PARLIAMENTARY DEBATE
Finance Bill (Second sitting) - 16 January 2024 (Commons/Public Bill Committees)
Debate Detail
Contributions from James Murray, are highlighted with a yellow border.
The Committee consisted of the following Members:
Chair(s) †Ian Paisley, Mr Laurence Robertson
Members† Abrahams, Debbie (Oldham East and Saddleworth) (Lab)
† Antoniazzi, Tonia (Gower) (Lab)
Carden, Dan (Liverpool, Walton) (Lab)
† Davies, Gareth (Exchequer Secretary to the Treasury)
† Green, Chris (Bolton West) (Con)
† Hendry, Drew (Inverness, Nairn, Badenoch and Strathspey) (SNP)
† Howell, Paul (Sedgefield) (Con)
† Huddleston, Nigel (Financial Secretary to the Treasury)
† Largan, Robert (High Peak) (Con)
Mak, Alan (Havant) (Con)
† Mayhew, Jerome (Broadland) (Con)
† Monaghan, Carol (Glasgow North West) (SNP)
† Murray, James (Ealing North) (Lab/Co-op)
† Quince, Will (Colchester) (Con)
† Siddiq, Tulip (Hampstead and Kilburn) (Lab)
† Simmonds, David (Ruislip, Northwood and Pinner) (Con)
† Throup, Maggie (Erewash) (Con)
ClerksJames Rhys, Kevin Maddison, Committee Clerks
† attended the Committee
Public Bill CommitteeTuesday 16 January 2024
(Afternoon)
[Ian Paisley in the Chair]
Finance Bill(Except clauses 1 and 2, schedule 1, clause 21, schedule 12, clauses 25, 27 and 31 to 34, schedule 13 and new clauses relating to those clauses and schedules)
Chair(s) †Ian Paisley, Mr Laurence Robertson
Members† Abrahams, Debbie (Oldham East and Saddleworth) (Lab)
† Antoniazzi, Tonia (Gower) (Lab)
Carden, Dan (Liverpool, Walton) (Lab)
† Davies, Gareth (Exchequer Secretary to the Treasury)
† Green, Chris (Bolton West) (Con)
† Hendry, Drew (Inverness, Nairn, Badenoch and Strathspey) (SNP)
† Howell, Paul (Sedgefield) (Con)
† Huddleston, Nigel (Financial Secretary to the Treasury)
† Largan, Robert (High Peak) (Con)
Mak, Alan (Havant) (Con)
† Mayhew, Jerome (Broadland) (Con)
† Monaghan, Carol (Glasgow North West) (SNP)
† Murray, James (Ealing North) (Lab/Co-op)
† Quince, Will (Colchester) (Con)
† Siddiq, Tulip (Hampstead and Kilburn) (Lab)
† Simmonds, David (Ruislip, Northwood and Pinner) (Con)
† Throup, Maggie (Erewash) (Con)
ClerksJames Rhys, Kevin Maddison, Committee Clerks
† attended the Committee
Public Bill CommitteeTuesday 16 January 2024
(Afternoon)
[Ian Paisley in the Chair]
Finance Bill(Except clauses 1 and 2, schedule 1, clause 21, schedule 12, clauses 25, 27 and 31 to 34, schedule 13 and new clauses relating to those clauses and schedules)
14:00:18
The Chair
Welcome back. I remind colleagues to pass speaking notes to Hansard. We are broadcasting.
Clause 28
Rates of landfill tax
Question proposed, That the clause stand part of the Bill.
Clause 28
Rates of landfill tax
Question proposed, That the clause stand part of the Bill.
14:01:57
Gareth Davies
The Exchequer Secretary to the Treasury
It is great to see you back in the Chair, Mr Paisley, and a pleasure to serve under your chairmanship. The clause increases the lower and standard rates of landfill tax, from 1 April 2024, in line with the retail prices index as forecast by the Office for Budget Responsibility at the time of the spring Budget 2023. Landfill tax is charged on material disposed of at landfill sites or unauthorised waste sites in England and Northern Ireland. The objective of the tax is to divert waste away from landfill, and support investment in more circular waste management options, such as recycling, composting and recovery.
Since 2000, landfill tax has contributed to a 90% decrease in local authority waste to landfill in England. Increasing the lower and standard rates of landfill tax by RPI in recent years has helped maintain a strong price incentive to divert waste away from landfill. The clause will increase the lower rate of landfill tax from £3.25 per tonne to £3.30 per tonne. It will increase the standard rate of landfill tax from £102.10 per tonne to £103.70 per tonne.
In conclusion, the clause increases landfill tax in line with RPI from 1 April 2024, to maintain a strong price incentive for diverting waste from landfill. I hope that it can stand part of the Bill.
Since 2000, landfill tax has contributed to a 90% decrease in local authority waste to landfill in England. Increasing the lower and standard rates of landfill tax by RPI in recent years has helped maintain a strong price incentive to divert waste away from landfill. The clause will increase the lower rate of landfill tax from £3.25 per tonne to £3.30 per tonne. It will increase the standard rate of landfill tax from £102.10 per tonne to £103.70 per tonne.
In conclusion, the clause increases landfill tax in line with RPI from 1 April 2024, to maintain a strong price incentive for diverting waste from landfill. I hope that it can stand part of the Bill.
14:03:42
James Murray
Ealing North
It is a pleasure to be back with you in the Chair, Mr Paisley. As we heard from the Minister, clause 28 is about rates of landfill tax. As he outlined, the clause seeks to increase landfill tax in line with inflation, to £103.70 per tonne for the standard rate; the lower rate will be £3.30 per tonne. The landfill tax was introduced in 1996 to encourage recycling, composting and recovery, and reduce landfill. It increased the cost of waste disposal at landfill to encourage waste producers and the waste management industry to switch to a more sustainable way of disposing of waste material. The tax was originally UK-wide, but has been devolved to Scotland from April 2015, and to Wales from April 2018.
We will not oppose the clause, but will the Minister provide an update, given that I raised the issue of landfill tax fraud during the passage of the last Finance Bill, in May 2023? As he may recall, we then discussed the most recent estimate by His Majesty’s Revenue and Customs of the landfill tax gap—the gap between the landfill tax due and the revenue collected—which was £125 million in 2021. We recognise that at 17.1%, that gap was much larger than the overall tax gap for that year. He may recall that I asked how much of the £125 million tax gap identified in 2021 had been recovered by HMRC. He said that he would get back to me on that point, as he did not have the information in front of him. I wondered if he had it to hand now, so that he could put it on the record in Committee this year. I would also be grateful if the Minister shared with us whether HMRC has annual estimates of the landfill tax gap for years more recent than 2021.
We will not oppose the clause, but will the Minister provide an update, given that I raised the issue of landfill tax fraud during the passage of the last Finance Bill, in May 2023? As he may recall, we then discussed the most recent estimate by His Majesty’s Revenue and Customs of the landfill tax gap—the gap between the landfill tax due and the revenue collected—which was £125 million in 2021. We recognise that at 17.1%, that gap was much larger than the overall tax gap for that year. He may recall that I asked how much of the £125 million tax gap identified in 2021 had been recovered by HMRC. He said that he would get back to me on that point, as he did not have the information in front of him. I wondered if he had it to hand now, so that he could put it on the record in Committee this year. I would also be grateful if the Minister shared with us whether HMRC has annual estimates of the landfill tax gap for years more recent than 2021.
Gareth Davies
I am grateful to the hon. Gentleman for that. I recall that exchange, and he is right to raise the issue of tax gap. Clearly, we all agree that we need it to be lower, and I assure him that at HMRC, every effort is being made to tackle the tax gap. I can update him; in 2021-22, the tax gap was 18.4%. As I say, HMRC is committed to continuing to tackle the gap, principally through two measures: first, through increased data sharing across Government agencies, and secondly, through the better use of intelligence-led interventions. Those two measures, particularly in 2022-23, recovered £280 million of compliance yield. If there are additional pieces of information and data that I do not have to hand, I am happy to follow up on those in writing.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
Clause 29
Rate of aggregates levy
Question proposed, That the clause stand part of the Bill.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
Clause 29
Rate of aggregates levy
Question proposed, That the clause stand part of the Bill.
