Sir Mel Stride
MP for Central Devon · Conservative · United Kingdom
“May I welcome the Chancellor to his position and thank him for his kind remarks earlier? May I also wish him every success, because I am afraid that under this Government we need some? He will know that if we are to fix the economy, we have to fix the welfare bill.”
“Given all that is going on, this could be the last time. The legacy of this Chancellor has been the highest taxes on record, a benefits bill spiralling out of control, and unemployment 300,000 higher than it was at the last general election. The right hon.”
“The right hon. Lady cannot bring herself to answer the simple question I asked. I will tell her: she is borrowing one quarter of a trillion pounds more than the plans that she inherited—that is her legacy. We hear that the right hon. Member for Makerfield (Andy Burnham) is considering borrowing even more.”
“May I begin by agreeing with you, Mr Speaker, and saying how disrespectful it is that this U-turn on fuel duty has already been released to the media earlier this week?”
“Today’s announcements will bring little comfort to the hundreds of thousands of people who have lost their jobs, the countless businesses that have folded and the high streets that are now hollowed out.”
“The Conservative party has been campaigning for a fuel duty freeze for months. The Chancellor repeatedly rejected those calls, creating unnecessary uncertainty for motorists and businesses. Why did it take her so long to realise that putting up fuel duty during an energy crisis is a bad idea?”
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“I do not disagree with the hon. Lady, but my point is that unless there is a successful economy, with jobs, growth and all the things that this Government are delivering, it becomes more and more difficult to provide social mobility. This Government are providing all the things that I have outlined, and that is driving social mobility. The way that the economy is managed has an important impact on poverty, which, as we know, is one of the greatest evils that hold people back. Since 2010 we have a million fewer people in absolute low income—a record low. The hon. Member for Mitcham and Morden (Siobhain McDonagh) raised the issue of child poverty; we have 300,000 fewer children in absolute low income. There are 200,000 fewer pensioners in absolute income poverty and 500,000 fewer adults of working age in absolute low income since 2010.”
“Friend the Member for Harborough, who will wrap up the debate in a moment, has my personal assurance that we will continue to take this matter extremely seriously. We will press ahead with vigour on the basis that, ultimately, it is only fair to do so.”
“That is to capture the fact that it is often companies outside of the EU that are transacting in this manner—many of those businesses are in the United States. I will conclude by saying that we are very serious about this matter. I have a great deal of time and some affection for the shadow Minister, the hon. Member for Bootle (Peter Dowd), despite the red book that beats in his breast pocket as I address him. In response to him I have to say that it is this party, the Conservative party in government, that is doing something about this issue. It is not the Labour party that ever got on top of avoidance, evasion and non-compliance—just look at the 6% compared with the 8%-plus under Labour. We are the party that is bearing down on these issues. My hon.”
“Friend the Member for Harborough pointed out, it has suggested that a 3% tax on revenues would be appropriate, raising about €5 billion, but that there should be a de minimis on the basis of those companies’ worldwide turnover and the level of taxable revenues that would fall due within the European Union. It also makes the point that it is important, within EU domestic tax legislation and the treaties between member states, that we have a definition of the concept of significant economic presence, which captures this idea of creating value in the way that I described. It also recognised the importance of going further and factoring in those definitions within the bilateral or multilateral trade agreements and tax treaties that we have with the rest of the world—with non-EU member states.”
“Under those circumstances, we would potentially look at a tax based on revenue, recognising that we do not want to capture market entrants or early-stage companies that may have some level of revenues and therefore fall to this type of tax, but which could be unprofitable at that stage of their development. This is where the whole issue of de minimis and thresholds comes in, which hon. Members have spoken about this afternoon. In that context, it might be worth briefly referring to the proposals put forward by the European Union in its recent paper. As my hon.”
“In those papers, we have suggested that our preferred route is a globally negotiated deal with our partners in not just the European Union but the wider OECD. That is to ensure that any agreement works effectively, and that we avoid the problems associated with unilateral action, such as situations of double taxation between ourselves and countries that we trade with around the globe. However, in that paper we do set out an interim position. I should make clear the Government’s intention that if we do not move forward at sufficient pace to put the appropriate measures in place, we will seriously consider an interim position—a unilateral move, which my hon. Friend the Member for Croydon South (Chris Philp) was keen to see.”
