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Employees Travelling Outside the UK: Expenses Rate

It is a pleasure to speak in this debate with you in the Chair, Sir Christopher. I thank my hon. Friend the Member for Crawley (Peter Lamb) for raising this important issue today and for the work that he and neighbouring MPs, on a cross-party basis, have been doing to highlight the concerns that their constituents have raised with them.

I can see that hundreds of people in the Crawley constituency have signed the petition. It is similar in Horsham and people near Heathrow and other major airports have signed it, too. The issue clearly affects many staff who work in the airline industry and, as my hon. Friend points out, particularly affects those who are on lower wages. Yes, they might enjoy and love the travel and going to visit so many different places as part of their work, as well as the benefits that come from a job working in the sky and working for airlines, but there are costs associated with being away from home. It was right to have the overseas scale rates system in place back in 2014, but it is not right at that the system has not been updated since then.

The OSRs play an important role in reducing administrative burdens when employees incur subsistence costs while travelling overseas, and the key thing is that they provide a practical alternative to reimbursing and evidencing every single expense. As a result, if they were abolished at any point in the future, that could place a significant burden on airlines, which is certainly something we want to avoid.

As my hon. Friend set out, the rates have remained more or less frozen since 2014. I was doing the maths earlier today in preparation for the debate, and I came up with a similar figure to him. If they had been uprated in line with inflation in the UK, they would have increased by 40% since 2014. Of course, inflation rates vary across the globe, but that gives us a sense of the size of the gap that has opened up over the last 12 years.

The Government have been listening to representations made by airlines, individuals and Members of Parliament, including my hon. Friend. As we announced just a few short weeks ago, we will review both the OSRs and the benchmark scale rates, which are the domestic equivalents that set out the scale rates for lunches and dinners that employees may have when they are in the UK on business.

We will also look not just at uprating the rates but at whether there is scope to simplify the OSRs. We want to engage in detail with businesses on such a proposal, and officials in HMRC have already begun that work. Rather than having hundreds of individual rates for individual countries that need to be updated in a painstaking and administratively costly way, and that are also difficult for businesses to administer, we may find that having buckets or bands works better for employers and employees. That is something we will want to look at as part of this review, so I would really welcome representations from my hon. Friend the Member for Crawley and the hon. Member for Horsham (John Milne) on what changes their constituents would like to see.

Let me be clear: we have not taken any decisions on where we would like to go, and our mind is not made up. We are convinced that we want to review the rates to make the system better, but we want to consider the issues carefully and gather evidence from those who are affected before a decision is made. Just last week, I met the CBI, which represents some of the large airlines, and it welcomed the announcement of a review. I look forward to receiving further representations from the private sector.

As my hon. Friend pointed out, it is important for the Government to strike the right balance between supporting businesses and maintaining fairness in the tax system, while also protecting the Exchequer to ensure that, in the round, we raise the necessary revenue to fund and put right our public services after the last 14 years, when too many were cut back. We also need to ensure that any administrative arrangements such as these remain straightforward and proportionate.

Of course, there is political change in the air, but I hope that this review will conclude in time for the Budget. We do not want to be in a place where, in years to come, we are still waiting for these changes. I hope that we can make swift progress in the coming months, so that my hon. Friend’s constituents, as well as employees of airlines across the country, can see some improvement.

I am grateful to my hon. Friend for securing this debate, and I am grateful to the hon. Member for Horsham for his intervention. I will take the strength of feeling in their representations back to the Department, for as long as I will be there.

Question put and agreed to.

4.14 pm

Sitting suspended.