No-deal Brexit: Short Positions against the Pound

Christian Matheson Excerpts

Monday 30th September 2019 Commons Chamber

[Mr Clarke]

I point to the wise words of the Opposition Deputy Chief Whip in the House of Lords last November, who said that short selling

“is not necessarily the evil practice that the popular press held it to be…It had a role.”—[Official Report, House of Lords, 28 November 2018; Vol. 794, c. 706.]

[Christian Matheson (City of Chester) (Lab)]

Short selling may have a role, but not when Government policy deliberately manipulates the currency to provide a big pay-out to individuals who have paid huge amounts of money either to the Conservative party or to individual right hon. Members. That is the problem. Does the Minister not understand that this is not about the Government’s taking a position on currencies? It is about the stink of something that does not seem quite right.

[Mr Clarke]

That is such an unworthy question that I do not intend to dignify it with an answer.

Oral Answers to Questions

Christian Matheson Excerpts

Tuesday 21st May 2019 Commons Chamber

[Robert Jenrick]

My hon. Friend is absolutely right and that is what the Government are doing: investing in ultra-low emission vehicles; increasing the capital allowances budget, now extended to 2023, for EV charge points; announcing a £400 million fund to get private sector investment in getting those charge points rolled out across the country; and, through the plug-in car grant, giving generous subsidies to help people to buy their first electric vehicle.

[Christian Matheson (City of Chester) (Lab)]

11. What assessment he has made of the potential merits of extending business rates relief to more music venues.

[The Financial Secretary to the Treasury (Mel Stride)]

We announced in the Budget that we were reducing business rates for small retailers and others by one third. Music venues are not specifically included, although local authorities may make some judgments around that. We, of course, keep all tax reliefs and taxes under review.

[Christian Matheson]

The music sector contributes billions to the economy and so much more in terms of life enrichment, but the opportunity pipeline is being constricted as music venues close under pressure. Will the Minister agree to just a small tweak to the retail discount scheme guidance to make it clear that music venues are eligible?

[Mel Stride]

Music venues are eligible for many of the reliefs, worth £13 billion over the coming years, we have introduced since 2016, as well as the switch from uprating the multiplier from RPI to CPI. Many benefit from small business rates relief as well. I will of course, as with all representations, take the hon. Gentleman’s comments on board and consider them going forward.

Oral Answers to Questions

Christian Matheson Excerpts

Tuesday 9th April 2019 Commons Chamber

[Mel Stride]

It is most certainly not our priority to reduce SDLT for the very wealthy. In fact, the current levels—12% plus 3% if it is an additional dwelling—are high. I can also inform the hon. Lady that the amount we raised through stamp duty land tax in 2017-18 was twice the amount raised back in 2010-11.

[Christian Matheson (City of Chester) (Lab)]

10. What representations he has received on the introduction of the 2019 loan charge.

[The Financial Secretary to the Treasury (Mel Stride)]

The loan charge was announced at Budget 2016 and was subject to public consultation. We have received representations, including from campaigners and the wider public. Disguised remuneration schemes pay loans in place of ordinary remuneration, with the sole purpose of avoiding income tax and national insurance.

[Christian Matheson]

I fully support measures to close loopholes for disguised remuneration, but not when they affect my constituents retrospectively. If the loans were illegal at the time my constituents took them out, why is it now necessary to introduce the loan charge?

[Mel Stride]

It is important that the House fully understands how disguised remuneration works. If, instead of paying an employee their earnings in the normal way, an employer pays them by way of a loan via an offshore trust in a low or no-tax jurisdiction—with no intention of ever repaying the loan and simply to avoid national insurance or income tax—that is wrong. As for the matter of retrospection, that model has never, ever complied with our tax code. The loans to which I refer are persisting today, not retrospectively. That is why it is right—and only fair on those taxpayers who pay the correct amounts at the right time, and on our vital public services, which rely on that money—that we collect it.

Clydesdale Bank and SMEs

Christian Matheson Excerpts

Tuesday 19th March 2019 Commons Chamber

[John Glen]

The hon. and learned Lady makes a reasonable point. It would be perverse to shred relevant materials in the context of a provision that they have entered into freely, showing a lot of good will, to try to find resolution and get to a better point of trust between the public and themselves.