“We have already brought in a measure, announced in the autumn Budget, to tax the royalties that flow to intellectual property held in zero and low-tax jurisdictions. This is very much a front-foot approach to those digital-based businesses that are shifting profits out of the United Kingdom in tax terms. We are consulting on that and legislation will come forward in due course. We expect it to raise around £800 million by 2023. That is a significant sum. It is the kind of amount that could potentially be useful to ease the pressure on our high streets, as many have called for this afternoon. The position paper last year and the March paper we just introduced by way of consultation were mentioned.”
“Friend the Member for Harborough (Neil O’Brien) rightly pointed out, typically we would be looking at the factories, the employment of people, where the intellectual property lies and where the decisions around risk and investment in the business are taken. We know that for certain types of digital platform—typically, the search engines, the online marketplaces and the social media providers—a lot of the value is generated via the interaction between the end user and the platform itself. Therein rests the actual value. The question we then have to ask is how do we effectively address that situation and ensure that where businesses generate huge sums of profit within the United Kingdom, a fair share of corporation tax falls due to them.”
“HMRC is doing a great job, by and large, in ensuring that those who are due to pay tax do indeed pay it. It is important to point out, as several hon. Members have, that what we are discussing today is predominantly not about avoidance and evasion. That is an important distinction. Whatever we may feel about tech companies or internet-based businesses—and they do not always acquit themselves admirably—the accusation is not in any way that they are avoiding taxation, but simply that the current international tax regime does not effectively accommodate the way they generate value within the United Kingdom. If this is not about avoidance, what exactly is it all about? It is about the way the current international tax regime assesses taxation and where corporation tax should fall due based on where the economic activity occurs. As my hon.”
“Members have pointed out, that it is important in terms of fairness and of having a level playing field—particularly, in that context, for those hard-working small businesses that occupy our high streets, which have to pay their business rates, a tax which cannot be avoided whether a business is profitable or unprofitable. On this side of the House, we recognise the paramount importance of getting to grips with the issues we have been discussing today. Hon. Members have, understandably, raised the issues of avoidance, evasion and non-compliance. Conservative Members have dealt at length on the great success we have had in that respect. We have raised or protected £175 billion since 2010. We have one of the lowest tax gaps in the world—the difference between what we could collect and actually do collect—at 6%.”
“It is a pleasure to serve under your chairmanship, Dame Cheryl. It was a pleasure to hear the opening speech, because it was insightful, clear and well-structured and set out. Given that this is a highly technical subject, that was quite an achievement. It was also extremely thoughtful. It has been remarked by a number of hon. Members that there are quite a few of us on this side of the House. That is because we care deeply about issues such as tax. Traditionally, we like to see taxes as low as possible, as my hon. Friend the Member for Saffron Walden (Mrs Badenoch) rightly pointed out, but we also recognise that tax is important, because it provides the finances for vital public services—our national health service, our social care, our armed forces, our police, our teachers and so on. We also recognise, as several hon.”
“As a result, the Finance Act 2003 is out of date and its references to “Community customs code” need to be changed to “Union customs code”. The order ensures that UK domestic law cross-refers to the most recent version of EU legislation with which it was intended to operate. It does not seek to alter materially the scope of the power to impose penalties; the underlying substantial legislation will remain the same. The order is particularly important because it continues to preserve the capability of our customs officers to issue a civil financial penalty when there has been a breach of a duty obligation, requirement or condition of the Union customs code, which is an important part of HM Revenue and Customs’ overall compliance strategy. I therefore commend the order to the Committee.”
“I beg to move, That the Committee has considered the draft Finance Act 2003, Part 3 (Amendment) Order 2018. May I say what a pleasure it is to serve under your capable chairmanship, Mr Davies? The order provides for a technical amendment to part 3 of the Finance Act 2003, which makes provision for civil financial penalties where there has been a failure to comply with a duty, obligation, requirement or condition in specified tax legislation. One such piece of tax legislation is the Community customs code: the body of European legislation that lays down the rules and procedures applicable to goods brought into or taken out of the customs territory. In May 2016, it was replaced by the Union customs code, more commonly known as the UCC.”
“Lady referred to the number of cases being handled by customs officers in the United States and Canada. Of course, those are different regimes, with different elements to them, but perhaps it is just indicative of the efficiency of HMRC and customs that they cover such a large amount of work with an efficient number of personnel. On that note, I hope that we can agree the order. Question put and agreed to .”
