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Treasury Committee

Oral evidence: Tax Reliefs and The venture capital market, HC 723

Wednesday 14 June 2023

Ordered by the House of Commons to be published on 14 June 2023.

Watch the meeting

Members present: Harriett Baldwin (Chair); Rushanara Ali; Mr John Baron; Douglas Chapman; Dame Angela Eagle; Danny Kruger; Anne Marie Morris.

Questions 298-386

Witnesses

I: Andrew Griffith MP, Economic Secretary, HM Treasury, Victoria Atkins MP, Financial Secretary, HM Treasury, Helen Dickinson, Director Business and International Tax, HM Treasury, and Joanna Key, Director Growth and Infrastructure, HM Treasury.

 

Examination of witnesses

Witnesses: Andrew Griffith MP, Victoria Atkins MP, Helen Dickinson and Joanna Key.

Q298       Chair: Welcome to this afternoon’s Treasury Committee evidence session. We are going to cover two of our open inquiries: tax reliefs and venture capital. May I start by asking our witnesses to introduce themselves?

Victoria Atkins: I am Victoria Atkins. I am Financial Secretary to the Treasury. Out of an abundance of caution, I should declare that I used to prosecute tax frauds and other massive frauds for not just HMRC but the Financial Conduct Authority and other prosecuting agencies.

Andrew Griffith: I am Andrew Griffith MP. I am Economic Secretary to the Treasury.

Joanna Key: I am Joanna Key. I am director of growth and infrastructure at the Treasury.

Helen Dickinson: Hi, I am Helen Dickinson. I am director for business and indirect tax at the Treasury.

Q299       Chair: Welcome. We have a lot to cover this afternoon. We think there will be a vote, but probably not until after the session ends. Obviously, if there is, I will adjourn the session.

I want to start with you, if I may, Financial Secretary. The announcement about HMRC closing its self-assessment helpline has upset a lot of our constituents this week. As you will be aware, I wrote to you yesterday about that, and I think it will have crossed your desk for a decision. Is that correct? Can you talk us through your thinking?

Victoria Atkins: Yes, very much so. I very much understand the concerns about this. I want to be frank with the Committee: our customer service levels across HMRC have not been as they should be. I have been working with officials to find ways of surging our customer service teams to try to help with those peaks in demand that we see across the line. As the Committee will imagine, this quarter is quiet for the self-assessment line, so we are temporarily closing it and directing the 350 or so members of staff who would normally answer those phone calls on to other phone lines, which are seeing much higher levels of demand.

Q300       Chair: You say it is going to be quiet. It is going to be absolutely silent, isn’t it, because no one is going to have a chance to get through?

Victoria Atkins: But they will be able to ring other general helplines. A great many of these queries at this time of year are the sorts of queries that can be dealt with through online services, so we are trying to direct people to use those services more generally. If you are tech literate, you conduct most of your life online, and the move that we are all trying to make—not just us, but banks and other organisations—is about trying to move customers online where it is appropriate; we want to encourage people to do that.

Also, to help those customers who need to make phone calls and who have complicated questions they need to ask, we want to move those members of staff on to those other lines for this quarter. The helpline will reopen on 4 September, because we are then building up towards the self-assessment deadline the following January, and it will be open throughout that period.

We will be watching this very carefully. If it is helping with some of the customer service problems that we have, we will look to see if we can surge other people into the higher-activity areas at other times of the year when there are peaks and troughs. This is about trying to use our people as effectively as possible to help customers when they are trying to contact HMRC.

Q301       Chair: These people are often trying to give you money. Do you think you have given them enough notice that you are closing this? You basically just closed it.

Victoria Atkins: In terms of trying to give us money, analysis of these phone calls suggests that a great many of these people have sent a letter or an email and are then chasing it because they have not heard back from HMRC. Now, the proper challenge to me then is, “Well, hang on a minute, what are you doing about emails and correspondence?” This surging of activity—moving people across to other helplines—is also to try to free up staff to help with correspondence so that people do not feel the need to chase correspondence. This is a pilot, and we are going to see how it goes, but I am genuinely trying to find all manner of ways I can to improve those customer service levels, because I do understand the concerns that our constituents have.

Q302       Chair: You started by agreeing that customer service at HMRC is not at acceptable levels. Is that your polite way of saying what we would say, which is that it is a complete mess? We are hearing really bad feedback from our constituents.

Victoria Atkins: In all my ministerial roles, I have tried to handle things with non-defensive transparency, and that is what I am trying to achieve with this. I absolutely understand that people want to see better services—I really do—which is why we are trying this and looking at other ways in which we can try to improve things.

Q303       Chair: One of your first decisions in this job, as I understand it, was to pause Making Tax Digital. This week, the NAO published an excoriating report about that whole project. What has gone wrong there?

Victoria Atkins: As you say, I had to make the decision in very quick time on my appointment. We want this programme to work, and we want it to work well for customers. It is an enormous transformational project; millions and millions of people will move from conducting their self-assessment taxes on paper—usually through their agents, but none the less on paper. We are now saying, “Right, we want to move you to a digital way of doing this.”  When it happens—and it will happen—it will be much easier for people. It will, again, be part of how we are used to conducting the rest of our lives.

But, because I want to deliver it well, I had to take a very cold, hard look at where we are. I took the decision to delay mandation for the first tranche of people until 2026. The reason for that is we have to pilot this properly. We have to speak and listen, importantly, to stakeholders, software companies, accountants, agents and others to ensure that we are factoring in their expertise as we design this.

As I say, I have ensured that we do it in a measured way with different cohorts of people. I take the view that many of those who are earning £50,000 or above will be registered for VAT, so they will have already made that jump across to Making Tax Digital for their VAT affairs. It will be less of a change for them than, let’s say, somebody who is just starting out their business. They may have an income of £10,000, and they will have an awful lot to deal with on a day-to-day basis as well as looking at a brand new Government project. We are trying to do this in a paced way in terms of mandation. I hope we get to a place where people are volunteering to sign up to this ahead of 2026 because we have been able to pilot it and deliver it well. Hopefully people will think, “D’you know what? This is by far the easier way of doing this,” and choose to join it themselves.

Q304       Chair: Correct me if I am wrong, but the Chancellor made an announcement this week about an initiative across the whole of the public sector to improve productivity. Do you accept that until HMRC gets its house in order, it is going to be hard for the Treasury to be lecturing other Departments about improving public sector productivity?

Victoria Atkins: I think everybody in HMRC would acknowledge that first of all, HMRC has such a big role to play in Government productivity. Also, we are responsible for extraordinary parts of the state. If you think of the size of self-assessment itself, then add on things such as business taxes and the different tax reliefs—which I know we are going to talk about—HMRC is an integral part of the Government, so it must follow that we lead with productivity. Making Tax Digital will be a really important part of that, but believe you me, it is not the only transformational project that HMRC is going through at the moment.

What I want to do—we will come back to this principle—is deliver this well, which is why we have taken this staged approach. It is also why I am looking very carefully at those businesses—or people, I should say—earning up to £30,000. I listened not just to the concerns of agents, accountants and other professionals, but to colleagues. We are the first port of call—I hope—when a constituent needs help. I know from colleagues that there is concern about how these changes may affect the very lowest income bracket. That is why I have said, again, “Let’s have a look at this. Let’s see whether the system is as it should be, and what direction we should be taking in Making Tax Digital for that lowest income cohort.”

Q305       Chair: You mentioned tax reliefs. We have had evidence that there are 1,180 different tax reliefs in our tax code. We will be drilling into some of those throughout this session.

Victoria Atkins: May I just declare, Chair, that I have not memorised all 1,180?

Dame Angela Eagle: Shame!

Victoria Atkins: I hope the Committee will forgive me that I have not memorised all of them.

Q306       Chair: This is precisely my point. The Chancellor accepts that the tax code is just simply too complicated, and yet you have gone along with the decision taken by the previous Chancellor to abolish the Office of Tax Simplification. You will have seen that the Committee opposes that. How can you possibly sit here and say that you don’t think we need to simplify these tax reliefs quite extensively?

Victoria Atkins: If I may, I think those are two different issues. I will take on the OTS point first. The decision was taken to abolish it. The Chancellor initially after his appointment looked at that again, and we decided to stick with that decision. When I came into the Department, I could see that. If you have a very respected, eminent external body—an arm’s length body—that is responsible for assessing the Government’s needs in terms of simplification, I think there is a real risk that it is almost divested. People think, “Oh, the OTS will look at that.” What we have tried to do is to bring that right back into the heart of the Treasury.

I hope you will forgive me if you have heard me say this before, but one of the first things I said to my officials on my appointment was that I want every single tax policy judged by three criteria: making taxes fairer, making taxes simpler and making taxes supportive of growth. For every single proposal I receive, officials have to mark on those three criteria how they think this policy meets them.

As I have said to you before, there are times where, frankly, there is a tension between, say, making taxes fairer and making taxes simpler. As a former Treasury Minister, Dame Angela, you will know yourself that there is that tension there. That is not a tension that the eminent panel of the OTS could themselves make decisions on, because they were there simply to look at simplification. I, however, have to look at not just fairness and simplicity; I have to look at the overall economy, as does the Chancellor. There are many, many factors we have to take into account, which is why we believe that putting responsibility for simplicity back on Ministers’ shoulders is actually the right way to make policy. I hope we get the chance to give some—

Q307       Chair: But how are you going to keep us informed of that?

