LIVEBLOG: Finance Bill 2021 Committee of Whole House: Day One
MPs debated committee stage of Finance Bill 2021, with debate on family finances, corporation tax and freeports. All clauses were retained. Government amendments relating to freeports were passed but no opposition amendments or new clauses were passed.
A guide and liveblog to the first day of Committee of Whole House debate on Finance Bill 2021 (also known as Finance (No. 2) Bill as it is the second Finance Bill in the current parliamentary session.
You can find a preview of the whole of committee stage of the Bill here.
You can find links to briefings produced for MPs by the CIOT, our Low Incomes Tax Reform Group (LITRG) and our sister body, the Association of Taxation Technicians (ATT) here.
The timetable for the debate was as follows:
5.45pm - Motion - Finance (No. 2) Bill: Ways and Means (Freeports (Stamp Duty Land Tax))
5.50pm Committee of Whole House Debate commenced
Group One: Family finances (including personal allowance freeze and covid-support measures) (followed by votes)
7.50pm Group Two: Corporation tax and the super deduction (followed by votes)
9.40pm Group Three: Regional economic development (freeports) (followed by votes)
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 watched here.
You can read our report on the second reading debate on Tuesday 13 April here.
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.
Ways and Means Resolution (Freeports (Stamp Duty Land Tax))
All tax measures and other charges (new taxes/charges and increases to existing ones) require a ‘ways and means resolution’ to authorise them before they can be legislated for. All of the measures in the Finance Bill as it stands have been authorised through such resolutions already. The resolution tabled here authorises government amendments tabled to the Bill relating to SDLT reliefs for freeports - which will be voted on today. You can read the resolution on today's order paper here under Business of the House. Up to 45 minutes is allowed for debate on this resolution.
The government amendments in question are amendments 43-52 to Schedule 22 of the Bill and apply to property acquisitions in freeport tax sites using certain sharia-compliant Alternative Finance (AF) arrangements, and provide for SDLT Freeports relief to be available for these acquisitions by looking at the intended use of the land by the “relevant person” rather than the financial institution. This will mean that property acquisitions in freeport tax sites involving AF arrangements are taxed in the same way as those using conventional finance. You can read a government explanatory note here.
- Make provision about returns, and liability to SDLT, in cases in which relief under Schedule 6C to the Finance Act 2003 (freeport tax sites, inserted by Schedule 22 to the Bill) is withdrawn in cases involving certain alternative finance arrangements (govt amts 44-45)
- Make provision about the payment of SDLT in cases in which relief under Schedule 6C to the Finance Act 2003 (freeport tax sites, inserted by Schedule 22 to the Bill) is withdrawn in cases involving certain alternative finance arrangements (govt amts 46-49)
- Make provision about interest on unpaid SDLT in cases in which relief under Schedule 6C to the Finance Act 2003 (freeport tax sites, inserted by Schedule 22 to the Bill) is withdrawn in cases involving certain alternative finance arrangements (govt amt 50-51)
- Make provision about the operation of Schedule 6C to the Finance Act 2003 (relief from SDLT for freeport tax sites, inserted by Schedule 22 to the Bill) in cases involving certain alternative finance arrangements (govt amts 43 and 52)
There was no debate on this motion. It passed without a vote.
Committee of Whole House Debate Day One
Group One: Family finances (including personal allowance freeze and covid-support measures)
Clauses 1 to 5, 24 to 26, 28, 31 to 33, 40 and 86; any new Clauses or new Schedules relating to the impact of any provision on the financial resources of families or to the subject matter of those Clauses
Amendments and clauses in this group: Clause 1 stand part + Clauses 2 to 4 stand part + 2 [McDonnell] + 3 [McDonnell] + 4 [McDonnell] + Clause 5 stand part + Clause 24 stand part + Clause 25 stand part + 93 [SNP] + Clause 26 stand part + Clause 28 stand part + 92 [SNP] + 15 [Ribeiro-Addy] + Clause 31 stand part + Clause 32 stand part + Clause 33 stand part + Clause 40 stand part + Clause 86 stand part + NC7 [Burgon] + NC8 [Ribeiro-Addy] + NC10 [SNP] + NC11 [SNP] + NC12 [SNP] + NC22 [SNP] + NC23 [Opposition]
You can read the full text of amendments, and brief explanatory notes, here.
Clauses and amendments
Clause 1: Income tax charge for tax year 2021-22 - PASSED
Annual measure allowing government to collect income tax for the next 12 months. (Yes, income tax is still a theoretically temporary measure requiring annual renewal!)
Clause 2: Main rates of income tax for tax year 2021-22 - PASSED
Sets income tax rates for non-savings, non-dividend income for 2021-22 for England and Northern Ireland at 20%, 40% and 45% (ie no change). Rates are reduced by 10% for Welsh taxpayers and Welsh Parliament adds Welsh rates on top. Scottish Parliament sets Scottish rates.
Clause 3: Default and savings rates of income tax for tax year 2021-22 - PASSED
Sets ‘savings rates’ which will apply to savings income of all UK taxpayers and the ‘default rates’ which apply to non-savings, non-dividend income of taxpayers who are not subject to the main rates of income tax, Welsh rates of income tax or the Scottish rates of income tax. Both stay at 20%/40%/45%.
NB. Dividend rates are unchanged. While the dividend rates (nil rate, ordinary rate, upper rate and additional rate) are fixed unless changed by an Act of Parliament and therefore don’t need to be set each year by Parliament, the basic, higher and additional rate, the default basic, higher and additional rates, and the savings basic, higher and additional rates (Clauses 2 and 3) do! It’s not obvious why the savings rate needs to be set annually while the dividend rate stays the same unless changed by an Act of Parliament.
Clause 4: Starting rate limit for savings for tax year 2021-22 - PASSED
Starting rate limit for savings unchanged at £5,000. This is a zero rate on income from savings, but is only available to people on low incomes. If your earnings from non-savings income are over your personal allowance (usually £12,500) plus the starting rate limit (i.e. over £17,500 for most people) you can’t get this.
Clause 5: Basic rate limit and personal allowance for future tax years - PASSED (356 -224)
The income tax personal allowance (the amount that can be earned tax free) and basic rate limit (the amount of earnings above the personal allowance on which income tax is payable at the basic rate) are indexed – that is they are increased annually in line with inflation (CPI). This clause overrides indexing for the tax years 2022-23, 2023-24, 2024-25 and 2025-26, freezing the personal allowance at £12,570 and the basic rate limit at £37,700.
This CIOT blog sets out our calculations of the difference the freezing will make to taxpayers, based on latest OBR inflation forecasts.
