Mr.
Field: I want to make a brief contribution on a tangential
issue that arises here. My hon. Friend has rightly said that it is up
to local authorities to determine whether or not an individual
qualifies for a blue badge. As someone who represents a central London
constituency and two central London local authorities within that
constituency, I would be very reluctant to see any move away from local
authorities having that power. I appreciate that it may not be in any
way in the Treasury’s thinking at the moment, but I strongly
oppose any suggestion that the mechanics of the blue badge disabled
driver system should be determined at a national level.
Westminster
city council is working closely on this issue with a number of
neighbouring and non-Conservative local authorities, such as that in
the London borough of Camden; in fact, Camden is of course now under
Liberal and Conservative control. Westminster city council feels very
strongly that it should continue to have autonomy in awarding such
badges and that a national badge scheme would not be in the interests
of disabled people. Although disabled people would like to have the
opportunity of coming to central London, if they all did it would
absolutely clog up the parking system in the area. I appreciate that
that is a tangential point and does not necessarily represent the
thrust of the comments made by my hon. Friend the Member for South-West
Hertfordshire, but I wanted to put something on the record about it. It
is an issue of considerable importance and a number of central London
local authorities are acutely concerned that, although elements of the
scheme have national resonance—obviously, in relation to tax
benefits—those should not apply to the operation of the scheme
itself. 2
pm
Kitty
Ussher: It might help if I start by explaining exactly
what the clause does, because the context for this policy change might
answer some of the wider questions as well. The clause supports the
Government’s commitment to provide help for the disabled by
changing the way in which the company car benefit charges are
calculated for disabled drivers who need to drive an automatic car
because of their
disability. Company
car drivers holding a blue disabled person’s badge are already
able to use the carbon dioxide emissions figure of an equivalent manual
car when calculating their company car benefit, in place of the figure
for an
automatic car, which is usually a higher-emitting vehicle. The logic is
that, because automatic cars emit slightly higher amounts of CO 2
per km than the equivalent manual car, it is unfair that people
who have to have an automatic car because of a disability that they
cannot control should be penalised through the taxation system. We are
making the system slightly more generous for people in that category by
saying that such drivers would also be able to use the list price of an
equivalent manual car to work out the benefit charge instead of the
list price of the automatic car that they currently drive. That is
usually to their advantage, because of the price differential between
two equivalent
models. The
clause would simply align the methods used to determine the list price
and the CO2 emissions figures. It is a logical tidying-up
exercise, but it also benefits disabled company car drivers, so it
should be supported. I welcome the support from the official Opposition
spokesperson. Both methods of calculating benefit will now be based on
an equivalent manual car, if that is more beneficial for the disabled
driver. If it is not, that does not have to be
so. Just
for the record, and subject to certain conditions, the cost of
accessories provided for disabled drivers is also excluded from the
calculation of the company car benefit
charge. The
hon. Member for South-West Hertfordshire was perhaps making two
arguments that pointed in different directions. He asked, first, about
disabled drivers who do not hold a blue badge and whether they should
also be included. The blue badge provides a clearly defined test of
disability, it has worked in this area of policy in the past and there
is no proposal to change it. However, it is worth stating clearly that,
in exceptional cases, affected individuals in particular circumstances
will be able to contact HMRC to seek guidance about whether there is
any flexibility or any prior agreement that can be
reached. Having
argued that the scheme should, perhaps, be more generous, the hon.
Member for South-West Hertfordshire questioned whether it could be made
tighter by using the definition that we debated earlier in the week in
relation to capital allowances, which also applies in respect of
vehicle excise duty and is tighter than the one that applies in this
area of
policy.
Mr.
Gauke: Perhaps I can take the Minister back a moment to
her suggestion that somebody who is not eligible for the blue badge may
be able to seek guidance from HMRC and may benefit from the scheme.
That is welcome, but I should be grateful if she reconciled that with
the wording contained in clause 54(5), which contains new section 124A
of the Income Tax (Earnings and Pensions) Act 2003. It
states: “This
section applies...at any time in the year when the automatic car
is available to the employee (“E”), E holds a disabled
person’s
badge”. That
flexibility does not appear to be contained in the legislation. I
should be grateful if she clarified that
point.
