Suggestions for Budget policies roll in from MPs
Treasury questions was held this week, with the usual wide range of questions from MPs.
Labour‚ s Chris Leslie cited concerns by the IMF about the fiscal and unemployment consequences for the UK if a transition deal on Brexit is not achieved by the first quarter of next year. Party colleague Kate Green urged the Chancellor to consider measures in his Budget on the work allowances in universal credit, which are currently a real deterrent to second earners looking to increase their labour market participation.
Lib Dem Leader Vince Cable was told by Hammond that his understanding of a statement by the Communities Secretary that the Treasury has agreed to increase net borrowing by ‚ £50 billion‚ to pay for new housing, is mischievously wide of the mark.
Conservative Theresa Villiers was told by Chancellor Philip Hammond that ‚ family-friendly policies that this Government have pursued has led to the increase in women in work and he will continue to drive ‚ a set of policies that encourages women into the workforce. Fellow Tory Philip Davies wanted the Chancellor to extend the period of time that an employee share ownership saving scheme can be paused to up to 12 months, in his upcoming Budget. Hammond said he will look into it ‚ carefully‚ .
Hammond claimed that as a result of delivering the lowest corporation tax rate in the G20 and cutting employment costs through the employment allowance, the UK‚ s unemployment rate is at its lowest level for more than 40 years.
Fiscal Devolution: London
The Government have committed to continue to work with the Greater London Authority and London Councils to ensure that London has the powers it needs to maintain its status as a ‚ world-leading city‚ , the Economic Secretary to the Treasury (EST) Stephen Barclay told Conservative Robert Neill. Neill wants the Treasury to urgently consider whether an element of fiscal devolution‚ for example, a tourist levy or something similar‚ might be part of a robust funding package for Crossrail 2. Barclay said it is a matter for Department for Transport but it is right that the London region does not retain disproportionate amounts of revenue.
Tory Paul Masterton was told by Hammond that exports to the rest of the UK are vital to the success of Scotland‚ s economy, generating £50 billion in 2015. That compares with £12 billion of exports to the EU and £16 billion to the rest of the world, and the UK accounts for 63 per cent of Scotland‚ s total exports. Masterton said that in his East Renfrewshire constituency the number of registered enterprises has gone up by 18 per cent since 2010 and any moves to fragment the UK would damage the Scottish economy. Another Scottish Conservative, Colin Clark, also spoke about the importance of the internal UK market, with financial and accounting services amounting to Scotland‚ s most valuable export service in 2015.
SNP‚ s spokesperson on the economy Kirsty Blackman, said if the UK crashes out of the EU, it will cost Scotland £30 billion over five years, according to research by the London School of Economics published this week. She wanted an assurance that ‚ no deal‚ is not an option but did not get such a guarantee from Hammond. She added that 56 per cent of EU nationals in FTSE 250 companies are highly likely, or quite likely, to leave the UK before the conclusion of the Brexit negotiations.
SMEs (East Midlands)
Sir Edward Leigh wanted to know steps the Treasury is taking to reduce tax-related bureaucracy for small and medium-sized enterprises in the east midlands. He bemoaned that the UK still has one of the longest tax codes in the world. ‚ I know that the Treasury is under constant pressure to bung extra pieces of money to particular interest groups, but may I suggest to the Minister (Mel Stride) that he sticks to his last on the Treasury Bench and argues the case for less taxation, simpler taxation and less debt.‚ Financial Secretary (FST) Mel Stride said the Treasury continues to work with the OTS but he makes no apologies for having a tax code that works to support our public services. The FST also said UK borders will be as frictionless as possible after Brexit. DUP‚ s Jim Shannon said small and medium-sized businesses in his constituency say they are over-regulated and that bureaucracy restricts their ability to employ more people.
Corporate Tax Evasion
In response to a question from Conservative Alex Chalk, FST Stride said that since 2010, HMRC has secured more than £53 billion from big businesses alone in additional tax revenue from tackling tax evasion, avoidance and non-compliance. Stephen Crabb, Conservative, wants colleagues to resist calls ‚ floating around‚ to place new and additional burdens on legitimate work, and instead ‚ redouble‚ their efforts at enforcement through HMRC to root out illegal work in the UK economy.
Shadow Treasury Minister Anneliese Dodds (Labour) said successive cuts to British corporation tax have manifestly not led to greater business investment. The FST replied by stating Labour‚ s plan to ‚ inflate‚ that tax to 26 per cent, ‚ would destroy jobs, destroy wealth, destroy growth and lower the amount of tax that we can collect‚ . Adrian Bailey (also Labour) is concerned at the message sent to corporate tax evaders when in February, Treasury Ministers withdrew from a meeting with the EU PANA Committee, which was set up to investigate issues and prioritise reform. Stride did not address the PANA question, opting to say how the UK is working with OECD generally.
Income Tax Thresholds
Hammond told fellow Tory Royston Smith that in 2017-18, as a result of increasing the tax-free personal allowance and the higher rate threshold, 31 million individuals will see their income tax bill reduced and 1.3 million individuals will be taken out of income tax altogether.
Most of the tax-related questions came from SNP MPs. Drew Hendry cited the Office for National Statistics which has revised downwards the UK positive net international investment position from £470 billion to minus £20 billion. Hammond said the cause is lower-than-anticipated returns on UK investment stocks held overseas, principally returns on mining and petroleum-related activities. Joanna Cherry wanted a commitment in the Budget to take action to enable Scotland‚ s police and fire rescue service to reclaim VAT in the same way as they have done for national bodies such as Highways England. Stride said that when the Scottish Government decided to restructure their police and fire services, ‚ they went into that decision with their eyes wide open‚ . Hammond told John McNally that he will take on board his suggestion to reduce the amount of VAT paid by businesses in our town centres to help them cope with online trade and the impending extra burdens.
Conservative North Cornwall MP Scott Mann said the second homes stamp duty levy, which has delivered £5.11 million into the Cornish economy and is set to deliver 1,000 homes.