Treasury Questions
6th December 2011
David Gauke answers questions from back bench MPs on subjects including HMRC Contact Centres, tax rates and closing tax loopholes.
HMRC Contact Centres
Tony Cunningham (Workington) (Lab): What recent discussions he has had with Her Majesty’s Revenue and Customs (HMRC) on the provision of customer services by private sector companies in HMRC contact centres; and if he will make a statement. [84786]
The Exchequer Secretary to the Treasury (Mr David Gauke): HMRC has kept me informed about its plans for a small-scale, short-term trial to test whether the use of additional resources for contact centres from third party providers might help it to improve levels of service.
Tony Cunningham: There are obviously issues relating to the use of the private sector in tax offices. Will the Minister meet me and other constituency MPs who are affected by this rather risky pilot?
Mr Gauke: I am happy to meet the hon. Gentleman, but HMRC is exploring ways in which it can improve the service in contact centres so that when taxpayers and tax credit claimants phone up they can get through more easily and more reliably. I would have thought that that was something that hon. Members on all sides of the House would welcome.
Nicholas Soames (Mid Sussex) (Con): May I ask my hon. Friend to recognise that the service provided by HMRC contact centres is not good enough and that many of our companies have great difficulty with continuity of service? Anything that can be done to improve the service is wholly to be welcomed.
Mr Gauke: I am grateful for those comments. It is worth noting that about 70% of calls now get through to HMRC contact centres on the first attempt, whereas last year the proportion was about 40%. Progress has been made, therefore, but we want to make further progress and it is sensible that HMRC explores what possibilities exist.
Mrs Mary Glindon (North Tyneside) (Lab): Will the Minister say how many more or fewer HMRC staff there will be over the next three years?
Mr Gauke: The overall trend in HMRC employment has been downwards since 2005, when the organisation was formed, and that will continue, but we are redeploying staff, for example in enforcement and compliance, which means that additional staff are being taken on to deal with tax evasion and tax avoidance.
Tax Rates
Christopher Pincher (Tamworth) (Con): Whether he has made an assessment of the effect on the economy of setting different tax rates in each economic sector. [84790]
The Exchequer Secretary to the Treasury (Mr David Gauke): The Government’s aim is to create the most competitive tax system in the G20. The corporate tax road map sets out a series of reforms in a single programme to give certainty to business, including by reducing the main rate of corporation tax to 23% by 2014. Where appropriate, the Government provide tax reliefs to support specific sectors of the economy, but simplicity is a key characteristic of a competitive tax system.
Christopher Pincher: I am grateful for that answer. One of the biggest employers in my constituency is Drayton Manor park, home of Thomas Land, and one of the greatest challenges that it faces is the lower rate of VAT levied on the leisure sector in our continental competitor countries. Has the Minister examined the case for lower VAT for the leisure sector in this country, and if he has not—I appreciate the bust that we inherited—what measures is he taking to make the industry more competitive?
Mr Gauke: We continue to look at VAT in the leisure and other specific sectors but we have to be careful to keep the tax system as simple as possible and we have to bear it in mind that such measures can simply move spending from one area to another. Furthermore, as my hon. Friend points out, we have to ensure that the public finances are in a sound state. I am sure that I remember reading one “Thomas the Tank Engine” story in which the big, unpopular engine Gordon went off the tracks. We do not want a repeat of that.
Jonathan Ashworth (Leicester South) (Lab): The Exchequer Secretary will be aware that consumption is a major part of the economy. Given that in recent days we have seen news that retail figures have been poor and the CBI has said that retail stores are laying off people at the fastest rate for two years, why will he not consider a temporary VAT cut to boost demand and get the economy moving again?
Mr Gauke: Returning to the fundamental question, the difficulty is that if we do not have credibility in the public finances and if interest rates rise, it will do nothing for consumption. We have to get control of the deficit, get borrowing down and stick to the path. We cannot grow money off the money tree, which, I am afraid, seems to be the Labour party’s policy.
Tax Loopholes
Valerie Vaz (Walsall South) (Lab): What steps he is taking to close tax loopholes. [84793]
The Exchequer Secretary to the Treasury (Mr David Gauke): The Government have set out a strategic approach to tackling tax avoidance, with an emphasis on preventing avoidance before it can occur. Measures introduced in the Finance Act 2011 will bring in an additional £1 billion a year over the course of this Parliament and protect further revenues. The Government will carefully consider Graham Aaronson’s report on a general anti-avoidance rule and engage formally with interested parties to establish whether that could further reduce tax avoidance.
Valerie Vaz: I thank the Minister for attempting to answer my question before I have asked it. Hard-working and hard-paying taxpayers demand fairness, but the stamp duty loophole cost the Treasury almost £1 billion. The Minister spoke earlier about redeploying staff; will he confirm that he will put more resources into enforcing tax evasion?
Mr Gauke: We are putting more resources into dealing with tax evasion and avoidance. Just this morning we have announced proposals that will extend the disclosure of tax-avoidance schemes to stamp duty land tax. The biggest measure we have taken in tackling tax avoidance was on disguised remuneration in the last Finance Bill. Unfortunately, Labour Members did not support us.
Stephen Williams (Bristol West) (LD): Only today my hon. Friend the Minister has had to table written statements blocking tax-avoidance schemes in derivatives, loan relationships and capital allowances and many other measures. A general anti-avoidance rule would back up the plethora of anti-avoidance measures that this and previous Governments have had to introduce. The coalition agreement provided for a study of a general anti-avoidance rule. The Treasury now has that study; will my hon. Friend give me an assurance that it is under urgent consideration for implementation at the earliest opportunity?
Mr Gauke: I can give the hon. Member that assurance. We are grateful to Graham Aaronson and his distinguished panel for studying this issue. We are looking at it. It is important to consult properly, but we are giving urgent consideration to the matter.