14:05:11
Gareth Davies
The clause increases the rate of aggregates levy from 1 April 2024 in line with the retail price index as forecast by the Office for Budget Responsibility when the rate was announced in the 2023 spring Budget. Aggregates levy is a charge on the commercial exploitation of virgin aggregate, which includes rock, sand and gravel. The objective of the aggregates levy is to encourage the use of recycled rather than virgin aggregate in construction. Returning to index-linking the aggregates levy rate following a period of rate freezes will ensure the value of this price incentive does not fall in real terms. The changes made by clause 29 will increase the rate of aggregate from £2 per tonne to £2.03 per tonne.
14:06:31
James Murray
As the Minister set out, the clause increases the rate of the aggregates levy in line with inflation. As the Government policy paper on this matter sets out, the aggregates levy was introduced on 1 April 2002. It is a tax on primary virgin rock, sand or gravel, which is mainly used for bulk fill in construction works. We understand the levy provides an incentive to aggregate producers and construction businesses to use recycled or secondary aggregate.
Interestingly, the rate of the levy has remained frozen at £2 per tonne since 2009. Could the Minister explain why the Government have chosen to raise the levy now, after 15 years of it being frozen? We recognise, of course, that levy rates will need to go up from time to time, but I would be grateful if the Minister could share the Treasury’s thinking behind the timing of this increase. It may, of course, be because there has been such high inflation under this Government in recent years that the increase in a nominal rate has become necessary. I would like to fully understand the Government’s thinking on this, so I would appreciate if the Minister could also confirm what representations were made to the Treasury as it was considering the decision over this rate, and what data was provided to him in making this decision.
Interestingly, the rate of the levy has remained frozen at £2 per tonne since 2009. Could the Minister explain why the Government have chosen to raise the levy now, after 15 years of it being frozen? We recognise, of course, that levy rates will need to go up from time to time, but I would be grateful if the Minister could share the Treasury’s thinking behind the timing of this increase. It may, of course, be because there has been such high inflation under this Government in recent years that the increase in a nominal rate has become necessary. I would like to fully understand the Government’s thinking on this, so I would appreciate if the Minister could also confirm what representations were made to the Treasury as it was considering the decision over this rate, and what data was provided to him in making this decision.
14:08:36
Gareth Davies
The hon. Gentleman raises an understandable and legitimate question that many have asked, and I am happy to provide an answer today. As he points out, the aggregates levy was introduced many years ago and, at its introduction, was designed and introduced with the intention of being index-linked to inflation. However, over a number of years, the tax was subject to a specific piece of ongoing litigation; as a result of that litigation, the Government decided over many years that it would be inappropriate to change the tax and revert to index-linking during that litigation period. As that litigation has now concluded, and a review of the aggregates levy has concluded on the back of that, the Government have decided that it is now the appropriate time to increase the tax and return to how it was originally intended: to index it to inflation.
Question put and agreed to.
Clause 29 accordingly ordered to stand part of the Bill.
Clause 30
Rate of plastic packaging tax
Question proposed, That the clause stand part of the Bill.
Question put and agreed to.
Clause 29 accordingly ordered to stand part of the Bill.
Clause 30
Rate of plastic packaging tax
Question proposed, That the clause stand part of the Bill.
14:09:32
Gareth Davies
The clause makes changes to increase the rate of the plastic packaging tax from 1 April 2024 in line with the consumer price index. The plastic packaging tax is charged on plastic packaging that does not contain at least 30% recycled plastic. It was introduced on 1 April 2022, as part of the Government’s resources and waste strategy. The tax provides an economic incentive to use recycled plastic rather than virgin plastic in packaging. It is designed to create greater demand for recycled plastic, which, in turn, will stimulate more investment in the collection and recycling of plastic waste, diverting it away from landfill and incineration. Increasing the rate of the plastic packaging tax in line with CPI will maintain the real-terms value of the price incentive to use recycled plastic in packaging. Clause 30 increases the rate of the plastic packaging tax from £210.82 to £217.85 per tonne from 1 April 2024.
14:11:13
James Murray
As we heard from the Minister, clause 30 raises the plastic packaging tax in line with CPI, and the change will take effect from 1 April. The Opposition have made clear throughout the introduction and the implementation of the plastic packaging tax that we are supportive of it as an important tool in tackling plastic pollution. The tax was introduced in April 2022 to provide an economic incentive for businesses to use recycled plastic in the manufacture of plastic repackaging. By applying such a tax on products that contain less than 30% recycled plastic, the tax was expected to create greater demand for recycled plastic, which would in turn stimulate increased recycling and the collection of plastic waste, diverting it from landfill or incineration.
As I set out in a Westminster Hall debate in October last year, we in the Opposition agree it is important to tackle less sustainable packaging products, including those from overseas. We also believe that it is important to build resilience here in the UK and that we have a clear, stable policy environment to encourage investment in our country. I was therefore concerned to note that, in response to the Government’s recent announcement that they would consult on a new mass balance approach to chemical recycling, the British Plastics Federation said:
“The lack of clarity to date has prevented companies from investing in the UK and some have looked elsewhere to build facilities.”
With the tax now having been in place for almost two years, what evaluation has the Treasury made of its success, including in building the domestic sector?
As I set out in a Westminster Hall debate in October last year, we in the Opposition agree it is important to tackle less sustainable packaging products, including those from overseas. We also believe that it is important to build resilience here in the UK and that we have a clear, stable policy environment to encourage investment in our country. I was therefore concerned to note that, in response to the Government’s recent announcement that they would consult on a new mass balance approach to chemical recycling, the British Plastics Federation said:
“The lack of clarity to date has prevented companies from investing in the UK and some have looked elsewhere to build facilities.”
With the tax now having been in place for almost two years, what evaluation has the Treasury made of its success, including in building the domestic sector?
Gareth Davies
I am grateful to the hon. Gentleman and I am glad that he supports the taxation, which we were pleased to introduce in 2022. He is right to challenge us on the impact of the tax, and we have been clear that we intend to evaluate this when enough years have passed to be able to fully assess the impact. In December 2023, the Government came forward with a plan to evaluate the plastic packaging tax, and that is now published on gov.uk. I am happy to write to him with the provisions of that plan, which will be carried out to 2026.
The hon. Gentleman talked about the chemical recycling and mass balance approach. He should know that we engage very closely and extensively with industry ahead of fiscal events. On that specific point, we recognise that chemical recycling is a legitimate form of reprocessing plastic waste. However, following the constructive engagement with stakeholders that I described, and across the whole plastic value chain, the Government understand that is not currently possible for businesses to use chemically recycled plastic in packaging and claim a relief from the tax due to the way in which the recycled content is calculated. I assure him that we will continue to engage with the industry, and we know that it is a matter of great importance to it. My hope is that that can form part of the plan to evaluate PPT in due course as well.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 35
Additional information to be contained in returns under TMA 1970 etc
Question proposed, That the clause stand part of the Bill.
The hon. Gentleman talked about the chemical recycling and mass balance approach. He should know that we engage very closely and extensively with industry ahead of fiscal events. On that specific point, we recognise that chemical recycling is a legitimate form of reprocessing plastic waste. However, following the constructive engagement with stakeholders that I described, and across the whole plastic value chain, the Government understand that is not currently possible for businesses to use chemically recycled plastic in packaging and claim a relief from the tax due to the way in which the recycled content is calculated. I assure him that we will continue to engage with the industry, and we know that it is a matter of great importance to it. My hope is that that can form part of the plan to evaluate PPT in due course as well.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 35
Additional information to be contained in returns under TMA 1970 etc
Question proposed, That the clause stand part of the Bill.
