6.30 pm

Shabana Mahmood: That may be the hon. Gentleman’s view, but I am simply pointing out that in order to fall foul of the GAAR someone has to have engaged in the most egregious form of abuse. It seems odd to me that falling foul of the GAAR will not therefore attract any additional penalty on top of the tax that is in dispute.

Charlie Elphicke: Will the hon. Lady give way?

Shabana Mahmood: No, I am going to make some more progress.

Tax avoidance and how to tackle it effectively and thereby close the tax gap remains a real problem for this Government, hence our new clause. We need more action from this Government, and where they fail the next Labour Government will step in. We are pushing the Government for greater action in three specific areas. Let me take each in turn.

Ian Swales: The hon. Lady talks about the next Labour Government. Does she wish to apologise for the slashing of the number of compliance and investigation staff by the previous Labour Government, to the point where this Government have had to add large numbers of people to carry out the work she so much wants?

Shabana Mahmood: Given the cuts at HMRC, this Government’s record on HMRC resources, which is a topic I regularly debate with the Minister, is not one for Members on the Government Benches to show off about.

First, let me take the issue of the quoted eurobonds exemption. That was originally implemented to make it easier for companies to obtain finance from the international bond markets by excluding corporate debt listed on recognised stock exchanges from UK withholding tax. Making it easier for companies to obtain finance on the international bond markets is a legitimate objective that we support. However, as covered in a spate of high-profile media stories last year, the exemption can also be used for tax avoidance purposes, allowing companies to shift profits out of the UK in the form of interest payments, without making any tax payment. As HMRC has noted:

“In recent years a number of groups have issued Eurobonds between companies in the same group, and listed them on stock exchanges in territories such as the Channel Islands and Cayman Islands, where they are not actually traded. In effect, the conversion of existing inter-company debt into quoted Eurobonds enables a

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company to make gross payments of interest out of the UK to a fellow group company, where otherwise deduction of tax would be required.”

The Government consulted on the issue in 2012, with HMRC proposing to amend the eurobond exemption so it would not apply where the eurobond is issued to a fellow group company and listed on a stock exchange on which there is no substantial or regular trading in the eurobond. HMRC stated:

“The effect of the amended rule would be to leave untouched the quoted Eurobond exemption for the overwhelming majority of Eurobond issues. It would deny the exemption only in the case of intra-group Eurobond issues that appear to be undertaken for the purpose of circumventing the requirement to deduct tax at source rather than being directed at the raising of third party finance.”

Despite HMRC estimating that the proposed restriction could have an extra impact of £200 million a year, in their response, the Government stated that they did not intend to proceed with it. Why not? Well, the Government said they made that decision in the “light of the responses” they received around a number of technical issues and after respondents questioned the positive Exchequer effect set out in the impact assessment.

That is simply not good enough. We say that abuse of the exemption can be shut down and must be shut down. Our proposals will explore removing the exemption where bonds are issued to connected persons, such as where a subsidiary issues a bond to a corporate parent or its private equity fund owners. To minimise disruption to private equity funds using the mechanism to simplify investor rebate claims under double taxation treaties, we would explore either offering an exemption for private equity partnerships where all, or the vast majority of, the ultimate beneficiaries would qualify for double taxation relief, or streamlining the withholding tax rebate process in consultation with the industry. So there is a mechanism to shut down the abuse of the exemption. It could and should have been taken up by the Government.

The estimates of the Exchequer impact of closing the loophole range from £1 billion to the Government’s estimate of about £200 million, with many more commentators saying that they would place it at about £500 million. In a letter to me dated 4 March 2014, the Minister said:

“Some newspapers quoted a figure of £500m for the tax at risk. This appears to be based on the unrealistic assumption that the interest paid out of the UK had not been restricted for tax purposes and that the beneficial recipient would not be entitled to gross payment. You will appreciate that I cannot discuss individual cases, but HMRC has confirmed to me that computational adjustments are frequently made. Consequently, the £500m sum is very wide of the mark. Any change here will not raise any significant yield.”

I was interested in that response, for which I was grateful and which I received after I had tabled a number of questions about the quoted eurobond exemption, because it displayed a concerning lack of clarity. The Minister says that the numbers quoted are “wide of the mark” but he does not say where the mark actually is. That is surprising, given that HRMC and the Minister have examined this in detail and have consulted on it, and given that they tell us that “computational adjustments” are regularly made for it. Despite that, still no figure has been given.

Mr Gauke: In my letter, I also offered the hon. Lady a meeting, attended by officials, to discuss the matter and explain some of these points to her further. I will try not

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to be personally slighted, but she has not responded to that offer. Why has she not done so? Is it because of the fear that when confronted with some of the challenges in this area she might find that this is all slightly more complicated than she has been led to believe by one or two newspaper articles?

Shabana Mahmood: I am grateful to the Minister for his intervention and I hope he does not take it as a personal slight that I did not, on that occasion, take him up on the offer of a meeting. I will try not to be patronised by the suggestion that these matters are far too complicated for me to understand and that I am getting my information only from newspaper articles.

Mr Gauke: It is quite the opposite: I have absolute confidence that the hon. Lady would have the capacity to understand that this matter is somewhat difficult, but it is often advantageous to speak to the officials who deal with it on a day-to-day basis in order to have a better understanding of it. It would be of benefit to her, and to the House as a whole, to ensure that this debate could take place on the basis of as good an understanding of the matter as possible. By the way, the invitation still stands.

Shabana Mahmood: I may yet take the Minister up on it. But it would be a mistake for him to think that our proposal has been made without consulting experts who are very much engaged on the issue of eurobonds. I am confident that the information we have put out as a result of our business taxation paper, launched yesterday, is accurate and that we have considered the different legal and other ramifications of limiting the abuse of the exemption as it currently stands.

Charlie Elphicke: Will the hon. Lady give way?

Shabana Mahmood: I am going to make a bit more progress.

Let us say for the sake of argument that the figure is close to the £200 million or so set out in the original HMRC consultation. I was surprised that the Minister did not think that sum would merit action. The tone of his comments to me suggested that he considered that to be a small sum and so it was not worth going ahead with the attempt to close down the abuse of the exemption. I am afraid that, as an argument, that is not something that I am prepared to buy. Why? Well, in this year’s Finance Bill Committee, we have debated and supported a measure in clause 61 on business premises renovation allowances.

Mr Gauke: I would hate it if the hon. Lady inadvertently gave the impression that it was my view that the £200 million was not something that we would seek to address; we certainly would. In my letter to her of 4 March, I said:

“In the small number of cases in which a restriction might be considered appropriate, it was also clear from the consultation responses that the proposal would not be effective in addressing the concerns.”

In other words, the proposal that was consulted on would not have got the £200 million. That is why we did not proceed with it. I want to make that clear, and I am sure that she would not want to give a misleading impression.

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Shabana Mahmood: I am grateful to the Minister for that intervention. I was talking about the overall yield. On the difference between the Government and the Opposition in relation to the technical way in which to seek to close down the exemption, the Government consultation looked at situations in which the bonds are not being actively traded. We agreed that that was not an appropriate way in which to close the exemption but, as I have said, we would explore removing the exemption where the bonds are issued to connected persons and, in doing so, we would look at mechanisms to simplify rebate claims under the double taxation treaties and consider, in consultation with industry, streamlining the withholding tax rebate process.

Charlie Elphicke: On these particular provisions, the hon. Lady said that she consulted experts. Will she confirm which particular experts she consulted?

Shabana Mahmood: I would be happy to have a long conversation with the hon. Gentleman about all the different experts, but let me just say that our experts were drawn from across the business and legal worlds. They gave advice and assisted us in thinking through many of the issues related to the abuse of the quoted eurobonds exemption. I will not take this opportunity to put that advice on the record, because I have not sought the permission of those experts to make public some of the assistance and advice that they have given to us. However, our paper is thorough on the issue of how we would seek to close down abuse of the exemption. That tells the House that we have considered these issues deeply, and have thought through all of the problems that might arise from the different attempts to close down the exemption.