“I am confident that it is well resourced for this. She asked specifically about the number of HMRC staff who will be available. As she mentioned, there will be up to 5,000 additional staff, given the Brexit changes and the customs changes that are to follow. That is not a figure that the Treasury has brought forward; it is a figure that the head of HMRC has come forward with. We and my right hon. Friend the Chancellor of the Exchequer have made it clear that we will ensure that sufficient funding and resources are available for HMRC to carry out the important work that it will have, going forward. That is why last year about £45 million was made available to HMRC for Brexit-related matters and, in the recent spring statement, the Chancellor made it clear that a further £260 million will be made available for the next year. The hon.”
“The answer is that until recently the legal advice, such as it was, was that there was not actually a requirement to make this change as the cross-reference was fairly obvious. However, more recent advice has suggested that we should make the change. The hon. Lady asked about the number of penalties issued under this regime. Between March 2015 and 2016 a total of 466 penalties were issued, with a total value of £577,712; since the UCC was introduced, in 2016-17, 345 penalties have been issued. The hon. Lady asked about the capacity of HMRC to handle the penalties and this particular regime. I point her to the fact that HMRC, as she knows, has an outstanding record on avoidance, evasion and non-compliance: £175 billion has been brought in or protected since 2010, and we have one of the lowest tax gaps, at 6%, in the world.”
“I thank the shadow Minister, as always, for her participation on these occasions. I had thought that this might be a very short Committee, given that this is a highly technical change. As always, however, the hon. Lady raised important points, which I will go through. First, the hon. Lady raised the TIIN and its accessibility—whether the URL was correct. I will have to get back to her on that, but I will certainly look into it because I recognise the importance of those assessments to her. I point out that there is no change in the scope or the penalties involved in this particular case or, indeed, in the manner of operation of this particular regime. However, it is right that that information should be properly accessible. The hon. Lady asked why it had taken so long—since 2016, in fact—to bring in this measure.”
“I beg to move, That the Committee has considered the draft Scottish Rates of Income Tax (Consequential Amendments) Order 2018. May I say what a pleasure it is to serve under your chairmanship, Sir David? The order updates legislation to reflect structural income tax changes announced by the Scottish Government and includes a number of consequential amendments to tax reliefs, which remain reserved. The changes will ensure certainty and consistency for taxpayers across the United Kingdom, no matter where they are based. The Government have transferred extensive income tax powers to the Scottish Government, ensuring that they are more accountable to Scottish taxpayers. Since April 2017, the Scottish Government have been able to vary the income tax rates and thresholds, except for the personal allowance for non-savings, non-dividends income.”
“I would say that it is entirely in line with the vows we made at that time, and indeed the Scottish Government have exercised their right under the Scotland Act 2016 to vary Scottish tax rates—both the thresholds and the marginal rates. The Scottish Government used those powers at their recent budget to make a number of changes, including the introduction of a new starter rate of 19%.”
“They will ensure that those reliefs and wider tax legislation continue to work as intended and demonstrate our continuing commitment to making the Scotland Act and devolution work. I commend the order to the Committee.”
“It will also ensure that Scottish taxpayers continue to get the right amount of relief on charitable donations and claim the right amount of pensions tax relief under the relief at source mechanism, and that those who have deferred their state pension continue to pay tax at their marginal rate on a lump sum. The order also makes minor changes to the Income Tax Act 2007, the Taxes Management Act 1970, the Income Tax (Trading and Other Income) Act 2005, the Finance (No. 2) Act 2005, the Finance Act 2016 and the Scottish Rate of Income Tax (Consequential Amendments) Order 2015, to reflect the new taxes. The changes will ensure that the tax system remains fair and consistent and that there are no complex tax relief rules depending on where in the United Kingdom a taxpayer is resident.”
“I thank my hon. Friend for that intervention. In the spirit of moving forward positively, I shall leave it for his remarks to be placed on the record as he has seen fit. As I was saying, the changes included the introduction of a new starter rate of 19%, an intermediate rate of 21%, and increases in the higher rate to 41% and in the top rate to 46%. The Scotland Act passed the powers to make consequential amendments to primary legislation via a statutory instrument, where required to respond to changes made by the Scottish Government. The order makes changes to reflect the new income tax rates so that certain tax reliefs continue to work as intended when the changes take effect in April. It will ensure that those in the new Scottish starter and intermediate rate bands continue to receive marriage allowance at the current rate of 20%.”
