Clause 70 - Hire cars for disabled people

Finance Bill – in a Public Bill Committee am 2:30 pm ar 11 Mehefin 2013.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Question proposed, That the clause stand part of the Bill.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

Clause 70 provides for one of a number of cross-cutting measures that are being implemented through the Bill following the introduction of the personal independence payment and armed forces independence payment from 1 April 2013 to replace  disability living allowance. The measures incorporate the inclusion of a reference to PIP in one of the definitions of “disabled child” for the purposes of employer-supported child care, which we have already debated when we considered clause 12; provide a vehicle excise duty exemption for recipients of enhanced mobility PIP and a 50% discount for recipients of standard mobility PIP, which we will come to in clause 188; amend the list of specified benefits for the purposes of exemption from insurance premium tax, which we will deal with in clause 199; amend, for the purposes of vulnerable beneficiary trusts, the definition of “disabled” to include those in receipt of PIP or AFIP, which we will come to in clause 213; and amend the definition of hire cars for disabled persons in the Capital Allowances Act 2001 to include reference to recipients of PIP and AFIP. That sets out the context of the clause.

As Committee members know, the short-life asset regime enables firms to write off the cost of capital assets over their life in the business against the firm’s taxable income, thereby enabling tax allowances to be brought into line with the actual depreciation of plant or machinery when an item is scrapped or sold within eight years of its acquisition. It ensures that the total allowances match the actual net cost to the business, providing an advantage where the allowances would otherwise be less than the net cost.

Cars leased to disabled people fall within the SLA regime. However, the definition of a disabled person for capital allowance purposes is based on receipt of a certain type of benefit, including the disability living allowance. Thus, given the recent changes to disability allowances, which have not been uncontroversial, with the personal independence payment and the new armed forces independence payment being phased in from April 2013, the definition of '”disabled person” for the purposes of capital allowances clearly also needs to change. So clause 70 extends the definition with effect from 1 April 2013. However, reference to DLA in the definition will remain until DLA has been completely replaced.

The tax information impact note states that the change is being made

“so that new and continuing recipients of these benefits and claimants of the tax reliefs and supports are both eligible for the same reliefs and supports”.

Strictly speaking, that is true. However, the tax information impact note also points out that

“it is expected that as part of the overall changes to the welfare system, approximately 500,000 disabled individuals will no longer receive either DLA or PIP”.

We regularly hear concerns that the changes are being made to suit the Government’s rapid deficit reduction agenda and the need for cuts, rather than to ensure that the welfare system meets the needs of disabled people. Of the 500,000 people expected to be taken off disability living allowance, does the Minister know how many currently hire cars that are therefore available for capital allowances under the SLA regime? Does he think that those who currently hire cars but are losing their disability allowance will therefore no longer be able to hire them?

Have the Government assessed the impact on the businesses that hire cars to such people? It will surely be more tax-efficient for such firms simply to stop hiring cars to people in such circumstances. I would be interested to hear the Government’s thinking on how that will  work in practice, or whether they have assumed that businesses will simply be expected to bear the additional cost. I would be grateful if the Minister addressed those points.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

Clause 70 is a purely technical amendment. It ensures that the beneficial capital allowances treatment for cars hired to disabled persons continues for recipients of both personal independence payments and armed forces independence payments.

The Government are reforming the welfare system by introducing universal credit. As part of those reforms, the Department for Work and Pensions is introducing personal independence payments, and the Ministry of Defence is introducing armed forces independence payments. Both have effect from 1 April 2013. To ensure that those who are intended to benefit from certain reliefs remain eligible, some technical amendments to the tax code need to be made.

One such amendment is required to the Capital Allowances Act 2001 in respect of cars hired to disabled persons. The capital allowances short-life asset regime brings tax allowances into line with the actual depreciation of plant or machinery when an item is scrapped or sold within eight years of its acquisition. That accelerates the timing of tax relief when compared with assets that cannot be treated as short-life assets. Usually, cars are excluded from the regime, but cars hired to certain disabled people are eligible for short-life asset treatment, as it has the benefit of making the cars cheaper for disabled persons to hire.

The current definition of a disabled person for capital allowances purposes is based on the receipt of certain types of allowance, including disability living allowance. The changes made by the clause will extend the definition of a disabled person for capital allowances purposes. It will include reference to recipients of both personal independence payments and armed forces independence payments with effect from 1 April 2013.

The hon. Lady asked how many cars are hired by disabled people, and how many people will be affected by the measures. More than 600,000 vehicles are leased to people in receipt of certain disability benefits. The impact on individuals who no longer receive disability benefits is unclear and may depend on a number of wider non-tax factors.

The hon. Lady referred specifically to the equalities impact assessment published alongside the announcement of the measure. I know that her question was more detailed. She asked how many of the approximately 500,000 disabled individuals who will no longer receive DLA or PIP will be affected by the measure. I do not have that number, but I will try to find out whether that number exists and we can get further information for her. If I can, I will provide it to her.

