The Chancellor of the Exchequer was asked—
Disguised remuneration is an aggressive and contrived form of tax avoidance that involves a loan, which there is never any intention of repaying, being routed via a low or no-tax jurisdiction and then back to the United Kingdom, to avoid income tax and national insurance. Her Majesty’s Revenue and Customs takes a measured, proportionate and sympathetic approach to the collection of this tax, which has always been due.
My constituent contacted me about this issue and said that he had no choice in how he was contracted to work on a BP Norway project. Why is he being pursued rather than BP Norway and the other companies, such as NRL, AML and ICS (Salary) Ltd, which all work together to undermine workers’ rights and minimise their own tax liabilities? What action have the Government taken against those agencies?
I refute the suggestion that anybody is forced into making a tax-avoidance arrangement. If something looks too good to be true, it generally means that it is just that. Of the settlements to date, which have been worth more than £1 billion, some 85% have been from employers, not employees, and we are actively pursuing the promoters of these schemes in exactly the way in which the hon. Gentleman would wish.
I understand that the all-party group on the loan charge has been sent evidence of the suicide of three people facing the loan charge. More than 100 people in Edinburgh West have been affected by the charge. Many of them have come to see me at constituency surgeries and are worried about their financial future. They did not understand that this tax was going to be put in place retrospectively. In the light of all the evidence, I am concerned about the wellbeing of those constituents who say that they may face financial ruin. Surely the only responsible thing to do is to pause and announce a delay and an independent review, given that we know that people have already lost their lives.
The loan charge is not retrospective. There has never been a time in the history of our country when the arrangements that I described a moment ago were ever compliant with our tax code. Of course, the loans, which there is no intention of ever repaying—they are simply there to avoid national insurance and income tax—persist into the present. Generous “time to pay” arrangements are available with HMRC; I urge anybody who is involved in avoidance of this kind to talk to HMRC and come to sensible arrangements.
Is the Minister not aware that the people affected by this charge are strivers and people who are just about managing? They are the people who are suffering as a consequence of this decision. How many times are the Government going to hit ordinary working people, including groups like the Women Against State Pension Inequality, without Ministers fulfilling their responsibilities, intervening in such circumstances and ensuring that common sense prevails?
If we include the loans, the average earnings of those who have been involved in this egregious tax avoidance is twice our country’s national average wage. There is no need for people to get involved in these schemes, the sole purpose of which is to avoid tax. Some Members have raised amounts of some £700,000 or £900,000 that HMRC is pursuing in this context; that would equate to a couple of million pounds going through these schemes. I remind the House that these are schemes that take loans from the UK out to an offshore trust in a low or no-tax jurisdiction and route it back into the UK as a loan that is never due to be repaid, simply for the purpose of avoiding tax. We do not believe that is right.
If the Minister is right when he says that the loan charge is not retrospective, how come we have examples like the situation faced by my constituent, who was pursued with an accelerated payment notice back in 2015, in relation to a loan charge scheme? He paid the amount that HMRC asked him for, but now suddenly, out of the blue, a request has been sent to a wrong email address that means he will probably have to pay more money. Does that not show that HMRC has shifted the goalposts and therefore that the loan charge is retrospective?
I entirely stand by my earlier remarks about the measures not being in the least retrospective. Of course, I cannot comment on the tax affairs of the individual that my right hon. Friend has just referred to; it would not be right or proper of me to do so.
I have received increasingly distressed representations from constituents affected by the loan charge. One of their concerns is that in making any settlement with HMRC, they risk giving up their right to review in the event of any subsequent change in Government policy. Will the Minister advise my constituents on what they might do? They currently feel trapped between that prospect and the risk of further financial penalty from HMRC if they do not come to an agreement quickly.
I have made it very clear, as have the Government, over a long period of time—at least since 2016 when these measures were first brought into effect, which is before I arrived in my current position—that our policy is our policy and that we will not change that policy. For those who have been involved in this form of aggressive and contrived tax avoidance, the recommendation is very clear: the best thing to do is to speak to Her Majesty’s Revenue and Customs and come to a sensible and reasonable arrangement for repayment.
I understand the Minister’s sincere desire to tackle disguised remuneration and thank him for always being available to discuss my constituents’ concerns. However, something has clearly gone very wrong with the operation of the loan charge and now, too, I fear with the roll-out of IR35 to the private sector. Will the Minister commit please to pause both the loan charge and the roll-out of IR35 to the private sector until my constituents’ concerns have been fully addressed?
IR35 is often raised in the context of the loan charge, but it is a completely unrelated matter. IR35 is about making sure that those who are effectively employed by other businesses are treated as employees for tax purposes, and that is only right and proper. The loan charge is about putting right the situation of this aggressive tax avoidance.
The hon. Gentleman makes a very important point, which is that, when it comes to paying the money that is due, HMRC has a duty to be proportionate and to make sure that appropriate arrangements are in place. There is no maximum limit for the time over which repayments can occur—there are often arrangements that come into place that are well in excess of 10 years. HMRC will continue to approach these matters on that basis.
May I also thank the Minister for the way that he is engaging on this issue? Although I certainly do agree that anybody who has tried to avoid tax in this way needs to be held accountable, I do ask whether it is right that HMRC can go back 20 years to reopen accounts that were accepted. If this tax was due then, why did HMRC not obtain that tax then? Why did it not charge it then? Why has it taken it 20 years to get to this point?
