome his work in this area. In addition to late payment, there is the issue of lengthy-term payment. For example, an SME in my constituency is negotiating with a multinational company, which presents an excellent opportunity. However, the terms and conditions of the proposed payment schedule would mean a 98-day wait for payment on a £3 million project, which is something of a disincentive and, indeed, a risk. I recognise and welcome the fact that the market is opening up to SMEs, but does my right hon. Friend agree that we need to keep working to inspire a more level playing field across all aspects of business practice if SMEs are truly to compete?

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I absolutely agree with my hon. Friend. The reporting requirements that I mentioned will give small businesses the information that they need to make more informed decisions, to negotiate fairer terms and to encourage other companies to improve payment practices. We take this very seriously in the Department and we are determined to change this kind of bad practice.

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But one of the worst performers regarding late payments to small and medium-sized enterprises is the public sector. What is the Secretary of State doing to ensure that Government Departments, agencies and local government promptly pay the small businesses that they use?

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The hon. Gentleman will be pleased to hear that while that was the case back in 2010, when payment practices throughout the public sector were appalling, there has been a significant improvement throughout central Government and beyond since then. At my Department, for example, we take great pride in paying almost all invoices within seven days.

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As the Secretary of State knows, we welcome the move to set up a small business commissioner to help with late payment, but the proposals are modest. Will he assure the many small businesses that will be dramatically affected by any downturn resulting from Brexit that he will put additional support for them in the supply chain to deal with the consequences of any of their customers delaying payment to deal with the problems of Brexit?

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I assure the hon. Gentleman that the proposals are not modest. The small business commissioner will have significant powers and the ability to help, including by providing general advice and direct services for the smallest of businesses. The commissioner will also be able to consider complaints and to take super-complaints from trade bodies.

Midlands Engine

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3. What recent steps he has taken to create the midlands engine. [905535]

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I continue to promote the midlands engine, which could add an extra £34 billion to the local economy by 2030 and create 300,000 new jobs. I am pleased that Sir John Peace has been appointed chair of Midlands Connect to drive productivity and growth across the whole of the midlands region.

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Whether through energy providers, video games companies or manufacturers, Warwick and Leamington’s local economy is a great contributor to the region’s prosperity. What measures are being implemented to build on such successes and to transform the wider midlands engine from concept to reality?

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I recall fondly visiting video games companies with my hon. Friend, who does a great deal to help local businesses, including by hosting a business forum last Friday. The midlands engine is already delivering. For example, we have a £5 million trade and investment package, £60 million for research, and a £5 million award for Midlands Connect. I am determined to do more.

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The result of last week’s referendum shows that there is deep discontent in many of our market towns and coastal areas, where people feel left out and left behind because they have not seen the benefits of economic growth. What steps will the Secretary of State take to ensure that the devolution agenda increases jobs, skills and infrastructure investment in some of these peripheral economies, not just in our great metropolitan cities?

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The hon. Lady will know that, since 2010, we have seen considerable growth in every single region of the UK, including in the midlands. With our focus on the midlands engine, we want to see even more. She is right to highlight the importance of devolution. In my Department, for example, the devolution of skills will make a big difference.

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One of the best ways of bringing in new industries and new jobs to replace the ones that we have lost in the west midlands over the past few decades would be to back Dudley’s exciting plans for an institute of technology, building on the brilliant work that is going on at Dudley Advance. Earlier this year, we were delighted to welcome a visit by the Minister for Skills, and I think that he was very impressed with what was going on. Will the Secretary of State meet a delegation from Dudley to hear about these plans and to discuss them with us in detail?

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I am a big fan of Dudley, and I would love to visit it again.

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7. Before the events of last week, I was delighted to hear that my constituent, Sir John Peace, was appointed head of the midlands engine project. Sir John is the founder of Experian, one of the midlands’ key financial service companies, and the chairman of Burberry. Will my right hon. Friend reassure me that it is exactly people like Sir John who will be in his thoughts and working with the Department over the summer to ensure that the midlands economy is prepared for Brexit over the next few weeks and months? [905539]

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My hon. Friend is absolutely right and makes a very powerful point. The midlands is doing well, but it can do better. Trade and investment will be key. I plan to lead the first midlands-only trade mission abroad—to north America in this case—in September, and I would be honoured if companies from his constituency joined me.

Insolvency Regulation (BHS)

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4. What assessment he has made of the effect of the case of BHS on his policy on regulating insolvency. [905536]

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As the hon. Gentleman knows, the Insolvency Service’s investigation into BHS continues. We are always looking to ensure that Britain is an open place in which to do business, but with the proper regulation in place to protect workers and prevent abuses. We recently launched our consultation “A Review of the Corporate Insolvency Framework”—not something that trips off the tongue. Importantly, if there are any early emerging findings arising out of the BHS case, I can assure him that they will be fully taken into account.

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I am grateful to the Minister for her response. Nevertheless, I am sure that Members of the House and people across the country were dismayed yesterday when they read that the pensions black hole in this country has reached a high of £900 billion. Can she assure this House, me and my constituents who work at BHS in Clydebank that, after reflecting on last week’s vote and the BHS scandal, the Government are doing everything in their power to assure their pension funds?

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The hon. Gentleman makes a good point. Yesterday was a dreadful day on the markets— two of our banks actually had to stop trading. Today, according to the results, is a better day. As the Prime Minister said yesterday, nothing has changed at the moment, so it is really important that we talk up our great country and our great economy, and that we instil confidence and stability on all sides.

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The issue of pensions is very important in the context of not just BHS, but Tata Steel. The consultation finished on 23 June. Will the Minister please update the House on where we are with the pensions scheme, and also reflect on the fact that the trade unions and many others have said that putting that scheme into the Pension Protection Fund would be a complete disaster?

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The consultation has, of course, now finished. There were concerns, certainly among Government Members, that Opposition Members perhaps had not been as supportive about the future plans for Tata as we would have liked, but, as the hon. Gentleman knows, our doors always remain open to him. He has done great work to ensure that we have a sustainable steel industry in south Wales.

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Many workers at BHS, such as those in my constituency, will no doubt have been watching in horror as events unfolded. What further support and assurance can the Minister give to the staff at BHS to support them through this difficult time? Furthermore, I have found—I am sure that other Members have, too—that BHS is not willing to engage with me as a local Member of Parliament. What can she do to ensure that it will engage with Members?

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I am quite surprised that BHS will not engage, as the hon. Lady puts it; that is not at all satisfactory. We are working hand in glove with the Department for Work and Pensions to ensure that people are getting the support and opportunities that they need to get jobs. I am pleased that that work continues. In fact, government does continue, notwithstanding last week’s vote.

Counterfeit Electrical Goods

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5. What discussions he has had with online retailers on the sale of counterfeit electrical goods. [905537]

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My officials and the Intellectual Property Office have met online retailers to reduce the availability of counterfeits on their platforms and to help to co-ordinate law enforcement action against sellers. The dedicated IP crime unit that was launched by the coalition Government investigates sales of counterfeit goods. In October 2014, the Government rightly introduced a criminal sanction to address intentional copying of products protected by registered design.

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Research undertaken by Electrical Safety First has found that 64% of counterfeit products are now purchased online, with sales via social media increasing by 15% every year. Have the Government considered the impact of this trend on consumers and the industry itself?

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I thank the hon. Lady for giving me notice of her supplementary question, because I can now give her a proper and good answer; otherwise, she would have just heard me say, “I will happily meet her.” I will happily meet her, but I can also say that the Government, industry and law enforcement are working together to tackle the threat posed by online sales of counterfeit electrical goods. We have something called Operation Jasper, a partnership between trading standards and industry that has been targeting the sellers of counterfeit goods, particularly on Facebook, and has succeeded in removing thousands of listings and users’ profiles.

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In my constituency in South Lanarkshire, which is home to the headquarters of the Scottish fire and rescue service, 214 house fires were caused by faulty electrical items in the past five years alone. As trading standards are largely enforced locally, online sales might be harder to tackle, so what is the Government’s strategy for curbing the rising online trade in counterfeit electricals?

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I think that I have answered that question, but the hon. Lady makes an important point about some of the dangers from faulty goods, especially those sold online. I was delighted that Lynn Faulds Woods, whom hon. Members will know from her various campaigns over the years to ensure that people are kept safe, has been working with the Government. She produced an excellent report and her work continues in how we are looking at policy to make things better and safer.

Traineeships Programme

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6. What assessment he has made of progress on the Government’s traineeships programme. [905538]

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I call Minister Nicholas Boles.

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I am surprised that you have shortened my name today, Mr Speaker.

The traineeship programme grew by more than 85% in 2014-15. Our first year evaluation showed positive progression rates with 50% of trainees moving on to apprenticeships and work, and a further 17% going on to further learning.

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I am sorry to disappoint the hon. Gentleman. Perhaps the world should know that his full name is Mr Nicholas Edward Coleridge Boles.

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Well played, Mr Speaker.

There is still a perception, I am afraid, that traineeships and apprenticeships are somehow second class compared with other career routes. As a former apprentice, I know just how rewarding they can be. This summer, I will be running a skilled trades summer school in my constituency to help young people to realise the advantages of electrical and mechanical engineering, the motor trades and joinery, for instance. Will the Minister meet me and members of Oldham College to talk about how we can raise the profile of those very important trades?

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I congratulate the hon. Gentleman on his fantastic initiative, which is particularly powerful given his history as an apprentice—he can preach the reality of it. I have to confess to him that I have never been to Oldham, so I would love to come for the first time to join him.

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Traineeships ought to be a route to good-quality apprenticeships, but we know that there remains a substantial gender pay gap for apprentices of more than £1 an hour. Will the Minister suggest how traineeships can be developed to encourage girls and young women into career routes that pay good salaries and have good prospects?

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The hon. Lady identifies an important challenge that has been long in existence, and we have a long way to go to correct it. The key thing is to try to persuade young women to go for the kinds of jobs that are open to them and would pay them much better rates: STEM-related careers and engineering-related jobs. Traineeships are often a good way for people to get a taste for a profession but, equally, we need to attack the problem much earlier—at primary school—to shape the attitudes of young girls and make them understand that, like the shadow Minister, the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), they have a career in technology open to them.

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Peter Cheese, chief executive of CIPD, has said that if the Government are serious about improving the quality of apprenticeships and skills, as well as the quantity, they need completely to overhaul the apprenticeship levy. Is he right?

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He is right, to the extent that we want massively to improve the quality of apprenticeships, as well as the quantity, and they are not in conflict. But of course, if we are going to do both, we have to have more money to spend. That is why the apprenticeship levy is absolutely critical. It will enable us to take Government spending on apprenticeship training from £1.5 billion a year at the moment to £2.5 billion a year in England by the end of this Parliament, which is essential if we are to get the quality as well as the numbers up.

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The Minister has tried to construct a reassurance on traineeships, but the facts that have been dragged from the Government tell a different story. Freedom of information figures published in FE Week show that just 9% of 19 to 24-year-olds and just one in five of all 16 to 24-year-olds went from traineeships to apprenticeships. The Labour party has consistently supported traineeships for getting many more young people into quality apprenticeships, so why have the Government wasted three years, failing properly to promote, explain or target them? Ten days ago, the Minister warned about Brexit uncertainties threatening apprenticeship growth and the levy, so will he now spell out new initiatives to tackle the necessary increase in traineeships, including support to further education colleges and providers who are desperate to press ahead with them; or else risk failing the young generation?

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I congratulate the hon. Gentleman on being one of the few people to resist the temptation to resign in the past 48 hours. He and the shadow Home Secretary, the right hon. Member for Leigh (Andy Burnham), will go down in the history books as brave champions of modern opposition.

I am delighted that the hon. Gentleman is an avid reader of FE Week; it is an interesting publication. He will know that traineeships are not only about pre-apprenticeship programmes. The whole point of traineeships is to take people into apprenticeships, jobs or further training—whatever is best for them—and he would seek to narrow this programme, the great strength of which is its versatility.

Skills Shortages

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8. What steps he is taking to address skills shortages in the workforce. [905540]

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As has been often discussed, we are introducing an apprenticeship levy, which will have two main outcomes. First, we will dramatically increase spending on apprenticeships. It will also require large employers either to invest in apprenticeships or to see their money used by someone else.

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I think that the hon. Gentleman is seeking to group this with Question 12.

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indicated assent.

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Very good. Grouping agreed.

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12. What steps he is taking to address skills shortages in the workforce. [905544]

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I am grateful to my hon. Friend for his answer. He will be very aware, as I am, that certain employers have said that they are not happy with the apprenticeship levy and have asked the Government to rethink, but does he agree that the levy is the best way to ensure that businesses invest in their employees’ skills and for the Government to put apprenticeship funding on a sustainable footing?

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Forgive me, Mr Speaker; we are all somewhat discombobulated at the moment. I should have mentioned that I am seeking to group this question with a later one.

My hon. Friend is absolutely right. What we are trying to design with the apprenticeship levy is actually something of an innovation in government: it is a new tax, but the companies that pay the tax will be able to spend it on training that directly benefits them, so it creates a huge incentive for those employers who pay the levy to get maximum benefit from it by creating more apprenticeships, and I believe that it will have a powerful impact in her constituency.

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The importance of home-grown skills is clearly now even more important, given the result of the referendum last week. Considering the importance of EU funding to British universities, what steps is the Minister taking to ensure that universities and other major providers of skills in the UK are equipped and supported, following last Thursday’s vote?

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I agree with my hon. Friend. One of the results of the decision to leave the European Union is that we as a nation will have to do what we have done for hundreds of years, which is live by our wits and our talents, and we need to develop those talents by investing in education, in science, in research and in skills training. He is absolutely right about the crucial role that universities play—obviously, my hon. Friend the Minister for Universities and Science is leading on that—but we are working closely together to get more universities involved in providing degree apprenticeships, so that people can get degrees and rise to high positions through apprenticeships.

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One of the messages that has clearly come across to me from my experience campaigning in the referendum is that the free movement of people between this country and the rest of the European Union is no longer acceptable to the people I represent. What contingency plans has the Department got for what it will mean for the British economy to end the free movement of people?

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The hon. Gentleman will know that no changes are going to take place any time soon in any of the arrangements with the European Union. We have made a decision that we are going to leave the European Union, but there will be a lengthy process of negotiation to establish exactly what new arrangements will be put in place. However, he is right that one of the chief sources of concern in our communities is the free movement of people, and I am sure he is also right that in his constituency, as in my own, that will have been a motive for many people to vote. That does not alter the fact that whether we are inside the single market or not, whether we have free movement of people or not, investment in the skills of our own people so that British people can get the best British jobs is what we need.

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The most recent employment skills survey conducted by the UK Commission for Employment and Skills found that 2 million staff had skills not currently being utilised in the workplace. Can the Minister detail the steps that he is taking to work with businesses to utilise those skills more productively?

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I feel as though I hardly use any of the skills that I have acquired during my long life—certainly not in this job. The hon. Lady is right that that applies to many people. It is one of the key reasons why we have resisted pressure to make apprenticeships something only for young people and only for new recruits, because for someone of 45, for example, who is returning to work after a career break or who has suddenly discovered in themselves an interest and a potential that they did not know about, it is right that there is Government support through apprenticeship training to enable them to develop those new skills and go on to a rewarding career.

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19. Local businesses in Worcester tell me that they worry about skills shortages and they want to invest in young people. In order for them to do so, it is crucial that young people coming out of school have information about apprenticeships. Does the Minister agree that we need to keep on making sure that inspiring apprentices and their employers get into our schools to talk about the opportunities that apprenticeships can offer? [905551]

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My hon. Friend is right. I know that he will be playing a vital role in shepherding through Parliament the Bill that will require all schools to allow other providers of opportunity post-16, whether FE colleges or apprenticeship employers, to come into the school to talk to young people during school hours, so that they are aware of the full range of opportunities out there, including apprenticeships.

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One of the ways in which skills gaps in the economy have been filled is with EU nationals. That opportunity could now be lost to Scotland, especially in particular sectors and in rural areas. Can the Minister give an assurance to EU nationals currently filling skills gaps in the Scottish economy that their skills are valued and that they will be able to stay?

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I am very happy to do that and I am grateful to the hon. Lady for giving me the opportunity to do so, not just in relation to Scotland but elsewhere in our country. In my Lincolnshire constituency there are certain industries, such as food growing and processing, and the NHS, which would find it very hard to operate without the skills brought in by highly valued migrant workers, not just from the European Union, though importantly also from the European Union. The Prime Minister was very clear yesterday that those people’s position in our country is secure, their working rights are secure, and we remain a member of the European Union. Not only are they secure, but they are valued. We welcome them and we want them to stay here and help us make our society great.

Higher Education

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9. What steps he is taking to improve the quality of higher education. [905541]

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The higher education and research White Paper, and now the Bill before Parliament, set out the steps that we are taking to raise the quality of higher education and to help ensure that all students get the teaching experience that they expect and the employment outcomes that they expect from their time at university.

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The University of Winchester is exceptionally strong in degree apprenticeships. It performs consistently well in student satisfaction surveys and regularly tops 90% in graduate prospects figures. Does the Minister agree that these are all key drivers for young people in deciding to make what is a significant investment in higher education, and that Winchester seems well placed for that?

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The University of Winchester is leading the way in degree apprenticeships, as in so many other areas. I was delighted, on Friday, to meet its excellent vice-chancellor, Professor Joy Carter, and I will meet her again shortly. Winchester is a good example of a university whose students have excellent satisfaction ratings and excellent employment outcomes, with 95% going on to employment, graduate employment or further study in a very short time.

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The University of Sussex down in Brighton gets £9 million of funding from the European Union. The leave campaign was very clear that that funding would be replaced by British Government funding after Brexit. Will the Minister get to his feet and guarantee that that funding will continue? If not, will he bring his brother down to Brighton to explain directly to students why the door of education is going to be slammed in their faces?

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This Government, more than any other, understand the importance of science funding. That is why we have protected science spending until the end of the Parliament—a decade of real-terms protection. Our universities and institutes can continue today to apply for EU competitive funding streams under Horizon 2020, and I am sure they will continue to be successful in the future.[Official Report, 5 July 2016, Vol. 612, c. 4MC.]

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I praise the Catapult programme run by the Department, but can the Minister give us any indication of the opportunities for it to be rolled out more widely and to be available to people in areas such as Northern Ireland?

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Certainly. In our manifesto we committed to rolling out our very successful catapult network, which provides shared facilities that companies, on their own, could not afford to construct. That enables our businesses to maximise the value of research coming out of our university system. In this Parliament, we have already delivered new catapults at Alderley Park in Cheshire and in Cambridge, with the precision medicine catapult. This is an expanding and very successful network, and it will continue to be so.

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The Minister’s higher education White Paper rightly bangs on about how important high-level skills are, but the imminent skills White Paper is not even part of his new Higher Education and Research Bill. With those who teach, manage and work in HE fearful of the consequences of Brexit, should he not be prioritising skills strategies for both our community-based and internationally focused universities and using FE colleges as key HE providers? Why is he instead gambling the bank on allowing unknown, brand-new providers to get degree-awarding powers from day one—probationary degrees from probationary providers—risking our universities’ brand reputation overseas, as well as jobs and productivity at home?

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I am working closely with my colleague the Skills Minister, whose forthcoming White Paper will have many of the answers to the questions the hon. Gentleman has posed. We are surprised by the tone of scepticism about the potential for new higher education providers to lift quality and enhance the range of high-quality higher education on offer in this country. I am afraid, though, that that is of a piece with the Labour party’s previous opposition to the conversion of polytechnics and to new universities in the 1960s.

STEM Subjects

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10. What steps he is taking to promote take-up of STEM subjects in higher education. [905542]

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I call Minister Johnson—the only Johnson who matters today.

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Thank you, Mr Speaker. The Government are fully committed to making the UK the best place in the world to do science. The number of full-time students accepted to study STEM subjects in England is up 17% since 2010. Initiatives such as the STEM ambassadors programme and the new Polar Explorer programme are providing inspiration for young people to consider STEM careers.

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To what extent can studio schools, such as the excellent Space Studio in Banbury and the new Bicester Technology Studio school, be used to promote the take-up of STEM subjects later in a student’s career, whether that is at university or as part of an apprenticeship?

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That is right: studio schools are pioneering a new and valuable approach to learning and are focusing on equipping students with a wide range of employability skills and academic qualifications. Schools such as the ones my hon. Friend mentioned in Banbury and the one in Bicester that will open in September give students the opportunity to work with specialist employers such as the UK and European space agencies and those in the fields of technology, sustainable construction, engineering and computing.

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As vice-chair of the all-party parliamentary group on nuclear energy, I am extremely keen to get more women into the nuclear industry and into studying STEM subjects at school and university, because we cannot meet the skills shortage without attracting more women and girls into engineering. I was therefore really pleased to hear the Minister agree with my hon. Friend the Member for Stretford and Urmston (Kate Green) about the need to get in much earlier, at primary school level, if girls are going to take that subject right the way through to higher education. What specific action are the Government taking to achieve that aim, and how will they take into account the good work that we are already carrying out in west Cumbria?

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The Government continue to work with all partners to raise awareness and interest in STEM careers. Initiatives such as the Inspiring Science Capital Fund, a £30 million programme that we launched with the Wellcome Trust, STEM Ambassadors, which is a £5 million-a-year programme, the Polar Explorer programme I have already mentioned, and the industry-led Your Life campaign are providing inspiration for young people to consider STEM careers. I am pleased to say that over 50% of STEM undergraduates are now women.

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The Minister will know how important EU research funding is to our universities, particularly in relation to STEM subjects. He will also know that those leading the leave campaign promised that no sector would lose out as a result of Brexit. Forget about the next two years—if I could push him on his earlier answer, what will he be doing to ensure that UK Government funds replace European funding, pound for pound, in supporting research in our universities?

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We remain members of the European Union. Our institutions are fully able to apply for and win European competitive funding schemes, and they will continue to be able to do so until such time as we change the basis of our relationship with Horizon 2020.

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I call another, equally important, Johnson—Diana Johnson.

Land Registry

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11. What his plans are for the future of the Land Registry. [905543]

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We recently consulted on options for the Land Registry. The consultation closed on 26 May and we are currently reviewing the responses. Until this is completed, no decision will be made.

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Having a Land Registry office in Hull, I note that in the consultation of July 2014, when the coalition scrapped plans to sell off the Land Registry, only 5% of people consulted said that it would be more efficient and effective to do so, and the Government admitted that the case for change had not been made. So what has changed since then?

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As I said, no decision has been made. It is clear, however, that the Land Registry has been moving increasingly from the use of paper to electronic means, and these modernisation and efficiency changes need to carry on. Regardless of ownership, this is just the kind of change we want to see.

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One of the strengths of the Land Registry is its transparency and independence, but those proposing to buy it have links to offshore tax havens—places that do everything to avoid such transparency and independence. The sale to firms with links to tax havens will undermine the trust of homeowners and mortgage lenders. Is not the truth that this sale of family silver makes a complete mockery of Government claims to be tackling tax avoidance and tax evasion?

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It would be entirely wrong to comment on any press speculation, but, as I said, no decision has been made.

Apprenticeships

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13. What steps the Government are taking to promote apprenticeships in the arboriculture, forestry, horticulture and landscape sector. [905545]

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We are working with employer groups to develop new apprenticeship standards such as arborist and forest operative. If I am ever seeking a new career, I can hardly think of a better one. We are also working on a pilot between the Department for Environment, Food and Rural Affairs and BIS to support a boost in the number of apprenticeships available in the national parks.

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I am delighted that the Government are addressing the skills shortage in this important area with their horticulture and landscape trailblazer apprenticeships. However, what talks has the Minister had with the Department for Education to make sure that courses offered to students provide what businesses actually need so that apprenticeships really work? I am going to welcome him to my constituency to talk about this so that perhaps he can assure me a little more.

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That is an excellent question. The advantage I have is that I am also a Minister in the Department for Education; I talk to myself worryingly often. My hon. Friend makes a very important point. When the skills plan is published, which will be soon, we will be guided very heavily by the review recently completed by Lord Sainsbury, who is looking at how we can ensure that the courses that people are offered in college are genuinely the courses that employers want because they provide the skills they need for modern jobs.

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I am sure that the people of Taunton Deane are in a state of eager anticipation and high excitement at the prospect of a visit from the Minister.

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Wales also offers opportunities for apprenticeships in forestry and horticulture, but employers and colleges in Wales are very concerned about how the apprenticeship levy will work. What recent discussions has the Minister had with Julie James, the Welsh Government Minister, and when does he expect the scheme details to be finalised?

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The hon. Lady asks a reasonable question. I had discussions with the Welsh Minister before the elections, which suspended matters briefly. There have been intensive contacts at official level not only between Her Majesty’s Revenue and Customs and the Welsh, Scottish and other Governments on how the levy arrangements will work from a tax-raising point of view, but with my officials on how the levy will operate. We will publish more details before the summer recess.

Courtaulds

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14. What steps he is taking to support people made redundant from Courtaulds UK Ltd in Belper. [905546]

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My thoughts are very much with the workers and their families at this difficult time. Jobcentre Plus has acted swiftly to offer support, including a jobs fair with other local partners for Courtaulds staff and others.

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I thank the Secretary of State for that answer, and I know that he has a personal interest in Courtaulds. Will he take steps to tighten loopholes restricting companies from moving assets to third-party companies before going into administration, which puts any potential sale of the company in jeopardy?

