Schedule 6 - Administration of creative sector reliefs

Finance Bill – in the House of Commons am 6:30 pm ar 5 Chwefror 2024.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Pleidleisiau yn y ddadl hon

Amendments made: 4, page 138, leave out lines 15 to 20.

This amendment and Amendments 5 and 6 allow regulations imposing information requirements for creative sector relief to provide for consequences of non-compliance short of the total invalidity of the claim (for instance, by making a claim invalid only so far as it relates to certain items of expenditure).

Amendment 5, page 138, line 25, after “which” insert

“, and the time by which,”.

See the explanatory statement for Amendment 4.

Amendment 6, page 138, line 26, at end insert—

“(c) the consequences of failing to provide the information as required (which may include the total or partial invalidity of the claim or a reduction of the claimed relief).”—(Nigel Huddleston.)

See the explanatory statement for Amendment 4.

Third Reading

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury 7:02, 5 Chwefror 2024

I beg to move, That the Bill be now read the Third time.

This Government are backing British business, supporting employment, and creating a simpler and fairer tax system. My right hon. Friend the Chancellor delivered an autumn statement with the clear intention of strengthening the economy, now and for the future. This Finance Bill, which Members of the House have had the opportunity to scrutinise and debate over the past few months, does exactly that. It takes forward important tax measures to help businesses invest for less; encourages innovation and supports our creative industries by elevating rates and simplifying credits; and improves and simplifies our tax system to ensure it remains fit for purpose.

Mr Deputy Speaker, allow me to remind Members of the Bill’s key aims. Our first aim is to support British industry, so that we can solidify our position as world leaders in key sectors. Making full expensing permanent allows UK businesses to invest for less. We have moved to make the UK’s plant and machinery capital allowances the most generous of any major economy. Permanent full expensing has been called the single most transformational thing we could do for investment, and it was welcomed by more than 200 companies and trade associations.

The Bill also merges two significant Government schemes: the SME scheme and the R&D expenditure scheme. In doing that, we are meeting our aim of simplifying the system while providing greater support to British businesses, so that they can spend less time on administration and more time on innovation. The Bill also introduces greater support for loss-making R&D-intensive SMEs and lowers the intensity threshold required to access that support to 30%, helping around 5,000 extra SMEs. To further support investment in renewable energy, we have introduced a new assets exemption for the electricity generator levy, a measure that will continue to drive growth in both our renewables sector and the wider economy. We also continue to support our world-leading creative industries with tax measures that reform the film, TV and video game tax reliefs, turning them into refundable expenditure credits that are easier for business.

Our second aim is to support employment. We must remove barriers to work and incentives to not work, and most of all, must ensure that hard work and expertise are rewarded. That is why the Bill makes changes to encourage people to stay in work and use their expertise for longer. The Bill will complete the abolition of the lifetime allowance, amending pension tax rules so that employees with valuable, hard-earned expertise are no longer encouraged to reduce their hours or retire early. The Office for Budget Responsibility estimates that this will retain 15,000 workers annually, keeping many high-skilled employees and experienced individuals in our labour market while ensuring that they receive their rightful benefits for working.

Our third aim is to create a simpler, fairer and more modern tax system—an aim that the Bill also supports. Making full expensing permanent is a huge simplification for larger firms, but we are a nation of millions of small businesses. In the Bill, we are expanding the cash basis—a simplified way for over 4 million smaller and growing traders to calculate their profits and pay their income tax. While we remain focused on reducing the tax burden, we cannot overstate the role of tax in supporting public services, so we must all do our part. Everyone must pay their fair share, which is why the Bill introduces a new criminal offence for those who promote tax avoidance schemes and continue to promote them after receiving a stop notice. Alongside this, His Majesty’s Revenue and Customs will for the first time be able to bring disqualification action against the directors of companies involved in promoting tax avoidance, including those who control or exercise influence over a company. These are vital steps in ensuring that the system is fair for all, and that those who try to undermine it face the consequences.

I thank right hon. and hon. Members from across the House for their helpful and insightful contributions to the debate on the Bill. I also thank the many stakeholders who have provided their views on the issues raised, the Treasury, HMRC officials and House Clerks who have helped the Bill to get to this point. This Bill backs British business, rewards hard work, nurtures innovation, and supports our leading industries while solidifying long-term economic growth. For those reasons, I commend it to the House.

