Oral Answers to Questions
Jacob Rees-Mogg Excerpts(8 years, 4 months ago)
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Mr Speaker
In the hope that the hon. Gentleman will provide a masterclass in the asking of a question, I call Mr Jacob Rees-Mogg.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
Thank you, Mr Speaker. I congratulate my right hon. Friend on his appointment. I accept that that is not a question but a statement. May I go on to point out to him that Brexit provides a great opportunity? The £24 billion purchase of ARM by SoftBank is a sign of that. The trade deals that are being offered are a sign of that. Will he grasp this fantastic opportunity and lead us through to the “broad, sunlit uplands”?
Mr Hammond
My hon. Friend rightly points to the fundamental strengths of the UK economy. Britain is still one of the most attractive places in the world to do business, to start a business and to invest money, and it is right that we should focus on those positive aspects. But it is also right that we are conscious of the short-term turbulence that we will inevitably experience and of the need to manage that carefully over the next 18 months.
Article 50: Parliamentary Approval
Jacob Rees-Mogg Excerpts(8 years, 4 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Jacob Rees-Mogg (North East Somerset) (Con)
In terms of the doctrine of the sovereignty of Parliament, is it not true that that sovereignty is delegated by the British people, not given to us by divine right? It is absurd to think of the sovereignty of Parliament as being by divine right as it is the divine right of kings. The British people have spoken and given us a mandate, and that mandate must be fulfilled, but the details of that mandate will no doubt be implemented by legislation.
John Penrose
I defer to my hon. Friend and parliamentary neighbour on the legality of where sovereignty begins and ends, and where it is delegated from and to. The fundamental point that is clear from his remarks—and, I hope, from my previous remarks—is that the people have spoken, we are now honour bound to deliver on that democratic decision, and we should not try to resile or step back from it in any way.
Bank of England and Financial Services Bill [Lords]
Jacob Rees-Mogg ExcerptsTuesday 19th April 2016
(8 years, 7 months ago)
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Mr Tyrie
That argument can be turned on its head. One can argue that this sets a precedent that is more easily rolled out, without the need for statutory change, to other bodies. In the Treasury field, we now have a statutory double lock for the appointment and dismissal of the head of the Office for Budget Responsibility, which was recently found to be of some use following controversy about alleged interference in the production of the forecast—again, we did not find any evidence of that, but the perception of it might have weakened the OBR. We have a requirement for a resolution of the House prior to the appointment of the chairman of the Office for National Statistics, and now we also have these arrangements. So we have a battery of different arrangements on which to draw.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
I congratulate my right hon. Friend on achieving this great success for parliamentary scrutiny, and I suggest that it is better to proceed in a non-statutory way. Bringing statute into the proceedings of the House always presents longer term problems, and setting a non-statutory precedent has lots of advantages.
Mr Tyrie
I always like listening to my hon. Friend, who is a member of the Treasury Committee and, of course, a constitutional expert. It is certainly true in this place that a good deal of quasi-constitutional change, which is what we have here, tends to take place gradually and often due to the development of informal arrangements. I think that that is all to the good, which is what I think my hon. Friend is saying.
Budget Resolutions and Economic Situation
Jacob Rees-Mogg Excerpts(8 years, 8 months ago)
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Mr Jacob Rees-Mogg (North East Somerset) (Con)
In broad terms, the Budget is extremely welcome. It continues the extremely sensible policies that the Chancellor set out as long ago as 2010, the essence of which is on page 127 of the Red Book, which sets out receipts and expenditure as percentages of GDP. Tax receipts will run at 35.7%, 36.3%, 36.9%, 36.9% and 37% of GDP over the next few years, which is in accordance with the normal long-run averages. Only in the highest years of tax receipts, going back to the 1970s, has taxation in this country managed to get as high as 38%. That sets out a limit for public expenditure if there is to be a balance, which it is obviously important to achieve when the economy is going well. We therefore see that public expenditure will be managed in line with the receipts that will come in, so that expenditure will be less than receipts by the end of the period.
That is absolutely what the Chancellor promised all those years ago when he said that he would mend the roof when the sun was shining. A glimmer of sun has come through the clouds of international crisis and the Chancellor has been busy on his ladder fixing the roof with his nails, his hammer and his wood. The process is now nearing completion, for which he deserves a great deal of credit.
Turning to the details of the Budget, the Chancellor also deserves much credit for his reforms of corporate taxation. It was Napoleon who first called us a nation of shopkeepers, and I noticed that the Chancellor quoted Napoleon in his speech. That may say something about his European ambitions, with which I am in less agreement, but we are indeed a nation of shopkeepers. Reducing the burdens of rates, VAT and bureaucracy is only to be welcomed and is thoroughly desirable. Ensuring that multinationals pay taxation according to law is also desirable, but it is always worth remembering that tax avoidance is perfectly legal. If tax is being avoided, it is for this House to change the law so that tax must be paid. It is not some moral virtue to pay more tax than the law requires, so removing loopholes is to be much commended.
I fully support the broad thrust of what the Chancellor is doing. He has got it right, and most of his tax measures are welcome, particularly his changes to personal taxation, an area in which I would like him to go further. Having made £8 billion from cutting the top rate of income tax from 50p to 45p in the pound, he should go further in an exuberant, Laffer-like fashion and cut it back to the rate at which Gordon Brown had it throughout his period as Chancellor.
