Finance Bill 2020 Committee – 10th sitting (live blog)

Documents on the Bill can be read here. These include explanatory notes on the clauses and the text of amendments and new clauses tabled for debate.

Proceedings can be listened to here.

Second Reading debate - Monday 27 April 2020

House of Lords report on off-payroll proposals - Monday 27 April 2020

Resolution approving changes on off-payroll working - Tuesday 19 May 2020

Public Bill Committee - 1st sitting (liveblog) - Thursday 4 June 2020 (am)

Public Bill Committee - 2nd sitting (liveblog) - Thursday 4 June 2020 (pm)

Public Bill Committee - 3rd sitting (liveblog) - Tuesday 9 June 2020 (am)

Public Bill Committee - 4th sitting (liveblog) - Tuesday 9 June 2020 (pm)

Public Bill Committee - 5th sitting (liveblog) - Thursday 11 June 2020 (am)

Public Bill Committee - 6th sitting (liveblog) - Thursday 11 June 2020 (pm)

Public Bill Committee - 7th sitting (liveblog) - Tuesday 16 June 2020 (am)

Public Bill Committee - 8th sitting (liveblog) - Tuesday 16 June 2020 (pm)

Public Bill Committee - 9th sitting (liveblog) - Thursday 18 June 2020 (am)

The live blog below is contemporaneous and not checked against Hansard. We cannot guarantee that no errors have crept in and we advise on checking any passage against Hansard before repeating it. New clauses debated during proceedings will not be voted on until the end of the committee's proceedings.

Committee members
Committee members are listed here. The main contributors are expected to be:

For the Government:
Jesse Norman, Financial Secretary to the Treasury (FST)
Kemi Badenoch, Exchequer Secretary to the Treasury (XST)

For the Opposition:
Bridget Phillipson (Labour), Shadow Chief Secretary to the Treasury
Stephen Flynn, SNP Treasury Spokesperson
Wes Streeting (Labour), Shadow Exchequer Secretary
Alison Thewliss (SNP), SNP Treasury Spokesperson

NC3 + NC18 + NC21: Impact of the Bill on business and incomes

New clause 3, proposed by Labour, would require the Chancellor of the Exchequer to review the impact of this Bill on household income and GDP in each of the the nations and regions of the UK.

New clause 18, proposed by the SNP, would require a review of the impact of the Bill in different possible scenarios with respect to the continuation of the coronavirus support schemes.

New clause 21, proposed by the SNP, would require the Government to report on the effect of the Bill on a number of business sectors.

Wes Streeting moved new clause 3. He began by saying that while the UK was one of the richest nations in the world, it was also one of 'staggering inequality', with some of the richest and poorest areas in Western Europe. Streeting warned that the risks from the fallout of the COVID-19 pandemic were yet to be fully felt, but could be profound and would be felt across the UK's nations and regions. He said that 'recovery cannot be a synonym for the resurrection of business as usual' and suggested that there was a case for further fiscal devolution as a means of boosting regional economic growth, reducing the centralising tendencies of the Treasury. In response to questions from both Stephen Flynn (SNP) and the FST, he pointed towards Scottish Labour's 'radical' plans for further devolution for Scotland and spoke of the economic benefits to Scotland of the Union.

Streeting also said that the new clauses proposed by the SNP would be important contributions in understanding the impact of Coronavirus on the UK economy and that these would be supported by the opposition. He also spoke in support of Labour's call for the government to hold a full 'Back to Work' Budget this summer.

Alison Thewliss wryly thanked the UK government for its wholehearted supported for the Union, which she said had resulted in recent opinion polls putting support for Scottish independence above fifty per cent. She warned that the economy and people's living standards would be 'sent reeling' if the government's Coronavirus support schemes were withdrawn too soon and urged the government to continue providing support. She spoke in particular on the impact on the tourism and hospitality industries and also of the need to understand the impact on groups who have 'fallen through the cracks' of the government's various support schemes.

The FST called on the committee to reject the clauses, which he said were unnecessary. He said that the measures contained in the Bill had been designed with 'careful consideration' of their impact on the nations and regions and UK and would (with the exception of income tax) apply to all nations and regions. He said that there already existed rigorous and detailed impact assessments of the government's policies and that HMRC regularly consulted with a range of stakeholders on the development of tax policy. He said that the government continued to careful monitor the impact of its Coronavirus schemes.

