1. What steps she is taking to reform the Human Rights Act 1998.
First, I would like to pay tribute to my hon. Friend’s work on human rights reform as a Minister in this Department. He is a great champion of liberty The Government are committed to scrapping the Human Rights Act and introducing a British Bill of Rights.
May I say at the outset that it is an honour to be the first Member to welcome the new Justice Secretary and the new Front-Bench team to their posts? I wish them every success. I also reassure my right hon. Friend, from experience, that being a lawyer is of very limited value in her Department—no offence to the Minister of State Britain’s decision to leave the EU will remove the jurisdiction of the Luxembourg Court, which is probably the biggest obstacle to delivering a Bill of Rights. May I welcome my right hon. Friend’s statement on the intention to continue this reform and encourage the Government to proceed to consultation as soon as possible?
This is an important reform; we need to get it right. We will be introducing proposals in due course. We will deliver on this manifesto commitment.
Which convention rights does the Justice Secretary propose to leave out of the Bill of Rights?
I thank the hon. Gentleman for his question, and I remember with fondness our time together on the Justice Committee, where he had many good thoughts to put forward. We will be putting out our proposals in due course, which will discuss these issues in detail, but one of the important points is that we want the ultimate arbiter of those rights to be the Supreme Court of the United Kingdom.
Does the Secretary of State agree that one of the problems with the current set-up is that the code of rights includes many reservations and qualifications that the European Court does not embrace? A British Bill of Rights can ensure that there is proper balance and that the interests of justice are served.
My hon. Friend makes a very good point. It is absolutely the reason we want to pursue a British Bill of Rights to put that in place.
If we are to have the Supreme Court as the ultimate arbiter, does that mean that the Lord Chancellor wants to withdraw from the European convention?
The Prime Minister has been very clear that leaving the European convention on human rights is not something that we are going to pursue.
May I, too, welcome my right hon. Friend to her post and her determination to proceed with a British Bill of Rights? Could I urge her to remember that the cornerstone of the rule of law in this country has always been the sovereignty of Parliament? May I urge her not to listen to those who argue that getting rid of an Act that came 40 years after we signed up to the European convention on human rights somehow or other undermines our position within the treaty.
My hon. Friend is absolutely right: human rights were not invented in 1998 with the Human Rights Act. We have a strong record, as a country, of human rights, dating back to Magna Carta, and the British Bill of Rights is going to be the next step in enshrining those rights in our laws.
May I welcome the Secretary of State to her new role and say that while, of course, it is not a prerequisite for the person in her role to be a lawyer, she will no doubt wish to listen carefully to any legal advice she receives about any proposals to reform the law There is almost universal opposition to the repeal of the Human Rights Act in Scotland; this is reflected in the Scottish Parliament and across Scottish civic society. On 11 August, I wrote to the UK Government seeking clarification of their plans for so-called reform of the Human Rights Act, following press reports. I have yet to receive a substantive response. At what stage in her plans will the Secretary of State seek to consult the Scottish Government, and can she confirm that she will listen to and respect their answer?
I have already had a number of legal meetings about this issue, and I am sure I will enjoy working with the legal profession in my role. The Prime Minister has already had a very good meeting with the First Minister of Scotland. I will be meeting the Scottish Justice Minister shortly to discuss a number of issues.
I call Richard Burgon.
rose—
Order. I do apologise; I had not realised that the hon. and learned Lady wanted a second bite of herself.
I was rather hoping to have a second bite of Her Majesty’s Government, Mr Speaker If the Secretary of State has been having legal meetings about the Human Rights Act, she will have been advised that human rights are not a reserved matter and that therefore the Scottish Parliament must be consulted regarding any legislation with regard to human rights. During the independence referendum, Scotland was told that it was an equal partner in this Union. Does she appreciate that to proceed with repeal of the Human Rights Act across the UK would fly in the face of that promise and exacerbate the democratic deficit that already exists in Scotland, where a Tory Government we did not vote for are planning to take us out of the European Union against our will?
I would point out that this was in the Conservative party manifesto and we secured a majority at the general election. As I said, I will be in touch with the Scottish Justice Minister; I look forward to talking to him about this subject.
I welcome the Secretary of State to her new role. It is good to see a Leeds person at each Dispatch Box. I understand that, like me, she comes from good, left-wing Leeds stock, and I look forward to our exchanges At the Secretary of State’s swearing-in ceremony, she quoted with approval the late Lord Bingham. On the Human Rights Act, Lord Bingham said in 2009: “Which of these rights, I ask, would we wish to discard?” He went on to say: “There may be those who would like to live in a country where these rights are not protected, but I am not of their number.” To give the Secretary of State another chance, because she failed to answer the question asked by my hon. Friend the Member for Kingston upon Hull East (Karl Turner), which of these rights does she wish to discard?
I, too, welcome the hon. Gentleman to the Dispatch Box. It is great to have somebody who is also from Leeds facing me, although I learned the error of my ways after growing up in a left-wing household in that great city.
Shocking!
All I can say is that I believe that everyone is capable of reform, even those on the Opposition Benches. I have not yet given up hope on the shadow Secretary of State for Justice The whole purpose of the Bill of Rights is to enhance human rights in this country. We have led the world in human rights since Magna Carta and the Bill of Rights that was published in Wales in 1689, and we will continue to do so.
I thank the Secretary of State for that response, but let me say this: “We were very clear that we will replace the Human Rights Act, which isn’t working for British people, with a British Bill of Rights that gives the ultimate power to citizens in this country.” Those were the words of the Secretary of State on the “Today” programme in May 2015. Given that, and in the light of the answer that she has just given, can she explain to the House why she wants to rob the people of Britain of their rights? Will she admit that talk of a so-called Bill of Rights is simply posturing and making concessions to the hard right of the Conservative party?
Human rights were not invented in 1998 with the Human Rights Act. There are major issues with the Human Rights Act and we need to move forward. We need a British Bill of Rights that enshrines our ancient liberties.
Order. We now need to make progress as there are a lot of questions. Progress thus far has been slow, so we can be speeded up by Mr John Mann.
2. What assessment she has made of her Department’s contribution to tackling online hate crime.
Hate crime is abhorrent and has no place in society. The Government published their plan to tackle hate crime, “Action Against Hate”, in July 2016. This Government believe that the enforcement of criminal legislation has an important role in tackling online hate. We also need deterrence and prevention, which require a broader response, from counter-narrative activity through to effective management from the internet industry.
The last time I asked the Secretary of State a question in here, she invited me to join her on a delegation to China. May I reciprocate and invite her and her Front-Bench colleagues to come to Bassetlaw day in the Jubilee Room, hosted by me and the hon. Member for Newark (Robert Jenrick) True Vision, the internet reporting organisation based in the Secretary of State’s offices, is the pride and joy of her Department and the envy of every other Government in the world. Is she going to allow it to disappear into some other Department, or is she going to keep it in her Department?
I thank the hon. Gentleman for his characteristically delivered question. The Secretary of State has, I gather, recently written to him on this matter. The cross-Government hate crime programme is highly regarded by this Government and internationally. I am committed to ensuring that that important work continues.
I welcome my hon. Friend to his post. The Government were right to make posting revenge porn online a crime. Figures released today show that there have been 200 prosecutions for revenge pornography, yet more than 1,000 cases have been reported to the police. Does the Minister agree that, as with other sex-related crimes, anonymity for victims perhaps needs to be carefully considered in cases of revenge pornography?
I thank my right hon. Friend for her question and, indeed, for the work that she and her Select Committee do in this area. Revenge porn is a terrible abuse of trust that can leave victims feeling humiliated and degraded. By making it a specific offence carrying a maximum sentence of two years behind bars, we have sent a clear message that this crime will not be tolerated. On anonymity, I am interested in what she says; if she would like to write to me about that issue, I will consider it.
I welcome the Minister to his post. Has he seen this morning’s comments by the Director of Public Prosecutions that social media is one of the driving forces behind the record high in recorded violent crimes against women and girls? I welcome what the Minister has said about the need for a broader response, so what does he plan to do to safeguard the many specialist services that exist to support women who are suffering online harassment and abuse, many of which are suffering funding cuts?
As I have already said, this crime is deplorable. I suspect that it has always happened and that social media has facilitated it, and that we are now detecting more crime of this kind. I am determined to maintain services that support women and, indeed, men who are subjected to the crime, and I will continue to keep a close eye on that.
What action are the Government taking to combat online anti-Semitic hate crime emanating from extremist groups on campus?
Online anti-Semitic crime, like revenge porn, is an appalling crime that is more easily committed through use of the internet and anonymity. With specific regard to anti-Semitism, the Government, thanks mainly to the fantastic work done by the hon. Member for Bassetlaw (John Mann) and his all-party group, have made significant advances. I will consider my right hon. Friend’s comments on anti-Semitic crime, particularly on campus.
3. What recent assessment she has made of safety in prisons.
In the last year, assaults have risen by 31% and those on prison staff have risen by 40%. That is totally unacceptable and I am determined to tackle it. Reforming prisons will be possible only if they are made safer places for staff and offenders alike.
As the Secretary of State’s response makes clear, prison safety continues to deteriorate. That significant problem puts both prisoners and staff at risk, but a major issue that must be tackled is the retention of staff. Will she set out exactly what she will do to make that a priority and how she will succeed where her predecessors have failed?
I absolutely agree that the retention of staff is a very important issue. I have been to a number of prisons and seen how brave, fearless and hard-working our prison officers are. They are vital in turning around offenders and getting them the education and skills they need to succeed outside. I am determined to support and work with them, and over the coming months I will lay out more detailed plans.
May I warmly welcome the Secretary of State and her team to their posts? Lawyers do sometimes have their uses, and so do non-lawyers. Her predecessor made prison reform a centrepiece of the agenda and rightly described the deterioration of safety in prisons as terrible. The figures have now got worse. He committed to an action plan to tackle violence in our prisons. Will the Secretary of State reaffirm that, and what specific steps will be taken to deal with what is a ticking time bomb in our criminal justice system, because nothing else has worked?
May I say how pleased I am to have been able to meet the Chairman of the Justice Committee? I take the advice of all my lawyers, but particularly that of the Chairman of the Select Committee, extremely seriously This is a critical issue that faces our prisons. We cannot have reform in our prisons if we do not have safe prisons for people to work in. Those two things go hand in hand. I am committed to an agenda of making our prisons safe and places of reform. I will be laying out my plans very shortly on this issue, and I look forward to discussing it more with the Select Committee tomorrow.
Will the Secretary of State look again at statements that were made by her Department recently about the number of prison officers? The Department claims that the number has increased, but it has not. Will she look at the matter again? I believe that she did not take into account staff being regraded or the number of hours that they actually work when she examined the number of officers in the system.
I will, of course, look at those numbers in detail. In fact, I am looking at them at the moment. As well as the number of staff, it is important to consider how staff are deployed and trained, and the powers that governors have to get the best out of staff working in prisons. I am looking at all those aspects, but I agree that staff are absolutely crucial to make our prisons work well.
One of the causes of a lack of safety in prisons has been novel psychoactive substances. Does the Secretary of State agree that the ban on the possession of those substances in prisons should really improve the safety of other prisoners and prison officers, if it is properly enforced?
My hon. Friend is absolutely right that NPS have been a major issue in our prisons. When I visited HMP Norwich last week, I was pleased to see that it was using the new legislation to tackle that issue in the prison, to search people and to catch them out. HMP Norwich has succeeded in reducing the usage of such drugs already. I would like to see that type of programme happening more across our prison estate.
4. What steps her Department is taking to improve safety for prisoners and prison staff.
Minister at the Dispatch Box.
Forgive me, Mr Speaker; I think that the summer recess has taken its toll on my memory of parliamentary procedure I am determined to ensure that our prisons are places of safety and reform. We need to help offenders to get off drugs, improve their education and get the work skills they need so they are less likely to reoffend when they come out.
I thank the Secretary of State for concentrating. Does she see a connection between the long-term decline in prison officer numbers—they went down 30% between 2010 and 2013, and they are going down again—and this massive increase in assaults on staff, which went up 90% over the last Parliament?
There are many factors driving prison violence and self-harm. I am looking at the evidence about what will work and what steps we can take, but I am determined to tackle this. I am very clear that the current levels of violence are unacceptable.
May I also warmly congratulate the Secretary of State and the new ministerial team on their appointments? Of course we need more prison officers in prisons, but may I urge the Secretary of State and her Ministers to consider the greater use of prisoners as mentors? Wandsworth is leading the way, with 50 mentors providing teaching and education, but that could also be used in employment, for therapeutic purposes and to cut down the use of drugs.
As a Prisons Minister, my hon. Friend did tremendous work in this area; we are very much learning from the work that he carried out in the Department. He makes an important point, and I think we need to look at the overall culture in some of our best prisons. We have exemplary work going on, such as mentoring, and we need to make sure that that is happening right across our prison estate.
The Secretary of State may be aware that the head of the prison service in Northern Ireland recently stood down. Attacks on prison staff are on the rise. Will the Secretary of State ensure that her Department engages actively with the Department of Justice in Northern Ireland to see what lessons can be learned and to try to improve safety in prisons in Northern Ireland?
I have been in touch with the Justice Minister in Northern Ireland, and I look forward to talking to her in due course.
May I, too, congratulate the Secretary of State on her appointment? Is not a large part of the problem the fact that we have so many Victorian prisons? Does she have any plans for a prison rebuilding scheme?
My hon. Friend is absolutely right. We have a big issue with prisons that are out of date and not fit for purpose, which makes it more difficult for our excellent governors and officers to manage them well. I am pleased to say that this summer we were able to close Holloway prison. We have a £1.3 billion building programme. I want new modern prisons to be built in which prisoners will get the education and work they need to succeed in outside life, and to close down some of our most dilapidated and out-of-date prisons.
5. What her Department’s strategy is for supporting victims of crime.
It is crucial that victims of crime are supported as effectively as possible. The victims code was revised in 2015. Victims of all criminal offences are now entitled to support from a wide range of organisations, as well as from criminal justice agencies. The reforms we are making to our courts will significantly improve services for victims and their families—for example, to enable them to give evidence remotely and digitally.
More than 23,000 individual crimes have been reported in Enfield during the past 12 months. For far too long, the victims of these crimes have been forgotten and ignored by the criminal justice system. Given that the Victims’ Commissioner supports the introduction of a law for victims of crime, when will the Government fulfil their election manifesto commitment to bring forward legislation on this issue?
We want to make sure that all vulnerable and intimidated witnesses can give their best evidence in court and feel less anxious. We are committed to making sure that victims of crime get the support they need. We have protected the overall level of funding for victims across the spending review period, and we announced funding of more than £95 million in 2016-17 to fund critical support services. We will bring forward our legislation, as promised, in due course.
Victims of crime want to see the perpetrators of that crime properly punished. Is the Minister happy that prisoners are automatically released halfway through their prison sentence no matter how disruptive they are or how much of a threat they still pose to the public, or does he agree with me that prisoners should serve the sentences handed down by the courts in full?
The purpose of justice and the primary goal of the justice system must be to reduce reoffending. If somebody in prison has been assessed, is deemed not to be a risk to society and has been properly rehabilitated, it is in the best interests of that individual and of society for that person to be released.
Too often the victims of criminal driving and their families are not actually treated as victims of crime, but told that they have been involved in an accident. How can that culture be changed, and when, finally, will we get the review of sentencing for these types of offences?
I do not believe that that is in my purview, but if the hon. Gentleman writes to me I will by all means reply to him on the issue. I agree that victims in such situations need more protection and that the culture needs to change.
One of the best ways to ensure that justice is served is to ensure that victims have the chance to make a victim impact statement to the court, but that does not always happen. What can the Minister do to ensure that it happens in every case?
As I understand it, victims are now getting more of an opportunity to make a victim impact statement because they can do so online. I agree with my hon. Friend that that should be possible.
As has been mentioned, today’s report on violence against women and girls shows an increase in prosecutions. However, victims charities remain concerned about their futures, as was stated by the chair of the Association of Police and Crime Commissioners Supporting Victims Group when asking the Ministry earlier this year to clarify what funding is available to PCCs. The Minister told my hon. Friend the Member for Wigan (Lisa Nandy) that he will be “keeping an eye on this matter”. With respect, keeping an eye on the matter is not good enough. Will the Secretary of State now confirm that victims services will receive the full funding that they require?
The victims services budget has increased significantly from £48 million in 2010-11 to about £95 million in the current financial year. In 2016-17, for example, we have allocated about £7 million to 99 rape support centres to provide therapeutic and practical help to male and female victims of rape and child sexual abuse. I do not recognise the description given by the shadow Secretary of State. The Government are committed to protecting victims, particularly women who have been victims of crime.
6. What steps her Department is taking to prevent the use of mobile phones in prisons.
The illicit use of mobile phones in prison undermines security, order and control, and has been linked to many forms of criminality. The Government are determined to take action to stop it.
The connection between technology and radicalisation by the dissemination of extremism in prisons is one of the most critical challenges we face. Will my hon. Friend continue to do everything possible to ensure that prisoners, who already face difficulties re-engaging with society, do not have that difficult task made impossible by those who would use technology such as mobile phones to spread extremist poison?
My hon. Friend will no doubt have seen the Government’s response to the review on extremism. I assure him that we will continue to work tirelessly to ensure that extremist ideologies are not spread by any means, including mobile phones.
There have been reports from Swansea prison of people throwing mobile phones over the wall, which provides anonymity that allows prisoners to indulge in all sorts of criminal activity. What is the Minister doing about that sort of thing?
The hon. Gentleman makes an important point. Every governor I have spoken to in the last six weeks has mentioned the growing problem of illegal mobile phones in prison. I believe that technology is vital to detecting and blocking such phones. That is why, in addition to the range of technologies that have already been deployed across the prison estate, we have held a high-level meeting with mobile network operators and asked them to use their expertise to develop new technological solutions to deny mobile phone signals in prisons. As responsible businesses, I expect those operators to co-operate fully.
7. What assessment she has made of the adequacy of court provision in Bury.
There is, and there will be, an appropriate level of court provision for the people of Bury.
I warmly welcome my hon. and learned Friend to his new role and thank him for that brief reply. Although court provision might be regarded as adequate now, it is important that it continues to be adequate in the future. I ask the new Lord Chancellor and ministerial team to look again at the proposals for north Manchester and, in particular, at the consequential effects on the police budget, given that the police will be faced with longer journey times when they attend court.
We might be faced with longer questions as well, but we are immensely indebted to the hon. Gentleman nevertheless.
May I start by paying tribute to the work that my hon. Friend has done and the proposals he has made for his local courts? He will know, as a lawyer, that we are investing a huge amount of money—a good £1 billion—to transform our courts and tribunals. Modern technology improves efficiency and means that fewer people need to attend court in person. Excellent facilities are available to the people of Bury and Manchester, which have some of the best courts in the country.
The Minister will know that the proposals across the whole of Greater Manchester are far-reaching and that they are controversial in parts of the city region. Will he explain to the House precisely what was agreed with Greater Manchester combined authority in the memorandum of understanding that his Department signed with it? Does it mean that the combined authority can look again at some of the court closures?
The hon. Gentleman will realise that none of these decisions is taken lightly. It is important to work closely with local government, and that is exactly what has been happening. To give him an impression of the tremendous improvement the court modernisation programme is making, it has been going for four months and 6 million pieces of paper have been avoided as a result.
Avoided?
Yes, 6 million pieces of paper have been avoided by using digital case files. That is a pile of paper as high as the Shard—the largest building in London.
rose—
Order. Huntingdon is a splendid part of the world that deserves to be represented effectively by the hon. Gentleman, whom I have known for a quarter of a century, but it is a long way from Bury, to which this question exclusively relates. [Interruption.] Order. The question is about Bury, I say to the young fellow. He can come in later—we look forward to hearing from him.
8. What information her Department holds on the level of social mobility and social diversity within the legal professions.
That information is published by the legal professions. For example, 13% of QCs are women, and 6% declare themselves as coming from a black, Asian and minority ethnic background.
Available data show very limited progress, particularly with only 13% of QCs and only a third of the people practising at the Bar being women. What can the Government do to improve that and rattle up the profession a bit?
We want a justice system that works for everyone and a legal services industry that uses all the talent in our country. I have already had very positive conversations with the Lord Chief Justice, who is keen to improve diversity figures in the judiciary, and I am due to meet the Bar Council shortly to talk specifically about the Bar.
What assessment has my right hon. Friend made of opportunities to increase apprenticeship-based routes into the legal professions and prison services to increase social mobility?
I am a huge fan of apprenticeships. The new apprenticeship levy brings a big opportunity for some of our large legal services firms, and right across the board, to increase the number of apprenticeships. I will certainly be talking to those firms about that over the coming months.
At one London provider of legal education, fees for the academic year ahead are as follows: nearly £11,000 for the graduate diploma in law; more than £15,000 for the legal practice course; and near to £19,000 for the Bar professional training course. That is on top of the cost of university education. Such fees are beyond the reach of many people from ordinary backgrounds. Given that reality, how will the Minister ensure a diverse legal profession?
I have been discussing this matter right across the legal profession. At the younger end we are seeing a lot more diversity; the question is how people progress through the pipeline. I would like more transparency so that we can look at people moving through the system. I have no doubt that the Lord Chief Justice and leading judges want to see more diversity. They are very keen to work with me on this agenda.
9. What steps the Government plan to take to tackle mental health issues in prisons.
15. What steps the Government plan to take to tackle mental health issues in prisons.
Prisons must become places of rehabilitation where offenders can change their lives and turn away from crime. Addressing health needs, including mental health, is key to creating a safe and rehabilitative environment for prisoners. We are committed to meeting the mental health needs of prisoners. All prisons have procedures in place to identify, manage and support people with mental health illness.
Will the Minister confirm that governors will have new powers and abilities to run their own mental health and health budgets, and will that include co-commissioning of mental health services with local clinical commissioning groups?
The approach going forward is under consideration at present. Governors have an important part to play in helping to structure healthcare services within their prisons.
Does the Department have a precise figure for the number of people in prison at the moment who have mental health issues? Will my hon. Friend reassure me that prison staff are adequately trained to deal with people who exhibit mental health issues?
Based on a Ministry of Justice survey, 49% of prisoners were assessed as being at risk from anxiety and/or depression and 16% reported symptoms indicative of psychosis. Department of Health figures, however, are somewhat different; north of 90% of prisoners have a mental health problem if substance misuse is included. I am seeking more data on this area. We are committed to meeting the mental health needs of prisoners, which is why all new intake prison officers receive mental health awareness training as part of their entry-level training.
One hundred people have taken their lives in our prisons in the past year. That is the highest level for over 25 years. More than 9,000 people have self-harmed in our prisons. That is an increase of over 25% in the past year alone. The Government should be ashamed: it is a dereliction of their duty of care. I want to know, having listened to the answer from the Government, what they are actually going to do to look after the thousands of prisoners who have serious mental health conditions and are not being looked after.
The aetiology of mental health is pretty complex. The genesis of problems do not just occur over the term of a Parliament. The system in place for mental healthcare and the continuity of care for people before, during and post their stay in prison is clearly not where it should be. I would argue that that has been the case for many decades. I have been asked to look at this matter and will be doing so, but it is a huge and complex area. As a consequence, I am not about to make any commitments at the Dispatch Box.
There is a particular risk for women in prison. Some 30% of women prisoners have had a previous admission for a psychiatric problem before they went into prison. In the past year, 11 women have killed themselves. My impression is that that is because the previous Secretary of State did not focus on the recommendations of the Corston report, which would have ensured a better level of mental health for women in prison. What is this Minister going to do on the Corston report and on women in prison?
I have read the Corston report and it is a good report. It was published in 2007 and it is still relevant today; it has intellectual coherence with the Charlie Taylor report on youth offenders. I will be looking at it and I am personally persuaded by some of the arguments in it, but I see no evidence that the former Secretary of State was not in any way keeping a close eye on the matter.
10. What steps her Department is taking to provide additional support for prisons with increased numbers of inmates who are detained for sexual offences.
We will always have prison places to fulfil the orders of the courts. Those convicted of sexual offences are just one cohort of a range we manage daily across the estate. In doing so, we will make sure that estate capacity is realigned to meet the demand for places, including for those convicted of sexual offences.
Her Majesty’s prison Lewes in my constituency has seen a huge surge in prisoners either on remand or serving a sentence for sexual offences. This is putting massive pressure not just on staffing but on space and resources. What specific help can the Minister give HMP Lewes?
My hon. Friend makes a very valid point. Those at HMP Lewes who are charged with sexual offences are generally held in separate units that provide suitable accommodation for their offending behaviours. Perhaps I can reassure her that the prison received £153,000 of the Government’s £12 million fund for safety, and that it plans to spend that on staff, focusing on safety and on violence reduction. There is a recruitment drive going on at the moment. Staff are being vetted and a number of staff will be starting imminently.
Surely the Minister understands that, whether it is prisoners who have been tried and convicted for crimes of a sexual nature or prisoners with mental health and other problems, it is the quality of the management of our prisons that must give us all great concern. When my Select Committee looked at education in prisons, we kept coming back to the fact that the culture of the prison comes from the top and is supported by well trained and well educated prison officers.
On this rare occasion, I agree entirely with the hon. Gentleman—the quality of leadership in a prison makes a huge difference to the regime. It makes a huge difference to how staff are inspired and to the rehabilitation of offenders. That is why Government Members are arguing for prison reform to empower governors, give them control of budgets and enable them to get local resources to meet the needs of offenders.
11. What steps the Government are taking to ensure that offenders find employment on release.
16. What progress her Department is making on ensuring that offenders find employment on release.
Most offenders arrive in prison with very low levels of educational attainment, very high levels of substance misuse and a very poor employment history. I believe that the purpose of modern prisons is to keep the public safe and to tackle each of those issues, so that prisoners have the foundations to secure and hold down a job on release.
I thank my hon. Friend, but I have recently visited prisoners from my constituency who told me that offenders do not have access immediately on their release to national insurance numbers, bank accounts or unemployment benefits. Will the Minister let me know what steps the Government are taking to improve this situation?
I agree with my hon. Friend that if “through the gate services”, as we call them, are to work and to stop reoffending, national insurance numbers, bank accounts and so forth need to be in place. There is a series of programmes in place to tackle this problem, including an offender banking programme, which opens about 5,000 new bank accounts every year.
The Minister has rightly identified the fact that research shows that employment after custody greatly reduces the chances of reoffending, so what work is his Department doing with the Department for Work and Pensions to make sure that offenders not only find work after they leave prison, but stay in work?
As my hon. Friend has rightly identified, tackling the challenge—and it is a challenge—of getting prisoners work when they leave requires a concerted effort across government and locally across the community. Every prisoner has the opportunity to meet a DWP work coach before release, and the work coach’s role is to guide them towards employment. Work coaches can also ensure that prisoners know their national insurance numbers and get the other services they need to be able to make an appropriate transition into the community.
Many prisoners are already on short-term sentences of under nine months and are often in prison for very short periods. Will the Minister give us some advice on how governors will be judged on placing such prisoners into employment when the challenges are very difficult?
Since being appointed to this job, I have met a number of governors, and most of them tell us that they want to be empowered to match resources to the needs of prisoners in their prisons, working with local employers and the whole community. That is what governors want, but this is not the responsibility of governors alone. If we want prisoners to be able to go out and find work, businesses have a role, the community has a role and we all have a role. If prisoners can leave, get jobs and restart their lives for the better, we all benefit.
