Coronavirus: Employment Support

Lord Beamish Excerpts

Thursday 19th March 2020 Commons Chamber

[John Glen]

My hon. Friend makes a reasonable point about the hospitality sector, and a very credible suggestion with respect to VAT. Across the benefits system and the tax system, we are looking at the optimisation of interventions to support the most vulnerable and most affected at this time, and to give reassurance to the whole country. We will urgently bring forward measures to address the concerns that he has raised.

[Mr Kevan Jones (North Durham) (Lab)]

Individuals are losing their jobs now—they are in desperate need now. Andrew Brown, a freelance graphic designer in my constituency, contacted me this morning; his business has folded overnight, and he cannot apply for any grants because he works from home. What does he do in that situation? The Minister talks about the great package that was announced the other night, but councils still do not have the guidance to get that money out to businesses. I urge him to get that out as a matter of urgency, because this morning Durham County Council told me that it will not be available until the weekend, and that is too late.

[John Glen]

I thank the right hon. Gentleman for his points. I accept the need to give urgent advice through the Ministry of Housing, Communities and Local Government. My understanding is that that advice will be coming tomorrow. I understand—

[Mr Kevan Jones]

It is too late—businesses are going bust now.

[John Glen]

I understand the frustration felt in the House. We are all receiving emails from constituents who are in a state of great anxiety. The Government are working—

[Mr Kevan Jones]

You are not!

[John Glen]

We are collectively working as hard as we can to come up with the right package as soon as possible.

Economic Update

Lord Beamish Excerpts

Tuesday 17th March 2020 Commons Chamber

[Rishi Sunak]

My hon. Friend’s football club, like many others, will be eligible for the business rates relief measures and grants that I have announced today. On HMRC, we activated Time to Pay last week, and there are now 2,000 specific, dedicated HMRC officers ready to take the calls of businesses such as Gillingham football club, in order to provide exactly what he suggested: a deferral for their tax payments and an agreed schedule for paying them back.

[Mr Kevan Jones (North Durham) (Lab)]

Yesterday, the Government announced measures for the hospitality industry. Businesses are laying off people today, throughout the country and certainly in County Durham, where I have spoken to businesses this afternoon. It is clear that the Chancellor does not have a clue how ordinary people live. They do not have access to savings and they do not have access to trust funds or independent wealth; they rely on what comes in each week. I urge him very strongly either to ensure that benefits are paid from day one, or to bring in some system that allows the Government to subsidise wages directly for some small businesses.

[Rishi Sunak]

It is because we care deeply about the financial security of all people that we want to work hardest to protect their jobs. That is the way to help working people in this country. We have strengthened the welfare system, and the measures that we have taken today will increase the likelihood that we can preserve those jobs. We know that there is more to do.

Tax Avoidance and Evasion

Lord Beamish Excerpts

Tuesday 25th February 2020 Commons Chamber

[The Chief Secretary to the Treasury (Steve Barclay)]

There is a shared desire across the House to ensure that the correct amount of tax is paid and that tax is not evaded, not least because the public services on which we all rely in our constituencies depend on that happening. Since 2010, we have introduced over 100 new measures to tackle tax avoidance, evasion and other forms of non- compliance, which, alongside HMRC’s other compliance work, have secured and protected significant revenue that would otherwise have been lost.

In 2018-19, HMRC brought in an additional £34.1 billion that would otherwise have gone unpaid, including £1.8 billion from the wealthiest individuals and £10 billion from the largest businesses. Our tax gap is at 5.6%—lower now than at any point before 2010 and one of the lowest in the world. To put that in context, in 2005, for example, under a Labour Government, the tax gap was as high as 7.2%. Action has been taken, but there is a shared desire across the House to continue to take further measures on this.

We have achieved that progress through a mixture of enforcement action for those seeking to avoid payment of what is due and through reform, because not all the tax gap is due to malicious behaviour. It can also be due to basic errors, whether that means the data that is used to calculate tax or how the calculations have been assessed. HMRC estimates, for example, that £10 billion of the current £35 billion tax gap is due to taxpayer error rather than evasion or avoidance, all of which shows that the Government have an important role in helping more individuals and businesses to get their tax right first time. A further £4 billion stems from firms going bust while owing tax. Likewise, other areas of the £35 billion tax gap are due to long-standing issues on which there will be a shared desire—for example, tackle tobacco smuggling, which is not a new issue under this Government, alcohol smuggling, and the tax lost through the hidden economy. Many of these are long-standing issues, but the crux of the matter is that the tax gap is at a near record low, thanks in large part to the actions taken by my predecessors in the Treasury.

[Mr Kevan Jones (North Durham) (Lab)]

I wonder whether the Minister thinks that there is a strong ethos of enforcement within HMRC, especially on landfill tax fraud, which I will speak about. In a case I was involved in, HMRC was not interested unless there was more than £20 million a year in evasion. Does that not send a signal that some people can get away with evading large amounts of tax, because there is not an ethos in HMRC to properly investigate?

[Steve Barclay]

As a point of principle, HMRC always seeks to collect the tax that it is due. One of the areas of innovation—I will come on to such areas as Making Tax Digital—is about making that easier for HMRC, but I appreciate that the right hon. Gentleman is making a point more about fraud than error. The underlying principle is that HMRC always looks to collect the tax that it is due, but if he has a specific point on a constituency basis, I know that my right hon. Friend the Financial Secretary to the Treasury will always be keen to discuss it with him, because he has a zeal for cracking down on any such practice.

The Government have done much to squeeze the tax gap: by ensuring that companies increasingly pay their way; by cracking down on offshore avoidance and evasion; by tackling tax avoidance schemes; by helping people to get their taxes right first time; and by investing in HMRC’s toolbox. If one looks at the actions being taken in terms of large businesses, they will see that there is an exceptional level of scrutiny. At any one time, HMRC is engaged with half the UK’s largest businesses and we have introduced specific measures to shape behaviours. For example, the diverted profits tax was introduced in 2015 to ensure that multinational companies pay UK tax in line with their UK activities. Under our rules, those companies either declare the correct amount of profits in the UK and pay the full amount of corporation tax on them, or they risk being charged a higher amount of diverted profits tax at a rate of 25%. It raises tax directly through encouraging changes in groups’ behaviour that, in turn, leads to increased tax receipts.

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[Steve Barclay]

The hon. Member picks up on a point the shadow Chancellor made in his opening remarks about the total number of staff, but the key issue is how staff are deployed and what technology we are using. I was just referring to Making Tax Digital. If tax is being filed through the Making Tax Digital platform, the number of staff that HMRC uses will change; that profile will change. We now have about 25,000 staff dedicated to tackling tax avoidance, evasion and other forms of non-compliance, and the proof of the staffing levels is reflected in the fact that we have a near record-low tax gap—far lower than for many years under the previous Labour Administration.

Since 2010, our criminal investigations have prevented the loss of more than £15 billion and resulted in more than 5,400 individuals being criminally prosecuted and convicted. In 2018-19, HMRC investigations secured nearly 650 criminal convictions for tax and duty fraud, resulting in numerous custodial sentences. HMRC has used billions of pieces of data, combined with analytics, to identify where tax is most at risk of going unpaid and to make tailored, targeted and proportionate interventions. Technology and capabilities have moved on, therefore, but, as I am sure the Financial Secretary will mention later, what continues is the dedication of staff within HMRC, who share the House’s desire to close the tax gap and ensure that people do not evade their responsibilities.

[Mr Kevan Jones]

On the analytics, what is HMRC doing to track individuals who set up companies, fold them after two or three years and then open up new companies? A constituent came to me with a case in the cosmetic surgery industry where the same individuals moved from one company to another while owing huge amounts to the Inland Revenue and to local councils in council tax. What is HMRC doing to track these individuals? The three individuals involved in the company my constituent highlighted to me have evaded huge amounts of tax.

[Steve Barclay]

The right hon. Gentleman raises an important point about the moving target of criminality and the ingenuity of approaches to evade tax or abuse the tax system. That is partly why I referred earlier to the fraud service set up within HMRC in 2016. It is also a key part of how technology is used in a dynamic way within HMRC to tackle that moving target of criminality. As I said in answer to his earlier intervention, if in their surgeries Members are told of case involving firms or local authorities in their constituencies, that intelligence is obviously of relevance to colleagues, and I can commit that the Financial Secretary would take those forward.

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[Mr Kevan Jones (North Durham) (Lab)]

Again, I would like to speak rubbish—actually, the evasion of landfill tax. I have spoken about this subject on a number of occasions. The Government are making progress in clamping down on it, but more needs to be done. The landfill tax was introduced in 1996 for perfectly good reasons—to avoid household waste and other waste going into landfill—and it has largely been successful. But over the years, as the tax rate has risen, it has become a target for wholesale fraud on a small scale and a large scale, involving organised crime. Her Majesty’s Revenue and Customs “Measuring tax gaps” in 2016 said that the gap on landfill tax was £125 million a year. I dispute that; I think it is a lot higher, and organisations such as the Environmental Services Association think that it could be upwards of £1 billion a year.

