James Wild MP: speeches

Speeches

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  I will not detain the Committee long on these clauses. We support clause 274 and the sensible modernisation work, which—the Minister must have overlooked this, but I am sure he will acknowledge it in his reasonable way—began under the previous Government—

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  One of the points that the Chartered Institute of Taxation also raised is the difficulty of dealing with promoters who are based outside the UK. It says that 20 to 30 of the active promoters who sell mass-marketed tax avoidance schemes have some offshore presence. How will the measures address the offshore issue? I am sure that the Minister will also address the 30-day point that my hon. Friend the Member for Wyre Forest raised.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  Clause 165, which deals with the preliminary notice, allows a 30-day period in which to make representations to HMRC. Does my hon. Friend have sympathy with the view put forward by the Chartered Institute of Taxation, which says that that period is inadequate? A 90-day period is used for similar notices, such as follower notices or accelerated payment notices.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  Clauses 263 to 271, which introduce the new system of advance tax clearance, will give legislative effect to the commitment in the Government’s corporate tax road map to offer greater certainty for major investment. A public consultation was run last year; the summary of responses, which came out at the Budget, shows consistent support for this measure. We welcome it and look forward to it beginning in July 2026. Under clause 263, HMRC will be able to issue binding advance tax clearances for investments worth more than £1 billion over their lifetime. Although corporation tax is the most important area in which respondents argued for certainty, it could also cover VAT, stamp duty, land tax, income tax and other measures. In simple terms, a company planning a project on that scale can get specified advice on how the tax rules will apply and can get a written determination that both sides need to follow, subject to the caveats to which the Minister referred, including the change of law. Will the Government be keeping the £1 billion pound threshold under review? Will they commit to publishing clear statistics on the number of applications and approvals? Clause 264 sets out the binding nature of the clearances. Where HMRC issues a ruling and the facts remain consistent, it must apply that treatment so that the taxpayer can rely on it. That is what we need to see and what investors want to see: certainty. HMRC will be bound to maintain the treatment for five years, as the Minister referred to, and clause 265 will allow the period to be extended for a further five years. I cannot see a limit on the number of extensions that could be granted. Given that the purpose is to incentivise people to get on with investments and have certainty in advance of a project, will the Minister explain how multiple extensions could be appropriate, when that could appear to frustrate the ambition to get shovels in the ground? Clause 266 will allow HMRC to modify or revoke clearance if facts change or by agreement with the taxpayer. Flexibility is sensible, because clearly projects evolve. Will HMRC publish clear criteria setting out when, and on what grounds, it may modify a clearance? Will there be a right of appeal for developers who have previously been given certainty only for the advice to be changed? We do not want to undermine the certainty that is the whole purpose of this measure. Clause 268 provides that where the taxpayer withholds or misrepresents material facts, any clearance can be treated as invalid. That is clearly right in principle, but will there be guidance so that legitimate applicants are not deterred for fear of being second-guessed after the fact? Clause 270 will enable the Treasury to make regulations to amend part of the framework, including adding or removing tax matters on which HMRC can give clearances. It is important that there be consistency of approach, so will the Minister give a commitment that there will be proper consultation before any such changes are put into effect? These clauses represent useful steps towards greater tax certainty for investors, but I seek a little reassurance, particularly on the five-year extensions.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  Not that one—the stamp duty one. Extending the oversight in clause 275 is clearly sensible, and I do not have anything to add on the cleaning-up operation in clause 277, the enabling of abbreviations in clause 278 or the title of the Bill.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  I beg to move, That the clause be read a Second time.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  I beg to move, That the clause be read a Second time. The new clause would require the Chancellor to publish an assessment of how the measures in the Bill affect the finances of households across different income levels. It would shine a light on the real impact on ordinary families of the Government’s choices. As we all know, households are under immense financial pressure, and the measures in the Bill will, in many respects, not make that easier. The Office for Budget Responsibility has confirmed that growth in real household disposable income per person is set to fall dramatically, from 3% in 2025 to just 0.25% a year over the forecast period. That is not just below the OBR’s March forecast, but well below the average growth of the last decade, as the Minister knows full well. The OBR has been up front about the reasons for that growth, if we can call it that: it says that slower real wage growth and rising taxes explain much of the decline. For a Budget that was supposed to focus on the cost of living, that is a pretty damning verdict. Even the Government’s own watchdog says that the Government’s measures will make things worse, not better. With inflation continuing to stay well above target and well above the level that this Government inherited, families are continuing to feel the price of this economic mismanagement, and they will do for some time. Whether through higher alcohol duty, air passenger duty or vehicle excise duty, or by making the cost of taxis more expensive, the measures in the Bill will directly hit households, and the costs that go on to business will obviously feed through into their prices as well. Behind all that, soaring borrowing means that billions of pounds are now being spent just to service the Chancellor’s debt. Hard-working families are paying the price for the failure to get a grip and to get growth into the economy. That is why we believe that the impact of these measures on households should be monitored carefully, and why the Chancellor should publish a full assessment, as new clause 34 would require.