Jesse Norman
MP for Hereford and South Herefordshire · Conservative · United Kingdom
“In view of the new Prime Minister’s spending priorities, it now seems highly unlikely that the ruinously expensive current plans will be put to the House before the end of this year. Seven months have already passed with no action.”
“10 North have real spending powers of its own? If the answer is yes, then this will be a new kind of cross-departmental Ministry—perhaps a territorial Ministry, like a regional Government but with no defined scope or mandate. We will need to see the legal instruments delegating Treasury authority and functions to it.”
“I rather fear that, given our longevity and at least the level of banter on the Government side of the Dispatch Box, we will be seen over time as the Morecambe and Wise, or perhaps the two Ronnies, of British politics.”
“The past few weeks have brought news of the deaths of Dolly Parton, Tim Curry and Wendell Berry. I am sure that many colleagues will share my sense of shock and sadness at the loss of those extraordinary figures, but also give great thanks for their lives. Truly, we live in a world of change.”
“10 North will not have spending power of its own, then ultimately the Treasury and the Chancellor will continue to sign off on its public spending and on any taxing matters. Decentralisation is really important, but No. 10 North will not be a means of decentralisation in this scenario; it will be just another layer of Government.”
“But we are not going to cast nasturtiums, in the words of a friend of mine, on any of this nonsense—not even on Baroness Lloyd and the hopeless Building Digital UK, who have entirely failed to address the issue of fibre broadband in neglected parts of my constituency and simply repeated the same language of incompetence and failure to me…”
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“The judgment made in 2013 was that it was better to take that approach than to base a charge on household incomes, because that would require HMRC to assess annually both household composition and the incomes of everyone in the 8 million or so households eligible for child benefit, which would effectively introduce a new means test, creating a substantial administrative burden on both the state and families. That is the dilemma. The effect of the charge is to introduce a high marginal tax rate. That is an unattractive aspect of the policy; we should be clear about that. If I may say so, it is not a salutary lesson in how not to withdraw a benefit, because the alternatives of not levying the charge at all or levying it on a cliff edge rather than by gradual withdrawal are worse.”
“Friend the Member for South Thanet and others from across the House, that the charge does not take into account overall household incomes, so it is possible—and it does happen—that a single parent earning more than £50,000 is liable to the charge while a couple each earning up to £50,000 is not. That is because, as he said, the charge is a tax, calculated in accordance with the principles of individual taxation at the individual level alongside other tax policy. Here we have one of those difficult decisions for the Government about what is the right thing to do.”
“The judgment made in 2013 was that it was appropriate to claw back some of the money paid to people on higher incomes and that everyone should make a fair contribution to removing the deficit while supporting those on the lowest incomes. I think that was the right judgment. Of course, for a minority of claimants where either they or their partner earn more than £50,000 in adjusted net income, there is a requirement to pay the tax charge or to opt out of receiving child benefit payments and therefore not pay the charge. It is a fair criticism, made eloquently by my hon.”
“I really cannot; I have two seconds left. The hon. Member for Oxford East mentioned fiscal drag. That is an important issue, but I do not think she is right that the charge has removed the universal nature of child benefit; it merely allows for a charge against it.”
“He raised a wider issue, so I will talk about what the Government are doing more generally before I address the question of Scotland that he raised so eloquently. As my hon. Friend and everyone in the Chamber will know, the Government are committed to strengthening the Union, which is arguably the oldest and most successful partnership of its kind in the world. Only last week, the Prime Minister announced an independent review to ensure that Departments in Whitehall work in the best interests of the Union. Protecting the Union is also a priority for both candidates who are vying to be the next Prime Minister.”