Amendments 2-4 (lead signatory former shadow chancellor John McDonnell) to this clause would would mean that the freezing of tax thresholds at 2021-22 levels did not apply until 2023-24. (NOT MOVED)
Clause 24: Enterprise management incentives - PASSED
EMI rules contain strict conditions about the time spent working in the business (usually 25 hours per week). Finance Act 2020 introduced a time limited exception so that participants of EMI schemes are not disqualified from relief as a result of taking leave, being furloughed or working reduced hours because of Coronavirus. This clause extends the exception (which originally took effect from 19 March 2020) until 5 April 2022.
Relevant CIOT briefing: Employment income and pensions
Clause 25: Cycles and cyclist’s safety equipment - PASSED
Another coronavirus-related measure. There is a tax exemption for the employer provision of cycles and cyclist’s safety equipment to support employers in promoting healthier journeys to work and to encourage green commuting. One of the conditions of the exemption is that the cycle or cycling equipment provided by an employer should be used mainly for qualifying journeys (to or from work or in the course of work). Due to COVID-19 restrictions many users of the scheme are not travelling to work and may be unable to meet the condition for qualifying journeys. This easement means that employees who have received a cycle or cyclist’s safety equipment on or before 20 December 2020, will not have to meet the qualifying journeys condition until after 5 April 2022.
Relevant CIOT briefing: Employment income and pensions
Clause 26: Exemption for coronavirus tests - PASSED
New exemption to ensure that employees who are provided with or reimbursed for the cost of a relevant coronavirus antigen test by their employer, will not be liable to an income tax charge. The exemption will have effect for the tax years 2020-21 and 2021-22.
Amendment 93 to this clause (tabled by SNP Treasury Team) would extend the income tax exemption for payments to employees in respect of the cost of obtaining antigen coronavirus tests to cover antibody coronavirus tests too. (NOT MOVED)
Relevant CIOT briefing: Employment income and pensions
Relevant ATT briefing - Exemption for coronavirus tests
Clause 28: Freezing the standard lifetime allowance - PASSED
The lifetime allowance is the maximum amount of tax relieved pension savings that an individual can build up over their lifetime. It has been linked to the Consumer Price Index since 2018-19. This clause freezes the allowance (at £1,073,100) by removing the indexation for the tax years 2021-22 through to 2025-26.
Relevant CIOT briefing: Employment income and pensions
Clause 31: Covid-19 support scheme: working households receiving tax credits - PASSED
In March 2020, the Chancellor announced a temporary uplift of £20 per week to the Working Tax Credits basic element for the 2020 to 2021 financial year, to provide extra support to low-income workers during the pandemic. A one-off payment is being made to tax credits recipients to cover a six-month period from April to September 2021 to continue this support. This clause exempts this payment from income tax.
Amendment 92 to this clause (tabled by SNP Treasury Team) would ensure that the one-off £500 payment to certain working households in receipt of tax credits could only be recovered where it is found that the individual was not entitled to the payment because they were knowingly concerned in underlying fraud either in relation to their tax credit award or the one-off payment. (NOT MOVED)
Amendment 15 to this clause (lead signatory Labour MP Bell Ribeiro-Addy) would require the government to publish an equalities impact assessment of the provisions of this section of the Bill. (NOT MOVED)
Relevant LITRG briefing - Working Tax Credit payment
Clause 32: Self-employment income support scheme - PASSED
Three amendments to existing legislation on tax treatment of SEISS payments: (1) extends HMT’s regulation making powers; (2) clarifies that the payments are taxed in the tax year of receipt; (3) provides a mechanism which will apply a tax charge if a person ceases to be entitled to a SEISS payment received on or after 6 April 2021.
Relevant CIOT briefing - Self-employment Income Support Scheme
Relevant LITRG briefing - Self-employment Income Support Scheme
Clause 33: Deduction where business rates etc repaid - PASSED
Provides a new statutory relief. Where a business repays coronavirus-related business rates relief because it no longer requires it, it is regarded as an allowable expense for corporation tax and income tax purposes. In other words, they pay the same tax they would have done had they not been provided with the relief in the first place. It can be extended to other repaid liabilities by regulation.
Clause 40: Capital gains tax: Annual exempt amount - PASSED
Maintains the CGT Annual Exempt Amount at its current amount of £12,300 for individuals and personal representatives and £6,150 for trustees of most settlements for tax years 2021-22 up to and including 2025-26.
Clause 86: Inheritance tax: Rate bands etc for tax years 2021-22 to 2025-26 - PASSED
Maintains IHT thresholds at their 2020-21 levels up to and including 2025-26. The nil-rate band stays at £325,000. The residential enhancement (commonly referred to as the Residence Nil-Rate Band or RNRB) stays at £175,000. The RNRB taper threshold stays at £2,000,000.
New clauses in this group:
NC7 (lead signatory Labour MP Richard Burgon) would require the Government to publish an assessment of the effect on tax revenues of introducing a 55% income tax rate on income over £200,000. - NOT MOVED
NC8 (lead signatory Labour MP Bell Ribeiro-Addy) would require the Government to publish an equalities impact assessment of existing income tax thresholds and a distributional analysis of the effect two specified increases for high earners. - NOT MOVED
NC10 (SNP Treasury Team) would require a report comparing the effect of (a) the coronavirus job retention scheme and the self-employment income support scheme being continued until 30 September 2021, and (b) the coronavirus job retention scheme and self-employment income support scheme being continued until 31 December 2021 on various economic indicators. - MOVED and DEFEATED after a vote (367 - 261)
NC11 (SNP Treasury Team) would require a report comparing the impact of the impact of (a) making the cost of a cycle an allowable expense on self-assessment tax return forms and (b) not doing so on various economic indicators. - NOT MOVED
NC12 (SNP Treasury Team) would require the Chancellor to review the impact of Clause 40 on equalities. - NOT MOVED
NC22 (SNP Treasury Team) seeks a report on the impact of equalising capital gains tax and income tax on (a) the regional distribution of capital gains in the UK, and (b) projected receipts. - NOT MOVED
NC23 (Labour Treasury Team) requires the Chancellor to carry out and publish a review of the effects of the clauses in this group on equality in relation to households with different levels of income, people with protected characteristics, the Treasury’s public sector equality duty and on a regional basis. - MOVED and DEFEATED after a vote (358 - 269)
Tax Minister Jesse Norman introduced the debate, setting out what the clauses are and giving the government view on the new clauses.
Among his comments, Norman said Clause 31 makes changes to ensure that the one-off £500 payment to eligible working tax credit claimants announced at Budget 2021 is not subject to income tax. This will ensure that the recipients of the tax credit benefit in full and that the payment meets its objective of providing additional support to low-income working households, he said.