People ask why this matters. It matters for two reasons. Taxpayers are losing revenue, and the cost of cleaning up the sites when things go wrong usually falls on the local authority or taxpayers. In addition, because of a lack of regulation on what goes into these sites, the long-term environmental impact on areas can be immense. This is an organised system. The threshold for getting into the business is low. Individuals involved in organised crime use it as a way of laundering money and, as the Financial Secretary to the Treasury knows, the case that I referred to a couple of years ago is still ongoing. I asked for a meeting with him and I understand that I now have a meeting with someone in HMRC. They have told me that they can come and see me but they will not tell me anything, which I find, frankly, a bit insulting to someone who is a Privy Counsellor and sat on the Intelligence and Security Committee, and who knows how to keep secrets better than anyone.

The important thing is that we drive this hard because it is not just a matter of the lost revenue but what waste crime is fuelling in terms of organised crime. In the north-east, Durham Police and other police forces are working co-operatively with the Environment Agency and others to tackle some of the worst offenders. I invite the Financial Secretary to come and look at the work that they are actually doing. But again, it comes down to a problem with HMRC. I was told that the case that I have just referred to was not really important because it was less than £20 million a year. That worries me because the emphasis has got to be on clamping down on this as hard as possible, not just because of the lost revenue but because of the impact. The clean money that comes out of the system goes into fuelling other criminal activities.

The Government have made some progress, and I welcome the new unit for waste crime. It is a start in trying to get all the agencies together to deal with the problem. I mean no disrespect to the Environment Agency, but it cannot tackle this on its own. It has got to be a joint effort. There are things that we could do now to clamp down on this crime. In her 2018 recommendations Lizzie Noel called for regulation, for example, of waste brokers, which I certainly support, and also the mandatory tracking of waste. I would go one step further. Waste brokers should own responsibility for where large pieces of waste go. As in the case that I referred to earlier, large companies produce waste and put it into a criminal network. If local authorities and even police authorities are doing it, it begs the question whether once the waste goes out of their gates people forget about it. That cannot be acceptable. We must make sure not only that the tax is paid but that the waste is disposed of in as environmentally friendly a way as possible.

We can make progress. Enforcement is good value for money. If we clamp down on the fraud that is going on, according to the Environmental Services Association Educational Trust, every £1 of enforcement yields as much as £5.60 in return, of which £3.60 goes directly back to the Government. I welcome the enforcement that is going on. I just want to ensure that it is financed well enough to achieve the returns. If it is done properly, enforcement will pay for itself. It is something that I feel passionate about, because I cannot stand to see criminals getting away with things as they clearly are, costing the taxpayer money and ruining our environment. So a clampdown in this area would be good for the taxpayer, good for the environment and more broadly, good for society.

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[Mr Kevan Jones]

Does my hon. Friend agree that it is long overdue that some of the big accountancy firms should be broken up? There is not really competition among these firms; there are cartels in some situations.

[Matt Western]

My right hon. Friend makes a very good point. With just those four businesses, they absolutely dominate the sector. I do fear that there is a cartel operating, and the sector should be broken up. I think that would be in everyone’s interests. Those firms—or certainly their UK arms—account, according to an HMRC report, for half of all known avoidance schemes. That is the scale of the problem.

This is coming at a massive cost—a loss to UK plc —that is estimated at between £35 billion and £90 billion. There is understandable public anger out there, because that money could be buying significant investments in our communities, whatever people may want to invest it in. That could be 40 new hospitals, two new aircraft carriers or 40 Typhoon jets—all for £35 billion, with some cash to spare. If the £90 billion takes their fancy, we could electrify the Chiltern line serving Warwick and Leamington, and then put money into free school meals for all. Instead, we have an attitude where we increasingly see flat regressive taxes, such as the rise in VAT in 2010 from 17.5% to 20% and the growing expansion of council tax, again hurting hard-pressed households.

Draft Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 2) Regulations 2019

Lord Beamish Excerpts

Wednesday 22nd May 2019 General Committees

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to serve on the Committee with you in the Chair, Mr Robertson. I am grateful to the Minister for his explanatory remarks but, as the Opposition have mentioned many times before, we have grave concerns about the use of secondary legislation to make sweeping changes to the statute book. Those changes could have a material impact on our financial services, and could affect jobs and consumers alike.

My right hon. Friend the Member for Delyn was absolutely right that the possibility that these measures will be revoked has become rather less hypothetical, given the comments made recently, including today. It is therefore essential that we look at these changes very carefully.

The official Opposition have frequently warned that this process risks creating drafting errors that are difficult to identify and may be found only after the legislation is enacted, despite our best attempt to provide legislative scrutiny. This instrument is an abject lesson in the perils of this process: it essentially comprises a collection of corrections to deficiencies, ambiguities and errors made in previous rounds of secondary legislation. That just goes to show that, as we stated at the time, the previous legislation passed in this place was rushed. Too much pressure has been put on already overburdened civil servants, who have been expected to do the impossible in some cases. This instrument corrects errors in six other statutory instruments. Who is to say how many more instruments will need to be corrected, and how many errors will go unnoticed until it is too late?

Many of us have argued that the situation has been compounded by the fact that the Government have been determined to opt for a series of different pieces of legislation, making minor amendments to them once the interactions between them have been determined, rather than having a coherent approach from the beginning. Colleagues who have been in these discussions previously will remember that we have asked for a Keeling schedule-like approach, whereby it would be possible to see the timings of the amendments made by the various pieces of legislation passed in this place. Of course, those statutory instruments have generally amended other pieces of legislation, which themselves have often been amended by other pieces of legislation. This is a horrendously complicated set of circumstances.

The Government have now withdrawn no fewer than 73 statutory instruments in the current Session. That is far more than usual, and we can only assume that much of the reason is the kind of drafting errors that we are talking about today. The Minister, perhaps understandably, tried to normalise the situation and suggested that—I hope I am capturing his words correctly—with any legislation, errors are made from time to time. This level of error, ambiguity and lack of clarity is, to my knowledge, unprecedented. Perhaps other Committee members remember this kind of thing happening previously. I am a new Member, but from what I understand about parliamentary history, I think this is fairly unusual.

The Minister suggested that all the changes that had to be in place for the immediate period after the UK leaves the EU were ready before 31 March. Is that reliant on some kind of threshold for the amount of legal difficulty that would be created by having ambiguity or inconsistency? Did the Government think, “Well, it will take a bit longer for a firm to get round to suing us or taking legal action about one issue, rather than another”? These issues are significant, because they are about allocating responsibility to different bodies, and indicating what firms are and are not able to do and what regimes they come under. These are important matters.

[Mr Kevan Jones (North Durham) (Lab)]

Does my hon. Friend agree that if we had left on 29 March with no deal and these instruments had come into being, large areas would not have been covered? That is being corrected today.

[Anneliese Dodds]

My concern—despite the Minister’s comments, I know he is trying to do his very best in difficult circumstances—is that it is not clear what criteria have been used to determine which are the really serious errors, inconsistencies and ambiguities, and which can just be altered later. As I say, perhaps the Government took a view about how long it would take for those problems to crop up in normal practice, but we need a bit more information.

There is also the issue that more powers will be transferred to the Financial Conduct Authority and the Prudential Regulation Authority. At the same time, concerns have been raised about Andrew Bailey’s comments suggesting that the UK would favour a lower-burden approach to financial regulation after we leave the EU, which some have interpreted to mean deregulation. Given that the Government have yet to provide us with information about their vision for their post-Brexit regulatory framework, it would be interesting to know whether the Minister thinks those who are concerned about a policy of deregulation are justified in their concern.

My Opposition colleagues and I have also raised concerns on numerous occasions about FCA funding. The FCA maintains that it is committed to keeping an overall budget that is flat in real terms, despite the rapid increase in responsibilities. Of course, the European Securities and Markets Authority, or ESMA—the regulator on the European level—received funding from member states, so when its responsibilities increased, member states could decide to provide additional funding. As the Minister has mentioned many times, the FCA’s status is different: its funding is provided by the bodies that it regulates. That may mean that it takes longer for the FCA to raise additional funds in the event of additional responsibilities. It may also increase the requirement for funds on bodies that are struggling, particularly as a result of a no-deal Brexit chaotic market situation.

As the Opposition have said before, this is one of many reasons why the FCA is not always automatically the appropriate choice for this massive transfer of powers from ESMA. That is also clear from Charles Randell’s comments that Brexit planning will mean “difficult decisions elsewhere”—his words, not mine—leaving many concerned that a lack of capacity at the FCA might also lead to deregulation, whether or not that is a conscious determination on its part. Again, it would be helpful to hear from the Minister whether he is also concerned about Brexit pressure leading to a reduction in what the FCA is able to achieve in areas that I know are important to him, such as consumer protection and the treatment of vulnerable customers.

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[Mr Kevan Jones]

It is a pleasure to serve under your chairmanship, Mr Robertson, and to see the Minister again. We passed in the corridor earlier this week and noted that it had been several weeks since we were in a Delegated Legislation Committee. I think we will be in a lot more, because this is just the start. In saying that, I am not apportioning blame. I sympathise with civil servants and the Minister—they have a mammoth task.