More than 60% of young people within the justice system have a communications disability, and more than a third of young offenders have speaking and listening skills at the level expected of an 11-year-old. With these skills being fundamental to the ability to hold down a job, will the Minister update us on what assessment the Government have made of speech and language support needs and of how well those needs are being met?
The hon. Lady is obviously right that many prisoners arrive at prison with huge learning difficulties and disadvantages. That is well documented. We need individual programmes tailored to the needs of the prisoner, and the way to do that, as my right hon. Friend the Secretary of State said, is to empower governors to work with probation companies and rehabilitation organisations to deliver those programmes.
I gently say to the Minister that I wrote a little report on this matter in 2008, a copy of which I dare say he will find either on the internet or in the House of Commons Library, if it is of interest to him.
I look forward to reading it.
I am sure he does. We are immensely grateful to him.
12. What proportion of prisoners are illiterate.
Fewer than half of the people entering prison have basic standards of English and maths. This is a huge problem because we know that low levels of education can prevent people from securing jobs on release and leading law-abiding lives.
The Secretary of State is quite right to say that both literacy and numeracy are essential to getting a job. Should we not therefore put more resources into educating prisoners on release so that they are able to get jobs?
My hon. Friend is absolutely right. The fact is that too many people enter our prisons without those skills. We need to use their time in prison to help them to gain the basic skills so that they can succeed outside. We have started measuring prisoners’ skills by testing them as they enter prison. I am keen to see that we measure real progress made during prisoners’ stay in prison and hold governors accountable for that.
Will the Secretary of State confirm that there will be no return to the policy of banning books for prisoners?
I confirm that books are freely available in prison.
I warmly welcome my right hon. Friend to her position. I was delighted to hear the new Secretary of State for Culture, Media and Sport talking about the importance of the arts in prisons. I hope that my right hon. Friend will recognise how the arts can bring prisoners to literacy and teach them a huge range of skills. I hope she will meet the National Criminal Justice Arts Alliance at the earliest opportunity to discuss what the arts can do, particularly in respect of literacy.
May I say what a fantastic job my right hon. Friend has done in championing the arts in every part of our country? His legacy lives on, and it will live on in our prisons.
I think that the right hon. Member for Wantage (Mr Vaizey) is overcome with emotion. What a happy day for the feller!
What discussions will the Secretary of State have with Justice Departments in devolved legislatures throughout the United Kingdom to ensure that best practice is replicated in the improvement of literacy in all UK prisons?
I look forward to meeting my counterparts from all over the United Kingdom and discussing these critical issues, because this is a challenge that we all face.
Order. We are running late, so extreme brevity is now required.
13. What steps her Department is taking to ensure access to justice regardless of ability to pay.
The Government’s reform programme is intended to deliver a simpler modern justice system that is available to everyone.
East Lancashire, which includes my constituency and up to five other constituencies, has only one legal aid solicitors firm to deal with housing. What is the Minister going to do about that legal advice centre desert?
It is important for legal aid to be available, and it is, in housing cases. It is also available in the most vital cases, in which people’s lives, liberty or homes are at stake. It is available in domestic violence cases, and cases in which children may be taken into care. I am, of course, grateful to the hon. Lady for highlighting the issue, but let us be clear about the fact that legal aid in housing cases is available, as is a national helpline, as well as the services of lawyers throughout the country.
T1. If she will make a statement on her departmental responsibilities.
I am proud to take on the role of Lord Chancellor and Justice Secretary, upholding the rule of law and reforming our justice system. I am determined to ensure that our prisons are places of safety and reform where offenders can get off drugs, improve their education, and develop the work skills they need so that they are less likely to reoffend. I pay tribute to our brave prison officers and probation staff Over the next couple of months I shall lay out my plans for prison reform, and set out plans to modernise the courts so that we can continue to have a world-leading justice system.
Sir James Munby was asked to undertake a review of the family courts in August 2014. Can the Secretary of State update the House on any progress that has been made in opening up the family courts and ending the secrecy that can lead to injustice?
I am due to meet James Munby next week to discuss that issue in more detail. Some progress has been made in opening up the family courts, but there is, of course, a balance to be struck between highly sensitive issues and opening them up fully. I will look at the issue in more detail.
T2. Will my right hon. Friend commit herself to using all the powers at her disposal to protect British military personnel and veterans, who have served our country bravely and with great honour, from spurious and outrageous legal claims such as those pursued by, for instance, public interest law firms?
I am delighted to tell my hon. Friend that this summer the Legal Aid Agency pulled the plug on its contract with Public Interest Lawyers, who will no longer be ambulance-chasing our brave service personnel. Legal aid should support vulnerable people in our society, and should not be used to pursue spurious cases against the armed forces who do so much to serve our country.
May I join colleagues in welcoming the new Justice Secretary and her team to their roles The Government created the toxic conditions for the record levels of violence, drug finds and deaths throughout the prison system by reducing the number of prison officers by a third, yet the former Prisons Minister spent much of his time at the Dispatch Box this year telling me quite proudly about his Department’s successful recruitment drive. The Justice Secretary did not seem to have the figures with her earlier when she answered a question from my hon. Friend the Member for Darlington (Jenny Chapman), so I will help her out. Can she explain why we have 421 fewer full-time equivalent front-line prison officers working in our public prisons than we did a year ago?
I fully acknowledge that we do have issues with violence and safety in our prisons. The levels are unacceptable. I am determined to deal with this issue and I will lay out my plans very shortly.
Since the Government’s probation privatisation, concerns have repeatedly been raised about the quality of pre-sentence reports for the courts as a result of arbitrary targets set. The probation inspectorate has this month described that as a persistent problem leading to inappropriate sentences being handed down. Vital safeguarding checks, such as domestic violence checks with police and child protection checks with children’s services, are not taking place prior to sentencing. Will the Justice Secretary today commit to an urgent review so that the public, probation professionals and sentencers can have confidence that when convicted criminals are sentenced, those deciding on them have all the necessary safeguarding evidence available?
Our probation services do vital work and the Minister responsible for prisons and probation is looking very closely at this issue, but I would point out that those now on shorter sentences get much more support thanks to our new probation contracts.
Contributions to topical questions must be brief, whether from the Back Benches or the Front. There is a lot to get through and not much time in which to do so.
T3. I would never excuse criminal behaviour but some prisoners and former prisoners I have met have been denied opportunities in life that many of us take for granted. What are the Department and other Departments doing to ensure the life chances agenda extends to prisoners?
I thank my hon. Friend for that question. Some of the problems in society are magnified in our prisons. As the Prime Minister said, if we are going to have a country that works for everyone, prison reform is very much a part of that, including on literacy, training, work in prisons and employment opportunities when people are released.
T4. The Secretary of State will know that Charlie Taylor was asked to carry out a review of the youth justice system last year. An interim report was published in February, and we were promised the final report in July. We still do not have it; can the Secretary of State tell us when we will have it, and give us an explanation for the delay?
This is an incredibly important issue. Both the youth justice Minister and I have met Charlie Taylor and we will publish our response this autumn.
T5. Does the Department intend to promote English law, the rule of law and our legal sector around the world, particularly to take advantage of the opportunities that may arise from Brexit?
English law has had a huge impact, spreading the rule of law around the world. It is the law of choice in over a quarter of jurisdictions, and Brexit gives us even more opportunities to promote this. I will be championing our £25 billion legal services industry as a key part of post-Brexit global Britain.
T7. The Justice Committee has expressed concern that judges are now reporting that they hear no money claims at all—claims that were brought by workers in low paid sectors and which often succeeded. So when will the Government publish the review of the impact of employment tribunal fees, which is now six months overdue, and act to restore justice for low paid workers?
May I start by welcoming the Justice Committee’s report on court and tribunal fees? We are intending to respond, and we are also going to publish the review of changes to employment tribunal fees in due course. This is an important area and we will do that.
T6. I want to ask the new Secretary of State about the treatment of women giving birth in prisons and those with young children, and whether she will do more to ensure children have access to their mothers and, where appropriate, their fathers, and can be as near to them as possible.
One hundred babies resided in mother and baby units in English prisons in 2015. Prisons do an excellent job in making these environments as pleasant as possible and babies are able to spend time away from the prison with nominated carers. However, knowing the importance of the early years for child development, it is essential that we consider alternative ways of dealing with female offenders, including those with young children and babies and other caring responsibilities.
T8. The Secretary of State alluded earlier to the closure and imminent sale of Holloway prison and she may be aware of the wish to site a woman’s centre on the site. Discussions are taking place, I understand, with the Mayor of London. Can the Secretary of State confirm that she and the Government will play their part in ensuring an outcome that secures services for women on that site?
I thank the hon. Lady for her question, and I will be very interested in looking more at the details of that proposal.
T9. Following the closure of Buxton courthouse in my constituency, the previous Minister decided, following my representations, that the work should go to Stockport, not Chesterfield, as had originally been intended. However, a sign has now appeared on the disused courthouse saying that the work has gone to Chesterfield. Will my hon. and learned Friend please investigate this and ensure that the decision made by the Minister is implemented, rather than the one envisaged by the officials in the original, flawed consultation?
I am grateful to my hon. Friend for raising this issue. He will be pleased to hear that I have had that notice taken down. The response to the consultation stated that the work would go to Stockport and Chesterfield, and that is what is happening.
Further to a previous question, I have many constituents who cannot get access to employment tribunals because the fees introduced during the last Parliament have proved prohibitive. Will the Minister promise to make a statement to the House on the impact of those fees?
As the hon. Gentleman will have heard, we recognise that we need to produce our review—which we are going to publish—and to respond to the Justice Committee’s report. Those documents will be available in the Vote Office, and that will happen in due course. We are committed to doing that.
Effective court administration is a very different matter from retaining inefficient and costly court buildings. The question is whether the closures are going hand in hand with investment, efficiency and the best use of technologies in the surrounding courts—not least in Bury, Mr Speaker.
I was not psychic; I now realise what the hon. Gentleman was driving at earlier. I am glad that he was persistent. Persistence pays.
My hon. Friend is right. We need a programme of transformation that maintains the very high quality of our legal system—I am sure Members would agree that it is one of the best in the world—but we want to make it the most modern as well, and that is what we are doing. We are investing £1 billion, we have saved a Shard-load of paper, as I mentioned earlier, and we are going to do a lot more, so that our courts can benefit from the digital revolution that every other part of society is already benefiting from.
My constituent’s 17-year-old son Shaquan was murdered last year in Brockley. Will the Minister meet me and Sharon, Shaquan’s mother, to discuss the repeated failings in our justice system that mean that his killer is still walking the streets?
I would be very happy to meet the hon. Lady and her constituent, and I am very sorry to hear about that case.
Colin Pitchfork was convicted of raping and murdering two young girls in the 1980s. Will the Minister please assure me and the public of their safety, given that Mr Pitchfork is being moved to an open prison?
My hon. Friend will be aware that the transfer of prisoners from one prison to another is based on a careful assessment of the risks involved. I am sure that that will have taken place in this case, but I would be happy to discuss the matter with him in more detail if he wants to do so.
Does the Secretary of State accept that the Human Rights Act 1998 is an indispensable part of the Good Friday agreement and that, whatever the plans are for elsewhere, the Government, as a co-guarantor of the agreement, are obligated to retain the Act in Northern Ireland?
The UK has led the world in human rights, from Magna Carta to habeas corpus, and the Government are committed to bringing forward a British Bill of Rights further to build on those ancient protections. The Prime Minister has already met Nicola Sturgeon to make sure that the UK works together—[Hon. Members: “This is about Northern Ireland.”] As the Secretary of State said, we intend to meet all those across the United Kingdom who have concerns about this.
Over the summer I visited the job club at North Sea Camp prison in my constituency, which was set up at the behest of prisoners there. Does the Minister agree that some of the best examples of rehabilitation are to be found in category D prisons? Will he come and see that prison so that we can learn about what really good rehabilitation can do for prisoners’ life chances across the wider prison estate?
Spreading best practice is obviously essential, particularly for rehabilitation. I welcome the opportunity to visit my hon. Friend’s constituency to see the excellent work that is being done by the job club.
Half an hour ago, the Secretary of State said that when the Human Rights Act is repealed it will be replaced with a new British Bill of Rights that will include additional human rights. What additional human rights will there be?
I said that we will enhance human rights in this country, and we will bring forward our proposals in due course.
With proactive cross-Government work, we have seen a 41% increase in disability hate crime prosecutions. Will the Secretary of State keep that as a priority?
I absolutely agree with that.
I received assurances from the Government that the post-implementation review of tribunal fees would be published late last year. Nine months on and after thousands more discrimination cases, we are still waiting. Why has it taken so long for the Government to get a move on and publish the review? Will the Government follow the Scottish Government by abolishing tribunal fees completely—that is Scotland, not Northern Ireland?
As the hon. Lady says, it is right that the review should be published. It will be published in due course with the reply to the Select Committee. We welcome the report and the discussion, so I thank her for her question.
Will a Minister confirm that this ministerial team will continue the good work of its predecessor in considering how prisoners’ family ties can be strengthened to improve rehabilitation and reduce recidivism?
My hon. Friend has a long-standing interest in this matter, as does the former Prisons Minister. We are determined to pursue this important part of rehabilitation.
I am sorry to disappoint some colleagues but, as usual, demand has exceeded supply.
(Urgent Question): To ask the Secretary of State if he will make a statement on safety at Sellafield.
Ensuring high standards of nuclear safety and security will always be a top priority for the Government. On Sellafield, I can assure the House that there is no safety risk to site staff or the public, and it is wrong to suggest otherwise As the hon. Gentleman knows more than anyone, Sellafield is a uniquely challenging site that contains the legacy of the UK’s earliest nuclear programmes, when nuclear waste was dumped with no plan for how it would be disposed of safely. The Government have been turning that around in order to clean up Sellafield as safely, cost-effectively and quickly as possible, which is an enormously complex task We have a strong regulatory system and all operators are answerable to an independent regulator. The Office for Nuclear Regulation is satisfied—it has confirmed that again this morning—that Sellafield is safe. The regulation of facilities is the ONR’s top priority with a team of around 50 inspectors deployed. The ONR requires the site to improve continuously. The ONR has confirmed that none of the issues raised in the “Panorama” programme is new. The ONR operates transparently. The issues facing Sellafield have been reported to Parliament in the ONR’s annual report and accounts, in which the ONR concluded that important progress has been made.
I thank the Minister for his response. The safety and security of Sellafield are the most important considerations for everyone working at the site. Safety is non-negotiable. As a former third-generation Sellafield worker, I know that the Sellafield workforce are acutely aware of its responsibilities towards the entire community and the country as a whole. As such, I welcome the interest of journalists and politicians—anyone and everyone—in the work undertaken at Sellafield. Visibility and accountability for that work should be welcomed. I would like to see more of it and I would like to see that done in a robust and responsible way. That is why the work of the National Audit Office and the Public Accounts Committee is so important As the Minister pointed out, the truth is that Sellafield is a unique site, hosting a unique and complex set of engineering challenges that have arisen over decades—arguably the most difficult engineering challenges anywhere in the world. Sellafield is a publicly owned site. The work of the Nuclear Decommissioning Authority, Sellafield Ltd and the rest of the supply chain is undertaken in the national interest using public money. Will the Minister commit today to long-term, predictable budgeting for Sellafield so that greater benefits can be gained and economies of scale achieved at the site? Public accountability for the work should not only be welcomed, but insisted upon, so it is vital that the NDA is allocated the resources necessary to discharge its responsibilities to our nation and my community In addition, it is essential that the industry regulator has the resources it requires to regulate effectively and efficiently. Will the Minister commit to providing the regulator with the resources it says it needs? I note that the regulator told “Panorama” that it was happy with progress being made at Sellafield. Will he ask the regulator to respond to the allegations made by the programme on a point-by-point basis? Does he agree, as I do, that the NDA was right to change the operating model at Sellafield and to replace Nuclear Management Partners? Does he also agree that the workforce should be commended for the work done in progressing the clean-up mission to date Crucially, in welcoming the renewed focus that “Panorama” has given to the work under way at Sellafield, will the Minister commit his Department to working with me, my community and the Sellafield workforce to acknowledge Sellafield as a national asset? The globally unique engineering challenges at Sellafield, accompanied with a truly world-class, highly skilled workforce, provide enormous opportunities for my community and the UK to become the global centre of excellence for the nuclear industry. Meeting the challenges of Sellafield places us in a unique position to meet the challenges facing the nuclear industry around the world, and we must utilise these skills. This should be worth billions to the UK economy. Alongside the development of the Moorside power station, my community should become one of the fastest growing economies anywhere in the UK. Will the Minister and his Department work with me, the local workforce and the local supply chain to make this a reality?
I thank the hon. Gentleman for his response, and I agree with him 100% about the non-negotiability of nuclear safety. There can be no disagreement on that, and I am glad that he recognises the progress being made all the time at Sellafield. I wish to place on record the Government’s appreciation for the difficult work done by the many people who work there. We have the most regulated and safest nuclear industry in the world. I do not want to encourage any sense of complacency about that, but it is a fact. Any nuclear power station in the UK must comply with our stringent nuclear safety laws, which are overseen by a robust industry regulator. We lead the world with our skills and expertise in this area The hon. Gentleman mentioned the regulator, which is clearly a massively important part of this landscape of protecting the public. As I said in my opening statement, the regulator has said very clearly that it is satisfied that Sellafield is safe, and it has repeated that again to our officials today. As he knows, the NDA has put out a detailed rebuttal of all the points made in the “Panorama” documentary, which I have watched; I think they were all rebutted robustly in the programme. As he knows, none of those points is new. Funding is incredibly important and it is done on a very significant scale; as he knows, it costs £2 billion a year to clean up Sellafield safely The hon. Gentleman asked me whether we agreed with the change in the operating model and, yes, of course, we do; it is generally recognised that that is a much better way of working. As I have said, I am assured that the regulator is doing its job, that progress is being made and that Sellafield is safe, and I wholly accept his offer to work closely with him to make sure that that is more widely understood and appreciated.
Only last week, I was at Hinkley Point B seeing the very high safety standards the nuclear industry practises. Does the Minister agree that being able to have an open and sensible discussion about nuclear safety issues is a key part of keeping our industry safe? Does he also agree that we have one of the most effective regulation systems in the world, which has meant that we have had many decades of safe, clean power generated? Sellafield plays a key part in that in this country.
I thank my hon. Friend for that positive and constructive intervention. This is a massively important issue on which no Government can show any complacency, but I believe that we have set up a proper framework and a robust system of transparency and accountability. Considerable progress continues to be made, but the safety record continues to be an impressive one, which is why countries all around the world come to see how we do it.
Yesterday evening’s television report on Sellafield was profoundly disturbing, and my hon. Friend the Member for Copeland (Mr Reed) was absolutely right to request this urgent question—I thank you, Mr Speaker, for granting it. My hon. Friend expressed his concerns at the revelations and referred to the importance of the storage and reprocessing facility for his constituency. Of course, the House must raise such concerns on behalf of the country I want to focus on a number of questions on which I believe the Minister should give the House either further information or reassurance, and preferably both. On minimum staffing levels, will he confirm that as recently as five days ago a formal notice was sent to the management, raising the unions’ concern about critical manning levels and the ability to comply with the appropriate procedures and practices when minimum staffing levels are not met Will the Minister also say whether he agrees with Dr Rex Strong, the head of nuclear safety, who said in last night’s programme that not meeting the minimum safety standards or staffing levels did not mean that there was a safety risk In 2013, the manager of the site, Nuclear Management Partners, produced its somewhat ironically entitled excellence plan, cataloguing the safety problems and the critical nature of the infrastructure with respect to both electricity and water supply on the site. Why did the Government not insist that further resources—staffing and, of course, financial resources—be invested in the site to clean it up at that point? The Minister will know that expenditure in 2012-13 was £7,348 million, with £3,157 million from the Department of Energy and Climate Change itself. The year following that report, the figure had fallen to £5,345 million. Will he explain why, after such a damning report, the resources going into the site decreased? Will he also confirm that the cost estimates for the clean-up of the site have increased at an annual estimate from £25.2 million to £47.9 million The programme also cited problems with alarms, and it was said that these were turned off repeatedly, without checking. Will the Minister confirm that that practice is no longer in force? Finally, will he confirm that he has absolute confidence in Dr Rex Strong as head of nuclear safety at Sellafield and John Clarke, the chief executive of the Nuclear Decommissioning Authority?
Again, I thank the hon. Gentleman for a constructive response, which reflects the cross-party concern to get this absolutely right with no equivocation. Issues were raised in the programme about minimum safety levels. I think they were responded to adequately in the programme. We were reassured that the NDA always has enough people on duty to maintain the site safely, and if the work cannot be done safely it will not get it done. I think the programme and the response to it have reassured us on that front As I said in my opening statement, cleaning up Sellafield safely costs £2 billion a year, and maintaining the NDA’s overall annual spend on cleaning up the UK’s nuclear sites at some £3 billion reflects the continuing importance that the Government place on cleaning up the civil nuclear legacy and Sellafield The hon. Gentleman asked about the reaction to the number of alarms raised—another issue raised in the programme. Those alarms, as he knows, are not unusual, given the types of material that people are working with and do not necessarily mean that there is a safety issue. However, we are reassured that staff are briefed never to be complacent and always react to alarms if they are serious, which is a point that was made in rebuttals in the programme On levels of confidence, yes, we do have confidence in the NDA. We also have a great deal of confidence in the independent regulator, which has made it quite clear that, as far as it is concerned, the programme does not raise any new issues and that Sellafield is safe.
Does the Minister agree that it is essential that the BBC give the same prominence to the regulator’s response as it has to the original claims made?
“Panorama” has historically served an extremely useful function in this country by shining a spotlight on some extremely important issues and throwing up some extremely challenging questions, and this programme was no exception to that rule. As we have discussed before, it is important that we have proper transparency and proper accountability on such a fundamental matter. Having watched the programme, I thought there was adequate balance in it, in the sense that the issues were raised and space was given for what I thought was adequate rebuttal of them in the rebuttals published by the NDA and the regulator, and the confirmation made to us about their view that nothing has changed in their perception of Sellafield. That is a matter of record and it is up to the BBC whether it continues to extend the balance shown in the programme and reflect that reality.
I welcome the opportunity to address the matter, and I congratulate the hon. Member for Copeland (Mr Reed) on successfully tabling his question. The issue is an important one and our prime concern on the Scottish National party Benches, as it is across the House, is the safety of staff and of the communities around Sellafield. The harsh lesson of incidents at nuclear power plants is that where safety is concerned, there can be no shortcuts in any circumstances. The Minister said that there would be no complacency on the Government’s part. What assurances has he sought that the issues identified in the BBC “Panorama” programme, particularly those related to staffing levels, will not be repeated at the Sellafield site? The issue of a permanent storage facility for the high level toxic legacy that we have has caused some consternation over the years. What progress has been made in identifying a safe and secure deep geological storage facility? We know that the economic costs in the nuclear industry are high, but the cost of allaying security and safety concerns is astronomical. If the price is too high to pay, will we scrap the nuclear obsession with Hinkley? What assurances can the Minister give us that there will no repercussions or attempted retribution for the whistleblower?
On the last point, I can reassure the hon. Gentleman. Whistleblowers always have a role to play. They are part of the landscape of accountability and transparency, and anyone watching that programme will have reached their own view on the motivations of those individuals. It is not an issue for Government. The hon. Gentleman sought assurances that issues would not be repeated. The critical thing, as we have discussed, is this House’s confidence that the architecture of transparency and accountability in the process, the role of the regulator and the way in which the regulator reports to this House is sufficiently robust. I have not heard any comments suggesting that the House does not have confidence in that process The hon. Gentleman is right to say that we are dealing with an unsatisfactory legacy of the past, when things were not thought through properly and were poorly designed. Now, when we look at new nuclear, we see that the process has changed. The decommissioning process is negotiated up front. The hon. Gentleman is right that permanent long-term solutions must be found. When we are clearer about that, we will make announcements at the appropriate time.
I welcome my hon. Friend to his new post. Given his new role in the Department, when does he expect to visit Sellafield to see it for himself?
I am delighted that my hon. Friend makes that point. It is a measure of the importance that the Government—effectively, a new Administration—attach to the issue that last week Sellafield was visited by not one Minister but two: Baroness Neville-Rolfe, who leads on energy in the Department, and, I am delighted to say, the Chief Secretary to the Treasury. That is significant in itself.
I thank my hon. Friend and neighbour the Member for Copeland (Mr Reed) for bringing this important matter before the House. I have many constituents who work at Sellafield and they have been in touch with me, as has the local Prospect union, because they are concerned about what the “Panorama” programme said about safe staffing levels. Those staff are committed to the highest standards of safety. They are a huge asset to our nuclear industry and they feel undermined by what was said in the programme. Can the Minister reassure my constituents and others working at Sellafield that there will be continued investment to fund the programmes and skills training there and show that the staff there are truly valued for the work that they do?
I am grateful to the hon. Lady for giving me the opportunity to reaffirm again the Government’s appreciation for the extremely challenging and incredibly important work that is done by people on the site. It is deeply impressive that, given the complexity of the site and the legacy—this is really difficult stuff—Sellafield’s safety record over the past three years is the best that it has ever been. I quite understand why residents and people working at the site may have been upset and disturbed by the programme last night, but I hope that my statement and corroborating statements from other Members have reassured them that as far as the Government are concerned—not least because the independent regulator attaches enormous importance to Sellafield, as reflected in the resources committed to monitoring the site on a very proactive basis—Sellafield is safe.
I appreciate that the Minister has a duty to offer reassurance, but I have to warn him that the content and tone of what we have heard today come dangerously close to complacency. The people who have been responsible for the historical errors of judgment and underinvestment are still involved in the industry today. These words will be heard with concern in the north of Scotland, where we are seeing nuclear waste shipped out from the former Dounreay plant. Will the Minister have the risk assessment for that operation scrutinised independently of the people who were responsible for making the plans?
The right hon. Gentleman is an experienced Member of Parliament so I take seriously his warning about tripping over a boundary into complacency. I said at the start that I was determined not to do that. What I am trying to do is reflect genuine empathy with people who live close to the site and who work on the site, who will have been unsettled by the programme last night, which raised nothing new and which, I am keen to stress, in the eyes of the regulator does not change its position in relation to the safety of Sellafield The right hon. Gentleman will forgive me if I give some priority to that. He knows the reality of the situation at Sellafield, which is that as a legacy of the cold war, vast amounts of nuclear waste, dumped with no plan for how it would be disposed of safely, languished for decades without anyone properly tackling the problem. The priority for us is to do what we are doing now, which is to continue working to turn that round and clean up Sellafield as safely, cost-effectively and quickly as possible.
Given what the Minister says about transparency, accountability and the paramount importance of safety in the nuclear industry, and given the Prime Minister’s clear concerns about security and the more widespread concerns about the economics, can the hon. Gentleman give us an assurance that the Government will come back to this House before making a final decision on Hinkley C?
I understand the right hon. Gentleman’s point. I have nothing to add to the public statements about the process of reviewing the Hinkley decision, which will look at all aspects of that deal, and we will make suitable announcements when we are ready.
