I will shortly turn to insurance premium tax, which is a very significant tax-raising measure that the Government have not been quite as keen to trumpet as other measures in the Bill. As I said at the beginning of my speech—I am not sure whether the hon. Gentleman was in the Chamber—it is significant that most of the very contentious changes in the Budget, particularly in respect of working tax credits, are not in the Bill but will be made in delegated legislation Committees. I dispute the Government’s characterisation of these measures, because I believe that they will leave working people worse off. That is not necessarily directly relevant to all aspects of the Bill, but it is relevant to the overall package of measures introduced in the Budget.
There is serious concern about the impact that the 8% surcharge will have on building societies. Of the six main building societies—Nationwide, Yorkshire, Coventry, Skipton, Leeds and Principality—only Nationwide currently pays the bank levy. Based on the most up-to-date profit figures from 2014-15, it is estimated that the building societies will pay about £126 million a year through the corporation tax surcharge, equating to about £630 million up to 2020. The building societies point out that the primary way in which they build their capital is through retained profit, so a tax on profit has a disproportionate effect on them. Moreover, they do not have shareholders, unlike public limited companies, so this is, in effect, a tax on the customers who own them—retail savers and mortgage borrowers. It will be important for the Government to explain their thinking on building societies and what analysis there is of how these changes will play out for them in practice.
The next key issue that we will return to in Committee relates to the climate change levy. Clause 45 removes the climate change levy exemption for renewable source electricity generated on or after 1 August 2015. I am afraid that this is another example of the Government undermining investor confidence in renewable energy. They have already tried to halt the development of the cheapest form of clean energy by pulling the plug on onshore wind, and this continues that trend. It would be fair to say that since taking office they have put placating their Back Benchers’ more strident views about renewable energy generation above the jobs and investment that would be created across our economy if we were genuinely able to move towards a low-carbon economy.
We will particularly seek to push the Government on a suggestion by the Chartered Institute of Taxation that they produce a road map, as they have done previously on aspects of taxation policy—in particular, corporation tax policy—setting out their plans for the future of environmental taxes to help the renewable energy industry, and business more generally, to take long-term investment decisions. That could be an important way for the Government to set out their intentions for the life of this Parliament and for us to test whether they mean it with regard to charting a course towards a low-carbon economy for our country.
Insurance premium tax, as I said in response to the hon. Member for Gloucester (Richard Graham), is a significant revenue-raising measure. Clause 43 increases
the standard rate of the tax from 6% to 9.5% with effect from 1 November 2015, raising £1.6 billion. There are very important questions about the distributional impact that that will have and whether those on middle and low incomes will bear the brunt of the increases. It is interesting that the Chancellor did not focus on the very significant revenue-raising measures in his Budget. Indeed, the rhetoric and narrative that he has been pursuing suggests that it is a Budget of giveaways. He will not be surprised that we will not let him get away with that characterisation.
Insurance premium tax has been described as a stealth tax. Ministers will be aware that several industry figures have warned that increasing it could prompt policyholders to buy less cover, possibly exacerbating problems caused by under-insurance, particularly with regard to car insurance. Again, we will wish to test those areas further in Committee when we will look carefully at any analysis by Government of the possible impact on under-insurance. The AA has said that insurance premium tax on the average car insurance policy is equivalent to a fuel duty increase of almost 2p per litre, so either way drivers are being hit in their pockets. I would be grateful if the Minister commented on the measure’s overall distributional income, what conversations the Government have already had with the insurance industry and what this means for future changes to fuel duty.
As I have said, we support other measures in the Bill, particularly the so-called tax lock both for income tax at the basic, higher and additional rates, and for VAT. I remind Treasury Ministers that, back in 2009, the current Chancellor was very critical about Chancellors passing laws to ensure that they fulfil the promises they make in general election campaigns, and I think that that criticism applies just as much to him now. However, we support the principle of the lock. We have pledged not to raise VAT, national insurance or the basic and higher rates of income tax, so we welcome those measures.