Quite clearly, mistakes or omissions were made in earlier SIs that we approved. Like the hon. Member for Glasgow Central, I want to get an understanding of how they came about. Have we got teams of civil servants in the Treasury, or are people coming from outside and saying, “Wait a minute. Have you thought about the implications of X, Y and Z?”? If it is the case that the mistakes have quite rightly been identified, it would be interesting to know how and why they are emerging. Is there an ongoing process in the Treasury of looking at SIs that we have already approved?

Perhaps we need to rename this type of SIs as “Tipp-Ex SIs” or “autocorrect SIs,” because that is exactly what they will be. It would be interesting to know what the process will be in the future, and how confident the Minister is that we will not be spending a lot more time coming back with these SIs. I am not criticising; as I say, there is a need for this. Mistakes do happen, and civil servants have been given the impossible task of getting these through.

Under “Extent and territorial application”, the explanatory memorandum states:

“The territorial extent of this instrument is to the whole United Kingdom…The territorial application of this instrument is to the whole United Kingdom.”

I have asked before how the regulations apply to overseas territories. I am interested to know what the implications are there.

The other issue is the impact assessment. I am not sure how the effects can be assessed if we do not know what the effects were in the first place. I find what the explanatory memorandum states under “Impact” very uninspiring. It states:

“There is no, or no significant, impact on business, charities or voluntary bodies.”

How do we know that? At paragraph 12.3, it states that no impact assessment has been undertaken, because

“in line with Better Regulation guidance, HM Treasury considers that the net impact on businesses will be less than £5 million a year.”

It would be interesting to know how that was arrived at or whether representations have been made by business. That is how we are in this situation of amending this SI. Does more work need to be done in assessing whether there will be a more negative impact?

The other issue, which was raised by my hon. Friend the Member for Oxford East—I cannot remember when we raised it first, but it was several months ago—is the impact on the ability of the Financial Conduct Authority and the other regulators to implement the regulations and the extra pressure that will be put on them. In the explanatory notes, it states:

“Impact assessments for the individual instruments being amended by this instrument have been published on legislation.gov.uk, apart from those that have been deemed to be de minimis.”

Again, we might not have known that those impact assessments existed, and these and other regulations are now being put over to such bodies as the Financial Conduct Authority. What assessment have we done that they have the capacity to do it? Has any assessment been done of what would happen if they came back and said, “If we are going to do these things, we might need some extra cash or resource?” I am sure the Minister will be very sympathetic to them if they came to him with that type of plea, but it is something we need to know.

I do not think this will be the last of these statutory instruments. I am sure the Minister will be pleased to know that. As the hon. Member for Glasgow Central said, in this process, our civil servants and Government have been asked to do a huge amount in quite a short period of time. I still think there will be unintended consequences from some of the regulations or from things that we do not know about that will emerge in the future.

Draft Electronic Commerce and Solvency 2 (amendment etc.) (EU Exit) Regulations 2019

Lord Beamish Excerpts

Wednesday 20th March 2019 General Committees

[Mr Kevan Jones (North Durham) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bailey. I apologise to the Minister—apparently he missed me last week in Committee when I missed an SI. I will make sure not to disappoint him today by asking a question. As my hon. Friend the Member for Oxford East said, we are coming to the end of the long series of SI Committees that we have served on. What a waste of parliamentary time they will have been if we, hopefully, get a deal. I also pay tribute to the civil servants who have spent hours and days of their valuable time on them, rather than their day jobs. A lot of the SIs are formed in the Treasury, but from speaking to former civil servants who I knew as a Minister, I know that civil servants across Whitehall are focused on these matters, so it is affecting their day jobs.

I will make a couple of points. My hon. Friend the Member for Oxford East raised the issue of overseas territories. In paragraph 4 of the explanatory memorandum, “Extent and territorial application”, it says:

“The territorial extent of this instrument is the United Kingdom…The territorial application of this instrument is the United Kingdom.”

Could the Minister touch on the overseas territories, such as Gibraltar and others, and how they will be affected or covered by the regulations?

I accept that the regulations are in preparation for a no deal, but in terms of their extent, what evaluation has the Treasury made of the number of contracts that will be caught by the regulations? In that context, what information has been put out to those companies, businesses and individuals about their possible effects when they come in? Many people will obviously want a deal, and are assuming that we will have one, but if we do not, the regulations will hit them straightaway if they are not careful. I wonder what preparation the Treasury has done for that. Some numbers would perhaps give us an understanding of the possible effects.

The Minister used the phrase “a limited period of time”. I am not sure that that is a legal definition. What evaluation has the Treasury made of how long the period would last, and what did he mean by “a limited period of time”?

DRAFT MERCHANT SHIPPING (PASSENGERS' RIGHTS) (AMENDMENT ETC.) (EU EXIT) REGULATIONS 2019 DRAFT MERCHANT SHIPPING (STANDARDS OF TRAINING, CERTIFICATION AND WATCHKEEPING) (AMENDMENT) (EU EXIT) REGULATIONS 2019

Lord Beamish Excerpts

Tuesday 5th March 2019 General Committees

[Mr Kevan Jones (North Durham) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bailey. It is of note that my hon. Friend the Member for Kingston upon Hull East is the shadow Minister in the Committee, because I worked with his father, who was a National Union of Seamen official for many years. I am sure he is looking down favourably on my hon. Friend today.

I agree with my hon. Friend on the draft regulations, but I would like to ask for clarification regarding the amounts in euros for which provision is made by article 6(1) of regulation (EC) 392/2009, and articles 17(2) and 19(6) of regulation (EU) 1177/2010. The amounts are in euros. The explanatory memorandum to the passengers’ rights regulations states that the exchange rate used is the average rate for the year ending 31 December 2017. Why is the exchange rate for that period used, rather than a more up-to-date one? I understand that the exchange rate was £1 to €1.14615. These amounts are clearly set at the moment. What is the mechanism for increasing or changing them in the future? Would we just adopt what was put forward?.

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[Ms Ghani]

I thank the hon. Members for Kingston upon Hull East and for Kilmarnock and Loudoun, and the right hon. Member for North Durham, for their consideration of the draft regulations, which deal with important issues relating to the carriage of passengers by sea and the qualifications that seafarers must hold. The regulations are designed simply to ensure that the EU-derived legislation will be retained in UK law and continue to function as intended. They make the changes appropriate to ensuring that the existing regulatory framework is retained and operates effectively when we leave the EU.

On the question of basic seafarer training, possible changes to STCW training requirements and the UK Government’s position, I emphasise the fact that the UK is party to the STCW convention and it is our policy to continue to apply changes to the convention in domestic law.

On how we will work with countries to ensure that our seafarers and their certificates are recognised, we are indeed working with European countries on a bilateral relationship and working in partnership with Nautilus International and the UK Chamber of Shipping to put in place a simple process for the Commission to recognise UK seafarers in future if we leave without a deal. We are focused on ensuring that the arrangement is reciprocated. The hon. Member for Kilmarnock and Loudoun must know that my portfolio includes responsibility for taking care of our seafarers.

The hon. Gentleman also mentioned countries outside the EU and EEA; already within the convention 50 countries are recognised and half of those are third- party countries, so we will continue to work with them. I believe there are about 24 or 25.

There was also a question about euros; I must say I was not expecting that this morning, but I am grateful to the right hon. Member for North Durham for raising it. The exchange rate was set at the beginning of the drafting process, as is normal. I am not sure what more I can say about the financing and the particular point he raised, but if he will allow me, I will write to him in detail to confirm the absolute answer to that. I would not want to give him anything inappropriate right here and right now.

[Mr Jones]

I accept the Minister’s explanation of why the 2017 figure was used, but I think she ought to remind her officials that when this regulation is laid, the information put before the Committee should be up to date, because there is clearly a more appropriate figure to use than the 2017 one. It is not a great point, but I think it is a point worth noting.

Draft Financial Regulators' Powers (Technical Standards Etc.) (Amendment Etc.) (EU Exit) Regulations 2018

Lord Beamish Excerpts

Wednesday 10th October 2018 General Committees

[Mr Kevan Jones (North Durham) (Lab)]

As an old friend, it is a pleasure to serve under your chairmanship, Sir David. I suspect this the first of an avalanche of statutory instruments that will keep you and other Chairs very busy over the coming years. The Minister could not say how many SIs would be generated.

[John Glen]

I have been helpfully informed by my friends on my left that there will be about 800 SIs across Government. I provide that answer now to the hon. Member for Rotherham.

[Mr Jones]

I am sorry to be pernickety, but that is 800 across Government. Can the Minister say how many will be generated by this sole piece? He obviously does not know; perhaps he could write to Committee members.

[Sarah Champion]

He tried.

[Mr Jones]

He did try, to be fair to him; he is not a bad Minister. This puts a spotlight on a cost of Brexit that is not being factored in. Those 800 SIs will all have a cost to them. It would be interesting if the Minister supplied information about not just the number of SIs relating to this regulation, but the estimated cost of each of them, including the cost of preparations by the Department. That will be a huge cost across Government.

