Justine
Greening: Can the Minister confirm that the background
note to the clause is wrong when it says:
“The
Government introduced a measure requiring oil suppliers to supply
sulphur-free diesel (SFD) to garage forecourts from 4
September 2007”,
and that it should
read “4 December 2007”? That is where the confusion on
our part arose. It is different from the ministerial statement, and I
think that it is wrong. Can she confirm
that?
Angela
Eagle: It sounds to me like it is wrong. I suspect that in
the explanatory note, the two dates are simply mixed up.
I was asked
about the revenue impact. It is nil. Ultra low sulphur diesel and
sulphur-free diesel are charged at the same rate; it is only when they
were mixed that the rate would have been higher. Mixing would not have
happened if we had not given comfort that in the event of a technical
breach we would not charge the higher rate, but then it would not have
been guaranteed that supplies would be where they were meant to be in
time for the mandation of sulphur-free diesel. It is purely a technical
clause to shift from one system of defining fuel and fuel mixes to a
more regulatory system under which sulphur-free diesel is mandated. It
deals with the transition between the old regime and the new. I hope
that hon. Members will be happy with those
reassurances. My
hon. Friend the Member for Broxtowe is right to mention that fuel duty
on petrol and diesel are the same. Differences in price, as I
understand it, are due to bottlenecks in supply and slightly different
ways of creating petrol and diesel, but I confirm that there is no tax
differential between what the Government collect on petrol and what we
collect on diesel. The price differences have to do purely with
distillation, bottlenecks in supply, shortages of supply in the
industry and so on, and have absolutely nothing to do with tax
rates.
I hope that
hon. Members will be happy to see clause 155 stand part of
the Bill. It is wholly beneficial and will mean that there are less
sulphur emissions, which we all want to
see. Question
put and agreed
to. Clause
155 ordered to stand part of the
Bill.
Clause
156Duties:
abolition of disregard of fractions of
penny Question
proposed, That the clause stand part of the
Bill.
Mr.
Hammond: I read the clause and thought that I understood
it. I then read it again and thought that I did not, so I looked at the
explanatory note, which told me absolutely nothing. To be fair, that is
what most explanatory notes do. They simply repeat what a person who
can read will have discovered from reading the Bill. The clause will
remove section 137(4) from the Customs and Excise Management Act 1979,
a provision that
says: “For
the purpose of calculating any amount due from or to any person under
the customs and excise Acts by way of duty, drawback, allowance,
repayment or rebate any fraction of a penny in that amount shall be
disregarded.” The
explanatory note says that that is redundant because the halfpenny
has
“ceased to be
legal tender”.
It seems to me that
that would reinforce the requirement for fractions of a penny to be
disregarded. As I recall, the halfpenny ceased to be legal tender about
20 years ago so it seems rather odd that we are now taking the trouble
to remove a subsection from the 1979
Act. I
got to thinking about the clause and realised that there is perhaps
more to it than meets the eye. Rounding down to get rid of fractions of
a penny in a total amount is perfectly sensible and we all understand
the reasons for it. However, for amounts per litre, kilo or
gram of a dutiable payment, which will be multiplied by many thousands
or millions, the case for removing, eliminating or ignoring fractions
of a penny becomes rather less
obvious. I
remind the Committee that we are not introducing a disregard of the
fraction, but removing the provision for the disregard of the fraction.
When there is a fraction of a penny per unit and the person paying may
pay for many thousands or millions of units at a time, there is a
potential revenue implication from this measure. If the Exchequer
Secretary can explain precisely what this is all about and why it is
happening now, perhaps my concerns will be shown to have been
unnecessary, but perhaps
not.
The
Chairman: And I am interested
too.
Angela
Eagle: Thank you, Sir Nicholas. It would perhaps have been
tidier had these changes been made in 1984 when the halfpenny ceased to
be legal tender. I was not in the Government then and from a
quick look around, I suspect that nobody in the room
was. Sir Nicholas, you are a long-standing Member of the House
and I do not know whether you served on the 1984-85 Finance
Bill.
The
Chairman: I am not
sure.