I was talking about yield, and how far a potential yield should dictate the Government’s policy in deciding whether to close down an abuse of the system. I referred to the business premises renovation allowance in clause 61. The Government have taken action to close down some of the abuse associated with that allowance, but the impact on the Exchequer was, we were told, negligible. So we see the Government proactively closing down a loophole in which the Exchequer impact is expected to be minimal, but where a loophole exists that is estimated to cost the Exchequer upwards of £200 million a year, they do nothing. How can they justify their decision not to take action to prevent the abusive use of the eurobonds exemption when there are hundreds of millions of pounds at stake?

The potential complexity of the change that would be required is no justification for the failure to act. It has not stopped this Government on other measures, including on the business premises renovation allowance. There seems to be no reason—not money, complexity or anything else—that could stop the Government from acting other than intense lobbying from the affected parties seeking to protect their own interests.

The Government have failed to act, but our new clause gives them the opportunity to do so. If they do not act, the next Labour Government will.

Ian Swales rose—

Shabana Mahmood: I want to make some more progress.

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Secondly, we want to push the Government to take action on disguised employment in the construction industry. Employers falsely declaring their workers to be self-employed is a long-standing and well-documented issue in the sector. Although there is of course some necessary and genuine self-employment in the sector, employers are currently able to declare someone to be self-employed when they exhibit all of the characteristics of an employee.

That results in three problems. The first is a cost to the Exchequer. The Treasury has estimated that that entailed a static cost of £350 million in 2009 and the House of Commons Library recently produced an estimate of about £500 million. The second problem is that those falsely classified as self-employed are denied their employment rights. That means that workers might work for the same company for several years, effectively as an employee, while not receiving any of the resulting employment rights, such as sick pay, holiday pay and maternity and paternity leave.

6.45 pm

Mike Kane: A recent report by Felix Behling and Mark Harvey, “The Evasion Economy,” estimates that in the construction industry alone, 400,000 people are bogusly self-employed.

Shabana Mahmood: My hon. Friend is absolutely right about the findings of that report and we know that this is a real problem, particularly for people in the construction industry.

Kelvin Hopkins: My hon. Friend is making a very fine speech and I agree with what she is saying. In 1970, I serviced on the TUC construction committee, and a major item on the agenda at the time was bogus self-employment and the loss to the taxpayer. Another point is important, too. They do not pay their national insurance, so they will suffer when their pensions come to be paid.

Shabana Mahmood: I am grateful to my hon. Friend, who is right that this is a long-standing problem for Governments of all colours and persuasions who have for too long been unable to deal with these very serious issues which result in people not being entitled to sick pay, holiday pay, maternity and paternity leave and other employee rights.

The third problem associated with disguised self-employment is that the unhealthy level of self-employment in the construction industry—40% compared with an average of 14% across all other industries—does not offer a sustainable skill supply for emerging growth opportunities or a change in the economic weather. Employers who want to invest in their staff and employ directly are losing out to companies that use payroll companies which, because they are paying less tax, can sometimes offer slightly higher pay to poach skilled staff.

In July 2009, we published proposals to tackle the problems of false self-employment in the construction industry, but it was not until last year’s Budget that the Government took an interest in the problem when they announced that they would consult on proposals to tackle tax avoidance by intermediaries based offshore who provided labour services to UK companies. We are

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still waiting for the Government’s response to their consultation on onshore intermediaries, which closed, I think, in March.

Last year, the shadow Secretary of State for Work and Pensions, my hon. Friend the Member for Leeds West (Rachel Reeves), reviewed the issue and, based on an investigation of the available evidence and widespread consultation with the industry, we have proposed that workers should automatically be deemed to be treated as employees for tax purposes if they meet criteria that most people would regard as obvious signs that they were employees rather than self-employed subcontractors. It is important to note that the measure would not only close a costly tax loophole but remove a perverse financial incentive for those workers whom most would regard as being in an employment relationship to be classified as self-employed. Such a shift would be good for the construction sector and its work force, too. We want the Government to take further action today to consider the issue and prepare the report envisaged in our new clause.

The third area in which we seek greater action is that of dormant companies. It has been estimated that 30% of all UK companies are not asked to submit tax returns. One explanation that has been given is that those companies are either dormant or are not liable to pay tax in the UK as they trade exclusively overseas. Once companies have declared themselves dormant, they are exempted from filing a corporation tax return for five years. For some companies, that window could be used as an opportunity to trade with tax impunity and yesterday we set out our proposals whereby we will require annual confirmation of dormancy and will further explore the possibility of banks’ automatically informing HMRC when there is activity in supposedly dormant accounts. That would deal with an issue of tax evasion, rather than tax avoidance, but it is important that the tax lost as a result of weaknesses in the rules of dormancy is firmly on the Government’s radar and it has not been to date.

As I have set out, tackling tax avoidance and closing the tax gap effectively remains a top priority for the public. This Government’s record is not good enough. Our new clause pushes for greater action on three important issues and practical measures that can help to close the tax gap. We hope that it will have the support of the House this evening.

Sir Gerald Howarth: I am pleased to take part in this debate—it is the first time I have participated in a Finance Bill debate for quite a long time. I rise to take issue with the hon. Member for Birmingham, Ladywood (Shabana Mahmood), who made a long and interesting speech, about her definition of tax abuse. Indeed, there was no definition of what is considered to be abusive tax arrangements. I think that we have all become lax in our use of language in a matter which is of huge concern to our fellow citizens, for the powers of the Inland Revenue—HMRC—to take money earned by our fellow citizens is an important power and one that should be used very carefully indeed. This House has a responsibility to ensure that these matters are properly debated.

I have to tell my hon. Friends that I am increasingly alarmed by the Government’s rhetoric on what they refer to as “aggressive tax avoidance”. I was brought up to understand that tax avoidance is not only legitimate

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but, indeed, the duty of the head of every household. It is not their duty to maximise their tax; it is their duty to minimise it. It is our money, which is taken from us by the Government.

Kelvin Hopkins: Will the hon. Gentleman give way?

Sir Gerald Howarth: Quite a lot of people want to speak, but the hon. Gentleman is a good man, so I will give way to him briefly.

Kelvin Hopkins: It is a simple point: the great majority of wage earners and salary earners can never escape, avoid or evade tax because they pay through PAYE. They have to pay every penny of their tax every week, every month, every year.

Sir Gerald Howarth: The hon. Gentleman is entirely right, but overwhelmingly it is the entrepreneurs of this country who drive our economy. Ensuring not only that our entrepreneurs are encouraged to invest in providing jobs for people but that this country is a good place in which people from overseas wish to invest their enterprise must be a major consideration.

As I say, I was brought up to understand that tax avoidance is entirely legitimate, and if a scheme is found to be outwith that which the Government intend, it is for Parliament to close any loopholes; tax evasion, on the other hand, is illegal. However, we have become consumed by the idea that because some high-profile companies do not pay tax in this country, tax avoidance as a whole is somehow immoral. I think that some of the companies that do not pay tax here ought to and I strongly support endeavours by the Government to ensure that they pay their fair share, but when, 10 days ago, I was approached by a constituent who told me about the accelerated payment scheme, I became very concerned indeed.

My constituent, a pharmacist, together with a local GP practice and a dentist, wishes to set up an enterprising, innovative scheme in Aldershot to provide a new, modern facility, but if he is told to pay the thick end of £100,000 when he understood the scheme to be perfectly lawful, where is that money to come from and what happens then to his investment in his proposed business? I think this measure will lead to great uncertainty. I pay tribute to my hon. Friend the Member for Cities of London and Westminster (Mark Field) for the clear way he has drawn attention to the potential repercussions of the Government’s proposal.

The Government are proposing to confer massive powers on state officials. Clause 213(3) provides that

“The payment required to be made under section 216 is an amount equal to the amount which a designated HMRC officer determines, to the best of that officer’s information and belief, as the understated tax.”