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My hon. Friend will know that my father’s first job was at a Courtaulds mill. I have taken an interest in the company for a long time and what has happened is very sad. Current insolvency law already enables assets to be disposed of prior to the start of formal insolvency and before recovery. It is, therefore, possible to take action against directors for misconduct, if that is what the administrators find. We will look carefully at the report when it is published in three months’ time.

British Steelmaking

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15. What infrastructure projects are using British-made steel. [905547]

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Crossrail, Europe’s biggest construction project, uses 7,000 tonnes of almost exclusively British steel. Network Rail sources 96% of its steel rail from Britain and it is all made in Scunthorpe—that is 120,000 tonnes a year for the next six years. We have changed the procurement rules so that wider social and economic factors are taken into account in public procurement, both locally and nationally, giving UK steel every chance to win contracts. In fact, it would be almost impossible not to buy British steel.

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North Cornwall has two new possible proposals for branch lines, one in Wadebridge and the other on the Okehampton link. Does my right hon. Friend welcome those proposals, and does she think, in the light of the recent EU referendum result, that it would be beneficial for British steel to be used in every new railway construction across the whole country?

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We have changed the procurement rules in relation to Government funding, but there is really no excuse. We know how brilliant British steel is—[Interruption]—especially when it comes to the construction of railway lines. It is the best steel in the world, which is why so many people buy it when they are constructing rail lines.

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I welcome the Minister’s comments about UK steel, and Scunthorpe steel in particular. What is she doing to ensure that there is a clear pipeline of infrastructure projects in train so that the correct capacity is put in place for creating the steel for those projects?

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I am grateful, as ever, to the hon. Gentleman for his question. One of the things that will certainly take place today is the Secretary of State leading an extremely large meeting, as the hon. Gentleman might imagine, of all the key players in British industry, following last week’s vote. One of the things that we have already discussed is the need to make sure that we address—if at all possible, and if we can really get determination—huge infrastructure projects. Whether it is HS2, a third runway or whatever, it is incredibly important that we make the very best of what has been a very bad decision by the British public, if I may say so.

Topical Questions

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T1. If he will make a statement on his departmental responsibilities. [905463]

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Following last week’s referendum result, my Department has been talking to businesses up and down the country, and we will work with them over the weeks and months ahead. To that end, later today I will host a round table with trade bodies and business leaders to consider our next steps. I would also like to take this opportunity to welcome Tim Peake back to earth after six months of education and inspiration aboard the international space station.

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I spent last week visiting businesses right across Telford. Notwithstanding short-term market volatility, the gilt market has been strong throughout and equities are back up today. Business leaders in Telford are confident about the future. Having visited Telford on several occasions, does the Secretary of State agree that it has a great future and is a great place to do business?

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I absolutely agree with my hon. Friend; I will visit Telford again and again with her. She will know that unemployment in her constituency has fallen by 60% over the past six years. That is testimony to the strength of local businesses, to her own work and to this Government’s policies. I will work with her in every way to secure Telford’s bright future.

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Despite the Secretary of State’s complacency, this is a very difficult time for British business. Over the past 24 hours we have lost our triple A rating and £150 billion has been wiped off the value of the FTSE 350. Will he reassure the many worried workers and businesses that, unlike with Tata, when he was on the other side of the planet, he will be in the boardrooms of Nissan in Sunderland, Hitachi in Newton Aycliffe, Jaguar Land Rover in Solihull and other businesses across the country to share his plan for a secure economic exit as they make investment decisions in the weeks and months to come?

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I was hoping to welcome the hon. Lady as the new shadow Business Secretary, but I understand that she is not in that position yet—if her leader is having problems filling it, I am happy to make some suggestions. I assure her that, yes, because of last week’s decision, there are of course some short-term challenges for businesses, but we must also remember that there are medium and long-term opportunities as well, including for the auto industry.

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It is clear that the Secretary of State not only does not have a plan, but does not even have a plan for a plan. He cannot say whether he personally wants to retain access to the single market for goods and services. Is it not true that the only plan he has is for his joint leadership bid, and that British businesses and the British job market stand to lose from the economic uncertainty that his party’s divides have unleashed?

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I was hoping that the hon. Lady would not play party politics with something as straightforward as this. Many businesses up and down the country are reflecting on last week’s decision, and my job is to reassure them that that decision can be made to work. As well as challenges, there are plenty of opportunities, and when I meet businesses later this afternoon that is exactly the message I will be giving to them.

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T2. The Greater Manchester region is a huge supporter of apprenticeships, with 30,000 starts last year alone. I recently met the young apprentices from Thales in my constituency, who are doing excellent and innovative work on the development of underwater sonar systems. Will the Minister outline what additional support his Department is giving to the city region to increase apprenticeship uptake? [905464]

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I congratulate Greater Manchester on achieving a 75% increase in apprenticeships since 2010. My hon. Friend will be aware that we have devolved the apprenticeship grant for employers—an incentive payment to encourage employers who have not previously employed apprentices to do so—to Manchester so that the authority there can target it at the particular kinds of employer that it wants apprenticeship growth to come through.

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T4. As we head towards Brexit, many EU-derived regulations will no doubt come under the microscope. Some of the most important are the working time regulations, which protect vital safe working limits in the workplace. Will the Government confirm that they intend to retain all elements of the working time regulations? [905466]

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The first thing the hon. Gentleman should know is that nothing changes right here and now. For the next few years, there will be no changes—we are members of the European Union, and all our rights and obligations will be respected. In the longer term, this country has always been committed, quite rightly, to workers’ rights. That will not change.

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T5. Pendle is home to a number of excellent aerospace companies such as Euravia, Senior Aerospace Weston and Rolls-Royce. What assurance can Ministers give the aerospace sector of the Government’s ongoing commitment following the vote to leave the EU? [905467]

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As my right hon. Friend the Secretary of State said, later today we will meet the trade council that represents the aerospace industry, and we are fully committed to that. We will continue to work closely with the aerospace growth partnership to tackle barriers to growth, to boost exports, and to grow high-value jobs. In particular that will include support for research and development, which now stands at £3.9 billion for aerospace research.

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T9. Fire and rescue services attend up to three fires a day that are a result of faulty tumble driers. Which?, the Local Government Association, Electrical Safety First and other consumer interest groups have all raised concerns about how Whirlpool has handled that problem. Is the Minister comfortable that Whirlpool has merely issued a safety statement and not a total recall? [905472]

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I have had a meeting with the hon. Lady, for which I am grateful, and she has really led for consumers on this issue. As I think I explained, an investigation has suggested that the approach taken by Whirlpool was reasonable, and that the nature of the risk was not such that a total recall was required. However, she is right to say that the company needs to get a move on, and it is not right or reasonable to leave people waiting for months and months to have a faulty product, for which Whirlpool should be accountable, replaced.

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T6. Does my right hon. Friend agree that it is the duty of Ministers who are loyal to the Crown to promote the British economy and not to talk it down? Will she agree to a joint meeting with me and Ministry of Defence procurement to discuss how we can more effectively promote and develop defence industries such as those in my constituency? [905468]

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I agree with my hon. Friend and he is absolutely right: these are obviously difficult times, but it is important that we do not talk down our great British economy and that we instil stability and confidence. He is right to mention our defence industry. As he might imagine, we work hand in glove with the Ministry of Defence on that issue and will continue to do so. I have already spoken to the Minister responsible for procurement in the MOD.

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Ah, splendid: the robust Chair of the Business, Innovation and Skills Committee, Mr Iain Wright.

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I think that is the kindest thing that anybody has ever said to me.

The Secretary of State fully appreciates that uncertainty lasting for months and years will drain business investment away from Britain. In our Select Committee this morning, Funding Circle told us that an £100 million investment deal with a European consortium will now not go ahead—it has been pulled, and it will not be the only one. Today’s round table is a welcome gesture, but in the face of the current unprecedented uncertainty, what tangible actions is the Secretary of State putting in place to maintain and stimulate inward investment, maintain that funding gap, and steady business nerves?

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It is good to see some leadership on business issues on the Labour Benches. The hon. Gentleman makes an important point. Today’s round table is not a gesture; it is about genuinely listening to businesses and businessmen and women about the issues that they face, and about how to take advantage of the opportunities that will be created. He will know that nothing changes for at least a couple of years, which will give us time to plan for the future, including for inward investment opportunities and new trade opportunities. I would be happy to meet him and discuss that issue further.

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T7. A significant amount of public money has been allocated to bring superfast broadband to areas missed out by the commercial roll-out, but because of a bureaucratic logjam it remains unspent while a significant number of small businesses in Cheltenham are left frustrated and unable to grow. What more can be done to unlock that money and get the remaining premises connected? [905469]

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May I say how pleased I am to see you in the Chair, Mr Speaker? A rock of stability as the stormy seas of change crash around us—[Interruption.] I was considered the thinking woman’s Boris Johnson—my hon. Friend the Member for Uxbridge and South Ruislip—but I now see that I am my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes).

One great benefit of Brexit is that in the past 24 hours not a single colleague has bent my ear about broadband, and it is a sign of things returning to normal that we are now discussing that important subject. I hear what my hon. Friend says. There are often problems on the ground, and I would like to go to Cheltenham and meet those businesses, plus the council, and see whether we can work together. We often find that on the ground wayleave rights are not being granted, or that something like that is holding back the investment that we need in places such as Cheltenham, which is home to so many high-tech businesses that are now free to trade around the globe.

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I think the hon. Gentleman would like his own dedicated and exclusive Question Time.

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In 2010, the Post Office chief executive said that in Paisley the cost of the refurbishment of the post office had been £439,000. That money was spent making significant changes to “improve service to customers and enhance the profitability of the Crown network”. Given that it is now planned that the post office will move from this upgraded high-quality unit to the wholly inaccessible and inadequate WH Smith, will the Minister please justify to me and my constituents why the money was spent on refurbishment in the first place?

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I will keep it brief, Mr Speaker.

The hon. Lady tabled a named day question on this matter and I have replied to explain that this is a matter for the chief executive of the Post Office, Paula Vennells. She has written a letter to the hon. Lady, which is in the House of Commons Library. For the benefit of the House, I can confirm that through the £13 million investment in our 50 Crown post offices, £440,000 has been spent on the Paisley branch. Through the Crown transformation plan, we have a Post Office that is more stable and closer to breaking even than ever. There are 11,500 branches, 200,000 extra opening hours and 3,800 branches open on Sundays. The people of Paisley have a strong and secure post office.

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I commend the Ministers on the Treasury Bench for their pragmatic approach to last week’s result. I think that we are all committed to the UK becoming an outward-looking global trading nation. With that in mind, will Ministers redouble their efforts to support the Australian Prime Minister, who has said that he has instructed his officials to work with New Zealand to prepare a trade deal with the United Kingdom very shortly?

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My hon. Friend highlights the opportunities of Brexit and we absolutely should now start embracing those opportunities; free trade agreements with many more countries is just one of them. Australia is an excellent example, and that is exactly the sort of thing we should be working on.

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Many of my constituents have no or very little access to computers and the internet. Will the Government continue to press banks and other key providers to retain high street services for customers who receive utility and other bills in paper form on request?

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The Department for Business, Innovation and Skills does not intervene in the individual billing arrangements of utilities or companies, but there are arrangements in place to make sure that those who need paper bills are able to request and receive them. Those who have disabilities, such as the blind, have protections to make sure that they can receive appropriate billing. If there are particular issues for any particular constituent, I would be very happy to look into them for the hon. Gentleman.

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Small and independent retailers in my constituency have, over recent months, experienced extreme difficulty in accessing telephone and broadband services when moving into new premises. I, too, experienced this when I moved into my new community office in Ilkeston. Will the Minister agree to talk to service providers to ensure that the installation of these services, which are so vital in the 21st century, are carried out in a reasonable timeframe?

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I have made no secret of my concerns about Openreach’s quality of service. We have had a very successful rural broadband programme, but there seems to be a particular unit in Openreach that targets MPs and makes them extremely angry. They take it out on me and I take it out on Openreach. It needs to improve its terms and conditions, and its new chief executive has made supplying businesses his priority.

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We are blessed to have a second dose of the hon. Gentleman this morning.

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Will the Minister finally give a date for the implementation of the pubs code? With licensees currently missing out due to the Department’s mistake and the delay, will she now apply the Burmah Oil principle to ensure that the code is retrospective from the original date, as it clearly can be?

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We have re-laid the regulations, and I am looking forward to them passing through their various stages so that we can implement the pubs code as a matter of urgency. I very much hope that it will be implemented by the time the House rises.

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Thank you for giving me two bites at the cherry, Mr Speaker.

I welcome the Government’s commitment to new universities coming forward, and I am working hard to further one in my Somerset constituency. Given recent developments regarding the EU, does the Minister agree that it is now even more essential that we enable universities to provide the skills needed to upgrade the workforce and maintain our position in the world?

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Yes, indeed. The productivity challenge facing the country is grave, and our universities are a big part of the answer. New universities in higher education cold spots such as Somerset will be a big part of our solution to these challenges.

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I understand that the UK Government have yet to confirm whether the allocation of the apprenticeship levy in Scotland will be based on the number of employers in Scotland, or the percentage of the levy paid in Scotland. Will the Minister provide that clarification today? If not, when will he?

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As I indicated to the hon. Member for Llanelli (Nia Griffith), I have been in discussions with the Minister representing the Welsh Government in this conversation. These discussions are ongoing. This is a matter for Her Majesty’s Revenue and Customs, not something for which I am directly responsible, but I know that there have been intensive negotiations and discussions. I do not want to pass the buck, but I fear that I will have to encourage the hon. Lady to direct her question to a Minister at Treasury questions, because the Treasury and HMRC are handling these discussions.

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Finally, I do not want the voice of East Antrim to remain unheard. I call Mr Sammy Wilson.

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Thank you, Mr Speaker.

This month it was announced that manufacturing exports from Northern Ireland to non-EU countries increased by 24%, while those to EU countries fell by 4%. What steps can the Minister take to help Northern Ireland firms to exploit opportunities to grow international economic links to promote growth in Northern Ireland, increase employment and help to reduce the UK balance of payments deficit?

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It is great to hear—the hon. Gentleman is absolutely right—that manufacturing is on the rise in Northern Ireland and throughout the UK. Volumes are up, exports are up and employment is up. There are, of course, further steps that we can take. Someone asked earlier about free trade agreements, and that is something that we can do and exploit now that we have Brexit.

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Order. We must now move on.

Points of Order

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On a point of order, Mr Speaker. I was led to believe that the Labour Front-Bench team was requesting a statement on this morning’s further chaos around HS2—both its preparedness and the resources it is sucking up from our economy. Did you receive any application for a statement on HS2? We have the Business Secretary here today. Does he not realise that British industry, which is in chaos and reeling from Brexit, wants to see HS2 stopped now before it sucks up all those resources?

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I certainly would not discuss on the Floor of the House applications for urgent questions—as colleagues will understand, it is a long-standing convention that those matters are not the subject of exchanges on the Floor—but I can say to the hon. Gentleman that I have received no indication from any Minister of an intention to make a statement on HS2. He will know that I am very conscious of requests from Ministers to make statements, and never would I be more likely to be aware of such an intention than in relation to HS2, but there has been no such notification of intent to my office to date.

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On a point of order, Mr Speaker. Members of Parliament are being bombarded with electronic communications from Team Trump on behalf of somebody called Donald Trump. I am all in favour of free speech, but I do not see why colleagues on either side of the House should be subjected to intemperate spam. Efforts to have them deleted have failed. Would you be kind enough to intercede with the Parliamentary Digital Service to see whether they might be blocked?

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First, may I commiserate with the hon. Gentleman who, as far as I can tell, has undergone an irritating and—some might think—exceptionally tedious experience? I am grateful to him for notice of his point of order. All hon. Members receive large numbers of emails and will have devised ways of dealing with the flow. However, while this is not directly a point of order for the Chair, I do not think it acceptable that Members should be bombarded with emails the content of which is offensive. I will ensure that members of the Parliamentary Digital Service, who have the facility to block certain types of email, are made aware of this issue. Moreover, I shall ensure that they contact the hon. Gentleman. In so responding to him, I emphasise that other right hon. and hon. Members might also wish to avail themselves of this service.

Finance Bill

(Clauses 7 to 18, 41 to 44, 65 to 81, 129, 132 to 136 and 144 to 154, Schedules 2, 3, 11 to 14 and 18 to 22 and certain new Clauses and new Schedules)

[2nd Allocated Day]

Further considered in Committee

[Mrs Eleanor Laing in the Chair]

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Before I call the Minister to move Government amendment 114 and for the sake of clarity, I grant the Minister the Chair’s permission and the House’s sympathy in respect of his requirement to stand throughout the proceedings—or, indeed, to be in whatever position suits him so that he can spend several hours at the Dispatch Box with his current disability. He has the House’s sympathy, as I said, and he may do as he sees fit.

Clause 144

General anti-abuse rule: provisional counteractions

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I beg to move amendment 114, page 194, leave out lines 12 to 15 and insert—

“( ) notifies the person of the person’s rights of appeal with respect to the notified adjustments (when made) and contains a statement that if an appeal is made against the making of the adjustments—

(i) no steps may be taken in relation to the appeal unless and until the person is given a notice referred to in section 209F(2), and

(ii) the notified adjustments will be cancelled if HMRC fails to take at least one of the actions mentioned in section 209B(4) within the period specified in section 209B(2).”

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With this it will be convenient to discuss the following:

Clause stand part.

Government amendments 115 to 174, 178, 175 to 177 and 179.

Clause 145 stand part.

Government amendments 82 to 86.

Amendment 4, in clause 146, page 209, line 25, leave out from “penalty” to end and insert

“shall be 100% unless the GAAR Advisory Panel or an officer duly delegated by that panel considers that there are exceptional reasons for lessening that percentage.”

Government amendments 87 to 99.

Clauses 146 and 147 stand part.

Government amendments 100 to 110.

Government amendments 112, 111 and 113.

Schedule 18 stand part.

Government amendments 69 to 81.

Clauses 148 and 149 stand part.

Amendment 1, in schedule 19, page 516, line 21, at end insert—

‘(2A) A group tax strategy of a qualifying group which is a MNE group must also include a country-by-country report.

(2B) In paragraph (2A) “country-by-country report” has the meaning given by the Taxes (Base Erosion and Profit Shifting) (Country by Country Reporting) Regulations 2016.”

Amendment 5, page 516, leave out line 39 and insert—

‘(2) The director or directors of the head of the group are personally jointly and severally liable to a penalty of £25,000 if:”.

Amendment 6, page 517, line 1, leave out

“head of the group is”

and insert

“director or directors, held jointly and severally liable, of the head of the group are”.

Amendment 7, page 517, line 5, leave out

“head of the group is”

and insert

“director or directors, held jointly and severally liable, of the head of the group are”.

Amendment 8, page 517, leave out lines 11 to 15 and insert—

‘(5) At the end of that period, the director or directors of the head of the group—

(a) are personally jointly and severally liable to a further penalty of £25,000, and

(b) where the failure mentioned in sub-paragraph (4)(b) continues, are liable to a further penalty of £25,000 at the end of each subsequent month in which no such group tax strategy is published.”

Amendment 9, page 517, line 15, at end insert—

‘(6) Any director held personally liable to pay a penalty under this Part cannot be reimbursed by the head of the group or any entity within or associated with that group.

(7) If the head of the group or any entity as described in subsection (6) is found to have either fully or partially reimbursed a director or directors for the penalty for which they were personally liable, the head of the group or the entity will in turn be liable for a penalty of £100,000.”

Amendment 10, page 518, leave out line 24 and insert—

‘(2) The director or directors of the head of the group are personally jointly and severally liable to a penalty of £25,000 if:”.

Amendment 11, page 518, line 29, leave out

“head of the group is”

and insert

“director or directors, held jointly and severally liable, of the head of the group are”.

Amendment 12, page 518, line 33, leave out

“head of the group is”

and insert

“director or directors, held jointly and severally liable, of the head of the group are”.

Amendment 13, page 518, leave out lines 39 to 43 and insert—

‘(5) At the end of that period, the director or directors of the head of the group—

(a) are personally jointly and severally liable to a further penalty of £25,000, and

(b) where the failure mentioned in sub-paragraph (4)(b) continues, are liable to a further penalty of £25,000 at the end of each subsequent month in which no such group tax strategy is published.”

Amendment 14, page 518, line 43, at end insert—

‘(6) Any director held personally liable to pay a penalty under this Part cannot be reimbursed by the head of the group or any entity within or associated with that group.

(7) If the head of the group or any entity as described in subsection (6) is found to have either fully or partially reimbursed a director or directors for the penalty for which they were personally liable, the head of the group or the entity will in turn be liable for a penalty of £100,000.”

Amendment 15, page 520, leave out line 12 and insert—

‘(2) The director or directors of the company are personally jointly and severally liable to a penalty of £25,000 if:”.

Amendment 16, page 520, line 17, leave out

“head of the group is”

and insert

“director or directors, held jointly and severally liable, of the head of the group are”.

Amendment 17, page 520, leave out lines 27 to 31 and insert—

‘(5) At the end of that period, the director or directors of the head of the group—

(a) are personally jointly and severally liable to a further penalty of £25,000, and

(b) where the failure mentioned in sub-paragraph (4)(b) continues, are liable to a further penalty of £25,000 at the end of each subsequent month in which no such group tax strategy is published.”

Amendment 18, page 520, line 31, at end insert—

‘(6) Any director held personally liable to pay a penalty under this Part cannot be reimbursed by the head of the group or any entity within or associated with that group.

(7) If the head of the group or any entity as described in subsection (6) is found to have either fully or partially reimbursed a director or directors for the penalty for which they were personally liable, the head of the group or the entity will in turn be liable for a penalty of £100,000.”

Schedule 19 and clause 150 stand part.

Amendment 19, in schedule 20, page 534, line 23, at end insert

“, or P has introduced Q to a person R with whom P has a business relationship, where P knows or should know that R is likely to facilitate Q to carry out offshore tax evasion or non-compliance.”

Amendment 20, page 535, line 5, at end insert

“; and P will be deemed to have known if P wilfully or recklessly failed to make such enquiries that a reasonable and honest person would have made”.

Schedule 20, clause 151, schedule 21, clauses 152 and 153, schedule 22 and clause 154 stand part.

New clause 4—Report on the workings of the General Anti-Abuse Rule

‘(1) The Chancellor of the Exchequer shall, within one year of the passing of this Act, publish a report on the workings of the General Anti-Abuse Rule.

(2) The report must include but need not be limited to—

(a) the number of meetings held by the General Anti-Abuse Rule Advisory Panel;

(b) the date by which the procedures of the Advisory Panel were published;

(c) the number of cases referred to the Advisory Panel and by whom;

(d) the number of cases on which a decision has been made by the Advisory Panel;

(e) the number of outstanding cases on which a decision has not been made by the Advisory Panel, and the dates on which those cases were first referred to the Advisory Panel.”

New clause 5—Report on the number of deliberate tax defaulters

The Chancellor of the Exchequer shall, within one year of the passing of this Act, publish a report containing the number of deliberate tax defaulters whose details have been published, and an estimate of the number of taxpayers who have been deterred from deliberately defaulting as a result of the provisions contained in section 94 of FA 2009 as amended by this Act.”

New clause 6—Report on the asset-based penalty for offshore inaccuracies and failures

‘(1) The Chancellor of the Exchequer shall, within one year of the passing of this Act, publish a report on the impact of the asset-based penalty for offshore inaccuracies and failures.

(2) The report must include but need not be limited to—

(a) how much tax revenue has been recouped due to this measure;

(b) the amount of monies paid in asset-based penalties; and

(c) the number of persons upon whom asset-based penalties have been levied.”

New clause 7—Report on the impact of the criminal offences relating to offshore income, assets and activities

‘(1) The Chancellor of the Exchequer shall, within one year of the passing of this Act, publish a report on the impact of the criminal offences relating to offshore income, assets and activities.

(2) The report must include but need not be limited to—

(a) the number of persons who have been charged with offences under each of sections 106B, 106C and 106D of TMA 1970;

(b) the number of persons who have been convicted of any such offence;

(c) the average fine imposed; and

(d) the number of people upon whom a custodial sentence has been imposed for any such offence.”

New clause 8—Whistleblowing in relation to tax evasion

The Chancellor of the Exchequer shall conduct a review of arrangements to facilitate whistleblowing in the banking and financial services sector in relation to the disclosure of suspected tax evasion, and report to Parliament within six months of the passing of this Act.”

New clause 9—Estimated impact of extending the scope of the Register of People with Significant Control Regulations 2016

The Chancellor of the Exchequer must, within 12 months of this Act coming into force, publish an estimate of the impact on levels of tax avoidance and tax evasion of extending the requirement placed on UK-incorporated companies by the Register of People with Significant Control Regulations 2016 to publish a register of people with significant control to companies incorporated in the Crown Dependencies and the Overseas Territories which have significant levels of trading activity within the UK.”

This new clause would require the Chancellor to publish an estimate of the impact on levels of tax avoidance and tax evasion of extending the current requirement on UK-based companies to publish information about people who have significant control over them to companies incorporated in the Crown Dependencies and the Overseas Territories which have significant levels of trading activity within the UK.

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I begin by expressing my gratitude for your dispensation, Mrs Laing. I will, of course, take interventions, and I hope it will not disconcert Members if I remain standing at the Dispatch Box while doing so. There is a great deal to cover and a large number of amendments have been tabled by Opposition Members, many of which I shall have to cover briefly. I shall try to provide as much information as I can as quickly as I can and respond to points raised in the course of the debate.

