Mr.
Gauke: I note that the hon. Member for Taunton says that
new clause 5 is the first of three clauses in his name. Of course, the
lead name on all of the new clauses is that of the hon. Member for
Twickenham. There was some excitement on our Benches that he might make
an appearance to speak to the new clauses. I have been a member of the
Committees on the past four Finance Bills, as has the hon. Member for
Twickenham, and I was hoping that we would see his first appearance in
those four
years. 2.45
pm Like
the hon. Member for South Derbyshire, I welcome new clause 5, as it
enables us to highlight this matter. The hon. Member for Taunton
rightly says that there are two components to the new clause, the first
of which
would increase the rate under the approved mileage allowance payment
scheme from 40p, which has been the rate since 2002, to 45p. In the
time since 2002, by and large the cost of motoring has gone up. The
cost of motoring varies, of course, depending on what happens with the
price of petrol. The price of petrol was a particularly important issue
a year or so ago, when it was higher, and I received a fair number of
representations about it. Perhaps there is an argument for a fuel duty
stabiliser to reduce the volatility of the cost of fuel. However, we
will not go there
today. I
believe that in 2007 Ministers promised a review, in discussions with
businesses on the 40p rate and whether it should be changed. However,
nothing in particular came of that. Perhaps the Exchequer Secretary
could tell us whether there are any ongoing discussions on that matter;
it is clearly a matter that must be kept under review. I would also be
interested to know the financial implications of new clause 5. Again, I
hope that she can inform the Committee of those implications.
Mr.
Jeremy Browne: Perhaps I should have
mentioned this point myself, but new clause 5 clearly has financial
implications although it is hard to predict them precisely because
there may be some behavioural change. Having said that, however, there
may be financial implications in not going forward with the new clause.
If volunteers are disincentivised from driving people so that they can
benefit from essential services, there may be an obligation on social
services departments to do that work instead, at a greater
cost.
Mr.
Gauke: That is a fair point. The figure involved here is
quite difficult to quantify, but there is a legitimate concern about
it.
The second
element of the new clause is the situation with volunteers. I agree
with the remarks of the hon. Members for Taunton and for South
Derbyshire about the importance of volunteer drivers. As it happens,
this week I was able to invite Mrs. Helen Dean, a volunteer
driver for one of my local charities, the Watford Peace Hospice, to the
MP Heroes tea party, which was held on Tuesday. A number of hon.
Members in the Committee from all parties were able to take part in
that event. Mrs. Dean, like many other volunteers, does
tremendous work in helping charitable organisations. I am sure that all
members of the Committee would unite in saying that without the
contribution of volunteers, charities would find their work much harder
and the demands on elements of the public service would be greater. So
we should acknowledge the contribution of volunteers.
I am grateful
to the hon. Member for Taunton for highlighting the matter of
volunteers. Clearly, it would be most unjust if those individuals faced
a financial penalty for their good work; it is right that we look
kindly on such contributions to society. We would be interested to hear
the Government’s response to the new clause, in particular
whether it is workable. None the less, the issue of volunteers is worth
highlighting.
Mr.
Bone: I should declare an interest at the outset, as I
drive a biofuel car, which is considerably more expensive than a petrol
car and therefore I would benefit from a higher rate if it was
granted.
The
position of volunteer drivers has been discussed extensively already
and it is a very important matter in my area. I agree with the hon.
Member for Taunton that it is not a question of providing a financial
incentive for volunteer drivers; instead, it is a question of those
volunteers getting back what they lose by doing that type of
driving.
The wider
issue is what the Revenue says at the beginning, that the tax-free
mileage allowance should effectively be the cost to the taxpayer of
using their car while on business. That is the purpose of the
allowance. In the past, many years ago, everyone used to have a company
car and there were enormous problems in working out taxable
benefits.
Sarah
McCarthy-Fry indicated
dissent.
Mr.
Bone: I see that the Exchequer Secretary disagrees, but I
am sure that she enjoys her Government car. For most people in
business, there was an attraction in their company providing a car,
which they used privately. However, there was then a problem of taxable
benefit in terms of how much of the petrol use was personal, and the
calculations became extremely complicated. A tax-free mileage allowance
led to habit switch: people bought their own vehicle and reclaimed the
cost of using it on business through the
allowance. The
question now is: has the cost changed? If the cost remains roughly 40p
a mile, that is fine, but have the Government done any research in
conjunction with car organisations, such as the Automobile Association,
on the actual average cost of driving a mile? If the real cost is
something like 70p per mile, the allowance needs to be looked at again.
It cannot be right that the taxpayer does not get reimbursed for the
full cost of using his vehicle while on business. Will the Minister
tell us what information the Government have on the subject? If the
actual cost is considerably greater than the Revenue allows for, that
does not tie up with what the Revenue says is supposed to
happen.
