1 May – Immigration Queues (UK Airports)
Does the Minister agree that airports themselves as well as Border Force can do more to improve this process and make sure that the right number of staff are available at the right times to deal with the expected flight volume?
26 April – Planning Framework Debate
Will my hon. Friend join me in urging councils that are currently consulting on potentially adding sites that are in the green belt to their local plan to stop doing so now that they have seen the final guidance? They should think, “We are not going to change the green belt because we don’t need to. Let’s look at brownfield sites first.”
25 April – Civil Aviation Bill
I am grateful to the hon. Gentleman for reminding us of the long debate that we had in Committee. Does he agree that recent news stories about delays at Heathrow have only strengthened the argument that it would be in the airports’ interest to publish those data, so that passengers know whose fault the delays are?
I had not planned to speak to the new clause and amendments, but I was tempted by the exchange on border services to relive some of our Committee debates.
I cannot support the shadow Minister’s amendments. I am not convinced that the licence dealing with the economic regulation of airports is the right place to impose conditions that ought to apply to every airport. I would hope that all airports operating in the UK would recognise that all these extremely sensible and worthy things were natural obligations that they ought to fulfil anyway, and that we should not need to legislate for them. If we do, though, we should legislate for them all, not just the one, two or three airports that happen to be economically regulated.
Clause 18, to which the amendments relate, allows—possibly even instructs—the Civil Aviation Authority to include conditions it thinks
“necessary or expedient having regard to the risk that the holder of the licence may engage in conduct that amounts to an abuse of…market power”.
If it was felt that an airport such as Heathrow was giving a particularly poor passenger welfare service because it could away get with it—because it has market power and people have to fly from there on certain routes—it would be perfectly fair for the CAA, recognising that risk, to impose conditions. We would all want the CAA to do that, if it saw those risks to any part of the passenger experience.
I want to touch on the experience of getting through passport control. Having been through four UK airports this week on Northern Ireland Select Committee duties, I was obviously spared having to go through passport control both in Northern Ireland and at Gatwick on Monday evening, so I have no recent miserable experiences to recount. However, this issue is becoming a reputational risk with people arriving in the UK on holiday or business, so we need to get it right. There is no particular magic to getting it right. The airports and the UK Border Force all have a role to play. As was said, it is a matter of getting resourcing to match the volume of passengers and flights, knowing when passengers are coming from jurisdictions that could make border control more complicated, and making available all the facilities that the Border Force needs, such as rooms near the passport checking station and so on. Airports could invest in electronic scanning devices as well. We need to encourage airports and UKBF to work together pragmatically to make the service the best it can be.
The Minister asked why no amendments were tabled on this for Report stage. I moved one in Committee, of course, and I was tempted to bring it back on Report to get the wider view of the House, but I was not sure that the Whips would welcome my being tempted down that line. Nevertheless, we need to find a way of getting UKBF to recognise its responsibility and to publish all the data on the length of queues by airport so that passengers and airports can know what the situation is likely to be. When the transparent data are made available, all involved will have the motivation to get those queues as short as possible by making the most effective use of the resources available.
Something that is missing from the indicative licence is a requirement to measure or try to improve people’s experience at border control, although that is understandable, given that it is not within the remit of the CAA to deal with that. Has the Minister had any discussions with the Home Office, given the recent problems at Heathrow and elsewhere, to see whether more data can be published to try to improve that experience?
May I join in the congratulations to the Home Secretary on the progress she has made? Without asking her to predict failure, if the Brighton conference fails to produce a suitably robust reform for the Strasbourg Court, do the Government have a fall-back position for getting these things into a far better, more streamlined state going forward?
Mrs May: I am rather more optimistic than my hon. Friend is about the Brighton conference, because I know of the considerable work put in by my right hon. and learned Friend the Justice Secretary, and by my right hon. Friend the Foreign Secretary and others across government, to work with the other 46 member states—remember, 47 countries will be around the table to discuss this. I am confident that the areas of change the Prime Minister has set out will indeed be addressed.