Victoria Atkins: If I may, I think we will get the chance to discuss some of the examples, albeit in the last few months, that we have been able to introduce. This, again—I have listened carefully to your speeches. I think it is a fair challenge from you and others in the House as to how you measure how we are achieving that. I have commissioned officials to work out some metrics as to how we do this. It is a very, very complicated process, but I hope at some stage in the next few months I will be coming back to you in the House with some suggestions as to how we can do that. Of course, do not forget that at every single fiscal event, if there is either a debate or a Finance Bill, the House can scrutinise those tax measures. I have no doubt that colleagues will be holding me to account at the Dispatch Box when it comes to simplification matters.

Q308       Chair: I briefly want to bring in the Economic Secretary on venture capital, specifically the tax reliefs for venture capital, and just to quickly ask about the tax system for venture capitalists. Are there changes that you are keen to make there?

Andrew Griffith: My overall scorecard is that the schemes we have—principally the EIS, VCT and SEIS—work well. They have spawned very significant amounts of capital that have gone particularly into early stage. They are primarily focused on high-risk, early-stage investments. We have seen those schemes evolve over time; some of them have been around longer than others. I think in aggregate, the EIS has mobilised £40 billion of investment into growth companies, so that is very supportive of the economy, but we have also taken the opportunity more recently with the SEIS to improve some of its parameters—so, the overall amount that can be invested and the amount of time you can continue to qualify in that early growth stage. I would be happy to give more detail—I do not want to take up too much of the Committee’s time—but on balance, I think we have some really good schemes that support venture capital. We can talk more later about some other reforms we are making.

Q309       Chair: I think it is really the sunset clauses where we have received a lot of evidence about the uncertainty that that is causing. I think the sooner that that could be clarified—

Andrew Griffith: I think we have given a very clear statement that the schemes will run until 2025.

Chair: Indeed.

Andrew Griffith: We can codify that in due course. It is the nature of Parliament that we do not bind our successors any more than we absolutely need to to give people that value certainty, but I think people can look at the longevity of those schemes now and see that there is a real commitment in Government. I am happy to reaffirm today my belief that these schemes work well for the British economy, and they work well for taxpayer fairness as well, because they are investing really at the risk capital end of the spectrum. I hope that helps.

Q310       Mr Baron: I want to follow up on what the Economic Secretary said. I get the message: you are very happy with the way the system works. The problem is that the industry needs a little bit more certainty, because often the timeframes for investment, particularly follow-up funding, can take years. The Chancellor said it was his firm intention to extend the sunset clauses of the EIS and the venture capital trust, but there is no sense of timeline in the Finance Bill. That is creating a little bit of uncertainty. There are noises from the industry, saying, “2025 may sound a long time away, but we need to plan going forward.” What additional certainty can you give? Why aren’t we hearing a little bit more about the timelines going forward?

Andrew Griffith: I think that is pretty good. I engage with the sector as well. They tell me that they are very pleased with that statement by the Chancellor—a clear statement of intent. I don’t know if the Financial Secretary has any comments on the Finance Bill specifically, but it is the nature of these schemes that they will run for a period of time. We have made modifications as well, and they have all been in a progressive direction that makes these schemes more workable. One person’s certainty—I understand that if you are making a runway of investments—is also another person’s rigidity, and we do keep these things closely under review, because they are finely attuned to the needs of what founders, entrepreneurs and investors are looking at.

Q311       Mr Baron: Okay, so you are going to extend it; you are just not going to tell us for how long yet.

Andrew Griffith: I don’t want, today, to go beyond what the Chancellor said. That was a very clear statement of intent by the Chancellor. Most of the people I have engaged with have taken that as the clear statement that it is. Obviously I will continue to work with my colleague the Financial Secretary as we seek to work out how best to codify that.

Q312       Mr Baron: Okay. Can I come back to something the Financial Secretary said? I very much welcome your three tests when it comes to new taxation. That is good to hear. The trouble is that you have inherited, because you are relatively new to the post, a tax code whose number of pages has doubled every 15 years, broadly speaking, regardless of the Government. I think you would accept that that is not good for economic growth and is not good for productivity, but I do not see anything yet from the Government that is actively going to try to put this right when it comes to simplification. What are you going to do about it? At the moment, we are not simplifying the tax system.

Victoria Atkins: Although simplification is important, it is not the only factor when it comes to encouraging growth and productivity. I don’t know if you have had the chance to see the Chancellor’s speech to the Centre for Policy Studies very recently; there is also, of course, what he said to the House during the Budget itself, as well as the Prime Minister’s commitment in his five priorities, one of which is to grow the economy. That is very much the direction that we as a Government are taking in trying to encourage growth.

I will give you an example of a tax relief that will already bear fruit when it comes to encouraging growth, which is the full expensing policy that the Chancellor announced at the Budget—

Q313       Mr Baron: Can I stop you there? I take that on board; I have seen what the Chancellor said, and I do know of the tax relief that you are going to mention, but the fact remains that a tax code that has nearly doubled every 15 years, roughly, if you measure it by the number of pages, is not good for growth and is not good for productivity. It is not the only component impeding growth, but it is a major one. Things are too complex. In addition, the Office of Tax Simplification has suggested that not all reliefs are achieving their original policy intention.

I suppose my question to you is twofold: what is the Government going to do to try to actively simplify the tax code, which is one of the more complex in the western world, and shouldn’t all tax reliefs be introduced with a measurable aim so that you can assess their effectiveness?

Victoria Atkins: Breaking that down, on growth and productivity there are very good examples—as you have acknowledged, full expensing is one of them—where a tax relief can help to encourage behaviour. In this instance, it encourages businesses to invest in the UK economy in order to improve productivity. Indeed, only this week PepsiCo has announced its largest investment in a very long time in the UK, and it attributes that decision to the full expensing policy. That is why the Chancellor has made it clear that it will last for three years. As soon as we assess it fiscally responsible to do so, we will make that permanent, because it has a real impact on investment.

Another example is a smaller company, Brompton Bikes. I went to visit them very recently. Because of the super deduction relief that the Prime Minister introduced when he was Chancellor, they have now got incredibly impressive-looking machinery, which is helping them to massively boost their productivity. So well-honed, well-targeted tax reliefs can help with things such as growth and productivity.

Q314       Mr Baron: Can I stop you there? We only have a certain amount of time. You have cited two additional tax reliefs that you are claiming are having an effect on increasing productivity and growth. That is to be welcomed, but it does not address the central point I am trying to get to, which is that if you measure it by the number of pages and codes, we still have too complex a tax system. I am not hearing anything positive back from you as to what you and the Government are actively doing to simplify that.

Let me give you one example. Why do the Government not look at making greater use of sunset clauses? That would ensure that whatever new taxes you bring in, they remain in focus. Hopefully, it would encourage a cost-benefit analysis as to their efficacy.

Victoria Atkins: This is where the way in which we measure simplification means that it takes us a bit of time to work through the metrics, as I indicated before to the Chair. While as a lawyer I very much believe in a well-written document and being able to get our message across as succinctly as possible, I am not sure that page numbers and lengths of tax codes are the best metric when it comes to what we are trying to achieve, which is growing the economy and increasing productivity.

We have a massive advantage over other developed economies in that we have fiscal events each year. That presents the Government of the day with the opportunity to look across the board at taxes, gaps, loopholes and, importantly, reliefs and to ask, “Are these reliefs working as we intended?” A very good example of that is entrepreneurs’ relief. A couple of years ago, it was reviewed and was found not to be having quite the impact that was intended, and therefore it was altered into the business asset disposal relief that we now know.

We have other examples. Social investment tax relief was not having the impact it was intended to have, so we allowed the sunset clause to take effect this year. The very fact of having fiscal events in itself forces us to look across the board at reliefs. But there are some very good examples of where reliefs do help: for example, you will have heard from HMRC colleagues about structural reliefs such as the personal allowance. That is an enormous simplification exercise, as well as being the right thing to do. It helps the lowest-paid.

Q315       Mr Baron: I have heard that, but time is running short and this is still not addressing the central question. A number of respected bodies and individuals believe that the complexity of our tax code and system is acting as a hindrance. It is almost a dead weight, as some people have described it. I am hearing all this good news about new tax reliefs achieving their aims, but I am not hearing much—and I hope HMRC and the Treasury are not in denial about this—about the fact that too much complexity actually clogs the system up.

I hope that I am not doing you a disservice by thinking that you might be in denial slightly. The tax system, code or however you want to measure it—it is not the only measure—has doubled every 15 years, roughly, in previous decades. I still have not had a concrete answer as to what you will do to try to go that extra mile to try to simplify it. The industry is crying out for that, despite all the good reliefs you are introducing at the moment.

Victoria Atkins: For example, at the spring Budget the Chancellor announced that we are consulting on the cash basis for the smallest of businesses. That is a massive simplification exercise for the smallest of businesses. We have also announced a huge increase of £1,000 to the employment allowance for NICs, because, again, we want to help the smallest of businesses employ more staff. In terms of simplifying the tax code, I very much want to do this, which is why I made it one of my three criteria. We are able to achieve that through the three criteria I have set, but also the fiscal events. That is the opportunity—

Q316       Mr Baron: One final question for both the Economic Secretary and the Financial Secretary: may I have your assessment of sunset clauses, please? You have not directly answered that in my line of questioning. Surely if we want to simplify the system, we should be attaching more sunset clauses to make sure that we do a cost-benefit analysis when the time comes. It gives an element of certainty to the industry as well. We have had claims from various people, including the committee of the OTS, that parts of the tax system can ossify. Why do the Treasury and the Government not make greater use of sunset clauses to make sure that things do not ossify?