There we have it—huge power residing in the hands of unelected officials. We, as right hon. and hon. Members, all know from our constituency experience the number of cases where HMRC gets it wrong. We are invoked to try to recover the money that constituents in many cases have been unable, by direct contact with HMRC, to secure for themselves. Very often, it is only after our intervention that the matter is put right. A dangerous precedent is being set here for a rapacious future Government, perhaps a Labour Government. Perhaps

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that is what the hon. Lady was threatening; I am not sure that I would yet be in a position to accuse her of being rapacious, but perhaps she will let us know her intention.

We should be careful about giving these extensive powers to HMRC. Interestingly, my noble Friend, Lord Howard of Rising, asked Her Majesty’s Government

“how much money was repaid to taxpayers as a result of overcharging by HM Revenue and Customs in each of 2009-10, 2010-11, 2011-12 and 2012-13.”

The noble Lord Deighton responded:

“The information is not available as HM Revenue and Customs does not collect information on amounts underpaid or overpaid.”—[Official Report, House of Lords, 23 June 2014; Vol. 754, c. WA135.]

Therein lies a severe problem. If HMRC is incapable of giving us that information, what confidence can we have that it will exercise these powers carefully?

I quite understand the challenge faced by my hon. Friend the Exchequer Secretary, who is a very splendid Minister indeed, in trying to restore the public finances to order after they were destroyed by the former Prime Minister and Chancellor of the Exchequer. It is a massive challenge that we face. But we could make a start by looking at some of the money owed to Departments. I understand that the Ministry of Justice, for example, has quite a lot of money outstanding. In November 2011, the National Audit Office reported that the Ministry of Justice was owed £2 billion in outstanding fines and uncollected criminal assets. Last year, it wrote off £76 million in uncollected court fines, which was a 50% increase on 2010-11.

I also understand when my hon. Friend says that the Government want to address the issue of taxpayers dragging out contested cases in the courts. It is a fair point. But if the measure goes through, what incentive will there be on state officials, never knowingly understanding the importance of time, to expedite contested claims themselves? The president of the Chartered Institute of Taxation made a good observation. He said:

“We have sympathy with the Government’s need to accelerate dealing with some tens of thousands of outstanding mass marketed avoidance cases which are jamming up the courts…However, handing HMRC almost unprecedented executive powers to decide who falls within the mischief they intend to deal with, without the usual safeguards and appeal rights, is not something which should be done lightly”.

I strongly endorse that.

I remind my hon. Friends that when we came into office 35 years ago, and the noble Lord Howe, then Sir Geoffrey Howe, as Chancellor of the Exchequer, delivered his first Budget on 12 June 1979, he and his successor, my noble Friend Lord Lawson, set about reducing tax, because they believed that by reducing the burden of taxation, they would reduce the incentive for taxpayers to incur costs in seeking tax avoidance schemes. I urge the Government to look more carefully at how we might increase our drive to reduce taxation itself as a more efficient way, a more Conservative way, to reduce the incentive for taxpayers to seek avoidance schemes.

I will not support new clause 12 and do not think that the House should do so, but I do think that it needs to look much more carefully at the powers that the Bill proposes to confer on HMRC officials.

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7 pm

Michael Connarty (Linlithgow and East Falkirk) (Lab): On the question of tax avoidance, if the Government do not design the tax system properly and people who should pay tax can avoid it if they do so legally, that might be correct legally, but it is not necessarily correct morally. Having said that, if the Government design the tax system in that way and someone takes advantage of it, particularly an entrepreneur, who might take the money they save in tax and reinvest it in further jobs and enterprises, that person can defend that on the basis that if the Government were really skilful they would not be able to avoid it. On the question of tax evasion, people should go to prison if they evade tax. It is very simple in my view.

I have written to the Minister on behalf of a constituent who is an entrepreneur. He is about to retire and will probably dispose of his company in the process, because he is not talking about another income stream coming from continuing contact with the company. He accuses the Government of bringing in retrospective legislation in this Finance Bill, because from clause 192—I have read this part of the Bill right the way through to chapter 3, which is on accelerated payments—it is quite clear that the Government intend these retrospective investigations to go back to 2004. It gives HMRC power to declare in the arrangements for follower notices the ability to claim the tax based on other cases that might be similar to the case it is investigating or discussing. If it does so, it can claim the payment from the individual based on that follower notice.

Ian Swales: On a quick point of clarification, the retrospective application that most people are concerned about is that which was applied in the Finance Act 2008, which was enacted by the previous Government.

Michael Connarty: I understand that the advice given to my constituent, who is a business person, came from one of the best financial advisers in Scotland. In fact, it was the financial adviser who wrote to Equitable Life long before anyone realised that it was defrauding people by enhancing assets falsely, and who was the first person called to give evidence to the Treasury Committee. They have advised my constituent that the problem is, in fact, in this Bill and the performance under its terms. It might be based on a previous ability to do so, but the concept of follower notices and accelerated payment notices are, in fact, in this Bill and did not exist before.

The question is whether the provision is retrospective, because I believe that the Minister is on record—I think that it might be in writing—as saying that he does not agree with retrospective tax powers. I also understand that the Treasury Committee confirmed in a recent report that this is indeed retrospective and the Government are yet to explain what is wholly exceptional about the performance they have put in this Bill—the follower notices and the accelerated payment notices—that will justify the use of retrospective claims for taxation.

It seems to me that when someone is doing their tax planning, particularly when coming to that later period in life—quite a few Members of this House are in that age group—they look at the law at the time, take tax advice from advisers, make arrangements and do their tax planning accordingly, and that is what they think will be their future income. Those people tend not to be

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receiving a pension paid by someone else; they are earning their pension by their own efforts and enterprises. If that advice is taken and their tax planning goes ahead, I want the Government to assure me that they will not then be told after this Bill is passed, “You made that arrangement in 2000, but we have decided that from 2004 that that tax planning, although legal then, is not legal, so we want you to pay a substantial amount of tax back that was not in the tax arrangements then.” I think that it is only just that the Government give people an assurance that they will not come seeking to turn what was a legal tax arrangement into an illegal one and cost them a substantial amount of money.

David Rutley (Macclesfield) (Con): The hon. Gentleman is making a powerful argument. However, he should consider whether his model of an individual looking at tax approaches is the right one; many businesses look to tax advisers for advice. It is those tax advisers, who have given what is at least imperfect advice to businesses, who need to be examined more carefully.

Michael Connarty: I hope that the hon. Gentleman thinks I am a bit smarter than his question implies. If someone does something that is tax-efficient but not legal or justifiable, it is clear that the Government can say that it is illegal and they want the money back. People pay financial advisers quite a bit for good, legal, tax-efficient plans—to find ways not of cheating the system, but using it efficiently.

I might think it wrong for people to avoid tax and I might say that they should put it all in the bucket, like those in the PAYE system. The reality is, however, that tax efficiency is about people seeking to minimise their tax; that advantages people employed by their enterprise or seeking a just reward for their efforts throughout their life as an entrepreneur. I am not against that. If we want to close an avoidance loophole, we should close it. If the loophole is open and used, the Government should not be able to come back 10 years later and say, “We’ve changed our mind. Yes, it was efficient and legal, but we want money from you.”

Under this legislation, once the decision has been made, there is no appeal; someone would have to go to private litigation to fight the taxman. That is the problem. The system will not be fair, but completely and utterly repressive—designed to give all power to HMRC and the Government and none to the private individual. My constituent is 65. He has worked for a long time and employed lots of people in my constituency. He has done things legally, but on retirement he could face the prospect of being chased by HMRC under this law, the only way to fight it being to have enough money in the bank to bring private litigation.

The proposals give all power to the taxman, and that is not a correct, just or moral way to run the country. I hope the Minister will assure us that the law will not be used in such a way and that, if required, amendments will be tabled to ensure that.

Several hon. Members rose

Madam Deputy Speaker (Mrs Eleanor Laing): Order. I assume that Members taking part in the Finance Bill debate are arithmetically astute, so will be able to work out as quickly as I can that, if the Minister is to have

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any chance of answering the many points put to him, particularly by Opposition Front Benchers, the four people wishing to speak have little more than 10 minutes left. If they take less than three minutes each, everyone will get to speak; if they take more, they will be being discourteous to each other.