The area with which I find the most disagreement is found on page 19 of the Red Book, which sets out the economic opportunities and risks linked to the UK’s membership of the European Union. [Interruption.] I am delighted that the nationalists, who so crave independence for themselves, none the less wish to be shackled to the European Union—it is one of their idiosyncrasies that many of us find so charming. If I may, I will deal with that extraordinarily tendentious page, strewn with errors, overstatement and over-egging the pudding. Let us start with the very first line, which states:
“Membership of the EU has increased the UK’s openness to trade and investment”.
That is entirely disputable. In fact, all our membership has done is put us in a customs union with very high levels of regulation and a high external tariff. The tariff on dairy products coming into this country is 42%, much to the disadvantage of our friends in New Zealand. So EU membership has not made us more open; it has closed us to some areas.
Page 19 continues with the statement:
“The UK’s full access to the single market…clearly increases the openness of the British economy”.
There is a word for that, and it is “balderdash”. What access to the single market does is put the dead hand of regulation on the 95% of British businesses that never trade with the continent. They are suffering from that regulation, and their business is made harder to do. This has nothing to do with openness; it is to do with burdens.
Then we get to a bit that I think shows the Chancellor’s wonderful and sophisticated sense of humour. He says:
“At the February 2016 European Council, the Prime Minister secured a new settlement for the UK in a reformed EU.”
It has to be said that the EU was most certainly not reformed at that Council, and our settlement in it was so small as to be hardly noticeable. At the same time it gave away our ability to veto any treaty for fiscal union to follow the monetary union. We said we would do nothing to obstruct that, so we gave away our strongest negotiating hand for nothing—for thin gruel.
Jim Shannon
It is always a pleasure to listen to the hon. Gentleman’s contributions in the House—we enjoy them very much. Does he agree that one thing the Prime Minister did not secure was anything for the fishing sector, and that he also secured very little for the farming community? Does he agree that the Prime Minister should have tried to get a settlement with those two things at the forefront of his agenda, to try to achieve things for those sectors? Those were just two sectors that he neglected.
Mr Rees-Mogg
I agree with the hon. Gentleman entirely that fishing and farming—the common fisheries policy and the common agricultural policy—are two of the great disasters of the European Union. The fact that they are not reformed and take so much of the budget—40% in the case of agriculture—is a considerable disgrace.
Mark Pritchard (The Wrekin) (Con)
I was listening to my hon. Friend and waiting for farming to come up. Is he aware that the National Farmers Union in Shropshire and the NFU nationally want to remain in the EU, believing that being an active member of the EU is actually very good for British farming?
Mr Rees-Mogg
Oh the great panjandrums, all with glee, merrily gather to support the Government, in the hope of their knighthoods, their peerages and so on. But when I speak to Somerset farmers, the finest farmers in the land, I see that they value the independence of their nation above a cheap ride from Brussels. Furthermore, we pay into the CAP almost double what we get out, so our farmers could have more money if we were independent.
Mr Rees-Mogg
I will not give way again, because I do not get a bonus minute for doing so and I need my minutes in this particular debate.
I want to get on to the third paragraph on page 19 of the Red Book, which talks of the “profound economic shock” that would be created by leaving. There is the over-egging of the pudding to which I was referring. The OBR is characteristically measured, saying that in the timescales with which it deals it is not possible to model any changes from leaving the European Union, but the Red Book says otherwise. It states that there will be years of uncertainty, but that assumes that our partners in Europe will lie and cheat. But they are our friends, or so the Government will have us believe, and article 50 of the treaty on the functioning of the European Union provides for a very straightforward two-year process for extracting ourselves, which my right hon. Friend the Prime Minister has said he will exercise if Brexit is successful. Again, what the Red Book says is exaggerated, wrong and bordering on the hysterical. It then goes on to talk about the single market in services, but that has still not been completed. It was something the Prime Minister was arguing for and did not get in the rather hopeless renegotiation he tried in Brussels not so long ago.
The final paragraph of page 19 states:
“Remaining in a reformed EU will make the UK stronger, safer and better off.”
[Interruption.] The Solicitor-General cheers from a sedentary position, as he has cheered these points since he was speaking to Edward Heath many years ago and thought that that was the way forward.
The EU fails in all that it does: it fails in the common agricultural policy; it fails in the common fisheries policy; and it fails in migration policy. The euro has been ruinous for those member states that have joined it. The idea that we are richer and securer with this disastrous project is cloud cuckoo land stuff. It is broad sunlit uplands for the UK economy if we deregulate, if we trade with the rest of the world, and if we look beyond this narrow European focus.
You will remember, Madam Deputy Speaker, that when Gordon Brown was Chancellor of the Exchequer, Conservatives complained that the Red Book, instead of being the austere document that set out the facts of the economy, was used to spin the Government’s view of the world. What a pity it is that this Red Book is following the Gordon Brown model of Red Books, rather than that higher tone that previous Tory Chancellors have followed.