Andrew Griffith: I will speak outwith HMRC. The point that you make is one that I fully support: we should be vigilant in bearing down on the tendency of the arteries to become clogged and for the corpus, whether of legislation or regulation, to increase over time. I suspect that that is just the nature of the beast and the nature of modern life.

One tool with which we can bear down on that is having sunset clauses to put time-delineated regimes in place, which then forces a moment of reappraisal. Another, which we are doing in the Financial Services and Markets Bill, is to put a duty on the regulatory body—the organisation itself. In this case, it is a duty to promote growth and international competitiveness. If you buy into the thesis that the nature of things is that they tend to grow hydra-like, that duty itself should challenge the organisation to look in upon itself and see whether it could do things in a simpler way, in a way that is more commercial, or in another way that reaches the same objective.

The third measure that we are applying—I know that you are interested in this domain, and the Committee has done a lot of good work scrutinising the Bill—is to beef up the role of cost-benefit analysis. We as legislators have a duty, whenever we present this House with legislation, to present robust impact assessments. They are very important tools. The Cabinet Office has done good work on the discipline around that. The same can be true of third-party regulators. I use this example because it is in my swim lane: in the case of financial services regulation, we are beefing up the role of cost-benefit analysis, improving the transparency, and making sure that those panels have practitioner voices on them who can articulate what it feels like sometimes to be at the sharp end rather than the designing end.

I have given you some examples there, Mr Baron, of what we are doing in a different domain, but one that I know you have a lot of deep expertise in.

Victoria Atkins: On sunsets, we look to use them where we can. Sometimes they are appropriate; sometimes they are not. We would not want to put a sunset clause, for example, on the VAT exemption on food. Obviously, it would frighten people were we to do so. The other part of this jigsaw is evaluation. It is exactly the point that you were coming to about how we make sure that the tax reliefs are working as they do. HMRC has conducted some 26 evaluations since 2011, including the first-time buyers evaluation. Many of those I get to see and say, “Yes, please. Let’s publish that. It is right that we do so.”

That, to my mind, is how we address some of the issues that you have rightly raised. I would also say that there are enormous opportunities following our exit from the EU. We have already seen, for example, the alcohol duty reforms—a massive simplification.

Q317       Chair: Unless you are a wine producer.

Victoria Atkins: Yes, but it gives that simplification.

Chair: I should declare an interest: I do not produce it, but I do consume it.

Victoria Atkins: And whisky producers, I know—but that is a simplification exercise. It is something that we can do, and it is something that I hope gives the Committee some confidence that we at the Treasury, working in partnership with HMRC, are taking this very seriously.

Q318       Danny Kruger: Victoria, I really appreciated what you said at the beginning about being non-defensive and transparent. You are being so, and I appreciate it. In that spirit, I would love to ask you all a question—maybe this is for officials as well—about the process of designing and introducing reliefs, and tax changes in general.

You mentioned the process for evaluation once they have been implemented. Something was raised by Kathryn Cearns from the Office of Tax Simplification before us. Her point was a good one. You were just talking about the value of the fiscal events as an opportunity for making a change. Actually, the way that works, of course, is that the Treasury design a whole bunch of changes in secret. They might selectively leak a few of them in advance, but basically it is all pulled out of a hat on the day. She suggests that that does not enable the process of consultation with the sector, and with the different bits of the economy that are going to be affected, about what might make it a good or bad relief or tax change. Do you think we could improve the process of design ahead of time to ensure better reliefs and better tax systems, but also better communication once they are announced, so that people know the opportunities that are there?

Victoria Atkins: That is a really interesting question. Of course, there will be some parts of policy making that we cannot share with other people ahead of Budget day, but in terms of the consultation element, a great deal of my life at the moment seems to be approving calls for evidence and consultations.

I don’t know if you saw this, but a few weeks after Budget day we had a tax admin and maintenance day. We had a whole load of consultations that we wanted to publicise, which came as a result of the Budget-forming process. But I said, “Let’s keep the Budget as a standalone event. These are important consultations, but they would inevitably get missed in the Budget, because they are much smaller issues than the childcare policy issue, for example, so let’s put them in TAM day.” We have done it a few times. The accountants, agents and others I have spoken to welcome it, because it is very tax-technical. Any of our constituents who are not involved professionally in tax will probably not have it marked in their diary, but for the professional sectors involved in tax admin and so on, it is a really big deal.

Following on from TAM day, we have L-day coming up later this summer ahead of recess, whereby we will publish the draft legislation that we are planning on producing over the next few months. With that, again, there will be many, many consultations and calls for evidence. People will have the chance to feed in, and we do genuinely listen to them.

Q319       Danny Kruger: That does seem to be once decisions have been made; you are then thinking about implementation and so on. Can I just ask the officials something? What is your sense, from the inside, of how the Treasury engages with interested parties—affected parties, potentially—through the introduction of tax reliefs? Does one of you want to take that?

Helen Dickinson: I am happy to take that. As the Minister set out, there are certain tax changes—particularly those that may impact on markets, for example—where we tend to announce them but then go through a process of consultation to ensure that we have understood all the impacts and think about exactly how we can look at the detail and refine that tax change. We will often go through a process of consultation on the more detailed objectives and function of the change in tax and then, as the Minister set out, also consult on the detailed legislation that we will use to bring it into effect. In the case of tax reliefs that interact with other areas of Government policy, my officials will be in touch with experts in relevant other Departments to ensure that what we are thinking about on tax reliefs fits alongside the wider Government policy that may be relevant.

Q320       Danny Kruger: Okay. I take that—thank you very much. I appreciate the difficulties of making policy in the open. I will now declare my interest: the reason for asking is that Rushanara and I chair the APPG on philanthropy and social investment. Victoria, you mentioned the social investment tax relief. The social investment sector—the charity sector or philanthropy sector—was knocking hard on all sorts of doors and windows of the Treasury ahead of the last Budget to try to ensure that that tax relief was extended. It wasn’t: as you mentioned, it was sunsetted.

It just feels to me that our general challenge, which you recognise, is that the complexity of the system is a huge inhibitor on productivity growth and so on. There are occasions when a tax relief is absolutely the right one in principle, but when the implementation is poor. To my mind, this is a classic example of that. The reason for needing SITR is that these are essentially sub-commercial investments. They do generate a return, but it often takes longer and there is a higher risk. It is a classic instance of where Government can be really useful, because the return on social investment is absolutely tremendous—there is the social value and the economic value as well.

We are talking about hundreds of millions of pounds-worth of value to the economy, let alone all the social upsides. But it was withdrawn because—I am sure you are familiar with this—the success of the scheme did not seem to merit the relief. It failed, as it were, because it was so badly communicated, there was so little proper engagement with the sector, and the rules and the guidance changed so often, and because we are talking about a nascent relief, which takes some years to bed in. I suppose I am challenging you generally on that decision and, in as constructive a spirit as I can, imploring you, if not to reconsider the policy decisions that have been made, then to keep an open mind about the opportunity to support social investment and philanthropy through the tax system in future.

Victoria Atkins: Very much so. I am thinking about the community investment tax relief as well, and I do not quite know whether that would address some of the issues you have raised. The wider point about communications and getting the message out there is a really fair one. Every Government Department has people who are very interested in what we have to say but, equally, in terms of trying to reach a population of 60 million, we do not always have the best vehicles for achieving that.

For example, albeit not on tax reliefs, last night I was delighted that Martin Lewis—who does such great work on ITV to get the message about managing your economics out to so many people—was able to talk about a really big decision that we had taken in Treasury and the Department for Work and Pensions very recently to extend the deadline for people to be able to fill the gaps in their national insurance payments, so that they can get a proper state pension when they retire. Mr Lewis can reach people that we probably cannot. There is a range of ways in which we need to communicate, but I very much take your point about the need for us to keep trying to ensure we get the message out there to people.

Q321       Danny Kruger: We are talking about professional advisers and investors—it is not totally retail—but even they are bamboozled by the complexity. They were confused about this relief—it looked a bit like the EIS. So I do think there needs to be a bit more ambition and deliberation if we are going to make some of these more complex reliefs a success.

Victoria Atkins: Can I give you an example of where we have tried to ensure that that happens? I know that the Committee has taken a great interest in research and development tax reliefs, and I very much understand why. I hope the Committee will have seen that we have just closed the consultation on the future of the two schemes and whether we should merge them. We have worked very closely across all sectors, but particularly those smaller businesses that are very R&D-intensive, to try and find ways to ensure these tax reliefs are targeted and reach the businesses that most need them.

Q322       Danny Kruger: I think Rushanara and I might write to you about the social investment tax relief again. I do not think we should close the door on that.

Finally, if I may, a more general question—this may be one for you, Andrew. Do you recognise that the UK has a problem with getting equity investment into our businesses—there is a bit of a predominance of debt finance—and that businesses struggle to raise equity? Do you recognise that as a problem, and what can the tax system do to address it?

Andrew Griffith: I recognise that there is always more that we can do. We have made some very successful interventions over the last couple of decades that particularly relate to the reliefs I talked about earlier—the seed stage of investment. There are more angel investors than ever before, mobilising more capital for founders and entrepreneurs, and that is absolutely right.

The big area focus for me and my Treasury colleagues at the moment is what they call scale-up capital. Depending on what you are trying to scale up, that could be anything from trying to raise £10 million in one go to even a couple of hundred million. It is not just that you have more difficulty raising that, but that not as much of that capital is coming from the UK. That has some other, longer-term and, we believe, deleterious consequences in terms of where decisions are made and where the next, subsequent rounds of capital are if we cannot mobilise capital from our markets. That is a very general answer to your question.