New clause 3 was defeated by 10 votes to 7 

NC4 + NC19 + NC20 : Environmental impact of the Bill

New clause 4 proposed by Labour would require the Chancellor of the Exchequer to review the impact of the Bill on the environment.

New clause 19, proposed by the SNP, would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting the UN Sustainable Development Goals.

New clause 20, proposed by the SNP, would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting its Paris climate change commitments.

Wes Streeting moved new clause 4, warning of the consequences to the national and global economies as a result of the developing climate emergency. He spoke briefly to the SNP's new clauses 19 and 20, highlighting areas where the government had fallen short in meeting the UN Sustainable Development Goals. He said that he welcomed the government's rhetoric about a 'green recovery' from COVID-19, but said that the government's words needed to be followed up with action.

Stephen Flynn said that he couldn't understand why the government wouldn't want to review the impact of its measures on meeting the UN Sustainable Goals, which he said the Scottish Government had pursued. He too was critical of the government and of past Conservative administrations for their approach to tackling poverty and echoed comments made in an earlier contribution from Wes Streeting on the government's approach to free school meals during the summer months. On clause 20, Flynn said action was necessary to protect the economy and meet climate change commitments.

The XST said these measures were unnecessary and that tackling climate change was a 'top priority' for the UK, as evidenced in its net zero goals for 2050 and in a range of environmental measures contained within the Finance Bill (and debated during earlier sessions of the committee). In the case of the latter, their effectiveness will be monitored through Tax Information Impact Notes (TINNs). She said it was 'simply wrong' to suggest that the government was doing little to support climate change.

Wes Streeting said that the XST's comments highlighted the complacency of the government in tackling the climate emergency and that he would press new clause 4 to a vote.

New clause 4 was defeated by 9 votes to 6.

NC5 + NC17 : Impact of the Bill on equalities

New clause 5, proposed by Labour, would require the Chancellor of the Exchequer to review the impact of the Bill on equalities.

New clause 17, proposed by the SNP, would require the Chancellor of the Exchequer to review the impact of the Bill on equalities.

Wes Streeting, for Labour, praised the impact of the Equalities Act introduced by the last Labour government. But, he said, unless there is a genuine commitment to tackling inequalities in our society they will continue to exist. Women make up 69% of low paid earners, he observed. Black African and Bangladeshi households have, on average, ten times less wealth than white British households. It is important that we measure government legislation in relation to its impact on inequality and equality within our society. He added that we have seen through the Women in Finance charter, supported by the Treasury, what can be achieved. It has driven real behavioural change in finance, he said.

Alison Thewliss, for the SNP, said she wanted to see who benefits from the measures in this Finance Bill - we don't know that, she argued. The Women's Budget Group had analysed the measures, based on TIINs, but they had found the government's assessments cursory, based on limited evidence, and it was impossible to judge whether the Treasury had met its obligation under the public sector equality duty to have due regard to equality. She described this as 'damning'.

Among the measures which did have an assessment was entrepreneurs' relief, where the government assessment was older men would disproportionately be affected, but she lamented that government did not share its working. The loan charge was expected to affect more men than women but not to have an impact on groups with protected characteristics, but again there was no explanation.

The XST, Kemi Badenoch, responded for the government. She noted that TIINs include equality assessments, and that the Treasury already publishes analyses of the impact of the government's measures on households at different levels of income alongside each Budget. This is the most comprehensive analysis of this type available. She said opposition spokespeople should take some time to learn about what the government are doing. She argued that neither of these clauses were useful and would not add any genuine value.

Wes Streeting described the minister's remarks as 'extraordinary' and 'incendiary', saying that he was giving voice to the concerns of his constituents. He said he did not believe the government's efforts on inequality matched the minister's rhetoric.

New clause 5 was pressed to the vote but was defeated by 9 votes to 7.

NC6 + NC22: Impact of the Bill – tax reliefs and the tax gap

New clause 6, proposed by Labour, would require the Chancellor of the Exchequer to report to Parliament on the number and revenue effect of the tax reliefs contained in the Bill, and on the efficiency of systems for designing, and assessing the effects of, such reliefs.

New clause 22, proposed by the SNP, would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of the Bill; and in particular on the taxes payable by owners and employees of Scottish Limited Partnerships.