Jim Shannon (DUP) said: "Has the Minister had any discussion with the Low Incomes Tax Reform Group (LITRG), which has indicated to me some of its concerns about how Her Majesty’s Revenue and Customs required claims from individuals? It is a delicate matter, but there is problem there. Has he had an opportunity to discuss it with the LITRG?" The minister replied that he maintains "a strong dialogue, through officials, and from time to time in person, with the LITRG and I have no doubt that the input it has given has been carefully considered in this regard. If he would care to write to me with his specific concern, I would be happy to pick that up as well." He claimed that amendment 92 (which related to Shannon's point) was "already comprehensively addressed by existing policy".
Labour's Shadow Financial Secretary to the Treasury James Murray set out what new clauses Labour will push for. Murray criticised the income tax threshold freeze. He is seeking a vote on clause 5 of the Bill (he wants the clause rejected). He wants the Government to be more tranparent about the impact of tax changes in the Bill. There is evidence that young people, BAME and women have been disproportionately impacted by the pandemic and it is sad that the Budget has not addressed that or the need for an equality impact assessment of the measures in the Budget, he said. Households will feel the hit from the need for councils to manage their finances. Out of work support is at lowest levels since the 1990s, he complained. Labour believes the UK needs a progressive tax system. Major international bodies say these tax rises on family finances are wrong.
Murray concluded: "We will be voting for the Government to be clear and transparent about the effects of the measures in this Bill on all the different families and households across this country. While Conservative Members may not want to support all of our points, I would not be surprised if some did not feel deeply uncomfortable at the prospect of making families pay more through this Bill. We therefore hope to offer them a chance to join us in rejecting clause 5, halting this Bill’s plans to make all income tax payers pay more from next year and forcing the Government to think again about the fairer tax system our country needs."
Andrew Jones, Conservative, said the response to the pandemic from the Treasury was quick, which was good. He said 'we should make work pay' and nobody's take home pay will be lower as a result of this Bill. We must not choke off the economic recovery, he accepts, but the changes to the personal allowance will not do that.
Alison Thewliss, SNP Treasury spokesperson, said SNP's New Clause 10 will support families. Any winding down of pandemic economic support to people must be reduced gradually because the Government has underestimated the pandemic repeatedly. "SNP amendment 93 would seek to extend the income tax exemption for payments to employees in respect of the cost of obtaining antigen coronavirus tests to cover specific antibody coronavirus tests, too. There is a wider argument for broadening the provision to future proof the Bill for future pandemics and other such incidents, so I hope Ministers will give the proposal some consideration." (Amendment 93 resulted from a suggestion made in a CIOT briefing while the latter point was made in a briefing note from the Association of Taxation Technicians, but was outside the scope allowed for amendments to the Bill.)
Speaking to amendment 92, Thewliss said: "We share the concerns of the Low Incomes Tax Reform Group that the rules on this are not yet clear enough, and I urge Ministers to provide that clarity and reassurance. This payment is made automatically by HMRC, but the provision talks of a clawback where someone who is not entitled to it receives it. It is unclear exactly how this will work. Our amendment would ensure that the one-off £500 payment to certain working households in receipt of tax credits could be recovered only where it was found that the individual was not entitled to the payment because they were knowingly concerned in underlying fraud, in relation either to their tax credit award or to the one-off payment."
Thewliss called the income tax freeze a tax rise by stealth. She talked of the opportunity to provide some tax break/financial incentive to encourage people to cycle. More generally on scrutiny she said Finance Bill evidence sessions might be useful, "but assessing the effectiveness afterwards—particularly the impact in different parts of these islands and on the people who live here—is vital."
Conservative Flick Drummond said the UK is well set for an economic recovery, and praised the policy of freeports. Since 2010, the personal allowance has grown faster than earnings in recent years, she said, but she worries of any potential tax hit to low income families in the Bill. She called for reform of pension tax, especially the lifetime allowance; she said freezing that is leading to unintended consequences, such as doctors considering early retirement. Skilled and experienced workers must be helped to continue to contribute to the economy.
Labour MP Stephen Timms, Chair of the Work and Pensions Committee, said that withdrawing the temporary increase in universal credit will bring hundreds of thousands of people into poverty. This cut will happen as unemployment is expected to peak. The uplift must be made permanent, he said (citing the support of 100 Conservative MPs). People risk 'drowining in debt', he charged.
Huw Merriman, Conservative, spoke about Clause 5 (income tax limit). Merriman said the message has been sent for years that 'work pays' and we have seen record levels of employment. The pandemic has put this at risk. He supports the freeze saying not to do so will be a disservice to taxpayers not to at least acknowledge the public debt. We are vulnerable to changes in interest rates on our debt, and ensuing inflation, he warns. We must maintain a good reputation for managing the econony, he said.
John McDonnell, former Shadow Chancellor, Labour, also spoke about Clause 5. He said the Bill is shifting the burden for economic impact of the pandemic on people who can least afford to bear it. Low earners are heavily indebted and are now being hit with a stealth tax rise (as a result of the income tax threshold freeze) - this despite the Conservatives saying now is not the time to raise taxes. Low pay is endemic in our society, he said, and many children in poverty are living in working households. We must not raise taxes on low income workers, he said. He went on to say that low income people should not be taxed more a year earlier than corporations. He closed his speech by saying wealth should be taxed more than income.
Lib Dem business spokesperson Sarah Olney said more working people will pay tax at rates they did not expect because of the Budget. Households budgets are already squeezed, she said. NHS staff should get more than a one per cent pay rise, she said. The Government has chosen to tax hard-pressed key workers sooner than corporations - this is not equitable. The lifetime allowance on pensions is leading doctors/NHS staff to consider early retirement because of uncertainty about this tax, she claimed, and something that needs a look at. We need to think about how to retain health professionals.
Sir John Redwood, Conservative, wants the Government to pause and recognise that it will have to revisit these measures in the Bill because they may be being too tough in their new tax measures, and too tough on people's incomes (when we need to have an economic recovery driven by them). Too soon for the Government to make far ahead economic forecasts, they may be trying to fill a big hole when the hole may prove smaller than that in reality, he said. OBR forecasts are not always reliable or consistent at the moment. State debt is a useless figure because we live in an age of monetary experimentation, he suggests. We must focus on promoting growth. The Government is being mean on people and businesses in the name of controlling state debt, he said.