When you drill into it, sometimes that is about the availability of capital, but there are also other barriers—people’s own individual risk appetite and their knowledge of where to go. That can be more developed in some groups than others, so we see big schemes to try and work with, for example, female entrepreneurs and founders, and with those from some different communities. Although, again, great strides have been made, and there are lots of Government interventions to try and help pump-prime on this—I really think, first, that we should give them a chance to succeed but, secondly, that there is a lot of Government support now, in a way that there simply was not even two or three years ago—the evidence suggests that, nevertheless, there is probably an over-concentration, as in so many parts of our public realm, in London and the south-east. It is absolutely one of my objectives, as Economic Secretary, to spread the availability of capital across the whole of our great United Kingdom.

Q323       Danny Kruger: On equity capital in particular, do you recognise that there is a bit of an imbalance in the system? 

Andrew Griffith: I have been referring to equity capital in the sense of venture capital. In fairness, there are also a lot of people in my office who would talk to me about the availability of credit. In many cases, it depends on the sort of capital that you are seeking for your own particular enterprise.

Q324       Dame Angela Eagle: Economic Secretary, the answer you have just given would probably have been what I would have been briefed to say in exactly the same context when I was at the Treasury in 2000 and whenever it was—quite a while ago—so it does not seem to me that an awful lot of change has happened to those reliefs. What worried me when I was there was that, although we could look at the bulk of money that had been put into the situation, there was no real attempt to analyse or assess whether the companies that had been helped had actually survived or were still in existence, or how many jobs had been created, or to make any of those kinds of quantitative assessments. Have you made any advance in terms of quantitative assessments of these reliefs?

Andrew Griffith: First of all, thank you. I suppose there is virtue in consistency of briefing, although—

Dame Angela Eagle: But not if there is no progress. 

Andrew Griffith:  I can expand on this at length, but if we look, for example, at the number of regional investment funds and the new nations investment funds that the Government have come forward with, those, I believe, would be novel, since—

Q325       Dame Angela Eagle: Could I suggest outputs? What annoyed me when I was there, and I could not get a handle on this because it was not looked at, was outputs—not where the funds were and how much money was in the funds, but outputs in terms of new companies created that were still surviving five years later, employment opportunities created and all that. Have you made any progress in that area of analysis?

Andrew Griffith: I have not personally, partly because it is quite difficult—it would have been then, and it is now—to construct what the counterfactual is in terms of what is going on in the wider economy. In the absence of the reliefs or Government interventions—we have both of those—would many of those businesses have been able to attract capital themselves? Many of them say that that would not have been the case.

In almost every case, as you know, what the Government money is doing is leveraging in additional private capital. That gives us comfort that those projects are investable, and the market itself is pricing a lot of that risk, but it is quite endemically difficult. It is also the case that many of these schemes have replicas across many other western economies, so there is no sense of exceptionalism here—this is the sort of reliefs I was talking about. The Prime Minister held a summit for 30 of the biggest global investors in tech yesterday, and they talked about very similar reliefs that happen in other, similarly developed economies. I do not know if Joanna has anything to add.

Q326       Dame Angela Eagle: Financial Secretary, you have these criteria: fairer, simpler, supporting growth. Well, fairer and simpler, as you rightly pointed out, are often in direct opposition to each other and you sometimes have to make a choice. Supporting growth can actually be about mobilising some of the tax receipts you have managed to get in, rather than minimising the tax receipts you get in. Your criteria beg rather a lot of questions, don’t they? They are opposing each other. You could argue that, to support growth, you have to have a higher tax take to invest strategically in particular areas. On your side of the political spectrum, you would say you have to have as low a tax take as possible, so I wonder how meaningful, philosophically and practically, your criteria are, although it is good that you have got some.

Victoria Atkins: The very fact that I have imposed them and, what is more, that officials are using them, I hope, brings its own value. There is, of course, a tension often between the “fairer” and “simpler” measures, in particular. The example in the Finance Bill at the moment is that we have discussed in the Bill Committee the rise in corporation tax. Although it will still be the lowest corporation tax rate in the G7, none the less, we recognise that, for smaller businesses or businesses that have not quite reached their full profit potential, it is not right that they are hit with a 25% corporation tax on profits of, say, less than £50,000. That is why we have tapered it, which means that it is not simpler, but it is fairer.

Dame Angela Eagle: That makes it more complex.

Victoria Atkins: My third criterion would be very much met by that, because it supports growth, and we want those businesses to survive and to thrive.

Q327       Dame Angela Eagle: We will see. I think, at the moment, growth for the first three months was 0.1%, so let’s wait and see. But let me just come in with another question—

Victoria Atkins: But it is great news that all the international and domestic institutions that look at our growth are upgrading it. We are not complacent, but that is very much moving in the right direction.

Q328       Dame Angela Eagle: An upgrading to 0.1% is not a fantastic upgrade.

Victoria Atkins: And yet Germany and elsewhere are in recession. I guess what I am saying is that this is about context-setting. We are very clear that we have to stick not just to the Prime Minister’s three economic priorities but also to the plans that the Chancellor laid out in autumn statement and in Budget to try to achieve the growth that we all want to see. We know that our colleagues across the House—

Q329       Dame Angela Eagle: Let’s wait and see. Do you agree, Financial Secretary, that tax reliefs are vulnerable to abuse? For example, are you worried that the non-dom relief is vulnerable to abuse?

Victoria Atkins: I think it is a responsibility on every Government to look at how tax reliefs are being used and if they are being abused. In the last decade or so, the Conservative and coalition Governments have introduced some 200 measures to try to cut down on tax evasion and the loopholes that are exploited by many—

Q330       Dame Angela Eagle: So have you assessed whether the non-dom tax relief is vulnerable to abuse?

Victoria Atkins: In fact, the House is in the process of scrutinising that in this Finance Bill—an element of it—but it also did so previously, in 2017. We have a measure in this Finance Bill closing a loophole, which will bring in £830 million more into the Treasury.

Q331       Dame Angela Eagle: From the non-dom—

Victoria Atkins: From the loophole we are closing through the Finance Bill, yes.

Q332       Dame Angela Eagle: So there has been abuse in the non-dom area.

Victoria Atkins: No, we are trying to direct the scheme so that those people who come to our country to work for a year or two—these are highly skilled and highly paid people, and if somebody from silicon valley wants to come to London to help support our tech industry, we want to welcome them with open arms. They will still, of course, pay UK taxes on their UK earnings—we have some £7.9 billion in tax receipts from the non-domiciled taxpayer community in the last year that we are able to calculate this for. That is a huge amount of money that they are paying, let alone the money that they are paying on VAT, council tax and the other day-to-day taxes.

But, in terms of the status itself, of course we keep it under review. In 2017, you will recall, we very much tightened the rules about how long someone can live here and the rate of the remittance. We have also now closed this further loophole, or we are in the process of closing it. So we keep this under review. But, again, this is about supporting growth. We want highly skilled, highly paid people to come to the UK to work in our fantastic life sciences, tech and other businesses, rather than, for example, going to Paris or Berlin.

Q333       Dame Angela Eagle: Of course there is always a balance with these things, but you also have to ensure that they pay their fair share of taxes when they get here.

Victoria Atkins: And they do. They pay UK tax. They pay income tax, NICs and CGT on their UK earnings.

Q334       Dame Angela Eagle: They may be avoiding payments on very much larger levels of earnings than that.

Looking at R&D relief, there has been £1.1 billion in fraud and error over the last three years. We took evidence from Alex Dunnagan at TaxWatch, who said that the £1.1 billion was not caused by “profit shifting or the use of avoidance schemes” but by what he called “boundary pushing”— advisers and accountants suggesting that companies put in what they know are borderline claims. He gave some examples, like creating a new croissant and saying it was research and development, or a new cocktail on your menu. What have you done about that, because that’s boundary pushing rather than profit shifting?

Victoria Atkins: My favourite, most egregious example is the pub landlord who apparently claimed that he had discovered avocados. That sort of behaviour is not what—

Q335       Dame Angela Eagle: That might just be ignorance.

Victoria Atkins: That is an interesting point. If I may just develop this, I hope the Committee knows that we have very much accepted the NAO’s advice in this regard, because we clearly want to get that figure right down. We want the money to be focused on businesses that really are investing in the sort of R&D that we would all understand that term to mean. The NAO advised that we should take a very careful look at a group of cases. We have just finished that. We are reviewing the evidence, and that will be published in July as part of our annual accounts.

We are already taking some very practical measures in the Finance Bill to try to close some of those problems that we know are emerging, particularly in the SME scheme. For example, practical measures that—

Q336       Dame Angela Eagle: Well, this is it, isn’t it? SMEs—who’s against them? Research and development—who’s against that? It all sounds fantastic, but if you have a load of cynical so-called tax advisers—

Victoria Atkins: Agents.

Dame Angela Eagle: If you have agents who push these ideas, you can suffer a lot of fraud. Things could have been done with £1.1 billion. Are you cracking down on the agents and the people that risk these kinds of things? What kind of punishment can they expect for this kind of exploitation?

Victoria Atkins: Every single person who votes for the Finance Bill will be voting to support practical measures, including, for example, requiring sign-off of these applications by a senior officer in the company. Very often, there is no fault; indeed, they do not even know that this has happened—senior officers in the larger SMEs, which for these purposes are businesses that have up to 500 employees, so they are not that small and not that medium in normal circumstances—but someone has signed away, without really realising what has happened, assignment rights to these agents. We will stop that, so that it can no longer happen, and so that, again, companies have that reassurance that they are kept in control of their R&D—

Q337       Dame Angela Eagle: But if you are an agent going round suggesting boundary pushing, what kind of consequences might there be if you are discovered doing that with loads of clients, leading to boundary pushing that then loses the public money?

