Savings (Government Contributions) Bill

Debate between Gareth Thomas and John Bercow

3rd reading: House of Commons & Report stage: House of Commons
Monday 12th December 2016 Commons Chamber

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

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

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 2—Impact review: automatic enrolment and pensions savings—

‘(1) The Treasury must review the impact of Lifetime ISAs on workplace pensions automatic enrolment and pensions savings within one year of this Act coming into force and every year thereafter.

(2) The conclusions of the review must be made publicly available and laid before Parliament.’

This new clause would place a duty on HMRC to review annually the impact of Lifetime ISAs on automatic enrolment.

New clause 3—Lifetime ISAs: Advice for applicants—

‘(1) The Treasury must, by regulations, make provision for all applicants for a Lifetime ISA to have independent financial advice made available to them regarding the decision whether or not to save in a Lifetime ISA.

(2) Any applicant that opts in to the services offered under subsection (1) shall be given a signed declaration by that service provider outlining the financial advice that the applicant has received.

(3) Any provider of a Lifetime ISA must confirm whether an applicant—

(a) intends to use the Lifetime ISA for the purposes of paragraph 7(1)(b) of Schedule 1,

(b) has a signed declaration of financial advice under subsection (2), or

(c) is enrolled on a workplace pension scheme or is self-employed.

(4) Where the provider determines that the applicant is—

(a) self-employed and does not participate in a pension scheme,

(b) not enrolled on a workplace pension scheme,

(c) does not intend to use the Lifetime ISA for the purposes of paragraph 7(1)(b) of Schedule 1, or

(d) does not have a signed declaration of financial advice under subsection (2),

the provider must inform the applicant about the independent financial advice available to them under subsection (1).’

This new clause would place a duty on the Treasury to make regulations that ensure all applicants for a Lifetime ISA have independent financial advice made available to them.

New clause 4—First-time residential purchase: research and impact assessment—

‘(1) Within one year of this Act coming into force the Treasury must conduct a review into the potential impact of provisions within paragraph 7(1)(b) of Schedule 1 on—

(a) house prices in the UK, and

(b) the operation of the housing market.

(2) The findings of the review must be made publicly available and laid before Parliament.’

This new clause would require a review of the Bill’s effect on the UK housing market/house prices.

New clause 5—Distributional analysis of the impact of the Lifetime ISA and Help to Save—

‘(1) Within six months of this Act coming into force the Treasury must conduct an analysis of the distribution of benefits of Lifetime ISAs and Help-to-Save accounts including between—

(a) households at different levels of income,

(b) people of different genders,

(c) people with disabilities, and

(d) black and minority ethnic groups.

(2) The findings of the analysis conducted under subsection (1) must be laid before Parliament.’

New clause 6—Lifetime ISA and Help-to-Save: value for money—

‘(1) Within six months of this Act coming into force the Treasury must assess the value for money provided by the Lifetime ISA and Help-to-Save scheme.

(2) The assessment must in particular include—

(a) the cost to the Exchequer of the measures,

(b) the number of individuals who have benefited from the measures, and

(c) the average tax deduction received by an individual as a result of the measures.

(3) The findings of the assessment must be made publicly available.’

New clause 7—Advice for applicants—

‘The Treasury must make provision by regulations to ensure all providers of Lifetime ISAs or Help-to-Save accounts provide applicants, at the point of application, with advice about the suitability of the product in question for each individual applicant.’

This new clause would require advice to be provided to applicants for LISAs or Help-to-Save accounts which must include information on automatic enrolment and workplace saving schemes.

Amendment 15, in clause 1, page 1, line 1, leave out clause 1.

See explanatory statement for amendment 16.

Amendment 17, in clause 3, page 2, line 17, leave out “1 or”.

Amendment 18, page 2, line 19, leave out “Lifetime ISA or”.

Amendment 19, page 2, line 23, leave out “Lifetime ISA or”.

Amendment 20, in clause 4, page 2, leave out lines 32 to 36.

Amendment 21, page 3, leave out lines 9 to 11.

Amendment 22, in clause 5, page 3, leave out line 23.

Amendment 6, in clause 6, page 3, line 36, leave out from “on” to end of line 37 and insert “30 April 2019”.