I have already dealt with the issue of retrospection. As to why tax may not have been paid at the time that it was due, there are a multitude of reasons for that not least of which is the fact that many taxpayers simply do not volunteer the correct information or they claim that their scheme works when clearly it does not. HMRC has, over many, many years, pursued these various schemes through the courts, including the Supreme Court, and on each occasion, these schemes have been found not to work.
The statement that the hon. Gentleman has made does not suggest that the CEST tool is inappropriate. The CEST tool is there to determine an individual’s employment status. In 85% of cases, it does give a determination. HMRC will stand by that determination provided the right data was put into the CEST process.
Following a recent case, an individual convicted of benefit fraud was given 900 years to pay off the £88,000 that they had defrauded from the state, but those facing the loan charge have not committed any criminal offence or broken the law, yet they are being hounded by HMRC for unaffordable sums. Can my right hon. Friend please advise me on why HMRC is persecuting innocent people to the point that it is affecting their mental and emotional wellbeing while allowing convicted fraudsters such leeway?
HMRC is not persecuting people, as my hon. Friend suggests. It is collecting the tax that is due. It is also not pursuing people for criminal activities, as he says. However, when it comes to criminality, I can tell the House that very recently, on 16 May, HMRC announced that six promoters of these schemes had been arrested on suspicion of loan charge tax fraud.
Those of us on the Labour Benches have repeatedly asked the Government what they are doing to clamp down on the enablers of the loan charge and we have repeatedly received feeble answers showing inertia and inaction, and we have had more of that today. More broadly, why are the Government not doing more to crack down on lawyers, accountants and others aiding and abetting tax avoidance under the guise of legitimate tax planning?
I think the hon. Gentleman probably composed his question before he heard my last answer, in which I made it clear that we have just recently had six arrests relating to the suspected fraudulent activity around the loan charge. We are also actively pursuing 100 promoters of tax avoidance schemes, including those relating to the loan charge, and have brought in up to £1 million fines for promoters engaged in this activity.
Six? There are thousands of these wheezes going on out there. Let me give the Minister another example. Under existing tax compliance and procurement rules, and public contracts regulations, there is provision for public contracts to be denied to individuals and organisations that do not comply with tax law, possibly including these promoters of loan schemes. Can the Financial Secretary admit that there is evidence of tax avoidance and enabling by organisations winning public contracts while not one single individual or organisation has been banned from securing those public contracts?
Is not the difference between the Government and the Opposition on tax avoidance quite simply that this Government are serious about it, having brought in and protected £200 billion since 2010? The tax gap is at a near historic low. If it was as high as it was under the last Labour Government, we would be deprived of sufficient funds to employ every policeman and woman in England and Wales. This Government are serious about avoidance and evasion, and we have a record of which to be proud.
Local Authority Budgets
I have regular discussions with the Home Secretary and the Local Government Secretary about their budgets and how they are best managed.
Will the Minister at least acknowledge that there is a problem? London boroughs are spending about £50 million a year—which they have to spend, but usually under the Children Act 1989—on families in extremis with no recourse to public funds. Will she acknowledge that that is the case and look at how local authorities are funded?
The hon. Gentleman will be well aware that the spending review is coming up. If there is a specific issue with London local authorities or other local authorities, I would expect that issue to be raised by the Local Government Secretary, and I encourage the hon. Gentleman to meet him to discuss the issue.
One specific issue in relation to the London Borough of Hammersmith and Fulham is the reopening of Hammersmith bridge. It is about time that the council got on with repairing and reopening the bridge. The council has a very good financial settlement. Will the Chief Secretary join me in knocking heads together between the council and Sadiq Khan’s Transport for London to get the bridge open?
I welcome my right hon. Friend’s efforts to build bridges across London and to improve London’s infrastructure. The London mayoral elections are coming up, and I suggest that people vote for somebody who is going to make change happen much quicker.
Will the Minister commit to ensuring that survivors of domestic abuse with insecure immigration status have safe and confidential reporting systems, without fear of being returned to their country of origin?
The question is actually about the fiscal effects of the no recourse to public funds condition. I think I know what the hon. Lady is driving at, but I hope that other people are as aware of the connection as I am.
I have to agree, Mr Speaker; I am slightly struggling with the link between fiscal policy and the hon. Lady’s question. However, she might be interested to know that in the spending review we are specifically looking at how we can help women suffering domestic violence and how we can take the matter into account when deciding the future of our public spending.
It was great to see the Minister on the Isle of Wight the week before last, although I am sad to say that there are not too many double entendres on her social media. She will be aware that I have written her a letter, asking her to ensure that the Isle of Wight becomes a pilot scheme in order for us to look at how we can better integrate Government services in the One Public Estate programme.
It was certainly a weekend to remember on the Isle of Wight. It was my first ever visit to that great place, and I was impressed. The Isle of Wight provides a good opportunity to look at how we can do things differently, including how we can integrate services to cut down on bureaucracy and put more money on the frontline.
I am sure that the people of the Isle of Wight were most gratified that the right hon. Lady was among their number, even if only for a relatively short period.