Clauses 144 to 146 make administrative changes to the general anti-abuse rule—the GAAR procedure—and introduce a new penalty for those who enter into abusive tax arrangements. Clause 144 allows Her Majesty’s Revenue and Customs to make a provisional GAAR counteraction where it believes additional tax is due but the assessment time limits are due to expire. Clause 145 is an administrative change to strengthen the GAAR’s procedural efficiency. The GAAR procedure currently requires each user of the same type of marketed tax avoidance arrangements to be referred separately to the GAAR advisory panel. This is an inefficient use of HMRC’s and the advisory panel’s resources, so clause 145 corrects this. Clause 146 introduces a new penalty of 60% for taxpayers who enter into abusive tax arrangements that are counteracted under the GAAR.

The Government have tabled 84 amendments to clauses 144 to 146, making minor changes to ensure that the legislation works as intended, but let me respond now to new clause 4 and amendment 4, which relate to the GAAR clauses I have just outlined. New clause 4 asks the Government to conduct a review of the GAAR in a year’s time. The GAAR advisory panel is already required to publish anonymised reports of the cases it considers. It is difficult to see how this new clause could provide a better insight into GAAR cases than this.

Amendment 4 proposes that a penalty of 100% is introduced for the GAAR. While under HMRC’s existing penalty rules a penalty of 70% to 100% will usually be charged in cases of fraud, it is right for the GAAR penalty to sit just below this. Under the new measure, tax avoiders can be charged penalties under the existing penalty rules and the GAAR penalty up to a maximum of 100%. As such, the amendment does little more than what we are already suggesting, and I therefore urge the House to reject it.

Clause 147 and schedule 18 introduce the new serial avoidance regime and a new threshold condition for the existing POTAS—promoters of tax avoidance schemes— regime introduced by clause 148. The new serial avoidance regime will tackle those tax avoiders who use multiple tax avoidance schemes. It will work by putting avoiders on notice when HMRC defeats a scheme they have used. If they use further schemes and HMRC defeats them, they will face serious and escalating sanctions, including a penalty starting at 20% of tax understated and reaching 60% for a third scheme defeat while under notice. Clause 148 introduces a new threshold condition for the promoters of tax avoidance schemes regime so that promoters who have promoted three schemes that have been defeated by HMRC over an eight-year period risk entering the POTAS regime.

The Government have tabled 27 amendments to clause 148 and schedule 18. The amendments to schedule 18 provide for those who try to avoid tax through companies they own or partnerships to be brought within the scope of the new regime. Amendments to clause 148 provide for POTAS to cover circumstances where tax avoidance is promoted through associated persons. The remaining amendments make minor changes to ensure the schemes work as intended.

Clause 149 introduces a new requirement for large businesses to publish their tax strategies, ensuring greater transparency about their tax approach to HMRC, shareholders and the public. Transparency promotes good tax compliance while providing a fairer, more stable and competitive environment in which to do business. The strategy published by businesses must cover the areas specified in legislation, be updated annually and remain accessible. A penalty may be chargeable if a strategy is not published or if the information contained does not meet the requirements of the legislation.

The Government are also committed to tackling cases of aggressive tax planning. Schedule 19 introduces a new special measures process which will apply sanctions to large businesses that persistently undertake aggressive tax planning or refuse to work with HMRC in a collaborative and transparent way. Taken together, clause 149 and schedule 19 will help to reduce the appetite for aggressive tax planning and improve large business tax compliance.

On the amendments tabled by the Opposition, amendments 5 to 18 would collectively introduce a requirement for directors of a business to be personally, jointly and severally liable for a penalty of £25,000 should the business fail to comply with the legislation, rising to a monthly charge of £25,000 after the initial 12 months have passed. Amendments 9, 14 and 18 also propose that the said named directors should not be reimbursed in any way and would impose further penalties.

These amendments are disproportionate and go against the principle of encouraging behavioural change across businesses. Boards take a collective responsibility for any decisions made on behalf of their businesses and their tax strategy is no exception. Ultimately, this Government believe any penalty is a business responsibility, not one to be pursued across a group of directors. In summary, these amendments would result in less clarity around any sanctions, not more, and I urge the House to reject them.

The amendment to clause 149, tabled by the right hon. Member for Don Valley (Caroline Flint), seeks to require large multinational enterprises to publish a country-by-country report on their activities within their published tax strategy. As I have set out, this Government fully share her aims of increasing transparency and clamping down on avoidance and evasion wherever it occurs. Indeed, this Government have led the way in calling at an international level for public country-by-country reports. However, I do not believe that her amendment would help to achieve the objectives that we all share. It is technically flawed, and hence would not achieve the stated transparency or pro-business objectives that we all espouse.

The right hon. Lady has said that multinational businesses such as Google would be forced to publish headline information about where they do business, the money that they make and the tax that they pay, but that is not the case. According to Government legal advice, the amendment would, in practice, place such a requirement only on UK-headquartered multinationals. Foreign-headquartered multinationals such as Google would not be caught at all, and that undermines the transparency objective of the amendment.

The amendment also risks putting UK multinationals at a competitive disadvantage by imposing a reporting requirement that does not apply to foreign competitors operating in the same market. For example, a company headquartered in the UK, whether on the mainland or in Northern Ireland, would have to file public reports, but a company headquartered in the Republic of Ireland—or, indeed, pretty well anywhere else—would not. That, I think, contradicts the level playing field objective whose importance the right hon. Lady has emphasised. At a time of increased uncertainty, we should be particularly cautious about disadvantaging UK-based businesses and imposing on them a further commitment that does not apply to their foreign competitors.

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I am grateful to the Minister for giving way, especially as he is in pain. He said earlier that the amendment was “technically flawed”, but that is not the advice that my right hon. Friend has received. It seems to me that, in reality, the Government are more driven by their ideas about tax competition. Will the Minister confirm that that is the case? If it is, I suggest to him that transparency is more important for the British people in particular, and that if any global company chooses to leave the UK simply because of demands for transparency and demands that it pay fair tax, which will be a rare occurrence, it may well be that it is not the sort of company that we want to be headquartered here.

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There are some issues of timing, but I must emphasise that the only companies that would fall within the scope of the amendment would be UK-headquartered companies. The Googles of this world would be unaffected. We believe that all this should be done on a multilateral basis, and—although my timing may be slightly unfortunate—I should point out that considerable progress has been made at European Union level. Indeed, the relevant commissioner has said that we are on the cusp of a deal and that he hopes that it will be concluded during the course of the Slovakian presidency, in the second half of this year. The UK has been leading the way in that debate, and, indeed, we have been calling for the Commission to toughen up its rules.

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I will just finish what I am saying before I give way. I am being bombarded by distinguished right hon. Members.

We know that the debate on corporation tax tends to focus on companies’ sales, but corporation tax is not based on sales; it is based on activity. If a company takes part in a lot of activity in the UK but makes a lot of sales in another jurisdiction, it is likely to pay a lot of tax in the UK, but not a lot of tax in other jurisdictions where there is little or no activity but a great many sales. If the UK is the only jurisdiction that is putting out this information, or requiring its companies to put it out, there will be many examples of UK companies that are acting completely properly in foreign jurisdictions and not paying a lot of tax in those jurisdictions, but are vulnerable to criticism. It would be very much easier for all businesses to be able to point to an Italian, German, French or Swedish company that is in the same position, with a lot of activity in its own jurisdiction and a lot of sales in another jurisdiction, and is paying its tax where the activity is, not where the sales are. If the UK is acting unilaterally, I worry about unfair reputational criticism of our companies. As the right hon. Member for Barking (Dame Margaret Hodge) knows very well, reputational damage to a business can damage its commercial interests,.

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Surely the problem is that so much of what we are finding out about companies—about where they do their business, where their profits are, and where they pay their taxes—is emerging through leaks. Massive reputational damage is being done to those companies. The amendment gives us a chance to put things on a much better footing by providing not all the information about companies, but the baseline headlines about where they do business, where they trade and where their profits are. Surely that is something on which we can lead.

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I think that the principle and the destination are pretty clear. We are moving in the direction of companies’ publishing this information, and I believe that the UK should be leading the way in working out a multilateral deal in which a number of countries impose essentially the same requirements. That, I think, would help to improve transparency and would provide a level playing field.

I do not think that the UK should be the last mover in this respect by any means. The United States seems to be some way away from moving in this direction, and I do not think that we should wait for the United States; I think we should be there before it. We should be able to deliver, especially given that such good progress is being made at European Union level. We remain members of the European Union, and there is appetite for this in other EU states. I have no doubt that, if no progress has been made in a year or two, the right hon. Member for Don Valley will come back and ask, “Why has this not happened?”, and in that event her case would be strengthened. However, I think that until we have given the deal a fair wind, it would be premature to act unilaterally.

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The Minister has a perfectly justified and extremely good reputation for being sympathetic in driving this agenda forward. He will recall our discussions, both in opposition and back in 2010, about precisely the point that is addressed in the amendment. We all agree that companies should pay tax where their profits are earned.

The Minister knows as well as I do that some of the poorest people in the world live on top of some of the richest real estate, and that extraction taxes should be paid where those profits are earned. May I ask him to respond fully to the point that is being made by the right hon. Member for Don Valley (Caroline Flint)? If he thinks that her amendment is defective in some way, will he commit the Government to looking at those defects and considering whether they can frame a clause that would address the first part of what she said, with which I understood him to say he agreed?

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The Finance Bill is not the ideal way in which to address this issue fully. I make no criticism whatsoever of the right hon. Member for Don Valley, who has shown much ingenuity in managing to ensure that her amendment is in order, but this is essentially an issue for company law.

We are keen to implement public country-by-country reporting, and we want to do it on a multilateral basis. As I have said, if there was a lack of progress the Government would obviously want to return to the issue, given the concerns that I think are felt by Members in all parts of the House. However, I think that we are in a position to aim for what I am sure we all agree would be the best result: achieving our aims on a multilateral basis.

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Will the Minister give way?

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I will certainly give way to the Chairman of the Public Accounts Committee.

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It is clear that the Minister has some sympathy with the amendment tabled by my right hon. Friend the Member for Don Valley (Caroline Flint) and most of the Public Accounts Committee, along with many other Members in many parties. Rather than requiring my right hon. Friend to come back to the House, will he therefore commit the Government to looking at this matter unilaterally if multilateral agreement is not achieved? Or will he go even further today and agree to a sunrise clause to add to the proposals that my right hon. Friend and I, and others, have put forward, so that this can come into action if the multilateral agreement that he is hoping for does not come to fruition?

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We are in quite a fast-moving area, and the progress that has been made in recent months has been considerable. Just at the beginning of this year, it looked unlikely that a deal would be possible, but now it looks as though the EU is heading in that direction. As I have said, the EU Commissioner has said that something is likely to happen by the end of this year. I must add the slight caveat that we will have a new Prime Minister by then, but it is certainly my view that if we have not made progress by this time next year on reaching a multilateral agreement, we will need to look carefully at the issue once again. I do not want to make a full commitment on this because—I am standing here desperately with the Dispatch Box as a source of support—I might no longer be in this position by then. I make that caveat, but I believe that there is every chance of an agreement. I would be disappointed if we did not make progress, but in the event of that happening—I hope it is unlikely—we would need to look at this again. I suspect that there is agreement between us here that it would be better for us to get a multilateral agreement than for us to go off alone.

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I think I have heard the Minister say that there will not be a multilateral agreement that includes the United States. So is it the Government’s position that we do not want to act unilaterally for the UK, but we will act unilaterally within the EU—even if we are not in it—even though the EU itself contains only 20% of the world’s multi- nationals? Is he saying that this does not need to be multilateral, and that it just needs to be EU-lateral?

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I do not think that this has to be universal, but there would be disadvantages for the UK if we were the only country to do it. There is a sense that UK companies would be criticised for failing to pay very much tax in jurisdictions where they did not have a lot of activities but had a lot of sales. This comes back to the point about educating the public about how corporation tax works. I think it would be an awful lot easier if there were just a few examples of other countries doing this. I do not think it needs to involve every other country, but if, for example, Germany, France and Italy had the same type of system, every time a UK company was criticised we could say, “What about that French company? What about that Italian company? The same principles apply to them.”

We do not have to move at the pace of the slowest, but if we adopt an isolated position on this, there would be a reputational risk for UK businesses. We do not need to run that risk, particularly as good progress is being made, and I urge the House not to accept this amendment. Instead, I hope that we will be able to implement a measure over the next few months.

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I suppose it depends which multinationals are in which segment of competition, but is the Minister saying that as long as, say, two or three other countries were to do this, the UK would join in?

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I do not want to put a precise number on this. There is a threshold, and it depends on which countries those might be, but if I thought that three or four significant economies were going in the same direction, the case for doing this would be much stronger. Or, to put the reverse argument, if I were standing here next year and two or three other countries had gone down this route, the concerns that I am expressing from the Dispatch Box today would clearly carry less weight than I think they do today.

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Perhaps I can help the Minister. On behalf of the Public Accounts Committee, I sent an open letter to the chairs of European finance and public accounts committees or their equivalents. The Minister might have picked up the fact that, to date, the letter has been signed by the chairs of parliamentary finance committees in Germany, Hungary, Finland, Norway and Slovakia, as well as by senior MPs in the Netherlands, the Czech Republic and Bulgaria. We also know that the French Finance Minister, Michel Sapin, is doing some interesting work in this area, as are many others. Does that help to push the Minister in the right direction and enable him to make us more of an offer today?

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Well, it supports my optimism that we are on the cusp of a multilateral deal, and that will enable us to work out the legislation in the most comprehensive and effective way. As I have said, our preference would be to do this through company law rather than through a Finance Bill, but the hon. Lady’s intervention supports what I was saying earlier about the comments of the relevant EU Commissioner at the last ECOFIN meeting in Luxembourg, which I attended 11 days ago. He was optimistic that we would reach agreement by the end of this calendar year. If that is the case, it is hugely encouraging, and the point that the hon. Lady has just made supports that proposition.

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I hope that the Minister will be willing to channel the leadership and enthusiasm that the UK showed in relation to the diverted profits tax, when we chose to go out alone and not wait for international agreements on base erosion and profit shifting. We introduced a whole new tax, with compliance burdens and penalties, and I suspect that that was a far bigger deal than requiring companies simply to disclose what they are already disclosing but in a slightly different format. I think that that was the right way to go.

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My hon. Friend is right to mention the fact that we went ahead with the diverted profits tax, although doing so was clearly consistent with the direction of the base erosion and profit shifting process. That tax also brought in significant revenue to the UK, which has been very helpful.

If we want to achieve greater transparency, as I believe we all do, it is right that we focus on driving forward international efforts on public country-by-country reporting. In order to get full information on foreign multinational entities’ global activities, multilateral agreement will be required to enable countries to introduce comprehensive rules with the widest possible scope. This will allow for a comprehensive multilateral approach that applies consistently across UK and foreign multinational entities. We must get this right so that, when it is introduced into UK law, it is effective and enforceable. We will continue to support and drive this multilateral change forward following the result of the referendum, and I share the determination of the Members supporting this amendment not to move at the pace of the slowest.

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rose

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I will give way one more time, but I am conscious that I am taking up a lot of time in what is quite a short debate.

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The Minister is being extremely generous in giving way. I am sure we all agree with him that this should be done multilaterally—there is nothing between us on that—and I am sure that it will be helpful to his aim of being able to demonstrate strong support for this across the House of Commons when he is dealing with his international partners. I should like to make a suggestion, and I hope that it will be helpful. Would he consider asking his officials to draft a clause for public discussion that is not defective and that he could put to his colleagues multilaterally as a measure that they might wish to include in their parliamentary legislation?

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I am grateful to my right hon. Friend for that suggestion. Let me take it away, because there are a number of ways in which this could be done, and we would want to consider it. I believe that this debate will be helpful to our parliamentary and governmental colleagues in other jurisdictions in that it demonstrates our cross-party determination to make progress on this matter. We are committed to acting swiftly to implement international agreements, as we have done with the OECD BEPS recommendations on country-by-country reporting. We are committed to improving the transparency of multinational tax affairs, but we support an effective multilateral approach. At this time of increased uncertainty, a domestic measure of the sort being discussed today would, I fear, disadvantage UK business for the reason that I outlined. I look forward to hearing the contribution of the right hon. Member for Don Valley, but I hope she is satisfied with the assurances that I have provided today.

Clause 150 and schedule 20 create new civil penalties for those who have deliberately assisted taxpayers to evade UK inheritance tax, capital gains tax or income tax via offshore means. The bill introduces a financial penalty of up to 100% of the tax evaded and public naming in the most serious cases.

I want briefly to respond to Opposition amendments 19 and 20. The intentions of amendment 19 seem twofold. The first would ensure that it is considered enabling to act as an introducer. Schedule 20 already covers acting as an introducer, so that part of the amendment is unnecessary. The second aim is to set a test to check whether it objectively appears that the adviser should have known that the advice was likely to enable offshore tax evasion and is therefore an enabler. The test would introduce a great deal of uncertainty, meaning that it would be unclear how much due diligence should be completed.

Similarly, amendment 20 proposes a test that would ask whether the adviser wilfully or recklessly failed to make inquiries that a reasonable and honest person would have made. The courts generally recognise that knowledge includes so-called “blind-eye” knowledge—where a person has a firm suspicion about specific facts and deliberately decides not to find out more about them—meaning that an enabler cannot bury their head in the sand. If they have good reason to think that they are assisting evasion, failing to make proper inquiries will not help them and they will be penalised under the schedule as it currently stands. Given the restrictions and uncertainty that amendments 19 and 20 would introduce, I urge hon. Members to reject them.

Clauses 151 to 153 and schedules 21 and 22 strengthen the civil sanctions levied on offshore tax evaders. Clause 151 will increase the minimum penalties for deliberate offshore tax evasion to 30% of the tax due. The current minimum penalty is 20% and the maximum penalty will remain up to 300% of the tax due. The clause will require offshore evaders who are seeking to minimise or reduce their penalty to provide more information about their evasion and enabling activities in co-operation with HMRC.

Clause 152 removes the protection from being publicly named for deliberate offshore tax evasion unless an offshore evader comes forward to HMRC voluntarily and makes a full disclosure. In addition, clause 152 allows HMRC to name the individual who controls a company or entity that has participated in offshore tax evasion.

Clause 153 introduces a new asset-based penalty that will apply to the most serious cases of deliberate offshore tax evasion, where the tax loss exceeds £25,000, and will levy a penalty of up to 10% of the value of the asset connected to the evasion. Such assets could include physical property, intellectual property, shares and bank accounts. The asset-based penalty will be levied in addition to any other tax-geared penalties and interest due. Taken together, the measures will provide HMRC with a greater understanding of tax evasion while significantly increasing the penalties on tax evaders and those who help them.

New clauses 5 and 6 concern the reporting of a number of offshore tax evaders who have been named by HMRC and the number of asset-based penalties levied within a year of the passing of this Bill. The asset-based penalties are expected to apply from the 2016-17 tax year and the strengthened naming provisions are expected to apply from the 2017-18 tax year, with the first details published under this clause expected to be in 2019-20. As such, there would be no time for the activities covered by the amendments to have happened by the deadlines set for the Government to report on them.

The Government are taking action to increase penalties on offshore tax evaders and those who enable them. However, there remains a persistent minority of taxpayers who continue to evade UK tax in that way. To tackle the minority, clause 154 introduces a new criminal offence for those persistent offshore tax evaders. Crucially, the offence does not require the prosecutor to prove that the taxpayer intended to evade their UK tax responsibilities offshore, increasing our ability to prosecute offshore tax evaders. A successful conviction under the offence can result in a fine or a prison sentence of up to six months. Those who continue to break the rules should face tougher sanctions and the new offence will help to ensure that they do.

New clause 7 makes a requirement to publish a report on the impact of the new criminal offence within a year of the Bill being passed. The new criminal offence is expected to come into effect from the 2017-18 tax year at the earliest, which is beyond the one-year deadline set out in the new clause, making it redundant. In addition, HMRC already publishes information on tax crime.

New clause 8, tabled by the SNP, proposes a review of arrangements to facilitate whistleblowing about suspected tax evasion in the banking and financial services industry. HMRC values the extensive information provided each year by the public. During the 2015-16 financial year, HMRC received over 125,000 pieces of information from the public. HMRC’s actions are subject to independent scrutiny and regular inspection from the Office of Surveillance Commissioners. I am satisfied that that gives me good assurance that its work in this area is well managed and highly effective. We therefore do not believe a review is necessary and urge Members to reject the new clause.

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Will the Minister give way?

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I will certainly give way. I was about to turn to new clause 9.

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I want to make two points about the response to whistleblowing. First, as I read the clause, it would lead to a review of whistleblowing in the banking and financial services sector. During my period as the Chair of the Public Accounts Committee, we did a lot of work on the whistleblowing from Falciani on the Swiss bank accounts and on the PwC leaks in Luxembourg. What was so interesting was that the only action that the two financial institutions took was to try to pursue the whistleblowers through the courts—trying to get them indicted and jailed. That is unacceptable.

Secondly, the internal HMRC lawyer who gave us the evidence that demonstrated that a sweetheart deal had been entered into with Goldman Sachs could not, in the end, return to his job. Everything of his was rifled through from his wife’s computer to his telephone and everything else. That is not good enough. I urge the Minister to think again and to instigate a review.

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I note what the right hon. Lady says, but I will not let her comments about sweetheart deals pass. We have discussed the matter before, and I point her in the direction of Sir Andrew Park’s review of those settlements and his conclusion that there were no sweetheart deals. This is an issue that she and I have discussed before and no doubt will discuss again, and I fear that we will not reach agreement. I note her points, but I am not persuaded by the case for new clause 8.

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Will the Minister give way?

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I am conscious that this is a relatively short debate and that I have already taken up a large proportion of it. I am not quite done, but I will take a short intervention.

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My point is about the NHS, where whistleblowers have suffered exactly the same kind of detriment, but the Government are now trying to change their attitude. I do not understand why we would not want to support whistleblowers within the industry when we have had one scandal after another for the past decade.

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My point would be about the sheer scale of the information provided to HMRC. I quoted the 125,000 pieces of information from the public, but by no means are all of those whistleblowers. HMRC certainly does receive a substantial amount of information from whistleblowers, which is helpful. As for how that works and its contribution to HMRC’s activities, I am not aware of worries that that is not working or that the existing provisions with regards to whistleblowers are ineffective. Of course these matters are always kept under review. If I thought that there was a strong case for returning to this issue, I would certainly be interested in doing so, but I am not hearing that at present.

The right hon. Member for Barking (Dame Margaret Hodge) has been waiting very patiently for me to turn to new clause 9, which would require the Government to estimate the impact on the tax gap of expanding our forthcoming register of persons with significant control to companies in the Crown dependencies and overseas territories. I do not believe that the clause would be effective in achieving its aims. It would cast the net too narrowly by focusing on companies with significant levels of trading activity in the UK. As the Prime Minister announced at the recent anti-corruption summit last month, the Crown dependencies and overseas territories have agreed to hold beneficial ownership information on all companies incorporated in their jurisdictions. Importantly, they will share that information with Her Majesty’s Revenue and Customs and UK law enforcement agencies, which means that our authorities will be able to see exactly who owns and controls companies incorporated there.

Although I understand the aims of the new clause, it would be less effective than the steps that we have already taken to improve transparency and tackle tax evasion. I do have some sympathy with the argument that, no doubt, we will hear from the right hon. Lady, but I am not persuaded by it, and I hope that she will not press her new clause to a vote.

I will not take up any more time of the Committee. I have tried to cover as much ground as I can and to anticipate the arguments that we will hear for the rest of this debate. I hope that the Government clauses, schedules and amendments can stand part of the Bill.

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I will try to be relatively brief, but, as the Minister has said, there is an awful lot to get through. I know that many Members wish to speak—indeed, today we have a profligacy of right hon. Members with us, particularly on the Opposition Benches, which is very good—so, perforce, I will have to be brief on various issues.

Labour does not oppose clause 144. On clause 145, which is to do with the general anti-abuse rule, I would like some assurance from the Minister that there are enough staff to deal with this work. I realise that the Government have gone into reverse gear on this, which I welcome, and the number of full-time equivalents has gone up from 57,000 to 60,000 this calendar year. That is a good step, but HMRC was significantly underperforming because it was very understaffed, and clause 145 proposes an additional amount of work for staff to do, so I should like some reassurance on that.

Clause 146 proposes penalties for the general anti-abuse rule. The Chartered Institute of Taxation, which has been extremely helpful to all Members, especially those on the Opposition Front Bench, is concerned that someone might be punished in a rather draconian manner for an innocent error of judgment. However, when my excellent researcher, Imogen Watson, looked at the case to which CIOT referred, she found that it was one to do with customs and excise rather than corporation tax and income tax. Perhaps the Minister can provide some clarification on that.

Amendment 4 on clause 146, which is tabled by me and my hon. and right hon. Friends, deals with raising the penalty from 60% to 100%. I heard what the Minister said about that, but I am concerned that the penalties would not be sufficient to change behaviour and encourage socially acceptable law compliant behaviour, which is what we all want to see.

Clause 147 deals with serial tax avoidance. The Chartered Institute of Taxation has expressed concern, and I understand its point, that this clause might introduce what would be a double penalty for an individual. Generally, we try to avoid double penalties for wrongdoing. Perhaps the Minister could have another think about the clause, or clarify for the Committee today that the CIOT has misunderstood things and there is no such double penalty being introduced. Could the Minister give us an indication—I know that these things are difficult—of how many non-taxpayers will mend their ways as a result of this measure and become taxpayers? Again, there is an issue of funding for HMRC.