“It is a delight to speak under your chairmanship, Mr Hollobone. This is an important topic that commands interest not only across the House but, more importantly, across the four constituent nations of our Union and among our constituents. I take my hat off to my hon. Friend the Member for Ochil and South Perthshire (Luke Graham) for securing the debate and for the energy that he and his generation of Scottish Conservative MPs bring to the House of Commons. It has been a tremendous tonic and has been very good for the House as a whole. Like my hon. Friend, I am surprised and a little dismayed that the Scottish National party is not present for the debate. That in itself tells a story that we need to explore more widely and that I will come to later.”
“Friend the Member for Ochil and South Perthshire is not one of disingenuousness or hypocrisy but one of public service and accountability. I thank my hon. Friend the Member for Ochil and South Perthshire for securing this debate and for his important and eloquent speech. It poses a challenge to the Scottish Government to live by what they say and to do what they profess. I am grateful to have had the opportunity to speak for the Government and demonstrate our continued support for the sustainability and prosperity not just of the Scottish nation and economy but of those of Wales and Northern Ireland. Question put and agreed to.”
“Once the 2016 Act is fully implemented, more than 50% of the Scottish Government’s funding will come from revenues raised in Scotland, making the Scottish Government more accountable to the people they serve. That is surely the point—with power comes responsibility—so the fact that the SNP is not present in the Chamber is a token of the wider problem of the Scottish Government’s lack of accountability. It is unfortunate that, although one constantly hears that Government’s grievances, they do not spend to address the issues of which they complain—my hon. Friend the Member for Angus (Kirstene Hair) is absolutely right to make the point about playing politics. However, the question at the heart of the debate and of the points raised by my hon.”
“Friend and colleagues will know, last year’s Budget provided a funding boost of £950 million in Scotland, £550 million in Wales and £320 million in Northern Ireland. By 2020, all three devolved Administrations will therefore have received a real-terms increase during this spending review. Before adjustments for tax devolution, block grant funding will have grown to more than £32 billion in Scotland, £16.1 billion in Wales and £11.7 billion in Northern Ireland. There has been further support through city deals and growth deals, including more than £1.3 billion for eight such deals in Scotland. I reassure my hon. Friend and the House that the Government are also committed to devolving greater responsibilities on tax and welfare.”
“Those are substantial sums that create a degree of responsibility. To have those powers is to be trusted to exercise them responsibly. If that means investing them in better services on behalf of local people, that is the responsibility that those Administrations face. It should be clear that those individual borrowing powers come on top of the funding that devolved Administrations receive through the Barnett formula. The fact that devolved Administrations already receive a share of all UK Government borrowing under the formula explains the need for limits on their borrowing to ensure the sustainability of the public finances. Spending decisions taken by the UK Government continue to deliver growth and prosperity across the whole of the United Kingdom. As my hon.”
“Their country and the United Kingdom as a whole greatly benefited. Borrowing powers are one of the most important ways in which the Government are strengthening the constitutional settlement, by providing devolved Administrations with greater choice and responsibility. Greater resource borrowing helps to ensure budgetary stability and affords devolved Administrations the flexibility to manage volatility associated with their new revenue-raising powers—or tax powers, in Scotland’s case. Similarly, capital borrowing powers offer much greater control over infrastructure investment. The Scotland Act 2016 increased the Scottish Government’s capital borrowing limit to £3 billion, with an annual limit of £450 million. The resource limit was also raised to £1.75 billion, with an annual limit of £600 million.”
“I do not think that they regard that as in tension with a proper unionism; they worry about the union with the EU. In their view, they are giving voice to a sovereignty that the United Kingdom of Great Britain and Northern Ireland expresses and has done for more than 200 years. As colleagues will know, I can never talk about the Union without mentioning my great hero, Adam Smith. He said that the 1701 union was: “a measure from which infinite Good has been derived” to Scotland. How right he was. The reason why that was true for Smith and is true now is that the Scots took advantage of the potential offered by that incorporating political arrangement. As the House will know, Scots spread out across the world, ran large chunks of it and were extremely effective and successful entrepreneurs and businesspeople.”