NHS Pension Scheme
The NHS pension scheme and other public service schemes are among the most generous pension schemes available in this country today. The tapered annual allowance is focused on the highest-earning pension savers to ensure that the tax relief that they receive is not disproportionate to that of other savers. However, I do accept that there is some evidence that the annual allowance charge is having an impact on the retention of high-earning clinicians in the NHS. I am in discussion with my right hon. Friend the Health Secretary about how to provide additional pension flexibility for NHS doctors affected by the annual allowance tax charge, and he will make an announcement as soon as possible.
I am grateful to the Chancellor for that answer, and particularly to the Government for accepting that the taper contributes to capacity gaps and retention issues in the NHS. Given that the costs of increased waiting times, delayed diagnosis and knowledge gaps far outweigh the tax revenue generated, would not the sensible and fiscally responsible thing be just to scrap the taper altogether?
I understand my hon. Friend’s point. However, the overall reforms to pensions allowances that were made in the previous two Parliaments and include the tapered annual allowance are necessary to deliver a fair system and to protect the public finances. These measures affect only the highest-earning pension savers and are expected to raise £6 billion a year. But, as I said, we are monitoring the response of high earners in the NHS, and I expect that my right hon. Friend the Health Secretary will be able to make an announcement soon.
A number of hospital consultants who live in my constituency have written to me to express their concern at the implications of the tapered annual allowance. With GP numbers continuing to fall, ongoing shortages across consultant specialties and armed forces doctors currently experiencing a 23% workforce shortfall, how is the Chancellor going to help doctors and patients by resolving the unintended consequences caused by the annual tapered allowance and lifetime annual allowance that are leading to doctors who would otherwise be happily continuing to work having to leave the profession to avoid disproportionate and unfair tax bills?
I think I have answered that question, but it is good to hear Labour MPs focusing on the disincentive effect of high taxation, particularly on professionals in our public services. Someone has to be earning £150,000 a year before the tapered annual allowance affects them. I would suggest that perhaps Labour Members who do understand the detrimental effect of very high marginal tax rates on professionals in our public services make those representations to their right hon. Friend the shadow Chancellor, who is intending to raise tax for everybody earning more than £80,000 a year.
One of the constituents I have in Barrachnie is a consultant who has told me that there are concerns about recruitment and retention. Given that a recent survey shows that 40% of doctors have retired early as a result of pension tax changes, I would urge the Chancellor to look again at this and make as strong a case as possible to the Health Secretary so that he can make sure that we have the staff in the NHS to serve our communities.
As I have already said, both the Treasury and the Health Department wish to address this problem. We have to find a mechanism that does it in a way that is fair and appropriate. The right way to do it is through increasing flexibilities within the NHS and, potentially, other public sector schemes. My right hon. Friend the Health Secretary will make an announcement as soon as possible.
Yesterday I met representatives of Alliance Health Group who were making representations because a number of very experienced surgeons are leaving the NHS due to the problems with the pension. I just wondered how representations would have been made to the Treasury on behalf of consultant groups.
The British Medical Association has been vocal, I think is probably the right word, in making the case around the disincentive effect of annual allowance charges, in particular, but also lifetime allowance charges. The Health Secretary and I have been discussing this for some time, and I think we are close to reaching a conclusion.
The workforce shortfall is the greatest challenge facing the NHS. What discussions has the Chancellor had with the Health Secretary about the combined impact of these changes together with the disastrous consequences for the NHS workforce that would follow a no-deal or WTO Brexit?
As the hon. Lady says, recruitment and retention is one of the big challenges facing the NHS. Clearly, anything that were to impede the NHS’s access to overseas workers coming into the UK to serve in our health service would have an impact on that. But I have also recognised and acknowledged today that the operation of the pension annual allowance charge does have a significant effect—particularly, it seems, on partners in GP practices.
The Government take child poverty extremely seriously and are committed to ensuring that all children have the best life chances. The Government believe that moving into work and progressing in work is the best and most sustainable route out of child poverty, and we have reformed the welfare system to ensure that work pays and working families can keep more of what they earn.
I despair at that predictable answer. There are 1.7 million children in destitution. Reports of children arriving at school hungry, scouring bins and stealing food from dinner halls are commonplace. Child poverty has risen by over half a million since 2010. Yesterday the UN rapporteur on extreme poverty was joined by Human Rights Watch in making it very clear that this Government’s relentless austerity measures and cruel welfare reforms are to blame for growing levels of hunger and poverty. Does the Minister agree with those internationally respected organisations?
No, I do not. I do recognise the diverse needs across this country. When I served with the hon. Lady on the all-party parliamentary group on hunger and food poverty and visited South Shields, I acknowledged that there are significant challenges. That is why I am very pleased to see that the employment rate in her constituency is up 20% since 2010.
I wonder whether the Minister and the Chancellor have had a chance to read the west midlands local industrial strategy, drawn up by the Business Secretary and the Mayor of the West Midlands, Andy Street. Is the Minister aware that youth unemployment has reduced by some 50% over the last few years in the west midlands? Is that not a way to take children out of poverty?
It is well known that Andy Street has done a phenomenal amount to invest in the right sort of infrastructure and transform the life chances of many people across his region, and he deserves credit across the House for what he has achieved.