[Christian Matheson (City of Chester) (Lab)]

This is not just about one case. The description that the hon. Member for Thirsk and Malton (Kevin Hollinrake) gave of the sale of tailored business loans is identical to the case of my constituent. Furthermore, that constituent has clear, documented and contemporaneous evidence of deliberate false representation by the bank to the Treasury Committee, the Financial Ombudsman Service and the FCA. I venture to say to the Minister, for whom I have a lot of respect, that this is widespread across the banking sector. We have seen the activities of the Royal Bank of Scotland Global Restructuring Group in attacking SMEs. Much as I support the idea of a tribunal, surely now is the time to go further and have a full public inquiry into the character of banking.

[John Glen]

I thank the hon. Gentleman for his comments. The key issue for many of these people, who have been waiting for a very long time—sometimes up to 10 or 11 years and longer—is to make sure they can get access to a mechanism that interrogates the evidence and deals with it swiftly. I was not indicating to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) that we should not say there are not parallels or themes, but I just feel that we have to look at the evidence on a case-by-case basis. I am certain that there is good will in the dispute resolution mechanism to interrogate thoroughly past cases that are unresolved.

Oral Answers to Questions

Christian Matheson Excerpts

Tuesday 5th March 2019 Commons Chamber

[Mel Stride]

It is just little old me, I am afraid, but I have to say that I believe we should respect the result of the June 2016 referendum, a democratic exercise that saw a higher turnout than for any other democratic event in the history of our country. The important thing now is that we get the right deal for us to leave, which we are working on. When it comes back to Parliament, I hope that the hon. Gentleman will support it.

[Christian Matheson (City of Chester) (Lab)]

21. The Chancellor has recently attended two events that I was also present at, which were organised by major aerospace companies, so he knows how they feel about the terrifying prospects of no deal. As these are the companies that pay this country’s bills, why is he ignoring them?

[Mel Stride]

We are most certainly not ignoring those businesses—or indeed businesses from a variety of different sectors up and down the economy. We have been deeply engaged with business, through the Treasury, the Department for Business, Energy and Industrial Strategy and other Departments. I can assure the hon. Gentleman that, for example, on the issue of just-in-time deliveries and the flow of trade across our borders, we have done an immense amount of work to prepare for the possibility of a no-deal exit to make sure that we protect the very companies to which he refers.

Draft Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019

Christian Matheson Excerpts

Wednesday 13th February 2019 General Committees

[Christian Matheson (City of Chester) (Lab)]

What a great pleasure it is to see you in the Chair, Mr Pritchard. I thank the Minister for his explanation of quite a complicated measure, but I cannot help but wonder at the amount of time—both his and his officials’, here and elsewhere—being sucked up by such measures. It is yet another consequence of the madness that is Brexit, and particularly the madness of no-deal Brexit—a prospect that the Government should have taken off the table weeks, if not months, ago, given the opportunity to do so.

The Minister made a genuine attempt to explain as clearly as possible this important, complicated matter. I do not doubt the sincerity of his speech, but I utterly despair at the fact that we are being sucked further into the morass of chaos that is Brexit at a time when the country faces so many major problems. I greatly and deeply regret the situation.

[Peter Dowd (Bootle) (Lab)]

It is a delight to see you in the Chair, Mr Pritchard. Once again, the Minister and I are here to discuss a statutory instrument that would set up a regulatory framework after Brexit in the event of us leaving in a disorderly fashion without a deal. On each of these occasions, my Labour Front-Bench colleagues and I have explained our objections to the Government’s approach to secondary legislation.

The volume and the flow of EU exit secondary legislation give rise to deep concern, from the point of view of accountability and proper scrutiny. The Government say that no policy decisions are being taken, but establishing a regulatory framework, for example, inevitably involves policy, and raises the questions about resourcing and capacity referred to by my hon. Friend the Member for City of Chester.

Secondary legislation should be used when the Government want to do things that are technical, non-partisan and uncontroversial. This Government continue to push through contentious legislation with high policy content using secondary legislation. As legislators, we have to get it right. These regulations could represent major changes to the statute book, so they need proper, in-depth scrutiny. In light of that, the Opposition would like to put on record our deepest concern about the fact that the process for these regulations is not as accessible and transparent as it should be, or as the Minister suggests it is.

Unfortunately, the regulations seem to have three statutory instruments within them: one amending the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018; one amending the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018; and one amending the Trade Repositories (Amendment and Transitional Provision) (EU Exit) Regulations 2018. The way they have been pasted together causes concern, to say the least, and the result is that they are extremely difficult to follow, let alone scrutinise. I would be grateful if the Minister responded to a number of concerns.

