Emma Reynolds
MP for Wycombe · Labour · United Kingdom
“My hon. Friend is a doughty champion for his area. As he said, the Prime Minister has been engaging with Cornwall—including, importantly, with its six MPs, including my hon. Friend—on a devolution agreement.”
“I thank the right hon. Gentleman, in whose footsteps I am again following by taking on another job that he did in government. As a former Environment Secretary, living in a rural area of Buckinghamshire myself and representing a semi-rural seat, I reassure him that this Government of course care about driving growth in rural areas.”
“I could not agree more with my hon. Friend. Driving public sector productivity is extremely important in two ways: first, because we get better value for money for taxpayers for the tax that people are putting in, including taxpayers in our own constituencies; and secondly, as she says, we are driving efficiencies, faster service delivery…”
“Public sector productivity is improving, with the NHS delivering 3.5% productivity growth in 2025-26, beating its 2% target. The Government will continue to drive public sector efficiency so that taxpayers’ money delivers the best possible public services.”
“My hon. Friend is a great champion for his constituency. The Cabinet statement on devolution set out the Government’s ambitions to accelerate devolution across the country by establishing a strategic authority for every area in England that wants one by the end of 2028.”
“The Government will support good growth in every postcode, including in Cornwall and Gloucester. We have already established No. 10 North to work in partnership with local leaders, businesses and communities, and at the Budget next month we will publish plans for further fiscal devolution, including greater retention of business rates rev…”
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“In turn, that will allow the Bank of England to protect financial stability, which of course supports the Government’s top priority of growth, by strengthening our economic stability. As has already been debated, clause 1 has been amended to remove a limitation on the scope of the mechanism, which was introduced in the other place. The Government are of the firm belief that, while this mechanism is not intended to be used for large banks, the unpredictable nature of bank failures warrants appropriate flexibility for the Bank of England to ensure that taxpayers and financial stability continue to be comprehensively protected. Clause 4 sets out that the Bank of England must reimburse the FSCS for any funds the latter provided that are not needed to cover the relevant costs of resolving an institution.”
“As we have already discussed in considering Government amendment 1, as well as amendments 3 and 4, clauses 1 and 4 introduce the recapitalisation payment mechanism that is the core of the Bill. Clause 1 inserts a proposed new section into the Financial Services and Markets Act 2000, which will allow the Bank of England to use funds provided by the FSCS to cover certain costs associated with resolving a failing banking institution. This proposed new section also allows the FSCS to levy the banking sector to recover such funds. Finally, the proposed new section requires the Bank of England to consult the FSCS before requesting funds, and it specifies the type of firms in the scope of the Bill. Clause 1 therefore gives the Bank of England the necessary power to protect taxpayers from risk when certain banking institutions fail.”
“At this point, I note that the Government published draft updates to the code of practice, which set out the sorts of things that are expected to be included in reports by the Bank of England. For example, reports would be expected to include an explanation of the choice to use the recapitalisation mechanism, as well as an assessment of the costs of using the mechanism compared with putting the failing firm into insolvency. The Government will issue a full update to the code of conduct in line with the provisions in the Bill that are coming into force. As mentioned at the start, these clauses provide important clarity for the Bank of England, industry and Parliament on the accountability mechanisms that apply when the recapitalisation mechanism is used. I therefore commend clauses 2, 3 and 5 to the Committee.”
“Clause 3 requires the Bank of England to notify the Chairs of the Treasury Committee of this House and the Financial Services Regulation Committee of the other place as soon as is reasonably practicable after the recapitalisation mechanism has been used. This means that Parliament will be engaged promptly following the use of the mechanism. Finally, clause 5 requires the Government’s code of practice, which sets out how the resolution regime is expected to work in practice, to include guidance on the contents of the reports of the Bank of England, which it is required to produce under clause 2. Clause 5 places an important obligation on the Treasury to ensure that there is transparency over what the Bank of England should expect to include in such reports.”
“Clause 2 also requires the Bank of England to produce an interim report within three months of using the mechanism, if the final report has not been provided within that period. This guarantees that scrutiny of the Bank of England’s actions takes place in short order after a resolution involving the mechanism. The Chancellor will be required to lay any reports before Parliament, ensuring that there is appropriate transparency and accountability regarding the use of the mechanism. The Chancellor, however, will have the discretion to omit certain information from such reports when they are published if doing so is deemed to be in the public interest—for example, if reports contain commercially confidential information, or if disclosure could potentially frustrate an ongoing resolution process.”