My hon. Friend the Member for Oxford East and the hon. Member for Glasgow Central made a good point about the capacity of the Bank of England, PRA and FCA to implement this and take over this responsibility. I have sat on many Committees since I have been in Parliament, and I do read the explanatory notes, even when the subject is boring or dry, as this may be. Uniquely for an explanatory note on a piece of legislation, no costs are included in this one. It will be interesting to see if all the SIs we get have explanatory notes in which no costs are included, as though this were a zero-cost game.

There is not just the question of what the SI will cost; there are other costs. Clearly, the tasks being taken on by the Bank of England, the PRA and the FCA will involve cost. If we are to do justice to the transparency of the Brexit process and those claiming great wins for the taxpayer out of it, the full extent of those costs needs to be known. It is unfair on those organisations to be given extra responsibilities but no cash to go with them, unlike other parts of Whitehall, where hundreds of millions are being spent employing new civil servants. This is a hidden cost of Brexit. This is one piece of legislation; how many times will it be duplicated across Government? I suggest many, many times, adding up to millions and millions of taxpayers’ pounds.

The explanatory notes state that no consultation was done, although the statutory instrument was published in draft in April. The notes say:

“The financial services regulators plan to undertake public consultation on any changes they propose to make to Binding Technical Standards or rules made under the powers conferred upon them by the Financial Services and Markets Act 2000 using the powers delegated to them”.

The important point there is about who will decide. Will there be ministerial or parliamentary oversight of what is in the consultation? Who draws it up? Is that left to the regulators to do? There will obviously be controversy on the issue that the hon. Member for Basildon and Billericay raised, and people will complain about it. Again, how will that be dealt with? Will Parliament or a Minister have any say over the regulators and how they conduct the consultation? It is said that the devil is always in the detail, and that was clearly demonstrated by the hon. Gentleman.

There may well be unintended consequences to taking on some of these regulations. There may well be better ways of doing things—I do not disagree with that—but where will the political pressure to get the authorities to change the regulations come from, if there is simply a general consultation? For example, someone has already decided that the regulation the hon. Gentleman referred to does not need looking at, but Parliament does need to look at it. Ministerial oversight is needed—not just of the draft regulations, but in a whole load of areas. Basically, we are delegating our responsibility to determine what should and should not be looked at to statutory bodies. In many cases, we might have a very different view from regulators.

We are all told that the draft regulations are being put in place for the nightmare scenario in which we do not get any deal in the negotiations that are taking place. I am interested in what happens to the SI if we do get a deal. Can the Minister explain—he may not be party to this—where this small piece of possible legislation is in the great negotiations? What happens if we get a deal? Does the SI fall?

As for regulators taking over these responsibilities, what will happen in future? Let us suppose we get no deal, the draft regulations go through and we try to transpose everything into UK legislation—this point was made eloquently by the hon. Member for Glasgow Central. What happens if our regulations get out of kilter with the EU regulations? Clearly, the sector is not based on a single company; We are talking about global business—money moving around the world—that does not recognise boundaries. What is the mechanism to ensure that if there are changes in EU regulations, we reflect them, or take them on board directly? Again, will that be left to the regulators? Will they decide which option we take, or will the decision come back to Parliament?

If such decisions are to come back to Parliament, we will be very busy in a whole host of areas for years to come. Basically, when EU regulations in this or any other area change, how do we ensure that we are not at a competitive disadvantage, or that the regulations for institutions based both in the EU and here do not somehow clash? This is not easy. It demonstrates one of the problems with what someone—I cannot remember who—on the leave side said: they said that that the deal would be the easiest ever done. No, it will not. This demonstrates in one small area the technical detail that will hit us.

I worry, because if our regulations are rather weaker—the hon. Member for Basildon and Billericay seems to think that our savers or investors are disadvantaged by the current regulations—and savers and investors are somehow less protected, that leads us to the point made by the hon. Member for Glasgow Central about what came out of the 2008 crash. What we needed was not more regulation for regulation’s sake, but international regulation to ensure that people in this country investing in a pension fund that might be investing overseas were protected, and vice versa. When people ask, “Will these dry regulations affect ordinary people?” the answer is: yes, they will if we get them wrong. That is why this is important.

[Mr Baron]

The right hon. Gentleman makes some good points. For absolute clarity, I was suggesting that current EU regulation was not serving investors well, and if it is to be encapsulated in our regulatory governance in March next year, we need to act quickly to put it right, because the consequences could almost make for a mis-selling scandal, if not a perfect storm. I just want to make him aware of that.

[Mr Jones]

I do not have expertise in this field, as the hon. Gentleman does, and I defer to him, but that is one area; what else is there? A proper consultation might have thrown these things up. The sector in which he is involved may well have made representations, particularly around the points he made.

Even if these measures are incorporated into UK legislation post March next year, how do they get unpicked? Who decides that? I sit on the important Regulatory Reform Committee, and we may well be very busy if we get flooded with things that have to be incorporated and then must be unpicked later on.

This statutory instrument seems quite mundane, boring and dry on the face of it, but it demonstrates the bigger picture that will hit Parliament. Not only will it have to spend an amount of time on this, but there will be unintended consequences that may not be relevant straightaway, but certainly will be. All those people said that leaving the EU would be simple, but these are the unintended consequences.

[John Glen]

I thank colleagues for the debate and the many points raised, all of which I shall do my best to interrogate individually. First, I acknowledge the rigour of the scrutiny from the Opposition Front Benchers.

[Mr Jones]

And the Back Benchers.

[John Glen]

I will come to the right hon. Member for North Durham later. I will do my best to deal with the serious points raised. It is worth reminding the Committee that the Government are working flat out in financial services, which I am responsible for, to secure a deal. Today, we are discussing the contingency arrangements for no deal. Obviously, there are a range of views, as expressed, about the desirability of no deal, but this is about doing what is prudent—essential, really—to have a functioning regulatory regime in place.

To refer back to the comments of the hon. Member for Rotherham, the Government expect to lay about 800 SIs before Parliament in time for exit. Some have already been laid before Parliament. I acknowledge the question from the right hon Member for North Durham about the numbers in this area, and will seek to clarify that as soon as I can. On that point, this is a live piece of work, and we are looking at how SIs should be aggregated appropriately. We are in live consultation, so I may not be able to give an accurate number.

[Mr Jones]

The Committee would appreciate the Minister taking a rough stab at it. I accept that he does not know now, but perhaps his Department could do that. The only alternative is to flood him with parliamentary questions, which we do not really want to do.

[John Glen]

I am happy to answer any parliamentary question. I think we said there are about 70 SIs, but that will not be fully accurate.

The hon. Member for Oxford East asked, at the macro level, whether financial stability will be protected. The statutory objectives of the regulators for financial stability will not change. They are enduring. A tripartite system was set up as a consequence of the crash. I think there is broad cross-party agreement on the need for that to continue, and it will.

The hon. Lady asked about holding regulators to account. Parliament will be involved in every aspect of the process to onshore EU financial services regulations, so all the changes the Treasury proposes to level 1 legislation and delegated Acts will be put before Parliament for it to approve. Any transfer of responsibility to the regulators, including any transfer of powers to make technical standards, will be put before Parliament for it to approve through affirmative-procedure SIs.

The Treasury is working closely with the Bank of England, the PRA, the FCA and the PSR on how to fix deficiencies, including in the technical standards that we propose should become the responsibility of regulators. As was said, the Treasury will be required to approve all the deficiency fixes proposed by the regulators to ensure they are consistent with the deficiency fixes that Parliament will be asked to approve in onshoring.

[John Glen]

We are seeking to give responsibility to the most appropriate body. The regulators are doing what they do. Frankly, some binding technical standards will not be suitably scrutinised or carried out within the Treasury. I refer back to the point I made about tier 1—or tier 2. Binding technical standards are sort of tier 3 within tier 2—it is a bit complicated—but basically, Parliament will have scrutiny over fundamental change, and the consequential changes that flow from that will be delegated to the appropriate body.

I think the hon. Lady asked whether this is about more than fixing deficiencies for exit. The withdrawal Act provides for the transfer of functions where necessary. Binding technical standards will need to be maintained by an appropriate body. After exit, that will be the UK regulators.

On what the hon. Lady said about her role as a Member of the European Parliament, it is absolutely right to say that we will have more to do because we will not have that scrutiny. As I understand it, MEPs can veto some binding technical standards proposals, but the UK FSMA framework of 2000 does not work in that way. Parliament has delegated technical rules to UK regulators, which is a difference.

The draft regulations set out the procedure where responsibility for future binding technical standards is transferred to regulators by other SIs. All those SIs will be scrutinised individually by separate Committees—I will probably be sat here introducing them—and subject to approval by Parliament under the affirmative procedure.