This amendment would delay the commencement of the Bill until the end of April 2019, when all firms will be auto-enrolled and the increase in minimum contributions to eight per cent. will be completed.

Amendment 16, page 5, line 1, leave out schedule 1.

This amendment, together with amendments 15 and 17 to 22, would remove provisions for the Lifetime ISA from the Bill.

Government amendment 3.

Amendment 1, in schedule 2, page 16, line 3, leave out “48” and insert “24”.

Amendment 12, page 16, line 31, at end insert—

“(1A) The conditions specified under subsection (1) shall not include the condition that the individual be over 25 years old if that individual meets all other specified conditions relating to the working tax credit.”

Currently those aged under 25 only qualify for Working Tax Credits if they work at least 16 hours a week. This amendment would ensure any individual aged under 25 would qualify for a Help-to-Save account if they met other specified criteria.

Amendment 2, page 17, line 36, at end insert—

“(d) a credit union.”

Amendment 8, page 18, line 16, leave out “maximum” and insert “average”.

See explanatory statement for amendment 11.

Amendment 9, page 18, line 19, leave out “maximum” and insert “average”.

See explanatory statement for amendment 11.

Amendment 10, page 18, line 19, after “means”, insert “an average of”.

See explanatory statement for amendment 11.

Amendment 11, page 18, line 19, after “£50”, insert

“across every two month period within the maturity period”.

Together with amendments 8, 9 and 10, this amendment would allow HTS to provide for “top-up” monthly payments above £50 so long as the average payment for every two months is £50.

Government amendment 4.

Amendment 14, page 19, line 2, at end insert—

“(e) provision for eligible persons to be auto-enrolled into Help-to-Save accounts through deductions from salaries or benefit entitlements unless the individual chooses to opt-out.”

This amendment would enable an ‘auto-enrolment’ workplace saving scheme which would see an individual automatically signed up to a Help-to-Save account. He or she must opt-out to stop money being deducted from their pay or benefits into a savings account.

Government amendment 5.

Amendment 13, page 19, line 31, at end insert—

“(3A) Where a bankruptcy order is made against a person with a Help-to-Save account any bonus paid into the Help-to-Save account will not form part of a debtor’s estate during insolvency proceedings.

(3B) Any bonus paid into a Help-to-Save account shall not be liable to be taken as repayment via third party debt orders.”

Amendment 7, page 20, line 23, at end insert—

“(ba) for a bonus in respect of a Help-to-Save account to be paid after six calendar months beginning with the calendar month in which the account is opened and at six month intervals thereafter;”.

This amendment would reduce the time before the holder of a Help to Save account would receive a government bonus to six months.

[Mr Thomas]

I am grateful for the opportunity to speak not only to new clause 1, but to amendments 1 and 2. I should declare an interest as a member of the M4Money credit union and as chair of the all-party group on mutuals.

New clause 1 seeks to give a statutory right to anyone wanting to save with a credit union via payroll deduction. Amendment 1 would reduce to one year the two years that those who are just about managing will wait before getting the Government top-up under Help to Save, to better incentivise saving under the scheme. Amendment 2, about which I shall speak a little more first, seeks to allow credit unions to offer the Help to Save product.

I took part in the Second Reading debate and raised the concern that credit unions would not be allowed to offer the Help to Save product. I have read through the transcripts of that debate and of the Committee proceedings and I can still see no good reason for the Government’s resistance to allowing credit unions to offer the Help to Save scheme. I recognise that Ministers want to ensure national coverage of Help to Save so that everyone who meets the criteria—the potentially 3.5 million people across the UK who Ministers think might do so—regardless of where they live can access the scheme. That clearly makes sense. I have no objection to the choice of National Savings & Investments as that national provider of choice. What I cannot see is any valid reason why credit unions cannot be allowed to complement the NS&I offer.

--- Later in debate ---

[Mr Speaker]

The final words in respect of this group of amendments are for the hon. Member for Harrow West (Mr Thomas).

[Mr Gareth Thomas]

This debate has been short but interesting. I hope that Members will forgive me if I confine my brief remarks to the three amendments tabled in my name. My hon. Friend the Member for Walthamstow (Stella Creasy) made a characteristically excellent speech dwelling on the debt tsunami coming our way. She rightly alluded to the challenges that many credit unions face in providing a service through local employers to their employees.