Labour's Richard Burgon talked of decades of failed tax policy. SInce Thatcher's era, there is a consensus among Tories that low taxes on rich people benfefits all, but we can see from research by LSE that this leads to higher income inequality, he said. He talked about his New Clause 7 that would require the Government to publish an assessment of the effect on tax revenues of introducing a 55% income tax rate on income over £200,000. He said it would target the richest part of society. Some of these rich people have exploited the pandemic crisis, he said. Publishing an assessement of the effect on tax revenues of a 55 per cent income tax rate as he suggests is an important stepping stone to build a fairer society.
Bell Ribeiro-Addy, Labour, says the £20 uplift and associated tax relief should be made permanent and paid to all claimaints. It is vital to families to help keep their head above water and this will be the case in six months as it is needed today. The Bill falls short in tackling inequality, which is no surprise to her, when those with the broadest shoulders should carry the greater burden. She wants the Government to publish an equalities impact assessment of existing income tax thresholds and a distributional analysis of the effect of two specified increases for high earners. We need a more progressive tax system, particularly as this will help women, she said.
Seema Malhotra (Labour) said around 700,000 people have lost their jobs, many households have seen drop in income and 39,000 relying on universal credit in Hounslow alone. The pandemic has laid bare structural inequality in the UK. The Conservatives are 'rewarding' people with council tax rises and real terms pay cut for key workers.
Rebecca Long-Bailey (Labour) said the £20 uplift should not be cut when the OBR says unemployment will peak when the uplift is due to end. No uplift for those on legacy benefits, she complained. On Clause 5, she said if there is wage inflation in next five years someone earning under the threshold now who gets an inflationary pay rise in 2022/23 will start to pay tax. The porest fifth of households are twice as likely to have seen their debts rise rather than fall during the pandemic crisis. Some households are looking at financial devastation under these plans, she warned.
Jim Shannon, DUP, raised a couple of points which had been highlighted by the Low Incomes Tax Reform Group. "Clause 31 ensures that the one-off £500 payment for certain working households receiving tax credit is not taxable, which is welcome. The problem arises when a person receives a payment that they were not entitled to under the rules. As the payment is made automatically by HMRC without requiring a claim from the individual, if HMRC mistakenly makes a payment to someone who is not entitled to one under the direction and it is not subsequently repaid, it appears that the tax credit claimant will automatically be subject to a tax charge under the Finance Act 2020. That triggers notification requirements for the individual, assessing powers for HMRC and potential penalties." He asked whether consideration will be given to ensuring that HMRC "will set the bar high in terms of what constitutes fraud, and whether it will be limited to those people who fall under section 35 of the Tax Credits Act 2002, in relation to their underlying tax credit award."
On clause 32 (SEISS), Shannon highlighted that taxpayers who have made amendments to their self-assessment tax returns on or after 3 March 2021 may have to pay back some or all of the grants that they have claimed. "There is a real concern, which I share, that unrepresented taxpayers may not be aware of their obligations to notify HMRC and, accordingly, may face penalties, inadvertently and perhaps without right. Minister, how will we ensure that HMRC will take steps to ensure that taxpayers become aware of any obligation to repay in time to avoid such penalties? In particular, it is unsatisfactory that taxpayers who have made amendments on or after 3 March 2021 but prior to the date of the claim appear to be obliged to pay back some or all of the grant immediately upon receipt. Some may be unaware that they have to do so, but they face harsh penalties, which were originally aimed at fraudulent claims or for failing to do this on a timely basis. So I am concerned that innocent participants in this process may find themselves in difficult times."
Thanking the Minister for his earlier response when he asked him about the Low Incomes Tax Reform Group, Shannon said he would "send him all the information that I am concerned about, which I hope he will be able to answer."
Responding to the debate, Tax Minister Jesse Norman said the Government has shown its committment to a progressive tax system, citing statistics on the proportionate contribution of the wealthy to the tax take.
On the coronavirus tests issue outlined by Alison Thewliss the minister argued that "antigen tests, which are subject to the relief in the Bill, are connected to employment, whereas antibody tests are not, which is why the relief does not extend to them". He said the Scottish Government can make changes on the taxation of antigen tests if it wishes to.
On the delay to the corporate tax rise compared to the freeze to personal allowance, he said it has support from the Resolution Foundation. He said the lifetime allowance is seven times the median pension pot, so not something to concern ordinary people.
Responding to Jim Shannon on his concerns about reclaims in the self-employment income support scheme, the minister said SEISS is well-understood and if people have claimed when not eligible for it, it is correct to reclaim the sum.
The House divided on three questions at the end of this group -
Clause 5 was approved by 356 votes to 224
NC10 was defeated by 367 votes to 261
NC23 was defeated by 358 votes to 269
All the existing clauses were retained in the Bill. No amendments were passed.
Group Two: Corporation tax and the super deduction
Clauses 6 to 14 and Schedule 1; any new Clauses or new Schedules relating to the subject matter of those Clauses and Schedule
Amendments and clauses in this group: Clause 6 stand part + Clause 7 stand part + Clause 8 stand part + 11 [McDonnell] + 79 [Opposition] + 80 [Opposition] + 66 [SNP] + 67 [SNP] + 53 [Lake] + 78 [Hodge] + Clause 9 stand part + Clause 10 stand part + 63 [SNP] + Clause 11 stand part + Clauses 12 to 14 stand part + 55 [SNP] + 56 [SNP] + 57 [SNP] + 58 [SNP] + 59 [SNP] + 60 [SNP] + 61 [SNP] + 62 [SNP] + Schedule 1 stand part + NC1 [McDonnell] + NC2 [McDonnell] + NC6 [McDonnell] + NC9 [Ribeiro-Addy] + NC13 [SNP] + NC17 [Carden] + NC19 [SNP] + NC20 [SNP]+ NC21 [SNP] + NC24 [Opposition]
You can read the full text of amendments, and brief explanatory notes, here.
Clauses and amendments
Corporation tax charge and rates
Clause 6: Charge and main rate for financial years 2022 and 2023 - PASSED
Sets the CT rate at 19% for 2022-23 (ie unchanged) and at 25% for 2023-24.
Relevant CIOT Briefing for all clauses in this group - Corporation tax and the super-deduction
Clause 7 and Schedule 1: Small profits rate chargeable on companies from 1 April 2023 - PASSED
Introduces a small profits CT rate at 19%. A company’s profits will be chargeable at a lower rate of CT than the main rate where those profits fall below the lower limit (£50,000). Where a company’s profits are above the upper limit (£250,000), those profits are chargeable at the main rate of CT. Where profits fall between these limits, the profits are chargeable at the main rate of CT and that sum is then reduced by an amount of marginal relief. There are additional rules for dealing with ‘associated companies’ and part years. (NB. Does not apply to ‘ring fence profits’ – that is, profits from oil and gas extraction.)