My constituency is directly across the Irish sea from Sellafield. I have visited Sellafield twice. My constituents contacted me last night. Like me, they watched that programme and were deeply unsettled by it. Given the catalogue of safety hazards that were highlighted last night, and also those that have been documented since Sellafield, and prior to that Windscale, were opened, and the history of both recorded and unrecorded discharges of radioactive waste into the Irish sea, will the Minister commit to working directly with the Nuclear Decommissioning Authority to ensure that an accelerated programme of decommissioning is put in place which will protect communities on both sides of the Irish sea and also ensure the safety of the staff there?
I understand the point that the hon. Lady makes on behalf of her constituents. That reinforces the point that I was trying to make earlier about the importance of this statement to try to give some reassurance to all communities that may be affected. I hope that I have done so. As I said, we have confidence in the NDA. We monitor its work closely in terms of both value for money and pace.
The Minister has talked a number of times about cleaning up Sellafield as “cost-effectively” as possible, yet it was only when the Public Accounts Committee in the last Parliament looked closely at the issue that the Government moved to remove Nuclear Management Partners, the American consortium that was running Sellafield. Will he now undertake, as the new Minister, not only to visit, but to make sure that, in all the complex engineering work on this very complex site—I think three of the top 10 engineering challenges internationally are at Sellafield—the difficulty does not overblow the challenge of benchmarking engineering projects in similar fields, so that we get good value for money for the taxpayer while carrying out the important clean-up?
I take this opportunity to congratulate the hon. Lady on the extremely effective way she has chaired that Committee. The point she makes about the role of the PAC in this is really important in terms of reinforcing the framework of transparency and accountability around this incredibly complex process. This process carries a huge bill for the taxpayer, so it is absolutely imperative for a Government of any colour to drive it forward in as responsible and cost-effective a way as possible, with value for money being a prime consideration, but I take on board her suggestion very seriously.
The UK Government’s entire nuclear policy, from Trident to Hinkley, is nothing short of appalling. If any of these allegations by the BBC are found to be true, it will surely be another in a long list of reasons to move away from this nuclear obsession. Does the Minister not concede that he should consider taking a leaf out of the Scottish Government’s book and ban the creation of new nuclear power stations to minimise the amount of waste going to Sellafield?
No.
The nuclear industry is normally a highly regulated sector. Has the Minister considered how his Department can work with Sellafield to ensure that there is faster implementation of safety measures and that the issue of storage—a very clear problem—is addressed as quickly and as safely as possible to ensure the smooth running of this vital plant?
In principle, yes.
Order. I am grateful to the Minister and to colleagues Bill Presented Savings (Government Contributions) Bill Presentation and First Reading (Standing Order No. 57) Mr Chancellor of the Exchequer, supported by the Prime Minister, Mr David Gauke, Jane Ellison, Gavin Barwell, Simon Kirby, Richard Harrington and Mr Rob Wilson, presented a Bill to make provision for, and in connection with, government bonuses in respect of additions to savings accounts and other investment plans Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 59) with explanatory notes (Bill 59-EN).
I beg to move, That leave be given to bring in a Bill to make provision for statutory entitlement to leave of absence from employment for bereaved parents and for connected purposes I seek leave to introduce a Bill to amend the Employment Rights Act 1996 to give parents who have suffered the loss of a child a statutory right to two weeks’ paid leave. May I start by paying tribute to the former Member for Glasgow South, who campaigned for this change, and to the many hon. and right hon. Members across the House who support this campaign Every Member of the House will agree that there can be few more distressing life events than the loss of a child. Yet, with up to 5,000 children dying every year, many thousands of parents go through this personal tragedy. As the House is aware, my wife and I lost our son, who was stillborn full term, in October 2014, and I was entitled to two weeks off work, protected by statute under the paternity rules. As it happened, I had a very understanding employer, so my legal rights did not come into question. However, it was comforting to know that I was entitled to two weeks off work by law—that I could take that time as needed to come to terms with the incredible loss. I know how valuable it was to spend precious time with my wife coming to terms with what had just happened, registering the death, making the arrangements for the funeral and preparing to say goodbye I cannot begin to understand what it would feel like to lose a child at seven months or at two, five, 10 or 15 years old. The grief must be unbearable, and my heart goes out to any parent who has had to go through this most terrible of life events. Yet, why should those parents not have the same protection in law as those who lose a baby through stillbirth or in the first few days and months of life? In such situations, a bereaved mother and father are entitled to full maternity and paternity leave, but if someone loses a child or an older baby—nothing. Surely that cannot be right At present, there is no statutory right to take time off on compassionate or bereavement grounds. However, all employees have the right to take immediate time off for dependants; in effect, that is a legal right to take time off unpaid to take the necessary action. Yet, there is no set limit on how many days can be taken as leave and a rather vague definition of a reasonable amount of time. Further, there is no statutory right to be paid during this reasonable amount of time. The reference to taking action distinguishes this form of leave from bereavement or compassionate leave. The type of action contemplated by the relevant provision is arranging and attending a funeral, registering the death and so on; it does not provide a right to leave to cope with the emotional reaction to the child’s death. An employee’s right to bereavement leave is therefore not protected by law in this respect, and the duty to show compassion is left entirely to the employer’s better judgment To be clear, most employers are excellent; they act with compassion and kindness, offering their bereaved staff the time they need to come to terms with their loss. However, some do not, and they behave in a manner that falls well short of what we would expect of them. Of course, we expect employers to act with sensitivity and flexibility in situations like this. Yet, given the countless examples of organisations acting without sensitivity and with utter inflexibility, surely it is time for the Government to act I am certainly alive to the pressures on businesses at the moment—especially small businesses—and I am loth to introduce any additional regulatory burden. However, given the relatively and thankfully small number of bereaved parents annually, the cost to business would be small. There is also an argument that such a proposal is beneficial to business. Most employers already go out of their way to treat their staff with compassion and often give them fully paid leave. This change would allow them to recover some of the cost of doing so So how much would this cost? It is difficult to say, because it would largely come down to the eligibility criteria, but research conducted by the House of Commons Library suggests that the cost could be as little as £2 million per year. However, the reality is that every bereaved parent is different; some will want to take time off, and others will want to get straight back to work. In the same way, not everyone takes their full maternity or paternity rights. The issue, however, is that they have the choice and protection by law Some will come at this from a religious perspective. In Hinduism, for example, when a death occurs, relatives are required to observe a 13-day mourning period after cremation. In Judaism, family members are required to stay at home for seven days of mourning after a death Statutory bereavement leave is a common right across Europe and in many countries across the world. While the exact conditions vary in terms of total time off and whether said leave is paid or unpaid, it is remarkable that one can argue that Albania or Bosnia and Herzegovina have better worker rights in this area than us. My proposal would give UK workers some of the best bereavement rights in the world in terms of the length of leave possible. While other countries, such as Israel, offer leave with full salary, longer leave at a lower statutory rate is a good starting point This is also a popular idea. The 2014 report “Life After Death” from the National Bereavement Alliance and the National Council for Palliative Care quoted research from ComRes, which showed that 81% of people agreed that there should be a legal right to receive paid bereavement leave. The Government e-petition calling for bereavement leave for parents, organised by campaigner Lucy Herd, has over 25,000 signatures, and a Change.org petition has over 165,000 signatures. The campaign also has the support of many organisations, including Child Bereavement UK, the Lullaby Trust, Working Families, Cruse Bereavement Care, Dying Matters—the list goes on I fully appreciate the concerns the Government and other Members of the House may have over such a Bill. It will not be perfect. There will always be sincere disagreements over the length of time given and the eligibility criteria. However, let us not make the perfect the enemy of the good. This Bill would be an important first step, giving thousands of bereaved parents up and down the country the opportunity to come to terms with their grief without feeling the pressure of having to return to work. I commend the Bill to the House. Question put and agreed to. Ordered, That Will Quince, Johnny Mercer, Frank Field, Dr Sarah Wollaston, Stewart Malcolm McDonald, Suella Fernandes, Wes Streeting, James Cartlidge, Greg Mulholland, Mike Wood, James Cleverly and Stella Creasy present the Bill Will Quince accordingly presented the Bill Bill read the First time; to be read a Second time on Friday 28 October, and to be printed (Bill 60).
I beg to move, That the clause be read a Second time.
With this it will be convenient to discuss the following: Amendment 174, page 167, line 40, leave out clause 82 Government amendments 149 to 151 Amendment 175, in schedule 14, page 481, line 36, at end insert— ‘(12) Section 169Z makes provision about the expiration of this Chapter.” Amendment 176, page 499, line 15, at end insert— “169VZ Expiration of Chapter 5 provisions (1) The provisions of this Chapter shall remain in force until six years after their commencement and shall then expire, unless continued in force by an order under subsection (2) (2) The Secretary of State may by order made by statutory instrument provide— (a) that all or any of those provisions which are in force shall continue in force for a period not exceeding 12 months from the coming into operation of the order; or (b) that all or any of those provisions which are for the time being in force shall cease to be in force (3) No order shall be made under subsection (2) unless— (a) a draft of the order has been laid before and approved by a resolution of both Houses of Parliament, (b) the Secretary of State has commissioned a review of the operation of Investor’s Relief and laid the report of the review before both Houses of Parliament.”
I shall speak to new clause 14 and amendments 174 to 176. Amendment 174 would remove clause 82 from the Finance Bill, thereby preventing the proposed cut to the rate of capital gains tax. The cut will reduce the basic rate of capital gains tax from 18% to 10%, and the rate on most gains made by individuals, trustees and personal representatives from 28% to 20%. Gains on residential property and carried interest will still be charged at the higher rate. I do not want to go over old ground, but I must emphasise the Labour party’s opposition to this reduction in the rate of CGT. I thank my colleagues from other parties for joining us in our opposition. At a time when our public services are stretched to breaking point, the NHS is on its knees, our education sector is over-stretched, housing is in a state of complete crisis, people across the UK are being forced to use food banks, some mothers are going hungry because they cannot afford to feed their children and themselves, and the wider economy is in desperate need of direct investment in skills, infrastructure and industry, it seems frankly absurd to give a tax break of £2.7 billion to the richest people in our society Let us not forget that this CGT giveaway hails from a Budget that also planned to take away billions in welfare payments from the most vulnerable people in need of state support. The Government seemed quite happy at the time of the Budget for 300,000 disabled people to lose more than £3,000 a year in their personal independence payments. In stark contrast, our own research has found that the CGT-cutting measures of the Finance Bill amount to a tax giveaway to 200,000 people of about £3,000 a year on average. I am pleased to say that due to Labour’s opposition and the support of some Members from other parties, the worst has not yet happened in relation to PIP, but that still does not justify this policy decision in the Bill. Labour party research shows that just 0.3% of the population will benefit, with those taxpayers likely to benefit to the largest degree being in London and the south-east. If the Government do not accept our evidence, perhaps they will listen to the Resolution Foundation, which said that the CGT cut was “focused on those on higher incomes—unsurprisingly because in general better off households are the ones making capital gains in the first place.”
The hon. Lady makes a compelling case. One of the major challenges we face in the UK is geographical and individual wealth polarisation. Based on what she says about where the likely beneficiaries of this tax system would be, what does she think that the policy will do to tackle the great challenge of wealth polarisation that we face?
I certainly do not think that it will address the issue that the hon. Gentleman raises—quite the opposite, in fact The Prime Minister herself made the following commitment to the British public on the steps of Downing Street: “The government I lead will be driven not by the interests of the privileged few, but by yours.” Going back on this policy today would be a good place to start.
Does the hon. Lady acknowledge that, even after this cut, CGT rates in this country will still be higher than they were for the majority of time under the previous Labour Government?
I note the hon. Gentleman’s point and thank him for making it. If I could see some real benefit to the wider economy or society in these proposals, or if times were good for everybody, perhaps I could understand the Government’s rationale for making such cuts to capital gains tax, but as things stand these proposals are not driven by the interests of the nation as a whole, but to be enjoyed only by the privileged few. I urge all hon. Members to vote with us to remove these cuts from the Bill because the provision simply has unfairness at its very core Speaking of policies for the privileged few, new clause 14 would require the Chancellor to publish a report giving the Treasury’s assessment of the value for money provided by entrepreneurs’ relief. When entrepreneurs’ relief was discussed in the Committee of the whole House earlier this year, the then Minister said: “officials have for some time been developing a detailed research programme designed to identify taxpayers’ motivations for using entrepreneurs’ relief, and I expect the results to be published at some point in 2017.”—[Official Report, 28 June 2016; Vol. 612, c. 236.] It would seem opportune, then, for the Financial Secretary to accept our provision tying her down to a deadline, given that the Department is already conducting some of the research needed. The Government do not have the best track record of publishing documents when they say they will, so a deadline enshrined in legislation would help. To help the Government in this endeavour, we have listed particular reference points. The report would specifically consider the cost of the relief, the number of individuals who have benefited from it, the average tax deduction received by an individual and the number of new business start-ups since the relief was introduced Analysis by Tax Research UK shows that 3,000 people benefited by about £600,000 each from entrepreneurs’ relief in 2013-14, at a total cost of almost £2 billion to the Treasury. Unfortunately, the most up-to-date figures for 2014-15 are not yet available, but I suspect that similar analysis will show the same results. As I said in my remarks about clause 82, this amounts to a large sum going into the hands of the very few, and it certainly seems like an inefficient use of public funds. Of course, Labour Members are in favour of supporting entrepreneurialism wherever we find it and we want businesses to grow and flourish in the UK. However, is simply offering a massive tax break years down the line when a business is sold the best way to achieve that? Should not the Government be providing support to entrepreneurs in the early stages of their business development? How on earth could an entrepreneur know if he or she wants to sell their business further down the line, when it is only starting off, so as to factor in the benefits of this tax relief? Let us see some evidence today. I hope that the Minster will commit to taking my comments on board The same principle goes for investors’ relief, which is the subject of amendments 175 and 176. Those amendments would introduce a sunset clause whereby the relief would expire in six years’ time. To extend it, the Government would have to introduce secondary legislation, but in order to do so a review of investors’ relief would need to be laid before the House. When we debated a similar amendment in the Committee of the whole House, which would have brought the relief to a close after five years, the then Minister stated that the first set of data would not be available until 2020-21. We have therefore helpfully amended our amendment to suit the Government’s timetable. I hope that the Financial Secretary will now commit to this sunset provision. Without wanting to repeat the remarks I made in the earlier debate, I think that requiring a review of the scheme’s efficacy would represent good practice—for all reliefs, indeed, not just this one Too often, tax reliefs are provided with the admirable aim of incentivising a certain type of behaviour, but there is no analysis—published analysis, I should say—of whether the policy is achieving the desired aim. That means that the limited resources that the Government keep telling us about might be diverted away from our public services, or limits could be put on our capital spending, for reliefs that might not even be working. I will not press amendments 175 and 176 to a vote, but I really hope that the Minister will address the merits of including such provisions when future tax reliefs are introduced I will touch briefly on Government amendments 149 to 151, which will ensure that the upper rates of capital gains tax will apply to carried interest gains. In short, carried interest gains refer to the profits paid to investment fund managers from the fund that are classified as capital gains rather than income for tax purposes. We support the amendments I am sure that all hon. Members are aware of the 38 Degrees campaign on the Mayfair tax loophole, which filled up our inboxes over the weekend. I will briefly reiterate the Labour party’s position. Clause 37 provides for a tapered system of income taxation on carried interest gains received in respect of investments that are held by a fund for less than three years. As the Minister explained in Committee: “If the average holding period is less than 36 months, the payment will be subject to income tax. If the period is more than 40 months, the payment will be subject to capital gains tax.”––[Official Report, Finance Public Bill Committee, 30 June 2016; c. 42.] The Labour party supports that provision, but we would have liked all carried interest to be subject to income tax. We tabled an amendment in Committee that would have removed the taper completely, thereby ensuring that all carried interest was treated at 100%—in other words, taxed as if it were income. Unfortunately, the Government did not support us, but none the less we still support the steps they have taken towards closing the so-called Mayfair tax loophole I will press amendment 174 to a vote, because the Labour party cannot and will not agree to a measure that benefits so few by so much. We will divide the House to prevent the unfair cut to capital gains tax from going ahead.
I know that when I mention the word “investor” in this House, some Opposition Members get a little a bit excited: their pupils dilate, their pulses quicken and their minds race with images of plutocrats rolling the dice of financial speculation. The reality, however, is a little different. I have spent my own career investing in businesses, and in this country private equity-backed businesses now account for almost 1 million people in employment. The latest research shows that in the run-up to the last crisis, those companies’ sales, investment in research and development, and, indeed, exports grew at a faster rate than the national average. Furthermore, I am sure that everyone in the House would welcome more money for charities, more research funds for scientists, more scholarships for students who need them and lower insurance premiums, and that is indeed what the private equity industry delivers. The funds that private equity companies manage benefit all of us through university endowments, charitable foundations, pension funds and the floats of insurance companies. When the private equity industry does well, the pensioner, the scientific researcher and the scholar from a disadvantaged background all benefit This is a Finance Bill from a Government who value their investors and will not demonise an industry, and who know that no contribution, however great, should be allowed to skew the scales of social justice. The clauses that involve changes to carried interest will ensure that the rewards that investment managers receive for their efforts are taxed not only correctly, but fairly. The clauses will introduce a 40-month holding period to ensure that capital gains tax treatment is reserved for genuinely long-term investments, as it should be. I know that Members on both sides of the House support the welcome change to remove the base cost shift loophole, which allowed costs to be advantageously offset against gains. The Bill will also consolidate Government action on disguised fee income that was introduced in the last Finance Bill and ensure that fund managers are paying income tax when appropriate. All in all, the measures will raise in the order of £200 million in the next financial year Those new arrangements are not only fair for British taxpayers and society; they will also ensure that we remain competitive internationally. Our general treatment of carried interest, which has been the subject of much debate in this House and various Committees, is actually in line with the treatment carried out in the United States, Germany, Australia and France. All those countries agree with the notion that carried interest is capital in nature and should be treated as such. If we look across Europe, we will see that our rate for carried interest will sit in the middle of those for comparable countries: it will be a little bit above that in Switzerland and Germany, and a little bit below that in France The clauses reflecting changes to capital gains tax will ensure that the UK remains a pro-enterprise, pro-growth nation. Small and medium-sized businesses of the kinds that I used to invest in account for more than half of private sector employment in the UK. They are responsible for three quarters of all jobs created since 2008, yet I know from first hand that small and medium-sized British enterprises still struggle to attract enough equity capital to grow. Adjusted for GDP, the size of the UK’s venture capital market is a seventh of that of the United States. Just 3% of British companies manage to expand from three employees up to 10, which is half the rate in America When I hear about changes to capital gains tax rates, I think about how they will benefit all those small businesses, helping them get the capital they need to grow and to increase investment and employment. Indeed, investors’ relief and the other changes to capital gains tax included in the Bill will build on the success of the seed enterprise investment scheme, the enterprise investment scheme, the funding for lending scheme and the British Business Bank, all of which are providing British companies with the capital that is necessary for growth. The changes will ensure that Britain remains a competitive prospect for investment without compromising Government revenue. The hon. Member for Salford and Eccles (Rebecca Long Bailey) mentioned the state of our finances and the need for revenue. I am sure that she welcomes the fact that the Office for Budget Responsibility projects that capital gains receipts will top £7 billion this year and increase to £9 billion next year, which is higher than in any other year in the past decade and a half. Rather than being a sweet deal for the rich, our capital gains tax rate actually sits in the middle of the OECD league tables of capital gains tax rates. Ten countries have rates of 0%, and our rate of 20% will sit two points above the average As we contemplate leaving the European Union, it will be vital that Britain’s economy remains dynamic, open and competitive to attract the investment we need and maximise the opportunities afforded to us. The clauses relating to capital gains tax and carried interest will ensure that the UK does exactly that, and I will support them later today.
I want to speak to the Labour party’s new clause 14 and amendment 174, which, as has been ably pointed out by the hon. Member for Salford and Eccles (Rebecca Long Bailey), would remove clause 82 and the increased nil-rate band for inheritance tax I will focus first on the entrepreneurs’ relief proposed by new clause 14, which makes a key point about the lack of Government transparency. When UK Governments of all colours introduce a tax change, they often do not return with the evidence to show that the policy has worked. They will implement the policy and say that it is wonderful, but they will not bring back the proof. The Minister was asked yesterday how many companies have benefited from the loan guarantee fund in relation to oil and gas, but she was unable to provide a detailed answer. I do not know whether she just did not have the answer at her fingertips or whether the Government have not actually sat down and worked it out. If Governments are going to make grand claims about what they are doing and how good their policies are, they really need to bring back their work and show it to us.
It is important, particularly in relation to entrepreneurial relief, to point out that the last thing we want is an economy where there are quick-fire gains. One of the criticisms of the tax treatment in the area of private equity and venture capital is that there have been too many incentives for people to sell out too quickly The corollary of that surely must be that if an entrepreneurs’ relief is designed to encourage entrepreneurs to hang on to their businesses in the longer term, it is difficult for the Treasury to bring back, in a shortish period of time, figures that suggest that a scheme has been a success. We have to look at the general tenor of an economy such as the UK. To that extent, I think that positive changes are being proposed, but I do not think that it is realistic or fair to expect the Treasury to come back in double-quick time and say, “This has been a great success.”
To be fair, the new clause does not ask the Treasury to come back in such a short time; it asks for a six-month review period. Instead of just saying that they will not do a review, the Government could quite easily say, “We will do a review, but we will do it in 18 months.” I would find that acceptable. I would like to see how the schemes are working. I am not necessarily saying that any of them are particularly bad, but the Government need to come back with their workings and tell us how those things are performing The UK tax system is incredibly, massively complicated, and there are tax reliefs and taxes for all sorts of things. I am not convinced that the majority of them are working as they were intended to, particularly those put in place 20 or 25 years ago. The whole thing needs looking at, and considering individual things is a sensible place to start. The new clause is about Government transparency, and anything we can to do increase Government transparency around tax reliefs, in particular, is great. It would be very good if the Government considered this for some point in the future, even if not exactly in the terms suggested The other thing I want to talk about is inheritance tax. The Conservative manifesto said that the party intended to “take the family home out of tax for all but the richest” As I mentioned in Committee, I have a real issue with regarding £1 million homes, or homes that are worth close to £1 million, as normal family homes and not the preserve of the very richest. In Scotland, the average sale price in 2015 for a detached house was £238,000. In Edinburgh, which is at the higher end of the market in terms of price, the detached average sale price was £382,778. Those are detached homes—not family homes, necessarily—so they are specifically at the higher end of the market. In the most expensive place in Scotland to buy, we are looking at homes costing £382,778 I have been looking at what someone could get for £1 million. In Orkney—fair enough, it is probably not the best example—they could get a six-bedroom home with an attached three-bedroom lodge and a guest wing for less than £1 million. Nobody would call that a normal family home. In Ayr, they could get a 10-bedroom detached category B listed mansion for less than £1 million. Also in Ayr, they could get a six-bedroom home, which seems relatively modest, in these terms, with a swimming pool for under £1 million. None of those could be classed as normal family homes. They are, in the main, homes that have been inherited—[Interruption.] Very few people will have just picked up these homes The other thing that the Conservatives said in their manifesto was, essentially, “You have worked hard for your money; we would like you to keep it.” The vast majority of the homes in question will not be first-generation owned. They will have been sold by the second or third generation because they have been owned by the family for a long time. They are not, by any stretch of the imagination, normal family homes. Even in the centre of Edinburgh someone could manage to get an eight-bedroom, detached, very large house for £1 million, and that is the most expensive place in Scotland to buy a home. The problem—this applies to a huge amount of the Conservative manifesto—is that the Conservatives think that what happens in the south-east of England is normal for the rest of the UK. It is not normal for the rest of the UK. I know that the south-east is where the majority of the population are based, but some thought needs to be given to this. Members will expect me to say this as a Scottish National party politician who supports independence, but if decisions were made closer to home, they would be more appropriate for people in Scotland.
I appreciate that my constituency is hardly typical as far as these matters are concerned —nor, indeed, is the Minister’s constituency on the other side of the river—but the logic of what the hon. Lady is saying is that we should move towards a regionalised tax system. I guess that she would quite like it to be a nationalised system, with the nation beginning on the other side of Hadrian’s Wall, but does she not recognise that the Barnett formula gives particular incentives to the nations of the United Kingdom, rather than to London and the south-east? I can understand the irritation that she feels about the fact that perhaps too much thinking is done for London and the south-east, but £1 million buys virtually nothing not only in my constituency but in many of the 73 constituencies in London, as well as those in the home counties. Short of regionalising our tax system, surely this is, at least, a sensible step forward to ensuring that those who have been able to bring up a family in a home are not forced to sell the home when a relative dies.
The right hon. Gentleman makes a good point. Perhaps we need to think about having differential policies across the UK, and possibly further devolution. That would be fantastic, and if he wants to support us in that cause, he is welcome to join us at any time This policy highlights a major difference between the south-east of England and the rest of the UK. The problem with Government being so far from people who are outside London is that policies are made for the benefit of the majority of the population—the people who live around here. That is really unfortunate for people in the north of England and in Wales, because the policies made by the national Government do not make sense for us.
Will the hon. Lady give way?
I will not take another intervention; I am sorry. I just want to mention briefly the Prime Minister’s statement that she will take “bold action” on tax. We have a big problem—we will still have a big problem after the changes that will be made by the Finance Bill, including the tax changes that we discussed yesterday—with the lack of parity and fairness in tax. Nurses, carers and people who work in all sorts of professions pay 20% tax. I acknowledge that the personal allowance has been raised, and that is very much appreciated, but those people pay the tax that is due on the majority of their income There are still too many loopholes in the rest of the system. I understand the point that was made about carried interest, and we need to see how that works going forward. I would love to see the Government’s working on that, and whether the policy has the effects that the Government intend. However, unearned income is still taxed at different rates from earned income. I understand the point that was made about private equity supporting our economy and supporting some of our community organisations, for example. However, the people in question are not paying the level of tax that they should be paying to the Government, so the Government do not have the funds to disburse that they should have to disburse We need to do something a bit more radical than tinkering around the edges. We need to look at making changes that actually bring about parity. We need to look at ensuring that the people who are making the megabucks in the City of London pay at least as much tax, and as high a percentage of tax, as our nurses and carers pay.
I will speak briefly in favour of amendment 151 on carried interest. In my time as a Member of Parliament, I have sometimes been critical of elements of the tax regime that applies in the private equity and venture capital world. It seems to me that the generous tax regime, although it has been justified to support entrepreneurs, has often been misused by those in the industry—inadvertently; I am not suggesting that anything untoward or nefarious has taken place. I believe that many in the private equity field have, particularly in good times, in effect been financiers rather than risk takers. As such, it would surely be more equitable for their rewards to be treated more like income than capital gains. That has been at the heart of the whole debate about carried interest The Government have been aware of this issue. Let us give them some credit for that. To some extent, we are trying to play catch-up on it. Inevitably, there has been controversy about the treatment of private equity firms’ carried interest, which is levied as a capital gain, rather than as income. There was a time—pre-2010—when the difference between those two things was rather greater than it is today. That may be because capital gains tax has been raised, but the starkness of the problem is to some extent less pronounced now than it was during the time of the last Labour Administration in the noughties It is clear that the Treasury is doing the right thing in trying to provide a more favourable regime that is intended to reward genuine entrepreneurs. In principle, that must mean that where carried interest looks like income, it should be treated as such for taxation purposes. That is what we are slowly doing with amendment 151.