“The “final report” produced by the Bank of England is intended to be a comprehensive account of the use of the mechanism, with the content and timing of the report to be specified by the Treasury. As alluded to in the published draft updates to the Bank of England’s code of practice, the Government expect such final reports to include a number of important points: first, an explanation of the choice to use the new mechanism; secondly, how the resolution conditions and objectives were considered and given regard to; thirdly, an assessment of the costs of using the mechanism compared with placing the firm into insolvency; and finally, an explanation of why any ancillary costs were considered reasonable and necessary.”
“Clauses 2, 3 and 5 relate to the reporting and accountability requirements on the Bank of England when it uses the recapitalisation mechanism. The Government added these clauses to the Bill in the other place, reflecting the understandable concerns raised about how the Bank of England will be held to account when using the new mechanism. Together, they aim to ensure that there is effective transparency and scrutiny when the mechanism is used, helping to provide important assurances following a resolution to the Chancellor, Parliament, industry and the public. Clause 2 requires the Bank of England to report to the Chancellor following its use of the mechanism. These reports must relate both to the exercise of the mechanism and the stabilisation option it is used in connection with.”
“Members will raise no objections. I hope hon. Members agree that the clauses are sensible provisions to ensure that the Bill works as intended and, as such, I commend them to the Committee.”
“The 8% rule states that resolution financing arrangements may be used only where the shareholders and creditors of the bailing institution have made a contribution equal in value to at least 8% of the institution’s liabilities. The Government have disapplied that requirement in their updates to the code of practice, as it is unlikely that the condition could be met by small banks since they will not hold sufficient loss-absorbing resources to reach the threshold. As such, the statutory notification requirement is redundant. Finally, clause 8 sets out the procedural matters of the Bill, which I trust will cause no concern to hon. Members. At this point, I should note the Government’s second amendment, which removes the financial privilege amendment inserted in the other place. That is standard procedure and I trust that hon.”
“This will ensure that the Bank of England can move swiftly to recapitalise the failing firm. The clause also ensures that funds provided by the FSCS can be taken into account appropriately when deciding whether sale proceeds or compensation are due to those who owned the firm before it was transferred. This would avoid including value that was contributed by the banking sector in any assessment of the compensation payable to former shareholders and creditors, which would clearly be inappropriate and increase the cost of compensation to taxpayers. Finally, clause 7 disapplies a requirement for the Bank of England to notify the Treasury as to whether a certain condition for providing financial assistance to a failing firm has been met, otherwise known as the 8% rule.”
“The clause allows the Bank of England to take into account the funds provided by the FSCS when calculating the extent to which certain liabilities are bailed in, when the Bank of England exercises its bail-in tool alongside executing a transfer. Without this, the Bank of England would not be able to consider the funds provided by the FSCS in instances where it exercises its bail-in tool. That might mean that the Bank of England would have to continue to write down certain liabilities, potentially including uncovered deposits, where doing so could negatively impact and destabilise the continued operation of the failed firm. Clause 7 also gives the Bank of England the express ability to require the failing firm to issue new shares, allowing FSCS funds to then be used to pay for those shares, thereby injecting the funds into the firm.”
“It clarifies that a recapitalisation payment is not classed as a management expense of the FSCS, and it clarifies that payments that are made in error, in connection with the recapitalisation funds provided to the Bank of England, can be levied for, which is consistent with the approach for the other statutory functions of the FSCS. Clause 7 makes amendments to the Banking Act 2009. It makes it explicit that funds provided by the FSCS, in resolution in connection with the new mechanism, would not count as extraordinary public financial assistance, reflecting that the new mechanism is intended to reduce risk to the kind of public funds described within this definition.”
