Date: 2023-04-19
James Murray: Thank you, Dame Rosie, for the opportunity to respond on behalf of the Opposition. I wish to speak in support of the new clauses in my name and the name of my hon. Friend the Member for Erith and Thamesmead (Abena Oppong-Asare). In this debate, we get the chance to discuss something rare: a tax cut from this Government. It is rare to see a tax cut from this Government, because we are so used to seeing tax rises from them--24 tax rises in the past few years. We now face a tax burden in this country that has risen to its highest level in 70 years. This month, people across the country are being hit by a double whammy of Tory tax rises. Freezes to income tax thresholds mean stealth tax rises for working people, while, at the same time, families are being hit by the Tories' council tax bombshell. Let me be clear about what these tax rises mean: the Government's six-year freeze in the personal allowance will take its real value in 2027-28 back down to its 2013-14 level, while this year, council tax for the typical band D property will breach PS2,000 for the first time. In the middle of a cost of living crisis, made worse by the Conservatives' tax rises, one permanent tax cut was announced by the Chancellor in his Budget last month. That tax cut, introduced by the clauses we are debating today, sees PSl billion of public money spent to benefit only the 1% with the biggest pension pots. It is an extraordinary way to spend PSl billion in the middle of a cost of living crisis, which is still hitting people across this country hard. Ministers may claim that their decision was driven by a desire to get doctors back in work, but it is clear that they could have found a fair, targeted fix for doctors' pensions at a fraction of the cost. The British Medical Association has said that a targeted doctors' scheme could cost as little as PS32 million to implement. The Conservative Chair of the Treasury Committee has said that even she was surprised that the  Government did a blanket cut, rather than a bespoke policy for doctors. That is why we oppose the Government's plans to abolish the lifetime allowance charge in clause 18 as part of their package of changes covered by clauses 18 to 23. I wish to spend a few moments addressing clause 25, which covers a separate pensions matter, unrelated to the package of measures that we have concerns about. Clause 25 introduces, as the Minister has said, a scheme of "top-up payments" for low earners contributing to net pay pension schemes who currently miss out on a Government pension savings incentive. We know that tax relief on pension contributions can be given to individual scheme members in two ways: relief at source and net pay arrangements. In the case of the former, even non-taxpayers are given basic rate tax relief, but in the case of the latter they are not. As the Minister said, this is particularly unfair as individual people have no control over which form of scheme their employer chooses. We commend the efforts of the Low Incomes Tax Reform Group, along with pension providers, Age UK, the TUC, and others, to campaign for a change to the law, which is culminating in clause 25 before us today. There are, however, a number of points of detail that we would like to raise with the Minister. To help draw these out, we have tabled amendments, three of which-- amendments 27, 28 and 29--have been selected for debate today. I wish to put on record my thanks to the Low Incomes Tax Reform Group for its help in drafting these amendments. We recognise that, under the measures proposed in clause 25, there is an onus on His Majesty's Revenue and Customs to make payments to eligible individuals. While we hope, of course, that HMRC would always do the right thing, we think individuals should be able to challenge the amount paid if they think it is incorrect. With that in mind, amendment 27 would require HMRC to provide recipients of the relief with a calculation of the payment so that it can be checked. I therefore welcome confirmation from the Economic Secretary to the Treasury in a letter sent to me this morning that "HMRC are already planning to provide customers with details of the payment and how it was calculated." I would welcome any further detail on that commitment that the Economic Secretary is able to give in his closing remarks. We have also tabled amendment 28, which would enable a recipient of the relief to challenge HMRC's decision if they think it is incorrect. In the letter from the Economic Secretary that I received this morning, he said he felt that was unnecessary: "Where an individual feels the top up payment is incorrect, HMRC will help them understand what may have caused the issue. HMRC will either address this or direct them to their employer". He also wrote: "Individuals who don't get a payment, but think they should, will be able to contact HMRC who will explain why a top-up payment has not been made and what is necessary to correct the situation." While I do not object to what the Economic Secretary has written, I would be grateful if he could address directly why he feels it is not right to put people's ability to challenge HMRC's decision in the Bill itself. Our amendment makes it clear that HMRC must be notified of such a challenge, "no later than four years from the end of the relevant tax year". When he replies, can he tell us what time limit applies to the process he referred to in his letter? Finally on this clause, the Low Incomes Tax Reform Group has highlighted concerns over how top-up payments are treated when people have filed a self-assessment tax return. If an individual received one of those payments after having filed a self-assessment return for the relevant tax year, their return for that year would then be incorrect, as it would not be a full record of their income for that year. By way of possible solution, the group has therefore suggested amendment 29, which we have tabled, a change that would enable HMRC to correct the tax return of a recipient of a payment. In his letter, the Economic Secretary suggested that HMRC already has the power proposed by the amendment. I would be grateful if he could confirm, for the avoidance of doubt, that that is the case. I return now to the measures in clauses 18 to 23, which, as I mentioned earlier, propose changes to the lifetime allowance charge and other tax-free annual allowances, so that I can discuss our two new clauses 4 and 5. With these new clauses, we want to press Ministers on the fundamental question why they chose to implement an expensive blanket approach that fails to offer value for money, rather than choosing a targeted scheme for NHS doctors. When the Government are considering how to spend over PSl billion of public money in the middle of a cost of living crisis, it is more important than ever to make sure that they are spending public money wisely. As I mentioned earlier, the British Medical Association has said a targeted doctors' scheme could cost as little as PS32 million to implement, and even the Conservative Chair of the Treasury Committee said she was surprised by the Government's blanket approach. The central question is this: do the Conservatives think this is the right way to spend PS1 billion of public money? Before he moved into No. 11 Downing Street, the Chancellor had recently seemed to favour an approach targeted at doctors. Last July, while he was the Chair of the Health and Social Care Committee, it published a report stating: "The Government must act swiftly to reform the NHS pension scheme to prevent senior staff from reducing their hours and retiring early". We might even have thought from what the Chancellor said in his Budget speech that he was going to announce a scheme for doctors, since he began that section of his remarks by saying: "Finally, I have listened to the concerns of many senior NHS clinicians, who say unpredictable pension tax charges are making them leave the NHS just when they are needed most."--[Official Report, 15 March 2023; Vol. 844.] However, what the Chancellor announced that day, and what is legislated for in this Bill, goes much further than the fair fix that was needed for NHS doctors. Rather than introducing a targeted scheme to keep doctors working, instead the Conservatives have introduced an expensive blanket change that will benefit all those with the biggest pension pots.