Owen Smith (Pontypridd) (Lab): The Government said in August that the deal between the UK and Switzerland would close other tax loopholes and net the Exchequer an additional £4 billion to £7 billion in revenue. Will the Minister explain why the Office for Budget Responsibility described the deal last week as a “fiscal risk”, declined to validate the Government’s numbers, citing “significant uncertainties”, and discounted the revenues from its central projection for receipts?
Mr Gauke: The agreement has not been ratified as yet; it is yet to go through the parliamentary process in this country or, indeed, in Switzerland. The OBR is rightly cautious, but even the £4 billion is likely to be greater than the amount we would have received from privatising Lloyds Banking Group and RBS. That is not an insubstantial sum of money which Members on both sides of the House should welcome. It will put an end to tax evasion through people putting their money into Switzerland.
Benefit Changes (Women)
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): What assessment he has made of the effects on women of the changes to child tax credit and working tax credit proposed in his autumn statement. [84795]
The Exchequer Secretary to the Treasury (Mr David Gauke): The Chancellor considered the equality impacts of the changes to tax credits announced in the autumn statement, which included an assessment of the effects on women.
Luciana Berger: That was not an answer to my question. Figures from the House of Commons Library show that since the election changes to tax, pensions, pay and benefits are hitting women more than twice as hard as they are hitting men. Of the extra £18.9 billion that is being raised, £13.2 billion comes from women, with just £5 billion or so coming from men. This is the biggest attack on women in a generation. Will the Minister tell us what his Government have against women?
Mr Gauke: Let us look at some of the measures we have taken that will help women and families—the additional support for child care announced last week, for example. The increase in the personal allowance for income tax will take 1.1 million people out of paying income tax at all—and 58% of them are women.
Margot James (Stourbridge) (Con): Does my right hon. Friend agree that it is important for us to target the women who need the money most, and that the plans to double investment in child care and free education for children from disadvantaged families must be beneficial in these times?
Mr Gauke: My hon. Friend is absolutely right. We are taking steps that will provide better opportunities for children, and measures such as the increase in child care provision will help women in particular.
Capital Allowances (Regional Growth)
Tristram Hunt (Stoke-on-Trent Central) (Lab): What recent assessment he has made of the effect of capital allowances on regional growth. [84800]
The Exchequer Secretary to the Treasury (Mr David Gauke): Her Majesty’s Revenue and Customs does not have the data that are required to analyse capital allowances claims by region.
Tristram Hunt: I thank the Minister for another great non-answer. Those in the ceramics sector in Stoke-on-Trent and elsewhere are concerned about the fact that the Government’s package for energy-intensive industry does little to prevent further offshoring of jobs and businesses. Will the Government give careful consideration to the suggestion in the Energy Technology Criteria List that the granting of enhanced capital allowances should include the low-carbon equipment that is vital to the sustainable future of Britain’s world-class ceramics industry?
Mr Gauke: I should have thought that the hon. Gentleman would welcome the measures announced last week for energy-intensive industries. We are also doing more to help the economy more broadly in the tax system. A couple of hours ago I happened to meet the chairman of one of the leading manufacturers in his industry, who was very supportive of the reduction in corporation tax from 28% to 23%.
Miss Anne McIntosh (Thirsk and Malton) (Con): York Handmade Brick Company is delighted by the announcement in last week’s Budget statement, and hopes to work closely with the Government to reduce emissions and ensure that we are on track to help energy-intensive industries such as brick companies.
Mr Gauke: I am grateful for my hon. Friend’s comments. We do not want to export jobs in pursuit of policies that are not effective and do nothing for UK industry.
Topical Questions
Chris Skidmore (Kingswood) (Con): The small business rate relief holiday has proved vital to many companies in Kingswood and across the country. Does the Minister agree that many of those companies will welcome the extension of that holiday?
The Exchequer Secretary to the Treasury (Mr David Gauke): My hon. Friend is absolutely right. The measure will provide support in the form of a reduction in business rates for more than 500,000 small businesses and 29% of all shops for the whole of the next financial year.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): Does the Chancellor agree with the chief executive of the Engineering Employers Federation, Terry Scouler, that
“the biggest threat to reducing”
the
“deficit comes from weak growth”?
In view of the fact that growth is dependent on demand, that this country is confronted over the next two years with the biggest squeeze on its living standards in a very long time, and that demand in our main export market, Europe, is also falling, can he tell us where that growth is coming from?
Mr Gauke: May I point out to the hon. Gentleman that Terry Scouler is supportive of the steps we are taking to get the deficit under control, and made that very clear last week. He was also supportive of some of the measures we announced last week, such as the reforms relating to R and D tax credits, which will help manufacturing.
Dame Anne Begg (Aberdeen South) (Lab): Is Her Majesty’s Revenue and Customs trying to maximise its income by not warning businesses immediately that they have incurred a penalty for late payment of PAYE? Businesses in my constituency have been facing huge bills because HMRC has taken six months before letting companies know about the fines they are incurring.
Mr Gauke: I am grateful to the hon. Lady for raising that point. I assure her that that is not a revenue-raising policy, but I am happy to raise her particular case with HMRC and find out what has happened in those circumstances, if she would like to contact me.
Tessa Munt (Wells) (LD): What plans does the Chancellor have in place for peer reviews of the Crown dependencies and the overseas territories, and what sanctions will be in place for individuals, banks and businesses that are found not to be complying with international tax standards and are guilty of money laundering and tax avoidance?
Mr Gauke: Of course we monitor these matters very closely and are in discussions with Crown dependencies and overseas territories, many of which are taking substantial steps to improve their compliance with international tax standards. We welcome that and will further encourage it.