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  I beg to move amendment 50, in clause 259, page 236, line 4, at end insert— “(1A) After paragraph 5(8) insert— ‘(8A) A person is not liable to a penalty point as a result of the late filing of a return under this Schedule if they had no tax liability due in the relevant period. (8B) For the purpose of this section, “no tax liability due” has the meaning that the total amount of tax owed, after credit for any tax deducted at source, tax credits, or other reliefs, is zero or results in a repayment to the taxpayer.’” This amendment would mean that a person would not be subject to a penalty point because of the late filing of a return where there is no tax liability due.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  I am grateful to the Minister for her response and to the hon. Member for Maidenhead for highlighting the large number of people who miss the deadline. As I say, the reality is that a number of people get late filing penalties when they do not owe any tax. The case I cited was that of someone called Andrea, who suffered with mental health difficulties for many years. During that time, she never earned more than a few thousand pounds and was well below the personal allowance, so she never had any tax liability, but she ended up with £10,000-worth of late filing penalties. That is clearly not appropriate. The new system that the Government are bringing in could be strengthened with the principle that someone who does not owe any tax cannot get a fine. I therefore wish to press amendment 50. Question put, That the amendment be made.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  It is good to be back in the saddle as we come on to some more clauses and, later this afternoon, new clauses. The amendment was tabled in my name, and I will speak to clauses 259 to 262 on penalties for the late filing of tax returns.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  I am surprised the Minister was able to say that last bit with a straight face when he was corpsing about carbon taxes earlier in Committee. As this will be the final time I speak in Committee, I thank you, Mrs Harris, along with Mr Efford and Sir Roger, for your time in the Chair. I thank the Clerks and officials, all the Members, who contributed so well to the Committee’s deliberations, and our Doorkeepers. I thank the Chartered Institute of Taxation, the Association of Taxation Technicians, the ICAEW and the many other organisations that provided valuable submissions on the provisions of the Bill. In particular, I thank the authors of the TIINs, which I have studied diligently. They do a very good job, but they do not do a review job. I thank Billy Falcon in my office, who has done sterling work in pulling together all the evidence from industry and in scrutinising the Bill, helping me to put together my remarks. I know that my hon. Friend the Member for Wyre Forest, the shadow Minister, will want to thank William in his office, who has performed a similar job, at rather short notice as well. He has helped to ensure that we have scrutinised the Bill thoroughly. I am grateful to the Exchequer Secretary and to the City Minister for their responses to our points and our new clauses. I am not sure which one of them I will see in February in King’s Lynn on the dodgems—

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  Well, as my hon. Friend the Member for Wyre Forest says from a sedentary position, pandemics, wars and energy price shocks did have something to do with the impact, but the figure is a 0.25% rise over the forecast period. The Minister can boast about that growth and say he is going to beat the forecast, but that is the OBR forecast, in black and white, following the decisions in the Budget. The Minister’s comments almost tempt me to push my new clause to a vote, but on balance, I beg to ask leave to withdraw the motion. Clause, by leave, withdrawn. New Clause 36 Review of the effects of this Act on the administrative burden on businesses “(1) The Chancellor of the Exchequer must, within 12 months of the passing of this Act, lay before the House of Commons a report on the effects of the provisions of this Act on administrative burdens faced by businesses. (2) The report must in particular consider any— (a) change in the time or resources required by businesses to comply with obligations arising under this Act, (b) effects on small and medium-sized enterprises, and (c) measures taken by HMRC to mitigate any increase in administrative burdens. (3) The Chancellor of the Exchequer must make a statement to the House of Commons on the findings of the report within three months of its publication.”— (James Wild.) This new clause would require the Chancellor of the Exchequer to review and report on the effects of the Act on the administrative burden on businesses, including the impact on SMEs and any mitigation measures. Brought up, and read the First time .

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  I am grateful to my hon. Friend for taking us through these detailed and complex clauses. On the point about lack of consultation, does he agree that there would be merit in holding public hearings ahead of a Finance Bill’s consideration in Committee, rather than just receiving written briefings? If we had done so, our Committee could have interrogated the concerns that my hon. Friend is so ably setting out.