Sarah
McCarthy-Fry: I welcome the debate on the new clause,
which has raised some important questions. I will deal with the rate of
the mileage allowance payment first and discuss volunteers later. I do
not want people jumping up and saying, “What about the
volunteers?” when I am talking about the mileage
allowance. The
allowance is currently calculated at 40p a mile, which is the rate at
which employers can reimburse their employees for using their private
cars for business journeys without that reimbursement being taxed. The
rate is set to reflect broadly the cost of business mileage, including
the costs of fuel, maintenance, depreciation and insurance. Let me make
it absolutely clear that it is not intended to be equivalent to some
overall assessment of the cost of motoring, but to reflect the specific
additional costs of driving businesses journeys in an employee’s
private car. The current rate of approved mileage allowance payments of
40p a mile is a reasonable reflection of those business motoring costs.
Of course, there will be some motorists for whom the rate is either
above or below their actual costs, but over the whole UK car fleet, it
represents a fair and, if anything, generous rate, according to our
calculations. One
effect of increasing the AMAPs rate would be to provide an incentive to
those employees whose actual costs are less than the proposed 45p a
mile rate to drive further in order to profit from the mileage
reimbursements.
That is not the purpose of the allowance, and it could lead to an
increase in unnecessary driving and thus to an increase in overall
carbon dioxide emissions, contrary to the Government’s
environmental
objectives. We
have been asked why we do not uprate the AMAPs rate in line with the
retail prices index. Since the AMAP was introduced in 2002, some
elements of the overall costs of motoring, such as fuel costs, have
increased, but over the same period capital costs have fallen and the
fuel efficiency of cars has improved. Furthermore, the reduced cost of
fuel per mile driven is taken into account when calculating the overall
costs of business mileage. We review the AMAPs rate annually as part of
the normal Budget cycle, but we have concluded that, as the rates have
to cover a wide variety of drivers and were never intended to reflect
the actual costs of motoring for every car, the present rates are
sufficient to cover the business motoring expenses of most
drivers. Mr.
Graham Stuart (Beverley and Holderness) (Con): Do the
Government publish the calculations on which their estimate that the
present rate is a fair amount is based? If not, will the Minister
ensure that they are published in future, so that we and our
constituents can see for ourselves that there is a reasonable and
rational basis for the
calculations?
Sarah
McCarthy-Fry: I will look into that. I should also like to
point out that the AMAPs rate does not restrict how much employers can
reimburse their employees. Employers remain free to pay their employees
whatever reimbursements they wish, and employers across the country
reimburse their employees for a range of expenses at various different
rates. The
AMAPs rate merely limits the amount that employers can reimburse
employees tax-free. Without such a limit, employers would be free to
use travel expenses as a form of untaxed remuneration, while paying low
salaries to their employees to avoid paying a fair amount of income tax
and national insurance. There is no justification for increasing the
AMAPs rate as proposed in the new clause, especially at a time when
maintaining sound public finances must be a central fiscal objective
for the
Government. I
want to move on to
volunteers—
Mr.
Jeremy Browne: The hon. Lady mentions the financial cost
of the new clause, but is moving on without having told us what it is.
I would be grateful to be told, as it is easier for her Department to
make an assessment than it is for me. That would surely have a bearing
on Members’
considerations.
Sarah
McCarthy-Fry: The estimated cost is £225
million a year.
Many hon.
Members spoke about the impact on volunteers. The implication of the
new clause and the comments of many hon. Members is that the current
AMAPs regime may be a barrier to volunteering. Let me place clearly on
the record my appreciation of the voluntary sector and the people who
give up their time to help build a stronger society and are selfless in
their generosity to others. Many hon. Members have spoken about that
this afternoon. The Government would never want to do anything to
undermine that spirit of giving or the wider culture of volunteering.
In particular, we
have never wished to intervene in reimbursements paid to volunteers,
whose work is highly valued, in order to tax them. It is right that
those who freely give their time and their vehicle to voluntary work
should be able to reclaim their motoring expenses. For that reason,
volunteers are not taxed on payments they receive if they just cover
reasonable expenses. As a
convenience, the Government allow voluntary organisations to reimburse
volunteers for mileage driven in the course of their voluntary work at
the statutory AMAPs rate. If they choose to do that, voluntary
organisations need not keep detailed records or produce detailed
evidence to HMRC to show that the reimbursement payments only cover
motoring costs actually incurred. However, using AMAPs in that way is
entirely a matter of choice for voluntary organisations; if they so
wish, they have the option of reimbursing volunteers the precise actual
costs incurred through driving in the course of their voluntary work.
However, full records would have to be kept and produced to HMRC to
ensure that only the actual costs of driving were reimbursed. For
voluntary organisations, therefore, AMAPs are an optional convenience
and I do not think that using that system hinders or impedes the work
of
volunteers.