Kitty
Ussher: I cannot possibly begin to describe the
circumstances, because those will depend on the individual’s
situation. If people feel that, in their individual circumstances, it
could apply to them, HMRC is saying
that individuals who are affected should contact it first before
applying and it will be happy to have that conversation. If I can
provide further detail, I will.
I was
discussing why the gateway for disabled company car drivers is
different from that in other policy areas, such as capital allowances
and vehicle excise duty. The policy aim has a different origin. For
example, in vehicle excise duty, the disability exemption is a total
exemption from paying that duty to help those who are practically
unable to walk to be driven or to drive themselves, whereas in company
car tax, blue badge holders are allowed to substitute only the
CO2 emissions, and now the list price, of an
equivalent manual car when calculating the company car benefit, to give
them parity with able-bodied drivers under law.
The main
point is that we are taking an existing policy that works well and
simply making it slightly more generous, because we think that there is
a logical policy reason to do so. We are not seeking to open a debate
about the definition of disability across the taxation system. The
policies have different rationales, which is where the differences
arise.
I take the
point made by hon. Member for Cities of London and Westminster about
the burden on councils. I hope that he will be reassured that we are
not opening up the entire blue badge scheme, so the relevant council
officials can rest easy. Question put and agreed to.
Clause 54
accordingly ordered to stand part of the
Bill.
Clause
55Exemption
of benefit consisting of health-screening or medical
check-up Question
proposed, That the clause stand part of the
Bill.
Mr.
Gauke: The clause deals with the exemption of benefits
consisting of health-screening or medical check-ups. It may help if I
set out a little background to the measure.
Two statutory
instruments introduced in August 2007 dealt with the taxation and
reporting of health screenings and medical check-ups provided by
employers to employees. Previously, employers and HMRC had persisted in
treating the provision of periodic health screenings and medical
check-ups for employees as exempt from tax and reporting requirements.
There was no specific provision requiring such benefits to be provided
universally in order to be tax and NIC exempt. However, HMRC took the
view in 2007 that the practice was based on an understanding or
assumption, rather than on strict legality. New regulations provided a
significantly narrower exemption for periodic health screenings and
medical check-ups.
The changes
introduced in August 2007 required any provision of health screenings
by an employer to an employee to be made available to all employees and
any medical cheek-up to be either made available to all employees or
made available to those identified by a health screening as needing
such a check-up. Those regulations came into effect on 14 August 2007,
but had a retrospective effect covering the 2007-08 tax year. Strong
representations were made about that retrospection.
HMRC agreed not to collect any tax for 2007-08 and, in February 2008,
that was extended to 2008-09, so we had a period of
confusion. Clause 55 is
a revision of the revised proposals of August 2007. After receiving
further representations, HMRC announced on 10 December 2008 that it
would include legislation in the Finance
Bill “to
exempt from tax the provision of yearly health screening and medical
check
ups” without
the proviso that they have to be generally available on similar terms
to all employees. That is essentially what is covered by the
clause. The
clause is welcome up to a point. It is fair to say that the changes
announced in August 2007 were somewhat botched and that there has been
a lengthy period of confusion, but concerns remain that clause 55 is
still somewhat restrictive. There is a restriction to one health
screening or check-up per tax year, but an individual may well require
more than one screening or check-up, or a check for more than one
potential condition, per year. It is often impractical to ensure that
an annual medical that occurs around the start or the end of the tax
year is not repeated within that same year, as people can end up having
two medicals in one year just by a few days. I should be grateful to
know why the Government have not reverted to the position before August
2007. Why is there a restriction of one check up per year? I suspect
that the answer may well be cost, but what is the cost? I am sceptical
that it is very
significant. The
clause will reduce the amount of red tape for employers and employees,
so we welcome it as far as it goes; it is clearly an improvement on the
uncertainty of the past two years or so. However, I would be grateful
to know why the Government have not sought to return to the arrangement
that seemed to be working perfectly adequately prior to August
2007.