I want to finish with one point on which I disagree with Her Majesty’s Government even more than I do over Europe—[Hon. Members: “Surely not!”] Surely, yes. I am talking about the outrageous proposals to bring my county of Somerset under the yoke of Bristol in this devolved metro Mayor system that none of my constituents want. We admire Bristol. We think Bristol is a fine and fabulous city, but it does not need to have Somerset money to subsidise it. It can live off its own. We tried all this with Avon. What Avon meant was that Somerset paid and Bristol spent. I am glad to say that the unitary authorities of the west of England area—what used to be known as Avon and will be Avon again if the Government have their way—will each individually be able to vote down this proposal. I will urge councillors in north-east Somerset—I know that councillors in north Somerset have previously rejected the same idea—to stand firm and not be bullied by the Government. They should not be seduced by £30 million a year, which is considerably less divided by four than the cuts that they have successfully implemented over the past six years. They must be bold and independent. I want independence for my nation, and I want independence for my county.
Mr Rees-Mogg
I am not Scottish; otherwise I hate to think what I might be saying in that regard. I am a Briton, and I am for the Union because my country is the United Kingdom. I want freedom for the United Kingdom and freedom for Somerset. I say no to devolution and no to European tyranny.
Oral Answers to Questions
Jacob Rees-Mogg Excerpts(8 years, 8 months ago)
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Mr Osborne
I know that Russia Today is the favoured channel of the Labour leadership, but this is Treasury questions. We are raising with the European Union—this is another example of where being part of a bigger club helps—the possibility of getting a pan-European agreement for country-by-country public reporting so that we can see what multinational companies are paying in different countries. Of course, our ability to achieve that is amplified by being part of the EU.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
If my right hon. Friend’s rather apocalyptic view of our leaving the European Union is correct, was it not irresponsible and inaccurate of the Prime Minister to say that he ruled nothing out prior to the completion of the most unsatisfactory renegotiation?
Mr Osborne
We have secured a renegotiation that I think addresses the principal British concerns about our membership of the European Union, and now we can advocate membership of this reformed EU. I think we will be stronger, safer and better off in that European Union.
Electoral Law
Jacob Rees-Mogg Excerpts(8 years, 9 months ago)
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Mr Jacob Rees-Mogg (North East Somerset) (Con)
May I say what a pleasure it is to be serve under your chairmanship for the first time in the new year, Mr Howarth?
The proposed Council decision, which is, I am glad to say, subject to unanimity and ratification by member states, aims to harmonise certain aspects of the conduct of European Parliament elections in member states. Initiated by the European Parliament on the basis of article 223(1) of the treaty on the functioning of the European Union, its more significant measures include common deadlines for establishing lists of candidates and electoral registers; making members of regional parliaments and legislative Assemblies ineligible for election as MEPs; proposals concerning the gender equality of candidates; proposals on electronic and postal voting; some mandatory 3% to 5% thresholds for winning seats; proposals relating to voting by EU mobile citizens and their data; incorporating the spitzenkandidaten process, under which there is a pretence of electing the Commission President; and making provision for detailed implementing rules. However, it does not include aspirational proposals, only set out in the European Parliament’s resolution, such as a common minimum voting age of 16 and a common voting day.
On 13 January, the European Scrutiny Committee recommended a reasoned opinion on the proposed Council decision. The reasoned opinion procedure, introduced by the Lisbon treaty, allows national Parliaments to object to a draft legislative act if they consider that it breaches subsidiarity. That principle requires that decisions should be taken as close to the citizen as possible. National Parliaments have eight weeks from transmission of a proposal to submit a reasoned opinion. If such opinions represent one third of all votes of national Parliaments, they constitute a yellow card. The initiator of the proposal, in this case the European Parliament, must review it. The EU Committee in the House of Lords has also decided to recommend a reasoned opinion. The Government have expressed some subsidiarity concerns, saying that some aspects of the proposal are best decided at national level. Their main concern appears to be that uniform practice for European parliamentary elections would be inconsistent with domestic electoral practices, making it difficult for the UK to hold European parliamentary and local elections at the same time, resulting in further reduced turnouts for European parliamentary elections.
The European Scrutiny Committee concluded in its reasoned opinion that there is no detailed subsidiarity statement in the draft legislative act, so the European Parliament has failed to comply with an essential procedural requirement; there is, in any case, insufficient substantiation in the resolution and the European “added value” assessment; and the proposal’s objective of creating a uniform electoral procedure to enhance the European Parliament’s democratic legitimacy through electoral equality is undermined by harmonisation at a level of detail which divorces the European Parliament’s electoral procedure from well-established and recognised domestic procedures. Bearing that in mind, the European Scrutiny Committee has raised specific objections questioning the European Union’s “added value” benefits of all of the significant measures outlined, excepting the measures on spitzenkandidaten and implementing rules.
The European Scrutiny Committee was not assisted greatly in this task by the Government’s inadequate subsidiarity and financial assessment of the proposal for the reasons set out in paragraphs 1.7 and 1.8 of its report, and so asks the Minister to comment on that.
The Chair
We have until 10 am for questions to the Minister. I remind Members that they should be brief. It is open to a Member, subject to my discretion, to ask a related supplementary question.
Mr Rees-Mogg
I have only one question for my hon. Friend and neighbour. The proposal before the Commission is subject to unanimity. Will the Government undertake to veto the proposal?
John Penrose
I am not sure of the formal status of our reasoned opinion, but as I plan to state later on, we disagree with large chunks of the proposal, so I cannot see that we will approve it in any form.