Clause 148, which relates to the promoters of tax avoidance schemes, is supported by the Labour Front-Bench team. Although we support clause 149, which deals with special measures and so on, we have put forward amendments 5 to 18 on it—the Minister referred to them earlier. Those amendments deal with increasing the penalty to £25,000 from £7,500 and for holding a director or directors “jointly and severally liable”. Rather strangely, the Minister said that the Government were in the business of “encouraging behavioural change”. Well, so are we. Having higher penalties could encourage behavioural change, by which I mean somebody not indulging in bad behaviour, and filing their reports and so on. That is why we came up with the idea of joint and several liability rather than leaving it to one person. That means that all directors would be aware of what was going on. Furthermore, if the penalties were levied, they would not be reimbursable, as is too often the case. Too often, companies simply reimburse their staff when the staff have engaged in non-criminal wrongdoing. That is not an incentive for them to avoid wrongdoing in future—quite the reverse if anything.

With clause 149 comes amendment 1. I will be brief on that amendment, because my right hon. Friend the Member for Don Valley (Caroline Flint) will no doubt be speaking to it. It is an excellent amendment, which is fully supported by the Labour Front-Bench team. I will say a couple of things very briefly in response to what the Minister said on it. He said that the amendment is technically flawed. That may be the case, but this is the first of almost 200 amendments. If the Government supported it, they could have corrected any technical flaws they saw in it. I also think that they are being a bit timid here, because I do not see how the provisions under amendment 1 will lead to disadvantage to UK headquartered companies or to reputational damage—quite the reverse. Whether the Minister likes it or not, the reputation of Google was adversely affected in the United Kingdom because its tax deal with the UK authorities was not transparent and because people thought that Google was getting away with it. If there had been more transparency, Google’s reputation might not have been adversely affected.

Similarly, provisions in amendment 1 could lead not to reputational damage for UK headquartered companies, but reputational enhancement. I have to say to the Minister—I cannot resist it because he is such a good Minister—that, in our society, talking the talk is seen as hot air, but Gauking the Gauke is seen as being polite and helpful. May I urge him to walk the walk and support amendment 1? If it needs tidying up, he should do it and sort out the technicalities.

Let me talk now about clause 150 and schedule 20—I know that I am going at a bit of a gallop, but there are others who wish to speak. I heard what the Minister said about amendments 19 and 20, which are putative amendments to schedule 20. I defer to his superior knowledge, as this is a very technical area, and I am not an accountant. I think that I understood him to say that what was proposed in amendment 19 was already covered in schedule 20. In relation to amendment 20, he referred to “blind-eye knowledge”, which is a new one on me. I, like him, am a lawyer, and it seems that schedule 20 is introducing civil penalties and not criminal ones, so I accept what he says and will not be pursuing amendments 19 and 20.

Labour supports clause 151, which is to do with penalties in connection with offshore matters and offshore transfers. Clause 152 relates to offshore tax errors and publishing details of deliberate tax defaulters. Helpfully, the explanatory notes say that the clause will amend the Finance Act 2009 to allow HMRC

“the power to publish the details of an individual who controls a body corporate or a partnership”—

when it has been—

“charged a penalty for a deliberate failure to notify HMRC of a tax charge or deliberate inaccuracy in a return, and”—

when that individual—

“would have obtained a tax advantage”—

from it—

“had it not been corrected.”

This must involve an offshore matter or transfer.

That would mean HMRC publishing details of naughty taxpayers or naughty non-taxpayers. In that connection, may I urge the Government again to think about when HMRC, which is under the supervision if not the direct control of the Government and where the Government have a great say on overarching policy matters, to reconsider the question of taxpayer confidentiality? When deals are being done with large companies, as opposed to individuals, those deals could, as part of HMRC’s bargaining, include a waiver of confidentiality on the deal. So, for example, in the notorious Google tax deal, the Chancellor of the Exchequer—understandably —repeatedly said, “I can’t tell you how we got to the deal. That is confidential.” Yes, that was true, but unfortunately that was because HMRC, with the Chancellor of the Exchequer, failed to insert in that agreement with Google a waiver of confidentiality from the taxpayer. If the taxpayer waives their confidentiality, the Government can publish it all. That should be in such settlements, and should have been in the appalling settlement with Vodafone that was done for billions of pounds—I think under a Labour Government, shamefully.

New clause 4, tabled by me and my hon. Friends, relates to clause 152 and requires a report on the workings of the general anti-abuse rule. I am sorry that the Government are apparently not going to accept it. In connection with that, I understand what the Government have said about new clauses 5, 6 and 7 and about the timeframes in them being meaningless because the reports would have to be done before the measures on which they were reporting had been implemented. I quite understand that. I did not understand the Minister to say that about new clause 4, but, if he did, he could perhaps clarify when summing up that it is a deadline issue. If it is not a deadline issue, as it was with new clauses 5, 6 and 7, perhaps he could confirm that the Government will support new clause 4, as they should.

Clause 153 is quite interesting for those of us on the Opposition Benches who like to try to think widely on tax measures, because it is a small step towards a wealth tax. That might not be the Government’s intention, and I am not saying that it is Labour’s proposal on taxes. We are looking at things very broadly, but asset-based penalties for offshore inaccuracies and failures are introduced by clause 153 and schedule 22. In that connection, I want to raise an issue that was raised with me by the Law Society of England and Wales. I declare an interest in that I am a member in good standing of that organisation—as is the Minister, I suspect. The Minister might have a ready reply for the issue the society raised: as we are talking about asset-based penalties, how does one value the asset? What is the mechanism for its valuation and what happens for those assets that fluctuate in value?

Labour supports clause 154, on offences relating to offshore income, assets and activities. I think that the Minister has already responded on the question of new clause 7, which, in a sense, would be coupled with the clause. He pointed out that the deadlines would not marry up, with the report being done before measures came into effect, and I quite understand that. I apologise to the Committee for not spotting it.

That brings me on to new clause 9, tabled by my right hon. Friend the Member for Barking (Dame Margaret Hodge), which is supported by those on the Labour Front Bench. I will let my right hon. Friend explain its necessity and desirability to the House if she catches the eye of the Chair.

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In the light of our debate this morning, an appropriate opening remark would be to point out that I believe that in the next hour we are debating the most important part of this year’s Finance Bill. Many amendments have been spoken about already this morning, and I am sure that Members will forgive me if I try to make my remarks brief and to focus only on three matters: the appropriate changes discussed in amendment 1, tabled by the right hon. Member for Don Valley (Caroline Flint) and others; new clause 8, tabled by me; and new clause 9, tabled by the right hon. Member for Barking (Dame Margaret Hodge). Let me say at the outset that the Scottish National party supports both that amendment and that new clause.

I will be brief, because I want to allow more time for the right hon. Ladies to present their case as fully as they can. Let me say something in general about why we are concerned. We all know that there is huge concern among the public about the extent of tax evasion and hidden wealth. It was a growing concern before the release of the Panama papers, and I remember discussing it in this House in the first week in February. It has been fuelled by concerns as people become more aware of the hiding of money in tax havens by individuals, corporations and trusts.

Let us put this debate into a broader context. According to Jason Hickel of the London School of Economics, tax havens hide one sixth of the world’s total private wealth. He has estimated that at about $20 trillion. Whether that is very accurate or not, all observers would agree that the total amount of money involved is absolutely staggering in scale. Indeed, the Panama papers from Mossack Fonseca are just the tip of the iceberg as regards what we face in the world today.

Many issues need addressing. Neither this debate nor the proposed amendment and new clauses address them all, but they are a start. I have been very disappointed by some of the Minister’s reasoning, particularly that on amendment 1. It struck me that he started to redefine on at least three occasions what he meant by multinational. First, he seemed, in my view, to be speaking as though it was almost global in nature, then it became EU-specific, then it became about just a few countries. It struck me that it is not amendment 1 that has not been thought through thoroughly, but the Government’s response to it. If the right hon. Member for Don Valley proposes to press it to a vote, the SNP will certainly follow her into the Lobby.

We know that many different groups are involved. The amendments specifically refer to corporations, but more than corporations are involved. If we had tabled our own amendment, we might have chosen slightly broader amendments to encompass trusts, for example. Being reasonable, we must put ourselves in a position where we make the first step. Sometimes somebody needs to make the first step.

When the Minister was talking, he reminded me of the days when I used to trod through the library at Stirling University, taking students and showing them back copies of Hansard. We could look at back copies of Hansard from the 18th and 19th centuries, and the subject that arose more than any other in debates in the House was slavery. One of the arguments continually used against doing something to make slavery illegal was that it would not create a level playing field.

Somebody has to be first. This is not just about finance and technical considerations, but about fundamental ethical considerations. Those ethical considerations are why we hope that these matters will be pressed to a vote and we will support the right hon. Ladies in that.

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The hon. Gentleman is right that somebody has to go first. I have one thought for him, and I would be interested in his view. His country relies quite heavily on the oil industry. Is he absolutely certain that it is right to impose something on Shell or BP that the Italian Government will not impose on Eni and the French Government will not impose on Total?

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I thank the hon. Gentleman for being interested in my view. Although I understand the point that is being made as well as that being made by the Minister, I think that in these matters, for all large corporations that operate nationally, taking the first step puts them at a reputational advantage because they are seen to lead the way even though there might be occasions on which doing that appears to put them at some short-term commercial disadvantage. So this is not as simple as saying that anyone is necessarily incurring a commercial disadvantage. For those reasons, we would welcome these new clauses, and we are aware that they would also apply to important sectors of the Scottish economy.

I shall briefly say something about the Scottish National party’s new clause on whistleblowing. I am particularly grateful to the right hon. Member for Barking for asking the Minister why he would not support that new clause. Indeed, as she spoke, I thought that, rather than our pressing the new clause to a vote here, it might be best to engage in cross-party discussions on how best to construct a thorough way forward. I agree wholeheartedly with the right hon. Lady, because when we look at the number of cases that have involved taking whistleblowers to court, one wonders where the balance of the scales of justice lie.

I recognise that changes have been made to the requirements on whistleblowing, some of which come into effect this September in the banking sector, but the requirements oblige companies to do things such as appoint their own whistleblowers champions and report the amount of whistleblowing to their boards. Those things require a culture of willingness in companies. If the will is not there, the current processes will have next to no effect. We are not saying that we know precisely how to secure effective whistleblowing. That is why it would be useful to have some cross-party discussions, in which I am sure the right hon. Lady would be happy to engage. In that spirit, although we believe in the new clause, we will not press it to a vote and look forward to supporting the votes led by the right hon. Ladies.

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I rise to support amendment 1, in my name and those of my hon. Friends the Members for Hackney South and Shoreditch (Meg Hillier) and for Houghton and Sunderland South (Bridget Phillipson) and the hon. Members for Amber Valley (Nigel Mills), for Southport (John Pugh) and for Edinburgh North and Leith (Deidre Brock). I am grateful for the support of six other members of the Public Accounts Committee who signed this amendment: my hon. Friends the Members for Islwyn (Chris Evans) and for Bristol South (Karin Smyth) and the hon. Members for Berwick-upon-Tweed (Mrs Trevelyan), for South Norfolk (Mr Bacon), for Peterborough (Mr Jackson) and for Warrington South (David Mowat). In total, 77 right hon. and hon. Members have signed the amendment, and it is a pleasure to follow the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin).

Apart from the Labour party’s support, for which I am extremely grateful—particularly that of my hon. Friend the Member for Wolverhampton South West (Rob Marris), who has been fantastic in his liaison and advice—Scottish National party, Liberal Democrat, Ulster Unionist party, Social Democratic and Labour party, Plaid Cymru, Green party and UK Independence party Members, alongside a number of Conservative Members, and the independent hon. Member for North Down (Lady Hermon) support amendment 1. There is truly cross-party support, and I am therefore grateful to all those right hon. and hon. Members.

Amendment 1 also has the welcome support of the business-led Fair Tax Mark and the Tax Justice Network and that of development charities such as Christian Aid, the Catholic Agency for Overseas Development, Oxfam, Action Aid, the One Campaign and Save the Children.

It is understandable, given the momentous events of recent days that are creating ripples that reach all corners of our nations and across parties, if Members are a little distracted from the business that we are debating today, so let me be clear about what is at stake. If amendment 1 is agreed to, the Government’s requirement that companies publish their group tax strategy on their websites will include, for large multinational enterprises with bases in the UK, the headline details required on their revenues and taxes paid, in accordance with the OECD requirements for country-by-country reporting. In lay terms, this is Parliament’s Google moment.

I should like to clarify something: the amendment would require companies to publish everything that the Government already require them to report to HMRC. Yes, I agree with the Minister that it would not achieve worldwide reporting for any multinational enterprise, but it would catch not only those parts of a multinational enterprise that are in the UK but those that are over a certain size and have a turnover of more than £600 million.

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I hope to be helpful, but the right hon. Lady said that companies would have to publish their tax information on their websites. What if a company does not have a website? Could that give the company a loophole, or would there be a way around that if a company did not have a website?

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I hope that the companies that we are talking about would be big enough to have a website; if not, we might get an opportunity to discuss that later. My goodness, in terms of their reputation, if they do not have a website, they are on a hiding to nothing.

The Minister tried to suggest that the amendment would relate only to UK companies, but it is in line with HMRC guidance that already affects the reporting strategies that the whole House has supported and includes multinational enterprises over a certain turnover. In that sense, we are working with the grain of how the Government have proceeded in these important areas.

There is widespread concern in the House, across all parties, that multinationals operate by different rules from the majority of hard-working, tax-paying businesses, large and small, in the UK. The greatest weapon of multinational enterprises is that their tax arrangements are shrouded in secrecy. The problem is that, in today’s world, as leaks emerge and information comes out, it is death by 1,000 cuts, whereas the amendment is about getting businesses and their reputations back on track. Not only would this be good for business, but it would ensure that those businesses that are playing fair have a chance to set out their claim and what they are doing in a very public way.

Governments across the world face a particular problem with multinationals. The common factor is that revenues are shifted to countries with poor governance, poor monitoring and low or no corporate tax rates. Why in 2010 did Bermuda have total reported corporate profits that were the equivalent of 1,643% of its actual GDP? Could that be because that country has a zero rate of corporation tax? Is there not something odd about a company—let us say, Google—that has huge numbers of sale staff in one country, but all the revenues reportedly received in another? It would surprise no one to find that the revenues are recorded in a country that has a corporate tax rate of 12.5%, as opposed to the UK’s 20%.

The House can take a stand against this entirely lawful but—I think we would all agree—unethical manipulation of different countries’ tax rules. As the OECD has rightly pointed out in its work on base erosion and profit shifting, the impact is to create unfair competition. Multinational enterprises that transfer profits to low-tax dominions gain a competitive advantage over, say, a UK rival, which pays 20% tax on its profits. We can seek to level that playing field today.

The whole House supported the Chancellor’s legislation to require financial reporting to HMRC from UK-based multinationals with revenues in excess of approximately £600 million and UK units of such companies where the parent company is based in a country that does not yet agree to country-by-country reporting. That reporting, in accordance with the guidelines that I have mentioned, would include showing for each tax jurisdiction in which they do business the amount of revenue, profit before income tax and income tax paid and accrued, and their total employment, capital, retained earnings and tangible assets. They would be required to identify each entity within the group doing business in a tax jurisdiction and to provide an indication of business activities within a selection of broad areas in which each entity engages. That information must already be provided to HMRC. We are saying, “Let’s go public.” I want the HMRC to be armed with all the necessary information to secure fair tax contributions from these companies, based on their UK activity, but we need more than the HMRC to have a confidential look; we all deserve to see the bigger picture, and by publishing, we will see that.

Publishing is one way to persuade some of these companies to restore their corporate reputations. Was it because of the extraordinary focus on Google that Facebook announced a welcome change to the recording of its profits in the UK? I believe so. If a company is reporting profits in tax havens where they have only a PO box and a name plate but no apparent staff or activity, do we not want to know that? Let us follow our convictions; let us do what we know to be right. Let us shine a light on the activities of these large multinationals which—let us be honest—run rings around revenue and customs authorities around the world. Let us not flinch, play for time, and hope that some international agreement will eventually be reached by the EU or the OECD.

I remind Members that so often during the referendum on the UK’s EU membership, we heard a lot from both sides about our Parliament’s sovereignty and our power to make laws and to tackle issues big and small. Well, this is the test. Is Britain still a leader or are we followers? This amendment is a pro-business measure. If we adopted it, Parliament would be saying that every business big and small must play by the same set of rules. The tide of opinion is changing in the business world. I am delighted that this week I have received support from SSE for the principle of public country-by-country reporting. I am delighted when major firms such as the cosmetics company Lush, which operates in 49 countries, sign up to the Fair Tax Mark and pledge never to use tax havens. I welcome the fact that since 2014, a quarter of the FTSE 100 companies have published information about their tax arrangements, with long-standing British firms such as Barclays foremost among them.

I commend the Minister for the steps that have been taken in the past six years to improve the level of transparency and for the clampdown on the secretive tax deals that have thwarted fair taxation for so long. In our hearts, do we not all know what the Googles of this world will be hoping? They will hope that we sidestep this issue and duck the opportunity for Britain to set a standard, to lead and to demand more openness. This House knows what those who want fair taxes from large and small businesses alike will want. Every right hon. and hon. Member knows what their constituents would say about these firms shifting their profits to low-tax and no-tax dominions. Let us spare a thought, importantly, for the developing countries, which reportedly lose as much in lost tax revenues as they receive in aid each year. That cannot be right.

Finally, in February, the Chancellor told an international meeting of Finance Ministers:

“I think we should be moving to more public country-by-country reporting. This is something which the UK will seek to promote internationally.”

I hear what the Minister says, but there comes a point when we have to show leadership. Much of our tax rules and other rules affecting companies are not applied worldwide. They are British home-grown rules that seek to provide fairness as well as competition.

I welcome the EU’s activities in this area, although I am not sure where we will fit in. We might have to accept whatever the EU says if we are part of the single market. That is a debate for another day. Unfortunately, the present state of the EU’s negotiations does not tackle the problems of those developing countries that lose out. As I understand it, some of the European discussions have not included the publishing of information on the activities of EU-based companies in developing countries. That does not go as far as what we require from companies reporting to our own tax authority, which we are asking to be put in the public domain.

The change that I am calling for would be part of the Minister’s and the Chancellor’s legacy—a chance to lead where other countries are sure to follow. Let us ensure that the age of secrecy is gone. Let us force the multinationals into the light. I humbly request a Division on this amendment, and I urge the Minister and Conservative Members to join right hon. and hon. Members from nine parties in the Lobby with me today to make a historic change. In years to come, we will ask ourselves why we did not do this earlier. Today is the day. Let us stand up for fairness. Today is a day for lions, not lambs. Let us see the British Parliament roar. I urge the Committee to support this amendment.

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It is a pleasure to follow the right hon. Member for Don Valley (Caroline Flint) and to support her amendment. I shall not repeat the arguments that she made so eloquently, but I shall make a few separate points.

Those of us who regard the UK as a great place to do business, and who want to attract international investment here and encourage our businesses to expand overseas and to export, recognise that we need a business climate that inspires confidence, where firms feel that they can compete fairly and that we have a respected financial system, tax system and market in which those operating here are seen to be behaving properly. Over the past few years we have found out from a series of leaks that large multinational companies have been misbehaving. Those companies are hauled through the press and parliamentary Committees, such as the Public Accounts Committee, on which I serve. That is not the right way to boost our business climate.

We need to move on from that and show the people of the UK and people around the world that companies that are based here and operate here follow the rules, and those that do not follow the rules will be caught and dealt with, and will be strongly encouraged, if not forced, to change their behaviour. That is the way to move the debate forward. Running and hiding and waiting for others to do that will not help. It is we who have taken the lead, taken action publicly against those companies and made them change their behaviour. For us to resile from that and say, “We’ve done our bit. Let someone else go first” will not work.

We are one of the main global financial centres. Companies come here to list on our stock market that were not founded here and are not headquartered or based here. We need to set an example and say, “If you want to come and be based here, you need to follow the highest standards. We want you to behave ethically.” I have no problem with UK-based companies trading in low-tax jurisdictions. If they are trading there commercially, if they have assets there, if they have employees there, that is their right, but they should publish a report so we can see that what they are reporting is commensurate with their activities there, and that they are not simply hiding profit there that was not earned there. I welcome the increased transparency that the amendment would provide.

I do not believe the bleak competition warnings. It is not as though every small company would be required to provide such a report. The requirement would apply only to companies with turnover of more than €750 million. I would not like to guess what that is in sterling. I am sure it will gradually go up as the economy strengthens, now that we have left the EU. I would be surprised if many companies of that size have major trading activities in developed countries without having a subsidiary there that is making the sales. If those companies do have such a subsidiary, they will have to file statutory accounts in those territories. I suspect that in most regimes those will be public, so people will know the turnover of those big corporations in those regimes, and they will know what tax is due. Companies filing for UK tax have to provide a segmental analysis that shows where they are operating in the world and breaks down turnover and profit. We are not creating a new set of disclosures that do not already exist; we are trying to enhance the ones that we have and make them work.

I checked some major multinational accounts this morning and found one segment that said, “UK, US and international”. That is of no use to us. The idea of segmental reporting in financial accounts was to provide some disclosure so that we knew who was operating where, how much they were making and what they were doing. I do not believe that for the vast majority of very large companies that are trading ethically and not trying to avoid tax the requirement will be a great hardship. Yes, it may put a little more in the public domain, but it will put that into one document where people can read and understand it, see it transparently and clearly, and get a full picture of what the company is doing.

Everyone will understand that there is no reason why a company based in the UK that happens to make a few sales in France but has no people or assets there should pay French corporation tax. Similarly, there is no reason why a French company selling into the UK would pay UK corporation tax. We can make that clear. What we want to know about is those companies that have a large turnover and very few assets and employees in a very low-tax jurisdiction, so that we can work out whether they are acting legally.

Perhaps they are—perhaps some guy sitting in Guernsey on his own happened to invent a great product and has been receiving royalties. That is fair enough. He is entitled to do that. If he is based in Guernsey, that is rightly his income. I suspect that there are not many such cases, compared with the scale of business activity in those overseas jurisdictions. At least when such activity is transparent the businesses concerned will be able to explain it and defend themselves, or we will all know that those companies are misbehaving and we will be able to choose whether to buy from them or not. The amendment would help us to achieve that. As with all Back-Bench amendments, it is not perfect. The report should be provided in a company’s financial statement so that there is some assurance from the audit process that the data provided are accurate. I urge the Government to bring forward a Bill which would do that, so that the information would be provided in the right place.

It is not perfect for the reporting requirement to be in a tax policy statement that applies only to the UK and without any audit requirement. It may not provide assurance that all the disclosures are absolutely right and that no territories have been omitted or data combined in a way that we cannot understand. I suspect that there will be penalties for failing to publish the whole statement, but no scrutiny of what is published. Perhaps if the same information is provided to HMRC, there will be greater transparency. HMRC may notice that what is in the public domain is not quite the same as the information submitted to it. We could therefore make the proposal better.

It would probably be better if we tackled this issue EU-wide. I am perhaps the only person in the Chamber who welcomes the fact that we shall be making these laws ourselves, rather than having the EU make them for us—tax was always meant to be a member state competency—but if we want to wait a short period to have these things done in a consistent format across the whole of Europe, I would not mind if publication were in 2018 rather than 2017. However, we could at least have a clause that says that we will do these things from 2018 unless the EU has done something that applies here before then, in which case we could repeal that clause.

However, that is not where we are. We have a choice between passing amendment 1 today or waiting and hoping that somewhere else will take the lead on something that we have been leading on. Our Government have rightly introduced a whole new tax to try to stop corporates abusing the global tax regime. I am not sure that a few disclosures are quite as displacing as a whole new tax was, so I am not sure why we are being a little more cautious in this situation.

However, the right way forward is for us to be united on this issue and for the Government to say, “On reflection, we will bring forward a clause on Report,” so that we can tackle this issue in the right way and not in a slightly forced way. That would be the best way forward, and I hope the Minister will agree when he responds to the debate. We could then show that we are all behind the policy I think the Government have. If we cannot do that, I will support amendment 1.

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I am grateful for the support that amendment 1, tabled by my right hon. Friend the Member for Don Valley (Caroline Flint), has received from MPs on both sides of the Chamber and a range of charities and voluntary organisations. The way in which she prepared for the debate was excellent, and I wish I had done as well, but I was a little distracted by other issues.

New clause 9, tabled by me and other hon. Members, would require the Chancellor to publish an estimate of the impact on levels of tax avoidance and tax evasion of extending the current requirement on UK-based companies to publish information to companies incorporated in the Crown dependencies and overseas territories that have significant levels of trading activity in the UK. The purpose of the new clause is to take forward the Prime Minister’s commitment to have publicly available registers of beneficial ownership for all the Crown dependencies and overseas territories.

As others have said, it is difficult to estimate the amount held in tax havens. Some estimates have put the private financial wealth held in them at between £21 billion and £32 billion, and that money is untaxed or very lightly taxed. The French economist Zucman estimated that $7.6 trillion was held offshore last year, which is the equivalent of the US budget for two years. The OECD has estimated that tax havens may cost developing countries the equivalent of three times the global aid budget. We are talking big, big, big sums.