John
Howell: My family would be intensely surprised to hear me
speak to this clause and encourage people to have more than one medical
per year. New Speakers are reluctantly dragged to the Chair; I am more
than reluctantly dragged to a medical. In the years in which I was a
partner at Ernst & Young, an annual medical was required for
insurance purposes, but my interpretation of annual was always somewhat
loose. I understand that the medical profession have a term for
that—white coat syndrome—which, in my case, I attributed
to the obvious mental scarring that occurred when I shared student
accommodation with too many
medics. During
the course of my experience with a regime that required annual
medicals, it was impossible to schedule them on a strictly annual
basis. It is not a question of a couple of days; it is often
impossible, with a large work force and the way in which a medical
schedule is taken up and booked far in advance by a doctor, to fit a
medical in within even a couple of weeks or a month of the annual date.
There were many occasions when a second medical occurred within the
same tax year. Also, although I never had to endure it, colleagues of
mine had to return during the year, either for further check-ups as a
result of their original medical, or for medicals for additional
reasons. For the reasons advocated by my hon. Friend, the rules need to
be further relaxed, although I assume that I will not have to be
subjected to more medicals than I need.
Mr.
Brian Jenkins (Tamworth) (Lab): I will not take much time,
because I know that Members want to pursue the Bill as rapidly as
possible, but I want some clarification from the Minister, because I
would be worried if I thought that we were taking a step
back.
There are
employees in this country who work in hazardous conditions, which might
require the employer to work with them and their trade union to ensure
that they have one medical check a year. I seek assurance from the
Minister that there is no way we are going to stop or financially
impede the opportunity to take that check, depending upon the type of
work the employee undertakes. I would of course like all employees in
any company to be treated equally, and if an employer wants to
undertake an annual medical check, all their employees should be
treated the same, but for individuals working in hazardous conditions,
we should ensure that we will put nothing in the way of checks
occurring more frequently than once a
year. Alison
Seabeck (Plymouth, Devonport) (Lab): In Devonport, we have
a dockyard. There are frequent reports of nuclear leaks, which are
exceptional, but were a leak to happen, each employee would clearly
need a full and thorough health check, which might be in addition to
one they have already had, so I share my hon. Friend’s
concerns.
Mr.
Jenkins: I understand totally that the employees in such
areas carry dosimeters all the time, and when those meters change
colour the employee must have a medical check, irrespective of when
they last had one, but there are many areas in industry across the
country where those conditions can arise, and I would not like the
ability to have annual checks to be put back. I would like the Minister
to make that totally
clear.
Kitty
Ussher: I will start by reassuring my hon. Friends the
Members for Tamworth and for Plymouth, Devonport that the provisions we
are debating are completely without prejudice to the relevant health
and safety legislation, which of course require workers to undergo the
necessary medical testing and treatment, in so far as their personal
health is affected by conditions at work. That is the crucial
difference, so I hope that that reassures
them. Responding
to the points made on more frequent medical checks, it has never been
our intention that medical treatment should be exempted from tax when
provided by a company. That is no different to any other type of
private medical treatment. An individual may go for a check-up in which
a problem is identified that is then treated via the company, but we
have no desire to treat that check-up as a benefit in kind. We
therefore provide a generous taxation position; I do not know whether
the Opposition would want to do so.
Before the
regulations were introduced in 2007, the guidance, as has been
mentioned, referred to periodic medical check-ups. That was based on
the understanding that, when an employer provides employees with
medical check-ups, they are commonly at longer intervals than once a
year—perhaps reflecting the fact that the hon. Member for Henley
is not alone in his aversion to check-ups. It is certainly our
understanding that routine check-ups, rather than treatment, tend in
practice to take place less frequently than once a year, which is
absolutely fine as far as the regulations are concerned.
The
regulations were introduced in 2007 because we needed to ensure there
was a clear legislative basis for what was otherwise simply an
understanding on the part of HMRC. We are changing them now precisely
because of the representations we have received and simply because we
want to get the provisions right. There were some anomalies that, to be
honest, HMRC had not identified. The example that makes the point most
clearly is that the 2007 regulations stated that precisely the same
check-ups needed to be made available to all classes of people, and
since some of the check-ups are for gender-related cancer, it
immediately became apparent that it was absurd to require that the
whole work force should be tested for testicular or breast cancer,
regardless of gender. It soon became clear that something needed to be
sorted out, so the clause aims simply to regularise that
position.
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