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Westminster weekly update: Budget delivered
One thing you need to do
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Five things you need to know
1. Chancellor delivers 2020 Spring Budget
Last Wednesday, chancellor Rishi Sunak delivered the first Budget of the new Parliament, the most recent since Phillip Hammond delivered his Autumn Budget in October 2018.
The Budget Statement announced what the chancellor described as the largest real-terms public investment package since records began in 1955 and sets out plans to meet specific commitments made in the Conservative Party manifesto, implement a strategy to 'level up' the UK and address the impacts of coronavirus.
Key measures affecting the legal sector include:
- an economic crime levy to be paid by firms subject to the Money Laundering Regulations
- £23 million funding to improve the criminal justice system, including £5 million to begin a trial of domestic abuse courts in England and Wales, to allow the concurrent consideration of criminal and family matters. An additional £15 million to improve the support available to victims of domestic abuse, including a digital hub to make the criminal justice process in England and Wales easier to understand. The Chancellor also announced £10 million of funding for measures to prevent domestic abuse, by working with Police and Crime Commissioners to expand existing projects such as the ‘Drive’ prevention programme
- Royal Commission on the criminal justice process – the Government will provide an additional £3 million to launch a Royal Commission on the criminal justice process in England and Wales which will “allow work on the Commission to begin at pace over the next year.”
- multiple tax-related measures, including: a consultation on Insurance Premium Tax; a call for evidence on raising standards for tax advice; a 2% non-UK resident Stamp Duty Land Tax Surcharge; tax reliefs for qualifying housing co-operatives from the Annual Tax on Enveloped Dwellings and Stamp Duty Land Tax; a reduction in Entrepreneur's Relief lifetime limit to £1 million; and a review of business rates to report in autumn
- an increase in the National Insurance contributions threshold from £8,632 to £9,500
- changes to pension relief and saving tax - To support the delivery of public services, particularly the NHS, the two tapered annual allowance thresholds for pension tax will each be raised by £90,000.
- review of changes to the off-payroll working rules (IR35) – following the Government’s review, reform to the existing rules will be legislated in the Finance Bill 2020 and implemented on 6 April 2020, as previously announced
- £5 billion allocated to roll out gigabit-capable broadband in the hardest-to reach areas of England, Scotland, Wales and Northern Ireland and £510 million investment in the shared rural mobile network to extend 4G coverage to 95% of the country in the next five years
- Limited Liability Partnership (LLP) returns – the Government will legislate prospectively and retrospectively in the Finance Bill 2020 that LLPs should be treated as general partnerships under income tax rules, which is designed to ensure that HMRC can continue to amend LLP members’ tax returns where the LLP operates without a view to profit
2. Economic crime levy announced
The Budget announced the government's intention to introduce a new levy on economic crime, to be paid by firms subject to the Money Laundering Regulations. The levy will be designed to help fund government action to address money laundering in the UK and carry out the commitments made in the Economic Crime Plan. The Budget sets out plans for the Treasury to publish a consultation on the levy later in the spring.
Responding, our president Simon Davis said: “Solicitors play an important role in the battle against money laundering and the Law Society – as the named supervisory body – shares the government’s objectives in having a robust regime in place.
“Our sector already devotes substantial resources to fighting financial crime. Now plans for a levy, to be paid by firms subject to the Money Laundering Regulations, have been announced I would urge ministers to ensure that any plans are evidence based, and do not inadvertently distract resources from the fight against economic crime.”
3. Criminal justice mentioned in Budget debate
Last Thursday, debate on the Budget began in the House of Commons.
Opening the debate, shadow chancellor John McDonnell MP acknowledged the seriousness of the coronavirus outbreak and said that the Labour party would “work with the government and parties across the House to protect our people and contribute to the worldwide effort to overcome the outbreak of the virus.”
McDonnell said that we are facing a crisis in our public services and that the Budget failed to address this social emergency. He used the justice system as an example, and referenced the Justice Committee’s finding that there is a £1.2 billion gap in justice funding.
He said that the Budget needs to commit £173 million to ensure that no domestic abuse survivors are turned away from women’s refuges, however that it had not done so and without this funding, the measures in the Domestic Abuse Bill cannot be delivered.
Responding, Dame Diana Johnson MP (Labour) said that while the abolition of the tampon tax was welcome, the £393 million of funding raised from the tax has previously been put towards services combating violence against women. She asked the shadow chancellor whether he had an indication of how this funding gap will be filled going forward. Replying, McDonnell said that he did not.
Elsewhere in the debate, Andrew Griffith MP (Conservative) said that the UK has immense natural advantages as a location to start, grow and run a business, including “a world-class legal system with a strong respect for the rule of law.”
4. Domestic Abuse Bill raised in the Lords
Last Monday, Baroness Sanderson of Welton (Conservative) asked a question in the House of Lords regarding the Domestic Abuse Bill and public information to accompany it. She argued that the problem will not go away just because of legislation, and that the government should raise awareness of the measures in the legislation to help confront and challenge domestic abuse.
Responding, Home Office minister Baroness Williams of Trafford said that the Domestic Abuse Bill includes an all-purpose definition of domestic abuse to ensure that the nature of abuse is fully understood. The government are considering options for public awareness campaigns.
Baroness Armstrong of Hill Top (Labour) asked the minister to ensure that public sector workers have received trauma-informed training to ensure domestic abuse victims are treated sensibly. Responding, Baroness Williams of Trafford said that it is important for people to get the right training to ensure they offer the right assistance.
Baroness Hamwee (Liberal Democrat) asked when the Bill will come into force. Responding, Baroness Williams of Trafford said that she hoped that it would be in force this time next year.
5. Civil servants give evidence on the Constitution Commission
Last Tuesday, Sir Mark Sedwill, Cabinet secretary and head of the Civil Service, and Sir John Manzoni, permanent secretary to the Cabinet Office and Civil Service chief executive, gave evidence to the Public Administration and Constitutional Affairs Committee. The government’s proposed Constitution, Democracy and Rights Commission was discussed briefly.
In response to a question from Tom Randall MP (Conservative) about the preparations being made by the Civil Service for the Commission, Sir Mark Sedwill said that ministers are still considering exactly the shape, timing and so on of the Commission. He stated that the Civil Service is in the process of advising ministers on the policy options for the Commission, and that once the approach has been settled the Civil Service will put in place the resources needed to carry out its work. He also claimed it would be wrong of him to pre-empt how long this process would take, or when the Commission might be established, as this is a decision for ministers.
Sir Mark Sedwill also noted that the Civil Service has identified some budgets that it might draw upon for the work of the Commission, subject to the approach ministers decide to take and the degree to which external experts are drawn in to support the Commission.
Coming up this week
Coming up this week, debate will continue in the House of Commons on the Budget on Monday before concluding on Tuesday and being taken up in the House of Lords on Wednesday.
In the House of Lords, there will be oral questions on Monday on the use of live facial recognition deployments.The Divorce, Dissolution and Separation Bill will also see its report stage on Tuesday.
If you made it this far
Read our guidance explaining how the transition period in the UK-EU relationship, beginning 1 February, will affect various areas of law.