“I will briefly speak to clauses 6, 7 and 8, which cover the more technical aspects of the Bill. Clause 6 makes amendments to the Financial Services and Markets Act 2000. It ensures that, where the FSCS makes a recapitalisation payment to the Bank of England, its ability to levy the banking sector is extended to cover such a payment. This is key to recouping the FSCS’s funds, and thus achieving the Bill’s aim of reducing potential risk to public funds in a resolution. The clause also stipulates that credit unions are exempt from levies for this purpose, which I am sure Members will agree is a sensible and proportionate approach, given that credit unions are out of scope of the resolution regime. The rest of clause 6 makes minor amendments to existing legislation.”
“May I also take the opportunity to thank the officials of the House and you, Ms Jardine, as well as the Treasury officials who have worked so hard on the Bill? We still have some stages to go, but it is an opportune moment to do that. Question put and agreed to. Bill, as amended, to be reported.”
“The Government are therefore working closely with borrowers, official and private creditors, and the IMF and World Bank to strengthen the wider debt architecture and provide timely and co-ordinated restructurings for countries, where needed to support holistic debt sustainability for low-income countries. The third way that the Government are pursuing this issue is through tackling unsustainable debt by promoting greater resilience in debt markets. In response to the shadow Minister, I mention that the UK is committed to provide sovereign financing on sustainable terms and to act in an open and transparent manner to support global debt sustainability. We are playing a leadership role internationally in several key ways. The hon. Members for Melksham and Devizes and for Esher and Walton asked what the UK was doing to provide leadership.”
“I highlight that the UK has a strong track record of pushing for effective and holistic solutions to debt challenges, including supporting the IMF’s three-pillar approach for countries facing liquidity challenges and pushing for more effective co-operation and co-ordination under the G20’s common framework. The UK also co-ordinates debt treatment through our membership of the Paris club and our commitments to the G20 common framework in partnership with other creditors. This is a key point: unilaterally writing off debt owed to the UK would not be in the interests of the UK taxpayer—the shadow Minister, the hon. Member for Romford (Andrew Rosindell), mentioned the UK taxpayer, of course—which would be subsidising ongoing payments to other creditors if done unilaterally.”
“We are working closely with the private sector through bilateral meetings, engagement with representative institutions and Paris club discussions. Hon. Members also raised the issue of comparable treatment by private creditors. I reiterate that both Zambia and Ghana have reached agreements on debt restructurings with their private bondholders. Official creditors have deemed these comparable with their own restructurings. My hon. Friend the Member for Southgate and Wood Green raised the need for UK leadership on debt relief, and we heard that from others, too.”
“The private sector, which has been mentioned by many hon. Members, must also play its part in debt restructuring efforts. We are actively engaging with private sector partners—for example, through the global sovereign debt roundtable—to ensure continued private sector support for addressing the debt challenges faced by countries, leveraging the City of London’s leading role in sovereign debt markets. Several Members, including my hon. Friend the Member for Southgate and Wood Green, mentioned the issue of private creditors and whether we needed legislation to force them to participate. The Government are not currently seeing evidence that private creditors are refusing to participate in debt restructurings. Recently, private bondholders have agreed to debt treatments for common framework countries, including Zambia and Ghana.”
“The final pillar looks at providing case-by-case action to reduce the cost of existing debt burdens where needed. Secondly, we are working to address debt vulnerabilities through improving the effectiveness of debt restructurings for countries in debt distress. The G20 common framework remains the best mechanism for co-ordinating debt restructurings to address unsustainable debt burdens, but further progress is needed. The UK is working closely with the G20 and other international partners to ensure the framework delivers more timely, orderly and predictable debt restructurings. I know that is high on the priority list of the South African G20 presidency this year. The UK will be pressing for rapid implementation of the lessons learned from the common framework, which were agreed under the Brazilian presidency of the G20 last year.”
“The first is on addressing liquidity challenges; the second is on ensuring effective debt restructurings; and the third is on promoting debt resilience. First, on addressing liquidity challenges, we are working with international partners to address immediate liquidity pressures facing many countries, which are crowding out vital spending on climate, health and education. We support the IMF and World Bank’s three-pillar approach, which is designed to support countries with high debt repayments. The first pillar is focused on action from vulnerable countries to improve revenue mobilisation and implement sound economic policies. The second focuses on ensuring that countries receive new flows of finance at concessional rates from international financial institutions and other development partners.”
