(Except clause 8; clause 33 and schedule 9; clauses 40 and 41 and schedule 11; new clauses or new schedules relating to the income tax treatment of armed forces’ accommodation allowances, the bank levy, stamp duty land tax, the effect of the Bill on equality, or the effect of the Bill on tax avoidance or evasion)

Finance (No. 2) Bill – in a Public Bill Committee am 9:25 am ar 9 Ionawr 2018.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Good morning and happy new year to you all. I have a few announcements to make; as there are a number of new Members on the Committee, they will be quite lengthy announcements, but they will set out the procedure for the whole Committee stage.

I remind Members that only water is to be drunk in the Committee Room—no hot drinks. I will pretend that I have not seen the one at the end of the room. That is a strict rule from the Chairman of Ways and Means. Mobile phones and iPads should be switched to silent. There are document boxes behind me, which people may find useful for storing their documents when the Committee is not sitting. I would appreciate it if Members followed those rules, so that I do not have to make many more speeches.

Neither I nor my fellow Chair will call Members to speak to starred amendments—amendments tabled without adequate notice. The notice period is three working days, so amendments should be tabled by the rise of the House on Monday for consideration on Thursday, and by the rise of the House on Thursday for consideration the following Tuesday.

Not everyone is familiar with Committee procedures, so let me explain them briefly. The Committee will be asked first to consider the programme motion. The Minister will move that motion, and we will then consider the amendments to it. There is a strict time limit of 30 minutes for that. We will proceed to a motion on written evidence and then begin line-by-line consideration of the Bill.

The selection list for today’s sitting is available at the end of the room. Amendments selected for debate have been grouped. Grouped amendments generally relate to the same or similar issues. The Member who tabled the lead amendment in a group will be asked to speak first. Other Members will then be free to catch my eye and speak to the amendments in that group only. A Member may speak more than once, depending on the subjects under discussion. At the end of debate on a group of amendments, I will call the Member who moved the lead amendment to speak again. They will need to indicate before they sit down whether they wish to withdraw that amendment or seek a decision on it. If any Member wishes to press an amendment in that group to a Division, they will need to let me know. I will work on the assumption that the Government wish the Committee to reach a decision on all Government amendments—we will nod at each other, Minister.

Please note that decisions on amendments will be taken not in the order on the selection list—the order in which they are debated—but in the order in which they appear on the amendment paper. Decisions on new clauses will therefore be taken after the conclusion of line-by-line consideration of the Bill. Where a group includes the words “clause stand part”, Members may make any remarks they wish to make on the content of the clause during the debate, and there will be no separate debate on the question that the clause stand part of the Bill. Where those words are not included on the selection list, Sir Roger and I will use our discretion in deciding whether to allow a separate stand part debate on individual clauses and schedules. Clause stand part debates begin with the Chair proposing the question that the clause stand part of the Bill; there is no need for a Minister or another Member to move that the clause stand part of the Bill.

As I indicated, I will first call the Minister to move the programme motion, as agreed by the Programming Sub-Committee, formally. I will then call Kirsty Blackman to move amendment (a). There will be a single debate on the selected amendments.

Motion made, and Question proposed,

That—

(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 9 January) meet—

(a) at 2.00 pm on Tuesday 9 January;

(b) at 11.30 am and 2.00 pm on Thursday 11 January;

(c) at 9.25 am and 2.00 pm on Tuesday 16 January;

(d) at 11.30 am and 2.00 pm on Thursday 18 January;

(2) the proceedings shall be taken in the following order: Clauses 1 to 7; Clauses 9 to 11; Schedule 1; Clause 12; Schedule 2; Clause 13; Schedule 3; Clauses 14 to 16; Schedule 4; Clause 17; Schedule 5; Clause 18; Schedule 6; Clauses 19 to 23; Schedule 7; Clause 24; Schedule 8; Clauses 25 to 32; Clauses 34 and 35; Schedule 10; Clauses 36 to 39; Clause 42; Schedule 12; Clauses 43 to 50; new Clauses; new Schedules; remaining proceedings on the Bill;

(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 18 January.—

With this it will be convenient to consider the following:

Amendment (b), in line 7, at end insert—

“(1A) The Committee shall hear oral evidence in accordance with the following Table—

Date

Time

Witnesses

Thursday 11th January

Until no later than 12.15 pm

HM Treasury; HM Revenue and Customs

Thursday 11th January

Until no later than 1.00 pm

The Office for Budget Responsibility

Thursday 11th January

Until no later than 3.30 pm

The Institute for Fiscal Studies

Thursday 11th January

Until no later than 5.00 pm

The Chartered Institute of Taxation”

Amendment (c), in line 15, at end insert—

“(4) The Committee recommends that the programme order of the House [11 December 2017] should be amended in paragraph 7 by substituting ‘25 January’ for ‘18 January’.”