Charlie Elphicke: I will endeavour to be as brief as possible, Madam Deputy Speaker.

I have often made the case against tax avoidance—international and national—in the House. I have often mentioned the behaviour of the water companies, which used the quoted eurobond exemption to further their strategies. Yet I cannot support the new clause, which is, in the words of the Labour party’s head of policy, the hon. Member for Dagenham and Rainham (Jon Cruddas), nothing less than an “instrumentalised, cynical” nugget

“of policy to chime with…focus groups and…press strategies”.

The shadow Chancellor showed that at the weekend.

The new clause would not raise £500 million. I will be interested to hear the Minister say exactly how much it would raise, as in many cases double taxation treaties could be used. When I raised the loophole in question, my case was about the debt-equity gearing ratio—a far more effective way of looking at the issue. I would be surprised if the Labour party had consulted experts beyond its own advisers. Indeed, there was a consultation on this issue in 2012. I stand to be corrected, but I do not believe the Labour party gave a response to that consultation. It simply thought, “What wheeze can we table as a new clause to plonk out there for our press strategy as our instrumentalised policy nugget?”

The new clause is highly cynical. It has been devised purely to make a case and to say, “Yes, we are on the pitch in the tax avoidance debate.” In fact, when the Labour party was in power receipts from income tax doubled but receipts from corporation tax went up by 6%. Again, we heard cynicism in the debate today with remarks about the tax gap going up by £1 billion to £35 billion. That is because the economy is growing. In reality, the percentage has fallen from 7.1% to 7%, so the tax gap has been heading in the right direction.

The Government have done a lot to make the case on this issue and to take the battle to the tax avoiders. I support the accelerated payments regime—I differ from my hon. Friend the Member for Aldershot (Sir Gerald Howarth) on this—because people who are subject to it know that they are engaging in a tax avoidance arrangement that is going to be under attack, and so should be prudent and keep the money to one side. If they are not doing so, they should be thinking about things rather more carefully, because they know they have entered into an arrangement that is likely to be under attack from the Revenue.

Kelvin Hopkins: It is a disgrace that while millions of ordinary people suffer the privations of wage cuts, unemployment and poverty, a rich minority is avoiding and evading taxes. I am talking about corporates and billionaires. There is indeed one law for the rich and one for the poor, the poor being the great majority of wage and salary earners. They are not necessarily poor in the specific sense, but they pay their taxes—I pay PAYE myself.

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The Government’s concerns about the deficit seem hypocritical given that they have failed to collect the taxes that are owed. The estimate of the amount of uncollected tax made by HMRC and the Government is of the order of £40 billion. But estimates by others—including the Public and Commercial Services Union, the trade union that represents the workers in the tax collecting industry, the TUC and Richard Murphy, a noted tax expert I have seen speak on many occasions—put the amount at £120 billion or even more.

Even if we take the £40 billion figure, if the Government collected half of it, that would be an extra £20 billion a year, equivalent to 5p on the standard rate of income tax. I suggest that that would not just bring down the deficit but would give us plenty more to spend on the health service and on decent pay rises for public servants, who have suffered so much for so long.

As for staffing in HMRC, I have spoken out about that under previous Governments as well, not just this one, because that has been a weakness for Government efforts to challenge tax avoidance and evasion for a long period. I will tell a little anecdote. In 1997, when I first came into Parliament, I went to visit my local VAT office. The people there said that if they had more staff, they could collect more taxes. In VAT from local businesses alone, every individual tax inspector collected five times their own salary. Naturally I wrote to the then Chancellor of the Exchequer. I got an answer back from a civil servant, not from the Chancellor, which said that the Treasury wanted to make savings by cutting staff. That is utterly irrational when staff collect many times their own salary.

As I said, with VAT from local firms the amount collected is five times a staff member’s salary. When it comes to the big corporates, extra staff collect many, many times their own salary, and we should have many more tax staff. Perhaps if HMRC did not have such difficulties with staffing, it would be able to work more accurately and would not make the mistakes that have been mentioned.

We have recently seen Vodafone, which apparently owed something like £7 billion in tax, do a cosy little deal with Dave Hartnett, the then boss of HMRC, and pay £1 billion. The rest was siphoned through Luxembourg, I think—wherever it was, large amounts of money were lost from the corporates. Interestingly, Dave Hartnett, who was a public servant and should have been committed to the public interest, retired and finished up as an adviser to corporates on tax avoidance. That is unacceptable. Civil servants should be motivated by the public service ethos and be determined to collect taxes. They should not be cosying up to the corporate world.

Finally, as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) has pointed out, the 1,000 richest people in this country have seen their wealth double in the past five years from a quarter of a trillion pounds to half a trillion pounds. That is a staggering amount of money. Much of that must be to do with tax avoidance and tax evasion. If we were to collect just some of that, we would have no deficit and plenty more to spend on the health service.

1 July 2014 : Column 856

7.15 pm

Nigel Mills: I will not vote for new clause 12, and I will briefly explain why.

A year ago, we enacted the general anti-abuse rule. One argument that Mr Aaronson made when he reviewed that idea was that it would allow us to have fewer of these complicated, focused anti-avoidance rules in Finance Bills and to avoid cluttering up the tax regime with more complexity because we would be able to rely on the general rule. I look forward to seeing that, rather than another huge, thick Finance Bill next year.

Subsection (1) of new clause 12 speaks of

“tax arrangements that are abusive.”

Surely those come within the general anti-abuse rule and can therefore be challenged, even if they are technically legal. Given that, we will not need to come back and assess the three items that are set out, because they will already have been tackled and there will be no further revenue to raise.

I racked my brains and did a bit of googling to try to find methods of tax avoidance using dormant companies. I struggled to think of one, because once a dormant company does something, it ceases to be dormant and therefore cannot be used to avoid tax. If what is meant is that companies are pretending to be dormant, but are actually active and are not filing returns that they know full well are due, that is tax evasion and should be clobbered severely using the existing rules. We probably do not need to create a huge compliance burden for every innocent dormant company out there. There might be sensible reasons for maintaining those companies, such as to protect a name or previous transactions, or simply that the cost and hassle of striking them off are greater than they ought to be. That would be an unreasonable compliance burden to impose.

We should be a bit careful about the language that we use about eurobonds. I have some sympathy with the view that when they were created 40 or 50 years ago and the exemption was passed, Parliament probably did not intend for intra-group loans to be traded randomly on Channel Island stock exchanges but never actually traded, just held by the same third party throughout the period. I see the temptation to remove the exemption and it was right that the Government proposed some sensible ways of doing so two years ago. However, if the Government consult on something and look into the detail, but then decide that it would not raise as much money as they thought and that it would act as a big disincentive to investment, it is unwise to come back to it so quickly. We should learn the lessons from that and just accept that if we want the UK to be attractive to investment and the hub of the private equity industry, which many small businesses in all our constituencies benefit from, it is foolish to risk putting up the cost of borrowing for that industry and adding complexity for it by revising the rules again.

I think that the new clause is superfluous and I will not vote for it.

Mike Kane: In the few moments that I have, I want to point out that self-employment is being used by far too many employers to engage workers in the construction industry, as my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) pointed out. According to the Union of Construction, Allied Trades and

1 July 2014 : Column 857

Technicians report “The Evasion Economy”, 400,000 workers are being engaged in that way. Those workers miss out on the rights that normal workers get. According to another UCATT report, “The Great Payroll Scandal”, this practice is costing the Exchequer up to £1.9 billion per annum.

When I talked to construction workers on Friday night, they spoke of the scandal of payroll companies making millions of pounds. This is a legitimised dodgy practice. The companies get workers to sign a contract to say that they are self-employed, but they work for a single employer. In any legal sense, their status would be defined as a direct employee, yet they lose all the rights that we have spoken about. It should no longer be possible for companies to instruct such construction workers to turn up on site when they want them. Construction workers need the security of employment rights and full national insurance contributions should be paid.