Amendments 55-62 (SNP Treasury Team) to Schedule 1 would prevent the introduction of a new definition of “associated companies” for the purposes of the small profits rate and use an existing provision instead. (NOT MOVED)
Relevant ATT Briefing - Corporation tax small profits rate
Rate of diverted profits tax
Clause 8: Increase in the rate of diverted profits tax - PASSED
The Diverted Profits Tax was introduced in Finance Act 2015 to counteract contrived arrangements used by large groups (typically multinational enterprises) to reduce their UK tax bill either by arranging their affairs so as to avoid having a UK permanent establishment, or by making payments which lack economic substance or end up in a low tax company that lacks economic substance. A punitive rate of tax is levied on profits deemed to have been diverted. This clause increases the DPT rate from 25% to 31% from April 2023. This is to maintain the current differential between the DPT rate and the CT rate.
Capital allowances: super-deductions etc
Clause 9: Super-deductions and other temporary first-year allowances - PASSED
Capital allowances are the mechanism by which businesses are able to get tax relief for capital expenditure. This is done by allowing a proportion of the capital expenditure to be expensed against annual pre-tax income. Capital allowances are given for specified items of capital expenditure, and the expensing is usually spread over a period of years. This clause introduces new temporary first-year allowances: a 130% super-deduction for expenditure that would normally qualify for main rate (18%) writing down allowances and a 50% first-year allowance for special rate (6%) expenditure, with expenditure subject to certain exclusions. These have effect for expenditure incurred from 1 April 2021 - 31 March 2023. These allowances can only be used to get relief from corporation tax (contrast with AIA, clause 15).
Amendment 11 (lead signatory Labour MP John McDonnell) would reduce the level of the capital allowance super-deductions to the current rate of 18%. (NOT MOVED)
Amendment 79 (Labour Treasury Team) would, in respect of companies with qualifying expenditure of over £1 million, add conditions relating to ILO convention 98, the living wage and the digital services tax. (MOVED and DEFEATED in a vote 365-260)
Amendment 80 (Labour Treasury Team) would, in respect of companies with qualifying expenditure of over £1 million, add a condition relating to climate-related financial disclosure to the conditions that must be met in order for expenditure to qualify for super-deductions. (NOT MOVED)
Amendments 66 and 67 (SNP Treasury Team) would remove leased assets from the list of assets excluded from the super-deduction and special rate allowance introduced by the Bill. (NOT MOVED)
Amendment 53 (Plaid Cymru) would require the Chancellor to analyse the impact of changes proposed in Clause 9 in terms of impact on the economy and geographical reach and to assess the impact of the capital allowances super-deduction scheme on efforts to mitigate climate change. (NOT MOVED)
Amendment 78 (lead signatory Labour MP Margaret Hodge) would require large multinationals accessing super-deductions to make their country-by-country reporting public. (NOT MOVED)
Relevant ATT Briefing - Super-deduction and the interaction with the small profits rate
Clause 10: Further provision about super-deductions etc - PASSED
Introduces clauses 11-14 (see below)
Clause 11: Reduced super-deduction - PASSED
What happens with super-deduction expenditure incurred partly after 31 March 2023? Or an additional VAT liability regarded as super-deduction expenditure accruing in a chargeable period ending after 31 March 2023? Answer: The super-deduction is reduced.
Amendment 63 (SNP Treasury Team) to this clause would ensure that companies subject to the small profits rate of corporation tax from 1 April 2023 receive the same effective rate of tax relief on qualifying expenditure incurred throughout the two-year period to 31 March 2023 as companies with greater profits. (NOT MOVED)
Clause 12: Disposal of assets where super-deduction made - PASSED
What happens with disposal of plant and machinery in respect of which a super-deduction claim has been made? Answer: All or some of the disposal value is treated as a balancing charge (a taxable profit) in the chargeable period the disposal event occurs in.
Clause 13: Disposal of assets where SR allowance made - PASSED
As clause 12, except for the 50% first-year allowance
Clause 14: Counteraction where arrangements are contrived etc - PASSED
Anti-avoidance provision for super-deduction and 50% first-year allowance
New clauses in this group:
NC1 (lead signatory Labour MP John McDonnell) would ensure that only employers that pay their staff the living wage and recognise trade union(s) would be eligible to receive the capital allowance super-deductions. (NOT MOVED)
NC2 (lead signatory Labour MP John McDonnell) would mean that sections 9 to 14 could not come into force until the Government had published a report examining the economic, social and environmental effect of the capital allowance super-deductions and that report had been agreed by the House of Commons. (NOT MOVED)
NC6 (lead signatory Labour MP John McDonnell) would set the following conditions before clauses 9 to 14 of the Bill come into force: that the Public Accounts Committee prepares a report on the effectiveness of existing capital allowances, and then that both Houses of Parliament approve the clauses coming into force. (NOT MOVED)
NC9 (lead signatory Labour MP Bell Ribeiro-Addy) would require the Government to produce an assessment of the impact of clauses 9-14 on equalities. (NOT MOVED)
NC13 (SNP Treasury Team) would require a report comparing scenarios in which (a) the United Kingdom reaches an agreement with OECD countries on a minimum international level of corporation tax, and (b) the United Kingdom does not reach an agreement with OECD countries on a minimum international level of corporation tax on various economic indicators. (NOT MOVED)
NC17 (lead signatory Labour MP Dan Carden) would require the Government to publish an assessment of the revenue effect of a global minimum corporation tax rate of 21%. (NOT MOVED)
NC19 (SNP Treasury Team) seeks a review of the estimated impact of corporation tax rate changes in this Act with the impact on investment from the changes to the corporation tax rate in each of the last 12 years on various economic indicators. (NOT MOVED)
NC20 (SNP Treasury Team) seeks a review of corporation tax provisions on (a) the link between corporate profit rates and ownership, and (b) the cost of re-introducing a small profits rate. (NOT MOVED)
NC21 (SNP Treasury Team) seeks a report on the impact of the super deduction on (a) progress towards the Government’s climate emissions targets, and (b) capital investment in each of the next five years. A review under this section must include (a) the distribution of super-deduction claims by company size, and (b) estimated tax fraud. (NOT MOVED)
NC24 (Labour Treasury Team) would require the Government to review the impact of the provisions relating to super-deductions and publish regular reports setting out their findings. (MOVED and DEFEATED in a vote 365-260)
Financial Secretary to the Treasury (FST) Jesse Norman explained that Clauses 6-14 and schedule 1 will establish a 19 per cent rate of Corporation Tax from April 2022. This will increase to 25 per cent in 2023. A small profits rate will be introduced, as will marginal relief for profits between £50,000 and £250,000. The diverted profits tax will also increase by 6 per cent.