“It is now important for the House to honour the commitment made in the Finance Act 2019 by enacting the regulations, thereby bringing them into force in line with their commencement provisions. I therefore commend the regulations to the House.”
“The allowance will apply across all sectors and sizes of UK trade, benefiting business owners, workers and the wider economy. The relief will be limited to the costs of the physical construction of the structure or building, and will not apply to the costs of acquiring the underlying land, rights over land, or planning permissions. In summary, the regulations will enact important improvements to our capital allowances regime, in line with the power this House approved in the Finance Act 2019. Since 29 October 2018, business investments in new, and renovations of old, structures and buildings have been accompanied by an expectation of this allowance of 2% relief per annum against income or corporation tax bills.”
“As I have said, the structures and buildings allowance has been designed to enable businesses to claim tax relief on the costs of new non-residential structures and buildings. This means that qualifying expenditure on new builds or renovations for which all the contracts for the physical construction works were entered into on or after 29 October 2018 will be eligible for relief. Relief will be available for any business that fulfils two conditions: first, that it owns a qualifying asset, either through direct building or by acquiring one from a developer; and secondly, that it uses the building for a qualifying activity for which the business is chargeable for UK tax. Qualifying persons will be able to claim tax relief at 2% a year on eligible construction costs, including renovations.”
“Following the first round of consultation, officials met scores of different companies, representative bodies and individuals from throughout the country. At the spring statement 2019, the Government published detailed draft legislation and invited further comments from stakeholders. I am pleased to report that the vast majority of stakeholders welcomed the structures and buildings allowance. I extend my thanks to the many individuals and organisations that participated in both rounds of consultation, either in person or through written representations. Stakeholder responses have been a considerable help in the shaping of the new allowance, leading to amendments, including those relating to short-term leaseholds, eligible pre-trading costs and periods of disuse.”
“The Finance Act 2019 gave power to that effect, and I am now pleased to introduce the draft statutory instrument necessary to enact the change. It was important to follow the legislative process to provide taxpayers with certainty that the allowance will come into force as soon as possible, to minimise the risk of deferred investment and to allow the Government to consult extensively on this important measure, as we have done. At the Budget, the Government published a detailed technical note for consultation that outlined the key features of the new allowance. Businesses that invest in new builds or renovations on or after 29 October 2018 will be able to claim tax relief at 2% a year on eligible costs, over a 50-year period.”
“At the autumn Budget, we announced an increase in the annual investment allowance for plant and machinery to £1 million per annum for two years, meaning that businesses will be able to deduct five times more qualifying plant and machinery expenditure in the year in which they make the investment. However, the UK is currently the only G7 economy that offers no capital allowances on investments in structures and buildings. That means there are no allowances on critical investments in bridges, roads or tunnels. It also means no allowances on investments in shops, offices or factories. In the 2018 Budget, the Government set out to rectify the gap in the capital allowances regime by providing relief to businesses on qualifying expenditure on new non-residential structures and buildings.”
“I beg to move, That the draft Capital Allowances (Structures and Buildings Allowances) Regulations 2019, which were laid before this House on 17 June, be approved. The instrument before the House gives effect to the amendments to several tax Acts, principal among them the Capital Allowances Act 2001. The Government are determined to ensure that the UK tax system supports business investment and jobs. At 19%, the UK has already reduced its corporation tax rate to the lowest in the G20, and it is scheduled to fall still further to 17% in 2020. The Government recognise the importance of providing tax reliefs for genuine business costs, which is why we are taking steps to increase the overall competitiveness of the capital allowances regime.”
“The hon. Gentleman said that there is an absence of transparency, but there were 18 weeks of consultation in two phases on both the principle and detail, so it is hardly clear that that is true. He also implied that a Labour Government would remove tax reliefs. If that is true, I would welcome him indicating to the House which reliefs a Labour Government would propose to remove or abolish.”