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  On the mechanics, the Association of Taxation Technicians has raised the point that the scheme is due to be a requirement from May, yet there is a lack of clarity about how or when advisers need to register. Further to that, will the Minister get HMRC to set target times for responding to—approving or rejecting—applications?

• 3 Feb 2026 · Finance (No. 2) Bill (Sixth sitting) · Hansard source

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  Perhaps both—there we go. Any other Members would be welcome to join us as well. I look forward to that. Sadly, the Exchequer Secretary was unable to give me that global figure, so I intend to press the new clause to a vote. Question put, That the clause be read a Second time.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  We are sorry to see the Exchequer Secretary disappear. I hope that he comes back this afternoon for our further deliberations. The clause introduces schedule 16, providing for the administration and enforcement of CBAM. They hand responsibility for managing this new carbon import charge to HMRC, and set out detailed compliance rules, including registration, accounting periods, returns, assessments and appeals. The schedule runs to 27 pages of text. Under these measures, any business importing CBAM goods worth more than £50,000 in a 12-month period, or expecting to reach that threshold within 30 days, must register, report each quarter and keep detailed records potentially for up to six years. HMRC will have wide discretion to make “best judgment” assessments and to counteract any artificial separation of business activities.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Yes—come visit.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Good morning, Sir Roger and members of the Committee. As the Minister says, clauses 112 to 116 will introduce the UK’s excise duty on vaping products and set out the legal and administrative framework for its operation. Clause 112 will establish the new vaping products duty, setting a flat rate of £2.20 per 10 ml, rounded down to the nearest penny. Clause 113 sets out what counts as a vaping product; the definition is drawn deliberately widely to encompass any liquid that contains nicotine and the solvents used with it, and even liquids without nicotine if they are intended for vaporisation. That means that the apparently popular zero-nicotine shortfills used by smokers who are trying to quit or taper down will be taxed, too. I am advised that shortfills will be the hardest hit by the new duty; Vape 360 reports a 203% price increase. That raises an interesting public health question about the rationale for taxing zero-nicotine liquids in the same way as addictive nicotine-containing liquids. I am interested to hear the Minister’s response to the concern that by adopting this taxation approach we might be discouraging people from switching to less harmful or nicotine-free alternatives. Clause 114 defines when a product is regarded as produced for duty purposes, not just when liquids are mixed but when they are packaged, labelled or marketed as suitable for vapes. Clause 115 leaves it to future regulations to set out when duty becomes payable and who is liable. Clause 116, the final clause in this group, gives HMRC new powers to control vaping products before duty has been paid. The Opposition will not oppose the clauses, but we do want to probe the Government’s thinking. Vaping has become increasingly common across the UK. According to the Government’s own tax information and impact note, approximately 5 million people in the UK vape. For the first time, according to the Office for National Statistics, more over-16s in Great Britain are using vapes or e-cigarettes than are smoking cigarettes: 5.4 million adults vape, compared with 4.9 million who still smoke. The duty was first announced by the then Conservative Government in the spring Budget of March 2024. Alongside the announcement, a consultation was launched on how the duty should work in practice. The Government have since opted for a flat-rate duty rather than the three-tiered structure originally proposed, which would have varied the rate according to nicotine strength. Having read the responses to the consultation, I know that that decision clearly reflects the bulk of the evidence provided and will create a system that is simpler to administer. As the Exchequer Secretary might say, that is evidence of consultation working and the Government listening, which we are becoming very used to. The tax will raise significant amounts: £400 million in 2027-28 and £465 million in 2028-29, with revenue then increasing further. When introducing a new tax, implementation matters. The Government’s own impact note shows that HMRC expects to spend £140 million just to deliver this measure, of which £20 million will be spent on IT systems, while the other £120 million will be for staffing and compliance costs. I will be grateful if the Minister can clarify whether the headline figure includes the £32 million contract that HMRC is currently advertising to deliver the vaping duty supply contract for five years. As Border Force will also receive up to £10 million to prepare, delivering the new duty will cost about £150 million, all in. That is a pretty significant sum, so we need to be sure that it will provide proper value for money. Can the Minister give a little more clarity and break down the costs, particularly the £120 million on staffing and compliance? How many people will that involve bringing into HMRC? What exactly will they be doing? Why is the figure seemingly so high in comparison with the take? Some consultation respondents