Mr Rees-Mogg
It is always a pleasure to follow the hon. Member for Caerphilly. Like him, I am a convinced European, but I am convinced about it as a geographic entity, rather than as a political one—I have rather more suspicions than him about that, and those suspicions are highlighted by the documents that we are considering.
The text adopted by the European Parliament is something to which all hon. Members should pay careful attention, because it sets out with great clarity and honesty the ambition of the European Parliament: how it views itself, and what it wants to get out of the process. It is a fascinating document, because although the view it expresses is the opposite of mine, that is the reality of where the European Union aims to go. It is clear in the document that the European Parliament sees itself at the forefront of creating a single European state.
Looking at the 35 reasons for why this proposal is necessary which are set out by the European Parliament, a common thread runs through them of our fundamental nature as citizens not of the United Kingdom but of a state called Europe. I promise that I will not go through all these points. Although the time is available, it would try the patience of hon. Members. Point B states that the aim is to,
“reinforce the concept of citizenship of the Union, improve the functioning of the European Parliament and the governance of the Union, make the work of the European Parliament more legitimate”.
It is about giving the European Parliament more power and more authority because of this concept of citizenship. Point E addresses voters’ lack of interest, with a particular concern for younger voters, stating that,
“voters’ lack of interest in European issues is posing a threat to the future of Europe, and whereas there is therefore”
—that is a particularly ugly construction, even considering that it must have been translated from several languages. I hate to think what the Finnish might be for “whereas there is therefore”—
“a need for ideas that will help to revive European democracy”.
I do not believe in European democracy. I believe in the democracy of the United Kingdom and of France and of Germany coming together as nation states, not in this broader concept. However, the European Parliament is quite clear about it. The document continues with a statement, as the hon. Member for Caerphilly said, of the power of the European Parliament, which,
“now has equal status as co-legislator with the Council in most of the Union’s policy areas”.
The European Parliament’s competencies have been gradually increasing, so it has got a long way towards what it wants to achieve with these advancing competencies. Point K sets out that the concept of citizenship of the Union,
“includes the right of Union citizens to participate in European and municipal elections”.
This focuses on the creation of citizenship of a single state, with the concern that electoral campaigning remains national. In this country it is entirely national, and there was hardly any mention of what was going on in continental Europe during our last European Parliamentary elections. That is because we believe in the nation state. The European Parliament is pushing again and again towards the creation of a single state. Point M states that,
“European political parties are best placed to ‘contribute to forming European political awareness’”.
Well, I am a member of the Conservative party, as people may have realised, or, if hon. Members prefer, the Tory party—that may in some ways be more suitable for me. It is technically a European party. It has a function within the geographic continent of Europe, but I must confess that I have never thought it was my role to contribute to forming European political awareness except as something to object to. The European Parliament has adopted a European awareness about Europe as a single state. This is made clear in point U, which states that,
“establishing a common European voting day would better reflect common participation by citizens across the Union, reinforce participatory democracy and help create a more coherent pan-European election”.
It is trying to create a legitimacy that is certainly not there at the moment for their scheme to create a single federal state. This is of the greatest importance. Point AI, which is the last point to which I shall refer and indeed the last point in the document, refers to,
“the principle of degressive proportionality”.
Again, I do not really know what “degressive proportionality” means. This is one of the problems with European documents. One has to get into the interstices of these documents to try to find out what they might mean in plain English, and then reveal that as far as one can in these Committees. It continues,
“the principle of degressive proportionality enshrined in the TEU has contributed significantly to the common ownership of the European project between all Member States”.
We all know what that European project is. It is about the advance to a single state in which the European Parliament is the Parliament of the European Union and we become a mere assembly within it, perhaps somewhere between a county council and the Scottish Parliament but not a proper national assembly. This document shows the route of travel of the European Union. That is where the current context is so important, because the Government are trying to paint a picture of it going our way—that over there, they are not as ambitious as they once were and they accept that closer European integration was yesterday’s story. We hear it again and again—with magnificent renegotiation, we are finally halting the tide of pro-Europeanism.
Then we have an unnumbered European document, a European Parliament resolution of 11 November 2015 on the reform of the electoral law of the European Union, that gives the game away. This is a usurping and pretending Parliament that seeks to take powers from us and is looking towards fulfilling its ambition of a single European state. The Government must oppose it by veto and we must send forth our clear concern about subsidiarity, but most importantly—above and beyond all the technicalities that we get from reading these papers—we must understand what is happening, what the aim is and what the ambition is. If we quietly discuss it in a Committee of a dozen people, and we do not make sure that it is more widely known that this is what is happening, we will find—regardless of renegotiation or referendum—that we are in a greater European state.
Wayne David
Does the hon. Gentleman agree that it is important to keep things in perspective? What we have here is a view from the European Parliament, expressed—I suspect—by just a few MEPs who happened to get together in a Committee. It does not reflect the view of member state Governments or the people of Europe.
Mr Rees-Mogg
The hon. Gentleman is brilliant, and it is always a pleasure to take his interventions and hear his wonderful exposition of how this is all fine. He says it is a very mild document from the European Parliament, and that the European Parliament does not really matter. I am sure that he did not say that when he was sitting in Strasbourg or going back and forth between Strasbourg and Brussels.