While there are only 300 people registered as unemployed in my constituency, there are nearly 2,500 children living below the poverty line, which tells us that living in a workless household is not the principal or only cause of poverty; low wages are also a cause. Will the Chancellor urgently review the living wage, so that it actually becomes a living wage, rather than giving it an inaccurate label intended only to ease the consciences of the comfortable?
The national living wage has gone up to £8.21 an hour. The Government’s aspiration is to allow it to rise to 60% of median earnings. It is important to acknowledge that in 2010 take-home pay was £9,200 after national insurance and tax. For someone working full time on the national living wage, that figure is now £4,500 more, at £13,700.
Investing in education and skills is a positive, proactive means of promoting aspiration and ensuring that the families of the future are in working households, not in poverty. To that end, what discussions are being had between Ministers in the Treasury and elsewhere in Government about education funding and investment in skills and training?
Conversations are going on among Treasury Ministers. The Chief Secretary has heard that representation, and announcements will be made in the autumn Budget.
In evidence to the Work and Pensions Committee, the Child Poverty Action Group said of the two-child cap:
“You could not design a better policy to increase child poverty than this one”.
Will the Minister use the spending review to ditch that policy?
We spend £95 billion on working-age benefits, hardship payments, benefit advances and budgeting loans. Obviously all matters are under review in the context of spending decisions, which will be made clear in the autumn Budget.
That is not good enough. Analysis by Cambridge Econometrics states:
“In all of the Brexit scenarios, real wages for low-pay workers are depressed due to increases in prices and reduced levels of productivity, due to skills shortages and lower industry investment.”
Faced with this child poverty double-whammy, does the Minister agree that it is no surprise that the Tories are set for an absolute drubbing on Thursday?
I listen to the Office for Budget Responsibility, which is forecasting sustained real-wage growth for every one of the next five years. The latest statistics capture household income up to April 2018, but since then we have had a year of real-wage growth.
Child poverty has now reached such an unconscionable level that Members are right to highlight that, this week, the Government were condemned by Human Rights Watch for pursuing what it called “cruel and harmful policies”. Whether or not the Government accept that, the reality is that 4 million British children now live in poverty, that that figure has grown by 500,000 in the last five years and that the majority of those children have parents who are in work. Let me ask the Government: if they do not accept that Conservative policies are creating this crisis, what do Ministers believe is responsible for this humanitarian disaster?
What is important is that this Government continue to focus on creating jobs, and allowing families to experience the value of such a job and receiving more money in their household take-home pay, and that is what we will continue to focus on.
Supporting the High Street
High streets are at the heart of our communities, and they serve a social as well as an economic purpose. To support them, at Budget 2018 I cut business rates for small and medium-sized retail premises operated by independent retailers by a third for two years from April 2019, saving businesses over £1 billion. We have also set up a £675 million future high streets fund.
I very much welcome those measures in last year’s Budget, but for this coming comprehensive spending review, will my right hon. Friend consider offering occupiers of listed premises in town centres with freehold or full repairing lease obligations a VAT exemption on repairs and maintenance of those premises, which is a cost they have to bear but their online competitors and other retailers outside high streets do not?
I have to say to my right hon. Friend that, under EU law, we cannot introduce a reduced rate of VAT that is limited to repairs, maintenance and renovation of listed buildings. In any case, VAT incurred on their properties by VAT-registered businesses may be recoverable from Her Majesty’s Revenue and Customs, subject to the normal VAT recovery rules. However, the good news is that we remain committed to supporting our high streets, and on Saturday we announced a £62 million fund to breathe new life into historic buildings on heritage high streets, which I hope will go some way to helping.
Does the Chancellor agree with me that companies such as St Modwen that buy up town centres such as Kirkby in my constituency do nothing with them—in fact, they leave them to rot—and then simply sell them on to a pension fund? Is that the way we want to run the future of our town centres, and has he not got anything more imaginative that can be done about it?
The £675 million fund that I mentioned is specifically intended to allow local authorities to develop plans for responding to the transformation of the high street that is coming. Retailing is changing, and high streets have to change to reflect that. We cannot hold that tide back, but we can help to support the transition.
Boots the Chemist, one of the most popular high street stores, says that just 22 of its 2,400 stores qualify for the Chancellor’s excellent business rates reduction scheme—not because of anything the Chancellor has done, but because of EU state aid rules. What can the Chancellor do to assist and to get around those rules?
I am a little mystified by this story about Boots, which I too read in the newspapers. When I announced the policy, I said that it was designed to help small independent retailers, and Boots, with 22,000 providers, does not fall within my definition of a small independent retailer. We always understood that this policy initiative was designed to support small independent retailers as they transition to the high street of the future.
I call Anneliese Dodds. [Interruption.] No? I had the distinct impression that the hon. Lady wished to come in on this question, but it is not obligatory.
On the next one I believe, Mr Speaker; I am terribly sorry.
On Mr Brake’s question—oh, very well. We do not want unwelcome contributors. The hon. Lady can choose her own destiny, and we are grateful to her.
Last Friday, I met members of the Chamber of Trade at Newtownards. Of three small shops in the town of Ards, one started off employing 10 and now employs 60, one started off employing six and now employs 30, and one started off employing 20 and now employs almost 100. Would the Chancellor consider rates reduction for those high street shops that increase employment?
As far as I am aware, rates is a devolved matter in Northern Ireland; it is a matter for the Northern Ireland Executive, which I very much hope will be back in operation very soon.