have questioned whether the new duty will actually shift behaviour. If producers simply absorb the cost, as tobacco firms once did, prices may barely change, which will undermine the public health rationale behind the policy. What consideration has the Minister given to that point? Will the duty rate remain under review if outcomes fall short of the expected impact? We can also look at the experiences of other countries such as Italy, where vape sales reportedly fell by 70% when a similar duty was introduced—not because consumers quit, but because purchases moved to the black market or unregulated online sellers. That takes us back to one of this Committee’s themes, which is about how raising taxes to a certain level drives people into the black market, and about where the sweet spot is for raising revenue without driving illegal behaviour. We will come on to the enforcement powers in some detail shortly, so I will not get into them now. This measure will play a useful role in regulating a growing sector, but the Government need to strike a balance between discouraging youth vaping, supporting smokers to quit and maintaining a workable, enforceable tax regime that does not cost the taxpayer a lot of money. I hope that the Minister will respond to the points that I have raised, and particularly the point about zero-nicotine vapes being treated in the same way as nicotine vapes.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Clause 126 creates new criminal offences relating to the possession and transfer of unstuck duty stamps . In plain terms, it becomes an offence for anyone who is not an approved stamp holder to possess a duty stamp that has not been affixed to a vaping product, or to transfer such a stamp to someone else. As the Minister says, the Bill allows a defence where the person did not know or have reason to suspect that they were handling an unstuck stamp, and carves out sensible exemptions, such as transfers between UK representatives and overseas principals, or during commercial delivery and returns. I would be interested to know what assessment the Treasury has made of the level of abuse that it expects under this regime. HMRC and trading standards are being given a budget for enforcement. Underlying that, there is presumably some assumption about the level of abuse of this system, so it would be interesting to have a flavour of that, given that all of us will be familiar with vape shops and associated issues from our constituencies. Clause 127 creates criminal offences for possessing, transporting, displaying, selling or otherwise dealing in unstamped vaping products. It also criminalises managers of premises who “cause or permit” the sale of unstamped goods. Under the definition in subsection (4), a manager of premises “is a person who…is entitled to control their use…is entrusted with their management, or…is in charge of them.” To pick up the example raised by the hon. Member for Maidenhead, if an 18-year-old is in charge of the premises such that they are unlocking on the day and will be locking up, are they the person, the individual, who could get the fine for dealing in the product, even though they may have had no role whatever in securing the stock and are simply there, getting their minimum wage payment to look after the shop? I would be grateful if the Minister could unpack what subsection (4) means in that sense. It is right that deliberate participation in the illicit vape trade is met with serious, fierce sanctions. We must also make sure that any junior staff who are wholly innocent—who do not know anything about the matter and could not reasonably have been expected to—are not prosecuted for the actions of others. We need some clarity from the Minister on how responsibility in those cases would be apportioned, and we must again ensure that enforcement authorities are operating with clear guidance. Clause 128 will enable courts, when convicting under clause 127, to make an order prohibiting the use of premises for the sale of vaping products for up to 12 months, and will create a further offence for managers who breach such an order. The power is of course intended to shut down problem premises that are repeatedly used for illicit trading. That is a tool that local authorities and trading standards officers—and, I suspect, Members of this place and our constituents—will very much welcome. There are many examples in constituencies across the country of illegal vapes being sold, and the communities near them suffer the impact of those criminal enterprises. We support action to deter such enterprises, but we are also familiar with examples in which trading standards, HMRC or others go in and seize the illegal vapes—the police may be involved as well—and in a matter of hours, that same premises will reopen, selling more illegal vapes. It is great to have a power to shut down such premises, but how will it be enforced? Will the resources be in place to do that? Will there be clear criteria on when the powers will be used, and how a change of ownership of a premises could affect a ban? We may effectively see fake transfers of ownership to try to get around it, so it is important that HMRC and trading standards have robust systems in place. Clause 129 sets out the penalty framework. On summary conviction, in England and Wales the maximum is the general magistrates limit—imprisonment, a fine or both; in Scotland, the maximum is 12 months and a statutory fine; and in Northern Ireland, it is six months and a statutory fine. So there is a little discrepancy there. On conviction on indictment, the maximum is two years’ imprisonment, an unlimited fine or both. That clearly allows for flexibility to distinguish