Has the OECD not recommended that all carried interest should be treated as income?
It has, but there is a distinction between different elements of carried interest, and we are trying to get to the bottom of that. To be brutally honest, in the longer term I would be much happier to have a regime in which we treated capital gains and income identically. There would not then be any sense in trying to arbitrage one way or the other. In many ways, perhaps inadvertently, the coalition began to move in that direction. I am sorry that I was not in the Chamber to hear the whole speech of my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), but he is absolutely right. Private equity has had a bad rap because of certain high-profile concerns—partly because of the misuse of tax to allow huge amounts of debt on to balance sheets—but a large number of businesses in each and every one of our 650 constituencies in the UK benefit from having private equity investors. Many jobs now exist because of the private equity investment that has come into play, particularly in growing businesses that will make a real difference in the future. The Government have broadly got this right, although I am sure we will have to come back and look at it again I would make one point to the hon. Member for Aberdeen North (Kirsty Blackman). It is not about inheritance tax—we have had our joust on that—but on a more fundamental point, on which I think she is absolutely right: the more complicated a tax code, the more the door is open to tax avoidance of all descriptions. We very urgently need to begin to simplify our tax code. We will add yet more pages to it today. A lot of them are to apply Elastoplast in ways that we can all support for individual reasons, but we need to get back to the principles of a much simpler tax system I believe that one of the impacts of leaving the European Union will be not a race to the bottom in lowering tax, but a much simpler tax system. This is a wake-up call for all of us in the House—obviously, particularly for those in the Treasury—to have a much simpler tax code. Such a code will be readily understandable and supported by all our constituents, which is one of the issues we face. It will also say to those bringing in much of the inward investment that will come to the UK from across the globe that we have a simple tax code, which will not be tinkered with in successive Finance Bills because it is very straightforward, and they will be able to work on that basis. I know that may be wishful thinking—going back many years, most Chancellors have talked about having a simpler tax code—but this now needs to be looked at urgently. Urgent attention must be paid to getting simplicity. If we do not do so, we will all very much pay the price.
I entirely echo the right hon. Gentleman’s comments about simplification. I may attempt to catch your eye, Madam Deputy Speaker, to address the House on that issue later. However, I caution him against linking that to Brexit, because almost all the complications, of which there are many in what we now call the tax code, are due to domestic legislation and are nothing to do with the European Union. Brexit may afford us an opportunity to start at the bottom on various areas of Government policy and endeavour, but leaving the EU will not provide such an opportunity in this case.
Obviously, the hon. Gentleman does not know me, or indeed the Minister, well enough to know that we are both very much on the pro-European wing of our party. I was not in any way blaming the EU. I was simply trying to make the point that, in looking to get a new set of trade arrangements with dozens of countries across the globe, we should not rush headlong into making lower corporation tax the incentive for companies. One of the big factors for them will be the sense that there is a simpler and more straightforward tax code in the United Kingdom, and that will make us open for business in the way that we have traditionally been open for business during the past 200 to 300 years The Floor of the House of Commons is not the place on which to make such a policy, but I very much hope that we will keep this very firmly in mind. There is now an urgent case for having a more straightforward tax system, even if it is one that only says what we are aiming to achieve. It will obviously be difficult to unravel tax benefits created in the past. I accept that it will be difficult to unravel all the reliefs, not least because entrepreneurs in the future, like those in the past, will want to rely on them in making investment decisions.
The right hon. Gentleman is making some very important points about simplification and its impact in ensuring that measures work in the way intended. Does he agree that simplification and clarification of the objectives of reliefs would go a long way to making sure that small enterprises or first-time entrepreneurs could understand and gain greater access to the available reliefs, which may be intended for them but are perhaps used by others with greater experience?
I am sure there is a lot of truth in that. I was a businessman before I entered the House. It was a relatively straightforward business, based in the City of London, in the service industry, so there were not a huge number of reliefs available, although it may well be that 20 years of additional pages of the tax code have made it even more bloody complicated than it was for those working in and setting up businesses in the 1990s. I agree with the hon. Lady. Again, getting rid of reliefs and making the system more straightforward is the right way forward. Rather than having a whole lot of reliefs to recommend to would-be entrepreneurs, let us try to cut down the whole thicket Madam Deputy Speaker, I have spoken for long enough. I almost veered off the subject, but had I done so, I am sure you would have been the first to stand up and say so. I very much hope that amendment 151, among others, will be supported. It is definitely a move in the right direction, although I am sure we will have to come back to the issue of carried interest in the future.
I am grateful for the opportunity to speak in this debate, which was opened by my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey), on the new clause and amendments relating to capital gains tax. I will speak particularly about new clause 14, on “Entrepreneur’s Relief: value for money”, amendment 174, which would remove the capital gains tax cut, and amendments 175 and 176 on the investors’ relief sunset clause. Labour’s main issue of contention with the Government is the reduction of capital gains tax, the reasons for which have been well outlined. I want to highlight the very serious issue of value for money in public finances, and to continue to make our call for the Government to look at the way in which we scrutinise and review tax reliefs. As we have argued since the Budget, the Finance Bill is inadequate if we are to rise to the challenges we face and to work towards a very strong economy in which we can all feel and believe that prosperity is shared by all. At a very tough time for the public finances, the Government have chosen to prioritise a corporation tax cut and a capital gains tax cut. Certainly while working on the Finance Bill, including as shadow Chief Secretary, I have had several conversations with business figures who quite openly said that they did not necessarily expect a corporation tax cut while other issues that are so important for their business success—investment in skills, housing, infrastructure and superfast broadband, and ensuring that we get the productivity shifts this country so desperately needs—require great attention. To purport that there is a simplistic link between a capital gains tax cut and a strong enterprise and investment culture is therefore not very honest, because it has not been proven that the cut is either necessary or sufficient to achieve that outcome, which we do indeed want Let us not forget that at the last Budget, the OBR took all the Chancellor’s measures into account and still downgraded the business investment forecasts. The latest figures from the Office for National Statistics estimate that business investment decreased by 0.8% between the second quarter of 2015 and the second quarter of 2016. Therefore, it continues to be a concern that the Government’s economic strategy does not take into account the wider needs of businesses beyond tax cuts It is the context of squeezed public services and lack of investment that leads me to raise the issue of tax reliefs, particularly those pertaining to capital gains tax, and the way in which we understand the needs of businesses. Tax reliefs are an important part of our tax system and have been needed for a variety of reasons, many of them extremely valid. However, after six years of this Government’s failure on the economy, in so many ways, with many people feeling the brunt of the cuts and with our public services under considerable strain, every penny of public spending should be going on much needed investment in our schools and hospitals and on supporting the most vulnerable. The figures got even worse this summer, with more than a third of children leaving school without the equivalent of five good GCSEs, and schools in my constituency tell me that they are giving out money every day to help parents buy school uniforms and shoes. We therefore need to justify every penny that is spent by the Exchequer That also has to apply to every penny that is not collected. Tax reliefs are effectively tax forgone. I firmly believe that we need to apply just as much scrutiny to relief as we do to expenditure. That is not to say that I am opposed to tax reliefs to incentivise good and positive business behaviours—far from it. For me, providing behavioural incentives to achieve economic and social goals is a central part of the role of Government, but they must use effective judgment that is based on the interests of fairness and prosperity. A Government who are working in strategic partnership with business and industry in the interests of the economy and society will actively consider such measures However, there is a serious paucity of scrutiny of whether and to what extent various tax reliefs are achieving those goals and whether they remain value for money for the taxpayer. The HMRC website lists 405 tax reliefs in the UK, but in reality there are many more. The Office of Tax Simplification has identified 1,140 tax reliefs. Of the 405 tax reliefs listed by HMRC, 102 cost more than £50 million, 84 cost under £50 million and there are 219 for which HMRC does not provide cost data.
Does my hon. Friend agree that of all those reliefs, the biggest scandal is tax relief on pension contributions, which costs more than £30 billion a year in forgone revenue and principally goes to the most well-off? For years, the Department for Work and Pensions has had no evidence that that tax relief produces a change in behaviour that results in more people making pension contributions. We are, in effect, handing out a lot of money mostly, but not entirely, to a lot of rich people to get them to do something, when there is no evidence that it does so.
My hon. Friend makes an important point. The conundrum of how we fund, finance and incentivise pension savings needs to be thought about much more holistically. He highlights an example of incentives that reach not the majority, but a minority. We must keep that under review The Public Accounts Committee took forward the work of the National Audit Office on these issues and took evidence. Its report found that some reliefs “costing some £100 billion a year, are designed to deliver a policy objective that could be met instead through spending programmes”, which would be more rigorous and more auditable. The report states that “HM Treasury and…HMRC do not keep track of those tax reliefs intended to influence behaviour. They do not adequately report to Parliament or the public on whether reliefs are working as intended and what they cost and whether they represent good value for money.” Nothing has really changed since the report was published last year. That is why Labour continues to raise this issue during the passage of the Finance Bill We need to question the efficacy of tax reliefs such as capital gains tax relief and entrepreneurs’ qualifying business disposals, or entrepreneurs’ relief. There are clear reasons for entrepreneurs’ relief and it can be argued that it incentivises investment, but does it make a great enough difference to be worth £3 billion a year to the Exchequer? I do not claim to have all the answers, but we do need evidence to prove that it makes that difference and the Government need to be challenged to justify this and other reliefs In Committee of the whole House, the then Financial Secretary to the Treasury defended entrepreneurs’ relief and, as usual, did so without evidence, saying: “of course, as with all tax reliefs, it is entirely appropriate that the Government keep it under review to ensure that it is well targeted and not open to abuse”.—[Official Report, 28 June 2016; Vol. 612, c. 245.] I challenge the Government to say when they will do that. New clause 14 would make the Government and all of us turn those warm words into action Furthermore, the Finance Bill introduces a new relief, investors’ relief, which extends the low rate of capital gains tax to investors in an unlimited trading company for at least three years. In principle, I support the idea of a relief that is intended to incentivise investment and to support access to capital for businesses, particularly at an early stage in a business’s life cycle, if we can provide evidence that it will help turn those with initial ideas into the successful job creators and innovators of the future. That is extremely important in creating the economy of the future, with all the opportunities that new technology and other initiatives can bring However, it concerns me that this could end up being yet another tax relief that is introduced for a good reason, but then left to mushroom into a relief that is extremely expensive and difficult to remove. We need a mechanism to ensure that there is time to review whether it is achieving the desired effect, whether the costs are aligned to those that are forecast and whether it constitutes value for money. For that reason, I support the sunset clause for the relief in Labour’s amendment 176, which would ensure that after a number of years, when we have the evidence on which to base our conclusions, those questions will not go unanswered I call on the House and the new Treasury Ministers to take seriously our scrutiny of tax reliefs and to support the Opposition amendments, which would put in place proper mechanisms for reviewing the reliefs and ensure that they remain targeted at supporting businesses, while showing evidence of value for money.
I will start by outlining the Government amendments in the group before responding to some of the points that have been made by hon. Members in what has been a thoughtful debate. As a new Treasury Minister, I have found a number of the speeches good food for thought as I look forward to a series of meetings into the autumn On Government amendments 149 to 151, the Finance Bill provides an incentive for people to invest in companies by reducing the main rates of capital gains tax from 18% to 10% and 28% to 20% on most gains made by individuals, trustees and personal representatives. We announced at the Budget that the 28% and 18% rates would continue to apply for carried interest. That is justified by the fact that carried interest is a performance-related award that is hybrid in nature, with characteristics that distinguish it from most other types of capital gain, as was alluded to by some hon. Members. We recently learned that it is possible to create an investment fund structure generating carried interest that, under clause 82 as it stands, would be taxed at 20% or 10%. That would clearly be unfair and contrary to policy. The amendments therefore ensure that the continuing 28% and 18% rates apply to all forms of carried interest.
The Minister says that the measures will drive investment. What evidence is there for that?
That point has been made repeatedly. Contributions from those critical of the policy often miss the way in which measures interact. We are trying to create a climate that encourages investment. A number of international studies have indicated that low rates of CGT support equity investment in firms and promote higher-quality investment in start-ups. That is an important source of innovation and growth. The evidence is there. The measures are part of a package that is trying to create a climate that makes our country attractive to invest in and enables domestic investors to invest in company growth. At the same time, as we have stressed and as other measures in the Bill stress, taxes must be fair and must be paid; the hon. Gentleman took part in a good debate last night about some of those measures A number of external bodies have expressed support for clause 82—that also goes to the hon. Gentleman’s point. The CBI and the Institute of Economic Affairs have both welcomed the cuts as a means of encouraging entrepreneurship and growth, and, as I have said, there is a body of evidence, not least internationally, to indicate that lower rates support equity investment in firms and promote higher-quality investment in start-ups. Again, I welcome the support of and international perspective given by my hon. Friend the Member for Richmond (Yorks) on this subject The changes made by clause 82 are about encouraging investment where we want businesses to expand. As I have said, they are very much a part of a general pro-business agenda, but we have also been clear that we want fair and competitive taxes and that taxes must be paid. We addressed that in a good debate last night, when there was a good degree of cross-party consensus The hon. Member for Salford and Eccles (Rebecca Long Bailey) mentioned the geographical distribution of the CGT cut. HMRC publishes national statistics on CGT each year that include a breakdown of its payers by geographical distribution, so there is transparency on that. It is also worth saying that it has been estimated that up to 130,000 individuals will pay lower taxes as a direct result of these changes to CGT, including 50,000 basic rate taxpayers The hon. Member for Feltham and Heston (Seema Malhotra) made a typically thoughtful speech, not just on CGT but on her general thoughts on tax reliefs and how we review them, as well as on tax simplification. Again, I felt that she did not perhaps entirely address the interaction between the various measures—they cannot be seen in isolation. The other issues she mentioned are hugely important; for example, the investment in skills, but I did not think she was fair about what the Government have done on that agenda, which has resulted in record levels of apprenticeships. She is right to say that there are other issues such as that one, but these measures are part of a general package and are not the whole picture Amendments 175 and 176 were also tabled by the Opposition. In the 2016 Budget we announced the introduction of investors’ relief, benefiting long-term investors in unlisted companies. As has been explained, the amendments seek to end that new relief after a period of six years, with the option of an additional 12-month extension if agreed by both Houses, and ask the Chancellor to lay a review of the operation of the relief before both Houses The amendments are unnecessary as the Government keep all tax policy under review in line with normal tax policy making practice. The hon. Member for Aberdeen North (Kirsty Blackman) again, I thought, did not really give credit to the interaction of different measures nor to the wider point that, given that the Government are bringing the measures forward to stimulate economic growth, there is absolutely no incentive for us not to keep a very close eye on them and review them at regular intervals. We do so all the time because we want measures to work—we want our measures to stimulate economic activity, and we do not in any way want them not to work. Indeed, there are a number of measures in the Bill to correct things that have been done in the past, where we feel that an improvement could make something work better We feel that there would be limited merit in conducting a review within six years as the first data on the uptake of the relief in its first year of operation will not be available to HMRC until 2021. Amendments 175 and 176 are neither needed nor useful, and we ask the Opposition not to press them to a vote New clause 14, again tabled by the Opposition, proposes that the Chancellor publish, within six months of the passing of the Bill, a report of the Treasury’s assessment of the value for money provided by entrepreneurs’ relief. As I have just said, the Government keep all tax policy under review because we want it to do what we have set out as the intention behind it, namely to stimulate economic activity and to make investment in business attractive to people. That review includes entrepreneurs’ relief, as demonstrated by recent action taken to ensure that the relief is effective, well targeted and not open to abuse. We will continue to act, where appropriate My predecessor as Financial Secretary has already informed the House of this, but it is worth reiterating, as it is germane to this point, that HMRC officials have commissioned an in-depth survey of taxpayers’ reasons for using entrepreneurs’ relief and its effects on behaviour. We expect the results of that survey, which will be published at some point in 2017, to inform future changes to the relief. I hope that that gives Members some comfort that the relief is being looked at very closely In our wider debate, some general points were made about the Budget being tilted towards the south-east of England. A number of points could be made in rebuttal, not least the debate we had last night, which touched on support for the oil and gas sector in Scotland. More generally, some interesting points were made about having a simpler tax system. In the next part of our debate on the Bill, there will be an opportunity to discuss the Office of Tax Simplification, but as this point came up during the current debate it is worth noting that the Bill puts the OTS on a statutory footing. Around half of the OTS’s 400 or so recommendations to date have already been taken on board. I again take on board the point made by my right hon. Friend the Member for Cities of London and Westminster (Mark Field). I feel sure that this a topic that we will return to over the coming months and years I thank all Members who have spoken in the debate.
I beg to ask leave to withdraw the clause Clause, by leave, withdrawn. Clause 82 Reduction in rate of capital gains tax Amendment proposed: 174, page 167, line 40, leave out clause 82.—(Rebecca Long Bailey.)
I beg to move, That the clause be read a Second time.
With this it will be convenient to discuss the following: New Clause 2 Review of the impact of the duty regime for high-strength cider ‘(1) The Chancellor of the Exchequer must carry out a review of the impact of the rate of duty charged on sparkling cider of a strength exceeding 5.5%, and lay the report of the review before both Houses of Parliament within 12 months of this Act receiving Royal Assent (2) The review must address (though need not be limited to) the impact of the duty regime on tax revenues and on the consumption of alcohol.” New Clause 3 Review of the operation of the transferable tax allowance for married couples and civil partners ‘(1) The Chancellor of the Exchequer must carry out a review of the operation of the transferable tax allowance for married couples and civil partners under Chapter 3A of Part 3 of the Income Tax Act 2007 and lay the report of the review before both Houses of Parliament within 12 months of this Act receiving Royal Assent. (2) The review must address (though need not be limited to)— (a) levels of take-up of the allowance; (b) the impact of the allowance on individuals with children aged five years or under; (c) the impact of the allowance on low-income households; and (d) ways in which the allowance could be changed to target low-income families with young children.” New Clause 6 VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service The Chancellor of the Exchequer must commission a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service, including but not limited to an analysis of the impact on the financial position of Police Scotland and the Scottish Fire and Rescue Service arising from their VAT treatment and an estimate of the change to their financial position were they eligible for a refund of VAT under section 33 of the VAT Act 1994, and must publish the report of the review within six months of the passing of this Act.” New Clause 8 Review of changes to tax on dividend income ‘(1) The Chancellor of the Exchequer must commission a review of how the changes to the tax on dividend income implemented by this Act affect directors of micro-business companies, to include— (a) the impacts across the distribution of such directors’ net income; (b) the impact on company failure rates; and (c) options for amending the law to minimise the impact on such directors who are on low incomes (2) The Chancellor must lay a report of the review before both Houses of Parliament within six months of the passing of this Act.” New Clause 15 VAT on Installation of Energy Saving Materials ‘(1) No order shall be made under the Value Added Tax Act 1994 which would have the effect of raising the rate of VAT on installation of energy saving materials, or any individual category thereof (2) No order shall be made under the Value Added Tax Act 1994 to vary Schedule 7A of that Act by deleting or varying any description of supply within Group 2 (Installation of Energy Saving Materials) (3) “Installation of energy saving materials” has the meaning given in Schedule 7A of the Value Added Tax Act 1994.”” New Clause 16 Review of impact of tax measures on intergenerational fairness ‘(1) Within six months of the passage of this Act the Secretary of State must lay before Parliament a report assessing the impact of — (a) Sections 1 to 3, (b) Sections 19 to 22, (c) Section 82, (d) Sections 92 to 96, and (e) Section 140 on the burden of taxation by age demographic. (2) A report under this section must include an analysis of the proportion of taxation paid by working age people under the age of 35.” New Clause 18 Impact of section 24 of Finance (No 2) Act 2015 on availability of affordable housing The Chancellor of the Exchequer must commission a review of the impact of changes relating to income tax made by Section 24 of the Finance Act 2015 on the availability of affordable housing, and lay the report of the review before both Houses of Parliament within six months of the passing of this Act.” New Clause 19 Distributional analysis of the impact of taxation measures ‘(1) The Chancellor of the Exchequer must review the impact of the measures introduced by this Act on households at different levels of income, and lay before each House of Parliament the report of that review within six months of this Act coming into force (2) The Chancellor of the Exchequer must review the impact of government fiscal measures on households at different levels of income at least once in each calendar year, and lay before each House of Parliament a report on each review.” Government amendments 132 to 134, 146 to 148 and 135 Amendment 179, clause 99, page 185, line 20, at end insert— “(c) “earning” do not include any amounts that constitute qualifying bonus payments within the meaning of section 312B of the Income Tax (Earnings and Pensions) Act 2003.” Government amendment 138 Amendment 141, schedule 3, page 337, line 1, at end insert— “Provision for small amounts of partnership share money repayable to employees to be exempt from tax if instead applied charitably 10 In section 503 of ITEPA 2003 (charge on partnership share money paid over to employee), after “paragraph 55(3) (partnership share money paid over on withdrawal from partnership share agreement),” insert— “paragraph 55(3A)(a) or (b)(i) (partnership share money paid over on withdrawal from partnership share agreement),” 11 (1) In Schedule 2 to ITEPA 2003 (share incentive plans), Part 6 (partnership shares) is amended as follows (2) In paragraph 55 (withdrawal from partnership share agreement)— (a) in sub-paragraph (3) after “as soon as practicable” insert— “, unless the plan includes provision authorised by sub-paragraph (3A)” (b) after sub-paragraph (3) insert— “(3A) The plan may provide that, where an employee withdraws from a partnership share agreement— (a) if the employee does not agree to an arrangement in accordance with sub-paragraph (b), any partnership share money held on behalf of the employee is to be paid over to the employee as soon as practicable, and (b) with the employee’s agreement— (i) if the partnership share money held on behalf of the employee exceeds a threshold amount of not more than £ 10 specified in the plan, the full amount must be paid over to the employee as soon as practicable, and (ii) if the partnership share money held on behalf of the employee is equal to or less than the threshold amount referred to in sub-paragraph (b)(i), as soon as reasonably practicable, the full amount must either— (3B) Partnership share money paid over to a charity or accumulated for that purpose under sub-paragraph (3A)(b) shall not count as employment income by reason of section 503 (3C) While the plan includes any provision authorised by sub-paragraph (3A), the company and trustees shall make available to participants and qualifying employees at least annually an account of the total amount of partnership share money that would have been returned to employees were it not for that provision and of the related charitable donations made (3D) The Treasury may by order amend sub-paragraph (3A)(b)(i) by substituting for any amount for the time being specified there an amount specified in the order.”” Government amendment 139 Amendment 180, schedule 25, page 642, line 2, at end insert— ‘(4A) The Chancellor of the Exchequer may not appoint the Chair of the OTS without the consent of the Treasury Committee of the House of Commons (4B) The Chancellor of the Exchequer may not appoint the Tax Director of the OTS without the consent of the Treasury Committee of the House of Commons.” Amendment 181, page 642, line 40, at end insert— ‘(2A) The Chancellor of the Exchequer may not terminate the appointment of the Chair of the OTS without the consent of the Treasury Committee of the House of Commons (2B) The Chancellor of the Exchequer may not terminate the appointment of the Tax Director of the OTS without the consent of the Treasury Committee of the House of Commons.” Amendment 182, page 643, line 3, at end insert— “References to Treasury Committee 5A (1) Any reference in this Schedule to the Treasury Committee of the House of Commons— (a) if the name of that Committee is changed, is to be treated as a reference to that Committee by its new name, and (b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which those functions are exercisable (2) Any question arising under sub-paragraph (1) is to be determined by the Speaker of the House of Commons.”
In this final debate, there is an array of amendments and new clauses to consider across a wide range of subjects. I am sure that we will cover a great deal of ground Let me first outline briefly the Government amendments, starting with Government new clause 9. To ensure fairness in the tax system, new clause 9 allows for the exemption from income tax of supplementary benefit payments funded by the Northern Ireland Executive. Government amendments 132 to 134 deal with disguised remuneration and Government amendment 139 deals with aqua methanol. Amendments 132 to 134 change the date for withdrawing a relief on returns arising from disguised remuneration for those who have not settled tax due to 1 April 2017, while amendment 139 changes the date on which the new aqua methanol duty rate comes into force to 14 November. Government amendments 135, 146 to 148 and 138 concern venture capital trusts, the lifetime allowance and dividends respectively. They make changes to ensure that these policies work as intended Let me deal with the new clauses and amendments tabled by the Opposition. New clause 15, tabled by the hon. Member for Salford and Eccles (Rebecca Long Bailey) and her colleagues is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials. Since 2001, the UK has applied the 5% reduced rate of VAT to the installation of 11 different types of energy-saving materials. That reduced rate remains in place and is unchanged. The European Court of Justice ruled last year that the UK had interpreted VAT law too broadly. Following that judgment, the Government published a consultation on this particularly complex issue, and we are considering the responses. While this new clause is designed to prevent the use of secondary legislation to alter the rate of VAT applied to the installation of energy-saving materials, the tax lock legislated for by this Government already achieves the same effect. Indeed, it goes further.
Will the Minister confirm that, now we are leaving the EU, we would have no intention of raising VAT to that rate? I hope that we will scrap it altogether.
As the Secretary of State for Exiting the EU said yesterday in his responses to the lengthy statement, those are all matters that will be looked at. He confirmed that he is indeed looking at it, as is the Treasury We feel that the tax lock goes further by preventing the use of secondary legislation to vary the scope of any reduced or zero rate. In effect, the new clause would serve no purpose except to duplicate existing legislation New clause 3 on the marriage allowance would place a legal requirement on the Government to carry out a review. Although I am sympathetic and have discussed the concerns of my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) and others who support the new clause, I hope to be able to show that such a report is unnecessary and to address some of these concerns Let me reiterate that the Government remain committed to recognising marriage in the tax system and to ensuring that the marriage allowance is delivered successfully. As hon. Members will be aware, take-up of this policy was initially lower than expected, but the Government have taken decisive action to change that. In spring this year, HMRC ran a successful marketing campaign to help raise awareness among eligible families, and the results were quite dramatic. Daily applications increased by a factor of seven between November 2015 and March 2016. Next month, HMRC will receive its 1 millionth successful marriage allowance application We are going even further. HMRC will launch a more ambitious campaign to raise awareness next month to help to continue the momentum. The Government have also assessed the distributional impact of the policy, which I know is a matter of interest to my hon. Friend the Member for Enfield, Southgate. We found that a quarter of those who will benefit are households with children, and most of the benefit from the marriage allowance will go to those in the bottom half of the income distribution scale. I understand that my hon. Friend will want to make more points about this issue in his contribution. I will seek to respond, briefly if I can, at the end My hon. Friend has also tabled new clause 2, which proposes a review of the impact of the rate of duty charged on sparkling cider of an alcohol strength exceeding 5.5%. The concerns that he raises—he has raised them before—are important, and the Government will continue to tackle alcohol problems as a driver of crime and support people to stay healthy, building on the alcohol strategy of 2012. The Government are aware that some ciders can be associated with alcohol harm and we have already taken action. Since 2010, for example, we have required drinks to contain a minimum of 35% apple or pear juice to be defined as cider, which is designed to increase the cost of the cheap white ciders From my previous role as a public health Minister, I am obviously aware of the concerns about alcohol harm. Further changes to alcohol policy would need sufficiently to target cheap drinks associated with these harms, without of course penalising responsible drinkers. The Treasury is always willing to consider any evidence about how these products should be taxed. Although I do not think a legislative requirement for a review is necessary, I look forward to hearing my hon. Friend’s contribution to the debate Amendments 180 to 182 deal with the Office of Tax Simplification. The amendments, tabled by the hon. Member for Ilford North (Wes Streeting), would require appointments to or dismissals from the position of the OTS chair to be subject to the consent of the Treasury Select Committee. The OTS provides the Chancellor with independent advice on simplifying the tax system. As I alluded to in the last part of the previous debate, to ensure that the OTS continues its important work, the Government are putting it on a permanent statutory footing and increasing its powers. I am grateful to my right hon. Friend the Member for Chichester (Mr Tyrie), the hon. Member for Ilford North, whom I see in his place, and other members of the Treasury Select Committee for their commitment to safeguarding the independence of bodies within government and to increasing their transparency. The Government’s view is that there is a balance between ensuring that there is robust scrutiny and doing so in a way that is proportionate to the function of the OTS Having considered the representations of my right hon. Friend the Member for Chichester and the hon. Member for Ilford North, the Government will ensure that the Treasury Committee is able to hold hearings with future OTS chair candidates before their appointments are formalised, and to put appointments to a vote in the House. We believe that those arrangements should be a permanent method of appointment of future OTS chairs. I do not think there is any justification for going further and legislating for a power of veto, which is what the amendments would do. I hope that members of the Treasury Committee will welcome the arrangements that I have outlined, and I invite them not to press their amendments.