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

I appreciate the chance to speak, Mr Owen, and I thank you for being our Chairperson.

Last year, the Chartered Institute of Taxation, the Institute for Government and the Institute for Fiscal Studies produced the “Better Budgets” report about the parliamentary process for dealing with the Budget. They raised a number of concerns, some of which have already been dealt with by the Chancellor, such as the fact that there are two fiscal events a year; he has moved to having one fiscal event a year, which is welcome.

The beginning of the report summary says:

“During conversations with people across the tax system, from officials and experts through to practitioners and representative groups, we have heard that the exceptional processes around tax policy making—in particular, secrecy, more limited scrutiny and challenge, and the power of the Treasury—have led to an ever-lengthening tax code, beset by a series of problems: confusion for taxpayers, poor implementation, political reversals and constrained options.”

Some of those are issues with the Budget, but others are issues with the Finance Bill process. One of the report’s key suggestions, which I have been pursuing in this House, and will continue to, even if I do not win today, is about the fact that the Finance Bill Committee does not take evidence. We have been told that that is due to lack of time, and that scrutiny of the Finance Bill needs to be curtailed and completed in a very short period. However, measures in the Finance Bill are very technical, and we have a short time in Committee. If we added just one extra day, we could take evidence.

The “Better Budgets” report said:

“The lack of stages in the House of Lords should mean that the Finance Bill is subject to particularly intense scrutiny in the House of Commons. But the reverse tends to be true”.

It also said:

“debate on the Finance Bill could be improved by using some of the committee sessions to take oral evidence”.

The three programme motion amendments that I have tabled allow us to do that. The Bill has already been in Committee of the whole House. I think it is reasonable, after Committee of the whole House, to take evidence on the generally more technical measures debated in Public Bill Committee.

The three amendments that my hon. Friend the Member for Glasgow Central and I tabled suggest that this Thursday we take evidence from the Treasury, Her Majesty’s Revenue and Customs, the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chartered Institute of Taxation. All those organisations will know more about tax, and probably about the impact of the measures, than most of us in this room. Obviously, the Minister will have briefings, and a whole team who can explain the issues to him, but we need to hear from those organisations and to be able to question their representatives. I have been frustrated in the past when asking the Minister questions during debates on the Finance Bill. Perhaps I have had a bit of an answer towards the end of his speech—the Minister is quite good at attempting to give answers—but that is too late. If we had had that conversation with many other people at the beginning, we would all have been in a much better position. That would have meant much better scrutiny.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Cities), Shadow SNP Spokesperson (Treasury)

My hon. Friend makes a very good point on the need for evidence. Some of the written evidence submitted to the Committee —it was made available very late, I must say; it came yesterday at around 4 pm, which gives us very little time to read a huge amount of evidence—suggested that there are things that need to be changed and that people would like to see tweaked. However, without having oral evidence and being able to interrogate people for it, it is very difficult to weigh up the evidence in the context of the Bill.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

I would go so far as to bet that all Committee members have not read all the written evidence that has been provided. I bet that they have not had time, given that the customs Bill is running at the same time, and the majority of us who are Front-Benching for that Bill are also Front-Benching for today’s Bill.

The timescale is not working. If we were to allow evidence sessions this Thursday, and then allowed the Public Bill Committee stage to stretch slightly—I am not sure it would even end up stretching as far as 18 January, because we could have a number of sittings before then—that would be a really positive change for the Committee. We would all be better informed, and it would be a good step for scrutiny and transparency, which the Government and the ministerial code suggest that we should have.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

It is a pleasure, as ever, to serve under your chairmanship, Mr Owen. I have sympathy with the Scottish National party on their amendment to the programme motion, which would require the Government to ensure that there was an evidence sitting this week. This is my third Finance Bill since becoming shadow Chief Secretary to the Treasury, and I have made the point on each one that we should have evidence sittings. The argument might be made, “We have had three Bills; what’s the point?” However, there is a pretty compelling argument that having had three Finance Bills is all the more reason to not just pause for breath but catch up, and get some people in to give evidence. The point is well made, and it was also part of the context for the debate in the House yesterday.

This is not simply an event; it is part of a process. Most of the traditions or protocols that we follow in the House have a perfectly rational basis, but there are occasions—I think this is one, in the light of the three Finance Bills this year—when we might want at the very least to step back from them. Every other piece of legislation that passes through the House gets its day in court, so to speak, as regards giving evidence, and of course the complex changes made to UK tax laws and systems have far-reaching consequences for everyone and for the economy.

