Draft Income Tax (Trading and Other Income) Act 2005 (Amendments to Chapter 2A of Part 5) Regulations 2019

Kevin Hollinrake Excerpts

Thursday 31st October 2019 General Committees

[The Financial Secretary to the Treasury (Jesse Norman)]

I beg to move,

That the Committee has considered the draft Income Tax (Trading and Other Income) Act 2005 (Amendments to Chapter 2A of Part 5) Regulations 2019.

It is a great pleasure to serve under your chairmanship, Mr Stringer.

The regulations make technical amendments to the rules governing offshore receipts in respect of intangible property—the hyper-sexy acronym is ORIP—that were introduced in the Finance Act 2019. The ORIP rules tackle large multinationals that have entered into arrangements to receive income from their intangible property—copyrights, patents and other intellectual property—in offshore territories where that income is either untaxed or taxed at low effective rates. The rules tax the proportion of that income that relates to the sale of goods or services in the UK.

ORIP reduces the opportunities for large multinationals to gain an unfair competitive and tax advantage by using contrived offshore intellectual property structures to reduce their tax burden, thereby levelling the playing field for businesses operating in UK markets. The rules as enacted include a regulation-making power to allow for amendments to improve targeting and minimise unintended consequences, and this statutory instrument is the result.

Following recent consultation, the statutory instrument makes technical changes to the detailed provisions that are necessary for the regime to work as intended. Overall, ORIP is still expected to yield £1.1 billion over the scorecard, and these changes do not affect the costings. Where they are relieving, most of the amendments are treated as having retrospective effect from 6 April 2019, when the ORIP rules commenced. A few of the amendments, where they are charging, will have effect prospectively from the day after the regulations are made.

Let me briefly say a few words about each amendment. First, ORIP is targeted at territories with which the UK does not have a full double tax agreement, or DTA. That is intended to ensure the UK remains compliant with its international obligations. The regulations make two changes to the scope of the legislation. First, they extend the ORIP charge to businesses that are resident in a territory that has a full DTA with the UK but where resident businesses do not qualify for relief under it. That may be because the business is of a type explicitly excluded from the agreement or because the income paid to the business is not covered by the double tax agreement. The effect of that is to bring as many low-tax territories within scope as possible while remaining consistent with the UK’s international obligations. The change is prospective and will take effect from the day after the regulations are made.

Secondly, the regulations introduce an exemption for companies resident in specified territories with which the UK does not have a full DTA. That exemption, which is subject to anti-avoidance conditions, will be used to ensure that ORIP does not apply to high-tax jurisdictions that do not have a full DTA with the UK.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I realise that these matters are very complex and we need to narrow down the opportunities for multinationals to shift their profits around, on which this Government have done much work. However, Google makes a 22% profit margin internationally and turns over around £10 billion in the UK, which means, with a corporation tax rate of 19%, that it should pay around £420 million a year in tax in the UK, yet it pays only around £70 million. Does the Minister agree that we cannot rest in our pursuit of increased measures until it pays the appropriate amount of UK tax?

[Jesse Norman]

I am grateful to my hon. Friend for his intervention, which reflects his characteristically acute understanding of financial and tax issues. Of course, the question in many of these cases—I will not take one in particular—is whether companies have paid the appropriate level of corporation tax in the jurisdictions where corporate tax is chargeable. There is then the separate question whether they pay a fair level of tax in the jurisdictions where they do business. He will understand that the latter is very much in the Government’s mind. That is part of the purpose of our new digital services tax, which we hope to introduce in the next Finance Bill and for which legislation has already been published.

The Economy

Kevin Hollinrake Excerpts

Thursday 24th October 2019 Commons Chamber

[John McDonnell]

I said that I would limit interventions, but I accept that they can often be a job application, so I do not want to limit this job creation scheme that we are creating here—I wish the hon. Gentleman well in his future career.

The scale of human suffering and hardship inflicted on our people over the last nine years is never mentioned by the Government. The reason is that they would have to explain why our people have endured so much. They would have to admit that austerity was never—as we have said, and let us repeat it—an economic necessity; it was always a political choice. The choice the Tories took was that the bankers—their friends, many now populating the Government Front Bench—would never have to pay for the crisis that they had caused through their speculation. Instead, they determined—[Interruption.] The Chancellor of the Exchequer says, “You caused it”—this is the man who was selling the CDOs through Deutsche Bank. Deutsche Bank was a major contributor to the economic crisis that we faced—they have a nerve coming here blaming others, when they caused it. They determined that they would not pay for the crisis, but that the rest of our society would. They also took the view that they would never let a crisis go to waste, so they used it as the excuse to cut the taxes of the corporations and the rich. They have made £47 billion in cuts to our public services and, on their plans, they will have given away £110 billion in tax cuts to the corporations by 2022.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The right hon. Gentleman pointed to the fact that it was this Government who bailed out the banks when, actually, the Asset Protection Agency was set up by the Labour Government.