14:13:18
The Chair
With this it will be convenient to discuss clause 36 stand part.
Nigel Huddleston
The Financial Secretary to the Treasury
Good afternoon, Mr Paisley. Clause 35 makes changes to improve the data collected by HMRC. That will enable HMRC to collect more accurate and timely information, helping to make tax easier to get right and harder to get wrong, and providing better outcomes for taxpayers and improving compliance. Clause 36 introduces a new simplified and fairer system of penalties for the late submission of tax returns and late payments of tax, for those taxpayers who voluntarily join Making Tax Digital for income tax self-assessment from 6 April 2024.
Turning to clause 35 in a bit more detail, the Government’s economic response to the pandemic was only made possible through the powerful use of data to make big policy decisions and deliver Government interventions. HMRC’s information about employers, employees and the self-employed was key to delivering both the furlough scheme and its self-employed equivalent, the self-employed income support scheme. The pandemic also highlighted gaps where a lack of data meant that the Government could not provide support to specific groups. For example, in the initial phases of the self-employed scheme, some self-employed people were excluded because they had only recently started a business and HMRC did not have the data needed to identify them and their potential entitlement to support.
Turning to clause 35 in a bit more detail, the Government’s economic response to the pandemic was only made possible through the powerful use of data to make big policy decisions and deliver Government interventions. HMRC’s information about employers, employees and the self-employed was key to delivering both the furlough scheme and its self-employed equivalent, the self-employed income support scheme. The pandemic also highlighted gaps where a lack of data meant that the Government could not provide support to specific groups. For example, in the initial phases of the self-employed scheme, some self-employed people were excluded because they had only recently started a business and HMRC did not have the data needed to identify them and their potential entitlement to support.
Clause 35 will allow HMRC to improve the data it collects and will help the Government address some of those gaps, build a tax system more resilient to future economic crises and improve tax compliance. It will give HMRC more data to help develop and target digital nudges and prompts to positively influence changes in customer behaviour and help them to get their tax right first time.
The changes made by clause 35 will require employers, company directors and the self-employed to provide additional data to HMRC. All employers who operate pay-as-you-earn as part of their payroll will be required to provide more detailed information by specifying the number of hours employees are paid for. Employers already must provide this information within broad bands of the number of hours their employees are paid for, but now they will need to provide the actual number of hours paid.
Through self-assessment returns, taxpayers will be required to provide dividend income received from their owner-managed businesses separately from other dividend income, and the percentage share they hold in those businesses. Taxpayers should hold that information already. This change builds on the current requirement to report a global figure of total dividends received from all sources through self-assessment. Again, via their annual self-assessment tax return, the self-employed will be required to provide start and end dates of their self-employment.
We listened carefully to the views expressed in the public consultations. That is why, following initial feedback from stakeholders, the Government narrowed down the data items we proposed to collect from six to three. We are taking a measured and proportionate approach, and are collecting improved data only in areas where taxpayers already hold it or already provide it voluntarily through the tax system. This approach will minimise any additional administrative burdens. It will help both taxpayers and HMRC by enabling efficiencies that will allow HMRC to better help those who most need support.
On clause 36, the Government’s new system of penalties was legislated for in the Finance Act 2021 and introduced for VAT-registered businesses from 1 January 2023. It replaces the current system of immediate financial penalties for late submission of a tax return and late payment of tax with a fairer and simpler regime. The changes made by clause 36 affect taxpayers who voluntarily join the Making Tax Digital for income tax self-assessment service from April 2024.
The new system penalises those who persistently fail to submit returns or pay tax on time, while being more lenient on those who make occasional mistakes. This will create a more consistent penalty regime for VAT and income tax self-assessment taxpayers, and a fairer system overall.
For taxpayers volunteering for the service from April 2024, the reformed penalties will be applied only where an annual filing or payment obligation is not met. They will not be penalised for the late submission of the quarterly updates required by Making Tax Digital. No taxpayers are required to join Making Tax Digital for income tax self-assessment until at least 2026, and that is not changing.
The changes made by clause 35 will require employers, company directors and the self-employed to provide additional data to HMRC. All employers who operate pay-as-you-earn as part of their payroll will be required to provide more detailed information by specifying the number of hours employees are paid for. Employers already must provide this information within broad bands of the number of hours their employees are paid for, but now they will need to provide the actual number of hours paid.
Through self-assessment returns, taxpayers will be required to provide dividend income received from their owner-managed businesses separately from other dividend income, and the percentage share they hold in those businesses. Taxpayers should hold that information already. This change builds on the current requirement to report a global figure of total dividends received from all sources through self-assessment. Again, via their annual self-assessment tax return, the self-employed will be required to provide start and end dates of their self-employment.
We listened carefully to the views expressed in the public consultations. That is why, following initial feedback from stakeholders, the Government narrowed down the data items we proposed to collect from six to three. We are taking a measured and proportionate approach, and are collecting improved data only in areas where taxpayers already hold it or already provide it voluntarily through the tax system. This approach will minimise any additional administrative burdens. It will help both taxpayers and HMRC by enabling efficiencies that will allow HMRC to better help those who most need support.
On clause 36, the Government’s new system of penalties was legislated for in the Finance Act 2021 and introduced for VAT-registered businesses from 1 January 2023. It replaces the current system of immediate financial penalties for late submission of a tax return and late payment of tax with a fairer and simpler regime. The changes made by clause 36 affect taxpayers who voluntarily join the Making Tax Digital for income tax self-assessment service from April 2024.
The new system penalises those who persistently fail to submit returns or pay tax on time, while being more lenient on those who make occasional mistakes. This will create a more consistent penalty regime for VAT and income tax self-assessment taxpayers, and a fairer system overall.
For taxpayers volunteering for the service from April 2024, the reformed penalties will be applied only where an annual filing or payment obligation is not met. They will not be penalised for the late submission of the quarterly updates required by Making Tax Digital. No taxpayers are required to join Making Tax Digital for income tax self-assessment until at least 2026, and that is not changing.
14:20:20
James Murray
As the Minister said, clause 35 makes changes to the types of tax return for which HMRC collects data. According to the Government’s policy paper on this matter, the modifications are for the purpose of improving and enhancing the quality of the data HMRC collects. We understand that the changes are designed to enable HMRC to create regulations specifying additional information it considers relevant to the collection and management of tax.
We understand that HMRC intends to implement three new requirements. First, employers will be required to provide more detailed information on employee hours worked by real-time information PAYE reporting. Secondly, shareholders of owner-managed businesses will be required to provide the amount of dividend income received from their own companies separately from other dividend income, and the percentage share they hold in their own companies via their self-assessment return. Thirdly, the self-employed will be required to provide information on start and end dates of self-employment via their self-assessment return.
The Opposition recognise that this is a significant change, and it is clear from the Government’s policy paper on this matter that it will also incur large costs for businesses. The one-off impact covering transitional costs for businesses is estimated to be £44 million, while the extra ongoing annual administrative burden is estimated to be £9.6 million. The Chartered Institute of Taxation has conveyed its concerns that it seems unrealistic that the average transitional costs to businesses of providing the data on employee hours will be just £18.42. Does the Minister believe that the costings are accurate for businesses that will need to plan for the new requirements?
Beyond the forecast costs to businesses, there is also the question of data gathering and its purpose. This clause gives HMRC the power to collect taxpayers’ data. Is the Minister confident that the legislation provides appropriate authorisation for the purposes of the measure? The Institute of Chartered Accountants in England and Wales is concerned that it has not been fully explained why data concerning employee hours is relevant for the purposes of the collection or management of the taxes listed in section 1 of the Taxes Management Act 1970. The Institute believes that the legislation will not work to obligate employers to report hours worked to hours paid, as hours worked are not needed for the collection and management of tax. I would be grateful to know the Minister’s response to this concern.