The Bill also establishes the super deduction, which the FST described as 'unprecedented in its generosity'.
Norman explained that the OBR has forecast that changes to Corporation Tax would generate £45 billion over the next five years. He also said that the 19 per cent rate would remain the lowest headline rate in the G20, and significantly lower than many other G7 nations.
He also said that the government had used the full weight of the public finances to support businesses during the pandemic, and that it was right for businesses to support the UK’s economic recovery, particularly those with large cash reserves. This was why the decision had been taken to increase Corporation Tax.
Norman described the super deduction as ‘world-leading’ and noted that the OBR had forecast the policy to cost £25 billion. He also described the Diverted Profits Tax as being an ‘effective deterrent’ against profit shifting. Duirng the course of the debate, the FST described the UK Government as an international leader in tackling tax avoidance and evasion.
Turning to the amendments and new clauses proposed by opposition MPs, the FST said that these would serve to constrain the implementation of government policy, deter investment and stifle economic recovery. He urged MPs to reject the proposals.
Ths minister claimed that amendments 55 to 62 "propose the removal of the associated companies rules that apply to the small profits rate. The rules will affect a small proportion of companies, but they are an essential feature of the regime to prevent profitable businesses from fragmenting in order to take advantage of a lower rate or creating unfair outcomes, and they were a feature of the previous regime on which these rules are based. In the absence of the rules, a consultant, for example, could provide his or her services through five companies with profits of £40,000 each and benefit from the small profits rate." (NB. The amendments, which were proposed by the Association of Taxation Technicians in a briefing, actually propose using an existing definition of associated companies rather than producing a new one for this Bill. The ATT argue that introduction of a new definition of ‘associated companies’ results in unnecessary complexity.)
Labour shadow minister James Murray contrasted the increase in costs for families described earlier in the debate on personal finances with delays in the introduction of tax rises for businesses.
He said that the super deduction was not targeted at small to medium sized businesses who already benefit from the Annual Investment Allowance but would rather benefit the richest businesses, such as Amazon, who do not need to benefit from government support and are 'already avoiding a lot of the tax they should be paying'. Citing the company's 2019 accounts, Murray said that the super deduction would have allowed Amazon to deduct £211 million, 'more than enough to wipe out its entire tax liability, twice over.'
He said it was 'truly astoinshing' for the government to provide support for businesses like this. Murray said that oposition amendment 79 would prevent the biggest tech firms from taking advantage of the scheme, as well as those firms who fail to follow fair work practices (including respecting workers rights and paying at least the living wage). Murray then described how the opposition's amendments would also ensure that firms demonstrate how they are meeting their environmental obligations, and the need to ensure that the super deduction is not left open to tax avoidance and fraud. Murray concluded by saying that a 'tax break for tech giants should be the last thing on the government's mind.'
Felicity Buchan (Conservative) described the Finance Bill as a 'delicate balancing act' that sets a path to rebalancing the UK's finances while also supporting investment, productivity and innovation. She said the measures proposed by the government would 'turbo charge' investment across British business. She said that although she described herself as a 'low tax Conservative', the increase in Coproration Tax in 2023 was necessary in the wake of the pandemic, reiterating the point made earlier by the FST that the headline rate would remain the lowest in the G7. Buchan said the increase was 'unavoidable' as the country seeks to balance its books, but that it would only apply to 1 in 10 businesses.
Richard Thomson (SNP) welcomed the increase in corporation tax rates as a 'justified' measure. He cited the SNP's Scottish election manifesto pledge to levy an extra business rate levy on firms headquartered in tax havens as an example of how government can better target firms perceived to be avoiding their liabilities, and called on Ministers to work closely with the Biden administration in the USA on the implementation of a minimum global tax rate. He explained that the provisions of new clauses 13 and 19 would require the government to review the impact of corporation tax changes and said it was 'important' for the government to compare its proposed changes with those already implemented in the last 12 years. Looking at new clause 20, Thomson said that the introduction of the small profits rate would create an 'unecessary degree of complexity into the tax system'. He said Treasury officials should produce costs to aid appropriate scrutiny. Thomson said the super deduction was 'poorly targeted' and would benefit larger companies in a way that fails to drive economic growth. Thomson concluded by saying that the SNP would not press its amendments and new clauses to a vote, but that it would continue to hold the government to account to ensure its policies were achieving their desired effect.
Andrew Jones (Conservative) welcomed the government's proposals and said that they would boost productivity and encourage investment. He described the super deduction as 'the largest business tax cut in modern British history' that would aid the government's wider 'levelling up' agenda.
Dame Margaret Hodge (Labour) moved amendment 78 on country-by-country reporting. She explained that although this would not be put to a vote this evening, it will be returned to again during report stage. She urged the government to give the issue 'proper and serious consideration', arguing that a 'knee-jerk rejection to a practical idea simply because it is proposed by backbenchers from across parliament would confirm, yet again, that government only listens to the few; the powerful corporations and the influential tax advisers and ignores the views of most taxpayers in Britain today.'
Dame Margaret welcomed the commitment to supporting investment but said the super deduction was expensive and poorly targeted. Amendment 78 would have better targeted the scheme and prevented the 'unscrupulous' from exploiting the system. She expressed frustration that the scheme would 'mainly be used to cut taxes for companies that were investing anyway' and would benefit 'those who have prospered most during the pandemic' with 'oven-ready capital investment plans'. The amendment would have provided openess and transparency as a condition for eligiblity for the super deduction. Although parliament had voted in favour of country-by-country reporting, Dame Margaret noted that this was a power that had yet to be used. She said the amendment would stop taxpayers' money being 'squandered' while ensuring that Britain developed a 'fair and responsible system of global taxation'.
John McDonnell (Labour) spoke about the failures of government tax policy to tackle tax avoidance and evasion, and warned of the risks posed by the super deduction. He said a temporary cut to employer's National Insurance may have been a better use of government money to support the economic recovery. He said he expected government to demand more from businesses receiving support, which is why he was proposing new clause 1, that would require businesses to demonstrate fair employment practices such as the living wage and trade union recognition in return for government support, new clause 2, setting out the socio-economic and environmental impacts of the government's proposals, and new clause 6, which would allow for a review of the effectiveness of tax reliefs. McDonnell said that new clause 6 was necessary because evidence from the Public Accounts Committee had highlighted the failures of HMRC's monitoring and reporting of the impact of tax reliefs. He said this was a 'damning indictment' of the government and he called on ministers to 'get a grip' on 'decades' of tax reliefs that have enabled businesses to profiteer from the tax system.