We have a proud record as a nation, reducing carbon emissions faster than any other G7 country since 2000. We have done that with a combination of spending measures and market mechanisms.
The Liberal Democrats were the first major political party to call for a zero-carbon Britain. We believe that target must be met by 2045. What assessment have the Government made of the climate change mitigation costs that would be incurred by 2045, of the support that would be needed for businesses to help them achieve a zero-carbon Britain by 2045, and of the health and environmental benefits?
We are currently assessing the report of the Climate Change Committee on this subject. No doubt the right hon. Gentleman is a regular reader of the Treasury Green Book on the way we assess investments. Last year, in the new Green Book, we specifically included looking at natural capital as a way of making that assessment. That is one of the lenses through which we shall be looking at the spending review.
I agree with the hon. Lady that Leeds does need flood protection. I remember visiting with her a few years ago to see the scheme. We have already achieved phase 1 with the £32 million for that, and the Government are putting forward £65 million for phase 2. My understanding is that Leeds City Council is keen to work with us on that, and we are keen to make progress.
Thank you, Mr Speaker; take two. The Environment Secretary said to Extinction Rebellion that he, at least, had got the message, but of course days later his Government were panned by the Solar Trade Association for new tax changes that will affect solar and storage schemes. That contrasts with Labour’s announcement last week of plans for 1.75 million households to benefit from the solar energy revolution. So will this Government abandon the damaging changes to VAT, match Labour’s solar investment plans and actually start taking renewables seriously?
As I said, we have an exemplary record in terms of our reduction of carbon. We are the top performer in the G7. It would be good to hear Opposition Members acknowledge the massive progress that we have made. The fact is that we are going to make more progress not by supporting a bunch of anti-capitalists that glue themselves to public transport, but by using market mechanisms instead, helping the economy grow. That is the way we improve the environment.
Fuel Duty Freeze
The price of fuel has only a marginal effect on how much fuel people purchase. That means that fuel duty freezes have a limited effect on emissions. Fuel costs, however, are a major expenditure for both households and businesses, which is why this Government have chosen to freeze fuel duty for nine successive years.
That is not the view of most people who actually know about these things. This Government have gone from climate emergency to climate complacency in just three weeks. There is 4% extra traffic on the roads because of the scrapping of the fuel duty escalator. What fiscal mechanisms is the Treasury contemplating to deal with climate change?
I take it from the hon. Gentleman that he supports increasing fuel duty. He asks who has that opinion. Actually, most economists agree that fuel consumption is highly price-inelastic, because working people do not always have the choice to use public transport or cycle. Not everybody lives in a city like Cambridge, with excellent public transport. We support the working men and women of this country, particularly in towns and rural areas, and we have saved them £1,000 a year on their fuel bills.
I declare my role as vice-chair of the all-party group for fair fuel. As the Minister outlines, it is the Conservative party that has frozen fuel for nine consecutive years. Since 2010, my constituents and people across the country have saved £1,000. As he mentions, the Opposition parties suggest that that was an ill-judged decision. Does he agree with me that it is this Government and this party who are on the side of motorists and hard-working people?
Absolutely. This Government will always support working people. We want to raise living standards. We are particularly conscious of those men and women who work in parts of the country, like the area my hon. Friend represents, where it is not easy to get to work. They need that extra money in their pockets to get on, do their jobs and run their businesses.
I have been saving the hon. Gentleman up for the delectation of the House: Mr Barry Sheerman.
That was a very, very complacent answer to a very important question. Is it not a fact that the house is on fire? We want a radical tax like the one Mrs Thatcher introduced with Geoffrey Howe in 1981. Why do we not have a tax on banks, Amazon and all the other people making profits, and put the money into fighting climate change now, when the house is on fire?
We on the Government Benches are not complacent about climate change; we are leading the world in this area. We are decarbonising faster than any other G20 country and we are investing billions of pounds in this area. If we want to tackle the challenge of decarbonisation, we will need to gather the greatest amount of private investment and innovation from the private sector. We will never be able to do that by going around nationalising industries below market value and making bellicose statements that shareholders are lining their pockets. The shareholders are the savers, the pensioners and the international investors that this country needs to thrive.
May I urge the Minister to reject the representations from the Labour party for a £9 billion tax rise on hard-working motorists? Does he not agree that rather than sandbagging hard-working people, it would be better to invest in more electric charging infrastructure to give people a real choice?
My hon. Friend is absolutely right and that is what the Government are doing: investing in ultra-low emission vehicles; increasing the capital allowances budget, now extended to 2023, for EV charge points; announcing a £400 million fund to get private sector investment in getting those charge points rolled out across the country; and, through the plug-in car grant, giving generous subsidies to help people to buy their first electric vehicle.
Business Rates Relief: Music Venues
We announced in the Budget that we were reducing business rates for small retailers and others by one third. Music venues are not specifically included, although local authorities may make some judgments around that. We, of course, keep all tax reliefs and taxes under review.
The music sector contributes billions to the economy and so much more in terms of life enrichment, but the opportunity pipeline is being constricted as music venues close under pressure. Will the Minister agree to just a small tweak to the retail discount scheme guidance to make it clear that music venues are eligible?