Mr Gauke: We have had a lively debate, and I will try to address as many of the points raised as possible in the time available.

New clause 12 seeks to have the Government produce a report on how to reduce the tax advantages arising from tax arrangements that are abusive. I agree that tax avoidance is a key issue, and the Government have made it abundantly clear that we will not stand for a minority of taxpayers continuing to seek unacceptable ways to reduce the amount of tax they pay through contrived and artificial means. That increases the tax burden on the rest of society and creates an unfair playing field for businesses.

Let me explain why I do not think that a report would be beneficial. The Government have taken strong and robust action to tackle avoidance. Since 2010 we have introduced 42 changes to tax law to close avoidance loopholes and make strategic changes to prevent and deter tax avoidance. Those measures include the introduction of a general anti-abuse rule, strengthening the disclosure of tax avoidance schemes regime, clamping down on stamp duty land tax avoidance with a new range of measures —including an annual tax on envelope dwellings—and numerous changes to business tax rules and reliefs to tackle bad behaviour, including misuse of the partnership structure and corporate loss buying.

We are going further. In the Finance Bill we are introducing new measures to put in place tougher monitoring regimes and penalties for high-risk promoters of tax avoidance schemes, and we are introducing accelerated payments and follower notice measures that will give HMRC the power to collect disputed tax bills up front, putting those who try to avoid tax on the same footing as the vast majority who pay all their tax up front.

Let me address the concerns raised by my hon. Friend the Member for Aldershot (Sir Gerald Howarth) and the hon. Member for Linlithgow and East Falkirk (Michael Connarty). The vast majority of people pay their tax up front, but it is possible for people working through self-assessment to make use of a tax avoidance scheme and hold on to the money during the—often lengthy—period where there is a dispute. The law is the law, however, and it is the law that existed when the arrangements were made that continues to apply. We

1 July 2014 : Column 858

are making a change, however, to say that while there is a dispute, the money should be held by the Exchequer and not the taxpayer, just as happens in many other circumstances where there is a dispute in our tax system. This is money that the individual would have already paid if they had not entered into an avoidance scheme. When completing their self-assessment return, they would have notified HMRC that they were taking part in a tax avoidance scheme under the disclosure of tax avoidance schemes regime, and as I said, the taxpayer can continue to dispute the case and will be paid interest should they win. The rights of the individual are therefore not being restricted. Prudent taxpayers should recognise that tax avoidance carries a significant risk of not working and the tax becoming payable, and they should make plans for such an outcome.

In addition to changes in law, we have invested £1 billion in increasing HMRC’s compliance resource, which has reaped huge benefits. HMRC is ever more successful at tackling the avoidance it sees, and it has an excellent record in litigating the avoidance schemes that taxpayers choose to take to tribunal. It wins about 80% of cases, and persuades many more taxpayers to settle before the case gets that far. Between April 2010 and March 2014, it won 94 avoidances cases in tribunals and courts, and in 2013-14 alone, its 30 wins protected £2.7 billion of tax.

The Government will continue to close loopholes in tax law and introduce strategic responses to tax avoidance across the tax system. We will act robustly to respond to abuses that we see. We consult on those measures where we can, although hon. Members will understand that in certain circumstances we must act quickly to close down abuse, so consultation is not possible. A report will add nothing to the progress that we have made and continue to make. Action is more important. We have proved we are taking action to tackle tax avoidance across the board, and we will continue to do so.

In the time available I do not think I can do justice to the fairly lengthy speech on eurobonds by the hon. Member for Birmingham, Ladywood (Shabana Mahmood), but the £500 million figure that she quoted, which is somehow supposed to be at risk, seems to be based on an article in a newspaper. It is not a figure we recognise. It wrongly assumes that the recipient of the interest would not be entitled to gross payment of interest and fails to take into account the fact that under the UK’s double tax treaties the tax would often be repaid anyway.

I extend again the offer that I made in March to the hon. Lady. I have been a shadow Treasury Minister and I recognise the challenges in developing policy in these areas without access to officials. I would be more than happy to meet her, with officials, to talk through some of the practical points of this issue. I think she will find that that £500 million is something of an illusion. In terms of the practical points that she raised about changing the withholding tax system, I ask her to bear in mind the double taxation treaties. Her proposals might not be as easy as she believes.

The alleged abuse of disguised employment in the construction sector is an important point. Some labour providers have created structures specifically designed to avoid tax and national insurance and gain a commercial advantage over those who play by the rules. The Government aim to put a stop to those practices in the

1 July 2014 : Column 859

construction sector and elsewhere through the new measures introduced in this Bill to tackle false self-employment intermediaries. They will provide a level playing field for compliant labour providers who help to facilitate the UK’s flexible labour market.

The new measures that we are introducing target structures set up to present workers as self-employed when they are really employees. This has been a growing problem in recent years and has spread from the construction industry to other sectors. That is not acceptable. Workers lose out on their rights, it creates competitive disadvantages for compliant businesses, and ultimately the taxpayer foots the bill. That is why we are acting now to stop the abuse. Intermediaries are the biggest mechanism for delivering false self-employment within the construction industry, and as I have said, the practice is spreading. Tackling employment intermediaries used to facilitate false self-employment will not only more effectively target a sizeable section of the false self-employment in construction—a point raised by the hon. Member for Wythenshawe and Sale East (Mike Kane)—but will stop the spread of the problem to the wider economy.

We believe our proposals are the best way to tackle avoidance in that area. The previous Government consulted on proposals to tackle false self-employment in construction in 2009, which deemed all construction workers to be employed unless they fulfilled one of three criteria. In practice, that would have meant that bricklayers would need to provide their own bricks and roofers would have had to supply their own tiles to be categorised as self-employed. As set out in the consultation response document, analysis suggested that the proposals could undermine legitimate commercial practice and run the risk of capturing genuinely self-employed individuals.

A dormant company is one that is not within the charge to corporation tax at all, whereas the new clause appears to relate to companies that are within the charge but fail to file returns. That is not avoidance but evasion. HMRC uses risk-based procedures and extensive data-matching analysis to identify companies that should have filed returns but have not done so. All such companies are risk-assessed to establish whether they come within the charge to tax. Research suggests that the risk of tax loss is small. HMRC’s activity is carefully targeted, ensuring administrative burdens for compliant customers are minimised while focusing on the non-compliant.

I draw the House’s attention once more to the Government’s strong response to the threat of tax avoidance, including our unprecedented action to close loopholes and provide new tools for HMRC to tackle avoidance. The report proposed by the Opposition is unnecessary and would distract HMRC from delivering on its important work tackling avoidance. I call on the hon. Lady to withdraw the new clause.

Shabana Mahmood: I am disappointed that the Minister will not engage with the practical measures envisaged in the new clause. We have had an interesting debate, but I wish to press the new clause to a Division.

Question put, That the clause be read a Second time.

The House divided:

Ayes 228, Noes 296.

Division No. 28]


7.29 pm


Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Ashworth, Jonathan

Austin, Ian

Balls, rh Ed

Barron, rh Kevin

Bayley, Hugh

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Blackman-Woods, Roberta

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Buck, Ms Karen

Burden, Richard

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, rh Mr Alan

Campbell, Mr Ronnie

Champion, Sarah

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Coffey, Ann

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Sir Tony

Dakin, Nic

Danczuk, Simon

Davidson, Mr Ian

Davies, Geraint

Dobbin, Jim

Dobson, rh Frank

Donohoe, Mr Brian H.

Doran, Mr Frank

Doughty, Stephen

Dowd, Jim

Doyle, Gemma

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Elliott, Julie

Ellman, Mrs Louise

Engel, Natascha

Esterson, Bill

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Fovargue, Yvonne

Francis, Dr Hywel

Gapes, Mike

Gardiner, Barry

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goodman, Helen

Green, Kate

Greenwood, Lilian

Griffith, Nia

Gwynne, Andrew

Hain, rh Mr Peter

Hamilton, Mr David

Hamilton, Fabian

Hanson, rh Mr David

Havard, Mr Dai

Healey, rh John

Hepburn, Mr Stephen

Hermon, Lady

Heyes, David

Hillier, Meg

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hood, Mr Jim

Hopkins, Kelvin

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

James, Mrs Siân C.