“Those models were detailed again in the Government’s White Paper last October, and by the Prime Minister in her Mansion House speech and subsequent statement to the House. We look forward to discussing both those options with our European partners and with businesses in both the UK and the EU as negotiations progress.”
“The Government set out in our future partnership paper last summer two options for our future customs arrangements—two options that most closely meet these objectives. One is a highly streamlined customs arrangement. That approach comprises a number of measures to help to minimise barriers to trade, from negotiating the continuation of some existing trade facilitations to the introduction of new technology-based solutions. The other is a new customs partnership, which is an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world that are destined for the EU, removing a need for a formal customs border between the UK and the EU.”
“The Government have been clear that in leaving the European Union the UK will also leave its customs union, allowing us to establish and enhance our trading relationships with old allies and new friends around the world. The Government have also set out that in leaving the EU customs union, we will be guided by what delivers the greatest economic advantage to the United Kingdom and by three strategic objectives: continued UK-EU trade that is as frictionless as possible; avoiding a hard border on the island of Ireland; and establishing an independent international trade policy. As we implement the decision of the British people to leave the EU at the end of March 2019, we want a deep and special partnership with the European Union.”
“We will respect the Belfast agreement, and we are engaged in further discussions with the Irish Government to come to a sensible arrangement that is in the mutual interests of ourselves, of Ireland and of the wider European Union.”
“As I am sure he will know, this is an entirely normal state of affairs for such discussions. Incidentally, this works both ways, in that while there is confidentiality on the part of those private sector organisations, that is also binding on the Government, as anything of a commercially sensitive nature will not be divulged by the Government either. The right hon. Gentleman raised the issue of Northern Ireland, on which we have made our position extremely clear: there will be no return to the hard border of the past. As we have made it clear to the EU27, we will not accept a situation in which we have a customs border down the Irish sea.”
“I thank the right hon. Gentleman for asking a variety of questions about what the Secretary of State for Transport said last Thursday. In addition to the remarks that the right hon. Gentleman mentioned, the Secretary of State also said that “we will not in any circumstances create a hard border in Dover that requires us to stop every lorry in the port of Dover”. That is absolutely right. The right hon. Gentleman will know that the discussions that we have had with other authorities in the EU27 are formal discussions, because the negotiations that we have been having with the EU have not been possible. However, some informal discussions have taken place. The right hon. Gentleman raises the issue of confidentiality agreements for those with whom Her Majesty’s Revenue and Customs is in discussions.”
“We have made it clear that once we have exited the implementation period, the European Court of Justice will have no further remit. We will take back our laws, to be determined by our courts at every level, including the Supreme Court.”
“Of course, the other important news that we have had today is that we have concluded, subject to the European Council meeting this week, an implementation period for the arrangements, which will not only give us additional valuable time to provide certainty to businesses, but ensure that we have all the arrangements in place for a successful customs system going forward.”
“Well, we waited a long time to get to the end of that, and I am not sure whether we are any wiser as a consequence. As the hon. Gentleman will know, we are leaving the customs union, and I set out in my opening remarks the two models that we are intent upon progressing with our European partners. I also stressed that we will arrive at a solution that is as frictionless as possible. I have been down to Dover to meet the organisation that runs the port, and also the Border Force personnel who are engaged with it, and I am fully familiar with the importance of a frictionless border.”
“My right hon. Friend is correct. We will be in a perfectly good position to ensure that we have near frictionless trade on day one, using the kind of facilitations that we are already using when it comes to the policing of our borders with the rest of the world, and indeed that exist between other countries such as Canada and the United States.”
“You are indeed a generous fellow, Mr Speaker. The nub of this issue is the misconception that having customs control at the border is the same thing as stopping every vehicle or jamming up Dover. There are approaches available—we set out them out at length in our White Paper last year, and we have been negotiating on them and will continue to put them forward to the EU—that use technology and the pre-lodging of customs declarations, and that may use inventory systems at ports or number plate recognition technology. All these approaches are perfectly capable of allowing traffic to move briskly through the ports, as indeed is the case today.”
“My hon. Friend makes an extremely important point. As we know, there is a trade deficit in goods between ourselves and the EU, so it is clearly in the EU’s interests—and, particularly in the case of Dover and Calais, in France’s interests—to make sure that trade continues to flow smoothly.”