“The Government are highly concerned by the debt challenges faced by many low and middle-income countries, with 3.3 billion people living in countries that spend more on servicing their debt than on health or education—a point made by many hon. Members. Among low-income countries, 10 are currently in debt distress and 25 are at high risk, and there is an urgent need to address the vulnerabilities. As a Government, we are fully committed to tackling unsustainable debt burdens in a way that supports development needs and helps countries address those vulnerabilities. We are acting in three key ways. I will attempt to answer questions, particularly from my hon. Friend the Member for Southgate and Wood Green who secured the debate, when discussing the three key ways.”
“Friend the Member for Loughborough (Dr Sandher) spoke with great passion about his experience working in Somaliland. He brings great insights to the House after working in that capacity previously. I thank the hon. Members for Melksham and Devizes (Brian Mathew) and for Esher and Walton (Monica Harding) for stressing that the UK needs to restore our leadership on international development. I will come to some of their questions later in my contribution. I also want to thank my hon. Friend the Member for Clapham and Brixton Hill (Bell Ribeiro-Addy) for raising crucial points about the situation that many low-income countries vulnerable to the impacts of climate change find themselves in. I will say a little more about that, too.”
“Thank you for calling me, Ms McVey. It is a pleasure to serve under your chairmanship for the first time, and I am sure not the last. I thank the hon. Member for Southgate and Wood Green (Bambos Charalambous) for drawing attention to these issues and for bringing this debate on debt cancellation to Westminster Hall today. I also thank the other Members, whose speeches have made for a rich discussion on this issue. I will mention them briefly and then hope to come to everyone’s questions, should time allow. I thank the hon. Member for Strangford (Jim Shannon) for his kind words about my appointment—I am still early in my time in this role. I also thank him for underlining the importance of the role of charities in the development work that they do in low-income and vulnerable countries. My hon.”
“That is what this debate is about, and we want a sustainable solution. He asked about the role of China specifically. I am happy to write to him, in a follow-up to his questions, on that. All I will say now is that it is really important that we work with all international partners on this issue, because only by working multilaterally will we have success in the sense of providing sustainable solutions. We do not think we can act alone. I thank all hon. Members for their thoughtful contributions during today’s important debate. Together with the international community, we must work actively and urgently in order to address the significant debt challenges faced by vulnerable countries, and the Government are committed to doing just that.”
“We continue to push for those reforms in the G20. I hope that answers her question on that point. I thank the shadow Minister, the hon. Member for Romford, for his contribution—I think this is the first time that we have debated this way. He asked about reassurance on sound economic policy and preventing corruption. We agree that any lending and policy must be agreed on a sustainable basis. First, the scale of debt treatments is set under the IMF’s debt sustainability analysis. Secondly, the UK is committed to acting in an open and transparent way, as we have shown by publishing our own self-assessment against G20 guidelines. The hon. Gentleman asked a number of other questions. He was talking about open-ended commitments and sustainability. I think we all agree we want to reduce the reliance of low-income countries on foreign debt.”
“To strengthen the resilience of vulnerable countries and free up fiscal space when responding to shocks caused by climate change, the UK has led the way in encouraging the broader adoption of climate resilient debt clauses, which suspend debt repayments, on a cost-neutral basis, in the wake of exogenous shocks. We welcome creditors who have committed to providing CRDCs, and encourage others to follow suit. My hon. Friend also said that the common framework should be expanded to middle-income countries and offer an automatic suspension for countries that apply for restructuring. The UK is fully committed to making the common framework a success. We support expansion of the framework to middle-income countries and providing automatic debt standstills for countries that apply for restructuring under the framework.”
“The Liberal Democrat spokesperson, the hon. Member for Esher and Walton, asked whether the Government would return to spending 0.7% of GDP on development, which the last Labour Government were very proud to commit to and reach. This Government remain committed to restoring ODA spending to 0.7% as soon as fiscal circumstances allow. Although the Office for Budget Responsibility forecasts show that the tests have not yet been met, we continue to monitor these forecasts closely and remain one of the top ODA providers in the G7. There were a number of questions about climate, including from my hon. Friend the Member for Clapham and Brixton Hill, and I want to make a few comments about that.”