I turn to the Treasury’s authority over regulatory changes. It is appropriate that the Treasury approves all the deficiency fixes that the regulators propose, and Ministers will be accountable to Parliament for that. On the responsibility for binding technical standards that regulators will take on post-exit, the Treasury will need to approve future changes to those technical standards and will be able to veto a proposal for the two reasons set out in the draft regulations: if it appears the proposal would

“have implications for public funds”,

or if it would

“prejudice…negotiations for an international agreement”.

I cannot anticipate what they are, but all I know is that I would be subject to parliamentary scrutiny on that.

[Mr Jones]

That is very interesting. As I understand it, the buck stops finally with the Treasury and the Minister. How does Parliament get into that? Are the proposals published or laid before Parliament? How would Parliament be able to have a view of that?

[John Glen]

Any changes that the regulators make must be consistent with the higher legislation that Parliament has approved.

[Mr Jones]

What if they are not?

[John Glen]

Then the regulators would have to explain why not, and I would have to explain and justify that. They are not licensed to innovate through this onshoring process. They are not given that discretion. We talk about correcting deficiencies, which is quite a technical term, but it means that where the legislation currently refers to EU institutions and EU bodies, technical wording needs to be changed to make it legally effective. It is not about innovating in terms of doing the sorts of significant changes that my hon. Friend the Member for Basildon and Billericay is suggesting that I take on board.

--- Later in debate ---

[Mr Jones]

So basically the Minister is saying, “Take ‘EU’ out and stick ‘UK’ in.” If that is the case—

[Alison Thewliss]

What is the point?

[Mr Jones]

That says a lot about a lot of these things. As this SI goes through, therefore, have those various bodies that will get these powers got the necessary technical expertise to be able to determine that, or is that a Treasury decision?

[John Glen]

They have been given the responsibility where their technical expertise is formed and known, and where their role currently is to deal with this stuff. It is not exclusively about a language change, but I am just trying to give an indication of the lack of policy innovation that is going on here.

--- Later in debate ---

[John Glen]

Where there are deficiency fixes that the regulator has proposed, they will be subject to approval, but I will be scrutinisable on those decisions, through Select Committees and the normal mechanisms of Parliament.

[Mr Jones]

I accept that the Minister is saying that he, as the Minister, will be scrutinised by Select Committees and others, but what role is there for Parliament to be able to challenge any of these?

[John Glen]

Regulation fixes will be put in the public domain and laid before Parliament for information, so there is nothing hidden about it.

[Mr Jones]

That is not good enough, because I could lay anything. Let us be honest: the Minister could write anything and place it in the House of Commons Library, but if Members of this elected House do not have an ability to question or change it, is not that a deficiency in the process? Otherwise, it gives the Minister the power to decide what is deficient or not. Afterwards, he can produce a report for the Select Committee or place it in the Library, but actually we have no influence at all as Members of Parliament.

[John Glen]

I just draw the Committee’s attention back to the purpose of this, which is to onshore, to ensure that we have a regulatory regime in place for a no-deal scenario. This is not about seeking to give additional powers to change in any way the policy framework that is set by the primary legislation that we have debated in the House. We are in the realm, I think, of constructing hypothetical scenarios of fixes that produce some meaningful change, which they would not be licensed to do in the first place, and saying that those would not be subject to scrutiny. They will be laid before Parliament, but it would not get to that point, because they are not licensed to do the sorts of things that the right hon. Gentleman suggests that they would do.

--- Later in debate ---

[John Glen]

Given the relationship that the Treasury has with the different regulators, it is for them to raise concerns with me with respect to the resourcing. All parties are intimately involved in a dialogue around the construction of the process. It is not done unto them by me or the Treasury. In terms of the adequacy of the resources, at the moment I have no concerns about that—it is matter that they would need to raise with me.

[Mr Jones]

The Minister says he has no concerns about it, but he does not know what the cost is. If he does not know what the cost is, I am not surprised that he does not have any concerns about it. I would also question the leaders of those organisations. If they have taken on responsibilities without knowing what costs are going to come down the line, that is foolish on their part, I would argue.

[John Glen]

All I can say is that the lines of communication are open between the FCA, the PRA, the PSR, myself and the officials. We are pretty open and clear. If there were concerns going through this process, which started several months ago, about the availability of resources, I am sure they would have been raised.

[Mr Jones]

In my experience as a Minister dealing with the Treasury, if responsibilities are taken on and then money is asked for afterwards, there is a likelihood that it will not be given. The estimated costs should have been set out in the explanatory notes, as they usually are. It is foolish to think of going along to the Treasury later with a begging bowl and trying to get money out of it—blood out of a stone comes to mind.

[John Glen]

I note the right hon. Gentleman’s point and I will now move on to the issue of supervisory co-operation and the continuance of that, as raised by the hon. Member for Oxford East. While it is true that we will be outside the EU’s framework, we want supervisory competition to continue. I am sure that the hon. Lady knows that there exists a high level of co-operation across many countries outside the EU framework, and our regulators stand ready to do this. A point was made about optimism for the future. The Chancellor set out some great opportunities in the Mansion House speech that we will have with global financial partnerships. The regulators will be deeply involved in that.

I turn now to the points made by my hon. Friend the Member for Basildon and Billericay and acknowledge the quality of his articles in the Investors Chronicle. I look forward to reading his book. The powers in the European Union (Withdrawal) Act 2018 deal only with fixing deficiencies at the point of exit, as he will know. Wider changes need to be considered at a later date, but I think he has put on the record some meaningful analysis of the implications of the regulations for the characterisation of risk around unit trusts versus investment trusts. I have heard that, as have my officials, and we will come back on that.

--- Later in debate ---

[John Glen]

I will take on that point, while also responding to the hon. Member for Glasgow Central, who made the same point about watering down of EU regulation. There is no provision to water down in the Act the regulations that we are seeking to onshore. The wider point has been made about the future direction. On that, again, I can be reassuring. We do not want to define ourselves as a nation by regulatory arbitrage.

I also acknowledge, as my hon. Friend the Member for Basildon and Billericay pointed out, that the financial services have ongoing issues with legislation that has been onshored while we have been members of the EU. They are not about reckless setting aside of prudential regulations. They are in areas, perhaps, on which there is greater emphasis in our UK financial services, as my hon. Friend mentioned, these are things that do not exist in other jurisdictions.

Those are matters that a future framework would at least give us a mechanism to examine and then there would be an understanding, if we achieve what we seek—reciprocal responses from both the sovereign regulatory supervisory bodies. But we are not starting from a point where we are seeking to deregulate.

On the point the hon. Member for Glasgow Central made about UK regulators losing influence, I visited Edinburgh and Glasgow over the recess and acknowledge the growing financial services hub that exists there. The UK is a major financial centre and UK regulators are major players in global forums for financial regulation. There are global colleges for supervision for banks, for example, where we are key players. Although I recognise that the context will be different, this is not the time for UK regulators to adopt a more detached role from international leadership in some of these areas.

Reference was made to the BBC report of the comment I made at the Lords Select Committee this morning about jobs. Throughout the last nine months that I have been doing this, I have been in frequent contact with firms about jobs lost. I was referring to a comment made by Sam Woods, the deputy governor of the Bank of England, about the contingency arrangements. In my opinion, it was not news; I was just reflecting what had been said by somebody else. Of course, contingency arrangements have been made, but I have seen no expectation or desire to move significant tranches of jobs to the EU beyond that. A deal would clearly arrest that fear. We have set out clear proposals on a future ambitious relationship with the EU. We hope that that will transpire, and we expect it to take place.

The other point was about rule-taking. We are not proposing that UK regulators will have to work within a framework, other than the UK Parliament framework. There would be parliamentary scrutiny of any significant changes that we wished to make, and we will set those changes in primary legislation.

The right hon. Member for North Durham made a point about the impact assessment. The regulations would have no cost to business, as they deal with the transfer of responsibility from the Treasury to the appropriate regulators. As a whole, the regulations will significantly reduce costs to business in a no-deal situation. That is the whole point--to ensure that the effects of the transition are minimised in an undesirable situation.

Through our dialogue with firms and trade bodies, we have attempted to minimise the disruption to firms, but it is inevitable that some preparation will be needed. The Government have committed to providing the UK regulators with the power to phase in regulatory requirements that will change as a result of exit, which will mitigate the cost to firms. Due to the wide scope of the changes needed and the broad set of firms affected, however, it has not been possible to accurately quantify the actual costs to firms—I concede that—but these regulations will reduce the cost to business in a no-deal scenario. That is undoubtedly their purpose.

[Mr Jones]

How?

[John Glen]

Because they will set a reliable regulatory framework that will mean that firms will not be at risk of defaulting or of not having the regulatory oversight that would not exist otherwise.

Finance (No. 2) Bill

Lord Beamish Excerpts

Committee: 1st sitting: House of Commons
Monday 18th December 2017 Commons Chamber

[Jonathan Reynolds]

Members have become accustomed to the fact that the number of homes that the Government claim to build is not always the actual number that are built. I will get to some of that record of failure later in my speech.

[Mr Kevan Jones (North Durham) (Lab)]

Does my hon. Friend think it is a bit ironic that when a similar measure was proposed in 2015, it was derided as a gimmick by the then Chancellor?