between serious organised criminal offending and smaller scale non-compliance with the law. Of course, in the Sentencing Act 2026, the Government are effectively legislating to abolish sentences of up to 12 months, with a presumption that those will become suspended sentences. That is still a penalty, but it will mean that people are in the community rather than in jail serving their punishment, as they should be. The reality is that most people breaking this law are unlikely to actually go to prison; they may simply get a fine. Will the sentencing guidance make clear distinctions between organised criminality and smaller-scale offenders? The final clause in the group, clause 130, deals with the issue of forfeiture. It goes beyond the general rules in clause 121 by allowing all unstuck stamps or unstamped products linked to offences under clauses 126 to 128 to be seized. In some cases, all the stock on the premises—the Minister made this point—may be forfeited if HMRC believes that it is used in a business connected with the offence. That could be a welcome measure, but we need to have some clarity about how unnecessarily broad powers could potentially be used. Will there be a clear route for traders to challenge such forfeiture of legitimate products where they consider that they have inadvertently breached the rules? Taken together, the clauses introduce serious new powers, which is why it has been worth spending a few moments considering them and how they will actually be used. I think particularly of the power to shut down a premises for 12 months; we must ensure that that is effective, and that people are prevented from seeking to get around it by pretending to sell the business or list a new owner of the business. I look forward to the Minister’s responses to the points that I have raised.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  I rise to speak to clauses 121 to 125, which set out the framework on forfeiture and civil penalties for the new vaping duty regime. As the Minister said, this is a very important part of the new regime, given the impact that illicit vapes could have. Clause 121 establishes a general liability to forfeiture for three categories of non-compliant goods, namely: an unstamped vaping product that should bear a duty stamp, any invalid duty stamp along with the product that it is attached to, or any unused duty stamp not affixed or returned within 12 months of issue. In plain terms, it gives HMRC the power to seize non-compliant vaping products. An invalid stamp is defined broadly, and includes any stamp that has been altered, forged or voided by HMRC. Other forfeiture triggers are linked to the wider civil and criminal offences contained elsewhere in this part of the Bill, which I am sure we will come on to. These powers are designed to allow both HMRC and local enforcement bodies to remove illicit or suspect products and counterfeit stamps from circulation. That is clearly an important deterrent against the black market in vaping products. Can the Minister assess the risk of the 12-month rule on unused stamps, and the broad definition of invalid stamps, inadvertently capturing legitimate business activity? For example, operators may over-order stamps as a contingency or make administrative errors. How will the Government ensure that, in those circumstances, genuine stock is not caught up and lost alongside contraband products? Once forfeited, what will happen to those goods? Will they simply be destroyed? It would be helpful to get clarification on that point. Crucially, what safeguards will ensure that forfeiture powers are used proportionately, and that any minor administrative mistakes by otherwise compliant firms do not result in legitimate products being seized and destroyed at the first opportunity? Clause 122 introduces a civil penalty regime for those who sell, offer for sale or deal in unstamped vaping products packaged for retail sale. The penalties set out are banded according to scale and repeat behaviour, rising to a maximum of £10,000 for 500 or more units, with escalating amounts for repeated contraventions within a rolling two-year period. It provides a strong financial penalty and a disincentive for retailers and wholesalers to stock unstamped products, and it complements the criminal provisions that follow later in this part of the Bill. Clause 123 creates penalties for approved stamp holders who lose stamps or fail to use, return or destroy them within 12 months of issue, unless they can demonstrate that they took all reasonable steps to prevent loss. In those circumstances, the penalty is set at five times the monetary value of duty per lost stamp, equating to £11 per stamp when the scheme goes live. That comes alongside the existing Finance Act 1994 penalties for altering or misusing stamps. The intention is clear: to encourage tight control of duty stamps, treating them almost as cash equivalents, and to discourage casual or insecure handling that might enable diversion or counterfeiting, which is welcome. Clause 124 introduces a broad, catch-all civil penalty for failure to comply with the vaping products duty regime using section 9 of the Finance Act 1994 as its legal framework. That is intended to ensure that HMRC can act where non-compliance occurs, but no specific penalty is written into the legislation, reinforcing the need for accurate record keeping and full compliance with operational rules. I can see why a general power may be convenient for HMRC, but for smaller businesses it could increase the risk of innocent mistakes attracting financial penalties. How will HMRC ensure that this general power is used proportionately? Will education and guidance be issued to firms?