We saw from the Panama papers how much of the money that is held offshore is held in UK tax havens. Of the 214,000 corporate entities that were exposed in the Panama papers, more than half were registered in the British Virgin Islands. I draw Members’ attention to another interesting bit of data, which shows the role of tax havens and overseas territories. A World Bank review that looked at 213 corruption cases over 30 years, from 1980 to 2010, found that 70% of those cases involved anonymous shell entities. The UK Crown dependencies and overseas territories were second behind the US on the list of those providing the shell entities that enabled that corruption and money laundering to take place.

I welcome the action the Government have taken and the leadership they have shown on the international stage, and we could just stay where we are, but the purpose of the new clause is to urge them to go further. All these issues are being revealed, and will continue to be revealed, through leaks—we have had the Falciani leaks and the Luxembourg leaks, and we have now had the Panama leaks. I am waiting for the next set of leaks; I bet they are out there—I bet a whole bunch of journalists are working on them now—but is that the way we want to learn about how corrupt individuals and greedy corporations are hiding their money, aggressively avoiding and evading tax? Would it not be better if we did everything within our power and within our authority to open up these issues so that we could see whether people were paying their fair share of tax, based on their profits, wealth or earnings, depending on whether they were an individual or a corporation?

The Minister knows that people are really angry about this issue. It is not something that has been invented by Opposition Members. I receive huge swathes of emails and letters every time I raise the issue of tax evasion and tax avoidance. If he takes the action we are suggesting and closes down the tax havens, that will be not just popular but right. That may damage the interests of a few wealthy individuals or corporations, which I think the Minister holds in awe, but it will be in the interests of the many, many people and small companies here in the UK who loyally pay their tax without any question.

I want to take the Minister through the pledges the Prime Minister has made. I was delighted in 2013 when he pledged at Loch Erne:

“Every one of the Crown Dependencies and Overseas Territories are going to have an action plan on beneficial ownership.”

In 2013 he also told them that it was time to rip aside the “cloak of secrecy” by creating a public register of beneficial ownership. In 2014 he wrote to the overseas territories urging them to consider having public registers of beneficial ownership, saying that

“beneficial ownership and public access to a central register is key to improving the transparency of company ownership and vital to meeting the urgent challenges of illicit finance and tax evasion.”

In 2015—this is the fourth example—he went to the Caribbean and again made clear his determination that overseas territories should open up. He said:

“I say to them all today, including those in this region, if we want to break the business model of stealing money and hiding it in places where it can’t be seen: transparency is the answer.”

We all agree with that, and we urge the Government to take action. They should stop talking and start acting. They should not always hide behind international co-operation. There is stuff that we can do now and that we should proceed with urgently.

If we are to know how much tax we lose from individuals hiding their money in anonymous accounts in the overseas territories and Crown dependencies—it could well be laundered money—and how much money global companies are hiding in tax havens as part of their aggressive tax avoidance strategies, we need every country to have a register of beneficial ownership, as set out in my right hon. Friend’s amendment, and those registers have to be public. That is especially important for developing countries.

As the Minister knows, we have the power to act. I fear that the reason the Government are not using their power is that they are happy to allow this massive tax avoidance and evasion to continue. I hope the Minister will reassure me in his reply that that is not the case, but that is what it feels like.

The Government have used the powers they currently have in other areas. We could therefore use an Order in Council to instruct all the overseas territories and Crown dependencies that are under our control to issue public registers of beneficial ownership. It is easy. The Conservative Government did it in the past when they used such Orders to ensure that capital punishment was abolished in overseas territories and Crown dependencies. A previous Labour Government used absolutely the same powers to ensure that discrimination against gay men was made illegal in overseas territories and Crown dependencies. If both the main political parties have used those powers in the past, why are the Government so reluctant to use them for something that is so popularly demanded and would be so important, and where they themselves agree that transparency has to be the way forward?

Some of the overseas territories are co-operating with the Government’s endeavours. However, newspaper reports tell us that the Cayman Islands and the British Virgin Islands are ignoring requests to meet officials to discuss evasion and avoidance. I understand that the Prime Minister has not met a single overseas territory since he first made the commitment to take action on opening up these tax havens in August 2013. I also understand that the Minister asked the overseas territories with financial centres to have plans for registers of beneficial ownership by 2014, but he was ignored, and he is still doing nothing.

I have here a table prepared by Transparency International that shows the current commitments on beneficial ownership by overseas territories and Crown dependencies. As the Minister knows, it shows that Turks and Caicos has done nothing, the BVI has done nothing, and the Cayman Islands is half co-operating, while Bermuda and others are refusing to have a public central register. The only country in our control that is having a public central register is ourselves. I congratulate the Minister on that—we are setting an example—but let us use our powers to go further.

What we hear and read from the two most important overseas territories—the British Virgin Islands and the Cayman Islands—is a matter of great concern. The British Virgin Islands did not come to the anti-corruption summit; it is against the proposal. Its Premier and Minister of Finance, Orlando Smith, has said:

“The moment we begin housing vast amounts of highly sensitive, private business information and then providing access to that information to a wide array of actors, the risk of a breach goes up immeasurably.

If legitimate businesses fear that their international transactions will be exposed to the world, or, worse yet, accessed by criminals or terrorists”—

I am not sure how that will happen—

“and used as a weapon of extortion or intimidation—then the gears of international finance will start to grind.”

Talking about terrorists and criminals is purely an excuse. The British Virgin Islands simply does not want to open up the books. It does not want us to know what are the beneficial ownerships of companies that have registered there or individuals who hold their money there.

After the Prime Minister said that he had made such wonderful progress in ensuring registers of beneficial ownership that would help us to find out who owned what, where, Premier McLaughlin of the Cayman Islands said:

“This is what we wanted, this is what we have been pushing for three years, for a disaggregated system which leaves the beneficial ownership information intact with the service providers.”

He got away with what he wanted. He was not forced by us to reveal the data that we so desperately need to find out what is hidden there. He went on to say:

“People don’t do business with us because we are nice”.

That is simply not good enough.

I urge the Minister to take this little new clause really seriously. I will request a Division on it. I urge him to do what he says he wants to do and open up to public account the tax havens that we, the United Kingdom, control.

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I rise to speak briefly to amendment 1. I congratulate my right hon. Friend the Member for Don Valley (Caroline Flint), many members of the Public Accounts Committee, and Members across the House who have signed this simple but important amendment, which, as others have highlighted, would require a clear public register of company activity. I pay particular tribute to the hon. Member for Amber Valley (Nigel Mills), whose expertise on this issue in the Public Accounts Committee has been particularly useful. As he rightly said, this information is mostly public, but one would need to have his qualifications, and there are not many with those, in order to track it down internationally. We on the Public Accounts Committee want a register where it is readily available to the “citizen auditor”. We want to put powers in the hands of the citizen to enable them easily to see where the taxes paid by companies are put.

The Minister spoke of the amendment being defective, but I do not believe that it is. It covers the same large-turnover companies that are covered by other Government reporting requirements. If it is defective, however, I again challenge him to bring back an improved version on Report. He has access to Government lawyers to do this. My right hon. Friend, though a very able woman, perhaps does not have at her fingertips the same expertise in legislative drafting. The power is in the hands of the Government on this issue.

I want to highlight another aspect of our work that I mentioned to the Minister. It is not UK parliamentarians alone who support this measure. In May, I went out to the OECD on behalf of the Public Accounts Committee to lobby and speak to parliamentarians of other nations around the world. We had a very useful and important discussion about the need for greater disclosure for the public benefit, with our citizens pushing our Governments to act decisively. As I said, I subsequently wrote an open letter that I sent to European partners, urging Governments to support the measure that is summarised in the amendment. The letter was signed by the chairs of parliamentary finance committees in Germany, Hungary, Finland, Norway and Slovakia, as well as senior MPs in the Netherlands, the Czech Republic and Bulgaria. Rather than detain the Committee, I draw Members’ attention to the Public Accounts Committee website, which has full details of the letter and information about how we went about it.

My right hon. Friend’s amendment is a really important first step. I appreciate that the Minister is willing to look at a multinational agreement. Unfortunately, however, much to my disappointment and the huge disappointment of my constituency and borough, which had the second-largest vote in the country to remain, we voted to leave the EU last Thursday, and Britain is going it alone, so why not do this now?

New clause 9, tabled by my right hon. Friend the Member for Barking (Dame Margaret Hodge), follows the same principle. It also follows a theme pursued by the Public Accounts Committee, when she chaired it and currently, on registering the extent of beneficial ownership in tax havens. I do not need to add a great deal to what she amply amplified. She and I, other hon. Members, and, I think, the Minister agree that transparency—sunlight—on activities affects behaviour. Public trust on tax is at an all-time low. We do not have a level playing field. As she says, the Government have the power to act on this very swiftly. The Prime Minister has supported it and the Minister has supported it, so why not act now?

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I thank all right hon. and hon. Members for their contributions in this very good debate. Most of them focused on amendment 1 and new clause 9, as I will, but the hon. Member for Wolverhampton South West (Rob Marris) raised a number of points that I will quickly run through before turning to the main issues.

On new clause 4, which relates to the review of the GAAR, this is not a deadline issue. I was not making that point, as the hon. Gentleman rightly observed. I would argue that a review of the GAAR is unnecessary. The principal purpose of the GAAR is to deter taxpayers from entering into abusive tax avoidance in the first place. As I have made clear throughout this process, measuring the number of times that the GAAR has been invoked is not a reliable indicator of its success. I made that point when I brought in the legislation relating to the GAAR, and that remains the case.

On clause 153 and schedule 22 and asset-based penalties, the hon. Gentleman asked how we value the asset. The Valuation Office Agency, which is obviously experienced in that area, will value the asset for HMRC. The date of valuation will be the date of sale. For assets not disposed of, the value will be the market value on the last day of the tax year. That is the standard approach.

On the number of people affected by clause 147, the measures are aimed at a small but persistent minority of taxpayers who remain undeterred by the Government’s continued strategy to bear down on tax evasion and tax avoidance. We expect that the total number of taxpayers affected by the measures will be a small proportion of the total avoidance population; I do not wish to indicate anything other than that. This is a principled approach and it is right that that shrinking minority is properly dealt with.

The hon. Gentleman also raised a concern about a double penalty. I hope I can reassure him that the offset provision will apply to ensure that there will be no double penalty apart from the new GAAR penalty, whereby the combined total is capped, in most cases, at 100%.

We could have a longer debate, as we have done in the past, on the wider, familiar issue of HMRC resources. At the summer Budget, the Government provided HMRC with an extra £800 million to fund additional work to tackle evasion and non-compliance by 2020-21. That will enable HMRC to recover a cumulative £7.2 billion in tax over the next five years by tackling evasion and non-compliance. I also point out, as I tend to do in these circumstances, that HMRC’s yield is at record levels and that the tax gap is at record low levels. Although I do not think that the best measure is the number of staff working in a particular area, it is the case that the number in enforcement and compliance has consistently gone up. I accept that that is not the case across HMRC as a whole, although, as the hon. Gentleman has pointed out, the number is increasing at the moment, including in enforcement and compliance.

To return to the issue of penalties and whether they are sufficient, the GAAR penalty has been set at a rate high enough to act as a clear deterrent while being proportionate to the behaviour concerned. As I have said, under the existing penalty rules a penalty of 70% to 100% will usually be charged in cases of fraud, and it is appropriate for the GAAR penalty to be below that range.

Let me respond to the intervention by the right hon. Member for Barking (Dame Margaret Hodge) about whistleblowing. In October 2015 the Financial Conduct Authority published a package of rules designed to encourage a culture in banks whereby individuals feel able to raise concerns. Those rules require a senior manager to be appointed a whistleblowing champion, internal arrangements to handle all types of disclosure, and a requirement to inform the FCA if an employment tribunal with a whistleblower is lost.

Given that I have responded to one point raised by the right hon. Lady, I will now address some of her other points about new clause 9, which seeks to provide more information about the tax gap numbers. My argument is the practical point of whether it is likely that HMRC could estimate or measure the impact of such a specific measure on the tax gap, particularly given that the basis is hypothetical, since the register of persons with significant control is not yet operational. That is, therefore, a challenge, but I accept that the new clause also enables us to have a wider debate about the Crown dependencies and overseas territories. That is an important issue and I want to focus more on it.

We have made extraordinary progress in the past six years with regard to Crown dependencies and overseas territories and, indeed, more widely. When I first took over this role some six years ago, the big campaigning issue for many outside organisations was automatic exchange of information. My predecessor, the right hon. Member for East Ham (Stephen Timms), is held in very high regard by Members on both sides of the House. He was a dedicated Financial Secretary and tax Minister who energetically pursued that agenda, but I can remember him saying in 2010, “That’s very much what we want to do, but we think it’s a long way away.”

The progress that has been made over the past six years, for various reasons, is considerable. The automatic exchange of information, which was once seen as a laudable objective but not something we were going to reach any time soon, has now been reached. It applies to Crown dependencies and overseas territories, which were all early signatories to the common reporting standard, and that is now coming into force. It is fair to say that the UK Government encouraged them to do that, and that is an example of how working in partnership with the Crown dependencies and overseas territories can result in quicker and more effective implementation, whereas imposing legislation reduces that co-operation and can ultimately harm our ability to tackle and deter corruption, tax avoidance and tax evasion. The approach we have taken over the past six years has been successful in making substantial progress, which people of good will on all sides did not think would be possible. The common reporting standard is a good example of that.

Although I accept that Crown dependencies and overseas territories have not signed up to public registers of beneficial ownership, we have to put the issue in context. The UK is pretty much the only jurisdiction that has done that. Of course we should expect Crown dependencies and overseas territories to meet international standards. As a Government, we continue to press the case for ever higher international standards, but failing to have a public register of beneficial ownership is not a breach of international standards. We would like the international standards to be such, but they are not at present. We have to consider the issue in that context.

I do not want to rerun everything I said earlier about amendment 1. I believe that we all share the same objectives and that the question is about how we get to where we want to be. I want to make it absolutely clear that, although there are some technical concerns and flaws in the legislation, the fundamental point is that there is a limit to the extent that we can require a foreign multinational entity to disclose information on its global activities under UK law. That is why we believe that the best way forward is through international efforts on public country-by-country reporting. Even if those flaws can be addressed, we still face that problem.

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In his earlier contribution, the Financial Secretary suggested that UK-headquartered companies would be disadvantaged, but my amendment is completely based on the information already required by HMRC, as laid down by this House with cross-party support. That includes multinational enterprises that are not necessarily UK headquartered but have a turnover of more than £600 million a year. Of course, the amendment does not catch everybody, but it is within the existing remit and range in the statute book. That is why I find it difficult to understand why there is a technical problem with my amendment. All we are saying is, “Make it public.”

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The issue is that foreign multinational entities would not be caught by the amendment. That is the advice I have received. It means that the public will get information only on the taxes paid and profits made by a multinational entity headquartered in the United Kingdom and not on those paid and made by foreign multinational entities such as Google. That is the clear advice I have received on the right hon. Lady’s amendment.

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I feel I have to pursue this point. Amendment 1 would insert two new subparagraphs in schedule 19. The first would mean that a

“group tax strategy of a qualifying group which is a MNE group must also include a country-by-country report.”

The qualifying group referred to is based on what the Government have already legislated for. The second subparagraph is very clear:

“In paragraph (2A) “country-by-country report” has the meaning given by the Taxes (Base Erosion and Profit Shifting) (Country by Country Reporting) Regulations 2016.”

That qualifying group, then, includes UK-headquartered companies but also companies from elsewhere whose turnover is more than £600 million a year, as I have said. It would affect not just UK companies but those companies with activity here that are headquartered elsewhere. I urge the Minister to ask civil servants whether they have got that advice right.

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I assure the right hon. Lady that I have asked civil servants about this particular issue—she will not be entirely surprised to learn that there have been fairly extensive conversations with civil servants about it. We believe that the amendment as drafted would not apply to foreign multinational entities. The challenge is that the information is, essentially, held in the UK and relating to UK-headquartered companies, so only UK-headquartered companies are well placed to provide it. She has highlighted one of the problems with a unilateral approach.

I have a huge amount of sympathy with the right hon. Lady’s argument, as she knows. We have discussed this before. I am pleased that the United Kingdom is leading the way in making progress on this at a number of international forums. I urge the House to consider that we do not need to go it alone at this point. We can work with other countries, given the progress that is being made, quite often at the UK’s instigation.

Another important point was touched on by my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) as well as the right hon. Lady, namely developing countries. I have a lot of sympathy with that point. It is worth noting that 39 countries, including the United Kingdom and developing countries such as Nigeria and Senegal, have signed the OECD mechanism for country-by-country reporting. That means that the information produced by companies and provided to tax authorities—not published, but already produced and provided to authorities—is shared with every one of the 39 signatories. I want to encourage other developing countries to sign that agreement, so that they have access to the information. The right hon. Lady made the point earlier that the EU proposals could go further on ensuring more information. I agree. That is the UK position and we have been arguing that case at EU level.

I never want to miss the opportunity to highlight what we do as a country to help developing countries’ tax authorities build up their tax capacity. That work does not get the coverage it deserves. The previous Labour Government also did such work, but we have built on that. The Department for International Development and HMRC do considerable work on helping developing countries ensure that they have the information they need and the capacity to do something with it.

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May I make this offer on amendment 1? My right hon. Friend the Member for Don Valley (Caroline Flint) and I are quite happy to meet the Minister and Treasury officials to iron out any technical deficiencies there may be. I make that offer today so that we can do so before Report. Secondly, I urge the Minister to think a little more broadly, in terms of the world that we live in now after the Brexit vote. If the United Kingdom, having left the European Union, chose to make it a condition of trading in the UK for multinational enterprises not headquartered here that they disclose that information, we could do so.

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I am not sure about the practicality of that. I will also make the point that we remain members of the European Union. There does not seem to be any likelihood of our leaving the EU within two years. Given the progress currently being made on public country-by-country reporting, I hope that the process will conclude while our membership continues.

As I have said, there are some technical issues that could be ironed out in amendment 1, but the fundamental issue of not being able to access information from foreign multinational entities that are not headquartered in the UK would remain a problem. Even with the best will in the world—and the best lawyers and parliamentary counsel—we will not be able to solve that problem.

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Will the Minister meet us?

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I am always happy to discuss this issue with the hon. Gentleman, but that underlying problem still exists.

In the light of all that, I will say that, yes, we want to make progress on public country-by-country reporting, but that needs to be on a multilateral basis. Amendment 1, despite some considerable ingenuity to get it in order to be debated today, does not do what is needed. I therefore urge hon. Members not to support it, in the knowledge that this Government want to make progress on this matter and expect to make considerable progress over the next few months.

Amendment 114 agreed to.

Clause 144, as amended, ordered to stand part of the Bill.

Clause 145

General anti-abuse rule: binding of tax arrangements to lead arrangements

Amendments made: 115, page 198, line 8, leave out “Condition 1 or 2” and insert—

“the condition in sub-paragraph (2)”.

Amendment 116, page 198, line 9, leave out “Condition 1” and insert “The condition”.

Amendment 117, page 198, line 10, at end insert—

“but no notice under paragraph 12 of Schedule 43 or paragraph 9 of Schedule 43B has yet been given in respect of the matter.”

Amendment 118, page 198, leave out lines 11 and 12.

Amendment 119, page 198, line 20, leave out from first “notice” to end of line 21 and insert—

“(a “pooling notice”) which places R’s arrangements in a pool with the lead arrangements.”

Amendment 120, page 198, line 21, at end insert—

“( ) There is one pool for any lead arrangements, so all tax arrangements placed in a pool with the lead arrangements (as well as the lead arrangements themselves) are in one and the same pool.

( )Tax arrangements which have been placed in a pool do not cease to be in the pool except where that is expressly provided for by this Schedule (regardless of whether or not the lead arrangements or any other tax arrangements remain in the pool).”

Amendment 121, page 198, line 22, leave out “notice of binding” and insert “pooling notice”.

Amendment 122, page 198, line 23, leave out

“(which has not been withdrawn)”.

Amendment 123, page 198, line 25, leave out from “43” to end of line 26.

Amendment 124, page 198, line 26, at end insert—

“Notice of proposal to bind arrangements to counteracted arrangements

1A (1) This paragraph applies where a counteraction notice has been given to a person in relation to any tax arrangements (the “counteracted arrangements”) which are in a pool created under paragraph 1.

(2) If a designated HMRC officer considers—

(a) that a tax advantage has arisen to another person (“R”) from tax arrangements that are abusive,

(b) that those tax arrangements (“R’s arrangements”) are equivalent to the counteracted arrangements, and

(c) that the advantage ought to be counteracted under section 209,

the officer may give R a notice (a “notice of binding”) in relation to R’s arrangements.

(3) The officer may not give R a notice of binding if R has been given in respect of R’s arrangements a notice under—

(a) paragraph 1, or

(b) paragraph 3 of Schedule 43.

(4) In this paragraph “counteraction notice” means a notice such as is mentioned in sub-paragraph (2) of paragraph 12 of Schedule 43 or sub-paragraph (3) of paragraph 9 of Schedule 43B (notice of final decision to counteract).

1B”.

Amendment 125, page 198, line 27, after “a” insert “pooling notice or”.

Amendment 126, page 198, line 30, after “A” insert “pooling notice or”.

Amendment 127, page 198, line 34, after “arrangements” insert

“or the counteracted arrangements (as the case may be)”.

Amendment 128, page 199, line 1, after “A” insert “pooling notice or”.

Amendment 129, page 199, leave out lines 4 to 10.

Amendment 130, page 199, line 12, after “a” insert “pooling notice or”.

Amendment 131, page 199, line 16, after “6” insert

“and Schedule 43B (generic referral of tax arrangements)”.

Amendment 132, page 199, line 17, leave out “of binding” and insert

“in question (and accordingly the tax arrangements in question are no longer in the pool)”.

Amendment 133, page 199, line 23, leave out “notice under paragraph 1” and insert “pooling notice or notice of binding”.

Amendment 134, page 199, line 26, leave out

“notice under paragraph 1”

and insert—

“pooling notice or notice of binding”.

Amendment 135, page 199, line 34, at end insert—

“( ) Where a person takes the first step described in sub-paragraph (3)(b), HMRC may proceed as if the person had not taken the relevant corrective action if the person fails to enter into the written agreement.”

Amendment 136, page 200, line 6, at end insert—

“Corrective action by lead taxpayer

2A If the person mentioned in paragraph 1(1) takes the relevant corrective action (as defined in paragraph 4A of Schedule 43) before the end of the period of 75 days beginning with the day on which the notice mentioned in paragraph 1(1) was given to that person, the lead arrangements are treated as ceasing to be in the pool.”

Amendment 137, page 200, line 9, leave out “notice of binding” and insert “pooling notice”.

Amendment 138, page 200, line 10, leave out from first “arrangements” to “and” in line 11.

Amendment 139, page 200, line 13, leave out from “about” to “is” in line 14 and insert

“another set of tax arrangements in the pool (“the referred arrangements”)”.

Amendment 140, page 200, line 16, leave out “bound” and insert “pooled”.

Amendment 141, page 200, line 17, at end insert—

“( ) No more than one pooled arrangements opinion notice may be given to a person in respect of the same tax arrangements.”

Amendment 142, page 200, line 19, leave out

“by virtue of Condition 2 in paragraph 1”.

Amendment 143, page 200, line 21, leave out “notice of binding” and insert “pooling notice”.

Amendment 144, page 200, line 22, leave out “bound” and insert “pooled”.

Amendment 145, page 200, line 25, leave out “lead” and insert “referred”.

Amendment 146, page 200, line 29, at end insert—

“( ) In relation to a person who is given a notice of binding “bound arrangements opinion notice” means a written notice which—

(a) sets out a report prepared by HMRC of any opinion of the GAAR Advisory Panel about the counteracted arrangements (see paragraph 1A(1)),

(b) explains the person’s right to make representations falling within sub-paragraph (2), and

(c) sets out the period in which those representations may be made.”

Amendment 147, page 200, line 30, after “given” and insert

“a pooled arrangements opinion notice or”.

Amendment 148, page 200, leave out lines 35 to 38.

Amendment 149, page 200, line 40, leave out “the lead arrangements” and insert

“(i) the referred arrangements (in the case of a pooled arrangements opinion notice), or

(ii) the counteracted arrangements (in the case of a bound arrangements opinion notice).”

Amendment 150, page 201, line 3, leave out from beginning to “paragraph” in line 4 and insert

“any tax arrangements have been placed in a pool by a notice given to a person under”.

Amendment 151, page 201, line 7, leave out “the lead arrangements” and insert

“any other arrangements in the pool (the “referred arrangements”)”.

Amendment 152, page 201, line 10, leave out “lead” and insert “referred”.

Amendment 153, page 201, line 17, leave out

“by virtue of Condition 2 in paragraph 1”

and insert “under paragraph 1A”.

Amendment 154, page 201, line 22, leave out “lead” and insert “counteracted”.

Amendment 155, page 202, line 25, leave out from “applies” to end of line 38 and insert

“if—

(a) pooling notices given under paragraph 1 of Schedule 43A have placed one or more sets of tax arrangements in a pool with the lead arrangements,

(b) the lead arrangements (see paragraph 1(1) of Schedule 43A) have ceased to be in the pool, and

(c) no referral under paragraph 5 or 6 of Schedule 43 has been made in respect of any arrangements in the pool.

(2) A designated HMRC officer may determine that, in respect of each of the tax arrangements that are in the pool, there is to be given (to the person to whom the pooling notice in question was given) a written notice of a proposal to make a generic referral to the GAAR Advisory Panel in respect of the arrangements in the pool.

