HL Deb 09 December 1986 vol 482 cc1071-4

2.45 p.m.

Lord Graham of Edmonton

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they have any observations to make on the report by the Federation of Master Builders entitled The Rise and Rise of the Black Economy.

The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara)

My Lords, the Government have received a copy of the report by the Federation of Master Builders and have noted its recommendations.

Lord Graham of Edmonton

My Lords, I am grateful to the Minister for at least noting the recommendations. Will he accept that among the strongest opponents of the black economy are bodies like the Federation of Master Builders, which object very strongly on behalf of their tax-paying members? Will the Minister recognise that a modest easement of the tax regime, including VAT being paid on essential repairs and maintenance, could act as a stimulus to the whole building industry? Does not the Minister further agree that, more importantly, it could lead to greater employment and to greater training facilities in the building industry?

Lord Brabazon of Tara

My Lords, I am glad that the Federation of Master Builders is opposed to the black economy. So, too, are the Government. As to any easing of the VAT regime, that is of course a matter for my right honourable friend the Chancellor of the Exchequer. I am sure that he will have studied this aspect but we have no plans at this stage to make changes.

Lord Dean of Beswick

My Lords, I too am grateful for the Answer. However, is not the Minister aware that this is only one of many reports indicating the situation in the building industry? Builders termed "cowboys" are totally abrogating their responsibilities —responsibilities which have to be legally carried by registered builders. Is the Minister aware that in the report which is the subject of this Question it is calculated that the Treasury is losing £7 billion a year by that type of builder evading all forms of tax—corporation tax, income tax—and any other form of payment to the Government? Bearing in mind that both the building industry in total, including private builders and trade unions, are wholly opposed to that, there must be some urgency in dealing with the situation.

Lord Brabazon of Tara

My Lords, the Government are attempting to deal with the situation. Extra Revenue staff will be redeployed to tackle evasion. We plan an increase of around 1,500 in that sphere. We have recently announced plans to deploy an additional 240 officers for VAT control and investigation duties. That brings the total additional staff deployed over the past four years to more than 800, so the Government do take this matter seriously.

Earl Ferrers

My Lords, can my noble friend say how the inspectors who are to be appointed can chase up VAT evaders when such people are paid in cash?

Lord Brabazon of Tara

My Lords, if a person is paid in cash, that of course is difficult to check on. However, in that situation, I should point out that, where a person buys supplies from shops, if he is not registered for VAT the VAT is, in fact, collected.

Lord Mellish

My Lords, is the noble Lord aware that master builders are few and far between in this industry which is famous for the man, the boy and a bucket? That is why any question of state ownership for the industry is absolutely ridiculous.

Lord Brabazon of Tara

My Lords, I think we agree with the noble Lord that this is a difficult problem to tackle.

Lord Gibson-Watt

My Lords, is my noble friend aware that so far as grants for the renovation of houses are concerned, the Government might do well to look into the methods by which the local authorities are not empowered to insist that the tender submitted is carried out by the original builder? This is a sphere where the Government might be able to help.

Lord Brabazon of Tara

My Lords, I am grateful to my noble friend. That is a point I had not appreciated. I will certainly draw the attention of my right honourable friend to that aspect.

Lord Winstanley

My Lords, is it not time that we looked again at the disregard figure in relation to supplementary benefit and other benefits so that some people could do a small amount of work and earn a little money without infringing the law?

Lord Brabazon of Tara

My Lords, that suggestion goes a little wider than the Question on the Order Paper. It certainly goes a little wider than the brief I have been given this afternoon. However, I will certainly bear it in mind.

Lord Graham of Edmonton

My Lords, if the Government accept the premise upon which this report has been prepared—that the Treasury is being deprived of an estimated £7 billion—can the Minister indicate that the Government will urgently discuss with building employers (although it is not restricted only to building) what ideas they have to eliminate this drain upon the national purse?

Lord Brabazon of Tara

My Lords, I am not necessarily able to accept the figure of £7 billion that has been quoted. Obviously, the fact that it is the black economy about which we are talking makes it very difficult to give any kind of figure. Estimates vary from as high as 144½ per cent. down to as little as 3½ per cent. of the gross domestic product. However, as I said in my original Answer, we have received the report to which reference has been made and we have noted its recommendations.

The Earl of Onslow

My Lords, is the black economy not incredibly encouraged by the fact that the lowest rate of tax and national insurance in this country is 50 per cent. higher than the highest rate in the United States? If a tax regime produces numbers of that kind, it is bound to produce a black economy should we not get our tax regime right before we start worrying about the black economy?

Lord Brabazon of Tara

My Lords, certainly, all of us on this side of the house wish to get the rate of taxation down.