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  We come to the final group on the carbon border adjustment mechanism. Clause 150, along with schedule 18, makes the technical but critical changes needed to fit CBAM into the UK’s existing tax and enforcement framework. These measures ensure that the new tax uses the same information gathering powers, collection mechanisms and penalties already in place. It is sensible to integrate CBAM in this way without creating a new process. Clause 151 defines what we mean by “emissions” for CBAM purposes and firmly anchors the tax in the existing climate policy framework by adopting the definition in the Climate Change Act 2008. Greenhouse gas emissions will be measured in tonnes of carbon dioxide equivalent, which is sensible. Clause 152 sets out the interpretive rules for part 5 of the Bill, working alongside clause 151 and schedule 16 to ensure that terminology throughout CBAM is coherent. Clause 153 gives the Treasury the power to adjust CBAM if the UK’s emissions trading scheme is linked to another country’s carbon pricing system. The Minister touched on this briefly, but as I mentioned in the debate on an earlier group, in May the Government and the EU formally agreed to work towards linking their emissions trading systems to align carbon markets. I do not think the Exchequer Secretary responded to me on that point before he left the Committee. I am conscious that this is not the Minister’s portfolio, but can she give an update on where the EU-UK negotiations on the linkage have got to? This is a broad delegated power that could have real implications for competitiveness, trade and treatment of foreign carbon prices. We have expressed concerns previously about the linkage with the EU ETS and the higher charges that might hit UK businesses as a result. I would be grateful for an update on where the negotiations have got to—if they have actually started—and how the Treasury will ensure that there is proper consultation and debate before using the powers.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  Clauses 117 to 120 will introduce the new vaping duty stamp scheme. The Opposition welcome the Government’s decision to move forward with a duty stamps regime for vaping products: it is, after all, a measure that can help our enforcement agencies and responsible businesses alike to distinguish legitimate duty-paid products from those that are illegitimate and being traded illicitly and illegally. We know that there is a substantial illicit market for vapes across the country; without a credible system of verification and traceability, it will continue to undercut legitimate producers, harm public health and cost the Exchequer millions of pounds in lost revenue, so we need to address it. Clause 117 will establish the legal framework for the duty stamps system. It defines when a vaping product is considered to be stamped, and it sets out that the duty stamp, whether affixed to the product or to its retail packaging, must comply with regulations made under the Bill. Importantly, the clause will enable each stamp to be digitally linked to the product that it marks, and will allow HMRC to collect specified information about those goods, marrying the physical and digital trails of compliance. That is a positive step, and I am pleased that the Government have adopted at least some of the approach for which the Opposition argued during the passage of last year’s Finance Bill when we considered the introduction of the duty stamp regime. In essence, these measures will bring to the vaping market a track and trace model that is similar to what already exists in the alcohol and tobacco sectors. Clearly, when used properly, such tools can be an effective enforcement system. They allow officers, retailers and consumers alike to verify legitimacy at a glance, building confidence in compliant businesses and exposing those who seek to cheat the system and the taxpayer. We should be clear, however, about the scale of the challenge that could be created for smaller manufacturers and importers. In implementing this approach, we should ensure that the practical burden of stamping, activating, tracking and reporting, alongside new IT infrastructure, is proportionate for the many businesses that may not previously have had to operate at such a level of compliance. We cannot allow a regime that is intended to fight the black market to end up driving responsible producers to consider joining it. Clause 118 will give HMRC the authority to issue and manage the duty stamps and to charge administrative fees. It also allows a third-party issuer to be appointed, as I referred to in my comments on the previous group of clauses. I hope that the Minister can confirm how those fees will be set. Will HMRC consult on the level of those fees? What safeguards will exist to ensure that the fees are proportionate and transparent so that businesses do not find themselves paying unpredictable charges that bear little relation to the cost of the compliance regime? Clause 119 will establish who can hold and use duty stamps: only approved stamp holders may do so, and they must operate from a fixed location within the United Kingdom. That makes sense in principle—it limits the opportunity for diversion or counterfeiting—but the practical implementation will matter greatly. Subsection (5) grants HMRC wide powers to restrict transfers, to define what counts as a fixed place and to cap the number of stamps issued to a business. If the system becomes too bureaucratic or opaque, small UK producers could find themselves struggling in the market while larger incumbents consolidate their position. The Minister referred to the logic behind clause 120 and the concept of a UK representative for overseas businesses that lack a domestic base. Clearly, there needs to be someone within UK jurisdiction who can be held responsible for compliance and any penalties that may be applied.