Miriam Cates (Conservative) welcomed the measures proposed in the Finance Bill and said that increasing corporation tax would ensure that businesses would pay thieir fair share of revenues to support economic recovery. She said it was right to delay the changes until 2023 to give businesses time to plan. While many businesses have suffered, others have benefited significantly at the expense of others forced to close or restrict their activity during the pandemic. She said it was therefore right that the government look to recoup some of this revenue. Cates said that the super deduction would help to encourage profit reinvestment and 'turn crisis into opportunity'.
Sarah Olney (Lib Dem) said it was right to ask firms who have benefited from the pandemic to contribute towards economic recovery and suggested that this could have been achieved with an immediate increase in the headline rate of corporation tax. She said that the delay to 2023 would give businesses time to plan their affairs and potentially limiting the amount of tax collected as profits. Olney added that the Biden administration's proposal for a global minimum tax rate could provide 'a fantastic opportunity' to create a fairer, more progressive tax regime globally. She expressed hope that the government would 'set an example to the rest of the world' and support the American proposals. On the super deduction, Olney expressed concern that the impact of the measure 'may be more limited than it initially appears'. She said this was because (a) it creates a cliff-edge for investment, particularly when coupled with the increase in corporation tax; (b) many manufacturing businesses invest for the long-term (c10 years), meaning that the 2 year incentive may have a limited impact on investment plans; and (c) many pieces of equipment are leased, rather than bought outright, meaning the deduction will not apply.
Olney suggested the measures could have been better targeted to support investment in the UK's climate ambitions and could have widened the range of firms benefiting from the scheme. She said that the Lib Dems would quadruple the annual employment allowance and provide tax cuts for SMEs to support private sector growth. She said that the Lib Dems would oppose the government's corporation tax proposals.
Bell Ribeiro-Addy (Labour) reiterated many of the points made earlier by John McDonnell and spoke of the need for a 'progressive' system of taxation.
Ben Lake (PC) said that the super deduction 'flies in the face' of the government's commitment to levelling up the UK's nations and regions, citing evidence that it would disproportionately benefit London and the South East, and 'lock-in' existing inequalities.
Richard Fuller (Conservative) spoke in favour of the measures, saying it showed the government setting a 'clear course' for the taxation of businesses. He expressed some concerns over the way that proposals for a global minimum tax were being trailled, warned of a need to consider how to tax data in the future, and how to use the tax system to incentivise private sector investment in the net zero agenda.
Anthony Higginbotham (Conservative) described corporation tax as a 'tax on success' and that he believed businesses should be able to keep more of the money they earn. He said the government had gone to great lengths to support businesses during lockdown, including within his own constituency, and welcomed the decision to delay the increase in corporation tax, giving businesses more time to recover from the pandemic. He said the super deduction would be an important tool in helping businesses to generate confidence and unlock investment, helping to create a high skilled, high wage, high productivity economy.
Rebecca Long Bailey (Labour) spoke about the super deduction. She said it was 'staggering' that HMRC had not kept a record of the impact of its tax reliefs (citing the Public Accounts Committee report referenced earlier by John McDonnell) and expressed concern that the deduction would support the very wealthiest businesses. Long Bailey also cited the names of industries that have benefited during the pandemic, and questioned whether they should be allowed to benefit from the proposal. She concluded that the measure was not a good use of public money and 'bordered on the obscene'.
Rachel Hopkins (Labour) said the super deduction would cost the equivalent of 20 per cent of the UK's corporate tax revenues, was wasteful and would 'exacerbate regional inequality'.
Summing up for the government, Jesse Norman, the Financial Secretary to the Treasury. He said that tax reliefs were 'an understood and established part of tax policy...they are not to be thought of as merely giveaways'. He urged MPs to see the value of the government's proposals in light of this. He said that the super deduction would also help to increase the UK's productivity and had been designed to help prevent avoidance and provide protections. The FST said the government took the issue of tax avoidance very seriously but would not comment on the specifics of individual firms. He said the UK had led the way on a number of reforms to the tax system, such as BEPS and the digital services tax and cited these as examples of the government's efforts to lead on tackling tax avoidance. Concluding, he said the government's policies would 'support business in developing and investing and building our collective economic future'.
The House divided on two questions at the end of this group -
Amendment 79 was defeated by 365 votes to 260
NC24 was defeated by 365 votes to 260
All the existing clauses were retained in the Bill. No amendments were passed.
Group Three: Regional economic development (freeports)
Clauses 109 to 111 and Schedules 21 and 22; and new Clauses or new Schedules relating to the impact of any provision on regional economic development
Amendments and clauses in this group: 54 [Lake] + Clause 109 stand part + Clause 110 stand part + Clause 111 stand part + Schedule 21 stand part + Govt 43 to Govt 52 + Schedule 22 stand part + NC4 [McDonnell] + NC5 [McDonnell] + NC25 [Opposition]
You can read the full text of amendments, and brief explanatory notes, here.
Clause 109: Designation of freeport tax sites - PASSED
This clause introduces a new power to designate freeport tax sites in Great Britain. Tax reliefs are part of the wider freeports policy. The reliefs will be available in areas in Great Britain which have been designated as freeport tax sites by regulations made under this clause.
Amendment 54 (Plaid Cymru) would require the Treasury to have received consent from the devolved parliaments on proposed freeport measures before introducing the changes proposed by Clause 109.
Relevant CIOT Briefing - Freeports
Clause 110 and Schedule 21: Capital allowances for freeport tax sites - PASSED
Provides for enhanced rates of capital allowances on qualifying expenditure incurred in freeport tax sites. Part 1 of the schedule provides for 100% first-year allowances (standard rates are 18% or 6% depending on the asset) for companies investing in plant or machinery for use primarily in freeport tax sites. Part 2 provides for an enhanced annual rate of structures and buildings allowances of 10% (standard rate is 3%) for qualifying expenditure incurred on non-residential structures and buildings situated in freeport tax sites.
Clause 111 and Schedule 22: Relief from stamp duty land tax for freeport tax sites - PASSED
Provides for a new relief from SDLT for certain acquisitions of land situated in freeport tax sites. The relief will be subject to a ‘control period’ of up to 3 years and the land being acquired and used in a ‘qualifying manner’.
