Clause 98 - Power to make temporary modifications of taxation of employment income

Part of Finance (No. 2) Bill – in a Public Bill Committee at 10:00 am on 11 January 2022.

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Photo of Lucy Frazer Lucy Frazer The Financial Secretary to the Treasury 10:00, 11 January 2022

I thank hon. Members for their contributions. Both the hon. Member for Ealing North and the hon. Member for Glasgow Central asked us to be more prescriptive in the legislation—to define the circumstances in which there would be a disaster or emergency—but we are bringing in this legislation precisely because we did not have the flexibility that we needed when we went into this pandemic. Therefore we do not want to tightly define the circumstances. We are bringing in this legislation to ensure that we have the tools at our disposal to exercise the necessary powers should an event like the one we have been through and hopefully are at the end of occur.

The hon. Member for Ealing North asked about the time period. As I pointed out, there is a span of two tax years for the essence of the proposals to be effective. As he will have seen throughout the pandemic, the Government have responded appropriately: they have brought in measures, withdrawn them and brought in measures again—I am thinking of furlough and the support and grants given through local authorities. There has been flexibility in the provision of support within the confines of the legislation empowering it.

The hon. Member for Glasgow Central talked about lack of financial preparedness from the Treasury. The Chancellor’s response to the pandemic has been recognised by a number of international financial institutions as including some of the most effective measures put in place in Europe and across the globe. The measures that the Chancellor has put in place have avoided significant unemployment—when we went into the pandemic we expected 12% unemployment, but it is much less than that. Two million fewer people are unemployed than we originally expected.