It is important that when matters are incredibly complex—and, let us be frank, many of the matters in question are complex—we should be able to tease out issues with experts. It is not that I do not believe the Financial Secretary to the Treasury and everything that he tells us; I do, implicitly. However, I am sure that he would like us to test his assertions, and we might want to do that with other people—and with other experts.

Several provisions in the Bill, and in previous Finance Bills, rewrite earlier measures and close loopholes. It is important for us to tease out those things, too. Why are we where we are, and what could we have done differently? Possibly we could not have done anything differently, but I am sure that if there had been evidence sittings for previous Finance Bills, the experts offering testimony might have pointed out to the Government technical pitfalls in some of the measures they wanted to introduce.

The amendment is in the spirit of attempting to move things on; it is not a wrecking proposal. I acknowledge that we will not win the debate, but it is important to state the need to push for evidence sittings. I do not think that I am alone in that view. Not only does the SNP take it, but so do many outside the House: the Institute for Fiscal Studies, the Institute for Government and the Chartered Institute of Taxation made a similar case in the report “Better Budgets: making tax policy better”, published in April 2016. Its authors pointed out that Finance Bills could be improved by oral evidence sittings, with little disturbance to the parliamentary timetable. I am sure that the Opposition would be more than happy to discuss parliamentary timetable issues with the Government.

Photo of Dan Carden Dan Carden Llafur, Liverpool, Walton

Andrew Tyrie, the former Chair of the Treasury Committee, also supports the idea of oral evidence sittings for the Finance Bill. Does my hon. Friend agree that there is widespread support for that across the House of Commons?

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

I think there is. I suspect that there are Members who would like to listen to the views of others besides parliamentarians on occasion. My hon. Friend makes an important point.

The authors of “Better Budgets” comment:

“This could be enhanced by ensuring effective liaison between the experts working to support the three committees that have a role in tax scrutiny—the Treasury Select Committee, which has hearings on the Budget and Autumn Statement”— as was—

“the House of Lords Economic Affairs Committee and the Finance Bill Committee—to make sure that the results of pre-legislative work inform legislative scrutiny.”

That is not an unreasonable position to take.

As my hon. Friend said, the former Chair of the Treasury Committee made the same point, and the Committee’s current Chair, Nicky Morgan, followed it up in a letter to the Minister on 7 November, in which she wrote that she was not convinced by the point made—namely, that we should not have evidence sessions. She rightly pointed out that the consultation was limited, and that it is important to try to tease some of these issues out separately. She also added that she sees no reason at all why a Finance Bill Committee cannot hear oral evidence, even on clauses that have already been debated in Committee of the whole House. I would appreciate it if the Minister commented on that—I know he will.

There seems to be developing consensus across the House that oral evidence sessions on the Finance Bill would greatly improve the quality of parliamentary scrutiny of it. I think they would do good, but frankly even if they did not, they would certainly do no harm. It is time to move away from outdated and arcane parliamentary measures, especially in this area.

I am not in any way suggesting that the Government have anything to hide. I do not think it is a question of hiding; it is often a case of, “We have always done it this way; let’s carry on doing it this way.” Maybe it is time for a rethink on this matter. I exhort the Minister to give careful consideration to this. I suspect that we will not get much movement on the issue, because we would be breaking a relatively long-held tradition by having evidence sessions on the Finance Bill, but we have to start pushing the matter at some point, and this is as good a time as any.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

It is a pleasure to serve under your chairmanship, Mr Owen. I look forward to vigorous debate on the Bill, today and in the sittings that will follow, as we take the Bill through the normal process.

The amendments from the hon. Member for Aberdeen South

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

North; how could I get that wrong? The amendments would introduce a day for oral evidence sessions, and would extend the period over which we debated the Bill in Committee. I understand why the hon. Lady tabled them, but I am afraid that the Government will resist them, for several reasons, not least because there was a Programming Sub-Committee, at which at least Labour party Members were present, in which we discussed the programme motion, and it was agreed unanimously.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

The Government changed the rules because they do not have a majority, so Scottish National party Members no longer have places on Programming Sub-Committees. We were therefore not able to make our case. We opposed that rule change, partly because we want to be on Programming Sub-Committees. If we had had the opportunity to make our case earlier, we would have done so.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I thank the hon. Lady for her intervention. That is partly why I welcome her having the opportunity to have this debate today, as I said earlier. Let me start with the comment that the hon. Member for Bootle made about the Chair of the Treasury Committee. He urged me to engage with her on this matter, and of course I will do precisely as he asks.

