House of Lords ‚ Finance Bill (all stages), Thursday 8 March

12 Mar 2018

It was a case of ‚ blink and you‚ ve missed it‚ , as the House of Lords considered and passed the Finance Bill after a cursory debate lasting just 39 minutes on Thursday morning. For historic reasons the Lords are not allowed to amend finance bills so the only stage of the bill to see any discussion in the upper house was second reading debate.

Lord (Michael) Bates, a minister at the Department for International Development who also acts as a government spokesperson on Treasury matters, opened the debate by drawing attention to the Bill‚ s limited length. He noted that ‚ the Bill before the House today is a mere 187 pages long, which compares favourably to the more than 600 pages of the previous Finance Bill. In part, this reflects the Government‚ s move to a single, annual fiscal event but it also represents the fact that in December the Government published a document setting out how future Finance Bills will interact with the new tax policy-making timetable. The new cycle carves out more time for consultations and commits the Government to publishing as much of the Bill as possible in draft. Even so, in this Bill some 111 of the 187 pages were published in draft form last September.‚

Bates then turned to the broad economic and fiscal context before highlighting some of the specific measures in the Bill, including scrapping stamp duty for most first-time buyers. To encourage additional business investment the Government had conducted the patient capital review, which had led to a ‚ £20 billion investment and tax incentive action plan‚ , including ‚ doubling the annual limit on how much investment these knowledge-intensive companies can receive through the enterprise investment scheme and venture capital trusts scheme‚ . He also drew attention to the increase in the rate of the R&D expenditure credit.

Bates said measures in the Bill were part of a package of anti-avoidance and evasion measures announced in the autumn Budget expected to raise £4.8 billion by 2022-23. These included ‚ provisions to make online marketplaces more responsible for the unpaid VAT of their sellers, close loopholes to ensure individuals with offshore trusts cannot avoid paying UK tax on payments or benefits taken from that trust, extend disguised remuneration rules to include close companies, and clamp down on waste crime by bringing illegal waste sites into scope of the landfill tax.‚

For the Liberal Democrats, Treasury spokesperson Baroness (Susan) Kramer criticised the minister‚ s ‚ extraordinarily rosy picture of the economy‚ , highlighting falling investment numbers and a lack of productivity. She said this was ‚ a tinkering at the edges finance Bill‚ rather than a visionary one, which she put down to Brexit. She argued for a hypothecated, dedicated tax to support the NHS (new Lib Dem policy). She spoke strongly in support of public registers of beneficial interests in the UK‚ s overseas territories, describing the absence of such as allowing ‚ an avenue that constantly provides the transit route to money laundering in this country and therefore to tax evasion and all the other kinds of evils that go along with it‚ .

For Labour, Lord (Bryan) Davies of Oldham began by observing that: ‚ Here we have a Finance Bill introduced by the Minister where the only contributors are the Opposition Front Bench spokesmen. This is an indication of how limited the House‚ s role is in relation to Finance Bills, and justifiably so‚ [But] we will have the opportunity to have a serious debate about the economy next week, when I anticipate there will be greater participation from all parts of the House.‚

Davies criticised the Government for introducing ‚ a procedural motion restricting opportunities for critical amendments‚ , a procedure he said Parliament has normally only immediately before a general election or when warfare is approaching. Like Kramer, Davies was critical of the bill for what he saw as a lack of substance. ‚ The Bill‚ s failure to address any real issues relating to the economy and society means that crucial issues remain completely unaddressed,‚ he argued, citing low wage growth and health service underfunding as examples of such an issue. He also complained that ‚ women come out of this Finance Bill more poorly than men‚ , while ‚ young people also feel heavily discriminated against‚ .

Responding to the debate for the Government Lord Bates suggested there were two potential reasons why there was not a long list of speakers for the debate: ‚ One could be a lack of interest, but the other reason could be that there is broad support across the House for the measures in the Bill before us‚ . Noting that Baroness Kramer had asked whether we would have a hypothecated tax for health, he argued that: ‚ Of course, we have such a tax in the sense that 20% of NIC receipts go directly towards the National Health Service.‚

The Bill received its second reading, as expected, without a vote. There was no committee stage and therefore no report stage. Third reading was granted without a debate and the Bill now awaits Royal Assent, which is expected this week (week commencing March 12th).

George Crozier CIOT Head of External Relations