I am grateful to the Minister for what she has said about the proposals. I am pleased that it has been possible to work out a compromise which I think is very reasonable all round, and which builds on the arrangements made by the former Chancellor for the appointments of the chairman and chief executive of the Financial Conduct Authority earlier in the year. I see no reason why this should not form the basis for a permanent arrangement to ensure that we get the best possible candidate into the OTS, supported by Parliament, in future years.
I thank the Chairman of the Treasury Committee for his indication of support for these arrangements. As he says, we have set out a procedure for the future. I have written to him, and the Chancellor will write to him as well, to confirm that for the record New clause 8, tabled by members of the Scottish National party, would require the Government to review the way in which the changes in dividend tax will affect directors of microbusinesses. First, we feel that it would be impossible to deliver such a review, because information from the self-assessment process will not be available until 2018. Secondly and more fundamentally, the dividend tax changes cannot be viewed in isolation, as I pointed out in the previous debate. Small company directors will have benefited from various recent tax changes made by the Government, including cuts in corporation tax and business rates—with more to come into effect in the spring of 2017—and the introduction of the employment allowance, which has made a considerable difference to business people in my constituency to whom I have spoken and, I know, to those in other constituencies. We think that these matters must be looked at in the round, and we therefore do not feel that we can accept the new clause New clause 18 proposes another review, on the impact of section 24 of the summer Finance Act 2015 on affordable housing. Again, we feel that that is unnecessary. The changes made by section 24 are being implemented in a gradual and proportionate way. Only one in five landlords is expected to pay more tax, and we do not expect the changes to have a large impact on either house prices or rent levels owing to the small overall proportion of the housing market that is affected. It is worth noting that the Office for Budget Responsibility has endorsed that assessment I gather from my predecessors that the subject of new clause 6, which asks the Treasury to conduct “a review of the VAT treatment of the Scottish Police Authority and the Scottish Fire and Rescue Service”, has arisen a number of times in the past, and I am afraid that I cannot add very much to the responses that SNP Members have heard before in the context of this and previous Finance Bills. The Treasury made it clear to the Scottish Government that the proposed changes would result in a loss of eligibility for VAT refunds. They chose to go ahead, which was their legitimate right, but there can be no expectation that we will review the issue, given that the consequences were clear beforehand.
If the United Kingdom opts for non-membership of the single market following Brexit, the UK Government—the Treasury—will be able to initiate all sorts of proposals relating to VAT, one of which may well be to devolve it to the devolved Administrations. The Scotland Act 2016 currently assigns responsibility for 50% of VAT receipts, but if the UK Government decided on the non-membership option, it would be possible to go further. Is the Treasury considering that?
As a number of Ministers have made clear in the House, we need to consider a huge range of issues as we proceed, but, as I have said, we are clear about the matter for the present. No doubt the hon. Gentleman will raise his point again during debates about our future outside the European Union New clause 16, tabled by Liberal Democrat Members, would require the Government to publish a review. I do not think that any Liberal Democrat Members are present, so I shall speak briefly before moving on swiftly to deal with new clauses and amendments tabled by members of other parties who are present The Government already undertake equality assessments of all new measures, which includes considering age as a protected characteristic. I am sure the whole House welcomes the fact that the Prime Minister has now launched an unprecedented audit of public services to reveal—among other things—racial disparities, and to look at the way in which public services serve people throughout the country. The Treasury will, of course, play its part in the audit, and no doubt some of these issues can be considered as part of that important exercise New clause 19 would require the Government to review the impact of measures in the Bill on different levels of income. In every Budget and autumn statement since 2010, the Treasury has published distributional analyses showing the impact of Government policy on the share of tax paid and spending received across household income distribution. Since 2010, the Government have published far more distributional analyses than their predecessors. As the Prime Minister has made clear on many occasions since taking office, we are determined to make Britain a country that works for everyone, and our policy choices and actions stand as proof of our commitment. The Government have received representations on this matter, not just from Opposition Members but from my right hon. Friend the Member for Chichester, on behalf of his Committee. We will consider the appropriate format of documents to be published at future fiscal events at a time closer to the date of the autumn statement.
When does the Minister think the autumn statement will be delivered?
The Chancellor will make that clear in due course.
As the Minister knows, the issue of distributional analysis is of great importance to the Committee. The previous Chancellor accepted it in 2010, but resiled from it in 2015, to the Committee’s considerable concern. On the understanding that the Chancellor really is considering reinstating the arrangements that had been in operation for the preceding five years, I would not be minded to vote for new clause 19. Am I to understand from what the Minister has said that a serious reconsideration is taking place, and that she or the Chancellor will return to the House in due course to inform us of their conclusions?
Treasury Ministers and the Chancellor take points made by my right hon. Friend and his Committee members very seriously. As I said earlier and as has been confirmed in an exchange of letters between my right hon. Friend and the Chancellor, we will consider the issue at future fiscal events closer to the date of the autumn statement. I may be able to write to my right hon. Friend with further information, but that is what I am able to say at the moment.
I thank the Minister for giving way. She is being most generous Yesterday, in an intervention on the speech of one of the Minister’s colleagues, I asked when we were likely to expect the very important autumn statement. The response was “some time in November, maybe December.” Can the Minister confirm that that is indeed the case?
As I have said, the date will be confirmed in due course, but I think it reasonable to assume that the window of opportunity to which the hon. Gentleman has referred is broadly correct I shall speak briefly—as, again, there is no Liberal Democrat presence in the Chamber—about amendment 179, which deals with the apprenticeship levy. This would exclude qualifying bonus payments to employees of employee-owned businesses from being considered as part of the employer’s pay bill when calculating the levy. To ensure the levy is as simple and fair as possible, the Government have decided to use the existing definition of earnings—those used for employers national insurance contributions. This avoids unnecessary complication. This point about avoiding complication was made repeatedly to us during the consultation. We feel the amendment would add complication and therefore we urge the House to reject it Lastly, Labour amendment 141 on employee share schemes proposes a tax exemption for residual cash amounts remaining in share incentive plans when they are donated to charity. While we appreciate the proposal is made with the best of intentions, we are concerned the change would, again, add complexity and the amendment lacks details. We would need further development and evidence of this idea before giving it further consideration I will end there, but I may look to respond briefly at the end if there are any further points I can add that would assist the House. I look forward to the debate.
I am disappointed by the Minister’s concluding remarks on amendment 141, which is in my name and those of my hon. Friends. She says the amendment lacks detail. We are talking about simplification today and I will go on to address the House on that issue, but this amendment covers more than an A4 page, so there is quite a lot of it. It might be the wrong detail—I freely accept that I am not an accountant—but I cannot get my head around the concept that it lacks detail. So I am disappointed and urge her to reconsider I am pleased at the movement from the Government on amendment 180. It will not surprise SNP Members to know that I want to touch briefly, as the Minister did, on new clause 6. Frankly, they have made their bed and they should lie in it. They were warned that this would be the financial effect, and having an inquiry into the financial effect of something they knew was going to happen and has happened—it may be an adverse financial effect—is what you get with devolution; you make your decisions and you live with them. They should not be looking indirectly through this mechanism for yet another bung from the English taxpayer when they are already getting shed loads of money under the Barnett formula. I support the Barnett formula and the Union, but sometimes people can push their luck a bit and I think that is what is happening here since they knew in advance what would happen I want to make some brief remarks on the question of evidence-based decision making and the difficulties we have in that regard as policymakers and legislators in this House. That applies particularly to financial matters. Although the House of Lords scrutinises Finance Bills, it does not vote upon them for good historical reasons. It cannot, therefore, amend the Finance Bill and we have to get it right here Oppositions cannot table amendments to put up taxes and it has become commonplace in recent years to table amendments to express concern and call for a review. That has been the mechanism used by those who take issue with a particular course of action, or lack of a course of action rather than moving amendments to abolish something, as the Liberal Democrats extraordinarily did yesterday with their amendment to abolish corporation tax, which, as the Minister said, would cost £43 billion a year. In this group, new clauses 3, 6, 8, 16, 17, 18 and 19 all call for a review, as did new clause 14 and amendment 176 which were debated previously. It is the flavour of the day This highlights a problem that the Minister addressed in her concluding remarks in the previous debate. We have at the moment an economy with extraordinarily good unemployment figures, and I praise the Government for that. That figure has come down, and we have had 2.5 million more jobs in the past six years. That is great, but it has been bought on a sea of debt, with the deficit going up 60% under a Government who said that they were imposing austerity in order to bring public finances under control. They are still not under control.
In the absence of the Government showing any willingness to take the bull by the horns on tax simplification, how can we get them to part with the information that they say they have on the continual review on tax reliefs? I have not been an MP for very long, but it strikes me that there is a failure in the system if we are not seeing the transparency that we need. If the Government are actually doing these reviews but not providing their working to the Committees or to Opposition MPs, that strikes me as a failure in the system. How can we get them to part with that information?
I quite agree with the hon. Lady. Sadly, I am unlikely ever to be a Minister, but I am hoping that the Minister will stand up this afternoon and say, “The hon. Member for Aberdeen North has made a jolly good point.” She has said that the Government keep all policies under review all the time, so let us have the transparency. I salute what the Government did for transparency yesterday in accepting amendment 145, tabled by my right hon. Friend the Member for Don Valley (Caroline Flint). I urge them to go that bit further today by publishing the evidence that they have and by marshalling more evidence and disclosing it. They must have the courage to seriously go for simplification, which would be better for business and employment in this country, even though there would be a cost to be borne by society in the form of less nuanced decision making and systems becoming more monochromatic and rough and ready. Some of that would of course rebound on Members of the House, because we would get constituents writing to us saying, “I have a particularly nuanced situation here, and you guys have made all these laws that are a bit monochromatic and do not help me.” We have to have the guts to say that that is a price worth paying, and as legislators we should be prepared to do so.
I had hoped to clear up my point in an earlier intervention on the Minister, but I fear that I was not happy with her answer so I shall try again and extend my case a little on the important matter of VAT on energy-saving materials. That is the principal issue at stake in new clause 15. As I was trying to explain to the Minister, many of us feel that it would be quite wrong to increase VAT on energy-saving materials, given that the House decided to choose the lowest rate that we are allowed to impose under European Union law. A case was then lost in the European Court, and the Government have wisely been undertaking a very long consultation into how they might implement this ill-conceived and unwanted judgment. The longer they consider it, the better, and the sooner we get out of the European Union, the sooner we can bring the whole charade to a happy end To many of us, this illustrates exactly what was wrong with our membership of the European Union, and this is something that we can offer to our constituents as we come out. They voted to leave and to take back control of their laws. That includes their laws over taxes. During the campaign, we on the leave side made a great deal of how we wanted to scrap VAT on energy-saving materials. Like many people in this House, we believe that we could do much more to save and conserve energy and to raise fuel efficiency, and if we did not tax those materials, perhaps they would be a bit cheaper for people. That would send a clear message that this was something that we believed in I urge the Minister to go as far as she can in saying that this Government have absolutely no wish to put up VAT on energy-saving materials, and that they would not do so if they were completely free to make their own tax decisions. I would love her to go a bit further—this might be asking quite a lot—and say that once we are free of the European Union requirements, we will be scrapping VAT on energy-saving materials altogether. It is not a huge money-spinner for the Government, and its abolition would send a very good message. It would particularly help people struggling in fuel poverty, who find energy-saving materials expensive. The extra VAT on them is far from helpful The Minister suggested to me that the Brexit Secretary was dealing with this matter, but I can assure her that he is not. He made a clear statement on these matters in the House yesterday and wisely told us—I repeat this for the benefit of those who did not hear him—that it is his role to advise and work with the Prime Minister to get our powers back. His job is to ensure that this House and all of us can once again settle the United Kingdom’s taxes without having to accept the European Union’s judgments and overrides. However, it will be for Treasury Ministers and the wider Cabinet to recommend how we use those wider and new powers and to bring to the House their proposals once they are free to do so.
I rise to address amendments 180 to 182 and new clause 19, tabled in my name and those of my hon. and right hon. Friends. As a relatively new Member, I want to place on the record my enormous thanks to the staff of the Public Bill Office, who over the course of the summer assisted in the production of not only these amendments, but more than 30 amendments to the Higher Education and Research Bill. I have been busy, but I have been keeping them busy. As a new Member, I have perhaps been slightly more demanding, so I am grateful for their time and support As the Minister acknowledged in her opening remarks, amendments 180 to 182 arose from concerns reflected right across the Treasury Committee about the nature of appointments to the most senior offices and the dismissal of post holders. The Office of Tax Simplification has an important public duty. Many of us want the tax code to be simplified, but we know that constraints are inevitable because the tax system is as complicated as life and will therefore always have a degree of complexity. However, we also know—particularly those of us with a large number of small and medium-sized businesses in our constituencies—that the more complicated the tax code, the more complicated it is for businesses to understand what it is they should and should not be paying. Companies with the means to get a great deal of expensive advice on how to make enormous savings are at a great advantage During the course of yesterday’s Finance Bill debate, my right hon. Friend the Member for Don Valley (Caroline Flint) spoke about the widespread practice of aggressive tax avoidance by multinational corporations. If the tax code were simpler and clearer, that sort of aggressive avoidance would be harder. That is why there is such parliamentary interest in the work of the OTS and a determination to ensure that Government appointments to the most senior posts have an appropriate degree of parliamentary oversight—primarily, but not exclusively, through the Treasury Committee I welcome the Minister’s constructive approach and the agreement she made with the Chair of the Treasury Committee, the right hon. Member for Chichester (Mr Tyrie), who does a sterling job of batting for all members of the Committee and on behalf of both sides of the House. This is a good example of how the Government and the Select Committee system can work together effectively to reach the right outcome. I do not intend to press amendments 180 to 182 to a vote this afternoon, because we have received sufficient assurances from the Minister and I look forward to that process continuing under successive Governments Turning to new clause 19, even newer Members of the House are familiar with the regular display and theatre of the Budget. In this modern age, there is an inevitable degree of briefing, counter-briefing and misleading in the run-up to the event in order to misdirect the Opposition and to enable the Government to be fleet of foot on the day and to save the best headlines for the Budget. On the day itself, we have the routine announcements about the business that needs to be conducted in any Budget and then, of course, we get the inevitable rabbit out of the hat. Once the smoke has cleared and the mirrors have been packed away, the real analysis begins of the consequences of each Budget item for the people whom we are sent here to represent. Even members of Select Committees or Bill Committees, who follow the scrutiny of Bills closely, know that trying to penetrate the real impact of a Finance Bill or any fiscal event is a significant challenge. I must say that that challenge has been made more difficult by the decision of the previous Chancellor, the right hon. Member for Tatton (Mr Osborne), to move away from his commendable practice of publishing alongside the Budget the distributional analysis of the impact of tax, welfare and public spending changes. The first question that all hon. Members face when presented with a Budget is about the impact on our constituents. Those of us who are committed to social justice are more interested in the impact on the poorer household than the wealthier household. In fact, the right hon. Member for Tatton described the analysis as the “most comprehensive and robust assessment available” That is why it was so disappointing that he decided to abandon that practice following the general election. The move was condemned at the time by a wide range of anti-poverty charities as a serious mistake. We could spend a lot of time debating why the previous Chancellor chose to abandon that practice at that particular moment, and we could have our usual exchanges about the priorities of Conservative Governments and Labour Governments, but with the appointment of a new Prime Minister and a new Chancellor I hope that we can instead debate the merits of the principle which we believe any Government, whatever their priorities and political shade, should follow The Chair of the Treasury Committee wrote to the Chancellor to express concern that at last year’s summer Budget the Treasury “replaced its previously excellent budget distributional analysis series with a manifestly deficient substitute.” Since her elevation, the Prime Minister has made great fanfare of the commitment she made outside No. 10 Downing Street to lead a Government who work “not for a privileged few, but for every one of us.” I would dearly love to have a debate with the Government about the means by which we achieve social justice and about whether it is a good thing in and of itself, but I certainly agree with the Chairman of the Treasury Committee that a “high level of transparency about the effects of tax and welfare policy on households across the income distribution would seem to be a logical, perhaps essential starting point.” That is what motivated the tabling of new clause 19 It is important that all Governments are clear and transparent about a Budget’s effects to enable proper parliamentary and public scrutiny of decisions—as happens in the Chamber, in Select Committees and in conversations around kitchen tables up and down the country. Knowing that the analysis is being produced and seeing it form as the Budget is prepared helps to concentrate the minds of Ministers and civil servants. It asks the question and gives the Chancellor, before he or she stands at the Dispatch Box to announce their Budget, an opportunity to reflect on the Budget in its entirety Successive Governments and Chancellors have once or twice fallen foul of public opinion by realising that the Budget as a whole is not necessarily as great as they thought it was when each part was being considered. Having the analysis in place as the Budget is prepared will not only aid public and parliamentary scrutiny, but enable Ministers to make the right judgment about how Budgets should be balanced. The Opposition believe, particularly when difficult judgments are to be made about tax and welfare changes and public spending, that the books should never be balanced on the backs of the poorest. I hope that we can find agreement in that area with the new Chancellor and Prime Minister, particularly given her stated aims, but whoever occupies the highest offices of this land, we can surely agree that parliamentary scrutiny is vital We should also agree that, as the Treasury has the evidence to hand and we are not asking it to do additional work—the analysis already exists—simply requesting that it be put in the public domain is not too much to ask. I welcome the fact that this afternoon the Minister has left the door open and says that this area will be considered by Ministers. On that basis, I accept that Ministers, the Chancellor and the Treasury will consider it. I assure the Minister and the Chancellor that we will return to this issue, through the Select Committee and at future fiscal events, if a change is not made. On the basis that the Government have an open mind and open ears on this issue, I am prepared not to press new clause 19 to a vote.
It is a pleasure to take part in this stage of our consideration of the Finance Bill. I was interested to hear the carefully constructed arguments of the hon. Member for Ilford North (Wes Streeting). Let me pick up on the point he made about wanting to see social justice from this and future Budgets, and to see it at the heart of the Government’s agenda, as was made clear on the steps of No. 10 by the new Prime Minister. He also talked about the impact on the poorest households, which is the focus of new clauses 2 and 3 and the reviews that they propose. As ever, it was also interesting to hear from the hon. Member for Wolverhampton South West (Rob Marris), and to listen to his thesis on post-factual analysis, be it on the Labour leadership contest or on this Bill. He mentioned roads, so perhaps he should come down to Enfield and give us a post-factual analysis of the cycle lanes that are planned in my borough to see whether we should continue with that expensive proposal, given the need for best value Let me return to the matters at hand. First, I wish to speak to new clause 2, which stands in my name and those of my hon. Friends the Members for Congleton (Fiona Bruce) and for Totnes (Dr Wollaston). Sadly, the latter cannot be here as she is leading her Health Committee on a visit, although she would want to be here to support this new clause. I hope and expect that across the House there is support for the principles of wanting to carry out a proper review of the impact of the duty regime, particularly in relation to high-strength cider, although I very much welcome the Minister’s comments. She will know all too clearly from her previous role in public health of the impact of alcohol and high-strength alcohol in particular, including cider, on the poorest and those most in need of our attention. I welcome the hint that a wider, more coherent view of the relationship between alcohol duties and harm could be taken, which was mooted by the previous Prime Minister but seemed to get kicked into the long grass—it has never returned. The Minister will be well aware of the permutations and the different interests across Government in relation to that review and its final outcome. The previous Prime Minister was talking about minimum alcohol pricing in terms of when not if, but this has now gone back to an if. I look forward in future Budgets and future consideration to a wider review and factual analysis of the relationships to harm and the impact on behaviour, particularly among the poorest New clause 2 hones in on an area that is about not just health harms, although that is the core of the argument, but an anomaly in our treatment of cider and of beer.
I was a “remainer”, so at the risk of sounding like the right hon. Member for Wokingham (John Redwood), may I ask the hon. Gentleman whether he agrees that this is one area where, as a small silver lining, leaving the European Union may assist, because the rates of excise duties, the definitions and so on are related to our membership of the EU? For example, I am thinking of the way in which wine is treated, because of the Italian, Spanish and French wine industries. If and when we leave the EU, we will have more flexibility in this regard.
I welcome reluctant converts to the cause of Brexit, whenever they come. That is a silver lining among many. I see this very much as sunshine, rather than silver linings. At the heart of it all, this is about our taking back control over a duty that has an impact on the most vulnerable, and we have already had arguments about VAT. I look forward to hearing the Scottish Members’ support for the same silver lining, because they have been battling to ensure that their proposal for minimum unit pricing is not subject to court and European Court interference. They, too, would perhaps welcome that silver lining; I look forward to their joining the hon. Gentleman in what he has just said As much as anything else, new clause 2 is about dealing with an anomaly to do with high-strength ciders. In the recess, hon. Members may have enjoyed ciders of all varieties. They may have popped their corks and had some sparkling cider, which is a substitute, perhaps a poor one, for champagne. They need have no fear about this, because the essence of my proposed review is very much about the nasty stuff. I doubt many hon. Members will have partaken in it, although they may have done. I am talking about people going down to their local office licence to get a large bottle or can of white cider, which is not particularly sparkling or pleasant. However, it attracts under-age drinkers and, in particular, dependent drinkers—
It has never seen an apple!
It has never seen an apple. The Minister intimated that the same is true of pears. We need to look at the fact that white cider attracts the lowest duty per unit of alcohol of any product while representing the cheapest way to consume alcohol and get drunk, and to enable addicts to continue their dependency. Three-litre bottles of high-strength ciders are available for just £3.50; people can get completely wasted on £3.50, but they would struggle to buy a bottle of some mainstream ciders for that. As a result, these products are causing disproportionate levels of harm, which is closely associated with dependent, street and under-age drinking. The Government are rightly emphasising and prioritising tackling street homelessness and putting funds into preventing homelessness. My hon. Friend the Member for Harrow East (Bob Blackman) has introduced the very helpful Homelessness Reduction Bill. We hope that, with cross-party support, he will be navigating its safe passage through this House on 28 October and all hon. Friends will attend to that Let me make a wider point about future Budgets, as connected to that is the need to examine the impact of duty and the evidence that price has a particular impact on behaviour.
My hon. Friend pre-empts the point I wished to make, and is making a typically eloquent speech. For too long, under all Governments and under generally liberal regimes, whether we are talking about salt, sugar, alcohol or fixed-odds betting terminals, there has not been a holistic approach from the Treasury that looks at the indicative costs to society. I am talking in terms of health services, social services and so on. I do not think any Government have got that right over the years: there is a cost if we do not get the fiscal policy right in trying to change behaviour across all these areas.