“I am grateful to both Opposition Front Benchers for their comments, which were quite wide-ranging. I will try, if I may, to keep my responses reasonably short. The hon. Member for Bootle (Peter Dowd) began with a very wide-ranging critique of reliefs as such. He then cited the Institute for Fiscal Studies on the reliefs in general that have built up in the tax system over the past several decades. However, in trying to criticise the Government on the grounds that the system is not consistently applied across different reliefs, he does not reflect on the fact that this measure is designed to correct an anomaly. We have an anomaly in our system in that we do not offer reliefs on structures and buildings. We are therefore removing a disincentive to investment and levelling the playing field in a way that has a clear policy justification.”
“It is hard to make swingeing criticism of the idea of reliefs and then not indicate any that a Labour Government would propose to abolish. It raises the question whether the Labour party is serious about this. The hon. Gentleman described these reliefs as “corporate welfare” and giving away millions of pounds to large companies. All companies benefit that have qualifying investments and are subject to UK taxation in the way indicated; it is not just larger companies. Many of the reliefs he describes are negligible and therefore should not necessarily be the target of extensive review. He talks about the reduction in corporation tax as though it is a bad idea but neglects the fact that significantly more corporation tax has been raised following these reductions.”
“Those companies’ return to profitability was the result of proper, prudent financial management. I remind the hon. Lady that in the specific case of the financial sector, the bank levy has taken billions of pounds a year more from the banks than the Labour tax that it replaced. I do not think her view has credibility. The hon. Member for Bootle criticised the timetable, but it is designed specifically to keep uncertainty to a minimum. Far from the suggestion that it would create more uncertainty, the point of my saying that qualifying expenditure on new builds or renovations for which all contracts for the physical construction works were entered into on or before 29 October 2019 will be eligible for relief is precisely to give very clear direction to future investment. I do not agree with many of the points that he made.”
“The statement that the acquirers of structures or buildings are asked to fill out consists of four factual pieces of information: first, what is the asset; secondly, when was it built; thirdly, when did it come into use; and, lastly, how much did it originally cost? That is not a heavy burden on any institution.”
“My hon. Friend is right. The point of the relief we are giving through the structures and buildings allowance is precisely to level the playing field and to enable and encourage more business investment. The hon. Members for Bootle and for Aberdeen North (Kirsty Blackman) asked about reviewing or monitoring. As they will be aware, the Treasury and HMRC continuously monitor tax reliefs according to the level of risk they pose, and they publish annual statistics on tax reliefs, including cost estimates where they are available. I will now turn to the other points made by the hon. Lady. She says charitable organisations will be heavily affected.”
“There would be a significant number of losers and a negative impact on business investment, when we are trying to have the exact opposite effect. The hon. Lady raises the issue of student housing. This measure is of course specifically aimed away from residential property and other buildings that function as dwellings and towards commercial properties. For that reason, student housing is not included, but hotels and care homes will qualify because the underlying businesses are service providers whose premises are being used in a trade.”
“I perfectly understand, and it is a verbal point. This is subject to a de minimis factor: any Government action will have some minuscule effect on many people, but that does not mean that it is significant enough to register. The hon. Lady raised a question about process, which I have already addressed. She raised a point about the Office of Tax Simplification. The difficulty with the suggestion it has made is that, if the boundary were removed between buildings that get relief at 2% and plant, fixtures and so on that get relief at 6%, the result would have to be a combined rate of relief somewhere in-between. The effect for many businesses with long-term investments in plant would be that they lost out through reduced relief or delayed relief if the rate went down.”
“The answer is that they are not. The hon. Lady is welcome to write to me with specific details of the student housing in her constituency. Of course, many students live in housing that universities would regard as equivalent to hotel accommodation of years ago. However, the general rule is that it is not included, but that hotels and care homes—where there is such trade, as I have described—are included. I think that is a tolerably clear line. The final point the hon. Lady raised was about the impact on GDP. The independent Office for Budget Responsibility has estimated that the capital allowances package announced at the Budget would increase business investment by 0.4%, so that number has been calculated and put into the public domain.”