Photo of James Murray James Murray Shadow Financial Secretary (Treasury) 7:07, 5 Chwefror 2024

I begin by wishing His Majesty the King the very best for a speedy recovery. My colleagues and I are thinking of him and the royal family at this time, and we wish him a swift return to full health.

Throughout consideration of the Bill, the Opposition have made it clear that it contains a number of measures for which we have been calling for some time. For instance, we welcome the Government finally making full expensing permanent after so many years of chopping and changing capital allowances; we have made it clear that we will maintain that policy if we win power this year. We have also made it clear that we will maintain the system of R&D tax credits introduced by the Bill—again, after so many years of this Government chopping and changing the design of the scheme. In both cases, that is because we prize stability and predictability for businesses; they have made it clear to us that they value that greatly.

We know that providing certainty is a critical factor in boosting business investment and economic growth. If Labour won the next general election, we would put that certainty and stability at the heart of our approach in government by publishing a road map in the first six months, setting out our business tax plans for the whole Parliament. We have set out our approach to full expensing and to corporation tax, so I am disappointed that the Minister was not able to give us a clear guarantee that the Conservatives will maintain full permanent expensing and cap corporation tax at 25% for the whole of the next Parliament. Businesses can have confidence, however, that both of those commitments are locked in with Labour.

Of course, there are provisions in the Bill of which we have been critical, not least the fact that it freezes tax for passengers flying around the UK on private jets, while hiking taxes for everyone else who is flying economy or business class. Also, the Government admit that some provisions will need to be returned to and corrected. That is a far from ideal position to be in before a Bill has even become law. We know this is the case because, towards the end of last month, HMRC admitted that the way in which the Government have legislated to remove the lifetime allowance has

“created unintended consequences for members with multiple pension schemes”.

HMRC says that further legislation will be necessary to fix three areas in schedule 9 relating to the abolition of the lifetime allowance. That clearly indicates rushed legislation that runs the risk of creating problems for all involved. The legal firm Wedlake Bell, for instance, has said:

“The proposed new tax regime replacing the LTA at breakneck speed from 6 April 2024 is very risky for all parties including trustees, administrators, members and indeed HMRC itself.”

More widely, our concern with this Bill, as with the autumn statement it followed, is that the Conservatives cannot hide or move on from their 14 years of economic failure. Those 14 years of failure have left economic growth languishing and people across Britain worse off. Last November’s autumn statement for growth was the 11th attempt at an economic growth plan from the Conservatives. The truth is that the Conservatives are incapable of getting our country back on track. We need a general election so that Labour can offer the change and the plan that families and businesses across Britain need.

Photo of Harriett Baldwin Harriett Baldwin Chair, Treasury Committee, Chair, Treasury Committee, Chair, Treasury Sub-Committee on Financial Services Regulations, Chair, Treasury Sub-Committee on Financial Services Regulations 7:11, 5 Chwefror 2024

I will not detain the House for long, because I have the feeling that not all my colleagues are here to listen to my remarks. However, I want to make a couple of points.

First, having heard the Opposition complain about the measures in this Finance Bill, one would think that they did not like them, but they are not here this evening, they are not voting against Third Reading, and they have not tabled any solid proposals themselves. The only economic policy anyone has heard from the Opposition is the extra £28 billion that they want to impose in taxes on our businesses and our families.

Photo of Katherine Fletcher Katherine Fletcher Ceidwadwyr, South Ribble

Does my hon. Friend agree that it is almost as though the Opposition do not have a plan?

Photo of Harriett Baldwin Harriett Baldwin Chair, Treasury Committee, Chair, Treasury Committee, Chair, Treasury Sub-Committee on Financial Services Regulations, Chair, Treasury Sub-Committee on Financial Services Regulations

I would agree with my hon. Friend.

I point out that the 110 pro-growth, pro-supply side measures in this Finance Bill have not stoked inflation. Indeed, inflation has fallen from over 11% down to 4%, and according to the Bank of England’s forecast, it is on track to reach 2%, so one has to commend the measures taken in this Bill, and I look forward to voting for that progress shortly.