[Jonathan Reynolds]

My hon. Friend is entirely correct. As we know, sometimes the situation in the Government means that they tend to look around for ideas, and they often find best practice in the Labour party.

--- Later in debate ---

[Jonathan Reynolds]

My right hon. Friend identifies another feature of a dysfunctional market. That will be corrected only by a change in Government policy, but we have not seen one in the Bill.

Conservative Ministers’ review of a previous stamp duty cut concluded that the tax relief, in itself, had

“not had a significant impact on improving affordability for first time buyers”.

That is why Labour has tabled an amendment calling for the publication of a review prior to the 2018 Budget on the impact of the relief on first-time buyers, including its effect on house prices and the supply of houses.

The Minister, as usual, talked an extremely good game on funding for new housing, which he said would help to ameliorate the supply issue. On further scrutiny, however, we find that no measures in the 2017 Budget will directly increase house building. Only one third of the £44 billion announced in the Budget is genuinely new, and there is no extra Government investment in new affordable homes. That builds on a legacy of failure. Let us remind ourselves that not one of the 200,000 starter homes promised by the Tories three years ago has yet been built. That lack of action is having a serious impact across every part of our society. During the Government’s seven years in power, homelessness has doubled. Shockingly, recent statistics from the Department for Communities and Local Government show that nearly 80,000 households were homeless in September; that includes 120,000 children. The situation is extraordinarily urgent.

[Mr Kevan Jones]

Does my hon. Friend agree that one of the mistakes that former Chancellor Osborne made was the cap on rents, which threw into complete chaos the planning of social landlords and housing associations in budgeting for building new houses? It had the effect of reducing the supply, rather than increasing it.

[Jonathan Reynolds]

Absolutely. A combination of policy measures—not just the failure on new housing completions, but a range of other measures—has contributed to this toxic situation. We see it perhaps most visibly in Greater Manchester—I live there and represent part of it—than in any other part of the country, and thank goodness that we in Greater Manchester have a Labour Mayor in Andy Burnham who is so determined to make a difference on this matter. If Labour was in power, we would set up a taskforce, led by the Prime Minister, to end this, and we would start by setting out plans to make available at least 4,000 homes for people with a history of rough sleeping.

The homelessness statistics obviously include the hundreds of families who tragically lost their homes in the Grenfell Tower disaster in June, four-fifths of whom are still living in temporary accommodation. Although Labour welcomes the additional funding for mental health services for those affected by Grenfell, we have profound concerns about the fact that no new money has been allocated for fire safety throughout the country. The Government ignored calls to fit sprinklers to all social housing tower blocks in 2013, after the disastrous and fatal events that happened at Lakanal House and Shirley Towers, so it remains the case that only 2% of tower blocks in the UK have sprinklers installed. That figure should be of serious concern to us all.

We can see that the measures included in the Bill fall far short of what is needed to fix the housing crisis in Britain. We want in particular to discuss one measure that the Opposition are concerned may be being used as a fig leaf for just another cut. This is in regard to clause 8, the income tax exemption for the armed forces accommodation allowance, which the Minister mentioned. The explanatory note to the clause states that this is

“to allow members of the armed forces to give up their entitlement to accommodation in exchange for an allowance to be used to rent or maintain accommodation in the private market.”

Labour is concerned that this manoeuvre is designed to force more servicemen and women into the private rental sector, as part of a Government shift towards selling off the military housing stock in which armed forces personnel would ordinarily be housed.

--- Later in debate ---

[Jonathan Reynolds]

Absolutely. There have been 13 consecutive cuts to housing association budgets, the cumulative impact of which is exactly as my hon. Friend describes. As constituency MPs, we are left requesting our local housing association simply to try to absorb the costs of this Government policy failure. In many cases, the housing association does so, but there is ultimately a cost. The cost is taking away available resources to build further houses, thus getting us into a situation in which the problem is never truly resolved.

I will return to the armed forces accommodation allowance. The Ministry of Defence has a target in the 2015 national security strategy and strategic defence and security review to sell off 30% of its estate by 2040, but the Conservatives have a track record of making poor decisions on selling off service family housing in the name of short-term savings. Annington Homes bought most of the service family accommodation from the Ministry of Defence for £1.6 billion in 1996. A 999-year lease was granted back to the Ministry of Defence at a discount, with the stipulations that the MOD would be responsible for maintenance and that Annington Homes could terminate individual leases and had the right to include five-yearly rental reviews and a breakpoint at 25 years. The National Audit Office has said that the MOD has therefore not benefited from the rise in house prices since the agreement and, in fact, has paid higher rental costs to Annington Homes. In 2016, Annington’s annual statement estimated its property portfolio to be worth £6.7 billion.

[Mr Kevan Jones]

Having tried to get out of the Annington Homes contract when I was responsible for armed forces housing, may I say that the situation is worse than my hon. Friend describes? The MOD is still paying not only for empty houses, but for houses that have been demolished. It was the worst deal possible for the taxpayer.

[Jonathan Reynolds]

I am grateful to my hon. Friend for sharing his expertise with the Committee. It truly is an appalling record of failure.

As every Member knows, there are enormous problems in the private rented sector in respect of affordability, quality and security of tenure. By forcing service families into the private rented sector, we risk reducing the quality of their accommodation and their quality of life. It might therefore impact on recruitment and retention rates.

The Government have so far offered little detail on which members of the armed forces will be entitled to the new allowance or what the rate will be and have not said whether the Treasury has done an impact assessment on local housing supply. The proposal ignores the fact that there is not a supply of affordable housing to buy or rent near many military bases.

It seems clear that the Government are attempting to rush the proposal through to make short-term savings, without considering the potential repercussions. Labour is demanding more consultation with armed forces personnel and a full and robust impact assessment of any proposed changes. Clear communication with armed forces families must be a top priority throughout this process and their long-term interest must be considered, as well as the long-term value for money for the taxpayer. Committing to sell this Government-owned housing risks shackling the public purse to ever-rising rents, as well as poor outcomes for armed forces personnel.

Given Labour’s concerns over the lack of detail over the armed forces allowance and any potential safeguards for members of the armed services in the private rental sector, Her Majesty’s Opposition have tabled an amendment that calls on the Government to publish a review of the measure to Parliament before it is enacted.

Overall, the measure forms part of a housing package that barely scratches the surface in addressing the country’s housing crisis. All the measures are too minimal to make a serious difference to the housing pressures that people face and too late to make up for the Government’s lack of action over the past seven years.

--- Later in debate ---

[Alison McGovern]

The hon. Gentleman seems to be arguing that it takes a little bit of time for capital expenditure to get going. That is an argument for us to increase capital expenditure now, and wait until we have increased supply to make the tax cut. It is the front-loading of the tax cut versus pushing off our investment until sometime in the future.

In proposing the stamp duty land tax cut, the Government have admitted that they have no further ambitions to rebalance our economy between the regions, and no further ambitions to tackle the disgraceful inequality between different parts of the country. In the north-west and the north-east, house prices have grown barely at all, whereas in the south-west, for example, they have shot up and wages have been held disgracefully low. This policy gives money to those who already have assets. It is a charter for inequality, and if it is ever to be implemented, it should not be implemented now.

The number of children in poverty is due to increase by nearly half a million: there will be 400,000 more children in poverty over the period of this Budget. The Government may say, “That is unfortunate, but benefits have to be frozen, and we need to focus on investment so that we can build our way out of these difficult economic circumstances.” This tax cut, however, is not investment. It is just a revenue cut—a tax giveaway—at a time when we could be ensuring that child poverty does not increase. The two-child policy that the Government have stuck to is an absolute disgrace. It shames our country that we are saying, “If you are the third child in a family, in poverty, the Government have nothing to say and will do nothing to help you.”

If the Tories who are now in power actually believed their rhetoric of compassionate conservativism, they would agree with me that if there were ever a time for this tax cut, it would not be now. Let me leave them with this comment. They may think that they can get on with this, and that they will have decent headlines on the front pages of the newspapers because newspaper editors might like the idea of first-time buyers being able to buy properties that they, perhaps, own. They may think that they will get a fair wind because tax cuts of this kind are popular.

I will tell you what is really unpopular in our country, Mr Owen. As we heard earlier from my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), what is really unpopular in our country is having to step over rough sleepers while walking home. What is really unpopular in our country is having to watch other parents taking paper into schools because our schools cannot even afford the basic necessities. And what is deeply unpopular in our country is watching the number of food banks grow because jobs do not pay enough.

People will remember that while all that was going on, the Tories were busy cutting stamp duty for people who could afford to buy houses. I do not think they will ever forget that.

[Mr Kevan Jones]

I agree with the hon. Member for Witney (Robert Courts) and the right hon. Member for Hemel Hempstead (Sir Mike Penning) about the armed forces allowance. In my experience, as in theirs, the modern member of the armed forces, whether male or female, wants choice. I have nothing against that, but I think that this is the wrong way of providing it. As we heard from my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), the problem now is that much of our military housing stock was locked into what was a terrible deal for the taxpayer during the last year of the Major Government, who sold most of the housing stock in England.

