Finance Bill – in a Public Bill Committee at 10:00 am on 17 October 2017.
Peter Dowd
Shadow Chief Secretary to the Treasury
10:00,
17 October 2017
I beg to move Amendment 16, in Clause 4, page 9, line 23, at end insert—
‘(7A) After section 716B (Employment intermediaries, etc), insert—
“716C Review of effectiveness of changes to reliefs for legal expenses
(1) Prior to 30 June 2019, the Commissioners for Her Majesty’s Revenue and Customs shall complete a review of the effectiveness of the changes made to this Act by section 3 of the Finance (No. 2) Act 2017.
(2) The review shall consider in particular the estimated value of the additional relief provided as a result of the changes in each tax year.
(3) The Chancellor of the exchequer shall lay a report of the review under this section before the House of Commons as soon as practicable after its completion.””
This amendment would require HMRC to undertake a review of the effectiveness of the changes relating to relief in connection with legal expenses in Clause 4.
Peter Dowd
Shadow Chief Secretary to the Treasury
We all agree that the current model of legal expenses or indemnity insurance for employees is wholly inadequate to the modern workplace. It is worth getting a plug in here in relation to the household insurance that people have for when they wish to defend their position in court, whether criminal or civil. I have experience of some of these policies not being fit for purpose. That goes to the heart of some of these issues, although it is not directly related. I am sure that other Members have had people come to them with insurance policies that they bought thinking they would cover them for this, that or the other, only to find that they are not fit for purpose. It is worth this Committee sending the message out that some of those policies are not up to scratch.
Getting back to the point, under the current system, only an employee who has had an allegation made against them can claim for legal expenses, which will be deducted from their earnings. Potentially, if a person is called as a witness at a public hearing, he or she will immediately be put out of pocket for any legal expenses. Similarly, if an employee is to give evidence at a public hearing, perhaps in one of our Committee Rooms in this building, under the current system they will be out of pocket if they need legal counsel. That is a deterrent to both employee and employer. The measure would tidy up and expand the current, rather vague, provision to cover employees giving evidence at public hearings, which we welcome; however, I have a number of questions.
How many employers will the new measure cover? Will it cover all employers? How extensive is it? Are any particular sectors affected by the measure? What is the estimated cost of such a measure to the Exchequer? Does the measure include cover for employment tribunals? That has been a bone of contention in the past few months, in the light of the Government’s introduction of quite significant fees for people making employment tribunal claims.
Kelvin Hopkins
Labour, Luton North
There is evidence that thousands of people have been deterred from bringing a case to employment tribunals simply because of the fees.
Peter Dowd
Shadow Chief Secretary to the Treasury
My hon. Friend makes an important point. That is why it is important to tease out the issues. People get confused and deeply worried about these matters, so we need clarity.
Our concern is that the measure will, in essence, be used as a tax break for employers, to the detriment of employees. I am not saying that that is the intention, but it is important to get clarity. Given the lack of detail, we believe that a review of the impact of the changes on the coverage of legal expenses is in order. It would focus specifically on the effectiveness of the measure, the value of the relief and, of course, how many employers and employees it brings within its purview. I reaffirm the point: it is important that this area is clarified and that people know the direction of travel, which is why we moved the Amendment, to keep tabs on the proposal.
Mel Stride
Financial Secretary to the Treasury and Paymaster General
Before I address Labour’s Amendment 16, I will set out the purpose of Clause 4.
The clause makes changes to ensure fair and consistent tax treatment for employees who receive legal support from their employer. Currently, employers may provide legal support or a legal indemnity insurance to their employees tax and NICs-free but, as the hon. Member for Bootle rightly points out, that only applies when employees have had allegations made against them in connection with their employment. Construction workers, nurses or surveyors, for example, may have legal indemnity insurance to provide legal advice in case they are accused of negligence. No equivalent tax treatment for relief is available in relation to proceedings in which no allegation has been made against the employee, such as when an employee is asked to give evidence before a public inquiry.
The changes made by the clause will extend the existing provisions to correct that unfairness. The relief will be made available for expenses incurred in employment-related proceedings where no allegation has been made against the employee. In addition, the clause extends a relief for individuals on termination of their employment or for individuals now deceased, so that a deduction is allowable if the relevant costs are met by the employer on behalf of the individual.
The hon. Gentleman asked some specific questions, in particular about the cost to the Exchequer of the measures, which will in fact be negligible. We expect fewer than 1,500 employees in total to require the benefits of the measure.