Finance Bill Committee
If we were to review corporation tax, we should review its whole fundamental structure. It is only two or three years ago that we rewrote the corporation tax code under the Corporation Tax Act 2009, which has, I think, 1,330 clauses and 613 pages. The entire tax policy is well worth the read. If we look at the general position of corporation tax in our tax field, in the out-turn for 2010-11, corporation tax was just above 8% of our total tax take. That will fall by the end of this Parliament to less than 7% of our total tax take. We will see that trend accelerate, because as other members of the Committee have said, there will be a general drift down of corporation tax rates as we try to remain competitive with other nations, which will no doubt take a similar direction.
At a time when we expect the share of our tax revenues from corporation tax to fall, we should be trying to find a way to simplify the corporation tax code radically, so that it is less burdensome for companies to administer it themselves, and less burdensome for the state to administer. I am not completely sure that that is overwhelmingly the direction that the Bill takes; there is a whole load of new and complex clauses to add to the corporation tax code this year, though I accept that they are largely to tackle various anti-avoidance measures.
If the Government are minded to review corporation tax, I urge them to review the whole tax completely, to see if we can radically simplify it and take out some of the Act’s 1,330 clauses. I am not sure that we need schedule A, schedule DI, schedule DIII, schedule DV, schedule DVI, trade and non-trade debits, capital versus revenue, and all the many different ways we have of charging companies tax on their profits. We could probably get away with a general tax on income and a general tax on capital, and spare everyone a whole load of adjustments that probably add very little productivity, and certainly add complexity, chances for avoidance and—one way or another—costs to the system.
I tried last year to convince the Government to review whether to allow groups of companies to file a single tax return, rather than them having to file dozens and dozens of separate returns, and then make loads of complex claims to try to mitigate some of the effects of having had to file dozens and dozens of them. They generally only lead to a trap for the unwary, and for people without expensive advice. Large groups with expensive advisers do not fall into traps. Small groups of two or three companies end up with a tax cost that Parliament did not intend them to face, because they make a mistake with their compliance.
If we had such a review, it would make our system a load more competitive and attractive for companies who wanted to invest in this country. I doubt that it would cost anything; I suspect it would be largely revenue-neutral. A few companies might lose around the edges, but the vast majority would gain from the simplicity and the reduced cost. If we are trying to make our business tax system the most attractive in the world, that would be a great step forward. It would stop some of the outdated creaking of our corporation tax system, which has been growing gradually for more than 100 years as we have added a bit here and a bit there. At some stage, we will find that the whole structure is in danger of falling over.
One of my previous tasks was to write reports for people on where to have their head office, or where to invest. I would compare various tax regimes and their attractive features. One of the problems with the United Kingdom is that we could probably tick most of the criteria. There had to be a tick with a little star in brackets next to it beside phrases such as, “Yes, we exempt capital gains on sales of overseas companies,” but that is quite complex and we have difficult rules on what a share is. There are all these policies that are intended to give generous relief to attract investment, but the actual technical detail of the code makes that quite hard.
For a lot of years, when we were trying to exempt tax on the sale of shares in foreign subsidiaries, there was no certainty that even shares in the main German or French company would qualify.
Mr McKenzie: I acknowledge the hon. Gentleman’s extensive knowledge of tax matters. I want to take him back to the Government’s tax rate target of 20%. He acknowledged earlier that the G20 countries would probably follow suit and reduce their corporation tax. Where does he think that the Government will set the rate, if the G20 countries also reduce the tax? Does he envisage a line that they should not or will not cross?
Nigel Mills: I am grateful for the question, but I suspect that that is probably above my pay grade and expertise. I would be incredibly surprised if, in this Parliament, the Government got the rate below 20%. No one has ever signalled to me that that is the idea. I suspect that as the years and Parliaments go by, other countries will gradually reduce their rates, and we may end up feeling pressured to go lower. I suspect that that will be a longer-term direction. If I had to guess, I would say that the aim would be 20% by the end of the Parliament, unless the Minister wants to tell me that he has a secret plan to get corporation tax down to 15% by then. [ Interruption. ] If he told me, it would not be a secret; that is probably true. If he told me, he would probably be in deep trouble.
