Clause 26 - Payments under Jobs Growth Wales Plus

Finance (No. 2) Bill – in a Public Bill Committee at 10:15 am on 16 May 2023.

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Question proposed, That the clause stand part of the Bill.

Photo of Victoria Atkins Victoria Atkins The Financial Secretary to the Treasury

The clause clarifies that payments made under the Welsh Government’s Jobs Growth Wales Plus scheme are exempt from income tax, with retrospective effect from 1 April 2022. The scheme was introduced by the Welsh Government on 1 April last year to replace traineeships and Jobs Growth Wales. The changes made by the clause will exempt from income tax payments made by way of training allowances under the scheme. Without the clause, the payments would be taxable, which would not be in line with the treatment of payments made for other training allowances.

Photo of James Murray James Murray Shadow Financial Secretary (Treasury)

As we have heard, the clause introduces an income tax exemption for payments made by way of training allowances under the Jobs Growth Wales Plus scheme, which the Welsh Government introduced on 1 April 2022 to replace the traineeships and Jobs Growth Wales programmes in Wales. This is a training and employment programme aimed at 16 to 18-year-olds who are not in education, employment or training, and is designed to help them overcome any barriers that they may face in further training or employment.

As I understand it, the scheme has three strands: engagement, advancement and employment. Under the engagement strand, participants receive a training allowance of up to £30 a week; under the advancement strand, they receive £55 a week, and under the employment strand, individuals will be paid at national minimum wage for the age group. We understand that the training allowances paid under the scheme will be exempt from income tax. That was announced by the Financial Secretary to the Treasury in a written ministerial statement on 11 October last year. The objective of the measure is to clarify the tax treatment payments made by way of training allowances under the Jobs Growth Wales Plus scheme, and it will have retrospective effect from 1 April last year. We will not oppose the measure.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Cabinet Office)

Will the Minister clarify how the payment has been treated in the interim period? I understand that back in October the Government announced their intention to treat it as exempt from income tax, but what has happened to the payments made since 1 April last year? Have the individuals been liable for income tax during that period? Will repayments or tax adjustments be required for those individuals because of the retrospective nature of the measure? Will the Government provide some clarity on how they intend to tackle those things to ensure that everybody has certainty about their tax treatment—that the individual who pays income tax has certainty about their tax treatment and that devolved Governments, when they are putting in place any of the allowances, are certain about the relevant income tax treatment in advance? We do not want uncertainty around something that is supposed to be positive for individuals.

Finally, will the Minister confirm whether there will be any additional cost to HMRC from fixing any issues that have arisen as a result of the possible previous tax treatment of the allowances and payments? That treatment is now changing because of the retrospective nature of the tax allowance. If the Minister does not have answers today, I am happy to receive answers later—she does not need to have her team scribble incredibly quickly now.

Photo of Victoria Atkins Victoria Atkins The Financial Secretary to the Treasury 10:30, 16 May 2023

I am happy to be able to tell the hon. Lady that they were exempted. In terms of costs, I see the word “negligible” in the Exchequer impact assessment, so that is the administrative side effect of what we are trying to achieve to support efforts to train young people in Wales, which are commendable and for which I welcome the support. Clause 27, which I do not think we will debate, allows us to clarify the treatment of devolution payments via statutory instrument, which we are keen to do. Indeed, the hon. Lady will know that significant work with the Scottish Government, led by the Chief Secretary to the Treasury, is going on across the Treasury to underpin the arrangements for the fiscal framework.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Cabinet Office)

Let me make sure that I understand what the Minister is saying. The Welsh payments were considered exempted, and this measure is just the legislation catching up with the treatment that they were being given anyway. Is that correct?

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.