“The right hon. Lady is right to say that the Government have clearly ruled out any infrastructure at the Northern Ireland border. In the discussions on Dover—not necessarily with myself directly, but through officials—all those options, including the number plate recognition to which she refers, have indeed been talked about.”
“I thank my right hon. Friend for her question, but of course we do not yet know, as we negotiate these arrangements with the EU27, exactly what form of arrangements will be in place. Of course we will be assessing those carefully.”
“We are confident that by using facilitations and various arrangements —[Interruption.] If he focuses for a moment on the kind of activity that is happening across the border between Northern Ireland and Ireland, such as fuel laundering, he will see that it has proven perfectly reasonable for the Police Service of Northern Ireland to intercept those engaged in such activities, well away from the border and very effectively, by using targeted approaches, as we might be able to do going forward.”
“We have made it clear all along that the new customs partnership is an extremely innovative approach and would be a first, because this is a unique situation in which we and our European partners have a strong trading relationship and a near complete alignment of rules and regulations pertaining to our trading arrangements. The hon. Gentleman suggests that there is no alternative to the new customs partnership in relation to the border between Northern Ireland and Ireland, but that is not the Government’s position.”
“I thank my hon. Friend for his comments and also take this opportunity to thank him for the sound advice and guidance that he, as the Member who represents Dover, has given to me. As he says, we can of course use technology to ease traffic flows. We will also invest as required to make sure that our borders function effectively. The Chancellor made it clear in the autumn Budget in November that £3 billion would be made available as necessary, across Departments, for that purpose.”
“There will be no requirement for anything like the level of stoppages at Dover that the right hon. Gentleman suggests. We will use technology to facilitate the movement of trucks and goods through the port of Dover. If there is an intelligence-led requirement to stop any vehicles, that can be done outside the port of Dover. We will make sure that traffic through the port keeps flowing.”
“I thank my right hon. Friend for his succinct question. Of course, that very much depends on where we end up in respect of our free trade agreements with the European Union and with other countries.”
“I refer the hon. Gentleman to the comments of the Secretary of State for Exiting the European Union this morning. I believe he has confirmed that Gibraltar will be part of the agreements that we are expecting the European Council to agree to very shortly, and that they will also extend to our Crown dependencies and overseas territories as appropriate.”
“I thank my hon. Friend for that point. I have no doubt that that is just one more example of where facilitations and technology can ensure that goods move efficiently across a customs frontier.”
“The right hon. Gentleman is absolutely right that under WTO terms we would have to treat the various countries equally, but we are confident that there will be a deal. Indeed, we made huge progress on the phase 1 issues in December and have heard just today that we are looking clearly at an agreement on the implementation period. We will be going forward for further agreement with the European Union on a deal for this country and the EU.”
“As I have already said, we will make sure that those elements of infrastructure—the places where goods can be checked on an intelligence-led basis and the technology that is required to keep our customs borders moving—will be in place by the appropriate time.”
“As the right hon. Gentleman will know, these matters are subject to negotiation at the present time, but what we will make absolutely certain of is that there is no hard border between Northern Ireland and the Republic of Ireland, that there is no customs border effectively within the Irish sea, that the Belfast agreement is respected, and that we have a relatively frictionless movement of goods across the Northern Ireland-Irish border.”
“My hon. Friend is absolutely right. What matters to business is that we keep the borders moving, and I have explained in my responses to many questions this afternoon exactly how we will approach that.”
“The Government are well aware of the particular needs of the motor manufacturing sector, with just-in-time delivery and the fact that some components move across what will potentially become a customs border in the future. Those needs are a priority for us during the negotiations. I have no doubt that the implementation period that has been announced today will be one of the things that will drive the economy forward even faster. The hon. Gentleman will know from the spring statement that the Office for Budget Responsibility has already upped the estimates of growth for next year, and hopefully the implementation period will make a further positive contribution to that.”
“The good news for the hon. Gentleman is that there will be no circumstance under which this Government, or a British Prime Minister, will negotiate a deal in which we have an effective customs border between Northern Ireland and other parts of the United Kingdom.”
“We will ensure that sufficient facilities are available for checks. As is the case at the moment, many of those checks will occur at business premises and storage facilities, including Stop 24, for example.”