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Kane, Mike

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lammy, rh Mr David

Lavery, Ian

Leslie, Chris

Lewell-Buck, Mrs Emma

Long, Naomi

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

Mactaggart, Fiona

Mahmood, Mr Khalid

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCabe, Steve

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McCrea, Dr William

McDonagh, Siobhain

McDonald, Andy

McDonnell, John

McFadden, rh Mr Pat

McGovern, Alison

McGuire, rh Mrs Anne

McKenzie, Mr Iain

McKinnell, Catherine

Meale, Sir Alan

Mearns, Ian

Miliband, rh Edward

Miller, Andrew

Mitchell, Austin

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Mudie, Mr George

Munn, Meg

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Powell, Lucy

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reed, Mr Steve

Reeves, Rachel

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Robertson, Angus

Robertson, John

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sawford, Andy

Seabeck, Alison

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Sheridan, Jim

Shuker, Gavin

Simpson, David

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Owen

Spellar, rh Mr John

Straw, rh Mr Jack

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Umunna, Mr Chuka

Vaz, Valerie

Weir, Mr Mike

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Williamson, Chris

Wilson, Phil

Wilson, Sammy

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Wood, Mike

Woodcock, John

Woodward, rh Mr Shaun

Wright, David

Tellers for the Ayes:

Julie Hilling


Susan Elan Jones


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Andrew, Stuart

Arbuthnot, rh Mr James

Baker, Steve

Baldry, rh Sir Tony

Baldwin, Harriett

Barclay, Stephen

Barker, rh Gregory

Baron, Mr John

Bebb, Guto

Bellingham, Mr Henry

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Crispin

Boles, Nick

Bottomley, Sir Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brooke, Annette

Browne, Mr Jeremy

Bruce, Fiona

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burrowes, Mr David

Burstow, rh Paul

Burt, rh Alistair

Byles, Dan

Cable, rh Vince

Cairns, Alun

Campbell, rh Sir Menzies

Carmichael, Neil

Carswell, Mr Douglas

Cash, Sir William

Chishti, Rehman

Chope, Mr Christopher

Clappison, Mr James

Clark, rh Greg

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Colvile, Oliver

Cox, Mr Geoffrey

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davies, David T. C.


Davies, Glyn

Davies, Philip

Davis, rh Mr David

Dinenage, Caroline

Dorries, Nadine

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Ellis, Michael

Ellison, Jane

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evans, Mr Nigel

Evennett, Mr David

Fabricant, Michael

Fallon, rh Michael

Farron, Tim

Featherstone, Lynne

Field, Mark

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freeman, George

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Garnier, Sir Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gillan, rh Mrs Cheryl

Goldsmith, Zac

Goodwill, Mr Robert

Gove, rh Michael

Graham, Richard

Gray, Mr James

Grayling, rh Chris

Green, rh Damian

Greening, rh Justine

Grieve, rh Mr Dominic

Griffiths, Andrew

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, rh Mr Philip

Hammond, Stephen

Hancock, Matthew

Hands, rh Greg

Harper, Mr Mark

Harris, Rebecca

Hart, Simon

Harvey, Sir Nick

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendry, Charles

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Horwood, Martin

Howarth, Sir Gerald

Hughes, rh Simon

Hunt, rh Mr Jeremy

Huppert, Dr Julian

James, Margot

Javid, rh Sajid

Jenkin, Mr Bernard

Jenrick, Robert

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, rh Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kennedy, rh Mr Charles

Kirby, Simon

Knight, rh Sir Greg

Kwarteng, Kwasi

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Latham, Pauline

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leslie, Charlotte

Lewis, Brandon

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lilley, rh Mr Peter

Lloyd, Stephen

Loughton, Tim

Luff, Sir Peter

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

Maynard, Paul

McCartney, Jason

McCartney, Karl

McLoughlin, rh Mr Patrick

McPartland, Stephen

Metcalfe, Stephen

Miller, rh Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morgan, rh Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, rh Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, rh Sir Richard

Paice, rh Sir James

Parish, Neil

Patel, Priti

Pawsey, Mark

Penning, rh Mike

Penrose, John

Percy, Andrew

Perry, Claire

Phillips, Stephen

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Pritchard, Mark

Pugh, John

Raab, Mr Dominic

Randall, rh Sir John

Reckless, Mark

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Robertson, rh Hugh

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Shepherd, Sir Richard

Simmonds, Mark

Simpson, Mr Keith

Skidmore, Chris

Smith, Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Sir Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stanley, rh Sir John

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Stride, Mel

Stuart, Mr Graham

Stunell, rh Sir Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Swinson, Jo

Swire, rh Mr Hugo

Syms, Mr Robert

Teather, Sarah

Thornton, Mike

Tomlinson, Justin

Tredinnick, David

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vaizey, Mr Edward

Vara, Mr Shailesh

Vickers, Martin

Walker, Mr Charles

Wallace, Mr Ben

Ward, Mr David

Watkinson, Dame Angela

Weatherley, Mike

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Stephen

Williamson, Gavin

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Yeo, Mr Tim

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Jenny Willott


Gavin Barwell

Question accordingly negatived.

1 July 2014 : Column 860

1 July 2014 : Column 861

1 July 2014 : Column 862

1 July 2014 : Column 863

Bill to be further considered tomorrow.

Business without Debate


Madam Deputy Speaker (Mrs Eleanor Laing): With the leave of the House, we shall take motions 8 to 14 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

1 July 2014 : Column 864

Financial Services and Markets

That the draft Financial Services and Markets Act 2000 (Regulated Activities) (Green Deal) (Amendment) Order 2014, which was laid before this House on 4 June, be approved.

Social Security

That the draft Jobseeker’s Allowance (Supervised Jobsearch Pilot Scheme) Regulations 2014, which were laid before this House on 4 June, be approved.

Capital Gains Tax

That the draft Double Taxation Relief and International Tax Enforcement (Japan) Order 2014, which was laid before this House on 10 June, be approved.

That the draft Double Taxation Relief (Federal Republic of Germany) Order 2014, which was laid before this House on 10 June, be approved.

That the draft Double Taxation Relief and International Tax Enforcement (Belgium) Order 2014, which was laid before this House on 10 June, be approved.

That the draft Double Taxation Relief and International Tax Enforcement (Zambia) Order 2014, which was laid before this House on 10 June, be approved.

That the draft Double Taxation Relief and International Tax Enforcement (Iceland) Order 2014, which was laid before this House on 10 June, be approved.—(Mark Lancaster.)

Question agreed to.

delegated legislation (committees)


That the Motion in the name of Secretary Vince Cable relating to Industrial Support shall be treated as if it related to an instrument subject to the provisions of Standing Order No. 118 (Delegated Legislation Committees) in respect of which notice has been given that the instrument be approved.—(Mark Lancaster.)


Rail Link from Penzance to Paddington

7.43 pm

Andrew George (St Ives) (LD): I rise to present a petition on behalf of more than 3,000 petitioners from west Cornwall, which calls for a resilience rail service between Penzance and Paddington. It was largely precipitated because of concern about inadequate investment in that service and also, of course, because of the disruption caused to the service by the February storms in both Penzance and Dawlish. It promotes major investment in the sleeper upgrade, improved signalling and a train care centre at Long Rock in my constituency—something for which we have campaigned for a very long time and on which we expect an announcement shortly.

The first petitioner is Janet Trudgeon of Rosehill, Marazion, and the petition reads as follows:

The Petition of residents of St Ives constituency and others,

Declares that the Petitioners believe that if the Government can spend up to £50 billion on high speed rail investment to the north (HS2), the people of Cornwall should not be denied the investment necessary for a resilient rail service to Paddington.