My hon. Friend the Member for Bootle (Peter Dowd) made an excellent speech from the Front Bench—perhaps inspired by listening to the works of Shostakovich, of whom he is a devotee. Given the numbers who might be eligible, he is rightly worried that the number of people who sign up for Help to Save will not be as great if credit unions are not included among the providers that can offer Help to Save.

I was interested by the Minister’s response, and I hear her concerns about new clause 1, which I look forward to exploring more in a meeting with the Economic Secretary to the Treasury. I was grateful to hear the Minister offer some reassurance on amendment 1 and the possible reduction to 12 months from 24 months. As a result, I will not press amendment 1 or new clause 1 to a Division.

I will, however, seek a vote on amendment 2 because I gently suggest to the Minister that she did not make a convincing case as to why credit unions should not be allowed to offer this product. It is clear that NS&I will be a good national provider, but it is unclear why credit unions cannot be given the opportunity to offer the product at the same time. Given all the effort and expense that the Treasury is going to, it seems odd not to take advantage of the opportunity that credit unions can provide to get more people signed up. In that spirit, I intend to press amendment 2 to a vote, but I will not press new clause 1 or amendment 1.

Clause, by leave, withdrawn.

New Clause 2

Impact review: automatic enrolment and pensions savings

‘(1) The Treasury must review the impact of Lifetime ISAs on workplace pensions automatic enrolment and pensions savings within one year of this Act coming into force and every year thereafter.

(2) The conclusions of the review must be made publicly available and laid before Parliament.’—(Peter Dowd.)

This new clause would place a duty on HMRC to review annually the impact of Lifetime ISAs on automatic enrolment.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

Point of Order

Debate between Gareth Thomas and John Bercow

Wednesday 14th September 2016 Commons Chamber

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

On a point of order, Mr Speaker. During International Development questions this morning, the Secretary of State said that she would make an announcement on future funding of the global fund at some point next week. It is true that the global fund replenishment conference will take place next week and therefore represents a hard deadline, but given the scale of taxpayers’ funding that is at stake—up to £1.2 billion, hopefully—should not we in the House of Commons, representative as we are of the British taxpayer’s interests, be informed before any briefings are made to the media or to other countries?

[Mr Speaker]

It is a matter for Ministers. Announcements can be made during recess periods, and frequently are, but if the Government know what they intend to announce, I would hope that they would be sensitive to the prior claim of Members of this House to be informed first, rather than the information being disseminated through the media or to some other less deserving source. I hope that that deals with the issue for now; I am genuinely grateful to the hon. Gentleman for raising it.

These matters usually end up having to be announced to the House anyway. We had a case of that some days ago, when, frankly, it would have been better for an earlier statement to be made to the House on grammar schools. It was not made as early as it should have been, but when it was eventually delivered to the House, I did ensure that everyone questioned the relevant Minister, and a considerable allocation was therefore required. It is always better, really, if the Government anticipate these things in the first place, rather than waiting until later than is necessary.

Bills Presented

Small Charitable Donations and Childcare Payments

Presentation and First Reading (Standing Order No. 57)

Mr Chancellor of the Exchequer, supported by Secretary Karen Bradley, Mr David Gauke, Jane Ellison, Simon Kirby, Caroline Dinenage and Mr Rob Wilson, presented a Bill to make provision about the payment schemes established by the Small Charitable Donations Act 2012 and the Childcare Payments Act 2014.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 68) with explanatory notes (Bill 68-EN).

Health Services Commissioning (Equality and Accountability)

Presentation and First Reading (Standing Order No. 57)

Rehman Chishti presented a Bill to make provision to reduce inequalities in the health care received by people with mental illness and learning disabilities; to require commissioners of health services to make an annual report to the Secretary of State on the equality of service provision to, and the health outcomes for, such people and of their qualitative experience of health care services; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 2 December, and to be printed (Bill 67).