Music venues are eligible for many of the reliefs, worth £13 billion over the coming years, we have introduced since 2016, as well as the switch from uprating the multiplier from RPI to CPI. Many benefit from small business rates relief as well. I will of course, as with all representations, take the hon. Gentleman’s comments on board and consider them going forward.
Not all of the small private hotels and guest houses in Cleethorpes are noted as music venues, but they would benefit from additional relief to their business rates. They are finding trading particularly difficult at the moment. Would the Minister look sympathetically on representations from them?
In short, yes. I always look sympathetically on any representations to reduce taxation.
What an agreeable and benevolent fellow the Minister is. We are deeply obliged to him.
Leaving the EU: Scotland
The Government published a detailed set of economic analyses on the long-term impacts of EU exit on the UK economy—its sectors, nations and regions, and the public finances—covering multiple EU exit scenarios. The analysis shows that the spectrum of outcomes for the future UK-EU relationship would deliver significantly higher economic output than in a no-deal scenario in all nations, including Scotland.
The Minister is right to highlight those analyses, which show that every single Brexit will be damaging to our economy and will hit public services. Coming after a decade of Tory austerity, will he rule out a no-deal Brexit and use the comprehensive spending review to start investing in our public services?
Clearly, the best way of avoiding a no-deal Brexit is to look favourably on what the Prime Minister brings back to the House of Commons in the week commencing 3 June.
I will tell the hon. Lady what is causing great concern and instability in the sector that I am responsible for—life insurance and the pensions industry, which is thriving in Glasgow and Edinburgh—and that is the fear of the SNP leadership introducing a new currency.
The result of the referendum was clear in 2016 across the United Kingdom, and we need to get on and deliver it.
The Minister did not quite answer the question from the hon. Member for North East Fife (Stephen Gethins). Is the Government’s default position still that on 31 October, we will leave on a no-deal basis if no agreement has been made?
That is the legal default, but as my hon. Friend will know, the Government hope, even at this late hour, to persuade him of the merits of passing the deal in the week of 3 June.
Is not the greatest threat of uncertainty to the Scottish economy the prospect of a second independence referendum?
Absolutely. Another divisive referendum within 18 months would be completely contrary to what the First Minister said five years ago, which was that it was a “once in a generation” event. It would absolutely be a real crisis for Scotland.
The Government are proud of their record of reducing income taxes to enable people to keep more of what they earn. We have increased the personal allowance by over 90% in less than a decade. We have given 32 million people an income tax cut compared with 2015-16, and thanks to the changes that I made at the last Budget, a typical basic rate taxpayer will pay £130 less income tax this year than last year.
I thank the Chancellor for that answer, and I thank him and his team for getting to grips with the extraordinary annual structural deficit inherited from the Labour party. Bearing that in mind, and given that we are now on a course towards a balanced budget, will he focus with laser-like precision on continuing to reduce income tax for hard-working families, putting clear blue water between us and the socialists in the run-up to the next election?
My hon. Friend is absolutely right to focus on the much improved state of the public finances and the direct link between that and our ability to consider further tax cuts. What I said at the spring statement remains the case: for the first time in a decade, this country now has choices—we have headroom because of the improved state of the public finances. We can choose to use that to support additional spending on public services, or we can choose to reduce the deficit more quickly. We can choose to invest in Britain’s future, or we can choose to cut taxes on ordinary working families. The luxury of choice is something that this country has not seen for a decade.
I think there must be an election coming up, because the right hon. Member for Esher and Walton (Dominic Raab) is on the front page of The Daily Telegraph today saying that we should “Cut income tax for a ‘fairer’ Britain”. We do need a fairer Britain, because we have the highest level of inequality in Europe. The so-called living wage does not solve inequality, according to the Institute for Fiscal Studies and the House of Commons Library briefing of yesterday, so when it comes to the choices that the Chancellor is going to make, what is his choice in tackling inequality in Britain?
I am afraid I do not agree with the hon. Lady about the national living wage. We have set out an ambition for it to reach 60% of median earnings by next year, which we will achieve. As I said in the spring statement, we now need to give a new mandate to the Low Pay Commission for the future trajectory of the national living wage, and I want us to be ambitious in doing that, but I do not want us to price low-skilled people out of work. That is why I have started a series of roundtables, the first of which was the week before last, with representatives from industry and the trade unions to decide what our strategy will be to increase the national living wage in this country.
How many people in the west midlands are benefitting from recent increases to the personal allowance and the higher-rate threshold?
The answer is lots. Had I known my hon. Friend was going to ask me that, I would have been able to give him a precise answer. I will write to him.
Put a copy of the answer in the Library of the House—we will all find it most informative.
My party has advocated the raising of the personal allowance, and I am glad that the Chancellor has done that over the past few years, but does he agree that part of the problem now is that part-time and full-time employees on low pay, just below the threshold of £12,500, pay national insurance contributions? Will he consider eliminating that to the same level as the allowance?
We always have to find the most cost-effective way to deliver the effect we are looking for. We have chosen so far to do that by raising the personal allowance thresholds, but the hon. Gentleman makes a perfectly legitimate argument for a different approach in the future. As I have said, we will have choices as a result of the much improved state of the public finances.