(3) Only one determination under sub-paragraph (2) may be made in relation to any one pool.

(3A) The persons to whom those notices are given are “the notified taxpayers”.”

Amendment 156, page 203, leave out lines 1 to 4.

Amendment 157, page 203, line 6, leave out “representations, and” and insert “a proposal.”.

Amendment 158, page 203, leave out lines 7 to 16.

Amendment 159, page 203, line 18, leave out from “given” to end of line 20 and insert

“to propose to HMRC that it—

(a) should give T a notice under paragraph 3 of Schedule 43 in respect of the arrangements to which the notice under paragraph 1 relates, and

(b) should not proceed with the proposal to make a generic referral to the GAAR Advisory Panel in respect of those arrangements.”

Amendment 160, page 203, leave out lines 21 to 25.

Amendment 161, page 203, line 26, leave out

“representations are made in accordance with sub-paragraph (2)”

and insert

“a proposal is made in accordance with sub-paragraph (1)”.

Amendment 162, page 203, line 27, leave out “them” and insert “it”.

Amendment 163,  page 203, line 28, leave out from beginning to end of line 22 on page 204.

Amendment 164,  page 204, line 26, leave out “given a notice” and insert “made a proposal”,

Amendment 165, page 204, line 31, leave out “gives a notice” and insert “makes a proposal”.

Amendment 166, page 204, line 32, after “must” insert

“, after the end of that 30 day period,”.

Amendment 167, page 204, leave out lines 34 and 35 and insert

“( ) give a notice under paragraph 3 of Schedule 43 in respect of one set of tax arrangements in the relevant pool, or”.

Amendment 168, page 204, leave out lines 37 and 38 and insert

“tax arrangements in the relevant pool”.

Amendment 169, page 205, line 18, after “which” insert “the designated officer considers”.

Amendment 170, page 207, line 35, at end insert—

“( ) In section 210 (consequential relieving adjustments), in subsection (1)(b), after “Schedule 43,” insert “paragraph 5 or 6 of Schedule 43A or paragraph 9 of Schedule 43B,”.”

Amendment 171, page 207, line 40, after “1” insert “or 1A”.

Amendment 172, page 207, line 41, leave out “lead” and insert

“referred or (as the case may be) counteracted”.

Amendment 173, page 208, line 7, leave out “1(4)” and insert “1A(2)”.

Amendment 174, page 208, line 8, at end insert—

““pooling notice” has the meaning given by paragraph 1(4) of Schedule 43A;”.

Amendment 178, page 208, line 24, at end insert—

“(10A) Section 10 of the National Insurance Contributions Act 2014 (GAAR to apply to national insurance contributions) is amended in accordance with subsections (10B) to (10E).

(10B) In subsection (4), at the end insert “, paragraph 5 or 6 of Schedule 43A to that Act (pooling of tax arrangements: notice of final decision) or paragraph 9 of Schedule 43B to that Act (generic referral of arrangements: notice of final decision)”.

(10C) After subsection (6) insert—

“(6A) Where, by virtue of this section, a case falls within paragraph 4A of Schedule 43 to the Finance Act 2013 (referrals of single schemes: relevant corrective action) or paragraph 2 of Schedule 43A to that Act (pooled schemes: relevant corrective action)—

(a) the person (“P”) mentioned in sub-paragraph (1) of that paragraph takes the “relevant corrective action” for the purposes of that paragraph if (and only if)—

(i) in a case in which the tax advantage in question can be counteracted by making a payment to HMRC, P makes that payment and notifies HMRC that P has done so, or

(ii) in any case, P takes all necessary action to enter into an agreement in writing with HMRC for the purpose of relinquishing the tax advantage, and

(b) accordingly, sub-paragraphs (2) to (8) of that paragraph do not apply.”

(10D) In subsection (11)—

(a) for “and HMRC” substitute “, “HMRC” and “tax advantage””;

(b) after “2013” insert “(as modified by this section)”.

(10E) After subsection (11) insert—

“(12) See section 10A for further modifications of Part 5 of the Finance Act 2013.”

(10F) After section 10 of the National Insurance Contributions Act 2014 insert—

10A Application of GAAR in relation to penalties

(1) For the purposes of this section a penalty under section 212A of the Finance Act 2013 is a “relevant NICs-related penalty” so far as the penalty relates to a tax advantage in respect of relevant contributions.

(2) A relevant NICs-related penalty may be recovered as if it were an amount of relevant contributions which is due and payable.

(3) Section 117A of the Social Security Administration Act 1992 or (as the case may be) section 111A of the Social Security Administration (Northern Ireland) Act 1992 (issues arising in proceedings: contributions etc) has effect in relation to proceedings before a court for recovery of a relevant NICs-related penalty as if the assessment of the penalty were a NICs decision as to whether the person is liable for the penalty.

(4) Accordingly, paragraph 5(4)(b) of Schedule 43C to the Finance Act 2013 (assessment of penalty to be enforced as if it were an assessment to tax) does not apply in relation to a relevant NICs-related penalty.

(5) In the application of Schedule 43C to the Finance Act 2013 in relation to a relevant NICs-related penalty, paragraph 9(5) has effect as if the reference to an appeal against an assessment to the tax concerned were to an appeal against a NICs decision.

(6) In paragraph 8 of that Schedule (aggregate penalties), references to a “relevant penalty provision” include—

(a) any provision mentioned in sub-paragraph (5) of that paragraph, as applied in relation to any class of national insurance contributions by regulations (whenever made);

(b) section 98A of the Taxes Management Act 1970, as applied in relation to any class of national insurance contributions by regulations (whenever made);

(c) any provision in regulations made by the Treasury under which a penalty can be imposed in respect of any class of national insurance contributions.

(7) The Treasury may by regulations—

(a) disapply, or modify the effect of, subsection (6)(a) or (b);

(b) modify paragraph 8 of Schedule 43C to the Finance Act 2013 as it has effect in relation to a relevant penalty provision by virtue of subsection (6)(b) or (c).

(8) Section 175(3) to (5) of SSCBA 1992 (various supplementary powers) applies to a power to make regulations conferred by subsection (7).

(9) Regulations under subsection (7) must be made by statutory instrument.

(10) A statutory instrument containing regulations under subsection (7) is subject to annulment in pursuance of a resolution of either House of Parliament.

(11) In this section “NICs decision” means a decision under section 8 of the Social Security Contributions (Transfer of Functions, etc) Act 1999 or Article 7 of the Social Security Contributions (Transfer of Functions, etc) (Northern Ireland) Order 1999 (SI 1999/671).

(12) In this section “relevant contributions” means the following contributions under Part 1 of SSCBA 1992 or Part 1 of SSCB(NI)A 1992—

(a) Class 1 contributions;

(b) Class 1A contributions;

(c) Class 1B contributions;

(d) Class 2 contributions which must be paid but in relation to which section 11A of the Act in question (application of certain provisions of the Income Tax Acts in relation to Class 2 contributions under section 11(2) of that Act) does not apply.””

Amendment 175, page 208, line 28, leave out from “notice” to “in” in line 30 and insert

“has been given under paragraph 5(2) or 6(2) of Schedule 43A to FA 2013 (notice of final decision after considering Panel’s opinion about referred or counteracted arrangements)”.

Amendment 176, page 208, line 34, leave out from “Panel” to end of line 36 and insert

“about the other arrangements (see subsection (8)) was as set out in paragraph 11(3)(b) of Schedule 43 to FA 2013.”

Amendment 177, page 209, line 2, leave out from “(4)(d)” to end of line 6 and insert

“other arrangements” means—

(a) in relation to a notice under paragraph 5(2) of Schedule 43A to FA 2013, the referred arrangements (as defined in that paragraph);

(b) in relation to a notice under paragraph 6(2) of that Schedule, the counteracted arrangements (as defined in paragraph 1A of that Schedule).”

Amendment 179, page 209, line 6, at end insert—

“(13A) In section 220 of FA 2014 (content of notice given while a tax enquiry is in progress)—

(a) in subsection (4)(c), after “219(4)(c)” insert “, (d) or (e)”;

(b) in subsection (5)(c), after “219(4)(c)” insert “, (d) or (e)”;

(c) in subsection (7), for the words from “under” to the end substitute “under—

(a) paragraph 12 of Schedule 43 to FA 2013,

(b) paragraph 5 or 6 of Schedule 43A to that Act, or

(c) paragraph 9 of Schedule 43B to that Act,

as the case may be.”

(13B) Section 287 of FA 2014 (Code of Practice on Taxation for Banks) is amended in accordance with subsections (13C) to (13E).

(13C) In subsection (4), after “(5)” insert “or (5A)”.

(13D) In subsection (5)(b), after “Schedule” insert “or paragraph 5 or 6 of Schedule 43A to that Act”.

(13E) After subsection (5) insert—

“(5A) This subsection applies to any conduct—

(a) in relation to which there has been given—

(i) an opinion notice under paragraph 7(4)(b) of Schedule 43B to FA 2013 (GAAR advisory panel: opinion that such conduct unreasonable) stating the joint opinion of all the members of a sub-panel arranged under that paragraph, or

(ii) one or more such notices stating the opinions of at least two members of such a sub-panel, and

(b) in relation to which there has been given a notice under paragraph 9 of that Schedule (HMRC final decision on tax advantage) stating that a tax advantage is to be counteracted.

(5B) For the purposes of subsection (5), any opinions of members of the GAAR advisory panel which must be considered before a notice is given under paragraph 5 or 6 of Schedule 43A to FA 2013 (opinions about the lead arrangements) are taken to relate to the conduct to which the notice relates.”

(13F) In Schedule 32 to FA 2014 (accelerated payments and partnerships), paragraph 3 is amended in accordance with subsections (13G) and (13H).

(13G) In sub-paragraph (5), after paragraph (c) insert—

(d) the relevant partner in question has been given a notice under paragraph 5(2) or 6(2) of Schedule 43A to FA 2013 (notice of final decision after considering Panel’s opinion about referred or counteracted arrangements) in respect of any tax advantage resulting from the asserted advantage or part of it and the chosen arrangements (or is given such a notice at the same time as the partner payment notice) in a case where the stated opinion of at least two of the members of the sub-panel of the GAAR Advisory Panel about the other arrangements (see sub-paragraph (7)) was as set out in paragraph 11(3)(b) of Schedule 43 to FA 2013;

(e) the relevant partner in question has been given a notice under paragraph 9(2) of Schedule 43B to FA 2013 (GAAR: generic referral of arrangements) in respect of any tax advantage resulting from the asserted advantage or part of it and the chosen arrangements (or is given such a notice at the same time as the partner payment notice) in a case where the stated opinion of at least two of the members of the sub-panel of the GAAR Advisory Panel which considered the generic referral in respect of those arrangements was as set out in paragraph 7(4)(b) of that Schedule.”

(13H) After sub-paragraph (6) insert—

“(7) “Other arrangements” means—

(a) in relation to a notice under paragraph 5(2) of Schedule 43A to FA 2013, the referred arrangements (as defined in that paragraph);

(b) in relation to a notice under paragraph 6(2) of that Schedule, the counteracted arrangements (as defined in paragraph 1A of that Schedule).”

(13I) In Schedule 34 to FA 2014 (promoters of tax avoidance schemes: threshold conditions), in paragraph 7—

(a) in paragraph (a), at the end insert “(referrals of single schemes) or are in a pool in respect of which a referral has been made to that Panel under Schedule 43B to that Act (generic referrals),”;

(b) in paragraph (b)—

(i) for “in relation to the arrangements” substitute “in respect of the referral”;

(ii) after “11(3)(b)” insert “or (as the case may be) 7(4)(b)”;

(c) in paragraph (c)(i) omit “paragraph 10 of”.”—(Mr Gauke.)

Clause 145, as amended, ordered to stand part of the Bill.

Clause 146

General Anti-Abuse Rule: Penalty

Amendments made: 82, page 209, line 14, after “person” insert “(P)”.

Amendment 83, page 209, leave out lines 15 and 16.

Amendment 84, page 209, line 17, leave out “the person” and insert “(P)”.

Amendment 85, page 209, line 21, leave out “the” and insert “particular”.

Amendment 86, page 209, line 22, at end insert—

“(ba) a tax document has been given to HMRC on the basis that the tax advantage arises to P from those arrangements,

(bb) that document was given to HMRC—

(i) by P, or

(ii) by another person in circumstances where P knew, or ought to have known, that the other person gave the document on the basis mentioned in paragraph (ba), and”

Amendment 87, page 209, line 33, at end insert—

‘( ) In this section the reference to giving a tax document to HMRC is to be interpreted in accordance with paragraph 11(g) and (h) of Schedule 43C.”

Amendment 88, page 210, line 16, at end insert—

‘( ) For the purposes of this paragraph consequential adjustments under section 210 are regarded as part of the counteraction in question.

( ) If the counteraction affects the person’s liability to two or more taxes, the taxes concerned are to be considered together for the purpose of determining the value of the counteracted advantage.”

Amendment 89, page 214, line 33, after “tax” insert

“(including any amount chargeable as if it were corporation tax or treated as corporation tax)”

Amendment 90, page 214, line 34, at end insert

“and (v) diverted profits tax;”.

Amendment 91, page 215, line 34, after “given” insert “a pooling notice or”.

Amendment 92, page 215, line 34, leave out “paragraph 1 of”.

Amendment 93, page 215, line 41, at beginning insert

“in the case of a pooling notice,”.

Amendment 94, page 215, line 47, leave out from beginning to “with” in line 48 and insert

“in the case of a notice of binding,”.

Amendment 95, page 215, line 49, leave out “of binding”.

Amendment 96, page 216, line 6, leave out “binding” and insert

“pooling or binding (as the case may be)”.

Amendment 97, page 216, line 43, at end insert—

(ja) an appeal under section 103 of FA 2016 (apprenticeship levy: appeal against an assessment), or”.

Amendment 98, page 216, line 45, leave out “(j)” and insert “(ja)”.

Amendment 99, page 217, line 23, at end insert—

‘( ) Where the taxpayer takes the first step described in sub-paragraph (3)(b), HMRC may proceed as if the taxpayer had not taken the relevant corrective action if the taxpayer fails to enter into the written agreement.”—(Mr Gauke.)

Clause 146, as amended, ordered to stand part of the Bill.

Clause 147 ordered to stand part of the Bill.

Schedule 18

Serial Tax Avoidance

Amendments made: 100, page 480, line 19, at end insert “, associated persons and partnerships”

Amendment 101, page 480, line 32, at end insert—

‘( ) A warning notice given by virtue of paragraph 46C must also explain the effect of paragraph 46E (information in certain cases involving partnerships).”

Amendment 102, page 484, line 10, after “decision)” insert—

“, paragraph 5 or 6 of Schedule 43A to that Act (pooled arrangements: notice of final decision) or paragraph 9 of Schedule 43B to that Act (generic referrals: notice of final decision)”.

Amendment 103, page 484, leave out lines 23 and 24 and insert—

“the necessary corrective action for the purposes of section 208 of FA 2014 has been taken”.

Amendment 104, page 484, line 28, at end insert—

“(1A) In sub-paragraph (1) the reference to giving a follower notice to P includes a reference to giving a partnership follower notice in respect of a partnership return in relation to which P is a relevant partner (as defined in paragraph 2(5) of Schedule 31 to FA 2014).”

Amendment 105, page 484, line 35, leave out from “advantage”” to end of line 36 and insert—

“has the same meaning as in Chapter 2 of Part 4 of FA 2014 (see section 208(3) of and paragraph 4(3) of Schedule 31 to that Act).”

Amendment 106, page 484, line 42, at end insert—

“(6) For the purposes of this paragraph a partnership follower notice is given “in respect of” the partnership return mentioned in paragraph (a) or (b) of paragraph 2(2) of Schedule 31 to FA 2014.”

Amendment 107, page 485, line 8, after “election” insert—

“, or a partnership return is made,”

Amendment 108, page 490, line 22, at end insert—

“( ) If the person mentioned in sub-paragraph (1) is a person carrying on a trade or business in partnership, the information which may be published also includes—

(a) any trading name of the partnership, and

(b) information about other members of the partnership of the kind described in sub-paragraph (4)(a) or (b).”

Amendment 109, page 494, line 31, at end insert—

“( ) In this paragraph “relevant failure”, in relation to a relevant defeat, is to be interpreted in accordance with sub-paragraphs (2) to (7) of paragraph 43.”

Amendment 110, page 504, line 43, at end insert—

“Associated persons treated as incurring relevant defeats

46A (1) Sub-paragraph (2) applies if a person (“P”) incurs a relevant defeat in relation to any arrangements (otherwise than by virtue of this paragraph).

(2) Any person (“S”) who is associated with P at the relevant time is also treated for the purposes of paragraphs 2 (duty to give warning notice) and 3(2) (warning period) as having incurred that relevant defeat in relation to those arrangements (but see sub-paragraph (3)).

For the meaning of “associated” see paragraph 46B.

(3) Sub-paragraph (2) does not apply if P and S are members of the same group of companies (as defined in paragraph 46(9)).

(4) In relation to a warning notice given to S by virtue of sub-paragraph (2), paragraph 2(4)(c) (certain information to be included in warning notice) is to be read as referring only to paragraphs 3, 17 and 18.

(5) A warning notice which is given to a person by virtue of sub-paragraph (2) is treated for the purposes of paragraphs 19(1) (duty to give relief restriction notice) and 30 (penalty) as not having been given to that person.

(6) In sub-paragraph (2) “the relevant time” means the time when P is given a warning notice in respect of the relevant defeat.

Meaning of “associated”

46B (1) For the purposes of paragraph 46A two persons are associated with one another if—

(a) one of them is a body corporate which is controlled by the other, or

(b) they are bodies corporate under common control.

(2) Two bodies corporate are under common control if both are controlled—

(a) by one person,

(b) by two or more, but fewer than six, individuals, or

(c) by any number of individuals carrying on business in partnership.

(3) For the purposes of this section a body corporate (“H”) is taken to control another body corporate (“B”) if—

(a) H is empowered by statute to control B’s activities, or

(b) H is B’s holding company within the meaning of section 1159 of and Schedule 6 to the Companies Act 2006.

(4) For the purposes of this section an individual or individuals are taken to control a body corporate (“B”) if the individual or individuals, were they a body corporate, would be B’s holding company within the meaning of those provisions.

Partners treated as incurring relevant defeats

46C (1) Where paragraph 46D applies in relation to a partnership return, each relevant partner is treated for the purposes of this Part of this Act as having incurred the relevant defeat mentioned in paragraph 46D(1)(b), (2) or (3)(b) (as the case may be).

(2) In this paragraph “relevant partner” means any person who was a partner in the partnership at any time during the relevant reporting period (but see sub-paragraph (3)).

(3) The “relevant partners” do not include—

(a) the person mentioned in sub-paragraph (1)(b), (2) or (3)(b) (as the case may be) of paragraph 46D, or

(b) any other person who would, apart from this paragraph, incur a relevant defeat in connection with the subject matter of the partnership return mentioned in sub-paragraph (1).

(4) In this paragraph the “relevant reporting period” means the period in respect of which the partnership return mentioned in sub-paragraph (1), (2) or (3) of paragraph 46D was required.

Partnership returns to which this paragraph applies

46D (1) This paragraph applies in relation to a partnership return if—

(a) that return has been made on the basis that a tax advantage arises to a partner from any arrangements, and

(b) that person has incurred, in relation to that tax advantage and those arrangements, a relevant defeat by virtue of Condition A (final counteraction of tax advantage under general anti-abuse rule).

(2) Where a person has incurred a relevant defeat by virtue of sub-paragraph (1A) of paragraph 13 (Condition B: case involving partnership follower notice) this paragraph applies in relation to the partnership return mentioned in that sub-paragraph.

(3) This paragraph applies in relation to a partnership return if—

(a) that return has been made on the basis that a tax advantage arises to a partner from any arrangements, and

(b) that person has incurred, in relation to that tax advantage and those arrangements, a relevant defeat by virtue of Condition C (return, claim or election made in reliance on DOTAS arrangements).

(4) The references in this paragraph to a relevant defeat do not include a relevant defeat incurred by virtue of paragraph 46A(2).

Partnerships: information

46E (1) If paragraph 46D applies in relation to a partnership return, the appropriate partner must give HMRC a written notice (a “partnership information notice”) in respect of each sub-period in the information period.

(2) The “information period” is the period of 5 years beginning with the day after the day of the relevant defeat mentioned in paragraph 46D.

(3) If, in the case of a partnership, a new information period (relating to another partnership return) begins during an existing information period, those periods are treated for the purposes of this paragraph as a single period (which includes all times that would otherwise fall within either period).

(4) An information period under this paragraph ends if the partnership ceases.

(5) A partnership information notice must be given not later than the 30th day after the end of the sub-period to which it relates.

(6) A partnership information notice must state—

(a) whether or not any relevant partnership return which was, or was required to be, delivered in the sub-period has been made on the basis that a relevant tax advantage arises, and

(b) whether or not there has been a failure to deliver a relevant partnership return in the sub-period.

(7) In this paragraph—

(a) “relevant partnership return” means a partnership return in respect of the partnership’s trade, profession or business;

(b) “relevant tax advantage” means a tax advantage which particular DOTAS arrangements enable, or might be expected to enable, a person who is or has been a partner in the partnership to obtain.

(8) If a partnership information notice states that a relevant partnership return has been made on the basis mentioned in sub-paragraph (6)(a) the notice must—

(a) explain (on the assumptions made for the purposes of the return) how the DOTAS arrangements enable the tax advantage concerned to be obtained, and

(b) describe any variation in the amounts required to be stated in the return under section 12AB(1) of TMA 1970 which results from those arrangements.

(9) HMRC may require the appropriate partner to give HMRC a notice (a “supplementary information notice”) setting out further information in relation to a partnership information notice.

In relation to a partnership information notice “further information” means information which would have been required to be set out in the notice by virtue of sub-paragraph (6)(a) or (8) had there not been a failure to deliver a relevant partnership return.

(10) A requirement under sub-paragraph (9) must be made by a written notice and the notice must state the period within which the notice must be complied with.

(11) If a person fails to comply with a requirement of (or imposed under) this paragraph, HMRC may by written notice extend the information period concerned to the end of the period of 5 years beginning with—

(a) the day by which the partnership information notice or supplementary information notice was required to be given to HMRC or, as the case requires,

(b) the day on which the person gave the defective notice to HMRC,

or, if earlier, the time when the information period would have expired but for the extension.

(12) For the purposes of this paragraph—

(a) the first sub-period in an information period begins with the first day of the information period and ends with a day specified by HMRC,

(b) the remainder of the information period is divided into further sub-periods each of which begins immediately after the end of the preceding sub-period and is twelve months long or (if that would be shorter) ends at the end of the information period.

(13) In this paragraph “the appropriate partner” means the partner in the partnership who is for the time being nominated by HMRC for the purposes of this paragraph.

Partnerships: special provision about taxpayer emendations

46F (1) Sub-paragraph (2) applies if a partnership return is amended at any time under section 12ABA of TMA 1970 (amendment of partnership return by representative partner etc) on a basis that—

(a) results in an increase or decrease in, or

(b) otherwise affects the calculation of,

any amount stated under subsection (1)(b) of section 12AB of that Act (partnership statement) as a partner’s share of any income, loss, consideration, tax or credit for any period.

(2) For the purposes of paragraph 14 (Condition C: counteraction of DOTAS arrangements), the partner is treated as having at that time amended—

(a) the partner’s return under section 8 or 8A of TMA 1970, or

(b) the partner’s company tax return,

so as to give effect to the amendments of the partnership return.

(3) Sub-paragraph (4) applies if a partnership return is amended at any time by HMRC as a result of a disclosure made by the representative partner or that person’s successor on a basis that—

(a) results in an increase or decrease in, or

(b) otherwise affects the calculation of,

any amount stated under subsection (1)(b) of section 12AB (partnership statement) as the share of a particular partner (P) of any income, loss, consideration, tax or credit for any period.

(4) If the conditions in sub-paragraph (5) are met, P is treated for the purposes of paragraph 14 as having at that time amended—

(a) P’s return under section 8 or 8A of TMA 1970, or

(b) P’s company tax return,

so as to give effect to the amendments of the partnership return.

(5) The conditions are that the disclosure—

(a) is a full and explicit disclosure of an inaccuracy in the partnership return, and

(b) was made at a time when neither the person making the disclosure nor P had reason to believe that HMRC was about to begin enquiries into the partnership return.

Supplementary provision relating to partnerships

46G (1) In paragraphs 46C to 46F and this paragraph—

“partnership” is to be interpreted in accordance with section 12AA of TMA 1970 (and includes a limited liability partnership);

“the representative partner”, in relation to a partnership return, means the person who was required by a notice served under or for the purposes of section 12AA(2) or (3) of TMA 1970 to deliver the return;

“successor”, in relation to a person who is the representative partner in the case of a partnership return, has the same meaning as in TMA 1970 (see section 118(1) of that Act).

(2) For the purposes of this Part of this Act a partnership is treated as the same partnership notwithstanding a change in membership if any person who was a member before the change remains a member after the change.”

Amendment 112, page 507, leave out lines 15 to 20.