Victoria Atkins: It is a complex area of law, but HMRC has begun to find ways of cracking down on the sorts of agents you describe, not just in the field of R&D but further afield. HMRC has begun to, for example, publicise when stop notices have been produced against agents.

Also, as I say, there are the very practical measures we are taking in the Finance Bill. For example, all claims will have to be delivered digitally, because that way we will have a very clear evidential trail of what was claimed when. They will require far more detail in future, and companies will need to inform HMRC in advance that they plan to make a claim. What is more, the claims will need to include details of any agents who were assisting in making the claim.

Q338       Dame Angela Eagle: If you saw a pattern of bad agent behaviour in one instance, what could be done to deal with it? Is there a law that would allow that agent to be visited and put out of business, or warned or fined or anything?

Victoria Atkins: Yes. There are already, of course, criminal offences available. I am looking very carefully at whether the totality of criminal offences available will help to address some of those areas. It is very complex because sometimes an agent might be pushing the boundary, but, if they do not cross the line, it is not a criminal offence. That is why HMRC, in fairness to them, sometimes have to be more cautious than perhaps we and our constituents would like. Because we want to ensure that these bad actors are pushed out of the system, they have to be very careful about the basis on which they are acting.

Q339       Dame Angela Eagle: Of course. Finally, you recently wrote to the Committee about the consultation that looked at tax relief abuse by umbrella companies, among other issues. That follows on from a call for evidence that took place in November 2021. Why has it taken over 18 months for the Treasury to progress this issue?

Victoria Atkins: I don’t know the answer to that, in that I dealt with as quickly—

Q340       Dame Angela Eagle: Perhaps you can write to us.

Victoria Atkins: I will write to you with an explanation.

Q341       Rushanara Ali: Good to see you all. There are just a couple of things that I want to pick up. First, you have already heard the declaration: Danny and I are co-chairs of the APPG on philanthropy and social investment. As a point of information, we think, from the report that we published last year, that some minor changes could unlock between £6 billion and £7 billion for the social economy, so we would very much appreciate a follow-up conversation on some of those ideas. They are pretty straightforward, and the point about advice is key.

Minister Atkins, you mentioned the Office of Tax Simplification, which is a separate, independent institution with expertise and credibility—all the things that we find valuable—but you said that there is a risk that Ministers might not be engaged. From that logic, it follows that other agencies should be brought in-house as well, does it not? How does that figure? We have an OBR and other institutions that give us advice—do you want to bring them all in-house? As Ministers, you might palm off responsibility to them. They provide expertise that will be beneficial to the Chancellor and Ministers and will help you. Why is it that the one thing you guys have maintained from the Kwarteng-Truss Budget fiasco and announcements is this thing that will not help you and will make it harder for you to do your job?

Victoria Atkins: Of course, the Office for Budget Responsibility has a very, very important role, not in advising us but in holding Ministers to account—

Q342       Rushanara Ali: You don’t want accountability?

Victoria Atkins: It gives you parliamentarians independent scrutiny of our Budget.

Q343       Rushanara Ali: So remove it then.

Victoria Atkins: But the scorecarding process is really, really important.

Q344       Rushanara Ali: I am giving you an example of the argument that follows. The NCA and lots of other agencies do important work for Ministers, and given the work you have done, I don’t believe you are saying that Ministers are so irresponsible that they will just palm off responsibility to them. It just does not make sense. We have cross-party support, and we are going to put up a fight against this decision. We should hold on to it, because we actually think it is good for you, unless you are so fearful of accountability and transparency—not you personally. You inherited it, and you and your colleagues have decided, “You know what? That’s one of the few useful things that came out of the Kwasi-Truss Budget that we should hold on to.”

Victoria Atkins: Interestingly, on the example of the NCA, of course they are law enforcement. They have warranted powers, and no Minister could ever go anywhere near that.

Q345       Rushanara Ali: If I had known you were going to say that, I might have gone back and checked for an exact parallel institution that, following that logic, you should abolish.

Victoria Atkins: As a Conservative, I think we should always be looking at arm’s length bodies and asking ourselves whether they meet the criteria that we as taxpayers expect and what they deliver. I very much welcome the work across Government and via Back-Bench colleagues to look at regulations and those who regulate.

Q346       Rushanara Ali: With respect, it does smack of not wanting transparency and accountability, and not wanting to have that support. I have a number of questions, so let’s move on.

Victoria Atkins: Just on that point, the Treasury, of all Departments, has two fiscal events a year at least where we are open to scrutiny. That, I am sure, is how you will decide about our simplification.

Q347       Rushanara Ali: But the OBR was being undermined during that Budget. The announcement was made to abolish this institution in the context of not wanting accountability. I am not saying it was you and your colleagues—the new Chancellor and others. Obviously, we have seen a rowing back of the bonfire of institutions that give independent advice and so on. That is the context in which this decision was made, and it is concerning that you and your colleagues, including the Chancellor, have decided to maintain that decision. You are in power and it is your prerogative, but we don’t think this is helpful; we don’t think it benefits you and the country.

Let me turn to a related point, which is to do with evidence and expertise. We heard from the Public Accounts Committee last month that billions have been lost to fraud—£5.5 billion before the pandemic, and it went up to £21 billion. Then we heard earlier from the Chair about the challenges that HMRC is facing and what you are trying to do there. There does seem to be a real issue about the chipping away of resources and expertise that could actually be beneficial in making sure that fraud does not happen within the process of providing new forms of taxes and new reliefs and so on. Once again, it seems like it is not going to help to remove these sorts of institutions in order to bear down on fraud, for instance.

I just wondered if you had a view on it, or does it not matter? Do you feel it is a completely separate point and it is just down to HMRC and what it needs to do to deal with tax fraud? Given that the numbers are so high now, does the resource that has been provided by OTS have any use in that agenda?

Victoria Atkins: His Majesty’s Revenue and Customs and the forms it took before then have always been a giant target for criminal attack. When I used to prosecute for HMRC—or HMCE, as it was—a single case of VAT fraud that we were prosecuting risked altering the GDP of another country because of the way the fraud was committed. It was that enormous. That was long before I was a Government Minister or Member of Parliament, and indeed before the coalition Government. The King’s Revenue is always under attack, and we find ways of trying to guard against that and the many, many ways that fraudsters try to commit crimes. The most popular criminal offence if you are a criminal barrister is cheating the revenue; it is a common law offence, because we have understood over time the dangers there are of people being able to defraud the taxpayer and the revenue.

              In terms of the Office of Tax Simplification, in all my professional career, including long before the OTS was set up, I am not aware of the OTS playing a particular role in helping law enforcement catch criminals. It can of course help, and it has advised in the past. Just because this office will no longer exist after the Finance Bill has passed, the work of realising where matters can be simplified and where the system may come under criminal attack does not stop. I have teams of fraud investigators looking at that.

Q348       Rushanara Ali: Presumably it will be officials in the Treasury now having to do that?

Victoria Atkins: No, in terms of law enforcement we have teams of specialist law enforcement officers with warranty powers.

Q349       Rushanara Ali: Sure, but the work of the OTS will now have to be done by Treasury officials to support Ministers.

Victoria Atkins: Yes, and rightly so—they should think of it like that.

Q350       Rushanara Ali: And you have the capacity to do that?

Victoria Atkins: Yes, very much so. As I say, it is now part of our bread and butter.

Q351       Rushanara Ali: On the fraud side, during the pandemic we asked, “Do you need more resources, and will the response to the pandemic mean that you are redirecting resources so that you can’t bear down on other things like fraud?” We were assured by HMRC that that would not be the case. I am pretty sure—basing it on memory—that Ministers were reassuring us too, but the reality is that we are seeing a situation where tax fraud has gone up pretty dramatically. Chipping away at institutions can be unhelpful.

Victoria Atkins: I want to distinguish between law enforcement and advisory work. Sorry, but it is really important.

Q352       Rushanara Ali: I know you are a former lawyer—I appreciate that. I defer to you on that. The broader point is about capacity, expertise and advice that helps Ministers to do their jobs better—or properly. Ministers have a great deal on, and we have seen a huge amount of churn in the last year, sometimes happening in less than a week or two. That is why stability and continuity on a professional and official level is really important, as is having an independent agency. On tax monitoring, what ongoing monitoring of costs of tax reliefs do Ministers undertake at the moment?

Victoria Atkins: As I said, we have the evaluation exercises to ensure that they are having the effects we want. Helen will be able to give more detail on this, but we have costed 252 of the non-structural reliefs after the May 2023 release. We do not report on the cost of all reliefs as we do not necessarily have sufficient information. For example, if someone is taking advantage of the personal allowance, we will not necessarily know the details of that.

We very much try to collect the data we can collect, and that is not too burdensome to collect on taxpayers thus complicating their tax affairs. Our multi-year estimates are available for 105 of those non-structural reliefs, which covers around £195 billion of relief in 2021-22. That is up from £155 billion in 2018-19. We know that the biggest 34 reliefs cost over £500 million a year each.

Q353       Rushanara Ali: One final thing, the OTS said that there was not a single Minister who is responsible for tax reliefs—there are multiple Ministers responsible. Do you think one Minister should have overarching responsibility, or do you think it works at the moment?

Victoria Atkins: Of course, the Chancellor has overarching responsibility.

Q354       Rushanara Ali: He has a lot of responsibilities, such as fixing the economy after last year’s crashing of it.