Angela
Eagle: I note that you cannot remember, Sir
Nicholas. Perhaps it would have been tidier to pass this measure in
1984. We decided to do it now because we got wind recently that
businesses have been looking to manipulate their duty calculation
methods to reduce their duty liability. Removing the subsection may
increase revenue slightly, although we do not think that it will be by
very much. It ensures equity and consistency. When the measure becomes
law and removes fractions, HMRC will need a common calculation method
to ensure equity and consistency between all those who
pay. 5.15
pm
Mr.
Hammond: The Minister just made a slip of the tongue. To
clarify, when she said that when the measure becomes law it will remove
fractions of a penny, I think she meant that it will remove the
disregard of fractions of a penny. It is the other way
around.
Angela
Eagle: Clearly that is what I meant to say—my
apologies for getting it the wrong way around. It shows what happens
when one tries to extemporise rather than read boring speeches that
have been written—[ Hon. Members:
“Harsh.”] Clearly the issue is the need for equity and
consistency and for there to be no particular advantage, even if it is
of a fraction of a penny, in people arranging their affairs to lessen
their liabilities, albeit slightly. It is simply a tidying-up measure.
We do not expect much revenue. I suspect that it should have been done
20 years ago.
Mr.
Hammond: I am not sure whether the Exchequer Secretary has
given way or finished—I shall go on as if she has given
way. I
think that she is confirming that the rounding of fractions of the
penny applies to the levyable unit of
duty.
Angela
Eagle indicated assent.
Mr.
Hammond: She is nodding her head, and the measure makes a
lot more sense. I cannot understand why one would want to disregard a
fraction of a penny when it may be multiplied by many thousands or
millions.
Does the
Exchequer Secretary agree that the explanatory note, once again, is
highly misleading? If what she said is the case, the measure has
absolutely nothing to do with the halfpenny ceasing to be legal tender,
as the note says. It is perfectly possible—it is done in
financial transactions every day—to calculate to many decimal
places of a penny. It is worth doing so if one is multiplying by a big
enough number. The explanatory note, which suggests that the abolition
of the halfpenny is behind the measure, is simply not right, if I
understand her explanation. Although there would be a necessity to
disregard the halfpenny from a global duty bill of, say, Diageo plc, of
£28,243,392.285, there is no reason to disregard the fraction of
a penny per unit in calculations.
The
Chairman: In order to help Hansard, I personally
took it that the Exchequer Secretary had sat down, and that the hon.
Member for Runnymede and Weybridge had another innings. Does the
Minister wish to
reply?
Angela
Eagle indicated dissent.
Question
put and agreed
to. Clause
156 ordered to stand part of the
Bill.
Clause
157National
savings Question
proposed, That the clause stand part of the
Bill.
Mr.
Hammond: I remember fondly from my childhood saving
stamps, which is what this measure is about. I do not know whether you
shared that experience, Sir Nicholas. When I was preparing for this
debate last night, it occurred to me that I was destined to be a shadow
Chief Secretary because I can remember eagerly going to the post office
to buy national savings stamps for which I had saved up. If I remember
correctly, we used to get them in various denominations with pictures
of Prince Charles on the ninepenny and Princess Anne on the one and
sixpenny coin. I might be
wrong. Mr.
Mark Todd (South Derbyshire) (Lab): The hon. Gentleman
does not look that old.
Mr.
Hammond: I can assure the hon. Gentleman that I feel
it.
My nostalgia
is because the provision deals with the legacy of the era of savings
stamps. I used to collect my saving stamps. When they had amounted to a
worthwhile sum, which in those days was about £1, I would go
into the post office and pay it into another defunct institution, the
Post Office Savings bank,
RIP. Apparently,
as national savings stamps and national savings gift certificates have
been withdrawn, a relatively small sum of money—a few million
pounds—remains stranded. I take it—I would be grateful
for ministerial confirmation—that that sum represents money that
was paid over and is represented by stamps that have effectively been
lost or destroyed and will never be redeemed.