I add my thanks to the officials from the Treasury and HMRC who have worked so hard on this legislation, only to hear that in a month’s time there will be another Budget and another Finance Bill. One has to recognise the hard work that has gone into this Bill, but I do worry that HMRC is being asked to do more and more. I worry about the fact that various thresholds have been frozen, and in particular, as the Minister knows, that the high-income child benefit charge is affecting more taxpayers up and down the land.

I am worried about one of the 110 measures—one that is within HMRC’s bailiwick. It is the measure allowing people to put fractional shares into their individual savings accounts. That was a very welcome announcement in last year’s autumn statement. I tried to put down an amendment to the Bill about it, but it was found not to be orderly because that change has not been legislated for this time around. In fact, the word is that HMRC will not be able to put that in place until at least the next tax year. Can I ask the Financial Secretary to convey the sense of urgency that I think we all feel about making these pro-growth, pro-investment changes?

There is a wide range of measures in this Finance Bill that I welcome, and I look forward to the Budget on 6 March. I think we can pay tribute to all the hard work that the Financial Secretary, his team, and all the Treasury and HMRC officials have put into this excellent piece of legislation.

Photo of Drew Hendry Drew Hendry Shadow SNP Spokesperson (Economy) 7:14, 5 Chwefror 2024

In this Third Reading debate on the Finance Bill, one thing has been conspicuously absent from both the Tory and the Labour Front Benchers’ speeches—the one thing affecting people most just now: their struggle with the cost of living crisis. People are struggling to pay their bills. They are struggling to pay their mortgages, which have gone up because of this Government’s disastrous mini-Budget. They are struggling to pay their rent. They are struggling to pay their food bills because of these parties’ disastrous Brexit, which is pushing food price inflation even higher. They are struggling to pay their energy bills, because this Government have been asleep at the wheel while prices have been rising, and even allowed the energy price cap to go up in January when bills have never been higher. This is a travesty of a Finance Bill. It has done nothing to help the people of Scotland with their finances, it has done nothing to help people across the rest of the UK, and I will definitely vote against it tonight.

Photo of Debbie Abrahams Debbie Abrahams Llafur, Oldham East and Saddleworth 7:16, 5 Chwefror 2024

May I ask colleagues in all parts of the House for some indulgence? Unfortunately, I was missed out on Report, but I very much wanted to speak about new clause 4, which I tabled. It is very close to my heart, and it is the reason why I became an MP. Specifically, it is about asking the Government to make an assessment of the public health effects of the Bill, particularly in terms of regional inequalities, the impacts on protected characteristics and the impact on the NHS.

I would first like to associate myself with the comments of my hon. Friend James Murray about His Majesty King Charles. I wish him a very speedy recovery, and send best wishes to his family.

I had hoped that I might convince the Minister just a little more than I did in Committee about what a difference the assessment in my new clause would make. I am going to extend the arguments just a little more, if he will bear with me. I appreciate that I cannot do anything about the issue in this Bill, but perhaps he could think about it for the one we will have after the Budget, because I will be returning to this issue again. The proposal is not about changing anything in the Finance Bill; it is about publishing the Government’s evaluation of the impact of their policies, as announced in the autumn statement, on the health of our constituents as mediated through, for example, changes in poverty and socioeconomic inequalities. Ideally, that would have been done during the planning of the autumn statement, but given that that did not happen, my new clause would have provided the opportunity to make decisions based on an evaluation of the impacts on our health, including our children’s health.

Many Members will have heard about and read the report of the Academy of Medical Sciences on child health, which came out earlier today. In it, the UK has been revealed to have a stalling infant mortality rate, which is worse than 60% of that in similar countries. This is after a century during which infant mortality has been decreasing. The academy has put to us, as decision makers, that we need to be doing a lot better. My new clause would have helped the Government in their quest for transparency, fulfilling the Prime Minister’s promise on that, and restoring confidence in the Government and in politics more widely. It would also have allowed the Government to monitor their commitment to levelling up our health across the country and to tackling the appalling north-south divide.

I was director of public health research at the University of Liverpool along with Professor Dame Margaret Whitehead, who in 1987 published her report revealing for the first time the north-south health divide. It came out a few years after the Black report and it showed the causal relationship between poverty and health. Margaret took it a step further, emphasising socioeconomic inequalities, not just poverty, as the key driver of these health inequalities.