[John Spellar]

May I correct my hon. Friend? In the last few months of the Major Government, Michael Portillo, in a hugely criticised deal at the time, basically gave Nomura the deal of the century.

[Mr Jones]

My right hon. Friend is right: the taxpayer got about £1 billion and it has been a shoddy deal, because not only did it lock us into a long-term contract, but it locked us into a ludicrous situation whereby, once houses became surplus and were given back to Annington Homes, the taxpayer had to refurbish them and also in some cases—when they were having to be knocked down, for example—if they were within the wire of a base, we were still paying the rents on what were basically empty spaces. I had a look at this when I had ministerial responsibility in the Ministry of Defence, and I am sure my friend the right hon. Member for Hemel Hempstead (Sir Mike Penning) did as well. We must not blame Nomura; it made a great deal for itself, but it was a bad deal for the taxpayer.

The right hon. Gentleman and the hon. Member for Witney (Robert Courts) raised an interesting point: the way our armed forces operate these days has changed. Many more people travel long distances at weekends: it is not unusual for servicemen and women who live in the north-east to travel to the south coast at weekends and back again. When Labour was in government, we put a lot more money into single living accommodation; that was the way forward.

We have been promised the new housing model by the MOD, but it has not yet materialised. I was working on that at the time, because I, like the right hon. Gentleman and the hon. Gentleman, recognised that the fit we have at the moment does not work. The Army did not like it, because the Army—or a certain general—held the very traditional view at the time that we needed the regiment around the base.

I cannot understand why this is being done in advance of that new housing model being brought forward. The hon. Member for Witney raised a point in respect of his area that I have also looked at: if we are going to bring in this change, we will have to bring it in over a number of years and provide housing locally, to ensure there is a supply of housing locally for those who want to live locally. We were looking at working with local housing associations and others to provide that.

There is nothing wrong with the model of this housing allowance, therefore, but if it is done in the vacuum in which it is being done, it can lead to situations whereby people take their housing allowance and then find that they are at the mercy of the over-inflated local housing market in and around some of our garrison towns and ports.

[Sir Mike Penning]

The hon. Gentleman—my friend—and I agree on most things, but no one is going to force people into doing this. We must wait for the model to come forward, and I would not vote for something where we forced people into such a scheme, as the Opposition Front Bench claimed. But my friend is wrong to say we will have to address this just around the localities: we will have to do that, but these people often want to find accommodation in their own home towns, so they can be around their family structure. That is the way the armed forces are now, rather than just having the garrisons, and the super-garrisons, which are coming.

[Mr Jones]

I do not disagree with the right hon. Gentleman, but unless we do some work on where we are going to house these people and families, we will be throwing them out to the market. That is why the last Labour Government introduced the early support for members of the armed forces who wish to purchase their own property, a move that was cancelled in the first Budget in 2011. There is a mixture here: some members of the armed forces want to buy, while others will want to rent as they move around.

To do this without any thought about how we are going to provide the housing behind it is a little strange, and I cannot understand why this measure is being brought in now. The right hon. Gentleman said people are not going to be forced, and I agree, but if they think it is attractive and then suddenly realise it is not, will they be able to go back?

Instead of having a piecemeal approach like this one, or putting the cart before horse, we should have waited for the new housing model before this proposal was brought forward. As part of this mix, I would also like people to be able in some cases to opt not for rental allowance, but for support for mortgage payments; we introduced that, but it was cancelled in the first Budget in 2011.

[Jim Shannon (Strangford) (DUP)]

I am doing the armed forces parliamentary scheme, which gives me the opportunity to speak to Army, Royal Navy and Royal Air Force personnel. The issue that comes up all the time is accommodation for families. If we do not get the accommodation right for families, we will not retain the personnel. We need to retain the personnel, so does the hon. Gentleman agree that we need to work on those issues and that the introduction of this policy could provide an opportunity to ensure that Army personnel can be retained and that the accommodation is up to standard?

[Mr Jones]

I do agree with the hon. Gentleman. Anyone with a close involvement with the armed forces, as he has, will know that we rely on those men and women to go on operations and that a key issue for morale is to ensure that their families are supported during those times.

I am a bit wary about this proposal for another reason. When the Australians introduced this type of rent allowance, they did it gradually, over a 10-year period. There was therefore a transition period with new starts and other people coming in. The proposals in the Bill seem a bit piecemeal, and if they are not done in a thought-out way, we could end up in a situation in which Annington Homes retracts the existing accommodation and people’s options become limited. Again, I think this is the right move forward but it is not being done in the right way. Anything that the Treasury can do to extract the Ministry of Defence from the Annington Homes contract would be universally welcomed—[Interruption.] The right hon. Member for Hemel Hempstead is shaking his head. He has obviously looked the same thing as me. Let us wait and see what the new housing model delivers, but let us hope that it adopts a joined-up approach that will be of benefit to members of our armed forces.

I want to turn now to stamp duty. My right hon. Friend the Member for Warley (John Spellar) asked the Minister which regions would benefit the most from this proposal. The Minister, as usual, sidestepped the answer, but it is in fact quite clear. The average house price in County Durham is £138,000. In London, it is £488,000, so it is quite clear where the money will go. As my hon. Friend the Member for Wirral South (Alison McGovern) said, the Government are completely ignoring the idea of trying to eradicate inequalities throughout the regions. Indeed, they will actually increase them through these moves.

There is a broader point, however. I passionately believe that people who aspire to own their own home should be able to do that, and we should be able to help them to do it. The problem with this Government, however, is that they have one trick in their armoury, which is the idea that the private sector should deliver all this. They believe that the only way to achieve the mythical 300,000 new homes is to allow the private sector to deliver them. Well, I am sorry, but if they are going to rely on the private sector to do that by supplying 300,000 new homes for purchase, that will not deliver the homes that we need in most areas—not just in London but throughout the regions.

[John Spellar]

Does my hon. Friend agree that the underlying problem is that the private sector supply side is becoming increasingly dysfunctional? Indeed, it is becoming an oligopoly, and many of the companies involved are no longer construction companies but just land banks.

[Mr Jones]

They are indeed. My hon. Friend the Member for Ipswich (Sandy Martin) mentioned the example of Persimmon earlier. Many of those companies are no longer housebuilders in the traditional sense. They are employment agents who employ contractors to do things. In my constituency, some of the complaints about new builds are pretty horrendous, and I think that that experience is shared across the House.

[Gareth Snell]

Where private developers are developing houses, they are all too often quick to run to the district valuer to argue that affordable and social housing makes development schemes unaffordable, so fewer affordable social houses are being built through private development.

[Mr Jones]

My hon. Friend makes a good point. Added to that is the fact that the definition of “affordable” in London is completely out of reach for most people.

The Government have this one idea that we are going to solve our housing problem through the private sector. I accept that it has a part to play, but the social sector, meaning both councils and very good housing associations, could step up to the mark and actually provide houses where we need them. If we look at the amount of money that is going into the subsidy, as mentioned by my hon. Friend the Member for Wirral South, we would not even have to spend money directly on social housing. We could provide new housing by just underwriting the debt of some of the social housing providers. In my area, Derwentside Homes and Cestria have now come together as an organisation called Karbon—I emphasise the k for the Hansard reporters, but I think it is a stupid name—which has been able to do small-scale developments by borrowing against its assets. If it had Government support for that borrowing, it could do a lot more.

Helping local authorities to take a share in things by putting land into deals or by setting up their own corporations of social landlords and councils could lead to the development of the houses that we need. Social housing is not a static model. People think that social houses are just for rent, but Karbon has a good subsidiary called Prince Bishops Homes, which allows people to start by renting and then, as their circumstances change, purchase the house and convert their rental into a mortgage. We need to look at schemes like that. Are they expensive in terms of what my hon. Friend the Member for Wirral South referred to? No, I do not think they are, and they will provide housing where we need it. I accept the particular pressure on housing in London, but there is pressure everywhere, not just from first-time buyers, but people who want to rent for the first time.

If the Government put their ideological baggage away and said, “Are we actually going to do what we say and produce the houses that people need?” they could do things in a different way. The Minister can talk about 300,000, half a million or a million homes—I say the same to my Front-Bench team—and it is fine to pluck figures out of thin air, but delivering them is a different thing altogether. If we look back at the history of housing in this country, we only actually build large numbers of houses when we have direct Government intervention, and we need that direct intervention now. It is easy for the Government to argue that the previous Labour Government failed here, but we did not. We actually transformed a lot of social housing. Two housing associations in my constituency received over £100 million to bring their stock of homes up to a decent standard, which was transformative for residents and tenants. Houses with 40-year-old bathrooms had them changed. There were new rooms, new central heating systems, new kitchens and more energy-efficient measures. I am not going to shy away from talking about what the Labour Government did when we were in power to change the lives of many people in this country.