Notwithstanding the fact that we had the opportunity in the Programming Sub-Committee to agree the programme motion or otherwise, several measures already give us a very high level of scrutiny of Finance Bills. We brought in a Government framework in 2010, under which, in a typical cycle, a Budget is followed by policy consultations, and much of the legislation that is to follow is then published in draft. In fact, around 60% of the Bill that we are looking at has been out there for consultation as draft legislation, despite the fact that this has been a rather unique cycle; the hon. Member for Bootle pointed out that this was his third Finance Bill.

These Bills have a very high level of scrutiny. We are moving to the new single fiscal event in the coming year; we will then have even more time to scrutinise Bills, because there will be more breathing space in that process, and obviously we will not have the interruption that we had last year.

There are other reasons why it would be tricky to deliver what the hon. Member for Aberdeen North seeks. For example, the Bill was in Committee of the whole House for two days, so if we had an evidence session here, perhaps the most contentious parts of the Bill, which are typically taken on the Floor of the House, would be absent from that particular element of scrutiny. The IFS, the Office for Budget Responsibility and the other organisations that the hon. Lady rightly raised have plenty of opportunities to scrutinise the Bill. In fact, the OBR, the IFS and others provide an analysis of the Budget and the measures in it. Typically, they give oral evidence to the Treasury Committee before Committee stage.

Wherever we end up is really a matter for the usual channels, among our parties. This relates to parliamentary process; it is not for the Committee to take the kind of decisions and make the kind of moves that hon. Lady and the hon. Member for Bootle seek. I reiterate that the Finance Bills are among the most scrutinised pieces of legislation that go through our Parliament. I therefore resist the amendments.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy) 9:45, 9 Ionawr 2018

I thank the Minister for his response. He did not give a reason not to take evidence; he gave the reason why he thinks the status quo is okay. I still have not heard anybody say why evidence would be a bad thing. The Government have previously said that timescales would be an issue, but they are not. As we have a single fiscal event, putting an extra week—an extra day, actually—on to the Finance Bill Committee would not be a problem. Having evidence sessions would be better for the Committee and for the rotating Back Benchers on the Committee—we have people here who have not sat on a Finance Bill before. As I said previously, having an evidence session after the Committee of the whole House is not a problem, because generally we discuss the more technical parts of the Bill after that. What the Minister said about 60% means that 40% of the Bill has not been consulted on.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

I need to clarify that point. I said that 60% of the draft legislation was out there and was therefore consulted on. That certainly does not mean that 40% of the Bill was not consulted on, albeit that the legislation was not out there in draft.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

In a number of places in the written evidence, various organisations said, “This was not consulted on in draft; we would have suggested these changes, if it had been.” The Committee is losing out because it does not take evidence. It would be better if it did. I do not understand why the Government are scared to take evidence.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

Does the hon. Lady agree that it is important to understand the position that Parliament is in? The Government do not have an overall majority, notwithstanding the arrangement with the Democratic Unionist party. Their position has changed. Given that, and given that the Government have taken control of the Committees, again notwithstanding the fact that they do not have the majority as a party, the question of scrutiny has changed a little.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

Absolutely. An added dimension is that because the Government do not have a majority, and because all the Brexit legislation is going through, there is an incredibly heavy legislative timetable with an incredible number of incredibly technical pieces of legislation. Therefore, it would be better for Members to have the opportunity to inform themselves. I do not think this is about increasing external organisations’ scrutiny, because, as the Minister said, there are a number of opportunities to do that. This is about giving Members the opportunity better to inform themselves and ask questions of those incredibly knowledgeable organisations so that we can make better decisions about tax law, and so that the Treasury does not create tax law that is not good and that it has to go back and fix a couple of years later. It would be better for everybody if members of the Committee were more informed and therefore able to take better decisions and make better laws.

Question put, That the amendment be made.

The Committee divided:

Ayes 9, Noes 10.

Rhif adran 1 Caledonian Pinewood Forest — (Except clause 8; clause 33 and schedule 9; clauses 40 and 41 and schedule 11; new clauses or new schedules relating to the income tax treatment of armed forces’ accommodation allowances, the bank levy, stamp duty land tax, the effect of the Bill on equality, or the effect of the Bill on tax avoidance or evasion)

Ie: 9 MPs

Na: 10 MPs

Ie: A-Z fesul cyfenw

Na: A-Z fesul cyfenw

Question accordingly negatived.

Main Question put and agreed to.

Resolved,

That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Mel Stride.)

Copies of any written evidence that the Committee receives will be made available to Committee members.

We now move to the line-by-line consideration of the Bill.

Clause 1