Air Quality (Diesel Emissions in Urban Centres)

Presentation and First Reading (Standing Order No. 57)

Geraint Davies, supported by Mrs Margaret Ritchie, Rob Marris, Alex Cunningham, Thangam Debbonaire and Tulip Siddiq, presented a Bill to make provision about urban air quality targets relating to diesel emissions; to require vehicle emissions targets and testing to reflect on-road driving conditions; to make the removal or disablement of pollution-reducing devices in vehicles a criminal offence; to provide powers for local authorities to establish low diesel emissions zones and pedestrian-only areas and to restrict the use of roads in urban centres by diesel vehicles; to promote the development of trams, buses and taxis powered by electricity or hydrogen in urban centres for the purpose of improving air quality; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 18 November, and to be printed (Bill 69).

Sugar in Food and Drinks (Targets, Labelling and Advertising)

Presentation and First Reading (Standing Order No. 57)

Geraint Davies, supported by Graham Jones, Alex Cunningham, Julie Cooper, Louise Haigh, Mark Durkan, Tommy Sheppard, Sir David Amess, Dr Philippa Whitford and Dr Julian Lewis, presented a Bill to require the Secretary of State to set targets for sugar content in food and drinks; to provide that added sugar content on food and drink labelling be represented in terms of the number of teaspoonfuls of sugar; to provide for standards of information provision in advertising of food and drinks; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 4 November, and to be printed (Bill 70).

Profit-sharing and Company Governance (Employees’ Participation)

Debate between Gareth Thomas and John Bercow

Tuesday 26th January 2016 Commons Chamber

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

I beg to move,

That leave be given to bring in a Bill to make provision about the entitlement of employees to benefit from profits made by their employers in certain circumstances; to require a company to allocate one seat on its board to an employee representative; and for connected purposes.

If an employee works hard for a company and helps it succeed and make a profit, surely the owners should share a little of that profit with them and with other employees. The best companies already do that. Indeed, the best companies also want their staff involved in decision making at the highest level, using their knowledge and expertise to help plot company strategy and keep senior management on their toes.

In truth, Britain has a productivity and fairness problem. Despite numerous initiatives, we are behind our main competitors in terms of productivity, while inequality continues to grow. Changing the way companies work—how they take key decisions and who is involved in them—is essential for sorting those problems out. We lag behind the rest of the G7 and most of the G20 in how productive our economy is. Indeed, between 2010 and 2014, annual average labour productivity was lower in Britain than in any other G20 or G7 country. While executive pay has shot up in recent years, the incomes of the rest of the workforce have struggled to keep pace, even with historically low inflation.

Part of the solution involves sharing a little more of the power and profits of big business with staff at all levels. Companies such as John Lewis share some of the profits they make with all their staff, giving the most junior as well as the most senior direct incentives to work even harder, think imaginatively and go the extra mile. Employees also get to help choose the board, again giving staff direct responsibility for selecting those at the very top whose decisions they will have to follow. Ensuring that the concerns of staff are heard at the top table is particularly important, as staff depend on a stable business for their livelihood. Absent owners or disengaged shareholders may have other priorities.

In countries such as France and Germany, this “shared capitalism” is a stand-out feature of business practice. Companies such as Deutsche Bank have staff on their German board who play an important and positive role. In France, firms with 50 or more employees benefit from up to 5% of profits being shared with all staff except recent arrivals. Indeed, French Governments of all political persuasions, right and left, have a long history of encouraging profit sharing among French companies; I understand that laws on profit sharing have existed in France for more than 50 years, requiring a mandatory profit-sharing scheme to be negotiated with French employees. Companies in France can choose to distribute rewards, either as a flat rate to employees, in proportion to wages, in proportion to the hours worked in the previous year, or through a scheme based on a combination of those principles. Arguably, the prevalence of profit sharing makes an important contribution to higher levels of productivity in France. Between 2010 and 2014, France had a level of productivity per hour almost double that of the UK.

Having employees on boards is the norm in many other successful countries. For example, in Denmark, France, Finland, Norway, Sweden and Germany at least one director is elected by the employees. In Norway—favoured by some for being outside the European Union—once a business has 30 employees, one director has to be chosen by the workforce. In Sweden, another key UK ally, once a company has 25 employees, around a third of directors have to be workers in the business. IKEA, that staple of the British high street, has worker directors on its Swedish board. In France, private companies with 1,000 or more employees, or 5,000 or more if they are worldwide, must have at least one or two staff on the board, while a third of all board members for state-owned companies are elected by the staff. In Germany, a third of the supervising board in companies with 500 or more employees are staff, but that rises to half in companies with more than 2,000 employees.