“I will now turn to a couple of questions that were asked during the debate. I apologise if I do not get to answer all the questions in the time available; I promise to write to hon. Members if I do not get to all of them. My hon. Friend the Member for Southgate and Wood Green asked about reforming the governance of international organisations. We agree that more needs to be done. First, we must change the international financial system in order to deliver a fairer deal for developing countries, including by using our board seats at the IMF and the World Bank, for a bolder approach on unsustainable debt. Secondly, we need to ensure that our system is more representative of those most in need, so we will make the case for not only fairer outcomes, but fairer representation in how we represent them.”
“Second, the UK helped to develop majority voting provisions, which are for use by the private sector specifically for syndicated lending. MVPs allow a majority of creditors to bind the minority to the terms of a restructuring and thereby mitigate the risk of a minority of creditors holding out in a restructuring scenario, which hon. Members mentioned in their contributions, and enable more efficient debt restructuring processes. On Monday, at her speech at the London Stock Exchange, the Minister for Development, my right hon. Friend the Member for Oxford East (Anneliese Dodds), announced that the FCDO will provide technical assistance for borrower countries that intend to include majority voting provisions in their contractual agreements with private sector lenders.”
“We also acknowledge the ongoing work by Georgetown University in this area. The UK has led the way in promoting debt resilience through the introduction of contractual innovations, an approach that the IMF has found to be working well. Under our G7 presidency in 2021, the UK developed two contractual innovations together with private sector stakeholders. The first relates to external shocks, which my hon. Friend the Member for Southgate and Wood Green mentioned in his speech. Climate resilient debt clauses help to strengthen the resilience of vulnerable countries by suspending debt repayments in the wake of external shocks, which frees up fiscal space for the country. The UK has led the way by including CRDCs in our own lending and calling for all lenders to adopt CRDCs by the end of this year.”
“I am not sure that is something we are actively considering, but I will check and write to the hon. Gentleman. In December 2024, we were the first country to publish our self-assessment against the G20’s operational guidelines for sustainable financing. In line with those guidelines, we publish annual reports on the total stock of debt owed to the UK, including reports on our new sovereign lending transactions. Finally, we are committed to provide sovereign financing on sustainable terms, adhering to the OECD’s sustainable lending principles. My hon. Friend the Member for Southgate and Wood Green also suggested creating a private sector transparency register. The UK supports all initiatives to improve debt transparency and is open to considering proposals for such a register.”
“The CCA scheme enables energy-intensive industries to receive discounts of up to 92% on their CCL bill. The new six-year scheme, announced on 16 October, will provide an estimated £1.9 billion of relief to 2,600 businesses in 53 industrial sectors over its lifetime. Overall, we expect a reduction in greenhouse gas emissions as a result of the clause compared with freezing the rates. In conclusion, the changes made by the clause will help to incentivise businesses to improve their energy efficiency, thereby progressing the Government’s climate objectives, which are vital for the UK’s long-term economic prosperity and energy security. I commend the clause to the Committee.”
“At autumn Budget 2024, this Government also announced that the main rate of CCL on liquefied petroleum gas will continue to be frozen. This is to ensure better consistency between LPG and other portable fuels—for example kerosene, which is zero rated under fuel duty—for commercial premises not connected to the gas grid. The changes made by the clause will increase CCL rates on gas, electricity and solid fuels by RPI with effect from April next year. Non-domestic energy supply users will see an increase on their CCL bill of around 0.025p per kWh of gas or electricity supplied. The rate on solid fuels will increase by 0.2p per kg. However, participants of the climate change agreement scheme are eligible to pay reduced CCL rates in return for meeting negotiated energy-efficiency and carbon targets.”
“Delivering on this mission will help to make the UK energy independent, protect billpayers, create good jobs and tackle the climate crisis. The previous Government followed a trajectory of rebalancing the gas and electricity rates over a five-year period to reflect that electricity emissions are progressively lowering due to the increasing contribution of renewable and lower-emission energy in electricity generation. The CCL rates for electricity and gas equalised in April 2024, and at the autumn statement 2023, under the last Government, rates were frozen for the year 2025-26. Now that the rebalancing has been achieved, uprating the main rates on gas, electricity and solid fuels from April 2026 will continue to provide an incentive for energy efficiency.”