We recognise that the timescale for introducing these measures is 2025-26, which will require HMRC to be ready and businesses to have got to grips with the necessary processes, guidance and software by then. What engagement has the Minister or HMRC had with businesses about this timescale, and has the Treasury considered drafting regulations for consultation prior to the legislation being enacted?
Clause 36 makes changes to the existing regulation-making powers that enable the Treasury to bring into force the penalties set out in schedules 24 to 27 of the Finance Act 2021. The new system that the schedules in the 2021 Act introduced will impose points-based sanctions for late submissions of returns and penalties for late payment of tax liabilities. We understand that the Government are planning for this system to come into effect with relevant self-assessment customers from 6 April 2026, through Making Tax Digital. Our understanding is that clause 36 will affect only volunteers who agree to test out the MTD system, which will therefore be before 6 April 2026. For the avoidance of doubt, will the Minister confirm that that is the case and make absolutely clear what penalties and sanctions such volunteers could face? Could he also confirm exactly what is meant, in the explanatory notes to the Bill, by the phrase:
“Where a change in circumstances means that HM Revenue and Customs does not have the functionality to support a customer, they may be moved back into the existing penalty regime.”?
There is a wider question about the timetable for delivering Making Tax Digital, which has slipped again and again. I would therefore be grateful if the Minister could make clear whether he has full confidence that the introduction of MTD for the self-assessment customers who are mandated for it is on track to happen by 6 April 2026.
We understand that HMRC intends to implement three new requirements. First, employers will be required to provide more detailed information on employee hours worked by real-time information PAYE reporting. Secondly, shareholders of owner-managed businesses will be required to provide the amount of dividend income received from their own companies separately from other dividend income, and the percentage share they hold in their own companies via their self-assessment return. Thirdly, the self-employed will be required to provide information on start and end dates of self-employment via their self-assessment return.
The Opposition recognise that this is a significant change, and it is clear from the Government’s policy paper on this matter that it will also incur large costs for businesses. The one-off impact covering transitional costs for businesses is estimated to be £44 million, while the extra ongoing annual administrative burden is estimated to be £9.6 million. The Chartered Institute of Taxation has conveyed its concerns that it seems unrealistic that the average transitional costs to businesses of providing the data on employee hours will be just £18.42. Does the Minister believe that the costings are accurate for businesses that will need to plan for the new requirements?
Beyond the forecast costs to businesses, there is also the question of data gathering and its purpose. This clause gives HMRC the power to collect taxpayers’ data. Is the Minister confident that the legislation provides appropriate authorisation for the purposes of the measure? The Institute of Chartered Accountants in England and Wales is concerned that it has not been fully explained why data concerning employee hours is relevant for the purposes of the collection or management of the taxes listed in section 1 of the Taxes Management Act 1970. The Institute believes that the legislation will not work to obligate employers to report hours worked to hours paid, as hours worked are not needed for the collection and management of tax. I would be grateful to know the Minister’s response to this concern.
We recognise that the timescale for introducing these measures is 2025-26, which will require HMRC to be ready and businesses to have got to grips with the necessary processes, guidance and software by then. What engagement has the Minister or HMRC had with businesses about this timescale, and has the Treasury considered drafting regulations for consultation prior to the legislation being enacted?
Clause 36 makes changes to the existing regulation-making powers that enable the Treasury to bring into force the penalties set out in schedules 24 to 27 of the Finance Act 2021. The new system that the schedules in the 2021 Act introduced will impose points-based sanctions for late submissions of returns and penalties for late payment of tax liabilities. We understand that the Government are planning for this system to come into effect with relevant self-assessment customers from 6 April 2026, through Making Tax Digital. Our understanding is that clause 36 will affect only volunteers who agree to test out the MTD system, which will therefore be before 6 April 2026. For the avoidance of doubt, will the Minister confirm that that is the case and make absolutely clear what penalties and sanctions such volunteers could face? Could he also confirm exactly what is meant, in the explanatory notes to the Bill, by the phrase:
“Where a change in circumstances means that HM Revenue and Customs does not have the functionality to support a customer, they may be moved back into the existing penalty regime.”?
There is a wider question about the timetable for delivering Making Tax Digital, which has slipped again and again. I would therefore be grateful if the Minister could make clear whether he has full confidence that the introduction of MTD for the self-assessment customers who are mandated for it is on track to happen by 6 April 2026.
14:24:09
Nigel Huddleston
I thank the hon. Gentleman very much for those questions and comments. I think he has a good understanding of the purpose behind the changes we are making, particularly in the context of the anxiety that many of our constituents face. We all had correspondence on this during the pandemic, when people were frustrated at not necessarily being able to get some of the support mechanisms for which they believed they were eligible because of that lack of information and data.
The macro point and the purpose behind the changes is well understood, and the hon. Gentleman is right to focus on the micro points. When it comes to the voluntary process, for example, which I will come on to in a moment, the whole point of having it is to learn before we make it mandatory. We expect and anticipate that we will need to learn from this experience, but going through that voluntary step first seems like a good process.
The hon. Gentleman mentioned the administrative burden on businesses as a result of this ask. We have chosen three out of the six because the information should be on hand or readily available already, so what we are endeavouring to do should be relatively straightforward. HMRC has been exploring with stake-holders how best to implement the proposals in a way that minimises burdens on businesses. No one wants to put a disproportionate administrative burden on businesses, but for the reasons that I outlined in the introductory comments, we see an upside to asking for the information. In practical terms, it will help nudging and supporting businesses to ensure that their taxes right. Should we face a situation such as the pandemic again, we will be in a much better position to understand the nature of businesses.
The hon. Member for Ealing North mentioned data and gave a total cost of £45 million for implementation of the measures. For the hours-worked data, the total estimated one-off cost to businesses is about £35 million. In subsequent years, the ongoing cost will and should be negligible. For the dividends data, the total estimated up-front cost is about £9 million; again, that remains consistent for subsequent years. For the start and end dates, there are negligible one-off costs, with total year-on-year costs estimated at about £600,000. Those costs are the current estimates based on the standard modelling approach and the measuring of administrative burden. We will of course keep a close eye on the costs.
I mentioned the variety of purposes and means by which that information could be useful, but the hon. Gentleman also made a point about information sharing, an issue that many stakeholders raised in the process of our updating this policy. I should note the work of the House of Lords Sub-Committee that investigated these issues and asked me similar questions not so long ago. I refer hon. Members to the answers I gave there, as well as further support. I want to provide the assurance, however, that there are strict laws about the sharing of data between Departments.
HMRC’s ability to disclose the information it holds to anyone is restricted by the Commissioners for Revenue and Customs Act 2005. Only by acting in accordance with the provisions of the Act can HMRC ensure that information is disclosed in a lawful way. Section 18 of the Act provides that HMRC must not disclose HMRC information to anyone unless there is a lawful authority to do so, and that includes other Departments and their agencies, local authorities, the police or any other public authority.
As I said, I am happy to respond further to the hon. Gentleman or to make further comments if I have not answered all the questions. However, I commend the clause to the Committee.
Question put and agreed to.
Clause 35 accordingly ordered to stand part of the Bill.
Clause 36 ordered to stand part of the Bill.
Clause 37
Abbreviations used in the Act
Question proposed, That the clause stand part of the Bill.
The macro point and the purpose behind the changes is well understood, and the hon. Gentleman is right to focus on the micro points. When it comes to the voluntary process, for example, which I will come on to in a moment, the whole point of having it is to learn before we make it mandatory. We expect and anticipate that we will need to learn from this experience, but going through that voluntary step first seems like a good process.