My principal focus is to ensure the continued resilience of the UK economy at a time of domestic and international economic uncertainty. By maintaining our balanced approach to the public finances and continuing to focus on investment and cutting taxes for working families, we have ensured that public debt is now falling sustainably, employment is at a record high, wages are rising and Britain’s economy is forecast to grow more than three times as fast as Germany’s this year.
The report by the all-party group on adult survivors of childhood sexual abuse demonstrated the economic impact of not supporting victims: 72% said it had had a negative impact on their career; 65% on their education; and 46% on their financial situation. The Chief Secretary to the Treasury said about survivors that
“it should be government’s responsibility to prioritise support for these people”.
Will the Chancellor prioritise support for these services in the spending review?
I had a very useful meeting with the hon. Lady a month or so ago, and we are now taking forward the work and evidence she presented us with and working with the Home Office on looking at the economic benefits of taking more action to help survivors of child sexual abuse. It is a priority for the spending review to make sure we deal with violence against women and girls.
The clean growth strategy set out our ambition to enable businesses and industry to improve energy efficiency by 20% by 2030. Today farmers in a community such as Ludlow can make use of the rural development programme for agricultural buildings, but we have also announced two new schemes. First, there is the £315 million investment in a new industrial energy transformation fund, and secondly, we have published a call for evidence on a business energy efficiency scheme focused on smaller businesses.
The Chancellor’s speech to the CBI this evening has been much trailed. I welcome his clear warnings to his Conservative colleagues about the hit the economy would face from a no-deal Brexit, especially those who have said there is nothing to fear from a no deal. For the benefit of Members in the Chamber, will he explain what he sees as the impact of a no-deal Brexit and his clear view that with
“all the preparation in the world”
a no-deal Brexit will still damage our economy?
I am grateful to the right hon. Gentleman: I may not have to take the trouble to go and deliver the speech this evening.
The right hon. Gentleman has raised a serious point. There are two separate effects of a no-deal Brexit that concern me. First, there will clearly be short-term disruption, which will have an unpredictable and potentially significant effect on our economy. Secondly, and probably more importantly, all the analysis that the Government and external commentators have published shows that there will be a longer-term effect, meaning that our economy will be smaller than it would otherwise have been. I did not come into politics to make our economy smaller; I came into politics to make our economy bigger, and to make our people better off.
I shall be happy to deliver the Chancellor’s speech this evening. Any time!
The reality is that for many the Brexit vote was, and may well be again, a kick at the establishment: an establishment that has inflicted nine years of harsh austerity on them, and which many feel has ignored them. As has been revealed this week, that austerity programme has meant children going to school hungry, without warm clothes or dry shoes, and single mothers with no food in their cupboards skipping meals so that their children can eat. Does the Chancellor even acknowledge the role that his austerity politics have played in delivering the Brexit vote?
I think the reasons behind the Brexit vote are complex, and it would be trite to stand here and try to identify them simplistically. Let me also remind the right hon. Gentleman of the contribution that his party’s Government made to the situation that we inherited, which caused us to have to make the tough decisions to which he has implicitly referred.
Ten days ago, I met heads and chairs of governors from across my constituency at Corfe Hill School. Will the Chief Secretary to the Treasury meet me to discuss their specific concerns about schools funding, and the need for additional funding for our schools in Poole and in Dorset as a whole?
I would be delighted to meet my hon. Friend. We are looking at schools funding, alongside other funding, as part of the spending review. It is a public priority, and we are taking it very seriously.
I am proud that this country will be the first in the world to introduce a new, innovative plastic packaging tax. We are in the process of formulating the tax. We have finished the consultation, and have received a large number of responses. We will be presenting proposals in the forthcoming Budget.
Will my right hon. Friend the Chancellor consider changing the method of assessing a property’s rateable value, so that all shops on the high street pay business rates that reflect their profitability and trading potential, putting them on a level playing field with their out-of-town and online competitors?
I understand my hon. Friend’s wish to ensure the vibrancy of the high street, which is going through a very difficult period. Owing to the way in which the business rate system works, relieving the burden on any part of the system means imposing it somewhere else, so we would have to look carefully at that, but I will take my hon. Friend’s representation as a serious proposal and consider it.
That is a matter for the Departments concerned. As the hon. Lady knows, there is a legal obligation to pay the national living wage, and we have put additional resources into ensuring that that obligation is enforced. We encourage employers to pay higher rates than the national living wage when they are able to, and we will continue to do so.
When Sally Masterton discovered a £1 billion fraud at Lloyds Bank the bank discredited her, constructively dismissed her and prevented her from working with the police investigation. Five years later Lloyds apologised for her mistreatment but nobody at the bank has been formally investigated or sanctioned for this mistreatment. Will the Minister use his powers to instruct the Financial Conduct Authority to carry out that investigation?
As my hon. Friend knows, the FCA is conducting two investigations into the events at HBOS Reading and Lloyds has instructed Linda Dobbs to look into who knew what when. It is absolutely clear now that such circumstances could not be repeated given the action we have taken with the senior managers regime, but I look forward to the outcome of those reviews and we will be taking action accordingly.
We are chasing tax dodgers everywhere. [Interruption.] Yes, we are. We have raised £200 billion of additional revenue since 2010 by clamping down on tax avoidance and evasion. Yet what did I hear when I came into the Chamber today? I heard Labour Member after Labour Member challenging my right hon. Friend the Financial Secretary to the Treasury about the loan charge, a clear attempt to deal with a piece of egregious tax avoidance which Opposition Members seem to have a totally different view about.