This is a document that has been approved by the European Parliament. The European Parliament is one of the three pillars of the European Union, alongside the Commission and the Council. The idea that this is a quiet paper put forward by a few MEPs on the European Parliament equivalent of an all-party parliamentary group, to be read in a village hall in Surbiton—if it has one—is absurd. This is a really serious document that has gone before the Council and is now a Council proposal. It is within one unanimous vote by the Council of being adopted as law across the European Union.
Fortunately, the Government have a veto and have indicated that they will use it. That is extremely good news, but it is a wonderful concoction to suggest that the document is something mild that can just be ignored. I wish it were so and that the European Parliament could be so easily dismissed, but regrettably it has become a major player in the development of the European project—understandably, because MEPs want power for themselves. That is probably why they stand for election and, as the hon. Gentleman said, Parliaments are always looking for more powers. But since Lisbon, it has a lot of them and this is a further push. What is so important about it is that it shows the reality of what is aimed for in the EU—the direction of travel has not changed. We may go down the road at a slightly slower pace—we may be on a bicycle when other members of the European Union are in Ferraris—but the destination is the same.
Financial Conduct Authority
Jacob Rees-Mogg Excerpts(8 years, 9 months ago)
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Mr Jacob Rees-Mogg (North East Somerset) (Con)
It is a pleasure to follow the hon. Member for East Renfrewshire (Kirsten Oswald) and to learn the phrase, “Couldn’t run a ménage”, which I hope will replace, “Couldn’t run a whelk stall”. I have always thought that was probably rather difficult anyway, so “ménage” is a better term.
I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on bringing forward this debate and on his amazing achievement in getting some redress of grievance not only for his own constituents but for many of our constituents, mine included. The Hong Kong and Shanghai Banking Corporation behaved quite disgracefully towards one of my constituents. It sold an interest rate swap that was larger than the loan outstanding—it was a condition of the loan taken out —and then, when interest rates fell, it revalued the loan to say that his loaned value was beneath the required level. It therefore put him in special measures and started to impose penal interest rates, and then when I got in touch, it said that under data protection it could not talk to me. The whole story was really quite disgraceful and not what one would expect of a major banking corporation. We are all very grateful for what has been done to get some redress for this.
I must refer to my declaration of interests. I am regulated by the FCA and have been for many years. I was regulated by its predecessor body, the FSA, and before that, going back to the mid-1990s, by IMRO—the Investment Management Regulatory Organisation. I do not think I have Stockholm syndrome, but I have to tell the House that I cannot support my hon. Friend’s motion. That is not because I do not think there have been errors of regulation—there have. We know only too well that the tripartite system of regulation prior to the crash in 2008 was a failure—nobody knew precisely who was in charge of what aspect of regulation and how it was to be managed, and in the end nobody was doing it at all. The FCA, however, was only introduced in 2013 and a lot of the problems to which hon. Members have referred predate its creation. This House legislated in the previous Session to try to deal with the problem, so this motion has been tabled much too early, because the FCA has not had the chance to prove that it is different from the FSA. The FSA undoubtedly failed, which is why this House abolished it.
Guto Bebb
I appreciate the points my hon. Friend is making—they are entirely reasonable—but I think that the difference between the FSA and FCA is being over-emphasised. The people who were FSA officers when the all-party group on interest rate swap mis-selling was established were the same people as the FCA officers who attended our first meeting after the FCA was established. I think that the degree of change is being overstated.
Mr Rees-Mogg
I do not agree with my hon. Friend on this occasion. Inevitably, some employees remained the same. It would have been extraordinary if all the regulators at the FSA had been fired and sent off to the great regulatory house in the sky. The powers and the responsibilities of the FCA were changed and, indeed, it has carried out an investigation.
The FCA has to be judicious and bear in mind that some people took out swaps knowing full well what they were doing. Not every swap that was sold was mis-sold. Interest rate swaps are a very important safeguard for people who are uncertain of the direction of interest rates. Indeed, with interest rates at their current lows, many people may feel that it is prudent to protect themselves by taking out an interest rate swap. It would be wrong to so overtighten regulation or to be so sensitive to what happened in the past to make beneficial financial instruments unavailable because of historical mis-selling. Each case needs to be looked at on its merits.
When I first took out a mortgage, I did so at a fixed rate because I knew I could afford to pay that rate but was uncertain about whether I could pay a higher rate. That is a prudent and sensible thing for people to do when engaging with the financial sector. The FCA had a big job of work to do in a quasi-judicial role. It could not just arbitrarily decide that all cases were mis-sellings and therefore they all had to be compensated for.
This House, too, needs to be judicious. The motion is really serious. It says that we have no confidence in an arm’s length independent regulator that this House established just three years ago. If we really mean that, we ought to be legislating to create a new one. We should not simply pass a motion; we should say that the body has failed, that it will be abolished as of 1 April and that a new one will be created.
This motion represents an intermediate step whereby the House faces one of two risks. One is that it is passed this evening and, like many other Backbench Business motions, absolutely nothing follows from it. This House would then look foolish. It would look as if whatever we say makes no difference and we would have no future power to bring our authority to bear on independent regulators when things may be more serious.