Amendment 111, page 507, line 38, at end insert—

““partnership follower notice” has the meaning given by paragraph 2(2) of Schedule 31 to FA 2014;

“partnership return” means a return under section 12AA of TMA 1970;”

Amendment 113, page 508, line 13, at end insert—

‘( ) For the purposes of this Schedule a partnership return is regarded as made on the basis that a particular tax advantage arises to a person from particular arrangements if—

(a) it is made on the basis that an increase or reduction in one or more of the amounts mentioned in section 12AB(1) of TMA 1970 (amounts in the partnership statement in a partnership return) results from those arrangements, and

(b) that increase or reduction results in that tax advantage for the person.”—(Mr Gauke.)

Schedule 18, as amended, agreed to.

Clause 148

Promoters of tax avoidance schemes

Amendments made: 69, page 219, line 15, at end insert—

‘(1A) An authorised officer must make the determination set out in subsection (1B) if the officer becomes aware at any time (“the relevant Part 2B time”) that—

(a) a person meets a condition in subsection (6), (7) or (8), and

(b) at the relevant Part 2B time another person (“P”), who is carrying on a business as a promoter, meets that condition by virtue of Part 2B of Schedule 34A (meeting the section 237A conditions: bodies corporate and partnerships).

(1B) The authorised officer must determine whether or not—

(a) the meeting of the condition by the person as mentioned in subsection (1A)(a), and

(b) P’s meeting of the condition as mentioned in subsection (1A)(b),

should be regarded as significant in view of the purposes of this Part.”

Amendment 70, page 219, line 16, leave out “Subsection (1) does” and insert “Subsections (1) and (1A) do”.

Amendment 71, page 219, leave out lines 21 to 25.

Amendment 72, page 219, line 25, at end insert—

‘(3A) Subsection (1A) does not apply if, at the relevant Part 2B time, an authorised officer is under a duty to make a determination under section 237(5) in relation to P.

(3B) But in a case where subsection (1) does not apply because of subsection (3), or subsection (1A) does not apply because of subsection (3A), subsection (5) of section 237 has effect as if—

(a) the references in paragraph (a) of that subsection to “subsection (1)”, and “subsection (1)(a)” included subsection (1) of this section, and

(b) in paragraph (b) of that subsection the reference to “subsection (1A)(a)” included a reference to subsection (1A)(a) of this section and the reference to subsection (1A)(b) included a reference to subsection (1A)(b) of this section.”

Amendment 73, page 219, line 28, at end insert—

‘( ) If the authorised officer determines under subsection (1B) that—

(a) the meeting of the condition by the person as mentioned in subsection (1A)(a), and

(b) P’s meeting of the condition as mentioned in subsection (1A)(b),

should be regarded as significant in view of the purposes of this Part, the officer must give P a conduct notice, unless subsection (5) applies.”

Amendment 74, page 225, line 7, at end insert—

( ) Part 2A contains provision about when a relevant defeat is treated as occurring in relation to a person;

( ) Part 2B contains provision about when a person is treated as meeting a condition in subsection (6), (7) or (8) of section 237A;”

Amendment 75, page 226, line 9, leave out from “person” to end of line 11 and insert

“is carrying on a business as a promoter and—the person is or has been a promoter in relation to the arrangements, or that would be the case if the condition in sub-paragraph (2) were met.”

(i) the person is or has been a promoter in relation to the arrangements, or

(ii) that would be the case if the condition in sub-paragraph (2) were met.”

Amendment 76, page 228, line 26, after first “to” insert

“, paragraph 5(2) or 6(2) of Schedule 43A to or paragraph 9(2) of Schedule 43B to”.

Amendment 77, page 230, line 9, at end insert—

Part 2A

Relevant defeats: associated persons

Attribution of relevant defeats

16A (1) Sub-paragraph (2) applies if—

(a) there is (or has been) a person (“Q”),

(b) arrangements (“the defeated arrangements”) have been entered into,

(c) an event occurs such that either—

(i) there is a relevant defeat in relation to Q and the defeated arrangements, or

(ii) the condition in sub-paragraph (i) would be met if Q had not ceased to exist,

(d) at the time of that event a person (“P”) is carrying on a business as a promoter (or is carrying on what would be such a business under the condition in paragraph 3(2)), and

(e) Condition 1 or 2 is met in relation to Q and P.

(2) The event is treated for all purposes of this Part of this Act as a relevant defeat in relation to P and the defeated arrangements (whether or not it is also a relevant defeat in relation to Q, and regardless of whether or not P existed at any time when those arrangements were promoted arrangements in relation to Q).

(3) Condition 1 is that—

(a) P is not an individual,

(b) at a time when the defeated arrangements were promoted arrangements in relation to Q—

(i) P was a relevant body controlled by Q, or

(ii) Q was a relevant body controlled by P, and

(c) at the time of the event mentioned in sub-paragraph (1)(c)—

(i) Q is a relevant body controlled by P,

(ii) P is a relevant body controlled by Q, or

(iii) P and Q are relevant bodies controlled by a third person.

(4) Condition 2 is that—

(a) P and Q are relevant bodies,

(b) at a time when the defeated arrangements were promoted arrangements in relation to Q, a third person (“C”) controlled Q, and

(c) C controls P at the time of the event mentioned in sub-paragraph (1)(c).

(5) For the purposes of sub-paragraphs (3)(b) and (4)(b), the question whether arrangements are promoted arrangements in relation to Q at any time is to be determined on the assumption that the reference to “design” in paragraph (b) of section 235(3) (definition of “promoter” in relation to relevant arrangements) is omitted.

Deemed defeat notices

16B (1) This paragraph applies if—

(a) an authorised officer becomes aware at any time (“the relevant time”) that a relevant defeat has occurred in relation to a person (“P”) who is carrying on a business as a promoter,

(b) there have occurred, more than 3 years before the relevant time—

(i) one third party defeat, or

(ii) two third party defeats, and

(c) conditions A1 and B1 (in a case within paragraph (b)(i)), or conditions A2 and B2 (in a case within paragraph (b)(ii)), are met.

(2) Where this paragraph applies by virtue of sub-paragraph (1)(b)(i), this Part of this Act has effect as if an authorised officer had (with due authority), at the time of the time of the third party defeat, given P a single defeat notice under section 241A(2) in respect of it.

(3) Where this paragraph applies by virtue of sub-paragraph (1)(b)(ii), this Part of this Act has effect as if an authorised officer had (with due authority), at the time of the second of the two third party defeats, given P a double defeat notice under section 241A(3) in respect of the two third party defeats.

(4) Section 241A(8) has no effect in relation to a notice treated as given as mentioned in subsection (2) or (3).

(5) Condition A1 is that—

(a) a conduct notice or a single or double defeat notice has been given to the other person (see sub-paragraph (9)) in respect of the third party defeat,

(b) at the time of the third party defeat an authorised officer would have had power by virtue of paragraph 16A to give P a defeat notice in respect of the third party defeat, had the officer been aware that it was a relevant defeat in relation to P, and

(c) so far as the authorised officer mentioned in sub-paragraph (1)(a) is aware, the conditions for giving P a defeat notice in respect of the third party defeat have never been met (ignoring this paragraph).

(6) Condition A2 is that—

(a) a conduct notice or a single or double defeat notice has been given to the other person (see sub-paragraph (9)) in respect of each, or both, of the third party defeats,

(b) at the time of the second third party defeat an authorised officer would have had power by virtue of paragraph 16A to give P a double defeat notice in respect of the third party defeats, had the officer been aware that either of the third party defeats was a relevant defeat in relation to P, and

(c) so far as the authorised officer mentioned in sub-paragraph (1)(a) is aware, the conditions for giving P a defeat notice in respect of those third party defeats (or either of them) have never been met (ignoring this paragraph).

(7) Condition B1 is that, had an authorised officer given P a defeat notice in respect of the third party defeat at the time of that relevant defeat, that defeat notice would still have effect at the relevant time (see sub-paragraph (1)).

(8) Condition B2 is that, had an authorised officer given P a defeat notice in respect of the two third party defeats at the time of the second of those relevant defeats, that defeat notice would still have effect at the relevant time.

(9) In this paragraph “third party defeat” means a relevant defeat which has occurred in relation to a person other than P.

Meaning of “relevant body” and “control”

16C (1) In this Part of this Schedule “relevant body” means—

(a) a body corporate, or

(b) a partnership.

(2) For the purposes of this Part of this Schedule a person controls a body corporate if the person has power to secure that the affairs of the body corporate are conducted in accordance with the person’s wishes—

(a) by means of the holding of shares or the possession of voting power in relation to the body corporate or any other relevant body,

(b) as a result of any powers conferred by the articles of association or other document regulating the body corporate or any other relevant body, or

(c) by means of controlling a partnership.

(3) For the purposes of this Part of this Schedule a person controls a partnership if the person is a controlling member or the managing partner of the partnership.

(4) In this paragraph “controlling member” has the same meaning as in Schedule 36 (partnerships).

(5) In this section “managing partner”, in relation to a partnership, means the member of the partnership who directs, or is on a day-to-day level in control of, the management of the business of the partnership.

Part 2B

Meeting section 237A conditions: bodies corporate and partnerships

Treating persons under another’s control as meeting section 237A condition

16D (1) A relevant body (“RB”) is treated as meeting a section 237A condition at the relevant Part 2B time if—

(a) that condition was met by a person (“C”) at a time when—

(i) C was carrying on a business as a promoter, or

(ii) RB was carrying on a business as a promoter and C controlled RB, and

(b) RB is controlled by C at the relevant Part 2B time.

(2) Sub-paragraph (1) does not apply if C is an individual.

(3) For the purposes of determining whether the requirements of sub-paragraph (1) are met by reason of meeting the requirement in sub-paragraph (1)(a)(i), it does not matter whether RB existed at the time when C met the section 237A condition.

Treating persons in control of others as meeting section 237A condition

16E (1) A person other than an individual is treated as meeting a section 237A condition at the relevant Part 2B time if—

(a) a relevant body (“A”) met the condition at a time when A was controlled by the person, and

(b) at the time mentioned in paragraph (a) A, or another relevant body (“B”) which was also at that time controlled by the person, carried on a business as a promoter.

(2) For the purposes of determining whether the requirements of sub-paragraph (1) are met it does not matter whether A or B (or neither) exists at the relevant Part 2B time.

Treating persons controlled by the same person as meeting section 237A condition

16F (1) A relevant body (“RB”) is treated as meeting a section 237A condition at the relevant Part 2B time if—

(a) another relevant body met that condition at a time (“time T”) when it was controlled by a person (“C”),

(b) at time T, there was a relevant body controlled by C which carried on a business as a promoter, and

(c) RB is controlled by C at the relevant Part 2B time.

(2) For the purposes of determining whether the requirements of sub-paragraph (1) are met it does not matter whether—

(a) RB existed at time T, or

(b) any relevant body (other than RB) by reason of which the requirements of sub-paragraph (1) are met exists at the relevant Part 2B time.

Interpretation

16G (1) In this Part of this Schedule—

“control” has the same meaning as in Part 2A of this Schedule;

“relevant body” has the same meaning as in Part 2A of this Schedule;

“relevant Part 2B time” means the time referred to in section 237A(1A);

“section 237A condition” means any of the conditions in section 237A(6), (7) and (8).

(2) For the purposes of paragraphs 16D(1)(a), 16E(1)(a) and 16F(1)(a), the condition in section 237A(6) (occurrence of 3 relevant defeats in the 3 years ending with the relevant time) is taken to have been met by a person at any time if at least 3 relevant defeats have occurred in relation to the person in the period of 3 years ending with that time.”

Amendment 78, page 234, line 27, at end insert—

‘(9A) Schedule 36 (promoters of tax avoidance schemes: partnerships) is amended in accordance with subsections (9B) to (9G).

(9B) In Part 2, before paragraph 5 insert—

“Defeat notices

4A A defeat notice that is given to a partnership must state that it is a partnership defeat notice.”.

(9C) In paragraph 7(1)(b) after “a” insert “defeat notice,”.

(9D) In paragraph 7(2) after “the” insert “defeat notice,”.

(9E) After paragraph 7 insert—

“Persons leaving partnership: defeat notices

7A (1) Sub-paragraphs (2) and (3) apply where—

(a) a person (“P”) who was a controlling member of a partnership at the time when a defeat notice (“the original notice”) was given to the partnership has ceased to be a member of the partnership,

(b) the defeat notice had effect in relation to the partnership at the time of that cessation, and

(c) P is carrying on a business as a promoter.

(2) An authorised officer may give P a defeat notice.

(3) If P is carrying on a business as a promoter in partnership with one or more other persons and is a controlling member of that partnership (“the new partnership”), an authorised officer may give a defeat notice to the new partnership.

(4) A defeat notice given under sub-paragraph (3) ceases to have effect if P ceases to be a member of the new partnership.

(5) A notice under sub-paragraph (2) or (3) may not be given after the original notice has ceased to have effect.

(6) A defeat notice given under sub-paragraph (2) or (3) is given in respect of the relevant defeat or relevant defeats to which the original notice relates.”

(9F) In paragraph 10—

(a) in sub-paragraph (1)(b) for “conduct notice or a” substitute “, defeat notice, conduct notice or”;

(b) in sub-paragraph (3), after “partner—” insert—

“(za) a defeat notice (if the original notice is a defeat notice);”.

(c) in sub-paragraph (4), after “(“the new partnership”)—” insert—

“(za) a defeat notice (if the original notice is a defeat notice);”

(d) after sub-paragraph (5) insert—

“(5A) A notice under sub-paragraph (3)(za) or (4)(za) may not be given after the end of the look-forward period of the original notice.”

(9G) After paragraph 11 insert—

11A The look-forward period for a notice under paragraph 7A(2) or (3) or 10(3)(za) or (4)(za)—

(a) begins on the day after the day on which the notice is given, and

(b) continues to the end of the look-forward period for the original notice (as defined in paragraph 7A(1)(a) or 10(2), as the case may be).”

Amendment 79, page 234, line 27, at end insert—

‘(9A) Part 2 of Schedule 2 to the National Insurance Contributions Act 2015 (application of Part 5 of FA 2014 to national insurance contributions) is amended in accordance with subsections (9B) and (9C).

(9B) After paragraph 30 insert—

“Threshold conditions

30A (1) In paragraph 5 of Schedule 34 (non-compliance with Part 7 of FA 2004), in sub-paragraph (4)—

(a) paragraph (a) includes a reference to a decision having been made for corresponding NICs purposes that P is to be deemed not to have failed to comply with the provision concerned as P had a reasonable excuse for not doing the thing required to be done, and

(b) the reference in paragraph (c) to a determination is to be read accordingly.

(2) In this paragraph “corresponding NICs purposes” means the purposes of any provision of regulations under section 132A of SSAA 1992.

Relevant defeats

30B (1) Schedule 34A (promoters of tax avoidance schemes: defeated arrangements) has effect with the following modifications.

(2) References to an assessment (or an assessment to tax) include a NICs decision relating to a person’s liability for relevant contributions.

(3) References to adjustments include a payment in respect of a liability to pay relevant contributions (and the definition of “adjustments” in paragraph 17 accordingly has effect as if such payments were included in it).

(4) In paragraph 9(3) the reference to an enquiry into a return includes a relevant contributions dispute (as defined in paragraph 6 of this Schedule).

(5) In paragraph 21(3)—

(a) paragraph (a) includes a reference to a decision having been made for corresponding NICs purposes that the person is to be deemed not to have failed to comply with the provision concerned as the person had a reasonable excuse for not doing the thing required to be done, and

(b) the reference in paragraph (c) to a determination is to be read accordingly.

“Corresponding NICs purposes” means the purposes of any provision of regulations under section 132A of SSAA 1992.”

(9C) In paragraph 31 (interpretation)—

(a) before paragraph (a) insert—

(za) “NICs decision” means a decision under section 8 of SSC(TF)A 1999 or Article 7 of the Social Security Contributions (Transfer of Functions, etc) (Northern Ireland) Order 1999 (SI 1999/671);”

(b) in paragraph (b), for “are to sections of” substitute “or Schedules are to sections of, or Schedules to”.”

Amendment 80, page 234, line 39, after “person” insert “or an associated person”.

Amendment 81, page 235, line 2, at end insert—

‘(12A) For the purposes of subsection (11) a person (“Q”) is an “associated person” in relation to another person (“P”) at any time when any of the following conditions is met—

(a) P is a relevant body which is controlled by Q;

(b) Q is a relevant body, P is not an individual and Q is controlled by P;

(c) P and Q are relevant bodies and a third person controls P and Q.

(12B) In subsection (12A) “relevant body” and “control” are to be interpreted in accordance with paragraph 16C of Schedule 34A to FA 2014.”—(Mr Gauke.)

Clause 148, as amended, ordered to stand part of the Bill.

Clause 149 ordered to stand part of the Bill.

Schedule 19

Large businesses: tax strategies and sanctions

Amendment proposed: 1, page 516, line 21, at end insert—

‘(2A) A group tax strategy of a qualifying group which is a MNE group must also include a country-by-country report.

(2B) In paragraph (2A) “country-by-country report” has the meaning given by the Taxes (Base Erosion and Profit Shifting) (Country by Country Reporting) Regulations 2016.”—(Caroline Flint.)

Question put, That the amendment be made.

Division 25

28 June 2016

The Committee divided:

Ayes: 273
Noes: 295

Question accordingly negatived.

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More than two hours having elapsed since the commencement of proceedings, the proceedings were interrupted (Programme Order, 11 April).

The Chair put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).

Schedule 19 ordered to stand part of the Bill.

Clause 150 ordered to stand part of the Bill.

Schedule 20 ordered to stand part of the Bill.

Clause 151 ordered to stand part of the Bill.

Schedule 21 ordered to stand part of the Bill.

Clauses 152 and 153 ordered to stand part of the Bill.

Schedule 22 ordered to stand part of the Bill.

Clause 154 ordered to stand part of the Bill.

New Clause 9

Estimated impact of extending the scope of the Register of People with Significant Control Regulations 2016

“The Chancellor of the Exchequer must, within 12 months of this Act coming into force, publish an estimate of the impact on levels of tax avoidance and tax evasion of extending the requirement placed on UK-incorporated companies by the Register of People with Significant Control Regulations 2016 to publish a register of people with significant control to companies incorporated in the Crown Dependencies and the Overseas Territories which have significant levels of trading activity within the UK.”—(Dame Margaret Hodge.)

This new clause would require the Chancellor to publish an estimate of the impact on levels of tax avoidance and tax evasion of extending the current requirement on UK-based companies to publish information about people who have significant control over them to companies incorporated in the Crown Dependencies and the Overseas Territories which have significant levels of trading activity within the UK.

Brought up.

Question put, That the clause be added to the Bill.

Division 26

28 June 2016

The Committee divided:

Ayes: 268
Noes: 305

Question accordingly negatived.

View Details

Clause 41

Charge for financial year 2017

Question proposed, That the clause stand part of the Bill.

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With this it will be convenient to take the following:

Clauses 42 to 44 stand part.

Clauses 65 to 71 stand part.

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The Bill introduces measures on small business investment that will simplify the tax system and ensure that allowances are fair and not open to abuse.

Clause 41 charges corporation tax for the financial year beginning 1 April 2017. Corporation tax is an annual tax approved by Parliament each year. This is an essential provision that enables us to collect tax. The key reform announced in the Budget to support business investment and back Britain’s economy is set out in clause 42, which cuts the rate of corporation tax to 17% with effect from 1 April 2020. I expect that our debate will focus on this provision, so I will start here, before commenting more briefly on the other clauses.

I will begin by setting out our broader strategy on corporation tax. The Government have been clear that taxes should be low but must be paid, and since 2010 we have made progress towards those goals. The main rate of corporation tax was 28% in 2010. By 2020, we will have cut the UK main rate by more than a third to make the UK more competitive and to support growth and investment. It will be one of the biggest boosts British business has ever seen. Further corporation tax cuts will increase the returns companies receive on their investments, and by 2020 corporation tax cuts delivered since 2010 will be saving businesses almost £15 billion a year. This will ensure that the UK has by far the lowest rate of corporation tax in the G20 and make Britain even more attractive to inward investors.

At the same time, we have taken significant measures to clamp down on tax avoidance and aggressive tax planning. The Government successfully helped initiate the G20-OECD base erosion and profits shifting project and worked internationally, including with G20 and OECD partners, to bring this to a successful conclusion in October 2015. We spent the earlier part of today’s debate considering some of the measures introduced in the Bill to address avoidance and evasion, but the Bill also takes further steps elsewhere. Key measures include tackling hybrid mismatch arrangements, introducing a restriction on the tax deductibility of corporate interest and expense, extending the UK’s withholding tax rights over royalties and ensuring non-resident property developers pay tax in the UK on profits they make in this country.

Low corporation rates enable businesses to increase investment, take on new staff, increase wages or reduce prices. This is borne out in receipts data: onshore corporation tax receipts have risen by almost 20% since 2010, despite lowering corporation tax rates. The Treasury and HMRC have modelled the economic impact of the corporation tax cuts delivered since 2010 and those announced at Budget 2016. This modelling suggests that the cuts could increase long-run GDP by more than 1%—almost £24 billion in today’s prices. The corporation tax cuts and other reforms we introduced have completely changed perceptions of the UK tax regime. The UK is now regularly cited in surveys as one of the most competitive regimes in the world.

As the Chancellor has said, in the last six years, the Government and the British people have worked hard to rebuild the British economy. We have worked systematically through a plan that means that today Britain has the strongest major advanced economy in the world. Cutting corporation tax rates has been a central part of the Government’s economic strategy, and that strategy is working.

The UK has been one of the fastest-growing economies in the G7, and the OECD forecasts the UK to be the fastest-growing G7 economy in 2016. There are 2.3 million more people in employment since 2010, and business investment is now 30% higher than it was in 2010. Tax competition is dynamic. In the last few decades, we have seen countries across the world cut their corporation tax rates. We cannot afford to stand still while others rush ahead. The UK needs to be as competitive as possible. A new 17% rate of corporation tax sends out the message loud and clear around the world that the British economy is fundamentally strong and highly competitive and that Britain is open for business. For those reasons, I urge the Committee to support the clauses, and to speak in anticipation of what we are about to hear, I hope the Committee will reject amendment 21, tabled by the hon. Member for Wolverhampton South West (Rob Marris), which would cancel the corporation tax cuts.

Let me move on to the other measures in this group. Clause 43 abolishes vaccine research relief from 1 April 2017. This relief is available only to large companies and is claimed fewer than 10 times a year, with a value below £5 million. The Government believe that direct spending programmes such as the recently announced £1 billion Ross fund offer a more effective and flexible approach to supporting the development of medicines and vaccines, and will have a far greater impact.

Clause 44 makes a small change to ensure that the introduction of the research and development expenditure credit does not have the unwanted effect of reducing the amount of relief available to certain small businesses. The expenditure credit replaced the old large company R and D tax credit scheme in 2016, following a period of three years in which both were available simultaneously. We recognise that R and D tax relief plays a vital role in supporting productive investment in the UK. These two changes will ensure that R and D tax support remains effective in meeting this objective.

Clause 65 extends the current time limit for claiming enhanced capital allowances in enterprise zones to eight years from the date on which the enterprise zones are announced. Businesses operating in the 46 enterprise zones across the UK can opt either for a rebate on business rates or enhanced capital allowance covering 100% of investment. Extending the time limit for claiming enhanced capital allowances to eight years will allow all zones to enjoy it for the same duration. I am sure that hon. Members of all parties will welcome this.

Clause 66 will strengthen the existing capital allowance anti-avoidance revisions to ensure that artificial and contrived arrangements cannot be used to gain excessive capital allowances. Capital allowances allow businesses to write off amounts that they spend on plant and machinery against their taxable profits. This reflects the depreciation in the value of the assets over time. When the business disposes of the asset, the legislation is designed to subtract this disposal value so that the allowances are reduced to reflect the net cost of the asset to the business. HMRC has received several disclosures of tax-avoidance schemes where the disposal value has been manipulated to an artificially low level. This leads to excessive capital allowances being received; the tax result does not reflect commercial reality and so constitutes an avoidance of tax. Clause 66 prevents this and ensures that business pays the correct amount of tax.

Clause 67 will ensure that trading income received in non-monetary form is fully brought into account in calculating taxable profits, income tax and for corporation tax purposes. HMRC consider that existing law and practice already requires that trading and property income received in non-monetary form is brought into account in calculating taxable profits. This is an equitable position arising from a long-held principle established in case law. However, this legal principle has been challenged in some instances. Clause 67 will insert a rule to provide that the value of the money’s worth is to be brought into account for the purposes of calculating the profits of the trade. This will have no effect on the vast majority of trades and will put beyond doubt that such income is taxable in full.

Clause 68 repeals the renewals allowance legislation. This allowance provided a tax relief for spending by a business on the replacement and alteration of trade tools. The relief is no longer available to businesses, and relief was repealed from the effective date on 1 April 2016 for companies and on 5 April 2016 for sole traders. The clause removes a relief that predated capital allowances. The number of traders using the relief was small, and there has been some evidence of abuse. Alternative means of tax relief for spending by businesses is available through the capital allowances regime and there is new relief for residential landlords for costs incurred in replacing domestic items such as furniture and appliances.

Clauses 69 and 70 make changes to the wear-and-tear allowance that currently allows landlords fully furnishing properties to claim a 10% tax deduction of their net rental income when calculating the taxable profits each year. The allowance can be claimed regardless of the actual costs incurred on replacements and can be claimed even when a landlord has not actually made any replacements. The changes made by clauses 69 and 70 will replace this with a new allowance, permitting all landlords to deduct the actual costs they incur on replacing domestic items such as furniture and appliances. In conclusion, this change will create a fairer system for landlords and for tenants where the genuine costs of replacement can be reclaimed against income tax.