Part 2 sets up a temporary permissions regime that says that if someone is carrying out an activity that is authorised in their home state, and several conditions are met, for a temporary period that person can carry on with that activity in the UK. The activity had to have been allowed under the Financial Services and Markets Act prior to exit day, and the person had to have had an establishment in the UK. Several further criteria must be fulfilled; in particular, the regulations seem to say that if the activity was part of performing a pre-existing contract or, more tenuously, part of “reducing the financial risk” to a party to a contract or a third party affected, a temporary permission should apply.

In other words, it seems that these regulations are trying to avoid cutting across existing contracts. They might have in mind, among others, private equity funders on one side of a contract when referring to parties involved with reducing the risk of a contract. I would like the Minister to explain more about that. What is meant by “reducing the financial risk”, and how far does that go?

Chapter 3 of part 2 sets the period for the temporary permissions regime. It seems to say that the period is 15 years for a contract of insurance and five years for other purposes. Does that mean that EU law continues to apply for 15 years for the purposes of insurance contracts, and for five years for other contracts? Clarity on that would be helpful. There is not much detail, and a period 15 or even five years is stretching the limits of “temporary”. We are concerned that in trying to avoid chaos for contractors, the Government might be creating even more uncertainty. I would be grateful if the Minister commented on that and clarified it.

Proposed new part 6, chapter 4 of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 appears to modify the Financial Services and Markets Act. This is the application of a Henry VIII clause—something that is much criticised by lawyers and judges, as we all know. Chapter 4 also gives the Financial Conduct Authority power to receive applications for permission to vary. That seems to be a significant amount of power going to the FCA, and there is seemingly little power here for Parliament to review or hold accountable.

Proposed new chapter 4 allows the FCA to cancel the temporary permissions based on:

“(a) the person’s conduct,

(b) the practicality of supervision by a regulator,

(c) the size of the person’s undertaking, and

(d) the nature or extent of the regulated activity”.

Can the Minister clarify what conduct would or might justify cancellation, and what

“the nature or extent of the regulated activity”

means? Are we correct in understanding that there does not appear to be a right of appeal on this determination? I would be grateful if the Minister clarified. Obviously, just process and natural justice should be upheld. We are concerned about the implications of making the FCA into a judge in individual cases, and a lawmaker.

Proposed new part 9 of the EEA passport rights regulations appears to give the Treasury the power to extend the temporary regime, as the FCA has to submit to the Treasury an assessment of the need to extend the regime. That, again, leaves doubt about how temporary this all is. I would be grateful for assurances on that.

Other parts of the regulations deal with transitional arrangements relating to central counterparties and trade repositories. On central counterparties, for certain activities a one-year transition period appears to apply, and for others,

“the Bank may direct that the central counterparty be subject to such transitional arrangements as it considers necessary or expedient”.

Again, I would like to know more about the thinking behind issuing such power and discretion to the Bank of England.

We are becoming increasingly alarmed at the Government’s unfolding approach to regulating financial services. There does not appear to be an overall plan; there is no indication of how different pieces of legislation fit together; and, above all, there is no clarity. I looked at legislation across the world that appears to be clearer than this, but is ridiculous. For example, in Fairbanks, Alaska, it is illegal to sell alcohol to a moose.

[Christian Matheson]

It is also illegal to sell antifreeze to the Indians of Quebec.

[Peter Dowd]

That seems a much clearer position than the Government’s. In Quitman, Georgia, it is illegal to change the clothes on a storefront mannequin unless the shades are down. That seems perfectly sensible. In South Bend, Indiana it is illegal for monkeys to smoke cigarettes. Apparently, cigars are okay, but only if the monkey goes outside. I am sure that monkeys could understand that legislation, but some of the regulations coming to us are quite ridiculous. We have to be clear.

As Members will know, earlier this week, Labour opposed the Financial Services (Implementation of Legislation) Bill on Second Reading, because it represented a worrying transfer of powers of significant scope to the Executive. We have all been deeply concerned about this, as we have said time after time. Today, colleagues will debate in the Chamber the Securitisation Regulations 2018, which Labour prayed against for similar—or at least related—reasons.