The hon. Gentleman mentioned the administrative burden on businesses as a result of this ask. We have chosen three out of the six because the information should be on hand or readily available already, so what we are endeavouring to do should be relatively straightforward. HMRC has been exploring with stake-holders how best to implement the proposals in a way that minimises burdens on businesses. No one wants to put a disproportionate administrative burden on businesses, but for the reasons that I outlined in the introductory comments, we see an upside to asking for the information. In practical terms, it will help nudging and supporting businesses to ensure that their taxes right. Should we face a situation such as the pandemic again, we will be in a much better position to understand the nature of businesses.
The hon. Member for Ealing North mentioned data and gave a total cost of £45 million for implementation of the measures. For the hours-worked data, the total estimated one-off cost to businesses is about £35 million. In subsequent years, the ongoing cost will and should be negligible. For the dividends data, the total estimated up-front cost is about £9 million; again, that remains consistent for subsequent years. For the start and end dates, there are negligible one-off costs, with total year-on-year costs estimated at about £600,000. Those costs are the current estimates based on the standard modelling approach and the measuring of administrative burden. We will of course keep a close eye on the costs.
I mentioned the variety of purposes and means by which that information could be useful, but the hon. Gentleman also made a point about information sharing, an issue that many stakeholders raised in the process of our updating this policy. I should note the work of the House of Lords Sub-Committee that investigated these issues and asked me similar questions not so long ago. I refer hon. Members to the answers I gave there, as well as further support. I want to provide the assurance, however, that there are strict laws about the sharing of data between Departments.
HMRC’s ability to disclose the information it holds to anyone is restricted by the Commissioners for Revenue and Customs Act 2005. Only by acting in accordance with the provisions of the Act can HMRC ensure that information is disclosed in a lawful way. Section 18 of the Act provides that HMRC must not disclose HMRC information to anyone unless there is a lawful authority to do so, and that includes other Departments and their agencies, local authorities, the police or any other public authority.
As I said, I am happy to respond further to the hon. Gentleman or to make further comments if I have not answered all the questions. However, I commend the clause to the Committee.
Question put and agreed to.
Clause 35 accordingly ordered to stand part of the Bill.
Clause 36 ordered to stand part of the Bill.
Clause 37
Abbreviations used in the Act
Question proposed, That the clause stand part of the Bill.
14:27:34
The Chair
With this it will be convenient to discuss clause 38 stand part.
14:27:54
Nigel Huddleston
Finally, clauses 37 and 38 simply set out the Bill’s legal interpretation and short title in the usual manner for such legislation. I commend them to the Committee.
James Murray
We have no concerns about clauses 37 and 38, you will be pleased to hear, Mr Paisley.
As this may be the last time I get to contribute to the debate today—
As this may be the last time I get to contribute to the debate today—
14:28:05
The Chair
Order. We still have the new clauses to debate.
James Murray
I am not intending to speak to any new clauses, so I thought to take this opportunity simply to thank you, Mr Paisley, for chairing, and to thank all the Clerks and House authorities. I thank all Members, Opposition Members in particular, and the third parties, including the Chartered Institute of Taxation, the Low Incomes Tax Reform Group, the Association of Taxation Technicians and the ICAEW, whose input has been invaluable.
14:28:32
The Chair
Thank you for those comments. I am sure people will appreciate what you have said. I also thank you for your contributions.
Question put and agreed to.
Clause 37 accordingly ordered to stand part of the Bill.
Clause 38 ordered to stand part of the Bill.
New Clause 1
Assessment of impact of the Act on compliance with climate change target
“(1) The Chancellor of the Exchequer must, within one year of this Act being passed, publish an assessment of the impact of this Act on the Government's ability to meet—
(a) the duty under section 1 of the Climate Change Act 2008 (the target for 2050), and
(b) its obligations and commitments under the Paris Agreement of 2015.”—(Drew Hendry.)
This new clause would require the Chancellor to publish an assessment of the impact of the Act on the UK Government's ability to meet its duty to achieve Net Zero by 2050 and its obligations under the Paris Agreement.
Brought up, and read the First time.
Question put and agreed to.
Clause 37 accordingly ordered to stand part of the Bill.
Clause 38 ordered to stand part of the Bill.
New Clause 1
Assessment of impact of the Act on compliance with climate change target
“(1) The Chancellor of the Exchequer must, within one year of this Act being passed, publish an assessment of the impact of this Act on the Government's ability to meet—
(a) the duty under section 1 of the Climate Change Act 2008 (the target for 2050), and
(b) its obligations and commitments under the Paris Agreement of 2015.”—(Drew Hendry.)
This new clause would require the Chancellor to publish an assessment of the impact of the Act on the UK Government's ability to meet its duty to achieve Net Zero by 2050 and its obligations under the Paris Agreement.
Brought up, and read the First time.
14:29:02
Drew Hendry
Inverness, Nairn, Badenoch and Strathspey
I beg to move, That the clause be read a Second time.
As we have heard today, the range of subjects we have covered has included air, road, shipping and much more, and yet the issue of climate change has not made a significant appearance, to the detriment of our proceedings. There is a climate emergency, and the public demand clarity on what is being done. The UK Government have shown time and time again that they do not take their published climate ambitions seriously and that they will simply, as they have demonstrated in recent months, do a U-turn on previous commitments and promises at the drop of a hat. Even their own former COP President says that they are not being serious on this issue.
As we have heard today, the range of subjects we have covered has included air, road, shipping and much more, and yet the issue of climate change has not made a significant appearance, to the detriment of our proceedings. There is a climate emergency, and the public demand clarity on what is being done. The UK Government have shown time and time again that they do not take their published climate ambitions seriously and that they will simply, as they have demonstrated in recent months, do a U-turn on previous commitments and promises at the drop of a hat. Even their own former COP President says that they are not being serious on this issue.
We know how damaging that is, not only from an environmental perspective but in the sense that the UK Government greatly undermine investor confidence in renewables across the nations of the UK. UK investment levels have fallen to 4.45%, compared with almost 10% worldwide. The UK cannot keep delaying and muddying the rising waters on climate change. The UK Government are shirking their responsibilities even as we face this emergency. Surely it is time that this Bill and every Bill that this House passes had a requirement to demonstrate that it is compatible with the UK targets, so when the appropriate time comes, Mr Paisley, I will press the new clause to a vote.
14:31:08
Nigel Huddleston
It will not surprise you to learn, Mr Paisley, that I respectfully disagree with many of the comments made by the hon. Member for Inverness, Nairn, Badenoch and Strathspey. The Government are—[Interruption.] As I said and as always, I disagree respectfully. The Government are fully committed to delivering on our legal obligations to reach net zero emissions by 2050. The net zero strategy and the “Powering Up Britain” publication set out the actions that the Government will take to keep the UK on track for its carbon budgets, and establish the long-term pathway to net zero. The UK has already made good progress, reducing emissions by 48% between 1990 and 2021, faster than any other G7 country.
The autumn statement delivered the cross-economy enabling environment for investment that will be vital to deliver the net zero transition. It did so with measures such as permanent full expensing for plant and machinery investments, accelerating grid connections, and reforming planning. The package provides long-term certainty for industry to invest in decarbonisation and supports firms through the transition.
The Secretary of State for Energy Security and Net Zero is responsible for upholding duties under the Climate Change Act 2008, but His Majesty’s Treasury and HMRC consider climate change and the environmental implications of relevant tax measures, with a climate assessment published in all relevant tax information and impact notes. HMT and HMRC are exploring options to strengthen the analytical approach to monitoring, evaluating and quantifying the environmental impacts of tax measures.
Given all the work that is under way and the substantive work on these issues that has already taken place, I urge the Committee to reject new clause 1.
Question put, That the clause be read a Second time.