That is a welcome intervention. I welcome the Minister to her place, as she has wide experience in this area. I understand that she was the longest-serving Conservative public health Minister. She can bring that experience to bear, not least because she has added responsibilities, given the make-up of the limited number of Ministers on the Treasury Bench, to cover those aspects of what some might call sin taxes and to create a better overall review. That can be linked up with what we look forward to receiving from the Government: the long-awaited life chances strategy. Be it on the social justice strategy, social reform strategy or life chances strategy, we must ensure that we focus on the poorest and most disadvantaged, who are particularly badly affected by high-strength ciders and other issues that have been mentioned High-strength ciders are usually about 7.5% alcohol by volume, they are sold in three-litre bottles and they contain 22.5 units of alcohol. That is over 50% more than the Government’s weekly limit guideline, just in a single container. The leading brands are Diamond White and White Ace. The price means that heavy drinkers of white cider can spend only a third as much on alcohol as low-risk drinkers would spend. These low-strength ciders and high-strength ciders range between 1.2% and 7.5% ABV, but we need to focus on the white ciders, because at the moment the tax is based on volume rather than strength. That has an impact on behaviours. Obviously, it has an impact on the behaviour of manufacturers. When they look at incentives and what they produce, they may say, “Let’s just go for volume. We won’t then be hit on strength.” There is not a similarity with the beer regime, which has that grading, and that has an impact, not least on what products come out. Unsurprisingly, on the high street there is much more of a market for lower-strength beer and different qualities of lower-strength beer. Meanwhile, there is a wide range of mainstream ciders, but no impact in duty terms on high-strength ciders In considering the impact of high-strength ciders, we should perhaps discuss Glasgow and Edinburgh where, I understand, 25% of alcohol treatment services patients drink white cider. Of those, 45% drink white cider exclusively, so this is a huge issue whether in Glasgow or Edinburgh, where there is a significant problem with high-dependency drinkers, or in London or elsewhere I am sure hon. Members will know of constituents who are particularly dependent on this harmful drink, which is the drink of choice for many a harmful drinker. Indeed, the chief executive of Thames Reach, Jeremy Swain, has said that 78% of deaths among his clients can be traced back to high-strength drinks such as white cider. That is a shocking statistic that needs to be out there. I implore the Minister, perhaps when she considers future Budgets, to look at what is happening, and why. Efforts have been made in relation to manufacturers and others—she will be aware of this from her previous role—to sort things out and become responsible, and it has to be said that retailers have done that: Heineken and Bulmers have withdrawn their white cider brands as they believe them to be socially irresponsible. That is to be welcomed and we should praise those companies Furthermore, retailers such as Costcutter, Morrisons, Nisa and Spar have acknowledged the problems associated with those products and reduced their stocking and promotion of white cider, but if hon. Members come to Green Lanes in my constituency, although they will not get near any of those established off-licences, they will see that high-strength ciders are readily available. They are, sadly, targeted at the heavy drinkers, who are more likely to have those white ciders. Also—this is based on evidence that needs wider debate and review—they are more responsive to the cheapest price for alcohol Those supporting such a review and such a measure are indeed those responsible retailers and manufacturers, as well as the health sector—those who see the impacts of liver disease and the changes brought about by lack of accessibility to and an increased price for such products. In addition, alcohol treatment charities, various parts of the drinks industry and dependent drinkers themselves have also made the point that they recognise the impact of having an increased price It is indeed time for the Government to provide additional reassurance that there will be a honed focus on the issue in future Budgets, as well as a wider review of the impact of high-strength alcohol, particularly with respect to cider duty and targeting on white cider sales. As the Minister said, we must always be proportionate in the way we handle duties and ensure that people are not unduly impacted when they either buy or go out for a cider, but these measures would not impact on most mainstream ciders of between 4% and 5% ABV On the issue of simplification, which was alluded to earlier, these measures would bring such products into line with the treatment of beer. Since 2011, there have been three tiers of beer duty, with low rates on low-strength beers and high rates on high-strength beers, so why do not the Government, to achieve simplicity, clarity and coherence, make similar provision in relation to ciders, particularly because of the impact of high-strength ciders on the poorest The Government have rightly put social justice at the heart of all they do, and that must include this area, where the spotlight of social justice must also shine in preventing harmful drinking. I look forward to the Minister perhaps adding a few words of support for a targeted increase in the price of high-strength cider, or at least agreeing to look at the issue again seriously in time for the next Budget so as to help the vulnerable and end the anomaly to which I have referred. That would recognise these proposals as part of a wider review of the important issue of alcohol duties and their relationship to harm Another issue has been of interest during previous debates on Finance Bills, and I wish to bring a strong focus to bear on it by speaking to new clause 3, which stands in my name and the names of 15 of my right hon. and hon. Friends. Indeed, others have indicated to me their support for a review of the marriage and civil partnerships transferable tax allowance. I want to comment particularly on low-income households, especially couples with young children. It would be very progressive if the Government were to focus on achieving more take-up—I welcome the Minister’s comments on that—and arriving at a more significant amount, which would disproportionately impact on lower-income households I welcome the introduction of the transferable allowance for married people and civil partners last April, so, unlike in previous debates, I will not, along with my hon. Friends, be imploring the Government to establish such an allowance in the tax system. We have that. That battle has been won and that promise has been kept. There is that recognition of marriage in the tax system, and it is evidence-based: the institution of marriage is valuable as it helps individuals to build social resilience, improves mental wellbeing and aids healthy relationships, particularly with children. I shall not dwell on that past battle because, as the Minister said at the Dispatch Box, she also, on behalf of the Government, is wholly committed to that transferable allowance. It is here to stay under this Government, which is wholly welcome and I very much appreciate it. If any other hands got on the tiller, I am sure that it could be under threat However, we must not sit back and be content. The bauble is there and we have recognised marriage, but we need to look, as we do across Government, at how that measure will impact on poorer households. Indeed, we need to consider incentives, including financial incentives, and disincentives around different couple relationships and penalties that still exist. I believe that we must prevent marriage, with its particular social benefits, which have been evidenced, from becoming the preserve of the more wealthy I am sure that Members from across the House will join me in not being content with the fractured society that is based around relationships breaking down. We must do all we can to support couples to stay together, particularly those with children, and consider the impact on children when couples do not stay together. Evidence states very clearly that the children of married couples, who have grown up with them, are better served by the fact that the couple stay together I recognise that there are different incentives and this is not all about the tax allowance. A range of support can be given to keep couples together, although that is perhaps the subject of another debate for another time. However, we can play our part through fiscal incentives. I recall a recent speech from the former Chief Rabbi Lord Sacks, who spoke about an issue that we often discuss. We pray in aid the fact that we are a party of one nation and that we want to build a country of one nation. Interestingly, Lord Sacks referred to the fact that there is a growing phenomenon of two nations, which he saw in terms of a failure to support marriage creating two nations with two very different sets of life chances. As the Government build on their strategy, we should not ignore this issue, and immediately the life chances strategy is published I shall be doing research on the word “marriage” and how much we are supporting marriage It is important to heed the words of Lord Sacks. He said: “In Britain today more than a million children will grow up with no contact whatsoever with their fathers. This is creating a divide within societies the like of which has not been seen since Disraeli spoke of ‘two nations’ a century and a half ago. Those who are privileged to grow up in stable loving association with the two people who brought them into being will, on average, be healthier physically and emotionally. They will do better at school and at work. They will have more successful relationships, be happier and live longer.” We should not allow that to be the preserve of one part of the nation. We can play our part fiscally to ensure that we are not divided and that many gain the opportunities derived from couples being together.
On that point, and particularly on the point about whether parents choose to stay at home or to work, despite the measure that has been put in, I support anything that allows parents to have a choice, or more of a choice, over whether they stay at home to look after their children or put them in childcare. However, we still have a massive problem with families not being able to make those choices, because childcare is not affordable for them, particularly for those caring for under-fives. Parents are still forced into being stay-at-home parents or taking low-wage jobs at strange hours because of the lack of affordable childcare. Does the hon. Gentleman support measures to change the childcare regime as well as the tax regime relating to this issue?
The hon. Lady tempts me into a wider debate. If the Minister were to respond on this, she would certainly point to the measures on childcare. When one looks at supporting couples with young children, there are other things the Government have been very much involved in to improve the offer. There is work to do on access and affordability, not least, in my constituency, in relation to poor households accessing childcare I appreciate the fact that the hon. Lady talked about choice. There is also an issue about choice in that the Government are rightly encouraging as many people as possible to work and to exercise that choice, but it is sometimes an invidious choice for those who would want to stay at home, and the fiscal incentive to do that is not currently there There is a huge impact generally across the tax system on single-earner couples, which is not getting sufficient attention, and this proposal for the transferable allowance addresses that. There are lots of other measures across the tax and benefits system that seek to focus support on children, but we must particularly support the benefits of this allowance, which is around couples, marriage and the commitment to marriage and civil partnership In conclusion, following the cause of new clause 3 can be a win-win situation for the Government. It not only, obviously, recognises what we do already on marriage in the tax system, but it allows us to get the maximum effect from the Government’s original commitment, which I believe was welcome, but which was somewhat partial in terms of its original intentions. Recognising the financial challenges, I think new clause 3 would ensure that we can seek to remove some of the disincentives to marriage for those who wish to marry; it would help us to support social resilience and help with transferability; and it is also fiscally conservative. In short, new clause 3 is about getting more bang for our buck in supporting marriage and social justice.
There are several new clauses on which I intend to speak—most of them briefly—and the first is new clause 18 New clause 18 calls for a review of the impact of section 24 of the Finance Act 2015. I and my SNP colleagues have concerns that the changes made in section 24 may have adverse consequences on the availability of affordable housing in Scotland and beyond. That legislation seems to be yet another London-centric policy that fails to take account of the diversity of the housing market throughout the UK Unlike other parts of the UK, where large rental agencies dominate, Scotland has a disproportionate number of landlords who own a small number of properties. That is hugely beneficial to tenants—particularly those on low incomes—as those small-scale landlords are often more willing to rent properties at an affordable price and to those relying on social security as a safety net. Owing to the changes introduced in section 24, we are concerned that those small-scale landlords may be forced drastically to increase rental costs, causing houses to be less affordable, or to sell their properties, potentially resulting in their being purchased by less sympathetic landlords or agencies. Given the UK-wide housing crisis that we are suffering and the rising cost of rented accommodation, it is incredibly important to ensure that landlords who rent at affordable prices and to those who depend on social security as a safety net are not pushed out of the market. New clause 18 therefore calls for a review of the impact of these changes on the availability of affordable housing so that those on lower incomes are not adversely affected New clause 6 calls for a review of the VAT treatment of the Scottish Police Authority and the Scottish fire and rescue service. I thank the Minister for her comments and consideration in her introductory remarks. Many in this Chamber may be familiar with the matter of VAT in relation to the Scottish police and fire rescue services, which my colleagues have raised in this House on a number of occasions. This remains an incredibly important matter that this Government have failed properly to address. Since the incorporation of police and fire authorities in 2013, the Scottish Police Authority and the Scottish fire and rescue services have been charged VAT by the UK Treasury. This UK Government have refused to grant an exemption to these vital services in Scotland, despite the fact that since the time of incorporation the HMRC has handed out exemptions to the new transport agency Highways England, and Olympic legacy organisation the London Legacy Development Corporation This Tory-backed charge on essential Scottish public services is costing emergency services tens of millions every year that could and should be spent on frontline services. Only in June, it was reported that Scotland’s police force has paid £76.5 million in VAT since it was formed three years ago and remains unable to claim this money. It is worth noting that only the Scottish police and fire services have been expected to pay VAT to Her Majesty’s Revenue and Customs and not English, Welsh or Northern Irish services. This is a disgrace. It seems absurd and unfair for this Tory UK Government to continually expect the Scottish Government to rectify the matter and cover the difference, especially given the consistent cuts to the pocket money they grant Scotland to run devolved matters. New clause 6 therefore seeks a review of the impacts of the VAT treatment on the Scottish police and Scottish fire and rescue services, including analysis of the impact of the financial position of these services arising from their VAT treatment I turn briefly to new clause 15, which seeks to prevent VAT from being increased on the installation of energy-saving materials. I agree with the intent of the right hon. Member for Wokingham (John Redwood) to prevent these VAT increases, if not his methods. This Tory Government have consistently instituted regressive policies in relation to clean energy and energy-efficiency measures, from cuts to the solar subsidies—
Does the hon. Gentleman agree that this would be a relatively cheap way of incentivising householders and energy-saving products in addressing some of the damage that the Government and the previous coalition Government did by, in effect, dismantling the green energy policy they claimed to support at the outset?
I thank the hon. Gentleman and agree wholeheartedly with his comments From cuts to solar subsidies, to the scrapping of onshore wind, to the scrapping of the green deal for energy for energy-efficient homes that the hon. Gentleman mentioned, to the selling of the UK Green Investment Bank—there are numerous other examples—this austerity-obsessed Government are taking the UK backwards with regard to renewable energy. I fear that with Brexit looming on the horizon this trajectory is set to continue. Given this environment of cuts, it seems logical for the installation of energy-saving materials to be exempt from a hike in VAT, as a bare minimum I will now speak to new clause 8 on dividend income. In Committee, my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) tabled an amendment regarding the proposed changes to the treatment of dividend income by HMRC. My colleagues and I feel that this issue has not yet been sufficiently addressed by the Government. We did not press the new clause to a vote at that time so that we could address the matter at a later date, and we do so now. I do not wish to rehash previous points made, but this is a matter of great importance and, as such, we have tabled the new clause. Numerous stakeholder groups raised concerns with the Committee regarding the regressive impact of the changes to dividend income proposed in this Bill, particularly the effect on small and microbusinesses, which employ between one and nine people. Those raising concerns have highlighted that the changes will have a disproportionate effect on microbusinesses run by owner-operators on modest incomes, given that there are already numerous disincentives to running microbusinesses—as opposed to traditional salaried employment—including, but not limited to, a lower level of job security and a lack of employer pension contributions.
The Finance Bill was devised prior to the vote to leave the European Union. The measure under discussion will have a disproportionate effect on microbusinesses, so does my hon. Friend agree that the Government should accept our new clause and review the measure in the light of Brexit?
I must admit that I have sympathy with all who have reservations about any position taken in this Bill, given that, as my hon. Friend has said, it seeks to implement measures devised prior to the EU vote and therefore fails to provide for an economy that faces the harsh reality of Brexit. I am sure that we all look forward to the autumn or winter statement—whenever it will be—and the redress it will contain, imaginary or otherwise. We will then see, I presume, whether the new Chancellor is as good with imaginary numbers as the previous one was not The Federation of Small Businesses has raised serious concerns. It has highlighted that the changes are particularly acute for members of organisations who are on modest incomes. It has further submitted extensive evidence regarding member feedback on the proposed changes. A number of responses have highlighted concerns from the owners of small and microbusinesses that the changes may mean that they will not be able to continue to employ their small workforces In addition, evidence was submitted to the Committee by Jason Kitcat of Crunch Accounting, who has produced excellent work on the matter. I acknowledge that Mr Kitcat has been referenced several times in discussions about the proposed changes, but his analysis is significant and, as such, ought to be raised again. Crunch Accounting has highlighted how the changes as proposed hit lower-earning microbusinesses the hardest. The Government have stated that the changes in dividend income will be offset by planned future changes both to the way in which Her Majesty’s Revenue and Customs treats corporations and to personal allowances. However, Crunch has highlighted how those anticipated changes will not fully offset the impact of changes to HMRC’s treatment of dividend income for microbusinesses, as proposed by the Bill. In addition, Crunch has highlighted how measures cited by Ministers, such as changes to employment allowances and the annual investment allowance, are rarely available to microbusinesses, as they have little capital investment requirements I stress that the importance of small and medium-sized enterprises to the Scottish and UK economy cannot be overstated. There are few things on which I agree with the Prime Minister, but I do agree with her statement last month that “small and medium sized businesses are the backbone of our country.” I further welcome her indication in the same speech that she intends to listen to smaller firms. However, I am concerned that, despite that profession from the Prime Minister, the regressive changes to dividend income will not only disincentivise new SMEs from forming, but have the potential to cause existing microbusinesses to fail It is essential to note the number of SMEs that are categorised as microbusinesses. The UK is home to 5.2 million microbusinesses, which employ 8.4 million people. In Scotland, microbusinesses play an essential role in the economy. According to recent Scottish Government statistics, 99% of businesses in Scotland are categorised as SMEs, the vast majority of which are microbusinesses. Overall, microbusinesses comprise 81.5% of the businesses in Scotland. The figures are similar for the UK as a whole. According to House of Commons Library research in late 2015, 99% of businesses UK-wide are categorised as SMEs, 95% of which are microbusinesses Microbusinesses are essential and central to the functioning of both local and national economies. Given that microbusinesses make up the vast majority of businesses in Scotland and UK-wide, I find it absolutely staggering that HMRC does not make an assessment of microbusinesses as a separate group. Given the prevalence of microbusinesses throughout the economy, it does not seem on this matter as though the Government have listened to the concerns of smaller firms, despite last month’s proclamations from the Prime Minister When my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin) introduced the original SNP amendment regarding the proposed changes to the way in which HMRC treats dividend income, the response he received to his concerns about microbusinesses was that “the Government have considered the general economic impact of the changes…the measure is not expected to have any significant macroeconomic impacts.”––[Official Report, Finance Bill Public Bill Committee, 30 June 2016; c. 18.] This statement taken alone is staggering, given that, as I have stated, 94% of businesses in the UK are categorised as microbusinesses. I fail to see how introducing a change that principally impacts microbusinesses would not be expected to have any significant macroeconomic impact The Minister stated in her introductory remarks that we do not yet know the impact of such legislation. I would like to highlight oral evidence given to a Committee of the other place on 8 February 2016 by Cerys MacDonald, the deputy director of personal tax at HMRC. When asked by the Chairman about the impact of these changes on microbusinesses, Ms MacDonald stated: “I can assure the Committee that we recognise that the dividend tax changes will mean that a lot of people in owner-managed businesses are now paying a higher level of tax than previously, despite the benefit that they will see in the reduction of the corporate tax rate.” Those two statements seem to me to be at variance with each other. Do the Government believe, as indicated by the Chief Secretary to the Treasury that the proposed changes to dividend income will not significantly impact on microbusinesses? Or do they believe, as indicated by Ms MacDonald of HMRC, that the changes will impact on owner-managed businesses, despite the planned future change to the corporate rate Given the uncertainty surrounding the inconsistent responses from Government, coupled with substantial evidence from the Federation of Small Businesses, Crunch Accounting and others, it seems as though the Government have not fully and comprehensively considered the impact of the proposed changes on small and microbusinesses—the backbone of our economy, as I am sure we all agree New clause 8 would require the Government to conduct a review of the impact of the changes on microbusinesses, including the impact on the failure rate of microbusinesses and the options for minimising the impact of the changes on directors who are on low incomes. I therefore advise hon. Members that we will press new clause 8 to a Division.
I rise to support new clauses 2 and 3, the social justice arguments for which, in support of some of the most vulnerable individuals and families in our society, have been so eloquently and comprehensively set out by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) that, although I had prepared speeches on both new clauses, there is no need for me to take up the House’s time to echo what he has already said. I therefore simply put on record my full support for what he said, and I ask to be identified with his remarks.
I rise to support amendment 141, which is in my name and those of my hon. and right hon. Friends. I am extremely grateful to Mr Speaker for selecting my amendment, and I would also like to place on the record my thanks to the Public Bill Office, whose advice and help on the matter have been greatly appreciated by me and my office. I hope that the amendment will find agreement on both sides of the House, and I hope that the Government will not oppose it. The amendment would establish a very small tax exemption for residual cash balances that remain in an employee share incentive plan when an employee leaves such a plan. A residual cash balance is a sum of money, insufficient on its own to buy a single share that month, which would usually be carried over to the next month but which has to be refunded if an employee leaves the scheme. I propose that that balance, capped at a maximum of £10, would instead be donated to charity. That would have the added advantage of reducing costly and burdensome processing by company payroll departments Share incentive plans are a good and tax-efficient way to save for the future, and many employees take them up. I believe we should encourage employee share ownership. When an employee leaves a share investment plan, there is commonly a cash residual amount remaining in the account; often, it is just a few pence or a few pounds. When the employee chooses to leave the plan—that is mandatory if the participant leaves the company’s employment—the cash residual can no longer be carried forward. Under the current system, any remaining cash held in the plan when the employee leaves the plan is required to be processed, via the employer’s payroll, to apply national insurance contributions and income tax via PAYE and to pay the net balance to the employee. This process typically costs between £2 and £9, but provides little benefit to the individual receiving such a small amount Furthermore, the benefit to the Exchequer is far less than the total cost to companies of administering these payments, with companies paying almost twice as much to process the payments as the Treasury actually receives. To put that into numbers for the ease of Members in the Chamber, it is estimated that the administration costs for companies are between £400,000 and £500,000, while the benefit to the Treasury is just £200,000. If amendment 141 was accepted, charities and good causes would benefit by about £360,000, on top of the savings that companies would make There is a precedent for such a change. There are already examples of situations in which HMRC has agreed to individual exemptions to share incentive plan providers, which are currently based on specific requests assessed case by case. There is an appetite for this change among share investment plan providers and HMRC. Amendment 141 would be only a very small change to this Bill compared with what it covers, but it is one that could bring benefits both to companies and to charities and good causes, while at the same time supporting share investment plans by removing a costly and bureaucratic part of the system. The amendment would also help to simplify the tax system and encourage more charitable giving, both of which are stated priorities for this Government and would be priorities for any Government I was very pleased and heartened yesterday when the Government accepted amendment 145 in the name of my right hon. Friend the Member for Don Valley (Caroline Flint). I sincerely hope that the Minister will accept this amendment and that we can achieve the same result today. If she does not say she will accept it, I will seek to divide the House, but I can genuinely see no reason why the Government would not want the amendment to be agreed to.
It is a great pleasure to follow the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). I rise to support new clause 3, to which I have added my name. I, too, agree with everything said by my hon. Friend the Member for Enfield, Southgate (Mr Burrowes). I cannot promise to be quite as brief as my hon. Friend the Member for Congleton (Fiona Bruce), because I wish to add one or two remarks of my own The fundamental problem is that family breakdown costs a staggering £47 billion per annum, according to the latest figures. Quite apart from the consequential social dislocation and pain that it causes, it is also undermining the British economy. Of huge importance is the fact that most breakdowns do not arise from divorce, but from the ending of relationships in which the couples concerned have not made to each other the public, exclusive and legal commitment that is marriage. Where they do make such a commitment, their relationships —not surprisingly—are far more likely to be stable In this context, there remains a massive public policy imperative to ask whether we are doing anything to make marriage less accessible than in other similarly developed countries. We are unusual in this country in having failed until recently to recognise marriage in our income tax system. The solution initially proposed was for a full transferable allowance, but in the event a transferable allowance of only 10% was enacted. A statistic that has already been mentioned but bears repeating is that the tax burden on one-earner married couples with two children on the average wage is 25% greater than the OECD average. The allowance is not making marriage more accessible in a meaningful way. In this context, it is no surprise that the take-up of the allowance has been so low, although the Minister welcomed the fact that the figure is moving in the right direction In going forward, two things could be done. First, if it is not possible in the short term to have a full transferable allowance, we should at least ensure that some married families on the basic rate receive a meaningful transferable allowance. Given that the research is so clear that child development is greatly enhanced by the presence of both mother and father in the family home and given the fact that the public policy benefits of marriage are so well developed, a full transferable allowance for married couples with children under five might be a good place to start Secondly, perhaps in the slightly longer term we could work towards the full transferable allowance for married couples generally. Of course that would not be cheap, but it would be considerably cheaper than the current cost of £47 billion. It would promote choice by removing obstacles to marriage. As has been pointed out, it is very much about promoting the life chances agenda. I look forward to the Minister saying one or two more words about this matter in her closing remarks.
I have a couple of questions about Government new clause 9, which relates specifically to Northern Ireland and the tax treatment of supplementary welfare payments that might be made there, but before I come on to that I want to acknowledge some of the other amendments before us The hon. Members for Stalybridge and Hyde (Jonathan Reynolds) and for Wolverhampton South West (Rob Marris) spoke persuasively about amendment 141. The question that arises is: why would the Government and Parliament not do what is proposed in that amendment Similarly, on new clause 19, which was tabled by the hon. Member for Ilford North (Wes Streeting), it is hugely important that this Parliament is in the business of making sure that there is transparency in our debates. Yesterday, the emphasis was on making sure that there was transparency in the tax affairs of companies. We as a Parliament should insist that we show full transparency in our intent on tax policy and taxation measures New clause 19 would take us back to having transparency on the anticipated impact of taxation on families and households of different incomes. There would also be an analysis later in the year of what the impact of particular tax policies and the cumulative impact of various tax policies had been. Surely that is what we should all be in the business of doing when we go through the complicated and confusing exercise of having the various stages of Budget debates here. One thing we all value is knowing what the impact of what we are talking about will be I was in this House when a Labour Government adopted a misguided Budget measure in respect of the 10p tax band. A number of Labour Members raised the alarm and said that there would be an adverse impact on people of low income. The Government briefed heavily that that was nonsense and people were marched through the Lobbies. Similarly, we had the recent experience of the proposed changes to working tax credit. People were celebrating the changes and thought they were wonderful, having believed the Chancellor’s spin. Thankfully, not only Opposition Members but Conservative Members raised real and practical concerns about what the impact would be Why would it be wrong to follow new clause 19 and ensure that in all our Budget deliberations in future there is an effort to have a properly appraised impact assessment for taxation measures? That would allow us to answer not the question that is usually asked immediately after a Budget, which is what credit particular MPs or Ministers should get for what measures—that is not really what a Budget is about—but that of who gets the benefit in terms of fairness, social equity and the efficiency of economic impact that that induces. For those reasons, I fully support new clause 19 Similarly, many hon. Members have made the case for new clause 15. Many of them have made the straightforward point that it would be almost perverse for the Government to refuse a new clause that would preclude an increase in VAT on the installation of energy-saving materials. I know the Government will say that it is otiose because they have no intention of increasing it, but over the past few years, we have experienced the Government adopting a series of perverse measures that have confounded the underlying policy commitments in respect of the green economy, renewables and energy efficiency. Given that the Government have introduced so many measures that have had a perverse effect on that sector and an adverse impact on households, it makes sense to have the belt and braces of new clause 15. I cannot see what is wrong with that I also note in passing—and at the risk of another voice-activated intervention—that when the right hon. Member for Wokingham (John Redwood) sought to contradict the Financial Secretary’s earlier comments, he cited what he thought was a point of clarity in the Brexit Secretary’s performance yesterday. He is the first Member to have offered me any point of clarity from that performance, which I thought demonstrated the new Secretary of State’s wish to be the first Minister to fulfil the new Government policy on environmental sensitivity, given that he treated us to more than two hours of cosmetics without a single microbead of substance The lead measure in this group, new clause 9, refers specifically to Northern Ireland. It deals with the ability there will be for the Northern Ireland Assembly to make additional supplementary payments as mitigation measures to offset some of the impact of the welfare reform measures now being imposed by direct rule from this House, courtesy of the so-called “Fresh Start” agreement. My party expressed our misgivings about and opposition to that overall arrangement, with regard to direct rule powers and the imposition of the effects of welfare reform legislation on Northern Ireland. However, we have long canvassed for mitigation and supplementary payments, and established that case with the Department for Work and Pensions early in 2012 The one concern people will have about new clause 9 is with the language used. Although in the new clause the Government clearly provide for the Treasury to ensure that “no liability to income tax arises on supplementary welfare payments of a specified description” they also allow the Treasury to make regulations to “impose a charge to income tax under Part 10 of ITEPA 2003 on payments of a specified description” The power is there to make sure that the Treasury does not activate a tax liability on supplementary payments that have been discussed and voted through by the Assembly but there also seems to be a power to subject some of those payments to tax I wonder why the Treasury feels the need to have that reserve power to impose a tax liability on such payments. We should remember that those payments will be made out of the Executive’s own resources in the devolved budget, because they come out of the departmental expenditure limit for the Assembly. The payments will not come under annually managed expenditure Why is that power there? Many people will be concerned that the Treasury will attempt to insinuate itself into any debate among Executive or Assembly parties about what measures they should adopt in mitigation of welfare reform by saying that it may subject some of those measures to a tax clawback. That is clear from subsection (3) of the new clause, and also from looking at subsection (4), which will permit the Treasury’s regulations to “make…different provision for different cases…incidental or supplementary provision” or “consequential provision”. That differential raises the question of why we want to reserve the power to impose tax on measures that the Executive or Assembly seek to bring forward and why the Treasury should be able to do so differently on a case-by-case basis, as that will give rise to arguments about inequity and capricious performance. The suspicion is that the Treasury sought to answer the stand-off on welfare reform in the Northern Ireland Assembly. The Assembly would not discharge the karaoke legislation it was being asked to pass in relation to welfare reform. The Treasury intervened by saying, “If you don’t pass it, we will effectively tax your devolved budget to the tune of what we estimate you would be overspending on welfare.” The Treasury insinuated itself into what should have been a debate for the devolved Assembly The danger is that now, even in the area of the mitigating powers—the supplementary payments the Assembly will be able to offer, as provided for in the “Fresh Start” agreement—the Treasury could, in the language of the new clause, insinuate itself in the choices and consideration undertaken by the Executive and Assembly. The Treasury’s past form shows that it has not resisted the temptation to insinuate itself. I therefore want assurance from the Financial Secretary that this language will not be there to give the Treasury the right to interfere in the choices that may be made by Ministers and Committees in the Assembly in respect of the supplementary payments they would be allowed to bring forward.