For a long time, this country has been happy quietly to endorse having workers on boards, so long as they are overseas businesses. EDF, France’s leading nuclear energy company, which is in the process of being handed the keys to Hinkley Point, has a board in which one third of members are elected by its workers. Indeed, as a French company, EDF also has a profit-sharing scheme. Deutsche Bahn, which runs much of our rail network through its subsidiaries, has six directors elected by its staff. Even though both companies are key players in British markets, particularly in England, English workers in those companies do not get to vote for board members; it is only German and French staff who do. In short, if German, French and Swedish workers are good enough to sit on a company board, is it not time that British and English workers were given their chance, too?

A number of companies operating in tough markets in the UK have demonstrated that employee directors work. John Lewis is one, and FTSE 100 company First Group is another. Mick Barker is the employee director of First Group. He has been a railway man for 39 years and is employed as a train driver for First Great Western. He serves on its board and various other key bodies. Indeed, First Group encourages its operating companies across the UK and north America to elect employee directors to their boards so that, in its words,

“the views and opinions of staff are represented at the highest level”.

In the UK, concerns about high levels of executive pay and falling workers’ wages have led to some debate about broadening the membership of the remuneration committees of big companies to include staff. Indeed, the Department for Business, Innovation and Skills considered reforming remuneration committees in 2011, but sadly nothing happened. Analysis by the House of Commons Library suggests that if a French-style profit-sharing system was introduced in the UK, corporate household names could be allocating to their staff an extra £500 to £1,200 a year once profits have been declared. Those are not huge sums of money to those at the very top of those businesses, but it would help to reward better the collective hard work required for any business to succeed.

That would neither add to business costs, nor undermine pay differentials between skilled and unskilled workers, or between founder and recent employees, but it would offer an incentive to all to co-operate together to support business success and achieve higher returns for both staff and owners alike. As the Institute for Public Policy Research has noted, if every private sector company in the UK with 500 or more employees had a profit-sharing scheme, over 8 million people in 3,000 British firms could benefit from hundreds of pounds a year extra.

Company law needs to change to reflect modern Britain. Employees’ crucial stake in the success of their employer needs recognition in law. It is about strong businesses, better rewards for staff, higher productivity and a less unequal country. The Bill is a step towards those ambitions, and I commend it to the House.

Question put and agreed to.

Ordered,

That Mr Gareth Thomas, Chris Evans, Meg Hillier, Mr Steve Reed, Mrs Louise Ellman, Mr Adrian Bailey, Rachael Maskell, Stephen Twigg, Mr Mark Hendrick, Stephen Doughty, Kate Osamor and John Woodcock present the Bill.

Mr Gareth Thomas accordingly presented the Bill.

Bill read the First time; to be a Second time on Friday 11 March, and to be printed (Bill 124).

CHARITIES (PROTECTION AND SOCIAL INVESTMENT) BILL [LORDS] (Ways and Means)

Resolved,

That, for the purposes of any Act resulting from the Charities (Protection and Social Investment) Bill [Lords], it is expedient to authorise:

(1) the charging of fees; and

(2) the payment of sums into the Consolidated Fund.—(Mr Rob Wilson.)

CHARITIES (PROTECTION AND SOCIAL INVESTMENT) BILL [LORDS]: PROGRAMME (No. 2)

Ordered,

That the Order of 3 December 2015 (Charities (Protection and Social Investment) Bill [Lords] (Programme)) be varied as follows:

(1) Paragraphs (4) and (5) of the Order shall be omitted.

(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion two hours before the moment of interruption on the day on which those proceedings are commenced.

(3) Proceedings in Legislative Grand Committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on that day.

(4) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.—(Mr Rob Wilson.)

[Mr Speaker]

I remind the House that at the end of the Report stage, I am required to consider the Bill, as amended on Report, for certification. My provisional certificate is available on the “Bills before Parliament” website and in the Vote Office.