The autumn statement delivered the cross-economy enabling environment for investment that will be vital to deliver the net zero transition. It did so with measures such as permanent full expensing for plant and machinery investments, accelerating grid connections, and reforming planning. The package provides long-term certainty for industry to invest in decarbonisation and supports firms through the transition.
The Secretary of State for Energy Security and Net Zero is responsible for upholding duties under the Climate Change Act 2008, but His Majesty’s Treasury and HMRC consider climate change and the environmental implications of relevant tax measures, with a climate assessment published in all relevant tax information and impact notes. HMT and HMRC are exploring options to strengthen the analytical approach to monitoring, evaluating and quantifying the environmental impacts of tax measures.
Given all the work that is under way and the substantive work on these issues that has already taken place, I urge the Committee to reject new clause 1.
Question put, That the clause be read a Second time.
Division: 1 held at 0 Ayes: 2 Noes: 9
Brought up, and read the First time.
14:34:25
Drew Hendry
I beg to move, That the clause be read a Second time.
As the explanatory statement suggests, this is the opportunity for the Chancellor to publish an assessment of the impact of the Act on public finances and the cost of living crisis. The cold weather is really biting today across the nations of the UK, and people are having to turn up their heating to be able to simply survive. They are suffering already higher energy bills, boosted by the further 5% increase at the start of this month. The same families are struggling with soaring food costs, higher rents, higher mortgages and much more. The SNP’s issue with the Bill lies primarily in what has been omitted: help for those struggling families.
The UK Government seem determined to completely ignore the realities facing people across the UK. For example, just a few days ago, it was revealed that a quarter of a million children could be lifted out of poverty if the UK Government took the simple and humane step of scrapping the two-child limit, with an additional 850,000 children pulled out of deepening poverty if the policy was removed. In the absence of such measures, and many others to support people suffering from the cost of living crisis, such as the £400 energy rebate that we called for, we believe that it is incumbent on the UK Government to report on the measures that they are taking and how they are affecting the cost of living, particularly in relation to rising household costs.
As the explanatory statement suggests, this is the opportunity for the Chancellor to publish an assessment of the impact of the Act on public finances and the cost of living crisis. The cold weather is really biting today across the nations of the UK, and people are having to turn up their heating to be able to simply survive. They are suffering already higher energy bills, boosted by the further 5% increase at the start of this month. The same families are struggling with soaring food costs, higher rents, higher mortgages and much more. The SNP’s issue with the Bill lies primarily in what has been omitted: help for those struggling families.
The UK Government seem determined to completely ignore the realities facing people across the UK. For example, just a few days ago, it was revealed that a quarter of a million children could be lifted out of poverty if the UK Government took the simple and humane step of scrapping the two-child limit, with an additional 850,000 children pulled out of deepening poverty if the policy was removed. In the absence of such measures, and many others to support people suffering from the cost of living crisis, such as the £400 energy rebate that we called for, we believe that it is incumbent on the UK Government to report on the measures that they are taking and how they are affecting the cost of living, particularly in relation to rising household costs.
Nigel Huddleston
I afraid that we are going to have yet another phase of respectful disagreement with the hon. Gentleman.
New clause 2 would require the Government to report on the likely impact of the measures in the Bill on public finances and the cost of living. Numerous Departments and Government bodies already have mechanisms in place to systematically monitor and evaluate the impact of Government policy on public finances and households across the UK. Those mechanisms are effective and ongoing, making the proposed new clause redundant.
It is the role of the Office for Budget Responsibility to produce official forecasts for the public finances twice a year, usually alongside a fiscal event. Those forecasts are produced independent of Ministers, objectively, transparently and impartially, as set out clearly by law. Furthermore, when considering specific pressures on the cost of living, mechanisms are already in place to assess the impact of Government policies on households’ personal finances. The Office for National Statistics plays a role in providing monthly updates through its “Cost of living latest insights” article, offering comprehensive data and showing trends.
In addition, our commitment extends to long-standing surveys and initiatives, including the family resources survey initiated in 1992; the living costs and food survey, which commenced in 2008; and the annual survey of hours and earnings, which has collected data since 1998. The Department for Work and Pensions also plays a crucial role with the annual publication of the “Households below average income” report, which monitors poverty and inequality trends across the UK, with emphasis on the wellbeing of the most vulnerable members of society.
Since 2010, His Majesty’s Treasury has published an “Impact on households” report at major fiscal events, to scrutinise the distributional impact of Government measures on personal finances across income groups. Distributional analysis published at the autumn statement 2023 shows that the typical household at any income level will see a net benefit in 2023-24 and 2024-25 following Government decisions made from autumn statement 2022 onwards. Low-income households will see the largest benefit as a percentage of income. Furthermore, looking across all tax, welfare and spending decisions made since the spending round 2019, the impact of Government action continues to be progressive, with the poorest households receiving the largest benefit as a percentage of income in 2024-25.
We believe that the mechanisms currently in place are effective in providing the necessary insights into the impact of the measures proposed in the Bill. In the light of those efforts and commitments, I urge the Committee to reject new clause 2.
Question put, That the clause be read a Second time.
New clause 2 would require the Government to report on the likely impact of the measures in the Bill on public finances and the cost of living. Numerous Departments and Government bodies already have mechanisms in place to systematically monitor and evaluate the impact of Government policy on public finances and households across the UK. Those mechanisms are effective and ongoing, making the proposed new clause redundant.
It is the role of the Office for Budget Responsibility to produce official forecasts for the public finances twice a year, usually alongside a fiscal event. Those forecasts are produced independent of Ministers, objectively, transparently and impartially, as set out clearly by law. Furthermore, when considering specific pressures on the cost of living, mechanisms are already in place to assess the impact of Government policies on households’ personal finances. The Office for National Statistics plays a role in providing monthly updates through its “Cost of living latest insights” article, offering comprehensive data and showing trends.
In addition, our commitment extends to long-standing surveys and initiatives, including the family resources survey initiated in 1992; the living costs and food survey, which commenced in 2008; and the annual survey of hours and earnings, which has collected data since 1998. The Department for Work and Pensions also plays a crucial role with the annual publication of the “Households below average income” report, which monitors poverty and inequality trends across the UK, with emphasis on the wellbeing of the most vulnerable members of society.
Since 2010, His Majesty’s Treasury has published an “Impact on households” report at major fiscal events, to scrutinise the distributional impact of Government measures on personal finances across income groups. Distributional analysis published at the autumn statement 2023 shows that the typical household at any income level will see a net benefit in 2023-24 and 2024-25 following Government decisions made from autumn statement 2022 onwards. Low-income households will see the largest benefit as a percentage of income. Furthermore, looking across all tax, welfare and spending decisions made since the spending round 2019, the impact of Government action continues to be progressive, with the poorest households receiving the largest benefit as a percentage of income in 2024-25.
We believe that the mechanisms currently in place are effective in providing the necessary insights into the impact of the measures proposed in the Bill. In the light of those efforts and commitments, I urge the Committee to reject new clause 2.
Question put, That the clause be read a Second time.
Division: 2 held at 0 Ayes: 2 Noes: 9
Brought up, and read the First time.
14:14:41
Debbie Abrahams
Oldham East and Saddleworth
I beg to move, That the clause be read a Second time.
It has been a pleasure to serve under your chairship during today’s proceedings, Mr Paisley. New clause 3 would compel the Chancellor to assess the impacts of the Finance Bill on poverty, inequality, and health and healthcare demand across the UK, and to lay a report before the House within six months of Royal Assent.
Let me expand a little on why the new clause is so important. This is the first opportunity I have had to come to a Finance Bill Committee to advance these arguments, although I have regularly made them on Report and Third Reading. The new clause partly reflects my experience as a former public health consultant and academic, and relates to one of the reasons that I became an MP. It is about tackling health inequalities. It is not about changing anything in the Bill; it is about understanding what its impact will be. It is about our not working in silos and understanding the Bill’s impact on the NHS, education and so on. That is why I tabled it.
