New Clause 24 - Living accommodation provided for employee

Finance Bill – in a Public Bill Committee at 6:00 pm on 25th June 2002.

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'.—(1) Section 145 of the Income and Corporation Taxes Act 1988 (c. 1) is amended as follows.

(2) In subsection (4) insert—

''(d) where employees working in a designated public service industry receive accommodation provided by their employers and can demonstrate that they have a permanent address elsewhere within the United Kingdom;''.

(3) In subsection (8) at end add—

''(c) the expression 'designated public service industry' includes the provision of public transport and other public carriage services, the provision of healthcare, the provision of education, and any other activity which the Secretary of State may by regulations made by statutory instrument so designate.''.'.—[Chris Grayling.]

Brought up, and read the First time.

Photo of Chris Grayling Chris Grayling Shadow Minister (Health)

I beg to move, That the clause be read a Second time.

The new clause is a probing one. It arises from a concern of a constituent who is involved in the public carriage business, and highlights an issue that will become an increasing problem for a variety of companies, particularly around London and the south-east, where the cost of living makes it difficult to attract workers in many key industries. My constituent recruited from some distance away a bus driver who came to work in my constituency during the week but returned to his home at weekends. The company provided a room for him during the week and the Inland Revenue assessed him for a substantial benefit in kind. He incurred a substantial tax bill.

If companies of essential public importance find it difficult to attract workers from within their own areas, they will be tempted to look further afield for workers. The new clause would modify the rules so that where it was clear that a worker had a proper address somewhere else in the country or could demonstrate title to a property or a substantial lease of a property not to or from a relative, they would be entitled to receive temporary accommodation during part of the working week in a different part of the country without incurring a tax liability. Regulations would have to establish clear guidelines for that to happen, but it would work in much the same way as Members of Parliament receive the additional cost allowance. It would recognise that such people incur additional costs when working away from home.

Given the mounting skills and labour shortages in key industries such as health care, education and transport in London and the south-east, I hope that the Government will consider the new clause favourably.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

The definition of public service industry is not easy. With only 55 minutes left of our sitting, it might not be the best time to discuss the definition, and we should perhaps come back to it on Report, but how does my hon. Friend define a public service industry? Speaking as another inner-city Member of Parliament, I must say that the public services go beyond simply the public sector to include the private sector, especially shopkeepers, who are the very glue of the community.

Photo of Chris Grayling Chris Grayling Shadow Minister (Health)

My hon. Friend makes an important point. The new clause limits the definition of public service industries to

''the provision of public transport and other public carriage services, the provision of healthcare, the provision of education''

and leaves it open to the Secretary of State's discretion, either on a short or long-term basis, to designate additional industries.

I want simply to establish a principle. It seems an anomaly that meeting labour shortages by encouraging people to work away from home for a few days each week will mean that those people can incur a tax liability. I hope that Ministers will take the initiative as a result of this probing new clause to examine the matters in greater detail and perhaps introduce their own proposals later.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I am grateful for the way in which the hon. Member for Epsom and Ewell (Chris Grayling) introduced his new clause. I have re-examined my notes on the existing tax reliefs and the circumstances in which an employee receiving accommodation would be exempt from the tax. I must be honest and say that, from the brief details that he has put before the Committee, I am at a loss to understand why the problem has arisen. Although his point is general, a particular case has clearly prompted it, and if the hon. Gentleman agrees to send me more details, I shall consider them closely. I can then decide whether the matter concerns only a specific issue regarding his constituent or a wider issue that needs Government attention.

I would rather not comment further at this stage to save the Committee's time, but I will be interested to receive the details of the hon. Gentleman's constituent's case.

Photo of Chris Grayling Chris Grayling Shadow Minister (Health)

I thank the Paymaster General for that assurance. I am glad to hear that she is willing to examine the broad issue and that I have highlighted a shortcoming in the system through my constituent. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.