Victoria Atkins: He has a lot of responsibilities. I have responsibility for the overwhelming majority of the reliefs. There are some that the Exchequer Secretary has responsibility for, including, for example, alcohol duty reliefs and EST. Between the three of us, all of the reliefs are covered. Ultimately, it is the Chancellor who has responsibility. In fairness, in his letter he made his commitment to simplification very clear, as well as his discussion of tax reliefs.

Q355       Anne-Marie Morris: Do you recognise that there are some tax reliefs that distort business activity and actually discourage it? I am sure that is not the intention, but do you recognise that as one of the things that is happening in the system?

Victoria Atkins: I have got to be mindful that we are not operating in a bubble here, and that there may be people listening to this outside. We look very carefully at reliefs and at taxes from which there is relief being sought. We look to discover where there are negative distortions. One could argue that persuading a multinational company to invest lots of money here in the UK is a distortion of the market, but it is one that you and I would very much welcome. In terms of the premise of negative distortions, we look at that as part of our policy review process throughout the financial year, but particularly with those two fiscal events.

Q356       Anne-Marie Morris: Do you do that with regard to historic tax reliefs as well as future ones?

Victoria Atkins: Yes.

Q357       Anne-Marie Morris: Okay, then let me ask you about the VAT threshold, which is always the one that comes up.

Victoria Atkins: The most complex of all complex laws in tax.

Q358       Anne-Marie Morris: Indeed. I think there is plenty of evidence, of which I am sure you are aware, that the ceiling—which seems pretty fixed—distorts activity and discourages business going over the level before the tax comes in. That is actually a lose-lose. What is the Government’s policy of reviewing those sorts of reliefs to see whether the benefit and the burden are disproportionate? I am conscious that when it was introduced way back when—not by you personally—the idea was to ensure that some businesses could trade before they hit the tax. However, we have now got to the situation, given where the threshold is, where it is not really doing that job.

Victoria Atkins: I very much accept that analysis in that, wherever we set the threshold, people will try to stay just under it if they do not want to be registered for tax. The reason I was searching through my files was that we conducted a consultation in 2018 on the design of the threshold, and how changes to it could better incentivise growth. I am told that there was no clear option for reform. I have it week in, week out, where some advocate for me to increase the threshold because they want fewer businesses to be accountable for VAT. There are others who go completely in the opposite direction and say, “No, no, lower it. Lower it right down to £20,000 or so”—I have heard—"because then everybody will have to register and there won’t be that distortion that you talk about”.

Again, as part of the ongoing discussion we have had this afternoon looking at either of those arguments, I have to assess the fairness but also the unintended consequences. If I look at raising it yet further, are we merely putting off that group of people who may be earning, I don’t know, £80,000 or that group of businesses earning £80,000? Are we increasing it by a few thousand pounds until they start to do the same? Equally, if we drop it down, the reality of that is all our constituents will pay more for the things they buy at the moment, because if everybody is charging 20% on their products, no matter how tiny or unprofitable the business is, that means an increase in the cost of living.

I am genuinely receptive to conversations about where that threshold is set, but the reasons why we have stayed where we are is that we believe on balance that £85k is about the right place. Of course, we also know that it is higher than any EU member state, so we hope that helps our smaller businesses that are perhaps looking to work in or export overseas to the EU. It is also the second highest in the OECD. I understand the discussion about this, but I hope I am showing you some of the things I have to include in my contemplations as to what we do with that threshold.

Q359       Anne Marie Morris: The last review of this, as you said, was in 2018 and we are now in 2023. Since then, quite a lot has changed given where we are with the cost of living crisis, the change in the economy, inflation and so on. Given that, is now the time to review this again?

Victoria Atkins: I will be honest: we do not have plans to do that at the moment. I would want to think very carefully about the message that might send to people who are nearing that barrier and who might think, “Gosh, if I hang on for six months or a year, perhaps it will go up and I won’t be eligible for it or have to register for it.”

Also, we know that even though the threshold is at £85k, a significant proportion of the businesses that are registered for VAT are doing so voluntarily. They are taking that decision. They have not reached that barrier yet, but they want to do so for whatever business reason. There is a delicate mixture here of different business models for sole traders and businesses. I would tread very cautiously in that world before making any big changes, even including a further consultation—I hope you will forgive me.

Q360       Anne Marie Morris: Perhaps you could clarify for the Committee, given this delicate balance, what criteria do you apply when looking at any new relief to consider whether, while initially it may look like a way of incentivising increased productivity and growth, it actually does the opposite for a sufficient number of businesses in certain circumstances? How do you go about that analysis?

Victoria Atkins: As you will appreciate, there are months of work before any fiscal event, and there will be many pairs of eyes that look over any policy proposal. Obviously, I can only speak about what I have experienced personally, but I have every reason to believe that others who have sat here will agree that one of the greatest challenges for any Minister, not just in the Treasury but elsewhere, is that fear of the unintended consequences. If we do something very well meaning with this, will it in fact have an impact over here that we were not intending? Hopefully, we will have foreseen it, but it is that concern as well.

Depending on the tax relief, obviously, the considerations for raising the personal allowance threshold are pretty different to the considerations of, for example, full expensing for giant, very profitable businesses, but we will always try to ensure that the way in which a policy is crafted will have the intended impact. We will want to know the pros and cons of that—again, a further criterion I apply to every policy proposal. It will have to be scorecarded as well, of course. That is the Treasury scorecarding it, and importantly the figure being overseen by the OBR, as an independent scrutineer of it. I cannot give you, “We go from step 1, to step 2, to step 3,” because for every policy, with different variables, it will alter.

I am conscious that I am sitting next to two very experienced Treasury officials, who will have seen not just the last spring Budget but many spring Budgets before that, so I do not know whether you can help with explaining the process a little better.

Helen Dickinson: In thinking about new tax reliefs, we will have almost a design checklist of questions that we want to ask ourselves, which includes what the policy objective is that we are seeking to achieve with the relief. We will want to look at how that fits within existing Government policy, and particularly at whether tax is the most appropriate lever to achieve that policy objective, given that we can, as Government, also sometimes use spending or regulation to achieve policy objectives.

We will want to look at potential unintended consequences. Something we always need to keep in mind is that, often, you hear from the people who would like the status quo to change, and there may be people who are actually getting a lot of benefit from how the tax system currently works. So one of the challenges that we have to ask ourselves is, “If we were to make this change with this relief, are there people who would lose from that rather than gaining?” We have to understand the implications of that.

We will want to work with our colleagues in HMRC to think, in particular, about, as the Minister said, the costing and analysis of it, but also what the potential compliance risks are, whether the definitions are clear, and how we could implement this within the current system. We will also want to think about how we would be able to monitor and evaluate this tax relief if we were to bring it in. We go through that checklist, in effect, and then it is generally a matter of judgment in weighing up the different factors, depending on the specific context at the time, and—

Q361       Chair: May we see this checklist?

Helen Dickinson: We would be very happy to write to you on that. Apologies, may I add a—

Chair: Yes. Sorry, I should not have interrupted, but I was just so eager to see your checklist. Anne Marie.

Q362       Anne Marie Morris: Given that the group of businesses most affected, which is going to be microbusinesses, is at the bottom end of the SME market, are they given particular scrutiny? Originally, there was a view that small businesses should be specifically looked at in the context of new tax reliefs to ensure that they, in particular, were not disproportionately burdened, because that is where the growth in the economy comes from. Where is the proofing for these very small, micro and small businesses?

Helen Dickinson: One of the things that we will want to look at is the distribution of the effects of any change in tax. That includes looking at the numbers of businesses that might be affected in different ways, so looking at, if we can—this may depend on the data that is available—how we would expect a measure to impact companies of different sizes. For example, in the main corporation tax regime I think 70% of our businesses pay the small business corporation tax rate of 19% rather than the main rate of 25%. That is the sort of thing that we would want to look at in designing reliefs.

Victoria Atkins: A really good example of that is the businesses rates relief package that was announced in the autumn statement—a £13.6 billion package. The help is for our smallest businesses—our retail, hospitality and leisure businesses, which have been particularly impacted in recent years—and the transitional relief is helping those businesses that perhaps have seen an uplift in their valuation. We want to make that movement to the higher rate as smooth as we can in the circumstances. The FSB and others are very good at making sure that the views of small businesses are heard loud and clear in the Treasury.

Q363       Anne Marie Morris: Financial Secretary, you could tempt me very easily to go into the business rates debate, which is much bigger than tax rates, but I will not, because the Chair will not be very happy if I do. I will just ask you one more question. Do you think that each time we have a fiscal event, or at least once a year, there should be a regular review of the cliff edges, which are now a permanent feature, it seems to me, of the tax system?

Victoria Atkins: Yes. Again, at the risk of repeating myself, with fiscal events, we genuinely look across the board at where thresholds and so on are set. We have had to make some very, very difficult decisions in the last two fiscal events, but the debate about cliff edges and tapering in fact encapsulates the discussion we are having about fairness and simplicity, I suppose.

Q364       Chair: There are distortions from cliff edges and thresholds, and there are distortions from these sunset clauses. I would just like to ask the Economic Secretary once again about the venture capital tax relief, because in your earlier answer you implied that the decision as to how long it got extended for was not one you were going to make quickly, because you did not want to bind future Parliaments. I take that as meaning there is not going to be any announcement before the next election, but you must have a personal opinion on how long you would like that relief to be extended for.