Government amendments 43-52 to Schedule 22 apply to property acquisitions in freeport tax sites using certain sharia-compliant Alternative Finance (AF) arrangements, and provide for SDLT Freeports relief to be available for these acquisitions by looking at the intended use of the land by the “relevant person” rather than the financial institution. (PASSED)
New clauses in this group:
NC4 (lead signatory Labour MP John McDonnell) would ensure that the benefits of capital allowances and relief from SDLT for freeport sites apply only to companies that meet certain criteria relating to employment and environmental credentials. (NOT MOVED)
NC5 (lead signatory Labour MP John McDonnell) would make the commencements of sections 109 to 111 dependent on the Secretary of State publishing a report that would allow MPs to assess the economic case for freeports, and on both Houses agreeing that report. (NOT MOVED)
NC25 (Labour Treasury Team) would require the Government to review the impact of the provisions of the Act introducing freeports and publish regular reports setting out the findings. (MOVED and DEFEATED in a vote 366-260)
Ben Lake of Plaid Cymru opened this debate, speaking in support of his amendment 54. He said the need for such an amendment was indicative of the Government’s disregard for devolution.
The FST, Jesse Norman, spoke next. He explained that the clauses will support the Government's freeports programme, designed to unlock investment. He said the Government had listened to feedback from a wide variety of stakeholders.
Bernard Jenkin intervened. He thanked the minister for creating a freeport including part of his constituency. But he couldn't see anything in the Bill which availed us of the advantages of being outside the EU. Was England being restricted because of Northern Ireland's situation, he asked. Norman replied that Sir Bernard had erred in his logic. There was nothing inconsistent in proceeding as we are while also having a strong offer in Northern Ireland.
Sir Bernard was also interested in whether the boundaries of freeports were open to amendment to take in businesses just outside. The minister said the emphasis was on new businesses. He couldn't comment on individual cases.
The minister explained the purpose of the government's amendments to Schedule 22. These would provide certainty that those using sharia compliant finance could benefit from the provision in the same way as those using conventional finance.
He said imposing additional criteria, as included in opposition new clauses, could delay the introduction of freeports and reduce their effectiveness.
Abena Oppong-Asare, for Labour, moved new clause 25. Labour want to see genuine levelling up and action to tackle inequality and low wages, she said. She accused ministers of pitting areas against one another.
On freeports, the Shadow Exchequer Secretary said Labour do not believe that they are the silver bullet for our economy that the Chancellor appears to believe they are. They are more likely to just move jobs from one place to another. New clause 25 would require an annual review of the impact of the policy. She asked the minister to address the costs of the reliefs in his response.
She noted that the enhanced capital allowance for plant and machinery spending is a 100% allowance – less generous than the 130% super-deduction. Presumably for the period they overlap companies will need will to consider whether they can claim the super-deduction?
On clause 111 CIOT "have raised a number of concerns about the operation of the relief. One issue is how exactly freeport tax sites will be be designated and whether particular buildings can be identified as either in or out of the boundary of the tax site. Can the minister also provide some clarity on joint ventures where there is both commercial and residential development. The Chartered Institute point out currently that the drafting excludes a common commercial arrangement from the relief. Finally there is the issue of relief for subsequent non-qualifying activity - a small amount of non-qualifying use can potentially lead to withdrawal of all the relief. Is the minister concerned that the risk of loss of the full relief in such circumstances could potentially discourage investment?"
Richard Thomson, for the SNP, offered his support to the opposition amendments and sought a commitment from the UK government to let the Scottish government push ahead with its 'green ports' adaptation of the freeports concept. He said it was important the UK government does not allow freeports to be used to allow business to elude their obligations to their workforce or to the environment.
Ruth Edwards (Conservative) said the East Midlands airport freeport was partly in her constituency. She mocked the idea that this would turn part of her constituency into some kind of 'wild west'. She also challenged the idea that freeports will suck in investment from other areas.
John McDonnell (Labour) spoke to new clause 4 in his name. If the government is giving tax breaks to businesses it should demand something in return, he said. His suggestions were modest demands, he argued.
Jane Hunt (Conservative), another MP local to East Midlands airport, spoke in favour of the Bill. She said freeports would bring much needed opportunities for economic growth.
Sarah Olney, Lib Dem business spokesperson, said it was time for the government to put forward its bold and radical for kickstarting the UK economy. She expected the Chancellor to jump at the chance to deliver the 'benefits of Brexit' but he had delivered.... freeports. We have always had the opportunity to have freeports - we had them as recently as 2012 - but the economic impact has been negligible. In other countries which have freeports, there is very little evidence to show they generate new economic activity.
Sir Bernard Jenkin (Conservative) said we should use 'every tool in the box' to reduce economic disparity, including freeports. "What we want to see is other tax advantages extended to other parts of the United Kingdom, like differential rates of corporation tax." He welcomed the tax provisions in the Bill but said that not included in the Bill were promised enhanced Structures and Buildings Allowances and lower NICs and proposed business rate reliefs. (NB. Enhanced SBA is in the Bill, in Schedule 21.)
Rebecca Long-Bailey (Labour) said the TUC had warned that freeports are a 'trojan horse' to water down employment protections, and there are real concerns that freeports could create a 'bonanza for money launderers and tax evaders'. The EU warned in 2018 that freeports were conductive to secrecy and resemble offshore financial centres in offering both high security and discretion and allowing transactions to be made without attracting the attention of regulators or tax authorities.
Jackie Doyle-Price (Conservative), local to the Thames Gateway freeport, said if she thought freeports would undermine workers' rights she wouldn't be supporting it. She representes three of the poorest 100 towns in the country, she said. She said the policy was rooted in Britain's status as a maritime nation.
Ben Bradley (Conservative), whose Mansfield constituency is also near to East Midlands airport, spoke in support of freeports. He accused Labour of seeking to limit the potential for growth and job creation with the amendments they have tabled.
Virginia Crosbie (Conservative) said she had put together the Anglesey freeport bid. "Our island haemorrhages young people every year because there are no quality jobs for them locally," she said.
Ian Liddell-Grainger (Conservative) said the Chancellor had done a remarkable job in supporting the economy during the pandemic. Broadening the debate on regional economic development beyond freeports he launched a broadside against 'incompetent' and 'pompous' Somerset County Council. "What do Somerset bring to the party? Nothing except trouble... and waste."
Responding to the debate for the Government, Jesse Norman said that on expected revenue for freeports it is not appropriate to comment at the moment - the tax sites have not been agreed, the revenues are very much site-specific. There is no evidence for the claim that freeports will water down employment protections, he said. He assured Bernard Jenkin that the enhanced SBA is in this Bill and employer NICs relief will be legislated in a future Bill and business rate relief will follow in due course.
Ben Lake closed the debate. He suggested Wales could have two freeports and asked the government to work more closely with the devolved administrations.
The House divided on one question at the end of this group -
NC25 was defeated by 366 votes to 260
All the existing clauses were retained in the Bill. Government amendments 43-52 were passed.
Debate on the Bill will continue tomorrow at 12.40pm or later. More here.