The new clause is also about transparency, to which the Prime Minister is very committed. It will have an important impact on the electorate’s lack of confidence not just in the Government, but in politics and all politicians. It is important that we are seen to be transparent and to be evaluating the work that we do. We can do that in a prospective way that anticipates what the impacts will be.
Finally, although the Government have a massive commitment to levelling up, we are experiencing one of the biggest health divides since 1980. I refer to 1980 because that was when our real understanding of the relationship between poverty and health began. The Black report was in 1980, and it was followed by Dame Margaret Whitehead, my former colleague at the University of Liverpool, authoring “The Health Divide”, which described the socioeconomic inequalities that drive health inequalities. Of course, that was in post-war Britain—a Britain with the NHS. Everybody thought that the NHS would be the saviour that would end all our health woes.
Evidence of the relationship between poverty and health has increased. “The Spirit Level”, by Professors Pickett and Wilkinson, showed that this is a universal experience and not just one in the UK. Health is driven by inequalities in societies right across the world. Indeed, it is almost a universal law that most of the societies with the smallest gaps between rich and poor do better than other societies, not just in health but in social mobility, crime reduction, increasing trust and so on, which are things that I think all of us here would subscribe to.
It has been a pleasure to serve under your chairship during today’s proceedings, Mr Paisley. New clause 3 would compel the Chancellor to assess the impacts of the Finance Bill on poverty, inequality, and health and healthcare demand across the UK, and to lay a report before the House within six months of Royal Assent.
Let me expand a little on why the new clause is so important. This is the first opportunity I have had to come to a Finance Bill Committee to advance these arguments, although I have regularly made them on Report and Third Reading. The new clause partly reflects my experience as a former public health consultant and academic, and relates to one of the reasons that I became an MP. It is about tackling health inequalities. It is not about changing anything in the Bill; it is about understanding what its impact will be. It is about our not working in silos and understanding the Bill’s impact on the NHS, education and so on. That is why I tabled it.
The new clause is also about transparency, to which the Prime Minister is very committed. It will have an important impact on the electorate’s lack of confidence not just in the Government, but in politics and all politicians. It is important that we are seen to be transparent and to be evaluating the work that we do. We can do that in a prospective way that anticipates what the impacts will be.
Finally, although the Government have a massive commitment to levelling up, we are experiencing one of the biggest health divides since 1980. I refer to 1980 because that was when our real understanding of the relationship between poverty and health began. The Black report was in 1980, and it was followed by Dame Margaret Whitehead, my former colleague at the University of Liverpool, authoring “The Health Divide”, which described the socioeconomic inequalities that drive health inequalities. Of course, that was in post-war Britain—a Britain with the NHS. Everybody thought that the NHS would be the saviour that would end all our health woes.
Evidence of the relationship between poverty and health has increased. “The Spirit Level”, by Professors Pickett and Wilkinson, showed that this is a universal experience and not just one in the UK. Health is driven by inequalities in societies right across the world. Indeed, it is almost a universal law that most of the societies with the smallest gaps between rich and poor do better than other societies, not just in health but in social mobility, crime reduction, increasing trust and so on, which are things that I think all of us here would subscribe to.
Then there is Professor Sir Michael Marmot’s totemic 2010 work, “Fair Society, Healthy Lives”, which set out six objectives that we as a country need to meet to address socioeconomic inequalities and the resulting health inequalities. He warned us in 2017, when he was monitoring the progress towards those six objectives, that we were one of the few developed economies in which life expectancy was flatlining. Then, in 2020, just before the pandemic, he published his 10-year review, which showed that life expectancy was not only flatlining but actually declining for women and in the most deprived parts of our country. We shared that unenviable state with the United States and Iceland; with us, they were the only advanced economies where life expectancy was declining. Indeed, that review was about not just our life expectancy but our healthy life expectancy—how long we could expect to live in good health and how long we would be active in the labour market. Finally, he noted that there was an even more stark north-south health divide.
Then covid hit. Would you believe it? It has not come out very much, but we saw exactly the same patterns of ill health, infection and death during the pandemic as we had seen before the pandemic in other conditions, such as heart disease. Sir Michael provided another update just last week in a report called “Lives Cut Short”. He said in The BMJ just yesterday that
As I said, I speak as a former academic who specialised in public health. To date, I have seen no evidence that policymakers are taking this issue on board and learning these lessons; indeed, we are failing to learn the lessons not only from an economic perspective but from the perspective of social justice. I urge people to watch a short film called “The Unequal Pandemic”, which shows not only the human cost of this situation but the evidence behind it.
Regarding evidence, I know that the Ministers will be interested in the fact that the Northern Health Science Alliance has argued that the relationship between health and wealth must be looked at, and that health and wealth must be looked at together. The alliance has calculated that improving the health of people in the north of England to the level of people in the rest of England would increase productivity by £13.2 billion a year. It is, therefore, in the Chancellor’s interest to do a full health assessment of all the measures in the autumn statement.
I am the chair of the all-party parliamentary group on health in all policies, which seeks to assess the health effects of Government policies. We have assessed a couple of Government policies already—people can see those assessments on my website—so I know that assessing the health effects of all Government policies is possible. It is not about primary data collection; it is about looking at secondary data and modelling it to see what the health impacts of policies are. It is possible to do this work.
Mr Paisley, thank you very much for your indulgence. Professor Sir Michael Marmot finished his piece in The BMJ by asking us to provide hope that we, as politicians, recognise and understand that we cannot go on like this. I agree with him. I will not press my new clause to a vote, but I urge Ministers to consider this matter seriously.
Then covid hit. Would you believe it? It has not come out very much, but we saw exactly the same patterns of ill health, infection and death during the pandemic as we had seen before the pandemic in other conditions, such as heart disease. Sir Michael provided another update just last week in a report called “Lives Cut Short”. He said in The BMJ just yesterday that
As I said, I speak as a former academic who specialised in public health. To date, I have seen no evidence that policymakers are taking this issue on board and learning these lessons; indeed, we are failing to learn the lessons not only from an economic perspective but from the perspective of social justice. I urge people to watch a short film called “The Unequal Pandemic”, which shows not only the human cost of this situation but the evidence behind it.
Regarding evidence, I know that the Ministers will be interested in the fact that the Northern Health Science Alliance has argued that the relationship between health and wealth must be looked at, and that health and wealth must be looked at together. The alliance has calculated that improving the health of people in the north of England to the level of people in the rest of England would increase productivity by £13.2 billion a year. It is, therefore, in the Chancellor’s interest to do a full health assessment of all the measures in the autumn statement.
I am the chair of the all-party parliamentary group on health in all policies, which seeks to assess the health effects of Government policies. We have assessed a couple of Government policies already—people can see those assessments on my website—so I know that assessing the health effects of all Government policies is possible. It is not about primary data collection; it is about looking at secondary data and modelling it to see what the health impacts of policies are. It is possible to do this work.
Mr Paisley, thank you very much for your indulgence. Professor Sir Michael Marmot finished his piece in The BMJ by asking us to provide hope that we, as politicians, recognise and understand that we cannot go on like this. I agree with him. I will not press my new clause to a vote, but I urge Ministers to consider this matter seriously.
14:49:47
Nigel Huddleston
I should state at the beginning of my remarks that I completely understand the intent of new clause 3, because the hon. Lady is raising issues that are of great concern to hon. Members right across the House. However, she will not be surprised to hear that, once again, I respectfully disagree with her on the need for these assessments. We believe the proposed new clause is redundant because there are existing mechanisms in place to monitor and evaluate the impact of Government policy on public health inequality and poverty.
Debbie Abrahams
On that basis, I did ask a question at the autumn statement. In relation to the social security measures, I asked what were the anticipated impacts on the health of social security claimants. I have heard nothing back from anyone on that. If that evidence exists, what is it?