Andrew Griffith: I am not here in a personal capacity, Chair. I thought I was pretty clear with what I said, and I thought the Chancellor was as well. You are putting words in my mouth in terms of what we will not do, and I did not say that either. I simply observed that the current status is that it is a well-performing relief. It is something that I support, as Economic Secretary, with my role of making capital markets work well and ensuring that growing businesses have the access to capital that they need. As Economic Secretary, I am happy to advocate for the continuation of this relief, and that is the statement that the Chancellor has given. You are pushing me in terms of when we codify that, and I do not have anything to say to the Committee today beyond what the Chancellor previously said.

Q365       Chair: But what I am also hearing, and I am perhaps putting words in your mouth, is that you would like to see it extended for a longer period—let us say five years.

Andrew Griffith: I think it is a well-performing relief.

Chair: I will bring in Douglas now. Forgive me, but I have to excuse myself. Dame Angela has very kindly agreed to take the Chair for the rest of the meeting.

[Dame Angela Eagle took the Chair]

Q366       Douglas Chapman: Moving back to capital markets, I think our discussions so far have shown that the venture capital markets are very London and south-east-centric—we have had data from the Federation of Small Businesses, for example. I picked up an article from Beauhurst talking about mapping the UK’s venture capital funds, and we find that, of the 381 funds with known headquarters, 302 were in London. That is 79%. All the regions in the UK were represented by at least one fund based in each region. Given the disparity in connectivity with funding, would the Treasury accept that this is a problem in terms of economic growth, prosperity and productivity?

Andrew Griffith: It is certainly a challenge that we seek to overcome. I think there is good progress being made. There are a lot of specific interventions. If you bucket it in two senses, there are the various different ways in which we make specific interventions—normally grant or match funding. We have got individual, location-based funds, and we have now set out, more recently, the nation-based funds. These are specifically designed to take the problem statement that you outlined and to try to address that through positive action—ringfenced money directed at specific areas. Most of those are quite new—they are not mature. I am convinced they will do the job of levelling up, but they have not yet had their full potential.

Joanna Key: Perhaps I could just add that there are three funds that have been around for a couple of years now: the Northern Powerhouse Investment Fund, the Midlands Engine Investment Fund and the Cornwall & Isles of Scilly Investment Fund. The evaluation we have so far is that they are performing very well, particularly the northern powerhouse one. At spring Budget ’21, I think it was, or spending review ’21, we announced an extra £1.6 billion. That included funding for Scotland, Wales and Northern Ireland, and extra funding for northern powerhouse.

Q367       Douglas Chapman: How much was that?

Joanna Key: It was £1.6 billion, I believe.                                          

Q368       Douglas Chapman: In terms of the actual funding that is available in completed transactions, I think we are looking at the north-west as being one of the most successful areas outside London. Scotland is probably the next along the line. But when it comes to Cumbria and the Minister’s own constituency, only 2% of the companies are based there, and it is that level of confidence to seek the funding that really is at the heart of this problem. If the Government are serious about levelling up, which I believe they are, more needs to be done and we need better answers from Treasury Ministers. It is not really making the impact that you say it is, and it is not making it fast enough. That is what we are getting back from industry as well. I have a quote here that says the Government’s attitude to levelling up is insufficient and is not cutting the mustard in terms of making the change we need across the whole UK if we really want to be a successful economy.

Andrew Griffith: I could push back—we can exchange polemics. The reality is that the northern powerhouse fund has directly invested £360 million in 1,085 SMEs. That is tangible data. That is a significant skewing in terms of where the Government is disporting money.

Q369       Douglas Chapman: We are talking about a few hundred million. The total market is £28 billion, so it is really quite small beer in terms of what we need to do for significant change.

Andrew Griffith: With respect, we must compare apples and oranges. That is the amount the state itself—your hard-pressed taxpayers’ money—is deploying. You are using a denominator that includes all of the private capital. That £360 million in that one area alone—the Northern Powerhouse Investment Fund—will be significantly augmented by private capital.

There is more to do. That is why, based on the success of the northern powerhouse, the midlands engine and the Cornwall & Isles of Scilly funds, we have now come forward with nations funds for Scotland, Wales and Northern Ireland. [Interruption.] Did I mention Scotland? I did—I would get into terrible trouble if I forgot one.

You can always have a debate about the exact quantum of those. For the most part, the interaction that I have had is that they are getting the right balance between the funding available—publicly supported, Treasury-supported funding—and the scale of the opportunities. It is a multivariate challenge because, in many cases, it is about the opportunities. It might be about the skills and the capabilities of the local financing market.

Q370       Douglas Chapman: I realise you maybe do not like quotes from elsewhere, but Barry Downes is a co-founder of Sure Valley Ventures. If we can just move the debate on a little, he has said that we often see that the research and development that happens in UK universities does not always transfer into ideas that are invented here and through to economic value and, for people locally, that is not captured in the local economy. From the Treasury’s perspective, how do we look at capturing more of these spin-outs from universities, which would help drive the economic development that we need? In my own constituency, we have recently become a city—we were awarded city status. Within 40 minutes of that city are seven universities, including Edinburgh, St Andrews, Dundee and so on. How do we maximise the investment that should be going into cities and universities, but outwith that London-Cambridge-Oxford triangle, so that we get more value for every taxpayer’s pound that you are obviously concerned about?

Andrew Griffith: In that respect, I wholly agree. It is our objective—the Chancellor’s objective—to take what works well not just in what they currently call the golden triangle, but in so many other markets, to exploit the fabulous IP that we are creating, to fund much better all the way along the curve of innovation and, ultimately, to make sure that, at every stage of its life, a business that starts and grows and wants to run itself here can have access to the capital.

In that respect, you will no doubt be aware of the Chancellor’s review of university spin-outside that is being conducted by two experts: Irene Tracey from Oxford University and Andrew Williamson of Cambridge Innovation Capital. I know that they are talking to some of the best practitioners in this space around the world, with a view to applying that across the whole of the university sector in the UK. That is not only to do with the capital availability; it is as much to do with the different processes and the capabilities on both sides to make those opportunities work. If you are not aware of that review, I am happy to write to the Committee. It is even going to conclude quite soon; it is well advanced.

Douglas Chapman: That sounds like good news.

Andrew Griffith: It is.

Q371       Douglas Chapman: Well, we don’t know yet—it has not been published.

The other issue is the British Business Bank. We have talked about venture capital funding, university spin-outs and so on, but the British Business Bank also has a significant role to play. Is the Treasury thinking about advancing its responsibilities and the level of funding it can provide? How would you do that, and not just across the regions and countries within the UK? Some evidence we have taken is about sectors in our communities that are not well supported by funding and that are often ignored or left out—some ethnic minorities and so on. How do we get that funding targeted a lot more effectively, so that we can take full advantage of people who have fantastic business ideas but who, for one reason or another, are just not in the space where they can access the funding they need to start up, scale up or take things further?

Andrew Griffith: That is absolutely right. The British Business Bank has an abundant set of programmes. As you will know, it primarily started life targeting, and ensuring that there was good access to credit for, the SME sector. It subsequently evolved into other investment schemes like Future Fund: Breakthrough, but it also has long-term patient capital that came out of the work that has been done on productive capital and patient capital. We have recently extended the life of British Patient Capital. I think that will put another £3 billion—because we are allowing them to recycle that capital—at their disposal.

The point you make is well understood. We want to foster opportunity and make sure it connects with the right funding it needs, wherever it is. The British Business Bank does have schemes to particularly target female entrepreneurs and founders, and those from ethnic communities.

Q372       Douglas Chapman: The evidence that we have already taken shows that it does not do the job that it was meant to do in that respect. More progress needs to be made faster and to a greater depth to allow that transition to take place. That is where we are with that.

Andrew Griffith: There is more we can do, and if that is the evidence you have received, clearly we should seek to go back to the British Business Bank and task them to achieve that. The data doesn’t lie. If there is a gap, and the gap is access to funding, as opposed to some of the other challenges we see in a very varied world, it can be about the confidence of some of those communities—the lack of mentors and mentorship, or of people who have similar backgrounds having made that success. Joanna, do you want to add anything?

Joanna Key: I completely agree. We have not yet mentioned the regional angels scheme, which the British Business Bank also runs—a £100 million scheme based in all 12 regions of the UK. It is designed to address exactly the problem that you identified. It is about not just handing over money or debt, but trying to create the ecosystem you alluded to, with the support for entrepreneurs to thrive and grow.

Q373       Douglas Chapman: I have a final question, since we have Joanna here, and your responsibilities include infrastructure. I was previously on the Public Accounts Committee, and we looked in some depth at the Crossrail project, which was £18 billion of spend, £4 billion over budget and four years late. Nevertheless, that kind of Government investment is vital if we want to make the levelling-up agenda real. Again, when did other parts of the country—I am thinking about Wales, Scotland, Northern Ireland and the north of England—ever get access to an £18 billion fund for a transport infrastructure project that was sanctioned by the Treasury?

Joanna Key: I would say that the integrated rail plan does precisely that. In fact, it provides more than £18 billion-worth of funding to the north and the midlands for rail infrastructure.

Q374       Douglas Chapman: What about Wales, Scotland or Northern Ireland?

Joanna Key: Transport is devolved in Scotland, as I am sure you know.

Q375       Douglas Chapman: You are from the Treasury; you know that any capital budget comes through the Treasury. If Scottish Ministers turn up at your door and say, “Well, we’d like a Crossrail equivalent,” what will the Treasury say to that?

Joanna Key: For every bit of infrastructure spending that comes out the Treasury that is for England, the Barnett formula means that the equivalent amount goes to Scotland. I guess that is the way Scotland gets its fair share, if you like.