“It is a great pleasure to serve under your chairmanship, Ms Vaz. The clause makes changes to the main rates of the climate change levy, or CCL, with effect from 1 April 2026. The Government are increasing the main rates of CCL on gas, electricity and solid fuels by the retail prices index to maintain the incentive for businesses and the public sector to be more energy efficient. Since 2001, the CCL has encouraged businesses and the public sector to be energy efficient by adding a tax on the non-domestic supply of energy. The Government have announced a national mission to make Britain a clean energy superpower and accelerate our journey to net zero, and improvements in energy and resource efficiency will play a significant role in reducing industrial emissions in the 2020s.”
“I hope that answers his question. I do not know whether the Chancellor has met representatives of the sector, but I am happy to write to him on that. The hon. Member for Inverness, Skye and West Ross-shire spoke about the cost of energy for people in his constituency. As I said, the rates on kerosene are frozen, which is why we are not uprating the rates on LPG. That will go someway towards helping those in rural areas. I declare an interest: I am not on the gas either, so we also rely on this form of energy.”
“I welcome the Opposition’s support for the clause. For quite some time there has been cross-party support for the CCA scheme. I welcome what the shadow Minister said about the Opposition’s support for the extension of that scheme for energy-intensive industries. The shadow Minister asked me about the UK chemicals industry. As he said, it is a very valuable sector of our economy. It is obviously included in the climate change agreement scheme, which exists to ensure that businesses for which energy makes up a larger proportion of their operating costs, and that are at higher risk of carbon leakage, are supported to make changes to their processes to reduce their energy intensity. The example he provided is concerning, but we have introduced measures to help such industries to cope with the fact that they are energy intensive.”
“Obviously kerosene is zero rated, but the effect of the clause is to increase the main rates of CCL on gas, electricity and solid fuels by RPI. That is in line with what we announced at the Budget, and takes forward those measures, so hopefully it will come as no surprise to hon. Members. Question put , That the clause stand part of the Bill.”
“The Government do not consider that necessary, as a tax information and impact note detailing the anticipated effects of the measure was published at autumn Budget. I would also highlight that the Government are taking a gradual approach to restoring the original real-terms value of the soft drinks industry levy. From 1 April, the levy will still be worth significantly less, compared with general prices, than it was in 2018. Clause 78 will protect the real-terms value of the levy and build on its significant success, by increasing both the lower and higher rates in line with inflation.”
“The new rates reflect forecasted changes in the consumer prices index in the year to 1 April 2025, as well as an additional increment to help to catch up for previous inflation. The catch-up reflects the 27% CPI change between 2018 and 2024 and will be spread evenly over the five rate increases from 2025 to 2029. That is to support soft drink manufacturers to adjust to the higher rates. The rates have also been adjusted to apply per 10 litres rather than per litre, so that rate changes can be made in smaller increments to reflect changes in CPI inflation more precisely. To illustrate using the current lower rate, 18p per litre becomes £1.80 per 10 litres—I think people could have probably worked that one out. We do not accept new clause 9, which would require the Chancellor to make an additional statement about the impacts of the measure.”
“Producers, manufacturers and importers of liable soft drinks must register, report, and pay the levy on the volume of liable soft drinks packaged in and imported into the UK. The levy rates have not been increased since their introduction many years ago, in 2018, and so have gradually reduced in value against inflation. In 2018, SDIL made up approximately 11% of the price of a 330 ml can of full-sugar Coca-Cola; in January 2025, it makes up only 6%. Uprating the levy in line with inflation will ensure that it remains effective and continues to encourage reformulation, by protecting its value in real terms. Clause 78 amends section 36(1) of the Finance Act 2017 to reflect the new rates of the levy to apply from 1 April 2025. Those are £1.94 and £2.59, per 10 litres of prepared drink, for the lower and higher bands respectively.”
“Clause 78 legislates for the new rates of the soft drinks industry levy, to apply from 1 April 2025. The levy came into effect in April 2018—it was introduced by the previous Government, with cross-party support—and is considered a successful mechanism for changing behaviour and encouraging reformulation of packaged soft drinks, resulting in reduced sugar content. That is seen through the levy’s significant success in reducing the sugar content in UK soft drinks by 46%. The levy applies to packaged soft drinks containing added sugar. It has a lower rate, which applies to drinks with a total sugar content of 5 grams to 7.9 grams per 100 ml, and a higher rate for drinks with 8 grams or more per 100 ml.”
