Treasury Questions
24th January 2012
David Gauke answers MPs’ questions on issues including tax reform, tax transparancy and measures to reduce tax avoidance.
Taxation Changes (Families with Children)
Roberta Blackman-Woods (City of Durham) (Lab): What assessment he has made of the effects on families with children of taxation changes coming into force in 2012-13. [91193]
The Exchequer Secretary to the Treasury (Mr David Gauke): The Government have taken unprecedented steps to increase the transparency of decision making, publishing detailed analysis of the impacts of individual measures in tax impact notes and presenting the overall impact of tax benefit reforms at fiscal events. The analysis shows that all but the top decile gain from direct tax changes, and that the Government continue to help protect the most vulnerable.
Roberta Blackman-Woods: Research by House of Commons Library and other independent sources shows that, of the £8.1 billion of tax rises in benefit cuts, women are paying £5.8 billion. That is a massive 72%. A further £2.4 billion of cuts will affect families with children. Why are the Government targeting the cuts on women and families? Does not that give the lie to the notion of our all being in this together?
Mr Gauke: We do not accept that. I must point out, for example, that of the 1.1 million people taken out of income tax because of policies that the Government have pursued, the majority are women.
George Freeman (Mid Norfolk) (Con): Will the Minister also confirm that, as well as the 1.1 million people taken out of tax, we are reducing the tax bill of 20 million of the poorest families?
Mr Gauke: Absolutely. It is important to point out that it is not just those who are taken out of income tax altogether who benefit, but the approximately 25 million people overall who receive an increase in personal allowance. That should be supported by hon. Members of all parties.
Yvonne Fovargue (Makerfield) (Lab): The Treasury has admitted that cutting tax credits will lead to an increase in child poverty. Rather than trying to change the definition of child poverty, was not the Prime Minister right in 2006 when he said:
“We need to think of poverty in relative terms”?
Mr Gauke: It is also important not just to think of poverty in terms of moving someone from one side of an arbitrary line based on a percentage of median income to another, but to look more widely. That includes improving poor children’s opportunities. The Government, through the pupil premium and other measures, are concentrating on opening up those opportunities.
Charlie Elphicke (Dover) (Con): Will the Minister tell the House how families can have a greater option of part-time working under the taxation changes, and whether they will have more encouragement to work with the introduction of the benefits cap?
Mr Gauke: With the work that my right hon. Friend the Secretary of State for Work and Pensions has undertaken, the Government are determined to ensure that work will always pay and that we do not have people trapped on benefits.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): Yesterday, we heard the Prime Minister say that jobs in retail are a vital part of the economy. Why are the Government making changes to working tax credits that will hit part-time workers in the retail sector hard? Is that a fair deal for parents who are trying to do the right thing? Can the Minister tell us how many couples who work between 16 and 24 hours a week will lose out, and by how much?
Mr Gauke: We are taking measures to ensure that work will always pay. On the Labour party’s complaints, I point out that its flagship policy at the last election to increase national insurance contributions for employers would have hit the retail and other sectors very hard.
COP26 Process
Mr Mike Weir (Angus) (SNP): What recent discussions he has had with Her Majesty’s Revenue and Customs on the operation of the COP26 process. [91194]
The Exchequer Secretary to the Treasury (Mr David Gauke): Ministers have regular meetings to oversee and challenge HMRC business, including the administration of tax credits and the recovery of overpayments.
Mr Weir: I am grateful for the Minister’s answer, but does he understand the intense frustration and anger of many of my constituents who repeatedly tell HMRC about errors in tax credits that HMRC does not correct, which subsequently give rise to overpayments? How often can HMRC be allowed to make mistakes and hide behind COP26 to evade any responsibility?
Mr Gauke: I understand the hon. Gentleman’s concern—he has raised this matter on behalf of his constituents a number of times. The Treasury and HMRC are always seeking to improve the system. It is in a better place than it was four or five years ago, but none the less, there are still issues. I constantly tell HMRC that we need to find ways to address problems when information is provided but not taken up and used.
Topical Questions
Andrew Jones (Harrogate and Knaresborough) (Con): I warmly welcome the work being done by the Office of Tax Simplification, but does the Exchequer Secretary agree that we can do more to boost tax transparency, for example by providing all taxpayers with an annual statement on how their hard-earned tax pounds are spent?
The Exchequer Secretary to the Treasury (Mr David Gauke): My hon. Friend raises an interesting point. In November, the Government and Her Majesty’s Revenue and Customs published a consultation paper on exactly those lines, and I very much look forward to the ten-minute rule Bill that my hon. Friend the Member for Ipswich (Ben Gummer) will introduce tomorrow, which makes that proposal. We should all agree that we should do everything that we can to make tax and spending as transparent to the public as possible.
Kerry McCarthy (Bristol East) (Lab): The Public Accounts Committee has
“serious concerns that large companies are treated more favourably than other taxpayers”
by HMRC.
That once again gives the lie to the Government’s claims that we are all in this together. What action will the Chancellor or the Minister take to ensure greater transparency and accountability in HMRC, and to assure ordinary taxpayers who are struggling to pay their bills this month that companies will also pay their full share?
Mr Gauke: The Government will respond in detail to the PAC report shortly, but it is only fair to point out that, in recent years, HMRC’s yield from large companies has increased substantially. Indeed, we have provided, as part of the spending review settlement for HMRC, additional resources to get more out of large businesses, so that we ensure that they pay their fair share.
John Glen (Salisbury) (Con): How much revenue does the Treasury expect HMRC to receive as a result of recent measures to reduce tax avoidance, and how much does the Minister estimate could be accrued from tax exiles who make £100 million in this country, clear off to Switzerland for five years, and then come back and advise the Leader of the Opposition?
Mr Gauke: As a consequence of the measures that we announced last year to tackle avoidance, we believe that something like £1 billion will be raised, £750 million of that relating to disguised remuneration, a policy that was opposed by Labour. I cannot talk about individual advisers to the leader of the Labour party and their tax affairs, but if such a person is advising the Labour leader, as far as we are concerned he is doing a great job and should carry on.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): The Government’s national insurance holiday for new companies to employ new workers has been acknowledged by the Prime Minister to be a flop. So far just £6 million has been spent on supporting jobs and £12 million in administering them, out of a budget of £1 billion. Will the Minister consider taking the advice of the Federation of Small Businesses and extending that support to all small businesses prepared to take on new staff?
Mr Gauke: The take-up has indeed been disappointing, but there have been 12,000 successful applications and we estimate that about 40,000 jobs have been supported in total. There are 17 participating businesses in the hon. Gentleman’s constituency. If I may correct him on one thing, the administration costs are not £12 million, but £325,000. As for extending the scheme further, we have to bear in mind the cost. We are concerned about that, even if the Opposition are not.