Turning to land banking, there is evidence that certain companies are using land banks. In some cases, companies submit planning applications and then just sit on the land. I welcome any approach to deal with that, but we need to be a bit more imaginative about allowing local government to be a bit more forceful with their planning powers. When Labour was in government, I was a huge critic of something called the regional spatial strategy, describing it once as Soviet-style five-year planning. It was too blunt an instrument.

We need to allow Country Durham and other areas like mine to expand housing, because we are increasingly becoming commuter belt for Tyneside and Teesside. Somehow restricting the allocation of housing to the urban conurbations fails to understand that, without new houses, a lot of villages and communities in my constituency will struggle to survive. More powers should be given to local authorities not only to form local plans but to implement them, too.

--- Later in debate ---

[John Spellar]

I start by welcoming the service accommodation proposals. I echo the comments of my hon. Friend the Member for North Durham (Mr Jones) on the short-term gain taken by the Ministry of Defence and the Treasury in a bid to shore up the finances of the Major Government, which did them absolutely no good in the 1997 election. Service personnel and their families have been suffering from the impact of that ever since.

On the basic question of the stamp duty measure, I suppose that it could be welcomed, superficially, as a reversal of the intergenerational transfer of wealth, but in fact, as my hon. Friend the Member for Wirral South (Alison McGovern) said, the reverse is the case, as the main beneficiaries will be the existing owners of housing. In a tight housing market with a large amount of stock and limited flow, the net effect of adding extra liquidity into the system is most likely to be an increase in the price of housing.

The other beneficiaries will be not just individual householders who seek to trade down, or even up, but private sector landlords who have been buying up property and forcing up prices. Many youngsters are not able to get together the sort of deposit that is now required unless they can go to the bank of mum and dad. With the average house price in London at nearly £500,000, they are having to find a deposit of some £50,000. We are targeting a considerable public subsidy towards one small group without actually dealing with the problem.

It was very instructive that the Minister was unable—or probably unwilling—to give the figures I asked for about how much the measure will cost in aggregate and how the costs will break down by region. It is inconceivable that such analysis was not carried out as the policy was drawn up and ground through the mills of the Treasury. To save me from tabling a parliamentary question, I urge the Minister to come up with those figures in his winding-up speech. I think that the figures will show a considerable disparity between regions, which is not uncommon under this Government, much as they seek to hide it. Just recently, a letter from the Secretary of State for Transport told us that we had it all wrong and the average spend on transport was roughly equal between the north and the midlands, and London and the south. The only issue was, as my hon. Friend the Member for North Durham found out, that the Government had omitted to include the £32 billion—I believe that is the figure—for Crossrail from the London figures, because that had somehow been designated as a national scheme.

[Mr Kevan Jones]

I can inform my right hon. Friend that it was actually worse than that, because the Government had also deemed the north as being the north-west, the north-east and Yorkshire.

[John Spellar]

I do not get involved in those arguments.

In essence, we are seeing major transfers of wealth to areas that the Government see as their political homeland. However, let us also look at the big house builders, as they are euphemistically called—really they are land bankers and, as my hon. Friend said, employment agencies. They also indulge in a number of other unsavoury practices. Several of them have now been exposed for their involvement in the racket of escalating leaseholds, which they have now been forced to back down from. They have had to pay considerable sums to buy back those leases from individuals—speculators—who bought them and were then exploiting residents on that basis. Is that not a symptom and a symbol of the dysfunctional nature of our housing market? The Government are not tackling that in any particular way.

Nor are the Government tackling the increasingly oligopolistic nature of the house building industry. There has been a significant decline in medium and small builders, who used to be the backbone of the building industry and of many towns. Building, by its nature, is subject to cycles, and banks have been incredibly reluctant to lend money to small builders, who have steadily either gone out of business, or been absorbed into the big builders. That has flowed into the lack of training that has taken place, because so many of the big house builders are mainly just the name outside a project and are not particularly interested in the small sites—brownfield sites—around our towns. With the breakdown in training, we then have the cry from those same builders that need to bring in more and more builders from abroad because of insufficient supply in this country. That is because over several years, if not decades, they have not been training people.

Nor do the Government have any programme, as far as I can see, that is equivalent to the better homes programme which, as a number of colleagues have said, contributed enormously, not only to bringing many properties back into effective use, but to improving the lives of many of our constituents. Finally, what we see here is figures being plucked out of the air. This is reminiscent not of an efficient market, but very much of Soviet planning, with declarations of 300,000 houses but no visible means by which that will actually be achieved.

Intelligence and Security Committee of Parliament

Lord Beamish Excerpts

Thursday 16th November 2017 Commons Chamber

[Mr Ben Bradshaw (Exeter) (Lab)]

I am delighted to welcome the long overdue reconstitution of this Committee and wish it well with its work. It is nice to see at least two of its members in the Chamber this evening.

[Mr Kevan Jones (North Durham) (Lab)]

Three.

[Mr Bradshaw]

I do beg my hon. Friend’s pardon.

I hope that one of the Committee’s early inquiries will be into Russian interference in the UK. As you know, Madam Deputy Speaker, I have been raising questions about this for the past year, during which the evidence of Russian interference in the American presidential election became credible and compelling. Until recently, the UK Government gave every impression of not wanting to talk about it, but mounting evidence on both sides of the Atlantic of covert Russian propaganda and social media activity, and the role of dark money in our democracy, makes it imperative that the Intelligence and Security Committee looks at this as a matter of urgency. The Digital, Culture, Media and Sport Committee has already launched an inquiry and the Electoral Commission is conducting investigations into Russian-backed interference in the referendum, including with regard to social media and the funding of the pro-Brexit campaign and its main financial backer, Arron Banks.

The American investigation into alleged collusion between the Kremlin and the Trump campaign, led by Justice Department special counsel Robert Mueller, has also now reached Britain. The FBI has named Nigel Farage, the former UKIP leader, as a person of interest, and Mueller has indicted a former Trump campaign operative, George Papadopoulos, who had meetings in London with a UK-based academic, Josef Mifsud, to discuss the latter obtaining dirt on Hillary Clinton from the Kremlin. We know that Mr Papadopoulos has had access to British Ministers, and that Professor Mifsud has met the Foreign Secretary, although that was at first denied.

While it is imperative that the Government and their agencies give the fullest help and co-operation to the Culture Committee, the Electoral Commission and the Mueller investigations—although I know this is not his area of responsibility, I would be grateful if the Minister could assure the House that that will be the case, especially as I have been told that the Mueller team was in London recently and was not happy with the co-operation it was receiving from the UK authorities—it is the Intelligence and Security Committee that has much freer and direct access to our intelligence and security services and can question them directly. That is why its reconstitution is so important.

Despite the mounting evidence of recent months, the Foreign Secretary was still insisting last week that he had seen no evidence of Russian interference, but on Monday the Prime Minister said, or at least implied, something very different in her Mansion House speech. She excoriated the Putin regime for hacking, interfering in elections, and spreading fake news to sow discord in western democracies and threaten our international order.

It would be helpful to the Houses of Parliament and the country as a whole if the Government would end this confusion now. Is Britain among the countries that the Prime Minister had in mind when she made her speech? Indeed, it would be rather odd, given the uniquely disruptive impact of the Brexit vote and Putin’s well publicised desire for it, if Britain alone were immune from the Kremlin’s intentions. If the Government will not clear this up, I hope the ISC will. I hope that the ISC will also use its good offices to ensure that the Government and all their agencies give every assistance necessary to the other UK bodies investigating these matters and to Robert Mueller’s team.

Additionally, I urge the ISC to include the issue of dark money and the role of think-tanks in any of its deliberations on this matter. We know that more than £400,000 was donated during the EU referendum to the Democratic Unionist party by the Constitutional Research Council. The CRC has also given money to hard Brexit-supporting MPs, including the Under-Secretary of State for Exiting the European Union, the hon. Member for Wycombe (Mr Baker). It was reported last week that the fine the Electoral Commission imposed as a result of the DUP donation resulted from a failure to disclose its source. That is not acceptable.

Finance Bill

Lord Beamish Excerpts

2nd reading: House of Commons
Tuesday 12th September 2017 Commons Chamber

Question again proposed, That the Bill be now read a Second time.

[Mr Kevan Jones (North Durham) (Lab)]

On a point of order, Mr Deputy Speaker. We are seeing an historic event tonight: a Government actually filibustering their own Finance Bill! I think that should have a plaque somewhere in this Chamber. I am told through the usual channels that the Conservative Whips told their Members to book hotel accommodation tonight because the Labour party was apparently going to talk the Bill long, even though Labour Members were assured by our own Whips that we would not. They have got to keep it going until 10 o’clock, so their Members can be reimbursed by the Independent Parliamentary Standards Authority. With 25 more speakers to go, and the Whips doing their best to cut down contributions, I wonder, Mr Deputy Speaker, whether you could institute a time limit to save Government Members from the incompetence of their own Whips Office. [Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Hang on a minute. I thank the Government Whips, who have turned out in force, for their advice. I do not know what fear you have put among them, Mr Jones. However, if they were really interested in filibustering, they would have asked you speak. The fact that they did not has probably saved the House. As you well know, that is not a point of order but you have put your point on the record.