I commend all hon. Members who have made very valuable contributions, in particular the hon. Member for Enfield, Southgate (Mr Burrowes). He is no longer in his place, but I would like to speak to his presentation on new clause 3. He set out clearly where we stand I want to put on record again the consistent support of the Democratic Unionist party for the provision of the transferable allowance for married couples. I remember the hon. Member for Congleton (Fiona Bruce) and I taking some verbal attacks in this Chamber—mostly from the Opposition Benches, I have to say—for our stance on this issue, but we persevered and the Government persevered. I thank the Government for bringing in the provision in their previous term. I had hoped there would have been some indication that the Government could support new clause 3. I understand, after talking to the hon. Member for Enfield, Southgate, that he will not press it to a Division. If that is the case, we have to abide by that The sadness for me is that the Government have, until today, chosen to invest the lion’s share of their resources in their other income tax policy of raising the personal allowance. It is undoubtedly true that that policy helps poorer families, but it is very badly targeted. If I may say so in a respectful way, it seems to be targeted at those who can well afford it, as against those who cannot. I have to put on record that I have some concerns about that. The Institute for Fiscal Studies has demonstrated that 75% of the benefit—and now, as the allowance is being raised from £10,000 to £12,500, even more than 75% of the benefit—goes to those in the top half of the income distribution. That is what the available statistics and charts indicate and I have to say they are very stark. They indicate an imbalance in the system that, as the hon. Gentleman clearly stated, is a concern.
There is another imbalance in the system. I do not know whether the hon. Gentleman is aware that the married couple’s allowance, which provides support to married couples where at least one spouse was born before April 1935, is worth £8,355 a year. Should we not also be looking at providing for those families with young children who are in the lowest socioeconomic bracket and supporting them similarly?
I could not agree more and I would like to make a comment on that later. New clause 3 clearly outlines the importance of that, but unfortunately we do not have the opportunity to support it today. I am sure the Minister, who knows I respect her greatly, will be able to respond to some of our concerns The IFS has demonstrated that, in contrast to the personal allowance, the transferable allowance results in 70% of the benefit going to those in the bottom half of the income distribution. The problem is that so far this has received only symbolic recognition. That has had two effects. First, the fundamental marriage accessibility challenge has not really been addressed, which is a massive issue given the impact on life chances of being brought up in a married home compared with a non-married home. Secondly, the very limited symbolic recognition has translated into low take-up. Given the distributional impact of the two tax policies and the impact of the transferable allowance on life chances, I have to say that if the Government are to have one symbolic policy and one substantive policy, they have got it the wrong way around. I say that with great respect. It would have been wiser to focus investment on the transferable allowance rather than redistribute billions to those in the top half of the income scale by raising personal allowances. I believe that we urgently need to change that. If the allowance cannot be made generally available to basic rate married couples, it should be focused, as the hon. Member for Congleton said, on families with children under five.
Is the hon. Gentleman aware that the highest levels of marriage breakdown occur when children are aged between nought and three? We are looking to support marriage at just that moment of greatest strain.
As always, the hon. Lady is wise in her interventions. I thank her for what she said, which underlines other important issues. If we can help at that critical time when the pressure is on, I believe that this House should do so. I hope that the Minister will do so, too, in her response The impact of the allowance on low-income households also needs to be addressed, as new clause 3 proposes. I hope we can do that at the right time. The new clause refers finally to “ways in which the allowance could be changed to target low-income families with young children.” Those points clearly illustrate for me what is necessary in this Bill, although the provisions may not be as hard and fast as I would like them to be Let me conclude; I am conscious of the time. In the longer term, there is a pressing need to adopt a more balanced approach to the resourcing of raising the personal allowance and increasing the transferable allowance. I fully support the transferable allowance and I would have hoped that the Government could commit themselves to it. Speaking as someone committed to progressive tax policy which targets those in the lower half of the income distribution scales rather than those in the top half, if the proposal means less money going to the personal allowance, in my judgment and, I believe, in the judgment of many in this House, that would be no bad thing.
I wish to speak to new clauses 15 and 19, and amendments 141 and 180 to 182, which were tabled in my name and those of my hon. Friends. I shall also touch on a few of the other amendments and new clauses in the group, which has turned into a bit of a rag-bag of issues New clause 15 relates to VAT on energy-saving materials. The new clause would prohibit the making of any order that would have the effect of raising the rate of VAT on the installation of energy-saving materials or any individual category thereof. In short, it would prevent the Government from implementing their planned hike in VAT through secondary legislation For hon. Members who might have forgotten the background, let me briefly recap how our ability to debate this amendment today came about. Amid the fallout from the so-called “ultra-shambles” Budget, the Government were forced to become the first in history, so far as I am aware, to accept an Opposition amendment to their Budget. It was designed to block the Government’s planned 300% increase in VAT on solar panels and energy-saving materials—essentially a green energy tax hike. The solar tax alone would add £1,000 to the cost of a household solar energy installation, punishing those who are trying to do the right thing and do their bit to halt climate change. It would also put at risk thousands of jobs in an industry that is already expected to experience up to 18,700 job losses, as was conceded by the former Energy Secretary, and this tax raid would have caused even more damage. For those reasons, we tabled an amendment to the Budget to enable the Chancellor to use the Finance Bill to maintain the current rate of VAT on green energy and home insulation The Government initially claimed that a European Court ruling prevented them from stopping the tax hike, although it was apparent that they had failed to negotiate at European level to protect the renewables industry. None the less, the industry made very clear that there was room, even within the ruling, to avoid the drastic measures that they were planning to impose. When that led to a significant number of Conservative Members adding their weight to calls from Opposition Members, it appeared that the Government would be defeated on the issue. Ministers initially backed down, claiming that what we were proposing had been their position all along, only to avoid making such a commitment when pressed during Treasury questions and, just a few weeks later, during questions to the Secretary of State for the now abolished Department of Energy and Climate Change That is not surprising, given the Government’s abysmal failure to provide any kind of certainty for the renewable energy sector in the United Kingdom. Over the past six years, they have consistently undermined support by, for instance, cutting the feed-in tariff by 64%, scrapping tax relief for clean energy projects, and removing subsidies for new onshore wind farms. The £1 billion for investment in carbon capture and storage has also been scrapped. At the same time, safeguards to reduce the environmental risks posed by fracking have been stripped away, and fracking under national parks has been given the go-ahead. The executive director of Greenpeace UK put it succinctly recently, saying: “A tax hike on solar panels was just the latest addition to a litany of poor decisions” He also said that the Government should accept that they had “a reverse Midas touch on energy investment” This would be an opportune time for the new Chancellor and his team to signal a change of direction by accepting our new clause, but I fear that, given the abolition of the Department of Energy and Climate Change, the Conservative party’s husky-hugging days are long gone. I am pleased, however, that the Government have finally seen fit to publish the report by the Committee on Climate Change on the compatibility of UK onshore petroleum with meeting the UK’s carbon budgets. I can see now why they sat on it for four months The report states: “Our assessment is…that onshore petroleum extraction on a significant scale is not compatible with UK climate targets” That, it says, will remain the case unless three key tests are met: first, “Well development, production and decommissioning emissions must be strictly limited”; secondly, “gas consumption must remain in line with carbon budgets requirements”; and thirdly, the report specifies the importance of “Accommodating shale gas production emissions within carbon budgets.” Does the Minister agree, therefore, that tighter safeguards in fracking—for which Labour consistently called during the passage of the Bill that became the Energy Act 2016 —are now absolutely necessary I digress. Let me conclude my remarks about new clause 15. Opposition Members want to ensure that the original solar tax U-turn is guaranteed in statute in the Finance Bill, to prevent a second U-turn. That would give the renewable energy market the certainty that it needs and deserves, and would, we hope, send a signal that the new Administration are prepared to look again at the future of the industry in a green economy. If we are to take seriously the intention of the new Ministers to rethink these fundamental issues, now is the time for them to show it New clause 19 was tabled by my hon. Friend the Member for Ilford North (Wes Streeting). As my hon. Friend explained so articulately, it would require the Government to review the impact of the measures in the Bill on households at different levels of income. It would also require the Chancellor to review the impact of Government fiscal measures on households at different levels of income at least once in each financial year. It is an excellent new clause, and it has the full support of the Labour Front Bench As I pressed on the Government earlier today in the capital gains tax debate and yesterday on corporation tax, this Bill has unfairness at its very core. The reduction in CGT alone amounts to a tax giveaway to 200,000 people—just 0.3% of the population—of around £3,000 a year on average. Clearly this Government conduct no distributional analysis of the measures they introduce, or if they do the results are so bad that they do not publish them. This amendment would force the Government to publish such analysis, and therefore I am pleased to have heard the Minister’s earlier comments; it seems that the Government are seriously considering this matter and I hope she takes it forward Amendments 180 to 182 specify that the chair and tax director of the OTS would be appointed and terminated only with the consent of the Treasury Committee, in line with what happens with the Office for Budget Responsibility. A similar Labour amendment, which would have had the same effect, was debated in the Public Bill Committee, but we did not divide the Committee on it. During the course of that debate I made the point that while Labour supports establishing the OTS on a statutory footing, we feel its independence is of the utmost importance. As I am sure the Minister is aware, Labour has placed on record our concerns about the OTS potentially being used for political purposes, and ensuring that the chair and tax director is accountable to the Treasury Committee seems a sensible approach to safeguarding its impartiality. Again, I am pleased to hear today that the Minister seems to be taking our opinions and those expressed in the House today seriously Amendment 141 would introduce a de minimis tax exemption for residual cash balances remaining in a share incentive plan when they are donated to charity, with an upper cap of £10. This seems like an extremely sensible suggestion, and the Labour Front Bench is supportive of the amendment. I congratulate my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) on tabling it and explaining it so articulately I shall say a few quick words on new clause 8 in the name of the hon. Members for Kirkcaldy and Cowdenbeath (Roger Mullin), for Aberdeen North (Kirsty Blackman) and for Coatbridge, Chryston and Bellshill (Philip Boswell). This new clause would require a review of how the changes to the tax on dividend income will affect directors of microbusinesses. There are some concerns, as we have heard today, that the changes to dividend taxation will have a detrimental effect on the owners of microbusinesses. Jason Kitcat, who has become quite famous today, has done some detailed analysis which shows that the dividend tax changes included in clause 5 and schedule 1 are somewhat regressive in nature. For instance, Crunch analysis shows that a limited company director paying themselves through dividends would be paying £1,528 more a year when their pre-tax profits are £48,000, whereas a director with £78,000 in pre-tax profits would only be paying £1,343 more in tax The Federation of Small Businesses has also stated that these measures have caused substantial disquiet among its members. This is especially acute for members on modest incomes who, unlike their employed counterparts, will now see a rise in their tax liabilities. This is very worrying and indeed makes the case for distributional analysis, referred to in relation to new clause 19, even more important. A review of the impact of these measures therefore seems quite sensible at this stage and we will support the SNP if it divides the House on this issue Finally, Government new clause 9 relates to the tax treatment of supplementary welfare payments in Northern Ireland. The Low Incomes Tax Reform Group has outlined some technical points for clarification on which I hope the Minister can shed some light: in essence, which payments will be taxable? The Budget said: “Where the Northern Ireland Executive intends to top-up UK-wide benefits from within its block grant as it implements welfare reform, the Government will exempt from tax the top-up payments to non-taxable benefits.” The implication, confirmed in the explanatory notes to the amendment, is that top-ups to taxable benefits will be taxable as well. However, if we take the payments to mitigate the impact of time-limiting contribution-based employment support allowance it seems that two situations are possible. One is that the person’s contribution-based ESA ends and they claim, or are already getting, income-related ESA. If the income-related ESA awarded is less than the person would have received through contribution-based ESA, they will receive a welfare supplementary payment to cover the difference. The second possibility is that their contribution-based ESA ends but they do not get income-related ESA, in which case the WSP will equal the full amount of the lost contribution-based ESA.
The hon. Lady referred to the issues that we have debated this afternoon as a “rag-bag”, but I think that is a bit unkind. I prefer to describe the debate as a smorgasbord of wide-ranging issues and thoughtful speeches. I shall not repeat my opening remarks, but I shall try to add something to each of the areas where it is relevant to do so, in no particular order I thank the hon. Member for Ilford North (Wes Streeting), who is no longer in his place, for welcoming the fact that the Chancellor is looking at the issue of distribution analysis, as he said he would in his letter to the Select Committee Chairman. We will comment further on that in due course. As a result, the hon. Gentleman decided not to press new clause 19 to a vote. [Interruption.] Ah, the hon. Member for Wolverhampton South West (Rob Marris) has returned to his place just as I was about to be nice about him. He must instinctively have known that I was going to thank him for his wide-ranging contribution to the debate. He presented me with some fair challenges as a new Minister. He also made some interesting points about tax simplification. I am due to have a meeting with the Office of Tax Simplification shortly, and he has certainly given me food for thought for my agenda. I reiterate that the Bill will put the OTS on a statutory footing, which I believe indicates the seriousness with which we take its work This has been a probing debate. My hon. Friend the Member for Enfield, Southgate (Mr Burrowes) is now on Select Committee duties and therefore unable to return to his place in the Chamber, but he made an interesting contribution on an issue that I know all too well—that of high-strength alcohol. This is something that needs to be looked at in the round, but I can assure him, given my three years in the job that I did before this one, that I take the matter very seriously. He was also generous enough to note, correctly, that the Department of Health has had a good deal of success, working with manufacturers, in reducing the number of very high-strength products on the market. I also note the discussion that took place about silver linings, in which varying views were expressed. I am sure that we will give further thought to these matters in due course. My hon. Friend the Member for Congleton (Fiona Bruce) and others also stressed the matter of the cost to society of some of those products My hon. Friend the Member for Enfield, Southgate also talked about the marriage allowance. I want it to be clear that the Government’s focus is on delivering the existing policy, but I did mention in my introductory remarks that a quarter of those who benefit are households with children. We do not want to create a two-track marriage system within the allowance, but the Government are none the less committed to helping low-income households and those with young children through a wide range of other policies including, for example, tax-free childcare and the new national living wage I want to add that the online application process for the marriage allowance takes only seven minutes. I call upon the hon. Member for Strangford (Jim Shannon) and my hon. Friends the Members for Congleton and for Enfield, Southgate and others who have an interest in this matter to assist us and promote it. I found in some of my summer recess meetings with groups in my constituency that awareness of the marriage allowance is low. It is of real benefit to lower-income married couples and all Members can contribute to promoting awareness and take up of it. None the less, I reassure all colleagues—my hon. Friend the Member for Mid Dorset and North Poole (Michael Tomlinson) also spoke about this—that I will continue to look closely at take-up with HMRC. I also suggest that promoting the personal tax account is another good way of promoting the take-up of the allowance, because when appropriate people take up a personal tax account they can get a nudge to apply. I reiterate that HMRC will receive the millionth application next month, putting us on course to meet the OBR’s revised forecast for take-up this year I have already mentioned the seriousness with which we take the Office of Tax Simplification, but it is worth noting that the recommendations led to the introduction of cash-based accounting for tax. One million self-employed individuals took that up in the first year alone, so those recommendations were important I appreciate the intention behind amendment 141 tabled by the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), but I said that the Government feel that the change would add additional complexity; I do not think he agrees with that. We have received no indication that fewer companies are making use of share incentive plans due to the administrative cost mentioned by the Opposition, but we will keep that under review. To tease out why our views differ on how the scheme might work and why the Government feel that the idea needs further development, if the hon. Gentleman is willing not to press the amendment, I am happy to meet him to discuss the matter and to understand why he feels that way.
I thank the Minister for those comments. I have a small sense of frustration as I believe that nearly every Conservative Member—indeed, all Members—would back the change on its merits, but I understand that Ministers have limited room for manoeuvre at the Dispatch Box, so I will accept that offer in good faith and will not press the amendment.
I thank the hon. Gentleman for that and look forward to our meeting Several Members spoke about new clause 15, including my right hon. Friend the Member for Wokingham (John Redwood) and the hon. Member for Salford and Eccles, and I reiterate that nothing would be achieved that is not already achieved by the Government’s tax lock. The reduced rate of 5% has applied to installations of energy-saving materials since 2001 and that rate remains in place and unchanged. As for the wider issues about European Union VAT and excise systems, we are considering a range of issues as we look to exit the European Union On new clause 19, as I said, we feel that the tax lock, for which we have already legislated, actually goes further by preventing the use of secondary legislation, about which the hon. Member for Salford and Eccles was worried Turning to new clause 18, I will repeat to the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) what I said in my opening remarks: the Government do not expect the measure to have a large impact on rents due to the small proportion of the housing market affected—around one in five individual landlords On the SNP’s new clause 8 and the points made about the changes to dividend tax, I reiterate that the way in which such changes affect small and microbusinesses cannot be looked at in isolation. The Government take the concerns of microbusinesses incredibly seriously—I met the Federation of Small Businesses only last week, for example. As for listening to the concerns of microbusinesses, I point hon. Members to the changes made to the Government’s “Making Tax Digital” consultation documents as evidence of our sensitivity to such concerns and we look to respond to them when we can. It is important to note that we believe the dividend tax is still progressive overall, and individuals with higher incomes will still pay a higher rate of tax on their dividends On the wider changes to small businesses and microbusinesses, I point the hon. Gentleman to Budget 2016 in particular, as it is introducing the biggest ever business rate reduction, worth £6.7 billion. It has yet to come into force, but it will make a very significant difference to a very large number of microbusinesses across all our constituencies Lastly, I hope to answer the highly technical point made by the hon. Member for Salford and Eccles, as well as the point made by the hon. Member for Foyle (Mark Durkan). Government new clause 9 will exempt from income tax supplementary payments that mitigate tax-exempt benefits paid by the Northern Ireland Executive. Any supplementary payments that mitigate tax benefits will themselves be taxable. As a result, all supplementary payments will be taxed in the same manner as the benefits they are mitigating, to ensure fairness and consistency with the tax system. I was asked whether the power being taken in this Finance Bill would be used more widely. No, the power being taken in this Bill will be restricted to only allowing for the tax status of the Northern Ireland supplementary payments to be established in regulations. Full welfare devolution has always been part of Northern Ireland’s devolution settlement. I hope that adds some clarity This has been a wide-ranging debate. We have touched on some good issues and found some common ground. The measures in this Finance Bill will benefit working people, boost UK businesses, and take on tax evasion and avoidance. In the days we have spent on Report, and during the Bill’s earlier stages, we have debated many aspects of it thoroughly, and on Third Reading the House will have a final opportunity to consider the Bill as a whole. At that point, I will set out the main reforms for which the Bill legislates, but I hope that this afternoon’s discussion has been helpful and that my responses to points have helped the various Members who raised them Question put and agreed to. New clause 9 accordingly read a Second time, and added to the Bill. New Clause 8 Review of changes to tax on dividend income ‘(1) The Chancellor of the Exchequer must commission a review of how the changes to the tax on dividend income implemented by this Act affect directors of micro-business companies, to include— (a) the impacts across the distribution of such directors’ net income; (b) the impact on company failure rates; and (c) options for amending the law to minimise the impact on such directors who are on low incomes (2) The Chancellor must lay a report of the review before both Houses of Parliament within six months of the passing of this Act.”—(Philip Boswell.) Brought up, and read the First time. Question put, That the clause be read a Second time.
Our consideration having been completed, I shall now suspend the House for no more than five minutes in order to make a decision about certification. The Division bells will be rung two minutes before the House resumes. Following my certification, the Government will table the appropriate consent motion, copies of which will be made available in the Vote Office and will be distributed by Doorkeepers.
I can now inform the House that I have completed certification of the Bill, as required by the Standing Order. I have confirmed the view expressed in my provisional certificate issued on 5 September. Copies of my final certificate will be made available in the Vote Office and on the parliamentary website Under Standing Order No. 83M, as modified by Standing Order No. 83S, a consent motion is therefore required for the Bill to proceed. Copies of the motion are available in the Vote Office and on the parliamentary website, and have been made available to Members in the Chamber. Does a Minister intend to move the consent motion?
indicated assent. The House forthwith resolved itself into the Legislative Grand Committee (England, Wales and Northern Ireland) (Standing Order No. 83M). [Natascha Engel in the Chair]
I remind the Committee that although all Members may speak in the debate, only Members representing constituencies in England, Wales and Northern Ireland may vote on the consent motion Resolved, That the Committee consents to the following certified clauses and schedules of the Finance Bill: Clauses 126 to 132, 141 and 142 of, and Schedule 16 to, the Bill as amended in Committee and Public Bill Committee (Bill 47).—(Jane Ellison.) The occupant of the Chair left the Chair to report the decision of the Committee (Standing Order No. 83M(6)). The Deputy Speaker resumed the Chair; decision reported. Third Reading
I beg to move, That the Bill be now read the Third time I remind the House just how important the measures contained in the Finance Bill are for the success and prosperity of people in this country. It is about putting more money back into the pockets of all the people who work so hard but sometimes struggle to make ends meet. It is about helping our businesses to grow and succeed, to invest and create jobs, and it is about protecting the nation’s finances by taking action to stop any individuals or businesses that seek to evade or avoid tax The Bill has been thoroughly debated for weeks, including with me as the Minister during the past two days. I therefore want to take a moment to thank hon. Members on both sides of the House for their excellent scrutiny of it and for the insightful and wide-ranging debate that has taken place during its passage through the House It is worth noting a couple of breakthroughs for which the Bill will be long remembered. The first is the amendment that was moved last night by the right hon. Member for Don Valley (Caroline Flint) on public country-by-country reporting, which the Government supported. The welcome degree of cross-party consensus cemented the UK’s position of international leadership on this issue. It is also worth noting the long and successful campaign by the hon. Member for Dewsbury (Paula Sherriff) and others that has brought significant progress on the issue of VAT on sanitary products. There are a number of other important measures, some of which we have debated today, and we have made important Government amendments to ensure that things work as they should I pay particular thanks to my predecessor, my right hon. Friend the Member for South West Hertfordshire (Mr Gauke), for his excellent work. Indeed, he did the lion’s share of the work in steering the Finance Bill through each of its stages. I also thank my hon. Friends the Members for East Hampshire (Damian Hinds) and for West Worcestershire (Harriett Baldwin) for setting out the Government’s case at different stages. I express my general appreciation to all hon. Members who have contributed to the Bill The Bill means that we will do more to help hard-working individuals and families, more to help businesses large and small, and more to safeguard the nation’s finances. Above all, it will ensure that we move forward into the new future from a position of financial strength in our economy. I therefore commend it to the House.
I pay tribute to the Financial Secretary for the way in which she has led the final stages of the Bill and to the hon. Member for Salford and Eccles (Rebecca Long Bailey), who has led for the Opposition. She took over in difficult circumstances and has handled it with great composure and competence It is clear to many people in the Commons today that this is a right bourach of a Bill, as we would say in Scotland. Not long after the Government voted down the SNP’s new clause on Scottish limited partnerships last night, the distinguished commentator and author Ian Fraser took to Twitter to say: “Now we know @theresa_may’s pledge to ‘reform capitalism’ was so much hot air” Indeed it was hot air. The only people smiling as a result of the Government’s opposition to our new clause are the criminals and tax evaders who will benefit so much from it The Government’s opposition to our new clause on oil and gas, which like our new clause on Scottish limited partnerships had much external support as well as support in the House, shows that they are ill fitted to lead the oil and gas sector into the future. It does not end there. The Government continue to victimise Scotland’s emergency services in respect of VAT, to press ahead with reforms that are compromising the provision of affordable private sector rented accommodation and to ignore the harm they are doing to micro and small businesses with their so-called tax reforms. The list could go on. It becomes clear that the SNP will oppose the Bill.
A great deal has happened politically since the March Budget and during the passage of the Finance Bill. Therefore, on Third Reading, when we are invited to consider the Bill in the round, we should ask ourselves how this set of composite tax measures and forecasts for revenues and budget deficits fits into what the Bank of England thinks is a rather revised picture today, although its gloom is probably exaggerated We also had a very significant event from the Government themselves over the summer recess, which has not been reported to this House or debated in this House, but which should not go without comment: the Chancellor of the Exchequer gave his consent for the creation of up to £170 billion of additional money and for the Bank of England to buy large quantities of Government debt and substantial quantities of corporate debt, making available a lot of cheaper money to the banks. As a result of that needless monetary relaxation—there was absolutely no evidence at the time that the economy had suffered an output or retail sales shock in the way that the Bank foolishly thought was happening—we see that interest rates have been driven down. In particular, longer-term interest rates, which are the Government’s price of borrowing, have been driven down, and so we now must imagine that the Budget arithmetic has changed quite a lot in a very favourable direction, as there is now presumably a substantial reduction in the forecast interest rate costs for Her Majesty’s Government over the balance of this year and into the next financial year, assuming that those programmes of aggressive bond buying continue to depress the rates in the way that is clearly planned At some point the Government need to explain why they endorsed the Bank of England’s very aberrant view. The Government’s forecasts for the economy, which are the thought behind this perfectly sensible Budget that we are in the process of approving, look forward to the UK economy growing by 2% this year and by 2.2% next year. The Bank of England now says that the British economy will grow by only 0.8% next year. I have no idea why the Bank thinks that, but it would of course change the arithmetic, and instead of our welcoming this Budget with an even smaller deficit, because of yield compression and cheaper borrowing, we should be worrying at this juncture about the shortfall in revenues next year on the back of a much-revised Bank of England forecast. Clearly revenues will be down by quite a lot next year if growth is to be only 0.8% rather than the 2.2% that was the premise of this Budget I fully support the Treasury’s March view. It is extremely likely that the British economy will grow by 2.2%. I do not have my own model but I understand how the Treasury model works and I do not think that the underlying assumptions behind the model for the March forecast were unrealistic. I do not think that they have fundamentally changed as a result of the events of the summer, with, perhaps, the one exception that if the Bank perseveres with injecting anything like £170 billion into the economy, growth could be even better than the Government were expecting, because that is a far bigger monetary stimulus than they clearly had in mind when they constructed the March Budget The Bank of England needs to be careful. One of the curious things about the timing of its decision was that it made that announcement before we saw the real economy figures for the first eight weeks after the Brexit vote. Those figures turned out to be perfectly reasonable. They were not negative in the way that the Bank had thought. The Bank also made the injection of money just after some very important figures came out, ones that it had obviously read in a different way from me If we read the money supply growth figures and credit growth figures for the second quarter of the current calendar year, we will see that they started to accelerate. We had pretty steady 5% growth for quite a long period, which was giving us a combination of low or no inflation and 2% or so growth, but then those figures suddenly accelerated to around 7% or 8%. It is therefore even more bizarre that, on the back of those numbers, the Bank of England should suddenly decide to try to pump so much money into the economy, at a point where it looked as if the commercial banking system was sufficiently strong and confidence had returned sufficiently to mean an even faster rate of money growth than the one that was achieving 2% growth overall. I am not suggesting that we need to drop this Budget because of that very large monetary stimulus, but the House should be aware that a very large monetary stimulus has been added at exactly a point where we had a perfectly sensible Budget based on perfectly sensible assumptions. The Government also need to be very careful before authorising any further monetary stimulus given what look like perfectly satisfactory numbers How could the Bank be that wrong—it is quite difficult to understand—and why did the Government endorse its strange interpretation? It says two things. It says that a Brexit vote could damage trade. Well, the one thing we seem to know from the very relaxed timetable the Government are proposing for getting us out of the EU is that in all probability we are going to be trading under existing single market arrangements this year and next year. There will not, therefore, be any damage to trade. I do not think there will be any damage to trade when we are out, but we are going to be trading under the current arrangements for the forecast period, so it is very difficult to see why we would knock anything off GDP because of trade. Indeed, we should be adding quite a lot in relation to trade, because clearly exports will rise quite a lot on the back of a much weaker pound The other thing it says is that there will be an effect on confidence. We have seen from recent surveys that there was a very short term hit to the confidence of big business executives who did not like the result of the referendum, but there was no hit to the confidence of consumers. They went out and spent more in the shops immediately after the Brexit vote than they were spending before. We saw, in the following month, that many senior company executives regained a lot of their lost confidence because they saw they were wrong and that the customers were returning to, or staying in, the shops. They are buying cars and new houses. Confidence has not collapsed, something the banks seemed to think would happen I urge those on the Treasury Bench to think about these matters extremely carefully. The very long procedure on the Finance Bill means that, in all probability, we are approving a Bill that was constructed in what the Bank of England thinks were very different economic times. I think the economic forecast and the economic times of March are very similar to the ones we should now accept, and I urge the Government to take that view. The House needs to note, if it is the view of the House, that on top of a Budget that has a reasonably relaxed fiscal stance compared with intentions a few years ago—something I am quite happy with—we now have a very large monetary injection. The Government need to be aware of what that might mean.