Mr.
Todd: The Minister anticipates the difficulty of the
answer that she has given. The representations that I have had make it
clear that while it is possible to reimburse the actual cost, many
small voluntary organisations find it an uncomfortable experience to
keep records to feed to HMRC, which suggests they would only do that in
extremis.
Sarah
McCarthy-Fry: I take on board my hon. Friend’s
point, but the facility is there if voluntary organisations are willing
to use it.
Mr.
Gauke: Further to the intervention by the hon. Member for
South Derbyshire, the same thought crossed my mind when the Minister
made her comments. Does she not recognise that the last thing
volunteers want is a big bureaucratic burden? They are giving up their
time and effort; they do not want to be faced by endless form-filling.
That simply does not address the
problem.
Sarah
McCarthy-Fry: I accept the hon. Gentleman’s point
but it does not detract from the principle that the facility is there
if they are able to use it. There may be ways the process could be made
easier. Perhaps the voluntary sector could work together to look at how
to do it—perhaps by using a standardised form. There are ongoing
discussions and all taxes are kept under review as an inevitable
process. I re-emphasise that we value the work done by volunteers. I do
not think the new clause will
help.
Mr.
Bone: Will the Minister give
way?
Sarah
McCarthy-Fry: Not at this point. I urge the Committee to
reject the new
clause. 3
pm
Mr.
Jeremy Browne: Before I respond to the debate, I am happy
to give way to the hon. Member for Wellingborough while the thought is
fresh in his mind.
Mr.
Bone: It is disappointing that we are rushing at this
stage of the Bill. Does the hon. Gentleman agree that it would be very
simple to allow volunteer drivers to have an exemption or to make the
rate 60p a mile for them. There would not be any form-filling involved;
it would be a straightforward exemption. There would be no significant
loss of money to the Exchequer and it would be a simple and fair way to
help those drivers. I urge the Minister to take that point on
board.
Mr.
Browne: I am pleased that I gave the hon. Gentleman an
opportunity to make that additional point.
I am now in a
slightly weird position, in that I am indirectly seeking to answer for
the Minister, although she might find that reassuring. However, I am
not sure that it would be as simple to have an exemption as the hon.
Gentleman believes, because I suppose that there would have to be some
process for deciding whether the mileage was being claimed for
voluntary driving or for some other form of driving. My preference
would be to stick with the arrangement that I propose in new
clause 5.
Mr.
Todd: Perhaps the hon. Gentleman is encouraged by what may
have been a throwaway line by the Minister—that there may be a
simple way in which voluntary organisations might be able to
communicate any variance from the rate to HMRC and that negotiations
with the voluntary sector might yield a mechanism for doing that. I
must say that I am sympathetic with that point in the new clause,
although I am not generally sympathetic to the arguments about business
motoring and providing support for that. My focus is firmly on the
specific issue of volunteer drivers.
Mr.
Browne: I am genuinely grateful to the hon. Gentleman for
that point, because I think that it is well meant and I think that
there is a common view in the Committee that we want to do everything
that we can to encourage people to contribute their time in that way.
However, he also made the point earlier that a lot of very small
charities are not just put off by the administrative burden that they
face; they are also slightly frightened off by all the talk about HMRC.
We all know that, of all the officers in a voluntary group, it is
always hardest to find a treasurer, because people are worried about
what the implications may be for them, in particular whether they would
be legally held to account if there were any irregularities even if
they had had the best intentions.
My fear is
that, even if the rules appeared to HMRC to be fairly straightforward
and were regarded by a company as being straightforward, there would
still be a disincentive for voluntary organisations and individuals who
wished to volunteer their time to go down that path, because they would
fear that they would inadvertently fail to comply with the rules. On
that basis, I think that the system that I propose probably offers the
best way forward.
I urge the
hon. Member for South Derbyshire not to be completely dismissive of the
case for people who are acting in a business capacity. As I said
earlier, I am not just talking about people who make lots of journeys
up and down motorways at 70 mph. It is possible that some of those
people, especially if they have a car with low fuel consumption, might
find out that the costs of their
driving worked out at less than 40p a mile for their first 10,000 miles.
However, there are some people in different circumstances. The example
that I gave was of people in rural communities where there is no
alternative form of transport to the car. For example,
if someone in a rural community was performing some nursing-type role
and was required to use their own car to go from house to house to
visit people who needed a daily visit to help them to wash or change
their clothes, or for some other form of personal care, that person
might find, especially if they were travelling on rural roads or if
they had to carry equipment and therefore needed a slightly bigger car,
that the cost, in terms of the reimbursement at the rate of 40p a mile,
was not an accurate reflection of the cost that they had
incurred. When I talk about “business”, I do not want the
hon. Gentleman to assume that that I just mean well-paid people driving
very big cars down
motorways.
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