“If I may, I will just correct the record. I said that they have raised billions more—and they have raised billions more—than the pre-existing Labour tax. That is a fact of the financial environment that surrounds banks, just as this is a new fact for the financial environment that surrounds corporations more generally. And on that point, I will sit down. Question put and agreed to.”
“The loan charge tackles so-called disguised remuneration arrangements, which use loans to avoid tax. It applies in the same way to people in the public and the private sectors. A tax information and impact note published in 2016 and a report on disguised remuneration published in March 2019 both considered the impacts.”
“My right hon. and learned Friend is absolutely right and HMRC will continue to take firm action against those who promote tax avoidance schemes. As he will know, and I think has been made public, it currently has more than 100 promoters under civil inquiry. It is important to be clear that although there are no criminal offences of promoting or marketing tax avoidance schemes specifically, HMRC may conduct criminal investigations and make referrals to prosecuting authorities where, for example, there is evidence that promoters have deliberately misrepresented the facts to it.”
“The hon. Gentleman is right that there is stress, but he should also be clear that a large number of people have been systematically using those means to avoid paying tax, and the potential amount payable is more than £3 billion. He should be protective of the tax base more widely when he reflects on those matters. He is right that HMRC is taking careful steps to ensure that it protects and supports those who may be in genuine difficulty, and those who have other personal concerns can of course be referred to outside agencies.”
“I think that my right hon. Friend misstates the case. A disclosure of tax avoidance number was associated with a large number of those cases. The people knew that they were in schemes that were potentially suspect. Every person is responsible for signing off their own tax return. I trust that my right hon. Friend will be reassured by the fact that recently six individuals were arrested on suspicion of promoting fraudulent loan charge arrangements. That speaks to a wider picture.”
“I can only admire the ingenuity of a man who can crowbar a question about the Ministry of Justice, unrelated to the loan charge, into this issue. Let me point out to the hon. Gentleman that regardless of what may be the case on that, HMRC is taking tens of billions of pounds, relating to avoidance and evasion matters, that are due. He should be very grateful and delighted about that.”
“May I put on record my surprise that a former chairman of the Public Accounts Committee, with its concern for the public finances, should take that view? Some people may have been very adversely affected in mental health terms and we must protect them at all times using all proper measures. HMRC is attempting to do that. However, there is a much larger number of people who are simply seeking to avoid paying tax due.”
“I remind the hon. Gentleman that there were other signs that indicated to people that they were in tax avoidance schemes—for example, a very low or relatively low effective rate of tax. The signs were there and people would have been right to pick up on them. Even if they were mis-sold, that does not have a bearing on the question of whether tax is now due.”
“In response to stakeholder representations at Budget 2018, the Government announced that the extension of the off-payroll working rules reform would not take effect until April 2020. That was designed to allow organisations more time to prepare. The reform will also not apply to the smallest 1.5 million organisations. The Government have now consulted on the detailed design of the reform. Responses to that consultation will be taken into account when drafting the legislation.”
“That is a very important question. I hope my hon. Friend will be reassured. Independent research shows that the public sector reform has been meeting its objective of improving compliance with existing off-payroll working rules without disrupting public services or reducing labour market flexibility. The Government recognise that the private sector is much more diverse, but HMRC will continue to work with stakeholders to improve employment status checks and associated guidance. It will also provide a significant package of education and support to businesses to help with implementation.”
“I am sure the hon. Gentleman will be aware that there is only about a 10% compliance rate with proper tax payable in this sector. He should therefore be applauding, as I am, the means to raise the level of compliance. In many ways, this is a simplification of the rules, which is being carefully and deliberately handled.”
“Having run a capital project myself, I am keenly aware of the importance of good cash flow; I am grateful to the hon. Lady for her question. HMRC receives more than 2 million VAT repayment forms a year, and in 2017, the latest year for which figures are available, over 90% of them were paid within five days of receipt. A supplement is paid if it takes more than 30 days before payment is made, and HMRC also has a free dedicated charities help desk designed to help organisations with their tax inquiries.”