I believe that when we voted to leave the EU, the aim was to empower Parliament to debate and make those decisions, not to concentrate them in the hands of civil servants or Ministers, yet the Government continue to put our economy at risk through their chaotic and opaque approach to lawmaking and the handling of Brexit. It is clear that rather than the Government pushing through such a large volume of piecemeal legislation, we need consolidated pieces of primary legislation, scrutinised in the proper and correct way, as opposed to regulations being brought to Committees in which no one from the Government Benches tries to challenge them.

Ultimately, we legislators have to get this right. This is not just about the principle of democracy and accountability, but about robust lawmaking that is clear, comprehensive, coherent and enforceable. That is our duty as parliamentarians. As far as the public are concerned, we are paid to do that, and we should do it, but the Government are not allowing us to. It is precisely because the stakes are so high, and because the Opposition view their responsibilities to the British public with the utmost intensity and severity, that we will be voting against the regulations.

European Union (Withdrawal) Act

Christian Matheson Excerpts

Thursday 6th December 2018 Commons Chamber

[Christian Matheson (City of Chester) (Lab)]

I was and remain a very firm remainer, but nevertheless I voted to activate article 50 because I wanted to respect the result of the referendum. After that, my responsibility is to secure what I believe to be the best outcome for the United Kingdom and my constituents. However, I must say that the more I hear about not just the lying in the referendum, but the manipulation of data and the cheating—and now allegations of foreign involvement—the less I respect it.

We hear that the Prime Minister is deserving of our respect for negotiating the deal and the continual promoting of it in the face of certain defeat. Again, for me, there is nothing to be respected about knowingly and deliberately driving the country off the edge of a cliff. On the Government’s own assessments, this deal will make the UK worse off and our people less prosperous and less secure. I cannot praise the Prime Minister for what amounts to a kamikaze approach in the face of clear evidence of impending economic damage—particularly to our manufacturing sector, with the lack of certainty over the hopes of frictionless trade.

From the outset, the Prime Minister has muddled and misrepresented. When she called the snap general election in 2017, she stated that the country was united, but Parliament was divided. She was entirely wrong: the country is more divided than ever under her leadership. After the general election, she might have reached out across the House to find support for the least damaging form of Brexit, although every form of Brexit is damaging. Instead, she chose to tack to the hard right and seek the sole approval of her own Brexit fundamentalists in the ERG. Yet these extremists will never be and have never been satisfied. They can never be thrown enough red meat, as John Major himself discovered.

This left the Prime Minister high and dry, clothed solely in the meaningless soundbites and slogans that have been the hallmark of this process. Indeed, I remain unclear about the point at which her slogan “No deal is better than a bad deal” morphed into “A bad deal is better than no deal”. A bad deal is what we have now. It makes us follow rules without having a say on those rules. Again, I am tempted to say that that would always have been the case if we were going to leave the EU, but still wanted to trade into that market while meeting the standards that that market demands.

There is no solution in the agreement to the question of the Irish border, largely because there is no solution possible that respects the Good Friday agreement aside from the UK remaining in the EU. We are told that technology will provide a solution, but as usual this is an empty soundbite. There is no technology available now, and no clue about what it will look like in the future. Technology may one day find us a cure for cancer, but that is no reason for me to start smoking now. Hon. Members will need to decide which is more important to them—the continuing peace in Northern Ireland and maintaining the integrity of the united Union, or leaving the European Union—because, certainly under this deal, we cannot have both. Business sectors have publicly stated their support for the Prime Minister’s deal, although leaked CBI emails demonstrate their true feelings, but all this deal will offer is two years of stability, during which they could up sticks and move to another part of the European Union.

Therefore, we must reject the false choice of the Prime Minister’s deal or no deal and start to chart our own route away from the ideological choice of Brexit. This is a simple one: do we want to be aligned with Europe, with its basic decent standards on food safety, consumer protection and rights at work, or do we try instead to align ourselves with deregulated, privatised Trumpist America? That is a simple choice and those are the only two options on the table.

[The Secretary of State for Environment, Food and Rural Affairs (Michael Gove)]

Nonsense!

[Christian Matheson]

It is absolutely the case and I will not take any heckling from the right hon. Gentleman.

We need to address concerns about free movement and the exploitation of migrant labour by bad employers, but there should still be an option to remain within the European Union and negotiate a much better deal than David Cameron would ever have come back with.

Oral Answers to Questions

Christian Matheson Excerpts

Tuesday 6th November 2018 Commons Chamber

[Christian Matheson (City of Chester) (Lab)]

2. What recent assessment he has made of the potential effect on tax revenues of the UK leaving the EU.

[The Financial Secretary to the Treasury (Mel Stride)]

The Government will be coming forward with a full and appropriate analysis of the impact of the deal we negotiate with the European Union well in time for the meaningful vote.