I thank the Minister and her Treasury colleagues, past and present, for their progress of the Bill through the House. I thank my own shadow Treasury colleagues, past and present, for their hard work in holding the Government to account. I thank my shadow Treasury team staff for their hard work on the Bill in the interesting times in which we have found ourselves. The Clerks deserve a mention for being pestered every five minutes by members of my staff—indeed, by the staff of other hon. Members, too. I make special mention of all Members who have worked very hard on the Bill and participated in a number of extremely thoughtful and interesting debates The Opposition will not be supporting the Bill on Third Reading. Although it contains some measures that we support, we simply cannot vote in favour of a Bill that does nothing to address the underlying issues in our economy. It has unfairness at its very core. I will, however, run briefly over the areas where we have found some consensus across the House First, there is the need to zero-rate VAT on women’s sanitary products. Many Members across the House spoke in support of this yesterday. I appreciate the Government’s sympathy with the campaign by my hon. Friend the Member for Dewsbury (Paula Sherriff). I place on record once again my congratulations to my hon. Friend who, along with many women outside this place, has campaigned tirelessly on this issue. Unfortunately, we still had to divide the House, as the Minister refused to put down a firm date for implementation of the zero rating. I hope the policy will not be kicked into the long grass once the Bill has completed its passage through Parliament. I know the Minister supports the general principle of the policy and I am sure that my hon. Friend the Member for Dewsbury will be very quick to call the Government out should they try to avoid taking this matter forward responsibly We have also found a broad level of agreement on country-by-country reporting. I am pleased that the Government saw fit to accept the amendment tabled by my right hon. Friend the Member for Don Valley (Caroline Flint). Again, I put on record my thanks and congratulations to my right hon. Friend for her hard work and determination on this issue. The amendment stated that the Government “may” exercise their powers in this regard. However, I hope that the Government “will” exercise their powers in that regard, and I shall follow their progress very closely We support the Government’s steps towards closing the so-called Mayfair tax loophole, even though they did not accept our amendment to provide that all carried interest would be subject to income tax—but that, unfortunately, is where the consensus ends One of the biggest problems facing the economy at the moment is low rates of investment. Investment by businesses has already fallen for the last two quarters and investment by Government is scheduled to fall in every year of this Parliament. Overall investment as a share of GDP is lower now than it was in 2007—despite rising profits to companies and an all-time low cost of borrowing for the Government The Government maintained in yesterday’s debate that cuts to the headline rates of corporation tax and capital gains tax contained in the Bill would incentivise business investment, but they did not convince me or my hon. Friends that that would actually be the case. When we debated the cut to corporation tax yesterday, I provided some helpful figures to demonstrate that it is not clear that reductions will deliver the investment that the country desperately needs. For the benefit of Members who were not in the Chamber yesterday, I shall briefly recap. The House of Commons Library analysis shows that business investment was higher in the year 2000 when corporation tax was at 30% than it was in 2015 when it was a full 10% lower. There is no obvious correlation between a low rate of corporation tax and high rates of business investment. Furthermore, corporations are not in need of cash in most cases. Figures provided by the House of Commons Library show that the UK corporation industry was sitting on cash reserves totalling £581 billion last year, so something is clearly precluding them from investing in the future. Frankly, the measures in this Bill will do nothing to change that behaviour Because of this lack of investment, productivity in the UK has fallen. Every hour of work in Britain produces one third less than every hour worked in Germany, the US or France, while real wages have fallen by 10% since 2008. That is simply not good enough—it is not good enough for British workers; it is not good enough for the economy; and it is not good for our sense of national pride. We need investment in infrastructure, in skills, in innovation and in industry. Labour is committed to providing £500 billion-worth of investment: £250 billion will be Government capital spending; and £250 billion will come from the national investment bank The national investment bank, along with regional banks, would transform regional economies and rebuild our financial system. Government capital expenditure would be used to improve vital infrastructure such as transport, housing and energy supply. Those are the kind of policies that businesses need to thrive, and I hope that the Government will consider them. They have not put such policies into the Finance Bill, but they have the power to put them into further pieces of legislation as this Parliament progresses The Bill fails to address the long-term pressures facing the UK’s energy supply industry and fails to deliver on our climate change targets, as agreed just a few months ago by the right hon. Member for Hastings and Rye (Amber Rudd), now the Home Secretary. The renewable energy sector, as we heard in the previous debate, has been consistently undermined by this Government, and the Bill before us today does nothing to provide the stability or support that this industry craves Earlier today, we debated a specific amendment on the VAT treatment of energy-saving materials in the hope that the Government would make it clear in statute that the proposed solar tax hike would not go ahead. Unfortunately, the Government would not agree to our new clause and as such the insecurity for this industry continues. Furthermore, the Bill still makes sweeping changes to the climate change levy, which could seriously undermine its efficacy. In Committee of the whole House, we tabled an amendment calling for a review of the impact of the climate change levy on carbon emissions, but we were unfortunately defeated in the Lobbies. The change will go ahead with no assessment of whether the somewhat altered levy will do its job. That, too, is just not good enough from the British Government Over the weekend, we saw China and the United States ratify the Paris climate deal. Together they are responsible for 40% of the world’s carbon emissions, so that marks a huge step forward in climate change responsibility. Our Government, however, have not ratified the treaty, and have rowed back on almost all their green commitments since the election. I will not list them again, as it is an extensive list, but the Bill does nothing to tackle the issue of climate change head on, and, we believe, weakens measures that are already in place As for the key issue of tax avoidance, I must reiterate our view that the Government’s piecemeal approach of slowly introducing new little schemes and penalties is simply not enough. As I said yesterday, we need to see real commitment to an overarching strategy that provides genuine “legal teeth” to tackle the tax avoidance industry. At a time when our public services are tearing at the seams as a result of increased demand and a lack of resources, it is not acceptable for people to be allowed to avoid paying their taxes. It is time for tax avoiders to understand that being part of our society means paying one’s fair share towards the upkeep of that society. Labour has set out its stall with its tax transparency and enforcement programme, much of which was reflected in the amendments that we tabled yesterday. I hope that the Minister took some of our suggestions on board It is disappointing, to say the least, that the Government did not see fit to accept our new clause proposing a wide-ranging review of the UK tax gap and its causes. They have to appreciate that we must design a system that will really challenge the tax avoidance industry. We must overhaul our tax laws so that they are based on broad principles that will make avoidance difficult. A full public inquiry would expose the perversity of the industry, and would signal to the world that we are serious about stamping out tax evasion and avoidance wherever they may flourish Let me end by saying this. Labour wants to build a high-investment, high-wage economy. It wants to build an economy that will allow the UK to be a country of the future, leading the way on research and innovation; an economy in which everyone pays their fair share, and support is provided for those who need it; an economy and a society of which the British people can be proud. However, that can be done only with a Government who are committed to making it happen. We do not believe that the Bill will achieve those goals, and we will therefore vote against it this evening Question put, That the Bill be now read the Third time.
I rise to present petitions relating to keeping Royal Mail delivery offices open in Marple and Bredbury. The two offices are currently being reviewed by Royal Mail with a view to their potential closure, yet they enable local residents to collect parcels and items of mail, provide a service that is vitally convenient and employ dozens of local people. Unfortunately, the nearest alternative facility is not in easy reach of the local population and has no direct public transport links Petitions organised by me and distributed throughout the area, as well as being placed online, had reached 3,105 signatures as of yesterday. The petitioners therefore request that the House of Commons urges Royal Mail to keep delivery offices open in Marple and Bredbury [Following is the full text of the petition: The petition of residents of the UK, Declares that the Royal Mail delivery office in Marple, which enables local residents to collect parcels and items of mail, provides a service that is vitally convenient; further that there is no local alternative provision of this service; and further that the nearest facility is not in easy reach of the local population and has no direct public transport links. The petitioners therefore request that the House of Commons urges Royal Mail plc to keep a Royal Mail delivery office open in Marple. And the petitioners remain, etc.] [P001706]
May I begin by thanking you for granting this Adjournment debate, Mr Speaker, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Nuneaton (Mr Jones), for being here to respond? I want to address the appalling state of affairs at one of the two local authorities within my constituency, the management of which leaves much to be desired at both political and administrative levels, is costing the local taxpayers vast sums they should not have to spend, and is a blot on the wider local government landscape. On any view, the Government need to get a grip of this council and ensure that it is turned from its present dysfunctional state into something that my constituents within the borough of Oadby and Wigston are entitled to expect and deserve Nothing that I am about to say will take the Minister by surprise because I have written to him and our right hon. Friend the Member for Tunbridge Wells (Greg Clark), the former Secretary of State for Communities and Local Government, and had informal discussions with them both about this council on several occasions over the past year or so In local government terms, apart from Leicestershire County Council, which has a county-wide remit outside the city of Leicester, I am concerned within my Harborough parliamentary constituency with Harborough District Council, which has a large Conservative majority, and Oadby and Wigston Borough Council, which has a large Liberal Democrat majority. Harborough District Council is well run and is not the subject of this debate, save in so far as it provides a marked contrast to the shambles that is Oadby and Wigston Borough Council. Walking into the offices of Harborough District Council allows one to experience a well-motivated, well-led and dedicated group of officers and staff at all levels of seniority. From the people at the reception desk to its most senior officers, despite the financial constraints that all local authorities now have to cope with, nothing is too much trouble. There is a can-do, will-do atmosphere, despite the small revenue budget of, I believe, under £10 million, its geographical size and the problems associated with rural sparsity In contrast, the atmosphere in the offices of Oadby and Wigston Borough Council is poisonous. It, too, has a small annual revenue budget, of about £8 million. It has an adult population of about 40,000. On Leicester’s south-eastern border, although a largely white British community, the borough has within its boundaries a growing black and minority ethnic population, mostly people of south Asian descent who came here directly from India and Pakistan or via east Africa. Many Leicester children attend its excellent schools, not least Beauchamp academy, the best school of its type in the east midlands. Several of Leicester University’s halls of residence are in Oadby, as are Leicester racecourse and the famous botanical gardens. Unemployment in my constituency is at or under 1%, and plenty of small to medium-sized businesses in the borough are doing well. It is, in short, a great place to live, to bring up children and to work, and there is much that its residents, my constituents, can be proud of and justifiably are. What spoils this happy picture is the borough council itself In 2015, nine senior members of the council’s staff initiated a grievance procedure against the senior management team—the SMT. I will not tonight identify these officers by name, be they the complainants or the respondents to the grievance, because their names are not important to the points I make, but their identities, particularly those of two of the three members of the SMT, the chief executive and the director of services, are well known locally, and there is no bar that I know of on others publishing their names, subject to the ordinary laws of defamation. Of the complainants, some have resigned fearing they would not face a fair hearing under the council’s internal disciplinary system, while others remain on full pay but are suspended, their work being carried out by agency or temporary staff. Some of the complainants are constituents of the hon. Member for Leicester South (Jonathan Ashworth), who is in his place.
The right hon. and learned Gentleman is making his case with typical force. Let me say to him and to the Minister that my constituents over the border in the city of Leicester are affected by this, and I entirely support the right hon. and learned Gentleman’s efforts and look forward to the Minister’s response.
I am grateful to the hon. Gentleman, my parliamentary neighbour, for his intervention. I hope that between us we can persuade the Government to do something to improve the state of affairs in this borough council, he on behalf of his constituents and I on behalf of mine The grievance consisted of 214 separate allegations against the SMT. They were considered individually and collectively by Richard Penn, a former senior local government officer from elsewhere who was known to the SMT, but I do not suggest collusion or bias against him. He conducted two exercises: one investigated the complaints from the staff against the SMT, and the other made recommendations about the future management and leadership of the council. Although Mr Penn did not uphold any of the individual complaints, he did conclude—this must have been inevitable given the scale of the grievances laid at the door of the SMT—that they painted a picture of an organisation “riven and very adversely affected by a deep division between the SMT and a majority of the second and third tier managers” Mr Penn concluded that the division between the SMT and the others exposed the need for the council “to take urgent action not only to heal the wounds of and behind the grievances but also to organise itself in such a way that it has the capacity and stability to face the future with confidence” He stated that the council did not have the resource and capacity in-house to do this on its own, and that external support and assistance to both the political and officer leadership would, in his view, be necessary as part of the recovery process. Mr Penn’s rejection of the 214 allegations is, I understand, to be appealed, and the complainants who have not already left the council’s employment and remain suspended are to be subjected to disciplinary proceedings by the council. These personnel problems are not helped by the council’s chief executive being on extended sick leave for a good many weeks this year. I hope he is now restored to good health It is my view that Mr Penn, because he is cautious and wanted to find or promote solutions, used language and a tone in both of his reports that, to someone not familiar with the council, masked the serious nature of his findings about the quality of the managerial and political leadership of the council. My duty is to protect the interests of my constituents, all of whom deserve a functioning, effective, efficiently run and focused council that can organise itself, manage its finances and provide the requisite public services, rather than the internal squabbling and incompetence they have had to put up with over the last few years I had become used to getting slow and indifferent service from the council as regards replies to constituency correspondence. To be fair to the chief executive, he asked that all correspondence from me should be addressed to him so that it could be more efficiently dealt with, but I did not realise quite how appalling the state of the council was until the night of the May 2015 general election The election count is held in the borough. Apart from my first general election for Harborough in 1992, when the count took place on the Friday morning after the election of Thursday 9 April, all subsequent counts have been done overnight. As a rule, the result is declared between 3 am and 4.30 am. In May 2015, it was not declared until nearly 9 o’clock on the Friday morning. It became clear during the early hours of the morning to all the candidates, the press, and the high sheriff, who was the returning officer—indeed, to most of us in the hall—that the chief executive had failed to organise the counting staff and set in place systems to get the count dealt with expeditiously. One senior staff member at the count walked out as dawn approached and resigned, and others were trying to sort out what can only be described as a total farce. There was an air of sullen rebelliousness in the room among the counting staff The chief executive failed to demonstrate the leadership required on that occasion, but, as I later discovered, the state of personnel relations within the council was already bad and getting worse. The staff were having trouble getting the paper records of the ballot boxes and the votes counted uploaded on to the computers. In the end, the high sheriff, a man of almost limitless patience, and I, someone of less Christian forbearance, told the chief executive to give us the result on paper and forget his computers so we could all go home I cite this not because of any inconvenience I suffered, but because it starkly and publicly illustrated the shambolic nature of the internal workings and poisonous personal relations in the council. I have subsequently learnt that the SMT had a mole in the complainants’ group who was making secret recordings of their private conversations and handing them to the SMT. Quite apart from being underhand and possibly criminal, it can reasonably be inferred that the SMT or a member of it was aware of this person’s activities and, indeed, authorised them I have also seen documents that indicate that Mr Penn knew of these secret recordings, although so far as I can tell he was the passive recipient of the information and I cannot form a judgment about how they affected his conclusions, if at all. He did not, though, from memory, disclose in his reports that he had seen evidence of those secret recordings or received emails from the mole. If I am wrong about that, I will correct it Just some of the complaints made and then considered by Mr Penn, albeit rejected as matters of detail, can be briefly summarised as follows: there was no clear direction or leadership from the SMT, and there was little or no communication between the SMT and the rest of the council, particularly about what was or was not possible during the coalition Government’s comprehensive spending review. I am not concerned this evening about the truth or the falsity of the allegations and am in no position to judge that one way or another, even if I do have criticisms of the somewhat cursory approach that Mr Penn appears to have adopted, judging from the terms of his first report. But that 214 allegations were made and required Mr Penn to consider them is evidence of a council in poor health and, as the saying goes, a fish rots from the head On 16 January 2016, in response to Mr Penn’s reports, the borough council’s newly created change management committee agreed a 15-point plan for immediate action to rectify the problems, most of which can only be described as a précis of the blindingly obvious and things that should be second nature to any half-competent councillor or council officer. This House is entitled to ask why on earth they were not being done already. The committee also decided on a plan for further review of the implementation of the cultural changes and lessons required, consisting of planning the way forward, staff involvement, the role of leadership, employee buy-in, infrastructure, capabilities and measuring success. This House is entitled to ask why such obvious management tools were not in place already and why it took 214 complaints, two reports from Mr Penn and the suspension of the nine complainants to achieve so little at vast public expense To take just four suspended complainants, their absence, in one case from June 2015 and in three cases from November 2015, has cost over £215,000 in salaries alone, and their agency replacements will add to that figure. One temporary staff member has cost nearly £55,000 in financial years 2015-16 and 2016-17 for a two to three-day week. By December 2015 the council had spent £107,000 on the investigation and approved a further £100,000, money presumably spent and to be spent on Mr Penn’s services via the Local Government Association, on the fees of outside solicitors, on monitoring services provided by Leicestershire and Cambridgeshire county councils and by Mr Quentin Baker of LGSS, a firm linked to Cambridgeshire and Northamptonshire county councils, and on a former employee of the Crown Prosecution Service instructed to consider the evidence necessary to support the disciplinary proceedings, as well as on other temporary staff As this farce continues, it is surely reasonable to hazard a guess that the total sums expended and to be expended could be as much as £500,000 which, when compared with the small size of the council’s revenue budget, is nothing short of a scandal. There is plenty more that could and should be said about the conduct of certain councillors from the majority group towards members of staff and opposition councillors, but time alone prevents me from dealing with that. Suffice it to say that the evidence I have seen does not make for pretty reading. In the light of the facts as I know them to be, I now ask the Government urgently to appoint commissioners or other competent officials to go into the council and get it sorted out, or to discuss with the county council in Leicestershire or the borough’s neighbouring district councils how they can take over the management of this borough council. I make no party political complaint about the council’s majority or its leader. If the residents of Oadby and Wigston want to elect Liberal Democrat councillors, they are free, if unwise, to do so, and if a Conservative council behaved like this I would say the same, but the council leader and his councillors have either been wilful participants or asleep at the wheel and must take responsibility for the shambolic state of the council and its administrative leadership I am sorry to say it, but failure, mismanagement and incompetence on this scale within the council now requires decisive action from the Minister’s Department, as well as the resignations of the council’s leader and certain senior members of its staff. It is time to give back to the residents of the borough a council that works for them. Doing nothing is not an option and I earnestly invite my hon. Friend to take action without delay.
First, I congratulate my right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) on securing this important debate. We have, as he said, spoken and corresponded about Oadby and Wigston Borough Council on a number of occasions, and it is clear from our discussions and correspondence that he has a great passion for his constituency and the interests of the people he represents. I am certainly grateful to him for giving me the opportunity to discuss such an important issue. Local government delivers essential services to some of society’s most vulnerable people, and it is therefore vital that it operates effectively I wish to begin by setting out the context and emphasising that local government normally functions well. There are many examples of excellent and innovative practice to be found across all types of councils. Councils are held to account through an effective system of local accountability, and where they do require help or advice, sector-led support is available As my right hon. and learned Friend will be aware, local government is independent of central Government. Through elected councillors—and, where applicable, mayors—councils are accountable to the communities that they serve through the ultimate sanction of the ballot box. On hearing what he has had to say today, I am sure that many of his constituents will be thinking about how their council has been run, and is currently run, and will look at that accordingly when they make their choice next time at the ballot box Since 2010, town hall transparency has been improved by new rules requiring councils to make public a written record of all major decisions. The public also have the right to film, audio-record, take photographs and use social media to report the proceedings of public council meetings. The introduction of the local government transparency code in 2015 requires all authorities to publish certain data about their resources and expenditure. That makes it easier for local people to act as armchair auditors and hold their councils to account. In addition, councillors hold regular surgeries with local residents, councils conduct consultations on their policies and budgets, and the activities councils undertake are subject to external scrutiny in the form of an annual external audit The Local Government Association provides external challenge and targeted sector-led support where it is needed. For 2016-17, my Department has given the LGA £21.4 million so that it can provide training and support for members and officers. The LGA provides policy briefings and arranges peer support from other local authorities. Options include one-to-one mentoring for elected leaders, corporate peer challenges and additional targeted support where it is required. The LGA also has an overview of performance in the sector. That enables it to offer support on a proactive basis to councils that appear to be facing challenges Only as a last resort would the Secretary of State for Communities and Local Government use his powers of intervention, and only where there is comprehensive evidence of extremely serious and widespread systemic failings in a council would that be the case. Statutory interventions are rare: the powers have been used only twice in the last five years, and only six times in the last 15 years As my right hon. and learned Friend will be aware, the Communities and Local Government Committee recently reported on our interventions in Tower Hamlets and Rotherham, and it agreed that our interventions in both those authorities had been justified. It also emphasised that removing control from democratically elected representatives is an extremely serious decision I will now turn to Oadby and Wigston Council itself. The authority has certainly had its challenges. In particular, there have been serious divisions between the senior management team and other officers. It is, however, currently benefiting from sector-led support, and I expect to see significant improvements with the council As my right hon. and learned Friend correctly said, a collective grievance was submitted by nine members of staff in May 2015. The council worked with the LGA and appointed an independent investigator, Richard Penn. Mr Penn is a former local authority chief executive with many years of experience as an independent investigator. He concluded that the 214 allegations that made up the collective grievance were unfounded. He found that “Oadby and Wigston Borough Council is in many respects a well-performing organisation that punches above its weight” He provided evidence to support this, including that the council has met all its statutory targets and indicators; completed several major regeneration schemes, including in the town and parks; improved its leisure offer; and redesigned its customer service experience Mr Penn did not, however, give the council a clean bill of health. In a supplementary report on the organisational issues arising from his initial investigation, he found that there were “deep divisions between the Senior Management Team and the officers who took out the collective grievance”. It was his view that the council needed to take “urgent action in order to tackle the major challenges of not only ‘healing the wounds’ but also of ensuring that the Council has the organisational capacity and stability to face the future with confidence.” I consider it essential that the council take immediate action to address these issues, as it is imperative that management issues should not be allowed to impact on local service delivery and the services that are provided to my right hon. and learned Friend’s constituents. In March this year, I wrote to the leader, Councillor Boyce, highlighting my concerns and emphasising the importance of working with the LGA to take effective remedial action I am pleased to see that since Mr Penn’s report Oadby and Wigston has worked closely with the LGA. The LGA has met the section 151 officer, the chief executive and the change management committee on multiple occasions. The council has been supported to understand the issues faced, and an action plan has now been agreed.
Am I not right in thinking that the section 151 officer is one of the temporary staff—the agency staff—brought in? This exemplifies the problem that I am facing. I really do think we need to be quite serious about requiring the borough council not to allow this just to drift on and drift on, and to fob us off with mealy-mouthed responses. We have to focus laser-like on this council, because otherwise it will just go on and on misconducting itself.
I thank my right hon. and learned Friend for his intervention. The Department takes this situation absolutely seriously. I hope that he will be assured from the comments that I am about to make that we will continue to take the situation extremely seriously and to monitor how the work that Oadby and Wigston is undertaking with the LGA pans out and how it improves governance of the council The action plan includes the following: achieving cultural change in the council, ensuring effective prioritisation, improving ways of working, and improving understanding of officer and member roles and relationships. There are clearly areas where the council must improve, and this plan sets out the improvement journey that the council now absolutely needs to make. I expect the council to implement it fully and effectively. I understand that the LGA is running a programme of sessions with members and officers, separately and together, this autumn. These will cover all elements of the plan, although they will, in particular, ensure that members and officers understand their roles and how to work effectively The LGA now considers that Oadby and Wigston has a thorough understanding of what happened and what it needs to do to put it right. The council’s external auditor, KPMG, has also been kept informed, and it does not feel that there are currently any matters that warrant further scrutiny from an audit perspective. It is important that the council continues to keep its auditors informed as it works to implement its improvement plan The LGA will also work with Oadby and Wigston to conduct a peer review, whereby officers and members of another authority will provide challenge and share learning. That is something that I have strongly encouraged. The peer review should consider whether the council has made sufficient progress against its improvement plan. I will take a keen interest in the findings of the peer review, and I encourage the council to make those findings publicly available Indeed, I expect the council not only to take steps to address the challenges that it has faced, but to reassure the public that its problems are in the past. The council must act in an open and transparent way, if it is to be properly accountable to the community that it serves. Wherever possible, the council should make available details of the problems it has faced, the action it has taken to address those challenges and the progress made. Oadby and Wigston has certainly had its challenges.
My hon. Friend is being extremely generous in giving way; there is nothing more tiresome than busy little Back Benchers who jump up and down all the time. What is the timetable that he has set himself and the council so that he will be able to measure whether there has been any change in the conduct of its administration? Saying, “We hope that the following things will happen,” is good, but unless that is done by a given date and it is required to report to my hon. Friend and the Department, things will drift and I cannot afford to see that happen.
My right hon. and learned Friend should not think that being a busy little Back Bencher is a bad thing. In fact, in this case it is extremely important, because he has raised an extremely important issue. He makes a very important point that this is about not just warm words, but making sure that the issues that the council has faced and the remedial action taken to deal with them are followed through. In that context, I need only to refer to the action that the Department took in relation to Rotherham Council. The Audit Commission produced several reports on the council and the local authority responded with warm words, but the actions suggested by the reports were not followed through properly. Subsequently, Rotherham Council found itself in an untenable position whereby the Department—this is very rare—decided that intervention was necessary. I say to my right hon. and learned Friend that I will be watching the situation extremely closely On timescales, at this point I am content to see the work with the LGA undertaken, but I will not be content if significant progress is not made. I think that this debate will make the council fully aware of that. As I said at the outset, local government must maintain its independence from central Government, and it must answer to its electorate. In very rare circumstances we directly intervene in local authorities, but in this case I expect significant improvement I ask one thing of my right hon. and learned Friend, and I am sure that he will deliver on this. If he is made aware of any additional information or additional issues that arise at Oadby and Wigston council, I would be more than glad to hear from him to make sure that those issues are being addressed. I thank him for bringing this important issue to the House, and I look forward to keeping this dialogue going with him over the coming months so that his constituents can feel confident that they are getting the service that they deserve from Oadby and Wigston council.
I wanted to intervene finally for two reasons: first, to welcome the wonderful Deputy Speaker to the Chair, and, secondly, to thank my hon. Friend again for the care and attention he has given to this matter. He has got lots to deal with in his portfolio, and I have every confidence, having heard what he has had to say, that he and his officials will keep a very close eye on this borough council. Of course, he and I will be in close contact with each other as the need arises, and I am grateful to him for helping out this evening.
I thank my right hon. and learned Friend for his kind comments, and I am sure we will continue that dialogue Question put and agreed to.