Finance Bill

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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 156

Duties: 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 157

National 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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