“The hon. Lady will understand that a range of schemes is available for some parts of the charitable sector. We recognise the concern that the hon. Lady is expressing; I cannot deal with individual cases, but obviously if she wants to write to me on the wider issue I will be happy to take it up with HMRC.”
“Again, I absolutely recognise the concern, although of course I am not familiar with the details. I cannot get involved in a specific case, but my hon. Friend is welcome to write to me and I will refer the matter to HMRC.”
“I am delighted to hear the news of new investment in my hon. Friend’s constituency, and I take my hat off to Dean’s shortbread. As he knows, the two-year increase in the annual investment allowance, which the Chancellor announced in the Budget, is helping firms right across the country to invest in new plant and machinery. It gives 100% first-year tax relief on the first £1 million of eligible investments and helps small and medium-sized firms such as Dean’s shortbread to continue to grow.”
“I point out that my hon. Friend wrote to my predecessor, and it was my predecessor, my right hon. Friend the Member for Central Devon (Mel Stride), who responded to him, rather than the present incumbent of this illustrious slot.”
“It is a great pleasure to serve under your chairmanship, Mr Hollobone. This is an important topic, as hon. Members from across the House have rightly said, which commands widespread interest across not merely the House but the country. In that context, if I may make a small but telling party political point, I wish that the Opposition had been able to field a spokesman to express their view on the matter.”
“Tragically, they are not the subject of this discussion; our attention must focus exclusively on beer and the beer duty. However, they contribute to the important presence of pubs in our national life.”
“Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney) will himself carry that beacon, or if not, will play an important role in making this argument, because it is an important one to advance. I thank all Members who have spoken for their contributions. As my hon. Friend the Member for Clacton rightly said, and as colleagues from across the House know, beer and breweries are an important part of our national life, and the same is of course true for that essential accompaniment, the great British pub. As a Herefordshire man, I ought to point out that pubs do not merely serve beer. In my constituency we have Bulmers, while in Herefordshire we have Westons, Tom Oliver and Denis Gwatkin; we have a host of fantastic cider producers.”
“I am grateful to the previous speakers for giving me that opportunity. I intend to take full advantage of it. I stand corrected on the point about the Opposition, for which I am grateful. I thank my hon. Friend the Member for Clacton (Giles Watling) not merely for his ingenuity and brilliance in securing the debate and raising this topic, but for the vigour and energy that he has shown in pressing this issue over the several years he has been in the House. In doing so, although he may not realise it, he takes up a beacon that was held for many years in this House by my great friend, my hon. Friend the Member for Burton (Andrew Griffiths), who I am delighted had the chance to speak. I have no doubt that, in due course, the hon.”
“It would also be wrong of me not to touch on the excellent work in the community of the local Campaign for Real Ale team, with my support, in saving, for the second time, the Broadleys pub in south Hereford from being turned into a Co-op. It sheds a very bad light on the Co-op, which is in many ways a fine institution that I otherwise rather admire, even if I did have the crystal Methodist in front of me at one point when I was on the Treasury Committee, if hon. Members remember him. It should not sponsor the closure of pubs in order to open new Co-ops merely a few hundred yards away from ones that already exist. I single it out personally, not as a matter of Government policy, for its misbehaviour in that regard.”
“Notable pubs in Hereford are the Barrels, where I held an informal surgery last Friday afternoon for a considerable period; the Volunteer Inn, known as the Volly; the Lichfield Vaults, known as the Lich; the Grapes; and the Britannia. However, I also pay attention to the specialists that have come into the market in my constituency over the last few years, which picks out this wider process of economic and social change, including Beer in Hand and the Hereford Beer House—part of a panoply of pubs across the entire county, including the King’s Head Hotel, the Man of Ross, the Mill Race in Ross and many other fine houses.”