Clause 71 makes changes to incorporate the revisions to the OECD transfer pricing guidelines secured as part of the joint OECD /G20 base erosion and profit-shifting project into UK domestic law. The beneficial revisions to the OECD guidelines ensure that they are refocused on appropriately rewarding real economic activity within a multinational enterprise. This is in line with the key principle that profits should be recognised where economic activity takes place. In addition, the revisions provide tax authorities with a new tool better to investigate the pricing of unique intangibles where there is no independent information with which to ascertain their value, ensuring that tax bases cannot be eroded through the mispriced transfer of the significant assets. Clause 71 will also widen the scope of materially updating the OECD guidelines, which can be incorporated within UK law by way of a Treasury order. Together, these changes will further support the work undertaken by HMRC to tackle aggressive transfer pricing positions taken by some multinational enterprise groups and ensure that these are swiftly incorporated into UK legislation.

As I have outlined, these clauses take a number of important steps to make our business tax environment one that better supports enterprise and growth, and targets reliefs where they are effective in advance of this Government’s plans for a successful economy. They implement OECD guidelines that the UK has championed on transfer pricing, and take other steps to clamp down on avoidance. They withdraw outdated and little-used allowances in favour of broader reliefs and spending programmes on vaccines. They support Britain’s enterprise zones, set up by the Government to boost growth and employment in key areas of opportunity. By bringing down the headline rate of corporation tax to 17%—the lowest in the G20—we are making it clearer than ever that Britain is open for business. These clauses should therefore stand part of the Bill.

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The Labour party supports all these grouped clauses except clause 42. I will not press amendment 21 to a Division because it has not been selected, but I will be inviting all Members, particularly those in the Opposition, to vote against clause 42 on corporation tax.

Clause 41 is effectively a technical change. I appreciate that it is on corporation tax and it goes with clause 42, but I think it need not detain the House now. On the abolition of vaccine research relief, paragraph 15 of the explanatory notes on clause 43 helpfully says:

“The low level of take-up of the relief suggests it does not have a significant impact on a company’s research decisions. The government believes that direct spending programmes like the recently announced Ross Fund offer a more effective and flexible approach to the production of medicines and vaccines.”

The Ross Fund is £1 billion and was announced by the Chancellor of the Exchequer in November 2015.

I appreciate this is not directly the Minister’s departmental responsibility, but if we are looking at things such as the Ross Fund, where the Government are directly funding rather than encouraging research through fiscal levers, I would like him to indicate whether that Ross Fund money will count as part of the 0.7% of GDP commitment for overseas aid. I again salute the Government for reaching that 0.7% target. The Labour Government of whom I was a Back Bencher for many years moved significantly towards that target, but it was the coalition Government who reached it, and it is this Government who have maintained that in spite of some pressure on occasions from what might be called their natural supporters, who have reservations about that 0.7%. I do salute the Government for reaching that, and they have the complete support of Opposition Members on maintaining that commitment, but there are always potential difficulties in how one measures what goes into that 0.7%. Whether this would come under the Department for International Development or the Department of Health in terms of vaccine research and the Ross Fund I know not, but I hope the Minister will, as a Treasury Minister, be able to give some indication as to whether this kind of thing counts towards the 0.7%, because were it to do so, some of us would raise an eyebrow, and I think one ought to know.

It also appears that the Government have decided that direct spending programmes are more effective and flexible for research than funding through fiscal measures. For us socialists, it is a welcome conversion on the part of the Government that they agree that they have a role in direct funding, but in terms of clause 43 and the abolition of vaccine research relief, this must form part of a wider canvas. I found it a bit shocking when the National Audit Office said a few months ago that there were about 1,200 tax reliefs. From memory, it found about six different sorts of measures that are often commonly called tax reliefs, and that only about 300 of them were being monitored by the Government as to their efficacy or otherwise.

It appears that the Government have monitored the efficacy of vaccine research relief and decided that it is not very efficacious. As I understand it, fewer than 10 companies were claiming the relief. I can understand that if that is the case the Government might wish to remove it, although of course in terms of pharmaceutical research, they could be 10 extremely large companies. The Government monitored that, however, and I salute them for doing so and for coming up with some results from their monitoring.

Clause 44 updates aspects of the cap on research and development aid. Broadly, we on the Opposition Benches—Labour, certainly—support this, because it was a Labour Government who introduced R and D relief for small and medium-sized companies in the Finance Act 2000, and the large companies scheme was introduced in the Finance Act 2002—I believe I sat on the Committee of that Bill as well, Sir Roger. At that time there was cross-party consensus, as there was when we were in opposition in 2013 regarding the introduction of R and D expenditure credits and their gradual replacement of the large companies scheme; we supported those measures in 2013. However, R and D tax credits have in very round terms led to £1 billion a year being claimed between the tax years of 2000-01 and 2013-14. That sounds very good and I have all kinds of figures here—helpfully supplied by the indefatigable researcher Imogen Watson, with whom the Minister will be familiar by now. I will not detain the House by reading them all out, but 33,800 different companies were claiming under the SME scheme and 7,800 were claiming under the large companies scheme.

Those figures are impressive: an average claim of £1 billion sounds impressive. However, since 2008 productivity has of course stalled in this country. One reason why successive Governments have given R and D tax reliefs of various different orders of magnitude and types is to encourage R and D, which will lead to newer products, goods and services and also to more efficient ways of doing things. Unfortunately, that has not been reflected in the productivity situation in the UK for many years, and I urge the Minister to reflect on that. In terms of the previous clause, he looked at the efficacy of the vaccine relief and decided to go in-house rather than carry on with the relief. I am not saying that the Government should take R and D in-house—I do not want to be misunderstood on that—but they should be looking at the efficacy, or otherwise, of it.

Clause 65 extends the capital allowances to designated assisted areas within enterprise zones for up to eight years. Of course the Labour party supports that. It is designed to encourage the purchase of energy-saving technologies. Again, I have a long list of qualifying technologies, which I will not read out.

I do want to ask a technical question, however, which I hope the Minister, with his usual omniscience, will be able to reply to. Pipework insulation is a qualifying technology, as are things such as high-speed hand air dryers and solar thermal systems, but I do not see on the list—it may be a lacuna on the list, or my fault—other forms of insulation other than pipework insulation. This is all part of the programme, which broadly has cross-party support from, I think, all parties in this House, that the UK should cut its CO2 emissions and greenhouse gas emissions, and one way to do that is by using fiscal levers. It would appear on the face of it that it would be good to have on that list insulation generally, in contradistinction to just pipework insulation. If it is not on the list, no doubt the Minister can explain why in his reply.

The second point that I want to make on the extension of capital allowances, the eight-year period and so on was raised by my hon. Friend the Member for Leeds West (Rachel Reeves) in a written question on 26 April this year to which the Minister helpfully replied on 5 May 2016 when he said:

“The government has carefully considered the case for exempting plant and machinery from business rates. However, there would also be fundamental operational challenges to delivering an exemption on account of the way in which the plant and machinery is embedded in the premises concerned”.

I ask the Minister to look at that again. It is a long time since I practised property law—I do not know whether the Minister ever did; that may have been a good few years ago as well—but there used to be things called fixtures and fittings, and indeed I believe that they still exist. They are often set out in commercial, rather than residential, leases. I am not sure why the issue of the embedded plant and machinery to which the Minister referred in his written answer is so difficult. I may be missing something, but I should have thought that if commercial lawyers can do it for fixtures and fittings in commercial leases, HMRC could do it for plant and machinery, embedded or otherwise, and that it would be worth the Government’s looking again at the issue raised by my hon. Friend.

Clause 66 is entitled “Capital allowances: anti-avoidance relating to disposals”. I wonder whether the Minister might be able to supply figures showing how much has been lost to the Exchequer through such avoidance schemes, but of course we support a clampdown on them.

Clause 67, entitled “Trade and property business profits: money’s worth”, confirms that trading income received in non-monetary forms is fully accountable in calculations of taxable trading profits for income tax and corporation tax purposes. The fact that trading income received in non-monetary forms is assessable for those purposes would seem fairly obvious to many of us. Indeed, paragraph 12 of the explanatory notes on clause 67 refers to a 1948 decision to that effect, made by what was then the judicial Committee of the House of Lords; it would be called the Supreme Court now. I hope that the Minister will be able to tell us what has happened in the intervening 68 years to require that fact to be included in legislation, given that, presumably, there was formerly reliance on the case law precedent cited in the explanatory notes.

Furthermore—this is just a curiosity of mine, in which I hope the Minister will, with his usual patience, indulge me—if trading income received in non-monetary forms is to be thus assessable, what about the barter economy? Some people trade through barter. It is not simply an agreement between neighbours; there are trading arrangements which have traditionally been considered not to be susceptible to income tax and the like. Might it be an unintended consequence of clause 67 that such arrangements would in future be assessable?

Labour broadly supports clause 68, entitled “Replacement and alteration of tools”. However, I want to raise an issue that was raised with us by the Association of Taxation Technicians, to whom we are grateful. The clause would repeal legislation providing tax relief for expenditure incurred by a business on replacement or alteration of trade tools. We are talking about an important, although small, corner of the economy, and the proposed repeal could cause small businesses book-keeping problems. The association helpfully provided an example, and, if you will indulge me, Mr Howarth, I will read it out. It is not very long.

“One of our members has given an example of the use of the provision by a carpenter”—

one of the association’s clients—

“who has to replace a saw almost every week. Treating expenditure on saws as if it was on consumables (in the same way as screws, nails and glue) makes perfect sense. If the provision is repealed”—

which, of course, is what clause 68 would do—

“each of the saws will have to be capitalised and then written off for capital allowance purposes. Such repeal would make no difference at all to the trader’s actual tax position. It would simply complicate record keeping, add administrative burden and increase the risk of computational error.”

I wonder whether the Minister would have a look at that again and establish whether some kind of de minimis threshold could be introduced for businesses of that kind. Let me give an example of my own; I do not know whether it would be caught. A hairdresser who needed to replace his or her scissors every month might then have to account for that in capital terms, which would involve an awful lot of paperwork for a small business.

Clause 69 is coupled with clause 70: they are twins. In a sense, clause 69 introduces an alternative version of what clause 70 removes, namely the way in which those in the property business can claim tax relief for wear and tear. The amount was, across the board, 10%. I understand that the arrangement was fairly rough and ready and no records had to be produced, and there was a thought that some landlords were abusing it. Clause 70 gets rid of that regime, and clause 69 introduces a new regime specifying actual expenditure. It sounds fairer that someone cannot claim 10% across the board if they have not spent the money, and that they have to demonstrate what they have spent. Clause 70 gets rid of the 10% allowance, and clause 69 requires records to be produced to prove that money has been spent. The difficulty is that we are talking about small businesses, and the dilemma for any Government is the trade-off between accurate, fair accounting and taxation, and something that is a bit rough and ready but much less onerous for small businesses.

The Chartered Institute of Taxation, to which I continue to be grateful, has expressed its concern that there is no definition in statute of what constitutes a dwelling house. That is a bit worrying. I tried on two occasions to meet representatives of the Residential Landlords Association to discuss this matter, but unfortunately they had to cancel on both occasions so I am none the wiser. If the Minister could say a little more about the Government’s thinking on the rough and ready 10% rule versus the accuracy required by clause 69, and about the definition of a dwelling house, that would be helpful.

Clause 71 deals with transfer pricing applications, but I will not say a great deal on that matter because we ventilated those issues, albeit from a somewhat different angle, when we discussed amendment 1 earlier. However, there is a quote on transfer pricing that I quite like from the Tax Justice Network. In quoting Lee Sheppard, it stated:

“Transfer pricing is the leading edge of what is wrong with international taxation…The purpose of the OECD model treaty was to make life comfortable for American, British, German, and French multinationals by ensuring that the taxation of their operations by host countries is limited by separate company accounting and the permanent establishment concept. Treaties accomplish this task very well—so well, in fact, that many multinationals pay tax nowhere”—

but those treaties are

“clumsy tools that affluent developed countries have used among themselves, to their collective detriment, and seek to impose on developing countries.”

I have quite a lot of sympathy with that. We read of large companies such as Apple appearing to pay almost no tax anywhere, although we can never be sure about that because of the lack of transparency. I can understand the practice of transfer pricing and I can understand multinationals acting within the law in shifting stuff—legitimately if not ethically—to the lowest tax jurisdiction, but paying no tax at all seems a bit bizarre. The UK Government should continue to take the laudable steps that they have been taking over the past 16 years, including the past six years, to clamp down on that activity.

Clause 42 deals with corporation tax. The official Opposition—and, I hope, all MPs—will be voting against clause 42 stand part, because it would lower corporation tax. The Institute for Fiscal Studies is a fountain of considerable wisdom. It is not always right, of course—no one is—but it is worth listening to. It has calculated that the Government’s cuts to corporation tax have cost £10.8 billion a year. The Minister has said, and I do not doubt him, that overall receipts are up, despite the rates being lower. However, that is not the only yardstick. We also have to look at how much higher the receipts would have been, had the rate not been slashed to the lowest in the G7 and the joint lowest in the G20.

Of course my party wants a competitive tax rate, but we also want a fair tax system. My understanding is that in 1999-2000, corporation tax as a percentage of total HMRC receipts was 11.67%. By 2015-16, that percentage had crashed to 8.31%—a huge drop. The Minister has referred to the efforts of this Government and the Government that immediately preceded them to rebuild the British economy, which he referred to as being fundamentally strong. It will not surprise him that I beg to differ. However, there are definitely good points.

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While there may have been a drop from 11.7% of total receipts to 8.3%, will the hon. Gentleman accept that other new forms of taxation, such as climate change levies and other climate taxes, have been imposed on businesses and have increased total tax revenues? The cake is bigger, so the slice of corporation tax is smaller, but the total amount is larger.

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The hon. Gentleman is quite right about the climate change levy. Changes in this Finance Bill effectively make the climate change levy just another tax, because it will no longer be used by the Government as a lever to change behaviour, which is why Labour dislikes the proposal. Business tax has probably gone up a bit overall, but what has happened in the economy, which the Minister described as fundamentally strong, is that employment is up by almost 2.5 million, and we salute that as a considerable achievement.

However, it has been bought on a sea of debt, on the drip, on the never-never. The national debt has gone up 60% in six years. We still have a huge annual deficit. Pay has stagnated for six years, and public sector pay will remain stagnant for another two or three years. Overall capital investment is markedly down. We have the biggest trade deficit in our history. Productivity is completely stalled. It is welcome that 2 million more people have jobs, which is good and the best route out of poverty, but almost every other economic indicator is poor and the Government propose to cut corporation tax.

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My hon. Friend mentioned borrowing. Given the economic situation over the last few days, it seems that the Chancellor might have to borrow more money to add to the national debt, and he is now talking about increasing taxes and cutting public services as well.

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I will not go too far down that route, but this Chancellor—in this sense and this sense only—has been saved by the Brexit vote. He was never going to meet his forecasts for getting the deficit down in the lifetime of this Parliament. He also completely failed when he forecast in the previous Parliament that the deficit would be down to zero by 2015. He then forecast that it would be down to zero by 2020. That was never going to happen. We predicted that and I am sad that it was the case.

Now, with the Brexit vote, as my hon. Friend the Member for Coventry South (Mr Cunningham) says, the forecast will be nowhere near right, but no doubt the Chancellor will then use the vote as an excuse. The Brexit vote has revealed some of the underlying problems in the British economy that just about every serious economist has been pointing out for the last five years. Cutting corporation tax in this circumstance is a bad idea, and I urge all hon. and right hon. Members to vote against clause 42.

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It is a pleasure to follow the hon. Member for Wolverhampton South West (Rob Marris). I want to say a few words about clause 42, because although I clearly welcome the planned reduction in corporation tax by 2020, following the welcome vote last week, it may now need to be part of the picture of how we change our business tax regime over that period. Unlike earlier, there are now a few more of us present who thought the vote was welcome.

For us to capitalise on the opportunities of leaving the European Union, we will have to make our country even more attractive to outside investment to stimulate growth, a key part of which is our corporation tax system. As the Minister is planning ahead that far and as we now have the special group in the Cabinet Office under the Chancellor of the Duchy of Lancaster, I urge careful thought about what our tax system should look like by the time we leave the European Union, what signals we are giving and how we can further improve it and make it more attractive. Perhaps we could look at an even lower rate to send out a signal that we are positive about business activity and that we want more investment and will reward it further.

Perhaps we could look again at how we do capital allowances, especially for infrastructure investment and manufacturing items, for example. Perhaps we could re-examine how we give tax relief for the building of new factories. This country is not actually that generous and does not give tax relief for any industrial building, which is not a clever way of encouraging manufacturing. In fact, we are one of the least attractive tax regimes for various infrastructure investment activity because of our lack of relief for structures. Perhaps now that we have the need and the time to review that, we should ask whether it is clever to structure our tax system in a way that is not as attractive as possible for industrial building and infrastructure activity, especially as we will need a lot of investment as we go forward.

Given that we are now leaving the EU, there are some other areas on which we can capitalise. We have had to make various changes to our tax codes, especially to our corporation tax code, to comply with EU law, some of which take away some anti-avoidance rules that we would have quite liked to keep. Perhaps now would be a good time to think: should we bring those back as part of our tax system to stop assets being moved offshore at a discount without the tax being paid? Certain examples of that were exaggerated in the campaign. None the less, there are some perfectly sensible and reasonable anti-avoidance rules that we could now bring back.

We had to introduce some compliance obligations in our system to try to make ourselves compliant with EU law which perhaps we will not need. For example, there is a measure that extends transfer pricing rules to UK transactions on the statute book but it has never really been tested or enforced. Perhaps we can sweep that away, thus taking away a compliance burden.

The vote may prompt our questioning whether our ever-expanding corporation tax code is sensible. Is now the right time, when we know that we have a big change coming, to see whether there is a better way of taxing our businesses? Is there a simpler tax code—perhaps something closer to accounts profit—that does not need all these adjustments? Can we capitalise on our general anti-abuse rule and perhaps have not quite so many detailed technical anti-avoidance rules? Can we just now rely on a robust principle that we know those rules are there, that they work and that we are building on them? Might it not make us an even more attractive destination if we say that we now have an even simpler tax code?

As I have said, I welcome the signal that we are reducing the corporation tax rate further, but if we are to help our economy grow over the next few years, we need to send some even stronger signals. There is more that we can do to our corporation tax code over the next four years than this sector is currently planning.

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I specifically want to talk about clause 43 in relation to vaccine breakthrough. I have issues with a couple of the Government’s proposals. First, it has been made clear that this measure costs the Government very little. In terms of foreign projections, the removal of the relief does not increase the Treasury’s take by a vast amount.

The explanatory notes on this were incredibly helpful and I really appreciated them, but they seem to be missing a few things. First, they say that only 10 firms claimed the relief, but they do not make it clear how many firms research and develop vaccines. After my slightly rudimentary research, I could find only about 10 firms that research and develop vaccines, which means that all of them claim the relief. Therefore, if I am correct, the uptake is quite high. That could be why companies are choosing to research and develop vaccines. I would appreciate it if the Minister confirmed how many companies research and develop these things. If he does not have that information today, perhaps he could write to me with any details he has on that.

The explanatory notes mention the Ross Fund. I appreciate that the fund is a good thing and that it is good that the Government are financially supporting the development of vaccines, but it seems to me that the fund does not necessarily cover everything that the vaccine relief previously covered. The Ross Fund covers the following: antimicrobial resistance, which is a really important thing to be funding in this day and age; diseases with epidemic potential, which, given what happened with Ebola, is a really important area to be funding; and neglected tropical diseases, which is a fabulous area for the Government to support. It is really important to be putting money into the various areas of research that have previously been neglected.

From the research that I have, it seems that vaccine research relief covers HIV/AIDS, whereas the Ross Fund does not. I would really appreciate it if the Government told whether HIV/AIDS research now falls through a gap, because it is an area that we need to continue to research and for which we do not currently have any vaccine or cure. I do not want it to get lost because companies are no longer able to claim aid or funding for such research.

I will not speak at too much length, as my concerns are around clause 43 and the fact that, although helpful, the explanatory notes left me with quite a few questions.

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I want to add my support to clause 42, notwithstanding the important points made by my hon. Friend the Member for Amber Valley (Nigel Mills), who set out the need for further thinking, perhaps, in the light of the Brexit vote. I was on a different side of the debate from him—only marginally—because I thought that there were concerns about economic risk, but there are certainly opportunities ahead, as well.

We need to ensure that we are ready to explore and realise those opportunities and the Government are absolutely committed to doing that. I hope that the Opposition are as well. It seems that the hon. Member for Wolverhampton South West (Rob Marris) is indicating that. We are up for that. As a result, I am perplexed about why clause 42 is not being supported by the Opposition. Such measures were vital when the proposals were first set out, and it is now even more important to put out a clear signal that we are open for business, that we understand business, that we want business to continue to come to the UK and that we want our exporters to thrive and flourish.

The corporation tax level is an important signal and an important driver in that regard. It is noticeable that the Federation of Small Businesses stated at the time of the announcement that it saw clause 42 as an important statement of intent that will provide a boost for affected firms. Small businesses are of course the backbone of our economy, but it is clear that the clause is an important signal for bigger businesses, too. It helps to illustrate and underline that Britain is open for business.

Given the decision made by the public, which I fully respect, it will be very important that we maintain the flow and increase the levels of foreign direct investment. I thought we were exposed in that area for a period of time, and I think that that exposure is still real, but we are currently the biggest destination in Europe for foreign direct investment. We have seen the biggest increase in FDI in projects in the north-west and I want to work with the Government and whichever party is around to ensure that we continue to see that flow. I want to ensure that the success we see in the country continues and that the northern powerhouse can fulfil its full potential. Key initiatives such as the life sciences corridor in Cheshire will require clear signals to businesses in the UK and abroad that we are open and want to move further forward, which is why I will support clause 42 when we vote, as I understand we will.

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I want to show our support for clause 42. In fact, I think it would be a bit strange for someone from Northern Ireland to take a different stance, especially given the fact that the Northern Ireland Government have put the reduction and devolution of corporation tax at the centre of their policy for attracting investment into Northern Ireland over the next 10 to 15 years.

There are two things. First, we must ask ourselves whether we believe that a reduction in taxation on businesses acts as an incentive. As I listened to the Opposition spokesman’s opposition to this measure, it raised a query in my mind: is the reduction of other business taxes regarded as acceptable and indeed desirable by the Labour party as a means of incentivising and helping small business? For the Opposition, it seems as though the reduction in business rates, which are a form of taxation, is desirable because it helps small businesses, but that the reduction of corporation tax seems to have no effect, or the opposite effect. If we are going to have some consistency, we must ask ourselves whether the principle of reducing taxes on businesses and their profits, and the impact that that has on the amount of money they retain for investment, is an effective means of stimulating business. If it is true of one form of tax, it is true of another. That is one of the reasons why I believe that the reduction in corporation tax is an important decision.

Secondly, during my former role as a Member of the Northern Ireland Assembly and as a Minister there, one of the things that came up consistently when we spoke to investors was corporation tax. We had an especially big problem, because we were living next door to a country—we have a land border with it—that had emphasised the reduction in corporation tax. Time and again, though not exclusively—there is no point in over-egging this pudding—investors mentioned the level of corporation tax: 12.5% in the Irish Republic and 22% then in Northern Ireland. When companies looked at the headline level of taxation, they viewed the Irish Republic as a much more desirable place to invest. Of course they looked at other things—the skills base, the availability of office and factory space, the infrastructure and so on—but corporation tax was an important factor.

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May I caution the hon. Gentleman? For some of those companies—not all of them—this is a classic sob story. Corporation tax in America is roughly twice the rate that it is here. People still invest in companies in America. Corporation tax is part of an overall picture, as he says. Yes, companies should pay tax. If we followed the logic of some of the things that he has said this afternoon, we would not tax companies. That may be his position; it is not the position of Labour party.

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It is not the position of the Democratic Unionist party either, because there are other ways in which companies can be held responsible for their infrastructure requirements. For example, one of the forms of taxation that the Government have introduced recently is the apprenticeship levy, where companies will be held responsible. They need trained workers, and they have to make a contribution from their profits to train those workers. There are ways to target the contribution that we require companies to make. I am not saying that companies should not pay for the infrastructure from which they benefit, but we must address one of the issues that they raise when they are considering whether we are a competitive place to invest.

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The hon. Gentleman is making characteristically important points. Although there has been a nod to what has gone on in the US, it is important to look at what is happening in the UK. As we have seen a reduction in corporation tax, we have seen a strong performance in foreign direct investment. Let us look at what has happened here, which has helped to move the situation further forward—and no doubt it has done so in Northern Ireland as well as the mainland.

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The hon. Gentleman is quite right: if we look at the record of companies in the United Kingdom as corporation tax has decreased, we see that we have experienced increasing foreign direct investment. Indeed, since the Northern Ireland Government announced that corporation tax will be reduced in, we hope, a year and a half’s time, there has been an upsurge of interest in the number of companies that wish to consider Northern Ireland as an investment proposition. We are already the second most successful region in the United Kingdom for foreign direct investment—I suppose that this bears out the Opposition spokesman’s point—because we have emphasised the other selling points that are available to us at present, but corporation tax is the additional one that will make things easier for us.

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Coming back to something that the hon. Gentleman said earlier about the training levy, for want of a better term, employers and particularly small businesses in this country have traditionally been reluctant about that levy. What do businesses in Northern Ireland feel about the levy?

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