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  We come to the final group of provisions on the important issue of the new vaping duty. I speak to clauses 131 to 138, which concern the general provisions underpinning the new vaping products duty regime. Clause 131 authorises HMRC to publish information about stamped vaping products, for the purposes of enabling retailers, consumers and other persons to assess whether a duty stamp has been activated in respect of a duty product. That is clearly a sane, sound aim, which gives retailers a way to distinguish between legal stamped products and illicit ones. However, that will only work if the data HMRC publishes is accurate and accessible. Mislabelling would harm legitimate firms, and if the system is cumbersome it will put people off using it. Can the Minister tell us when HMRC will make available a practical, user-friendly checking mechanism—whether that is a public database, an app or some other technology—so that retailers and consumers can verify stamps quickly and easily? What safeguards will exist to correct errors swiftly where inaccurate data risks unfairly damaging a compliant business? Clause 132 sets out a new information-sharing framework specific to the duty, letting HMRC exchange data with other bodies involved in enforcement. This is a legitimate and useful tool, but can the Minister give assurances about how the data will be logged, audited, and subject to clear internal controls? Clause 133 delegates day-to-day enforcement to local authorities and trading standards teams, which makes sense. Last year trading standards seized over a million illegal vapes inland and detained 1.2 million at ports in England. Those powers need to be properly resourced if they are going to be effective in stamping out illegal trade, as we know that trading standards is already under considerable pressure to deliver on its various legislative requirements. It is fair to say that there is patchy implementation across the country. What support will Government provide to local authorities to ensure consistent enforcement and genuine deterrence everywhere, not just in well-resourced areas? Counties, such as my county of Norfolk, have suffered as a result of the revised local government funding formula that the Government have put in place. I want to see them able to deal with the threat of illicit vapes in the same way as the metropolitan areas that benefit from the new formula that the Labour Government put in place. Clause 134 gives the Treasury wide discretion to make supplementary transitional regulations under the regime. In practice, it is a broad power to fill in the blanks. Can the Minister give some confidence that it will not lead to a complex, rapidly changing rulebook? The Minister referred to the parliamentary procedure for such regulations under clause 135. To be clear, those regulations include the ability to amend an Act of Parliament, which is a considerable power. If such measures came forward, it would clearly be right to properly consult and debate them before they took effect. Will the Minister commit to formal consultation in such cases? Clause 136 simply implements consequential amendments so that vaping products are recognised across the existing excise framework. Clause 137 deals with the definitions that determine which products fall within scope—clearly, they need to be kept up to date. Finally, clause 138 sets the commencement and transitional arrangements. As we have discussed, businesses are expected to register from 1 April, with liability beginning from October. That is an ambitious timetable, but I am pleased to hear from the Minister that the interim guidance is available on gov.uk. I was not aware of that, so I will look it up later this evening, as she suggested. We do not oppose any of these clauses, but I look forward to the Minister’s response on whether there will be formal consultation, particularly where Acts of Parliament will be changed by regulations. That is something every member of the Committee should expect.

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  I share the hon. Member’s concerns about the £50,000 threshold. Has he considered what might be a more appropriate level, in order to reduce the impact on smaller producers?

• 3 Feb 2026 · Finance (No. 2) Bill (Fifth sitting) · Hansard source

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  I am not clear from the Minister’s comments whether he has accepted the Valentine’s invitation, but I am sure I am not alone in not expecting a member of the Committee to corpse on CBAM, which some might say is a rather dry topic. While CBAM can play a role in ensuring a level playing field for UK manufacturers and producers, it also highlights the levies and taxes applied by the Government on energy, which means that our energy prices are much higher than our competitors. I think we all want to see that burden reduced. At the 2024 Budget, the Government confirmed the UK will introduce this new CBAM from January 2027, covering broadly the same types of highly traded carbon-intensive basic materials, and putting a carbon price on emissions embodied in certain imported goods, so that they face a comparable cost to that paid by domestic producers. Different countries clearly regulate industrial emissions to very different standards. UK manufacturers already have to follow obligations to measure, reduce and pay for their emissions, which are costs that we think need to be ameliorated. Extending that principle to imports should, in theory, help to prevent carbon leakage and ensure it results in real global emissions cuts, rather than simply offshoring production and pollution. As the Minister said, the new charge will initially apply to five sectors: aluminium, cement, fertilisers, hydrogen, and iron and steel. Fertilisers, which are one of the sectors brought within the scope of CBAM, are clearly a critical input for British agricultural producers, particularly for arable farms, where fertilisers already account for around 40% of crop-specific spending and around 12% of total farm costs. The National Farmers Union has warned about what it calls a fertiliser tax, and has said that using domestic production as the baseline for CBAM levies, despite the UK no longer producing ammonium nitrate at scale, risks a wholesale increase in fertiliser prices at a time when farm confidence, as we all know, is at rock bottom. The direction of travel is clear. Over time, both the EU and UK will raise the cost of high-carbon fertilisers, making lower-carbon alternatives more competitive as carbon prices tighten. Applying higher taxes where the UK is not a significant producer increases input costs for our British farmers. There is a risk of downstream leakage where UK farmers pay more for fertiliser due to