“For example, Barbara Crowther, the children’s food campaign manager at Sustain, has said: “It’s absolutely right that after six years, the government should now increase the penalties for all the companies who have not done enough to reduce the sugar levels in drinks, and we urge them to ensure all money raised by the levy is reinvested in children’s health.” The levy has been globally recognised as a transformative health tax intervention. Modelling studies have associated it with up to 5,000 fewer cases of obesity in girls aged 10 to 11 and a 28.6% reduction in hospital admissions for tooth extractions for children under the age of five. Our Government take children’s health very seriously, particularly given the worrying levels of obesity in our society and the issues with children’s dental health.”
“I thank the shadow Minister for reiterating that there was indeed cross-party support in 2018 when the previous Government introduced the soft drinks industry levy. I say gently to him that if the previous Government had kept the levy in line with CPI, we would not be in this situation. The shadow Minister asked what considerations have been made about the impact of the measure. As I said in my opening speech about the clause, the catch-up reflects the 27% CPI change between 2018 and 2024. Because we have considered the impact on soft drinks manufacturers, it will be spread evenly over the five rate increases from 2025 to 2029. The shadow Minister should consider the fact that we are gradually spreading the increase. It is worth considering the views of those who have supported the Government’s change.”
“It is a bit of an exaggeration to read into this change, which we have introduced because the previous Government failed to keep the levy in line with inflation, and somehow infer from that—”
“I am coming to that. It is an exaggeration to infer from that that it becomes a new norm. It does not. I am certainly not going to write next year’s Budget or the year after’s Budget—that would be way above my pay grade in any case—but we are introducing this clause precisely because the former Government failed to keep the levy in line with inflation. Question put and agreed to. Clause 78 accordingly ordered to stand part of the Bill. Clause 79 Limited liability partnerships Question proposed , That the clause stand part of the Bill.”
“It forms part of a package of measures announced at the autumn Budget 2024 that are aimed at closing the tax gap, cracking down on avoidance and evasion and strengthening the powers of His Majesty’s Revenue and Customs to tackle promoters of avoidance schemes. The changes made by clause 80 will close a loophole that is exploited by a minority and ensure that anti-avoidance rules are more robust. I should be clear the vast majority of close companies and their participators are compliant and pay any tax due. Clause 80 makes a sensible change that is proportionate, ensures fairness and will affect only those few who seek to avoid tax. Our commitment is to ensure a fair and just tax system, and this measure is a step towards upholding that promise.”
“The Government are aware of the attempted use of co-ordinated or circular loan arrangements by shareholders in close companies to avoid the section 455 charge and thereby extract funds from their companies untaxed instead of receiving taxable earnings. As a result of the changes made by clause 80, where shareholders use circular loan arrangements to extract value from their companies, a tax charge will be applied on the relevant amount withdrawn. This will ensure that such arrangements do not avoid a tax charge. The targeted anti-avoidance rule will also be updated to protect against future exploitation. In summary, clause 79 makes changes to ensure that LLPs are not used to avoid tax chargeable gains.”
“This will ensure that, where a member contributes an asset to an LLP that subsequently enters liquidation, and the LLP disposes of the asset back to the member or to a person connected to them, they are taxed on the gains on the asset up to the time of its contribution to the LLP. The gain will be treated as accruing at the time that the LLP disposes of the asset. On clause 80, a close company is a company owned and run by a small number of people. In a close company, there are fewer restrictions and less accountability around how the company and its owners interact. The tax charge known as section 455 is a charge on loans to shareholders left outstanding after the company’s year end. The charge is remitted if the loan is repaid.”
“However, when an LLP is liquidated, it ceases to be tax transparent and becomes treated like a company, but the LLP is only charged tax on its gains since the contribution of the asset. As part of the liquidation, the liquidator could dispose of the LLP’s assets back to the contributing member or to a party connected to them, washing out the gains made prior to the asset being contributed to the LLP. The changes made by clause 79 will create the new occasion when a deemed disposal arises for chargeable gains purposes, and will have effect where an LLP enters liquidation on or after 30 October 2024.”