[Christian Matheson]

The Government’s own figures demonstrate between a 2% and 8% hit on the broader economy after Brexit. Is it not the case that there is no form of Brexit that will not have a massive impact on the public finances and, therefore, on public services?

[Mel Stride]

We are in the middle of a negotiation. At the appropriate moment, when we know exactly what the deal is—the deal that is available and that we have negotiated—we will of course come forward with a full and comprehensive analysis of both the fiscal and the economic impacts of that deal.

EU Customs Union and Draft Withdrawal Agreement: Cost

Christian Matheson Excerpts

Monday 22nd October 2018 Commons Chamber

[John Glen]

The hon. Gentleman makes a very sensible point about the urgency of securing a deal across lots of areas of our country, including the health service, and that is what the Government are engaged in seeking to resolve.

[Christian Matheson (City of Chester) (Lab)]

The truth is that this is typical crackpottery by the Brexit extremists on the Conservative Benches, who seem to be running the show over there at the moment. Will the Minister tell us what the effect will be on the aerospace sector and on Airbus next to my constituency of leaving and being outside the customs union, as opposed to remaining in and protecting those jobs?

[John Glen]

It is in the interests of aerospace and defence industries across the country for the Government to come to the right long-term solution that secures jobs and certainty about their operating environment in the UK and for trading abroad.

RBS Global Restructuring Group and SMEs

Christian Matheson Excerpts

Thursday 18th January 2018 Commons Chamber

[Christian Matheson (City of Chester) (Lab)]

Much as I support calls for a tribunal system and an inquiry, the longer I listen to the debate, the more I believe that there has to be much greater involvement of the police in what are clearly criminal conspiracies—particularly, perhaps, in relation to agreements between valuers and the banks to drive down the values of properties. The hon. Member for Thirsk and Malton (Kevin Hollinrake) is absolutely right that while we cannot forget the personal damage done to small business owners, this is an attack on the whole of the UK economy, which is underpinned by those small businesses. It should therefore be taken seriously in criminal terms at the national level.

My constituent Graham had his business destroyed by Clydesdale and Yorkshire bank, which unlawfully mis-sold tailored business loans to him and to other SME customers. The selling involved widespread and systematic unlawful conduct, including making deliberately false representations to coerce customers into taking on the obligations under tailored business loans. Customers were not told about any interest rate swaps associated with or embedded into their tailored business loans, nor were they given the bank’s standard terms and conditions before or at the time of entering into the TBL. There was no mention of potentially substantial early termination penalty charges—break costs—allegedly associated with such interest rate derivative products.

As a result of this mass mis-selling, customers of these banks have suffered significant financial losses. The hidden break cost liabilities asserted by the banks meant that it became virtually impossible for customers to pay off their TBL completely or to switch their borrowing to another bank, as the hon. Member for Dundee East (Stewart Hosie) said. SMEs were therefore locked-in victims, forced to continue paying interest rates as high as 6% or 7% on these loans when the base rate was reduced to 0.5%.

SMEs were subjected to various other forms of abuse, including the manipulation of property valuations mentioned previously, which resulted in alleged covenant breaches of the loan-to-value ratio on the property underpinning the loans, as well as the unlawful repossession of properties, the manipulation of overdraft facilities to exert additional pressure, the unfair imposition of inflated bank charges and the unlawful calling-in of personal guarantees. It is no wonder that so many small businesses, and the families underpinning them, have gone under in these intolerable circumstances.

From investigating Graham’s case and those of other constituents, I, like other hon. Members, am absolutely clear that the Financial Ombudsman Service is not fit for purpose, perhaps because it lacks the skills to understand these very complicated financial instruments, perhaps because it is under-resourced, or perhaps because it lacks the political will and is too close to the banks. It could also be—the Minister may want to consider this—that the legislative regime under which it operates is not sufficient and that it does not have sufficient scope.

I have one final point to make. This scandal has been compared to the PPI scandal, but I think it is in a league way beyond it. Adding extra money to somebody’s payment protection insurance and then skimming some off the top is one thing, but deliberately driving down, crashing and destroying somebody’s business, to which they and often their families have dedicated their lives, is in a league beyond anything we can comprehend. I return to the point I started with: this is criminality and it should be dealt with as such.