The provisions give the Treasury a new power to make
regulations which would require the Commissioners for the Reduction of
the National Debt to transfer these monies—I think, in total,
about £7 million—to the national loans fund. The
explanatory note says, rather curiously: “The
tradition of using such funds to help defray the National Debt is no
longer appropriate in today’s financial services
environment.” It
is interesting that Parliament as a whole is dealing with the issue of
dormant accounts and unclaimed assets in the dormant accounts
legislation, which we still await in this House—the Minister
might be able to give us some news on that. I was moved to wonder, and
I was able to wonder aloud, because I found myself seated next to the
chief executive of National Savings and Investments at a dinner last
week—very convenient—why the unclaimed assets, or dormant
accounts, as they effectively are, in National Savings and Investments
are treated differently from the dormant accounts in the rest of the
banking and building societies sector. As we know, the
Government’s decision is that the assets that are stranded
because accounts have gone dormant, people have lost their records or
they have died without anybody becoming aware of it, and the money that
is in those accounts will be dealt with through a statutory procedure
that the Government are laying down, initially on a voluntary basis,
and will be used for certain specified
causes. I
am curious to know why the Government feel that money that to my mind
is entirely analogous money—money that has been handed over by a
saver and then, for whatever reason, not redeemed—should not be
treated in the same way and be subject to the same regime that the
Government have put in place for other unclaimed residual assets. Can
the Minister answer that and perhaps throw some light on the progress
of the Bill that is currently awaiting its Commons stages, and whether
we are going to get the Bill before the summer recess? I am sure that
members of the Committee, who might have the privilege of serving on
the Public Bill Committee for that Bill—I know my hon. Friend
the Member for Fareham is extremely interested in the
issue—would find that of
interest.
The
Chairman: I have to say, before the Minister replies, that
it may be of interest, but not to this debate. The hon. Gentleman
speaking for Her Majesty’s Opposition is anticipating the Second
Reading debate on another piece of legislation. I hope that the
Minister will take my guidance in dealing with the
matter.
The
Economic Secretary to the Treasury (Kitty Ussher): It
being the first time that I have risen this afternoon, may I say what a
pleasure it is to do so under your chairmanship, Sir Nicholas. May I be
so bold as to speak on behalf of the entire Committee in saying that
perhaps we should pass our thanks to the maintenance department for
fixing the light bulb, which seems to be somewhat quieter than it was
last Thursday, although I notice that one of them has expired, but at
least it has done so silently.
The hon.
Gentleman who speaks for the Opposition rightly described the general
purpose of the clause. It is not so much a policy issue as an
accounting issue, as I shall explain. There is a residual amount of
money of around £7 million from national savings stamps that
have not been redeemed and also gift tokens. The former were first
issued in 1917 and withdrawn in 1976 and gift tokens were introduced in
1947 and withdrawn in 1989. Those were managed by the Commissioners for
the Reduction of the National Debt. The proposal is simply to give us a
power to make regulation to provide for the transfer of funds held by
the commissioners in those two examples to the national loans fund.
There is no economic impact, but it is a sensible policy for a number
of
reasons. First,
the National Audit Office has rightly expressed concerns on the
security and access controls of such out-of-date systems. We wish to
develop a new National Savings and Investments residual account as the
single secure repository for all funds remaining in such closed
products where National Savings and Investments has not been able to
make payment to its customers. We also want through that new product to
make sure that we provide equality of interest rate treatment on all
closed product holdings in line with the Financial Services Authority
guidelines for treating customers fairly, which were not in operation
when the initial products were
developed.
Mr.
Hammond: I saw that point in the explanatory notes but, as
I recall, national savings stamps did not bear any interest. They were
non-interest bearing instruments, so what does equality of treatment in
terms of interest mean? As I understand it, neither of those two
products was
interest-bearing.
Kitty
Ussher: My understanding is that that is correct but,
since those products were issued, National Savings and Investments has
voluntarily adopted the banking code and advertising standards code and
moved from having its own adjudicator to using the Financial Ombudsman
Service to deal with customer complaints. It is working to comply on a
voluntary basis with relevant FSA regulations. It would be more
appropriate to review all those products.
I will
answer the hon. Gentleman’s points in general terms. We feel
that it would be better to set up a residual account to look at all
these issues in the light of National Savings and Investments’
correct commitment to look at them alongside the new guidelines
developed in that area.
The hon.
Gentleman made points which I am now advised are outside the scope of
this
discussion.
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