As we have heard, amendment 16 would require HMRC commissioners to complete a review before
The Government acknowledge that legal inquiries can be a challenging and unfamiliar time for employees. The clause will make the system fairer by extending the existing relief for all employees who may require legal advice, helping to ensure that they get the support they need. I therefore commend the clause to the Committee.
Peter Dowd
Shadow Chief Secretary to the Treasury
Again, I appreciate the Minister’s explanations and assurances to some extent, but this is one of those areas that is of importance to people. It is very technical, but teasing the issues out is important. A review might be of specific areas, but reviews often bring up other issues and signpost for us where regulations or the law may need to be changed or tightened. For that reason, it is important for us to send the message that this is something that we will review. Notwithstanding the assurances given, I will press the Amendment to a vote.
Division number 2
Seasonal Working — Legal expenses etc
The chancellor of the exchequer is the government's chief financial minister and as such is responsible for raising government revenue through taxation or borrowing and for controlling overall government spending.
The chancellor's plans for the economy are delivered to the House of Commons every year in the Budget speech.
The chancellor is the most senior figure at the Treasury, even though the prime minister holds an additional title of 'First Lord of the Treasury'. He normally resides at Number 11 Downing Street.
The House of Commons is one of the houses of parliament. Here, elected MPs (elected by the "commons", i.e. the people) debate. In modern times, nearly all power resides in this house. In the commons are 650 MPs, as well as a speaker and three deputy speakers.
As a bill passes through Parliament, MPs and peers may suggest amendments - or changes - which they believe will improve the quality of the legislation.
Many hundreds of amendments are proposed by members to major bills as they pass through committee stage, report stage and third reading in both Houses of Parliament.
In the end only a handful of amendments will be incorporated into any bill.
The Speaker - or the chairman in the case of standing committees - has the power to select which amendments should be debated.
A parliamentary bill is divided into sections called clauses.
Printed in the margin next to each clause is a brief explanatory `side-note' giving details of what the effect of the clause will be.
During the committee stage of a bill, MPs examine these clauses in detail and may introduce new clauses of their own or table amendments to the existing clauses.
When a bill becomes an Act of Parliament, clauses become known as sections.
Ministers make up the Government and almost all are members of the House of Lords or the House of Commons. There are three main types of Minister. Departmental Ministers are in charge of Government Departments. The Government is divided into different Departments which have responsibilities for different areas. For example the Treasury is in charge of Government spending. Departmental Ministers in the Cabinet are generally called 'Secretary of State' but some have special titles such as Chancellor of the Exchequer. Ministers of State and Junior Ministers assist the ministers in charge of the department. They normally have responsibility for a particular area within the department and are sometimes given a title that reflects this - for example Minister of Transport.
The House of Commons votes by dividing. Those voting Aye (yes) to any proposition walk through the division lobby to the right of the Speaker and those voting no through the lobby to the left. In each of the lobbies there are desks occupied by Clerks who tick Members' names off division lists as they pass through. Then at the exit doors the Members are counted by two Members acting as tellers. The Speaker calls for a vote by announcing "Clear the Lobbies". In the House of Lords "Clear the Bar" is called. Division Bells ring throughout the building and the police direct all Strangers to leave the vicinity of the Members’ Lobby. They also walk through the public rooms of the House shouting "division". MPs have eight minutes to get to the Division Lobby before the doors are closed. Members make their way to the Chamber, where Whips are on hand to remind the uncertain which way, if any, their party is voting. Meanwhile the Clerks who will take the names of those voting have taken their place at the high tables with the alphabetical lists of MPs' names on which ticks are made to record the vote. When the tellers are ready the counting process begins - the recording of names by the Clerk and the counting of heads by the tellers. When both lobbies have been counted and the figures entered on a card this is given to the Speaker who reads the figures and announces "So the Ayes [or Noes] have it". In the House of Lords the process is the same except that the Lobbies are called the Contents Lobby and the Not Contents Lobby. Unlike many other legislatures, the House of Commons and the House of Lords have not adopted a mechanical or electronic means of voting. This was considered in 1998 but rejected. Divisions rarely take less than ten minutes and those where most Members are voting usually take about fifteen. Further information can be obtained from factsheet P9 at the UK Parliament site.
A parliamentary bill is divided into sections called clauses.
Printed in the margin next to each clause is a brief explanatory `side-note' giving details of what the effect of the clause will be.
During the committee stage of a bill, MPs examine these clauses in detail and may introduce new clauses of their own or table amendments to the existing clauses.
When a bill becomes an Act of Parliament, clauses become known as sections.