The Petitioners therefore request that the House of Commons urges the Government to do what is necessary to make sure that the rail link from Penzance to Paddington is one that passengers can rely on.

And the Petitioners remain, etc.


1 July 2014 : Column 865

Head and Neck Cancer

Motion made, and Question proposed, That this House do now adjourn.—(Mark Lancaster.)

7.45 pm

Sir Paul Beresford (Mole Valley) (Con): I thank my hon. Friend the Minister for coming. She is smiling slightly, because we have had this discussion on a number of occasions and it will continue, at least until I get my way, if that is at all possible over the coming years.

I must begin by declaring a short list of potential interests. I am still a part-time practising dentist—very part-time. I am also chairman of the all-party parliamentary group on dentistry and the APPG on skin, which has a link to this debate.

In an earlier debate, I focused on oral cancer and, in particular, on the causative role of the human papillomavirus. I have been trying to persuade the Minister to encourage the Joint Committee on Vaccination and Immunisation, or JCVI for short—don’t the medicos always do that?—to broaden its horizons beyond the inoculation of teenage girls against cervical cancer. The results in relation to cervical cancer are very encouraging, but the virus is key to the cause of many other cancers, and that applies predominantly to two variations of it.

In a previous debate, the Minister was very nice, and explained sweetly that I must rely on the advice of the JCVI—or, at least, that she must do so. She explained that the committee was expanding its sights. Although it was enlightening to hear that it would be examining the HPV-related effects of men having sex with men, it did not help me very much because I am looking beyond that. I think that the committee should be looking above the waist, and, more specifically, looking at the trauma of pain, suffering and death—a very horrible death—as well as at the financial costs to the NHS of the existence of the virus elsewhere in the human body. I am aware that the virus plays a part in skin cancer, but I have decided to concentrate on the head and neck.

A quick cruise through the latest papers on head and neck cancer makes for frightening reading. Despite the reduction in smoking, the number of head and neck cancer cases is rising steadily and rapidly. The stark reality is that the number of new cases is growing year on year, at a much higher rate than the experts expected. Some are talking of an epidemic. The problem is now so acute that one form of cancer which falls into the “head and neck” category, oropharyngeal cancer, is the fastest-growing cancer in Scotland, and is a significant and growing problem in the rest of the United Kingdom.

Jim Shannon (Strangford) (DUP): I congratulate the hon. Gentleman on raising this subject. In the past year in Northern Ireland, 1,218 people have been diagnosed with head and neck cancers, and 64 people die of such cancers every year. Does he think that that is because this is seen as a lesser cancer—if that is the right way in which to put it—than others which seem to catch the eye of the public? If so, does more need to be done to increase the focus on head and neck cancer?

Sir Paul Beresford: I am focusing on it, because worldwide it constitutes about 5% of cancers and causes 6% of the deaths, and because, as I think is generally

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accepted, in a large proportion of cases HPV is a causative agent, or the root cause. There is a way of dealing with that and I think that we ought to adopt it.

In the United Kingdom, the latest findings put the incidence of HPV at 23.5% for oral cancer, 35.6% for oropharyngeal cancer, and 24% for laryngeal squamous cell carcinomas. I have no data for skin cancer, but obviously it applies to head and neck skin. On a personal note, my brother-in-law recently died from a squamous cell carcinoma on his head, which was undiagnosed and untreated, and when it was found it was too late. Head and neck cancers are fifth in the global rankings of cancer incidence, and sixth in the global rankings of cancer deaths.

The cost of oropharyngeal cancer to our health services is enormous. A new report is due to be published following extensive research on the economic cost of head and neck cancer. The findings of the research suggest that the official estimate of the burden placed on the national health service is significantly less than the actual total. The data I have seen of the report that is coming out soon conclude that the cost of oropharyngeal cancer was approximately £115 million at 2011 prices, laryngeal cancer £96 million and oral cavity cancer £98 million. The total at 2011 costs is just under £310 million. We must add that that is almost certainly low because of under-reporting, that we have three years of inflation and, worst of all, three years of increasing numbers of cases. I am not sure, but I suspect that that does not include peripheral rehabilitation costs such as physiotherapy and speech therapy and some cosmetic dentistry in appropriate cases, nor does it cover the unquantifiable cost to quality of life, with the pain and disfigurement that much head and neck cancers produce, and the treatment that is required peripherally for patients.

Perhaps what is most surprising—I have only just discovered this—is that these cancers are more prevalent in men than women at a ratio of approximately two to one. It is common knowledge that the NHS is under immense financial pressure. In fact, demand for access to the NHS is at unprecedented levels. The Government have taken commendable steps towards ensuring that the health service is protected from spending cuts, which have been necessary in so many other areas, but that does not mean budgets have not come under pressure and resources have not been stretched. It is therefore a matter of the very gravest concern that the full economic burden of head and neck cancer, and by extension HPV, is not taken into account. It should be. The whole of the problem of HPV and the way it infects different parts of the body should be addressed by the Joint Committee on Vaccination and Immunisation.

Australia has a policy of vaccination of both males and females. That is producing what is called a herd immunity. Although I am specifically looking at head and neck, with the role of the HPV virus, it is quite clear that there could be a dramatic reduction in a number of cancers, including head and neck cancer, over time with gender-neutral vaccination. Clearly, men currently face a significantly greater, and rising, risk of HPV-associated head and neck cancers.

I therefore again put it to the Minister that it is not fair, ethical or socially responsible to have a public health policy that leaves 50% of the population vulnerable to infection. Such vaccination, combined with early

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detection and action on smoking and heavy drinking of alcohol, could save a huge number of lives just as we are facing a dramatic increase in head and neck cancer. I hope that the Minister will be able to persuade the JCVI to broaden its horizons and to look at the human suffering, as well as the total costs of HPV to our national health service.

7.52 pm

The Parliamentary Under-Secretary of State for Health (Jane Ellison): I congratulate my hon. Friend the Member for Mole Valley (Sir Paul Beresford) on securing this debate on this important issue and on continuing to champion it. It shows Parliament at its best when Members bring to bear here the expertise and insight they have acquired outside this place, and that is certainly what my hon. Friend is doing and I commend him on it.

Let me set the scene before dealing with some of my hon. Friend’s specific concerns. As he said, we have debated this issue before and I am anxious to try to keep him up to date with any developments as well as to make sure the House has a general picture of what we are doing in this area.

The Government want England to lead the world in tackling cancer. That is why our 2011 cancer outcomes strategy set the ambition to save a further 5,000 lives a year from cancer by 2014-15, including head and neck cancer. As my hon. Friend rightly said, the incidence of head and neck cancer has been increasing since the 1970s, with over 6,500 people in England diagnosed with oral cancer alone in 2012. That is due to the prevalence of the major risk factors for oral cancer, such as heavy alcohol consumption and smoking. Chewing betel quid, which is more common among south-east Asian communities, is also a risk factor for oral cancer and that may have contributed to the trend. As the House knows, we have major programmes of work in place to tackle smoking and excessive alcohol consumption —and it is heartening that, although there is a long way to go yet, we did see smoking prevalence rates dip below 20% for the first time in England in the most recent figures.

There is now growing evidence that HPV, already linked to the development of nearly all cervical cancer in women, is also a major risk factor for oral cancer. That is not disputed. The types of HPV that are found in the mouth are almost entirely sexually transmitted, and they have been associated with about a quarter of head and neck cancers. So if we can reduce the incidence of HPV in females through a high uptake of the national vaccination programme, a reduction of other HPV-associated cancers in females and males is likely to follow. I note, however, that my hon. Friend feels that that herd immunity is not going far enough and there is further to go. It is worth restating that the aim of the current HPV vaccination programme is to prevent cervical cancer related to HPV infection—that is where it started. When introducing the vaccine in 2008 the Joint Committee on Vaccination and Immunisation, which advises the Government on all immunisation matters, did not recommend HPV vaccination for boys because the reasoning was that once 80% coverage among girls had been achieved there would be little benefit in vaccinating boys to prevent cervical cancer in girls.