We have taken trips down various paths of history today. It is worth going back to what the previous Government thought when they came into office in 1997. I was passing time a few minutes ago reading the 1997 Budget speech, which could almost have been given by the current Chancellor. It was about stability being a necessity for generating investment, and a whole load of things that the Labour party believed in 1997, when it was following Conservative spending plans that it gradually stopped believing in as its time in office went on. That was the Budget when the incoming Government reduced the corporation tax rate by 2%. The then Chancellor said:
“My changes in monetary policy were designed to help companies make long-term investment decisions with confidence. My changes in corporation tax are directed to the same long-term objective… I have decided to cut the main rate of corporation tax by 2 per cent., from 33 per cent. to 31 per cent., the lowest ever rate in the United Kingdom. This means that we shall have the lowest corporation tax…of any of our major competitors—Germany, France, America or Japan…This is a long-term commitment which will increase both inward investment and domestic investment to the benefit of the whole country.”—[Official Report, 2 July 1997; Vol. 297, c. 306.]
That is clear evidence that the previous Government realised, as the current Government do, that we must have a competitive corporation tax rate if we want to stimulate domestic investment, and investment from outside the country.
I am perfectly happy and convinced that the Government’s policy of trying to lower the corporation tax rate to, I suspect, 20% is the best way to show that we are a competitive regime that is open for business investment. If we are worrying about a lack of business investment, it would seem incredibly strange to change our minds on corporation tax. That would be reversing our direction and saying to business, “You are not happy to invest at the moment, so we will reduce the return that you would get from that investment by increasing the rate.” It would be a disastrous way to go.
On the shadow Minister’s remarks on tax relief for capital investment, there is a concern that over the years we have ended up, probably accidently, with the least attractive tax regime for infrastructure investment, due to the various parts of structures that do not attract any tax relief. We are trying to encourage private investment in infrastructure, so it might be necessary to review how the regime is working. We need to ensure that our intended policies do not conflict with our aim due to an accidental aspect of the tax regime, especially given the great international competition to attract investment funding.
I strongly recommend that the Minister considers an idea that I gave him last year—the idea of looking at whether we need a separate capital allowance code. We could allow companies simply to relieve their accounts depreciation. Do we need the hassle of all the elections and different codes for long-life and short-life assets, environmentally friendly assets, cars and so on? All that is hugely complex. We want to say to a business, “If that asset will last you five years, and its economic life is five years, have your tax relief over five years. If it is 20 years, have it over 20 years. If it is two years, have it over two years.” That is the right position for a modern tax regime, and one that many of our competitors are in.
I suspect that I will not support the amendment, with its request for a review. I urge the Opposition to table amendments—or perhaps support mine if I choose to table them on Report—on a proper, wholesale review of our corporation tax code, so that it can become a modern, up-to-date code that would attract investment and be attractive for business. I urge the Minister to use the Office for Tax Simplification. It has done sterling work so far, so we know that it can do it. That would be a great project for it.
Owen Smith: The hon. Gentleman is making an interesting speech, and I agree with many of his points. I assure him that if, on Report, he tables amendments of the nature that he has described, we will look carefully at them and may find ourselves supporting them.
Nigel Mills: I am grateful. It is a pity that his predecessor did not find the spirit to do that a year ago. Perhaps there has been an improvement there.
Ian Mearns: The hon. Gentleman would like an overhaul of the corporation tax system; does he think, in line with other areas of Government thinking, that we will see some form of regional variation in corporation tax, to stimulate growth in different parts of the United Kingdom?
Nigel Mills: That is a great question. I must tell the hon. Gentleman that I am not a great believer in regionalisation. I have concerns about us looking at separate corporation tax rates for Scotland—that may be being debated in the main Chamber—and Northern Ireland. I think it is difficult, when we have the same tax codes and the same tax base, to have different rates, because we risk making tax avoidance quite easy. Having a brass plaque company in Edinburgh to take advantage of a lower tax rate is far easier than having a brass plaque company in Geneva or in the Cayman Islands. We have to be careful how we handle separate rates in the same tax regime within one nation. I am not sure I would favour regional corporation tax rates, just because of the ease of avoidance. How would we know where a large company with hundreds of outlets was generating its profits if it chose to account for it all through one part of the country, to achieve a much more beneficial result? I am not sure that that would be a positive step forward.
With those remarks, I urge the Government to take the radical view and simplify and reform the corporation tax system for the benefit of attracting the investment that we desperately need.