My Lords, let me say that this is an important provision in the Bill, which the Opposition support. We are glad to see that this important piece of legislation gives effect to certain promises that have been given on the overall issue of targeting tax avoidance.
In his previous answer, the noble Lord made it quite clear that there will be additional tribunal judges and so on, and I very much welcome that commitment because we all know the blockages that can occur in the work of tribunals. However, on the question of the staff in the new directorate, I was not too sure whether he was indicating that staff were being transferred from other parts of the department, because the department is so overladen with people with the expertise to get the work done that it is easy to effect such a transition, or whether further recruitment had been necessary. That point also applies to Clause 5, which deals with the important dimension of tax avoidance.
It is quite clear that the Government need to take further action to tackle the issue of false self-employment. In the past, many of the stories about that have issued from the construction industry, but it is quite clear that the vast growth in the number of self-employed applies far beyond the bounds of just the construction industry. It is clear that there have been occasions when self-employment levels have been very high in certain industries, but the construction industry stands out: the average is 14%, but in the construction industry
it is 40%. What is the incentive among so many of the people who contribute to that industry being identified and set up as self-employed? Partially, it is to do with the nature of the work, but the construction industry is not that unique in the work that it does. For the construction industry to have such a substantial number of self-employed raises the obvious anxiety that it is of advantage to intermediaries, when considering taking on labour, to act in a way in which they take on “self-employed” workers, who are not really self-employed because they are effectively under the direction of those who see that their work gets done. This is a very real problem.
We want to confirm that the Government have committed themselves to monitoring closely the impact of changes introduced by this Bill on the issue of false self-employment. Ministers are aware, as we are, of the degree of self-employment that exists, which has probably been increasing in significant numbers in recent years. Are the Government committed to bringing forward new measures to tackle any continued abuse in this area? We would like a timeframe for some kind of review on this issue. It is commendable that the Government express the correct sentiments, but the Government are to be truly applauded only when they have properly served the nation by having delivered. We are interested in the question of delivery.
Let me say that we have reasons for anxiety. In the 2012 Autumn Statement, the Chancellor forecast that the Swiss deal would raise £3.12 billion. The latest figures from the ONS put the revenue to date as £868 million, which is a shortfall of £2.25 billion. As all Members of the Committee will recognise, that is a shortfall of almost two-thirds. In July, HMRC’s director-general of business tax told the House of Commons Treasury Committee that the actual amount recovered is now expected to be “reduced substantially” to around £1.7 billion, which is a shortfall of £1.42 billion. Despite the fact that the Government set out with the best of intentions, that is the result of ineffectiveness.
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In October last year, HMRC published figures that showed that the tax gap—the difference between the amount of tax that should in theory be collected against what has actually been collected—had risen from £34 billion in 2010-11 to £35 billion in 2011-2012. The Government might regard a £1 billion increase as not terribly important, but we can all think of constructive ways in which £1 billion of extra revenue for the Treasury could be used for the public good. Again, that illustrates the difference between intention and achievement. In July this year, the National Audit Office found that HMRC’s performance targets for the amount of tax expected to be raised from 2010-11 onwards were set at £1.9 billion a year lower than they should have been. That is post evaluation of performance.
Surely these three illustrations—and there are others—must give the Minister cause for concern, and should certainly give the Committee cause for concern, when the intentions behind this legislation are stated and when we look at what the achievements have been in the recent past on other measures.