The other risk is that the chairman of the FCA feels that he has to resign and take responsibility, because there is no chief executive of the moment, which makes this a very strange time to be holding this debate. If the chairman falls on his sword, what would we achieve? One person would go, but the organisation would remain intact because we have not legislated to replace it.
This House should be proud of its constitutional standing and recognise the extraordinary power it has. We can summon people to the Bar of the House if we are sufficiently annoyed with the way they conduct themselves. We can make them answer to Select Committees, and indeed we do. However, if we use that power without due consideration, without being certain and without having every fact at our fingertips that this body, not its predecessors, is the one in which we have no confidence, we undermine the standing of the House of Commons and its ability to do that in future when our case may be better founded.
James Cartlidge (South Suffolk) (Con)
My hon. Friend is making a typically powerful speech and I agree with much of his argument, but does he not accept that we are here primarily to represent our constituents and that the reason so many Members are upset with the FCA is that it is not giving redress? The time it is taking is so frustrating and the motion puts pressure on it to provide redress.
Mr Rees-Mogg
I am grateful to my hon. Friend for that intervention, because I think there is a difficulty with time. Reference has been made to the HBOS report, which took a long time to come forward. Again, it started under the FSA, and the failures were of the FSA, not of the FCA. For a body that has been going for only three years, such a timespan is perhaps not that unreasonable, given that for two of those years it was making a specific investigation.
We have made huge progress, thanks to my hon. Friend the Member for Aberconwy, in achieving redress of grievance. That is enormously important, and it is right to do that. However, a vote of no confidence is the nuclear weapon of Parliament. It is something that brings Governments down. If we pass the motion, it ought to lead to fundamental change at the FCA and resignations, but I fear that we are trying to fire this gun before we have loaded it with gunpowder, and that therefore it will misfire. In that respect, I hope that my hon. Friend will withdraw the motion, because I think it has had its effect through the debate.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sorry to say that we are now going down to five minutes, because of interventions. I call George Kerevan.
Charter for Budget Responsibility
Jacob Rees-Mogg Excerpts(9 years, 1 month ago)
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John McDonnell
I will in due course.
It is increasingly clear that the charter and the fiscal mandate are not economic instruments, but political weapons. This is not an economic debate. It is about the politics of dismantling the welfare state, the closing down of the role of the state, and the redistribution of wealth from the majority to the minority. Austerity is not an economic necessity; it is a political choice.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
The hon. Gentleman said at the beginning of his speech that he wanted to reduce the deficit, but whenever any cut is proposed, he is against it. What would he cut? What would he do to balance the books?
John McDonnell
If the hon. Gentleman bears with me, he will discover the answer. He is renowned for his patience.
Tax Credits
Jacob Rees-Mogg Excerpts(9 years, 2 months ago)
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Seema Malhotra
My hon. Friend is absolutely right, and it is shocking that a Government who profess to care about democracy should be so afraid of scrutiny.
Today’s changes are substantial and highly controversial, and we oppose them.
Seema Malhotra
I will in a moment.
These cuts in tax credits will hit working families in every constituency, and they were to be sneaked in through the back door. Indeed, when asked directly during the election campaign whether the Government would cut child tax credit, the Prime Minister said:
“No, I don’t want to do that.”
His statement was repeated on “Question Time” on 1 May. Today’s debate is about a political decision made by the Chancellor which is set to see more than 3 million families lose an average of £1,000 a year.
Seema Malhotra
I will in a minute.
This measure is ideologically driven, it is cynical, and it will directly increase levels of poverty in Britain.
James Cartlidge
If the measure is passed, will it be Labour’s policy to reverse it?
Seema Malhotra
I will give way in a moment.
Effectively, these regulations, which come into force in April next year, will lower the level at which working tax credit starts to be withdrawn from £6,420 to £3,850, and increase the taper rate at which tax credits are withdrawn from 41% to 48%, meaning that for every £1 earned over the threshold there will be a 48p reduction in the level of tax credit entitlement. As a consequence of these changes to working tax credit, the level at which child tax credit begins to be taken away is lowered from £16,105 to £12,125. This change was not announced in the summer Budget, but is a consequence of steepening the taper for working tax credit.
Seema Malhotra
I will not give way.
These measures will hit families with children the hardest and impact on child poverty at a time when the Government are also abandoning their commitment to eradicating child poverty by 2020, and effectively abolishing the child poverty watchdog. The Social Mobility and Child Poverty Commission’s remit will now just be social mobility. Tax credits have played an enormous role in tackling child poverty. I hope that Government Members will think twice before they go through the Lobby tonight.
Mr Rees-Mogg
I am very grateful to the hon. Lady for giving way and I congratulate her on her promotion and her new appointment. She is now more than quarter of an hour into her speech, but we still do not know where the £3.4 billion would be saved from, if not from this measure? The Opposition cannot be credible if they are still going to go for further deficit spending.
Seema Malhotra
The hon. Gentleman’s constituents will certainly be pleased to hear him raising their concerns about the likely impact of these changes on their incomes. I hope that he will engage—[Hon. Members: “Answer!”] He has heard the answer before from the Labour party. We certainly would not give tax cuts to the very wealthy in this country, which his party has had a good record of doing over the past five years.