Q376       Douglas Chapman: It might be a fair share, but we could not take on a significant project of that scale with a Barnett formula arrangement, unless it was outside the scheme. Wales and Northern Ireland could not do that either, although the need might be there. There is no way of actually discerning what that process might be. I know you have been at the Treasury for a long time, but I would say that Scotland, Wales and Northern Ireland have not had a transport infrastructure programme on that scale—in living memory, almost. In terms of levelling up, if that is what you really want to do as a Government, you have to try to nail that particular problem.

Joanna Key: One thing I want to add is that Crossrail was also partly funded by London taxpayers and the city, but I absolutely take your point.

Douglas Chapman: Again, looking at a previous Prime Minister, no sooner was the ribbon cut on the Elizabeth line than he was announcing Crossrail 2. It seems an easy process within the Treasury to say, “Yeah, we can go from Crossrail 1 to Crossrail 2.” I don’t know what the overspend would be on Crossrail 2 or what the core budget for that might be, but it seems like a very easy process for a Government that have no devolved responsibility. They can just make up their minds to spend cash right, left and centre if they so choose, and yet other areas of the UK need to go cap in hand to the Treasury to try to make things work, and to try to build an economy that we want as much as you do in terms of productivity, prosperity and success. I will leave it there, because I don’t think I am going to get any answers from any of the four.

Q377       Chair: Economic Secretary, the Committee has heard evidence from the British Business Bank that, for every pound of equity investment in the UK, all-female founder teams received 2p. That is surely an unacceptable ratio for an industry in which public sector support is provided by tax reliefs. What are you going to do about it?

Andrew Griffith: First of all, all-female founder teams are the exception, just as all-male teams are. The majority of businesses, just as the majority of people in this House, form teams that consist of more than one sex. We are dealing with quite small sample sizes.

As I said before, they have specific programmes designed to promote their particular forms of funding—outreach programmes. The Treasury itself has a very significant and well-developed Women in Finance programme. It is not as simple—if it were, I think, with all respect, that we would solve this problem more directly—as looking only at the lens of access to capital itself. A lot of it will go to things like the mix of business. If the majority of capital in recent years has gone to businesses of a tech or a fintech nature, and it is likely that, upstream of those, one has to have an educational background in STEM, then the real cause that we should be looking at is to get people of any sex into STEM courses so that they can then, downstream, exploit the opportunities offered by technology. That is just one example.

The point I would make is that it is a multivariate challenge. I do not think there are any particular solutions, but I am aware that the British Business Bank and other providers of finance do have significant programmes to reach out to founders from female backgrounds—all-female teams—and also those in the BAME community.

Q378       Chair: Let us think about this a bit more. Should the Treasury change the rules of venture capital tax reliefs to require open reporting about who is receiving funding, so that they could be eligible for the reliefs? Might that also involve more transparency about the gender mix of those companies, and also obviously the owners? That would be transparency, and then—

Andrew Griffith: Clearly, the fact that you and I both have data about the gender mix of people receiving finance suggests that that data is collected—I know not by whom, but clearly the fact that we are talking about some data points means that it is being collected somewhere.

Q379       Chair: For every pound of equity investment, 2p goes to all-female founders. Your response to that, if I could sum it up, Economic Secretary, was to say, “Oh well, there are women everywhere else.” Given that this is a tax relief that British taxpayers are paying for and that 52% of the people in this country are women, we might require a bit more transparency about who is receiving the money and the gender mix in those companies because, let’s face it, we know that, in a lot of these areas, there are more men than women, and we cannot keep track of how the money is being used unless there is more transparency on gender disparities. Are you resistant to that data being collected?

Andrew Griffith: I am not resistant; I just don’t know enough, in truth. The fact is that we do have data on this, because we are both citing from individual reports. I do not believe that those reports specifically talk about tax relief, Dame Angela; I think those reports are talking about the overall magnitude of venture capital investment in the sector. That suggests that it is not just the small subset of tax relief; it is the much broader pattern of institutional and private capital, and there is always a balance to be struck. I would like us to do more. I would like to work with the industry—

Q380       Chair: But you do not think that transparency and publishing those figures, or requiring venture capital companies to publish those figures, might be a good start to establish where we are and then perhaps set targets for making it better in the future?

Victoria Atkins: Would you mind if take this? I declare my previous interest as Minister for Women, when I looked at including not just female participation in business and wealth creation but gender pay gap regulations and so on. The Committee may recall that a few years ago Alison Rose conducted a really in-depth review into the barriers women face when trying to set up businesses but also, importantly, seek investment to scale up businesses. That was definitely one of the largest barriers we face. From that review, the Investing in Women code was founded, which I understand the British Business Bank has signed up to, as has British Patient Capital, which is the largest domestic investor in the VC market. We know it is getting better. Is it getting better as quickly as we would like? No.

Q381       Chair: But if we had transparency about where the money was going, we could actually have an up-front conversation and be able to look at how this is going, rather than saying we are not quite sure where it is at.

Victoria Atkins: I very much believe in transparency, as I hope I have made clear in this. The one caveat that springs immediately to mind, given how small this market is, is business confidentiality. I do not know whether that is a factor that we need to take into account. If you have a very small group of people who are seeking investment under these schemes, they could potentially be identified if data was issued. You will know, for example, that when we have parliamentary questions and so on, sometimes we have to be a little careful about numbers if they are fewer than 10 or whatever. That is just my instinctive reaction. I do not know whether Helen—

Q382       Chair: Do you think it might be that low?

Victoria Atkins: I don’t know. Just to correct, I am not suggesting it is that low. I am just saying I wonder if that is a factor. I don’t know the—

Q383       Chair: Let me go back to the Economic Secretary, whose area of responsibility this is. There is a similar issue for black entrepreneurs. There is a complete lack of diversity. We all know this, even if we have not seen published figures. We know there is a huge lack of diversity for
BAME people, and also for women, in this area. Why can’t we be more proactive about doing something about it? The British Business Bank told this Committee that they have the ability to create female-targeted funds—they could even create a BAME-targeted fund—but they don’t have a “dedicated pool of capital” for it. Would the Treasury support the creation and funding of a large-scale female entrepreneur scheme to try to put this right?

Andrew Griffith: What I want to do is to address the underlying causes. I do not want to segregate individual funds, based on people’s race, background, sex or gender preference. We can spend a lot of time abstracting that with different forms of data; what I actually want to do is to address the barriers, and those barriers may be mentorship, they may be confidence, they may be business mix, they may go to people’s educational background. Those are the things, Dame Angela, that I would rather focus on.

It is a problem, and we have seen the data. We have all seen the same report, and your Committee has taken evidence. We can spend a lot of time just going down a wormhole of seeking to impose different reporting requirements, or we could spend the same amount of time to create outreach, create role models, build on the good work that Alison Rose did with the Rose review of female entrepreneurship, and gradually, in a hard-working, sleeves-rolled-up way, actually try and address some of the problems. It speaks to regions. It speaks to race. It speaks to sex.

Q384       Chair: I suspect you could do a bit of both. I don’t see them as either/or responses to the issue.

Andrew Griffith: I will certainly look at what—

Chair: You seem very resistant to doing anything about—

Andrew Griffith: That is a travesty of what I have said. What I said is that what I want to do is actually focus our time on the root causes, not on going down a wormhole of data.

Chair: I understand that.

Andrew Griffith: What I am absolutely happy to do—because I think this is a much bigger issue—is to take away and look at what enhanced reporting is practical, sensible and commercial for the British Business Bank, as it spends hard-earned taxpayers’ money in a responsible way. I am absolutely happy to go away and look at what we can do.

Chair: These are also public funds.

Andrew Griffith: I said I will take that away and look at what we can do. I am very happy to write to the Committee.

But there is a bigger issue. The amount of capital provided by the British Business Bank is relatively small, and I think we are talking about a problem that goes across regions, across sex, across race and across the broader issue about how people get access to capital. That is where I would rather be focusing our efforts—not on trying to come up with more devious ways of reporting the problem, but on actually trying to solve the problem.

Q385       Chair: I don’t think I was talking about devious ways of reporting; I think I was talking about transparency, so I would check the dictionary on that one.

The final question I want to ask in and around this area is about the Odey Asset Management issue that is going on. Do you think that that kind of thing going on in financial services encourages or discourages women from getting involved in financial services? Do you think the Government should be doing more, and particularly that the regulators should be doing more, to drive this kind of behaviour out of the sector?

Andrew Griffith: With your own formidable knowledge in this space and your understanding of the federated and operationally independent nature of financial regulations, and, as I understand it, with an investigation continuing, I will not be commenting further to this Committee on an individual matter—as I am sure you would not have done in my position.

Q386       Chair: Perhaps you could say something more generally about the impression of the industry that this kind of impunity gives and how that affects women who might be considering going into the financial services sector. I would have expected you to say something about that, even if you did not want to comment on Odey Asset Management and the scandal around it, so I am going to give you a chance to say something in general about this.

Andrew Griffith: I want a financial services sector that is open to everybody, whatever their background, that is a tolerant and respectful place to work, and that encourages the best and brightest of every generation to come and put their skills to work for the good of the UK in a really important industry that makes up about 11% of our entire GDP. We cannot achieve our goal to grow the growth and prosperity of our nation without that.

Chair: Right. That is much better. Thank you very much, both of you.

Andrew Griffith: Thank you for giving me the chance, deputy Chair, to—

Chair: I was rather hoping you would get their straightaway, but better late than never.

I would like to take this opportunity to thank both of you on behalf of the Committee for the time you have spent giving us evidence so that we can complete these two extremely important reports. With that, I conclude the Committee’s evidence session.