Bridget Phillipson, for Labour, moved new clause 6. She highlighted the high number of tax reliefs and expenditures in the UK. She argued for a broad review of tax reliefs to determine 'exactly who is benefiting from the hundreds of tax reliefs that exist, whether they are fair, whether they represent good value for money, and whether they are securing the policy outcomes originally intended.' She argued that internal reviews, when they do occur, do not lead to an adequate level of scrutiny. "But little is done to secure the ongoing scrutiny of tax reliefs. Other countries do this much more regularly," she said.

Phillipson said costs of some reliefs had spiralled out of control, but it wasn't only costs which needed monitoring.  Behavioural impacts should also be considered. She drew the minister's attention to concerns raised in a recent NAO report. "There remains a concern that for something that is such a cost to the government, there is little in the way of evaluation to ensure value for money. Of the 362 tax expenditures that exist, 111 have been costed by HMRC, 63 have been assessed by the Treasury and only 15 have had published evaluations since 2015, and this is despite their cost having grown in recent years."

She noted that in July 2019 the OBR identified the cost of tax reliefs as one of four new fiscal risks to the public finances.

Drawing on work by Tax Watch UK, Phillipson said that some companies claiming significant tax credits under the video games tax relief were not even paying corporation tax. The relief was initially estimated by the government to cost £35 million a year, but it reached £108m in 2017-18. Netflix have similarly benefited from tax reliefs despite, she charged, 'operating a tax avoidance structure to minimise its tax liability in the UK'.

She asked the minister to respond to a letter from some of her Labour colleagues calling for the Social Investment Tax Relief to be continued.

She cited a comparative assessment of tax expenditures in 43 G20 and OECD countries, which had concluded that: "The UK falls into a group of 26 countries deemed to produce only basic reporting of tax expenditures. This contrasts with other countries including Australia, Austria, Canada, France, Germany, Italy, the Netherlands, Korea, Sweden, which are argued to have comprehensive and detailed reporting on tax expenditures. Now this best practice covers the frequency of reporting, whether there is a legal requirement to report, whether reports are integrated into budgets, the number of estimations and the quality of accompanying descriptions."

She said that the Resolution Foundation also pointed out that the governments of Canada, Australia and New Zealand produce an annual tax expenditure statement which can varyingly include projections over the forecast period which can be compared to outturns and could be accompanied by parliamentary debate.

She continued: "We want to see such parliamentary debate around tax reliefs, a point echoed by the 2017 report Better Budgets - Making Tax Policy Better, a joint effort of the IFS, the Institute for Government and the Chartered Institute of Taxation. They say that when Parliament does engage on tax issues this is usually focused on new proposals - as we are today - rather than the effectiveness of past measures. Their recommendation is there should be increased support to parliament on tax issues. I think the case for improved parliamentary scrutiny of tax reliefs is hard to deny, given their increasing and substantial cost, at a time when we understand the pressure on public finances."

Alison Thewliss, the SNP spokesperson, agreed with Bridget Phillipson's remarks. She called on the UK government to do everything it can do to eliminate the tax gap. 

She thought the tax gap arose, in many cases, from the complexity of the tax system. She said successive governments have played 'whack-a-mole' with tax avoidance but what was needed was a comprehensive anti-avoidance rule. She returned to the issue of Scottish Limited Partnerships, calling on the government to enforce the rules it has. She drew the committee's attention to a news report that more than 700 British firms had been blacklisted in the Ukraine for suspicious activity - all related to money laundering across the former Soviet Union and involving Scottish Limited Partnerships.

The FST replied to the debate. These amendments are not necessary, he said. The government keeps all tax reliefs under review already to ensure they strike right balance between simplicity, effective targeting and overall yield. The government also carries out evaluations - RDEC and entrepreneurs' relief are recent examples. He said that HMRC will continue to monitor and evaluate reliefs and will bring forward a pipeline of further evaluations in due course. "They are also considering, very much at my instance (?) as well, a proposal for a more systematic evaluation programme for tax reliefs which responds to the concern raised by [Bridget Phillipson]." He said that in May HMRC had published costings for a further 47 previously uncosted tax reliefs.

On new clause 22, he said the government would continue to publish the annual tax gap report. Data limitations mean it is not possible to evaluate the tax gap at a granular level, eg disaggregating impact of compliance with SLPs. He said the tax gap was a matter of very close scrutiny for the government, and the avoidance tax gap had fallen very significantly, from about £5 billion to an estimated £1.8 billion. 

On the Social Investment Tax Relief he said the government had reached no view on this relief. He said the concern was that the relief had been on the books for five years or so and had been very little used - much less so than anticipated. The question is can it be made effective, and if so, how?