Around 10 million people—a sixth of the population—will be affected by these changes. Every Member in the House represents some of those who will be hit—around half the working families in our constituencies. However, it is heartening to read in media reports today that at least five Members on the Government Back Benches are planning to vote against the changes. We have also heard reports, cited by the Chair of the Work and Pensions Committee, that the Chancellor spent yesterday talking to anxious Tory MPs and urging them not to defeat him in the vote today, after they took him at his word when he said that the Government represented low-paid workers. I am sorry that Conservative Back Benchers feel let down by their Chancellor, but it is not too late for the Government to change their mind.
It is disappointing that the Government have failed to tackle the real drivers of welfare spending—notably, low pay and the high cost of rent. That failure caused the Department for Work and Pensions to overspend by £25 billion over the last Parliament. The Chancellor has slashed entitlement to housing benefit, including through the bedroom tax and the benefit cap, yet the number of working people being paid housing benefit has still risen by 400,000 since 2010 because working people are not bringing home enough money to pay the rent. The number of people paid less than a living wage has risen by 45% since 2009, with 4.9 million workers today being paid less than the living wage.
This week the Government also launched the most sustained attack on rights at work in 30 years. The Trade Union Bill amounts to a suppression of the democratic rights of ordinary people, and the Government’s cuts to tax credits are a disgraceful attack on the incomes of families up and down the country. Labour would bring down welfare spending not by punishing the most vulnerable but through supporting a higher wage economy, introducing a real £10-an-hour living wage, tackling high rents by addressing the housing crisis, and supporting trade unions to ensure fair pay.
The proposed changes arguably represent the largest single cut to family incomes ever implemented by a Government. I hope that Conservative Members will search their consciences on this issue and vote with their hearts and their heads by joining us in the No Lobby today.
EU general budgets for 2015 and 2016
Jacob Rees-Mogg Excerpts(9 years, 2 months ago)
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The Chair
Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the relevant documents to the Committee? Mr Rees-Mogg, do you wish to speak?
The Chair
No. I have on my notes “likely to be Jacob Rees-Mogg”. As we have an outbreak of good humour, I call the Minister to make the opening statement. You have no more than 10 minutes, Minister.
Mr Gauke
May I put it on record that I am grateful to see the hon. Member for Worsley and Eccles South in her place? I hope we can continue to debate this and other matters in future. I am also delighted to see the hon. Member for Scunthorpe in his place, and I hope we will continue to debate Treasury matters.
First, in terms of our position on the EU solidarity fund, the Government support the objectives and principles of the fund in providing assistance to member states affected by serious natural disasters. However, the Government also take the view that the Commission should always look first to reallocate funds from within existing agreed budgets to meet in-year pressures, rather than coming to member states to request additional money. Past examples show that the Commission is able to find reallocations—for example, when programmes are delayed or take-up is slower than expected.
In terms of the budget more widely and the need to prioritise areas relating to jobs and growth, the Government’s record is clear. As I made clear in my opening remarks, the best way to put pressure on inefficient spending is to cap the overall expenditure. The deal negotiated by the Prime Minister in February 2013 was the first real-terms reduction in the EU budget, and such budgetary restraint is very important. As the Prime Minister said at the time, EU spending reform is a long-term project, but the deal that he secured represents important progress, including on common agricultural policy expenditure. While spending on CAP was cut by 13%, spending on areas of pro-growth expenditure increased and now accounts for 13% rather than 9% of the overall budget.
It is also worth mentioning wider budgetary reform. The UK welcomes the objectives of Vice-President Georgieva’s “budget for results” initiative, which aims to develop a more performance-orientated budget that delivers tangible results for EU citizens. We are working closely with the Commission on that and see it as an important opportunity to help improve the value and efficiency of EU spending and to increase transparency about it for taxpayers. The Chancellor made our position clear at ECOFIN earlier in the year. We have held discussions with the Commission and offered technical assistance, and we are keen to drive this agenda forward.
On migration funding and our response to the crisis, the UK is of the view that a great impact can be made in conflict regions, which is why we are the second largest bilateral donor to the Syrian relief effort. We will continue with our significant efforts to ease the burden on front-line member states by providing practical, on-the-ground support. In line with the Prime Minister’s announcements, we will also take forward plans to resettle up to 20,000 Syrian refugees over the course of this Parliament.
With regard to funding of Frontex, to which we contribute not via the EU budget but through a separate bilateral contribution, we will match increased EU funding as proposed under draft amended budget 5. I hope those points are helpful to the Committee, and I will be happy to answer any further questions.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
May I say, Mr Walker, what a great pleasure it is to serve under your chairmanship for the first occasion in this Parliament? I did so many times in the previous Parliament when you were chairing, with great élan, the Procedure Committee.
To begin with, what are the Minister’s expectations for our rebate? It has gone up this year, which is good news, but last year we obviously had the problem of suddenly discovering that we owed the EU a great deal more money. Does he think that that will be a recurring problem or will the good news on the rebate be the more important part?
Mr Gauke
In terms of the rebate and the surcharge, which, as my hon. Friend rightly pointed out, emerged last year, the first point is that he is right that the rebate has increased. The effect of that is that the net additional contribution, as a consequence of revisions to our gross national income, has fallen by something in the region of €100 million. It is worth saying that the draft amending budget before us confirms this; that is an important point. On the wider question of whether we are likely to see any repeat of what happened last year, it is worth remembering the negotiation achievements that were reached last year by the Chancellor of the Exchequer, ensuring that no country is bounced into having an additional liability in the way that occurred last time.