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Judged by any standard, the HPV immunisation programme has been very successful. More than 7.8 million doses have been given so far in the UK since 2008, and we have among the highest rates of HPV vaccine coverage achieved in the world. I encourage hon. Members to look at their own local statistics, because although we achieve a very high average vaccination rate, there is some local variation. That matter is worth pursuing, particularly with schools, as this vaccine is delivered in schools almost universally. Some 86% of girls who are eligible for routine vaccination in England in the 2012-13 academic year have completed the three-dose course and 90% have received at least two doses, but in some schools the rates are lower and we want to get those up.

There is an increasing evidence base on the association between the HPV infection and oral, throat, anal and penile cancers, and on the impact of HPV vaccination on those infections. As a result, the JCVI issued a call for evidence in August 2012 to inform a review of HPV vaccination. The JCVI is very much aware of the issues concerning HPV vaccination for men who have sex with men, and at its October 2013 meeting recognised that the current immunisation programme may be of little benefit to those men and agreed to create an HPV sub-committee to consider the evidence for extending that vaccination programme. The sub-committee will aim to identify and evaluate the full range of options.

Sir Paul Beresford: The Minister has just talked about extending the programme, but to what or to whom?

Jane Ellison: On to my next paragraph. The sub-committee will look to identify and evaluate the full range of options for extending the protection from HPV infection to men who have sex with men, including by vaccinating them, and the potential extension of the programme to include adolescent boys. That deals with the point my hon. Friend was making. The JCVI HPV sub-committee—I apologise for all the acronyms but they are inevitable in a health debate—met for the first time on 20 January 2014 to review the available evidence on the impact and cost-effectiveness of potential extensions to the HPV programme. Any recommendation by the JCVI must be based on cost-effectiveness; there is a particular formula it uses to look at that within our health economy. The sub-committee will report its findings to the JCVI following consideration of a yet to be completed study by Public Health England into the cost-effectiveness of extending the HPV vaccination in both those directions. I hope I can give my hon. Friend some reassurance by confirming that the study will consider the impact of vaccination against penile, anal and oropharyngeal—head and neck—cancers and genital warts. Those things definitely form part of the studies that will be made and of the calculation about cost-effectiveness. There is no evidence to suggest that the current HPV vaccines will offer protection against skin cancer—I do not know whether he wishes to develop things further in that area, but we are aware of no evidence that makes that link.

The decision on the vaccination of adolescent boys requires the development of complex models to determine whether or not it would be cost-effective. Obviously, this would mean extending an already big programme to a much larger group. These models may identify a

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need to generate additional evidence, and therefore a decision on vaccination of adolescent males is not likely before 2015 at the earliest.

Sir Paul Beresford: One difficulty with models is that they take absolutely no account of the unpleasantness of the disease and the damage it does. Head and neck cancer is one of the most frightful conditions to deal with and to live with.

Jane Ellison: My hon. Friend makes a good point, but I will have to come back to him on it. I will not speculate at the Dispatch Box. Many factors go into these calculations, but I will make inquiries with regard to other JCVI decisions. I think that the severity of effect is taken into account and is part of the calculation, but I will clarify that and come back to the hon. Gentleman. None the less, he is right to remind the House of that matter.

The evidence to support a decision on a selective programme to target men who have sex with men may become available at the end of this year, which is earlier than expected. Obviously, the Department will consider carefully the advice from JCVI once the Committee has completed its assessment. As that is all in the future, it is worth talking about some of the things that we have at our disposal now in terms of early diagnosis. In addition to taking steps to tackle unhealthy lifestyle factors and the virus linked to head and neck cancer, we have also set out, through the mandate to NHS England, a clear ambition for the NHS to improve outcomes for all people with cancer.

One of the most common symptoms of oral cancer is a persistent sore or lump on the lip or in the mouth, so there is an opportunity for both doctors and dentists to play a role in supporting earlier diagnosis.

Since 2005, the referral guidelines for suspected cancer, published by the National Institute for Health and Care Excellence, has supported GPs to identify symptoms of oral cancer and urgently refer patients. The National Institute for Health and Care Excellence is currently updating that guidance to ensure that it reflects the latest available evidence.

Sir Paul Beresford: With great respect, on the question of the sore or the ulcer, the problem with cancer is that it is not sore until it is too late.

Jane Ellison: I will reflect on that point. I do not pretend to have the hon. Gentleman’s professional expertise. He has corrected the record, if he feels that it needs correcting. I hope that he will not disagree with me when I say that dentists have a key role to play in the early detection of oral cancer.

Sir Paul Beresford indicated assent.

Jane Ellison: All dentists are trained as undergraduates to look for such signs during routine check-ups and to pay close attention to patients’ self-reported history of smoking and drinking—both key risk factors. A new patient pathway, currently being piloted in 94 practices, includes an oral health assessment, which requires dentists to examine the soft tissue of the mouth; assess a patient’s risk in relation to oral cancer; and offer advice on lifestyle changes.

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I am also pleased to say that the General Dental Council has confirmed that improving early detection of oral cancer is to be included as a recommended topic in its continuing professional development scheme.

The hon. Gentleman will also be aware that the Department has run a series of “Be Clear on Cancer” campaigns, and we keep all forms of cancer under review to see whether they might be considered within that campaign. As he made the case that oral cancers and head and neck cancer are becoming more common, they too will be kept under review.

As I have mentioned in previous debates, the NICE improving outcomes guidance in head and neck cancer, which was published in 2004, provides advice on the organisation of health care for adults with those cancers. Head and neck cancer has also been referred to NICE as a topic for quality standard development.

The NICE guidance has informed the development of NHS England's service specification for head and neck cancer, which was published last summer. This clearly sets out what NHS England expects to be in place for providers to offer evidence-based, safe and effective services.

Of particular relevance to patients with oral cancer is the £23 million radiotherapy innovation fund, which supports the radiotherapy centres across England to deliver increased levels of intensity-modulated radiotherapy. That is a more precise form of radiotherapy, which reduces the risk of patients with oral cancers suffering from a permanent dryness of the mouth as a result of treatment.

Tessa Munt (Wells) (LD): The hon. Lady refers to innovative radiotherapy and I wonder whether she is aware of how much work is being done on the indications suggested by my hon. Friend the Member for Mole Valley (Sir Paul Beresford)—I congratulate him on this debate. I also wonder whether NHS England does not recognise that this type of radiotherapy can be used for anything except lung cancer.

Jane Ellison: I know that my hon. Friend has ongoing concerns in some of these areas and I will certainly draw her comments to the attention of NHS England and respond to her after the debate, if that is acceptable.

Since October 2010, the cancer drugs fund has helped more than 50,000 cancer patients in England and cetuximab is available through the fund for the first-line treatment of advanced head and neck cancer when certain clinical criteria are met.

I would like to reassure my hon. Friend the Member for Mole Valley that the National Institute for Health Research clinical research network is recruiting patients to 34 studies of head and neck cancer, of which three are focused on HPV-associated cancer. The NIHR also funds 14 experimental cancer medicine centres across England with joint funding from Cancer Research UK. Two of those centres have a disease focus on oral cancer.

I should make it clear, as I like to in every debate that we have on any health condition, that the NIHR welcomes funding applications for research into any aspect of human health, including head and neck cancer. I would certainly encourage my hon. Friend to encourage those that he knows in research circles to come forward with projects for which they might like to seek funding.

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I thank my hon. Friend once again for securing today’s debate. I hope that the discussion, although it has covered some familiar ground for him, has been helpful in providing reassurance of our commitment to reduce the incidence of head and neck cancer and to improve the outcomes for those diagnosed with the disease. In particular, I thank him for championing the cause as these cancers are less well-known and for that reason they particularly benefit from parliamentary

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attention of this sort. I will undertake to keep him fully informed, as I hope that I have to date, as the matter and the JCVI’s considerations progress. I will also undertake to draw the attention of the JCVI to the debate and to my hon. Friend’s speech in particular.

Question put and agreed to.

8.6 pm

House adjourned.