Bridget Phillipson wound up the debate. She said she would 'test of the will of the committee' by putting the new clause to the vote.

New clause 6 was defeated 9-7.

NC 7-13 – already debated but will be voted on (or not moved) here

New clause 7, proposed by the SNP, would require a review of the impact of the scheme to be established under Clauses 19 and 20 (loan charge). This was rejected by the committee without a division.

New clause 8, proposed by the SNP, would require a review of the impact on investment of the changes made to entrepreneurs’ relief. This was withdrawn.

New clause 9, proposed by the SNP, would require a review of the impact on investment, employment and productivity of the changes to capital allowance over time; in the event of a free trade agreement with the USA; and in the event of leaving the EU without a trade agreement, with an agreement to retain single market and customs union membership, or with a trade agreement that does not include single market and customs union membership. This was withdrawn.

New clause 10, proposed by the SNP, would require a review of the impact on investment of the changes made to structures and buildings allowances in Schedule 4. This was rejected by the committee without a division.

New clause 11, proposed by the SNP, would require a government assessment of the effect on tax revenues of the Digital Services Tax, and in particular the change in revenues associated with Scottish Limited Partnerships. This was withdrawn.

New clause 12, proposed by the SNP, would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of Clause 98 and Schedule 13 (amendments relating to the operation of the GAAR), and in particular on the taxes payable by owners and employees of Scottish Limited Partnerships. This was rejected by the committee without a division.

New clause 13, proposed by the SNP, would require the Government to report on the effect of Clause 78 (simplified VAT treatment of call-off stock) on a number of business sectors. This was withdrawn.

NC14 + NC15: Migration levels and the Bill

New clause 14, proposed by the SNP, would require a government review of the effects on measures in the Bill of certain changes in migration levels.

New clause 15, proposed by the SNP, would require a government review of the effects of the measures in the Bill on migration levels.

Stephen Flynn proposed these new clauses for the SNP. He cited a business leader in his constituency who had said the removal of free movement of people would be 'catastrophic'.

Wes Streeting, for Labour, said his party's views were very well known - the economic debate around migration was an important one. 

The FST responded that the scenarios in the new clauses were entirely hypothetical, and they were also not necessary. 

New clause 14 was pressed to the vote and rejected by 9 votes to 2. New clause 15 was withdrawn.

NC16 + NC23: Impact of the Bill on child poverty

New clause 16, proposed by the SNP, would require the Chancellor of the Exchequer to review the impact of the Bill on child poverty.

New clause 23, proposed by Labour, would require the Chancellor of the Exchequer to review the impact of the Bill on poverty and consider whether the OBR should conduct such assessments as a regular duty.

Alison Thewliss moved new clause 16. She said the SNP thought it was important that the government were held to account for the impact on child poverty of measures in this Bill.  

Wes Streeting moved new clause 23. He set out child poverty rates in the constituencies of some of the MPs on the committee. He accused the government of refusing to act. He called on the government to act on the Social Mobility Commission's recommendation for the OBR's remit to be extended.

The FST replied to the debate. He said the government would always be committed to ending child poverty. He said DWP figures showed that there were 200,000 fewer people living in absolute poverty compared to 2009-10 including 100,000 children. Much of the information being asked for is already in the public domain, he said. 

Responding to criticism from the minister and Labour spokesman of the record of the Scottish government, Stephen Flynn highlighted the introduction of a £10 pw child benefit supplement for the poorest families in Scotland which is expected to lift 30,000 children out of poverty by 2023-24. He asked if the UK government would do the same. The FST said they would watch to see how successful it was.

New clause 16 was put to the vote and rejected by 10 votes to 7.

On a point of order the FST thanked the chairs of the committee, committee members and officials who had assisted him and facilitated the Bill's passage.

Bridget Phillipson thanked the chairs, clerks, her colleagues and other committee members, her staff, as well as those individuals and stakeholders who had provided helpful information to the Labour Treasury team. 

Alison Thewliss also offered thanks to the chairs, clerks and the SNP's researchers.

NC 17-23 and NS 1 – already debated but voted on (or not moved) here

See above for information on these new clauses

Alison Thewliss withdrew new clauses 17-22. Bridget Phillipson withdrew new clause 23.

The Government's New Schedule 1 was moved and agreed without a vote.

The Bill, as amended, was reported to the House. The committee stage has been concluded.

By Chris Young