We have been building on that evidence base for the past 40 years or so. Many will have read “The Spirit Level” by Professors Richard Wilkinson and Kate Pickett which showed the universal relationship between socioeconomic inequality and educational attainment, social mobility, trust between communities—where has trust gone within our communities?—reducing crime and much more. The narrower the gap in socioeconomic inequalities, the better almost all societies across the world do on a whole host of measures including health and wellbeing.

Professor Sir Michael Marmot’s 2010 totemic “Fair Society, Healthy Lives” report set out six objectives across our life course of what we as a country need to do to address these socioeconomic inequalities and reduce health inequalities. He warned us in 2017 when we started to see life expectancy in England as a whole flatlining, which was accompanied by declining healthy life expectancy. We heard many questions in today’s Department for Work and Pensions orals about what we can do to get a fit and healthy labour force, and our inequalities are partly why we are in our current position. Professor Marmot also revealed that life expectancy for the poorest women and in the poorest areas was declining, and that we were one of three advanced economies in the world where this had been happening, along with the USA and Iceland. This is not a question of our having reached peak life expectancy; we are falling behind most of our competitors. He also revealed that health inequalities had increased and that there was an even starker north-south health divide.

Then covid hit. The same pattern of infection, ill health and death was seen with covid as was seen before the pandemic with other conditions. The same groups of people and the same areas were affected by covid as were affected by, for example, heart disease.

Last month Michael provided another update in his latest report, “Health Inequalities, Lives Cut Short”. He said in The BMJ a couple of weeks ago something that I asked the Prime Minister about last week:

“if everyone had the good health of the least deprived 10% of the population, there would have been 1 million fewer deaths in England in the period 2012 to 2019. Of these, 148,000 can be linked to austerity. In 2020, the first year of the covid pandemic, there were a further 28,000 excess deaths.”

Today, I see no evidence that policymakers have learned from or even understand this injustice, or its economic consequences. I urge them to watch a short film, “The Unequal Pandemic”, which shows the human cost of this inaction. Our experience of covid and these inequalities is not inevitable.

Today’s Academy of Medical Sciences report estimates that a cost of £16.13 billion a year could have been avoided by early childhood intervention. The relationship between population health and productivity is also well established. In its 2018 “Health for Wealth” report, the Northern Health Science Alliance argued that in order to improve our productivity and growth we must improve our health. It calculated that improving the health of the north to the level of the rest of England would increase productivity by £13.2 billion a year. It is in the economy’s and the Chancellor’s interest to undertake this health assessment of his measures. I appreciate that that is not going to happen in this Bill, but I would be grateful if the Minister would consider it for the next one.

I was grateful in the Finance Bill Committee for the Minister responding with a long list of data that the Government already collect on poverty, and so on. Unfortunately, he did not explain how these data were then analysed to assess the impact of his Government’s measures on, for instance, stricter social security sanctions, and how those would affect the current levels of children living in poverty, deep poverty and destitution, as described in the Joseph Rowntree Foundation “UK Poverty 2024” report. He did not explain if these data had been disaggregated to examine the impacts of these policies on different parts of the country, on disabled people or on people from ethnic minority communities, and he did not explain what scenario-modelling on poverty, deep poverty and destitution had been undertaken to understand whether more children will die before their first birthday because they had been born into a poor or destitute family. For each 1% increase in child poverty, an extra 5.8 babies per 100,000 livebirths will die before their first birthday.

Professor Sir Michael Marmot has asked us to provide hope—hope that we as politicians can recognise and understand that these inequalities must be addressed and that they are not inevitable, and I agree. I urge the Minister to really consider this, if not now, then in the next Finance Bill, and to come back with a set of proposals on how the Government are going to do it.

Question put, That the Bill be now read the Third time.

Rhif adran 73 Finance Bill — Schedule 6 - Administration of creative sector reliefs

Ie: 282 MPs

Na: 40 MPs

Ie: A-Z fesul cyfenw

Rhifwyr

Na: A-Z fesul cyfenw

Rhifwyr

The House divided: Ayes 283, Noes 39.

Question accordingly agreed to.

Bill read the Third time and passed.