Nigel Huddleston
I shall respond to the hon. Lady on the plethora of analysis and support that goes on for a range of policy areas. We are not lacking in either interest in this area or consideration of impact. As I said, there are numerous Government Departments, bodies and other mechanisms already in place to systematically collect, monitor and evaluate the impact of Government policy across the UK.
The Department of Health and Social Care and its arm’s length bodies are responsible for developing and evaluating policies to help people to live more independent, healthier lives for longer. As part of DHSC, the Office for Health Improvement and Disparities works across DHSC, the rest of Government, the healthcare system, local government and industry, to shift focus toward preventing ill health, particularly in places where there are the most significant disparities. DHSC also invests in research and evaluation through the National Institute for Health and Care Research, which delivers robust evidence to inform policy development and implementation, including evaluation of policies and research to fill longer term evidence needs and gaps.
The Treasury carefully considers the impact of its decisions on those sharing protected characteristics, in line with both our legal obligations and our strong commitment to providing fairness. We go beyond our legal requirements by publishing a summary of equality impacts for tax measures within the tax information and impact notes alongside the Finance Bill.
Various parts of Government, including from within the Cabinet Office’s equality hub, promote the Government’s commitment to levelling up opportunity and ensuring fairness for all. The hub includes the Government Equalities Office, the Race Disparity Unit, the Disability Unit, and the Social Mobility Commission, all of which provide valuable input.
As I mentioned in answer to new clause 2, since 2010 the Treasury also publishes an “Impact on households” report at major fiscal events, but I will not repeat the comments I made there. The “Households below average income” report also provides valuable input. For example, in 2021-22, there were 1.7 million fewer people in absolute poverty after household costs than in 2009-10, including 400,000 fewer children, 1 million fewer working-age adults, and 200,000 fewer pensioners. We believe the mechanisms currently in place are effective in providing the necessary insight, so I urge the Committee to reject new clause 3.
The Department of Health and Social Care and its arm’s length bodies are responsible for developing and evaluating policies to help people to live more independent, healthier lives for longer. As part of DHSC, the Office for Health Improvement and Disparities works across DHSC, the rest of Government, the healthcare system, local government and industry, to shift focus toward preventing ill health, particularly in places where there are the most significant disparities. DHSC also invests in research and evaluation through the National Institute for Health and Care Research, which delivers robust evidence to inform policy development and implementation, including evaluation of policies and research to fill longer term evidence needs and gaps.
The Treasury carefully considers the impact of its decisions on those sharing protected characteristics, in line with both our legal obligations and our strong commitment to providing fairness. We go beyond our legal requirements by publishing a summary of equality impacts for tax measures within the tax information and impact notes alongside the Finance Bill.
Various parts of Government, including from within the Cabinet Office’s equality hub, promote the Government’s commitment to levelling up opportunity and ensuring fairness for all. The hub includes the Government Equalities Office, the Race Disparity Unit, the Disability Unit, and the Social Mobility Commission, all of which provide valuable input.
As I mentioned in answer to new clause 2, since 2010 the Treasury also publishes an “Impact on households” report at major fiscal events, but I will not repeat the comments I made there. The “Households below average income” report also provides valuable input. For example, in 2021-22, there were 1.7 million fewer people in absolute poverty after household costs than in 2009-10, including 400,000 fewer children, 1 million fewer working-age adults, and 200,000 fewer pensioners. We believe the mechanisms currently in place are effective in providing the necessary insight, so I urge the Committee to reject new clause 3.
Debbie Abrahams
I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Question proposed, That the Chair do report the Bill to the House.
Clause, by leave, withdrawn.
Question proposed, That the Chair do report the Bill to the House.
14:40:55
Nigel Huddleston
On a point of order, Mr Paisley. Before you conclude your comments, I think this is an appropriate opportunity for me to make similar comments and thanks to those made by my opposite number. I agree with everything he said. I put on record my thanks to you, Mr Paisley, and your co-Chair, who did not have the opportunity to participate in this Bill; there will be other opportunities in the future.
Of course, I thank the Clerks and all officials who have worked on this Bill across multiple Government Departments, including His Majesty’s Treasury and His Majesty’s Revenue and Customs, but it goes well beyond that. I thank members of the Committee in this place, and also members of the House of Lords Sub-Committee for their input and work. I also thank all those stakeholders who have provided invaluable input. Some have provided specific input recently in the form of written submissions to this stage of the process, but many have participated over many years in extensive formal and informal consultations. I put on record our deep gratitude and thanks to all those who have taken their responsibilities and interests incredibly seriously, providing great input into this Bill to date.
Of course, I thank the Clerks and all officials who have worked on this Bill across multiple Government Departments, including His Majesty’s Treasury and His Majesty’s Revenue and Customs, but it goes well beyond that. I thank members of the Committee in this place, and also members of the House of Lords Sub-Committee for their input and work. I also thank all those stakeholders who have provided invaluable input. Some have provided specific input recently in the form of written submissions to this stage of the process, but many have participated over many years in extensive formal and informal consultations. I put on record our deep gratitude and thanks to all those who have taken their responsibilities and interests incredibly seriously, providing great input into this Bill to date.
The Chair
Thank you for those comments, Minister. We have had a brace of Ministers, shadow Ministers and Committee Clerks. We did not have a brace of Chairs, but we did have the Statler and Waldorf-esque Parliamentary Private Secretaries in a brace. Thank you all for this vital work that Parliament does. The line-by- line scrutiny of the Bill is serious work, and people taking their time to really do this line-by-line is appreciated. I know that the staff, Clerks and Hansard will be appreciative of your kind comments, Minister, and yours too, Mr Murray.
Question put and agreed to.
Bill accordingly to be reported, without amendment.
Question put and agreed to.
Bill accordingly to be reported, without amendment.
Committee rose.
FB01 Low Incomes Tax Reform Group—Clause 16 and Schedule 10—Provision relating to the cash basis
FB02 Low Incomes Tax Reform Group—Clause 36— Commencement of rules imposing penalties for failure to make returns etc
FB03 Chartered Institute of Taxation—Clause 16 and Schedule 10—Calculation of trade profits etc (cash basis)
FB04 Chartered Institute of Taxation—Clause 35— Additional information to be contained in returns under TMA 1970 etc
FB05 ICAEW Tax Faculty—Clause 14 Provision in connection with abolition of the lifetime allowance charge, and Schedule 9 Pensions
FB06 ICAEW Tax Faculty—Clause 35 Additional information to be contained in returns under TMA 1970 etc
FB07 Chartered Institute of Taxation—Clauses 13-15 and 17, relating to Employment Taxes and Pensions
FB08 Chartered Institute of Taxation—Clauses 3-7 & Schedules 2-6, relating to Creative Reliefs (Films, television programmes, video games etc)
FB01 Low Incomes Tax Reform Group—Clause 16 and Schedule 10—Provision relating to the cash basis
FB02 Low Incomes Tax Reform Group—Clause 36— Commencement of rules imposing penalties for failure to make returns etc
FB03 Chartered Institute of Taxation—Clause 16 and Schedule 10—Calculation of trade profits etc (cash basis)
FB04 Chartered Institute of Taxation—Clause 35— Additional information to be contained in returns under TMA 1970 etc
FB05 ICAEW Tax Faculty—Clause 14 Provision in connection with abolition of the lifetime allowance charge, and Schedule 9 Pensions
FB06 ICAEW Tax Faculty—Clause 35 Additional information to be contained in returns under TMA 1970 etc
FB07 Chartered Institute of Taxation—Clauses 13-15 and 17, relating to Employment Taxes and Pensions
FB08 Chartered Institute of Taxation—Clauses 3-7 & Schedules 2-6, relating to Creative Reliefs (Films, television programmes, video games etc)
Contains Parliamentary information licensed under the Open Parliament Licence v3.0.