Photo of Ian Mearns Ian Mearns Llafur, Gateshead

Perhaps the Minister should ask the Minister with responsibility for disabled people to look into her crystal ball. Back in December, she was able to tell us exactly how many people would get a reduced award or no award at all under the new PIP payments. She said that 560,000 people would be reassessed, 160,000 people would receive a reduced award, 170,000 people would receive no award and 230,000 would receive the same amount or more. The hon. Lady will be able to tell the hon. Gentleman the answer to the question.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury 2:45, 11 Mehefin 2013

The hon. Gentleman makes clear something that Government Members already know: we have an excellent Minister for disabled people. The Treasury works closely with her Department to come up with estimates and figures, and to determine, the potential impact of measures. We shall continue to do so, especially with that Minister.

Photo of James Duddridge James Duddridge Chair, Regulatory Reform Committee, Chair, Regulatory Reform Committee

I apologise that I was not present at the start of the debate. A car has been obtained through the Motability scheme for a disabled member of my family, and the process is slightly more complex than has been portrayed. There are several categories of claimants, such as children who will not be receiving PIP, but who have higher rate disability living allowance due to mobility, and I think that they will be affected. Will the Minister write to the Committee to confirm the impact, if any, of the measure on the Motability scheme, which is invaluable to our constituents?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

My hon. Friend clearly speaks from personal and constituency experience. I will certainly furnish the Committee with that information.

Photo of Brooks Newmark Brooks Newmark Ceidwadwyr, Braintree

May I throw in my two cents-worth? Is it not right that the personal independent payment scheme is not simply an attempt to take away money from the deserving, but a more granular benefit that provides some people with more money and some people with less? Is it not the case that some of the most deserving people who will benefit from the broadening of the measure will be seriously injured service and ex-service personnel? Will those service personnel who were not captured before under the scheme now be able to benefit, or is this simply a matter of transferring people from one definition to another?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

There might be individuals who were not captured before, but who will be captured under the changes. My hon. Friend makes a wider point about the Government’s focus on benefits, particularly regarding the most vulnerable, to ensure that the most needy receive the most benefits, which is something with which we all agree.

Photo of Fiona O'Donnell Fiona O'Donnell Llafur, East Lothian

Has the Minister had any discussions with the Ministry of Defence about how to make veterans aware of the possible advantages for them?

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

I have not personally had such a discussion with the Ministry of Defence, but I know that Treasury and MOD officials have been working closely on the matter. There is a programme that is centred on ensuring that members of the armed forces are aware of all the benefits to which they are entitled, such as those that we are discussing. Given that the hon. Lady has drawn attention to such an important issue, I shall ensure that it is considered with the seriousness that it deserves.

Photo of Rory Stewart Rory Stewart Ceidwadwyr, Penrith and The Border

May I reassure the Minister that an enormous amount of information seems to come out of the Ministry of  Defence, the Army, the voluntary sector, the third sector in general and, indeed, councils on the support provided to soldiers? Anecdotally at least, there seems to be a co-ordinated response at the moment. I am sure there is not much more to be done, other than perhaps to bring more of the third sector providers for disability into the conversation.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

I thank my hon. and gallant Friend for his intervention. He speaks with great personal experience of our armed forces, so I am reassured by his comments. He raises an important point about the involvement of the third sector in helping people with disabilities.

Photo of Catherine McKinnell Catherine McKinnell Shadow Minister (Treasury)

I might be wrong, but I sense that the Minister is about to conclude his remarks. However, he has not yet addressed my question about the impact of the measure not only on those who will be reclassified under the new scheme and will not qualify for disability vehicle hire, but on leasing companies? Have the Government considered that issue? Obviously, the change will have a significant impact on individuals, but the Finance Bill must be laser-focused on economic impacts, so the Government should have given some consideration to the measure’s economic impact on companies that hire Motability vehicles to disabled individuals.

Photo of Sajid Javid Sajid Javid The Economic Secretary to the Treasury

The hon. Lady is right to sense that I am trying to reach a conclusion, but she is also right to make that important point. When the Government looked at the change, our focus was on the people—disabled people in particular—on whom it will impact. I do not have much information to hand about the potential impact on leasing companies. She is right that some may face a change in demand, which might be detrimental to them. That is an important point, but it is not the driver of the Government’s policy. Foremost in our minds is what many hon. Members have referred to in the debate: we must ensure that benefits are focused on the people who are most affected.

If there are no more interventions, I shall now get to my conclusion. The changes will ensure that recipients of the new personal independence payment and the armed forces independence payment will continue to receive the same beneficial treatment under the capital allowances code as under the existing welfare regime.

Question put and agreed to.

Clause 70 accordingly ordered to stand part of the Bill.