If we want more renewables and more electric cars we need a more resilient electricity grid, and that needs more investment. Does my right hon. Friend agree that the last thing we need for a cleaner, greener Britain is for the Labour party to wipe billions of pounds off our National Grid’s investment capacity?
What we want is a brief sentence on the Government’s policy. We are not having dilations on the policies of other parties; that is not the purpose of Question Time.
I think the idea that an industry could be nationalised not at market value is completely wrong; that is fundamentally against the principle of property rights on which our entire economy is built.
I am working very closely with the Department for Education, looking at the FE sector and at the new qualifications we are introducing, such as T-levels, and making sure the sector is sustainable in the future. We are also reforming it to deliver the best possible outcome for students.
What estimate has my right hon. Friend made of the effect on national debt of nationalising the National Grid and the effect it would have on the taxes paid by ordinary working people and the public services they receive in my constituency?
We know that the cumulative burden of the commitments made by the Opposition Front Bench would reach almost £1 trillion over a Parliament, and I have heard—[Interruption.] If the shadow Chancellor has a number, no doubt we will hear about it in a moment; I have heard him say that it does not matter because these companies are profitable, so the profits will pay the additional interest costs. But let me tell my hon. Friend the Member for Sleaford and North Hykeham (Dr Johnson) something: I remember the last time we had widespread nationalisation in this country and—do you know what?—none of the companies the Government owned were profitable. Funny that, isn’t it?
We are simply making sure that the tax that was always due is paid, and that is right and proper. As I have set out, we are taking a front-footed approach to clamping down on promoters, and that has included six recent arrests for potential criminal activities.
Will the Chancellor of the Exchequer acknowledge the important role that the national lottery has played in this country? When he looks at the national lottery, will he ensure that any future lottery that is run on a national basis is taxed at the same rate?
My right hon. Friend raises an interesting question, and I will look carefully at the taxation of the national lottery and any future lotteries.
Anti-idling rules are a good start in reducing air pollution, but local authorities need the legal powers and resources to enforce them. Would the Treasury consider making new money available to local authorities to stop cars idling?
The Government have committed £3.5 billion to improving air quality for the entire population, and I understand that that involves Bath and North East Somerset Council receiving nearly £6.5 million. I understand that the council is also expected to bid for part of the of the £220 million clean air fund, and I wish it luck with its application.
I am pleased to hear that education is going to get a special focus in the forthcoming spending review. Please can Somerset have special consideration, since pupils there get way below the national average in both secondary and primary school funding? With a sound economy, I am sure that we can sort this out.
I was pleased to have the opportunity to meet my hon. Friend to discuss this issue. The reality is that there is a big gap in funding, with the lowest-funded authorities getting approximately £4,300 per pupil and the top-funded authorities getting £6,800. We are looking at that, because we have to have fairness across the country.
Revenue funding continues to flow to oil refineries in the middle east at the expense of tidal technology, an area in which we are a world leader. When will this Government accept that investing in tidal energy would bring huge benefits to the whole economy?
This Government are investing in innovation in the tidal and marine sector. For example, we have invested in the marine innovation centre in Shetland, and I recently met a delegation to discuss those proposals. However, investments that we make on behalf of the taxpayer have to be the right strategic energy investments for the country and provide good value for money for the taxpayer.
I met headteachers and school governors across Cornwall recently, and they are very concerned about the pressure that their school budgets are under, so can I put in my bid for more money for education in the comprehensive spending review, and can we ensure that that money is fairly distributed so that schools in Cornwall get their fair share?
It sounds like I will not need to conduct any more meetings, because we can just continue this debate in the Chamber. I hear what my hon. Friend says, and I agree that there is unfairness across the system. We are working on that at the moment.
Wherever the Royal Navy deploys, the Royal Fleet Auxiliary deploys alongside it, but instead of getting the 2.9% pay increase that the sailors got, RFA personnel got a below-inflation 1.5% increase. As the total cost of the difference is only £400,000, will the Government think again and give our brave RFA crews the pay rise they deserve?
Royal Fleet Auxiliary personnel are part of the civil service, so this is a matter for the Cabinet Office, alongside the Ministry of Defence, but I am sure that it will have heard the hon. Gentleman’s representations.
As the questions today have demonstrated, the Treasury needs to take a much longer-term view of investing in people and their human capital, just as it does in relation to physical capital. When is the Office for National Statistics’ human capital review finally going to report? It was announced in March 2018, but I cannot even find out whether its consultation has been published yet.
I pay tribute to my right hon. Friend, because it was at her prompting that I originally asked the Office for National Statistics to look at how we measure and value human capital to ensure that there is no systematic bias against human capital in favour of physical capital. The ONS has in fact delivered its draft report, and the question of how we measure and value human capital will be at the centre of the spending review process.
Has the time not come for the Chancellor to heed the call from the Westminster leaders of seven Opposition parties to fund proper compensation for those infected and affected by the NHS blood scandal across the whole United Kingdom?
That is an issue for the Department of Health and Social Care. I understand the hon. Lady’s concerns, and I will pass them on to my right hon. Friend the Secretary of State for Health and Social Care.