CBAM, while competing with imported food from non-CBAM regimes that are still benefiting from cheaper, higher-carbon inputs, again undermining British producers and our food security. This all lands on top of the other provisions within the Bill, namely the family farm and family business tax, as well as the cuts and delays we have seen in the sustainable farming incentive and the land management payment schemes and, of course, the additional pressures that are coming through in the cost of employment. Will the Minister set out what specific assessment the Treasury has made of the impact of CBAM on fertiliser prices, on different farm sectors and on UK food security? How does he intend to prevent downstream carbon leakage, which simply shifts emissions from factories to fields? Some industry groups, as recently reported in the Financial Times , warn that they think the Government’s current design has flaws and could accelerate de-industrialisation rather than prevent it. A major concern is that the Government plan to apply a single sector-wide rate, based on average emissions, instead of differentiating by product type and country of origin, as I understand the EU scheme does. UK Steel, the Mineral Products Association and the Chemical Industries Association have warned that, without changes, the mechanism will leave domestic producers worse off than their overseas competitors and undermine planned investment and decarbonisation. Has the Minister modelled the impact of using a single sector-wide rate rather than a more granular approach, as well as the impact on investment, jobs and emissions in each of the covered industries? The Chartered Institute of Taxation, which has provided considerable help and input on all the provisions of the Bill, has flagged that further uncertainty will be caused by questions about the UK and EU emissions trading schemes being linked before the implementation date. The Government and the EU announced last May that they intend to link their ETSs, with mutual exemption from CBAM as part of the package, but I understand that formal negotiations have yet to begin. Perhaps the Minister can give us an update. There are also ongoing political discussions with the EU on the interaction of the two schemes, and the EU’s CBAM is undergoing some delays. That impacts on certainty for some transactions involving Northern Ireland, so I would be grateful if the Minister provided some clarity on where those discussions have got to. Clause 139 establishes CBAM as the new UK tax on emissions, where a broadly equivalent price has not already been paid overseas. That is the foundation of the new charge. Clause 140 defines CBAM as “charged on the emissions embodied in a CBAM good” when it “is imported into the United Kingdom.” Those goods are defined by reference to the detailed tariff codes set out in schedule 15. Schedule 15 focuses on the initial regime for aluminium, cement, fertiliser, iron and steel products, and hydrogen, and it gives HMRC powers to keep the schedule updated in line with tariff changes. Could the Minister elaborate on why those five sectors were chosen for inclusion from 2027, and on when the Government will set out a clear timetable and test for extending CBAM to other sectors, such as glass or ceramics? Will there be a competitive disadvantage for high-carbon sectors left outside the first tranche, as they will still be exposed to cheaper, higher-emissions imports without any corresponding border adjustment? That point has been made to me privately by some of the Minister’s colleagues who would like to see a wider scope. Has the Treasury modelled how many businesses fall just above the £50,000 annual import threshold, and is it confident that it is capturing those that have substantial business and not imposing a burden on others? Clause 141 sets out when a good is treated as imported into the UK for CBAM. It covers standard imports and goods under special customs procedures, such as warehousing and movements between Great Britain, Northern Ireland and the Isle of Man. The clause intends to dovetail CBAM with existing customs laws. In Committee, I have repeatedly highlighted the importance of practical guidance: the hands-on support that HMRC will give to smaller and medium-sized importers —I suggest that the £50,000 limit is fairly low. Clause 142 ensures that where “a CBAM good has been declared for a special customs procedure,” processed into a non-CBAM good and then imported, CBAM is still charged on those emissions. This anti-avoidance provision aims to prevent companies from avoiding CBAM by doing limited processing to move a good out of the product list before releasing it into free circulation. The provision is welcome, as it would prevent people from dodging the rules. Clause 143 places the liability for CBAM on the importer, broadly mirroring customs law by tying liability to the person in whose name the customs declaration is made, or on whose behalf it is made. That is intended to provide certainty, which is important, by aligning CBAM with established customs concepts and practices. Will HMRC give simple template wording or clear guidance so that businesses know how to declare who is responsible for CBAM and for sharing information throughout the supply chain? The Chartered Institute of Taxation has also raised an important question. As the Minister will know, some businesses operate within VAT groups. If they import goods, they hold an EORI—economic operators registration and identification—number, which anyone who lived through the Brexit negotiations and debates will be familiar with. Under HMRC guidance, one VAT group member with an EORI number can make a customs declaration on behalf of another member. However, this group of clauses does not appear to allow for the formation of a CBAM group similar to a VAT or plastic packaging tax group. It is unclear how the measures affect those liable under the clause where one VAT group member uses another’s EORI number. If the current easement does not apply to CBAM goods, each member may need its own EORI number, which would add some complexity and administrative burden. Will the Minister clarify the position and understanding on that? If an issue needs to be addressed, will the Government introduce legislation to allow for CBAM grouping to maintain the existing simplifications, as I am sure is their intention?