When it comes to the revisions of GNI that have an impact on the calculation of contributions of member states, as far as the UK—or, indeed, any member state—is concerned, until all revisions have been done by all member states, it is not possible to make an assessment of precisely what additional sum is likely to be made.
Finally on this topic, let me make it perfectly clear that under this Government the UK rebate is safe. The rebate will continue to be calculated on an unchanged basis. There was no change to the formula and no change to the types of EU expenditure that we get a rebate on. The UK abatement remains fully justified due to continuing expenditure distortions in the EU budget; it is simply a matter of fairness. In terms of the surcharge issue, which is a separate but related one, we cannot yet say whether the UK will make a payment or receive a repayment from the EU later in the year until all calculations have been completed.
Mr Rees-Mogg
The Minister said that the external aid budget will go up by 22%. Do our contributions to it that go through the European Union but are not co-funding operations with the European Union count towards our 0.7% target for overseas aid?
Mr Rees-Mogg
Very often in these European debates on the budget, we look at the smaller issues, but subheadings 1 and 2—economic, social and territorial cohesion, and sustainable growth and natural resources—cover about €111 billion of expenditure. Those terms seem to be vague and woolly. Will the Minister give us some more guidance as to where the money really goes? What is economic, social and territorial cohesion, other than building a fence in Hungary? What is sustainable growth and natural resources? I do not think that we are not doing a lot of mining in the European Union.
Mr Gauke
On my hon. Friend’s previous question, I can confirm that the contribution to the EU budget that is spent on overseas aid is included in our 0.7% official development assistance target. I am pleased to be able to provide that clarification.
My hon. Friend makes a wider point about the vagueness of the definitions, but that is perhaps not unique to the European Union. Whether descriptions relate to UK expenditure or various UN conventions and expenditure, they are not always as clear as they might be. There have been issues in trying to explain to the general public how we spend money within the UK, and such terms can be a little vague. I support my hon. Friend’s enthusiasm for greater transparency in this area. The Government introduced UK taxpayers to tax summaries setting out where expenditure goes so that they can be better informed about how public money is spent.
On the EU budget headings, my hon. Friend referred to sustainable growth. This includes common agricultural policy pillar two spending, which focuses on rural development that is environmentally sustainable. That is part of heading 2 spend. The EU budget spend contributes to financing through various programmes. For example, Horizon 2020, which I touched on earlier, is perhaps one of the less controversial areas of EU expenditure, as are cohesion funds for sustainable development within the EU.
I hope that I have provided some information for my hon. Friend about the relevant headings, but if he would like more, I am happy to set that out.
Mr Rees-Mogg
My initial point is that we should always remember that when the EU budget talks about “own resources”, it means our money, which was the point that Margaret Thatcher made so forcefully all those years ago to get our money back. The EU does not, in fact, have any of its own resources. It has money that it squeezes out of the British taxpayer, and it gives us a little bit back in return, but it does not have its own resources.
I am concerned about the size of the budget that is spent on things about which we know very little, except the common agricultural policy, which I fear is used to subsidise inefficient continental farmers and damages the interests of our farmers, because it is biased in favour of small, inefficient farming units whereas so many of our farmers have consolidated. That is a particular problem when dairy prices are so low because our farms, have become much more efficient, in many cases quite painfully.
My neighbour, my hon. Friend the Member for Somerton and Frome, and I have large rural constituencies with a lot of dairy farmers who suffer because the CAP is focused away from British farmers to less efficient farmers—and we pay for it. That seems to be the worst of all possible worlds. It will, as the hon. Member for Worsley and Eccles South said, go down to representing 35% of the EU budget, but that is still an enormous amount to be paying in agricultural subsidies. If we look at the experience of New Zealand and how competitive it has become after weaning itself off subsidies, the lesson is quite clear. We want efficient, larger farming units that are able to compete globally, not to have the principles of the 1960s applying to farming.
It is also difficult to know where the money is going, which was why I asked the Minister about the €110-odd billion in the main parts of the budget. We often argue about the rise in administrative expenses. They are important, but they are 6% of the budget, and that 6% of the budget ought to be reduced. An administrative cost of 6% is pretty high in the context of other Administrations but if we save money there, we are talking about hundreds of millions, whereas if we save money in the major part of what the EU is doing, we can talk about saving billions. It really is a question of going through this line by line and seeing whether the money is being spent reasonably.
Perhaps Parliament does not take the whole issue of European spending seriously enough because we hand the money over and that is it, whereas we spend four days debating the UK Budget, as well as the autumn statement and so on. However, we are having a two-hour debate with not many participants on a quiet Monday afternoon in which we are discussing the very large European budget, the inefficiencies that go with that, and the aspects of the spending that may not be in the British national interest.
I am fully supportive of what the Government have done on the MFF—it was an absolute triumph. I did not think that it would be possible to get the European budget cut. It worries me that outside the MFF, the process is subject to qualified majority voting, so our ability to limit things is seriously curtailed and, as the Minister suggested, we have to find allies in like-minded countries that do not want spending to go up. The question is whether the use of this money is wasteful and in the British national interest. The reminder is, as always, that this is our money—our taxpayers’ money.