[John McDonnell]

I say to the hon. Gentleman, who I have a lot of time for: it is best to listen to what I have said before he intervenes, because he did not, I think, accurately report what I said.

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[Ben Bradley]

Will the right hon. Gentleman give way?

[Kevin Hollinrake]

Will the right hon. Gentleman give way?

[John McDonnell]

No, I will press on. I understand that we are short of time.

The Tories will indeed protect their own. Under them, it will always be the people who are burdened with cuts in services and pay and benefit freezes. What people need now is real change. They need real change in our economy, so that we can face up to the existential threat of climate change through Labour’s green industrial revolution; real change to provide the scale of resources that our NHS, our schools and our police services need, funded by a fair taxation system in which we will tackle tax evasion and avoidance; real change to bring forward the scale of investment that our infrastructure needs to compete in the global economy and meet the challenges of the fourth industrial revolution; and real change to ensure that our people share in the prosperity that we will create through decent wages, ownership and an end to the rip-off of privatisation.

Only a Labour Government can bring about the real change that our country needs after a lost decade under the Tories. What does that say? It says that it is time for a Labour Government.

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[Rushanara Ali]

rose—

[Kevin Hollinrake]

rose—

[Sajid Javid]

I give way to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake).

[Kevin Hollinrake]

One of the worst effects of the banking crisis was the impact that it had on many thousands of small and medium-sized enterprises in this country, who lost their livelihoods and sometimes their homes. The Business Banking Resolution Service, which has been set up to deal with historic complaints, is excluding many people on very tight eligibility criteria, which I regard as unfair, as someone who sits on that steering group. I believe it requires the intervention of the Chancellor to get UK Finance to come to the table, to be fairer about those eligibility criteria. Will he commit to do that?

[Sajid Javid]

Look, first I commend my hon. Friend for all the work that he has done, and continues to do, to support small businesses throughout the country. He has raised an important issue. He knows that work is ongoing to address that, but I would be happy to meet him and discuss it further.

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[Vernon Coaker (Gedling) (Lab)]

This debate about the economy gives us an opportunity that the shadow Chancellor tried to take and the Chancellor missed, although the right hon. Member for Sevenoaks (Sir Michael Fallon) started to get to where I think this debate on the economy should be taking us. Let me explain what I mean.

My constituents in all parts of Gedling—in Carlton, Arnold, Netherfield, Colwick and Burton Joyce—say exactly the same as is being said by many people in the country: that the system, as it is currently, does not work for them. They do not believe that the way the system operates is fair and they want something done about it. And what they want from this Parliament is a vision of an economy that is different from the way it functions now.

It is such a big issue that the Financial Times—the doyen of the City of London—recently ran an editorial that itself asks the question,

“How to build a more responsible…capitalism”.

It talks about how that can be done. I hope that the new Chair of the Treasury Committee will consider whether his Committee should look at how we are going to deliver a market system that regulates itself in a way that does not allow the excesses that we have seen. This is a quote from a Guardian report on the Panama papers:

“Twitter and Facebook received hundreds of millions of dollars in investments that can be traced back to Russian state financial institutions…Aggressive tax avoidance by multinational corporations, including Nike and Apple…billions in tax refunds by the Isle of Man and Malta to the owners of private jets and luxury yachts.”

None of us, whether we are Labour, Liberal, Scottish nationalist or Conservative—whoever we are—can believe that is right. Where in the Chancellor’s speech did it say that whoever was in government they would tackle that?

It cannot be right that multinational companies are shifting a growing share of profits offshore—£600 billion in the past year alone. Then we turn to the people who HMRC pursues for a few pounds that they owe, or the Benefits Agency pursues for a few pounds that they owe. That is not the sort of society that people want. That is not the sort of society that people think is fair. The Sunday Telegraph, on page 5, laid into the way in which investment funds work. Nigel Woodford—I have never heard of him—

[Kevin Hollinrake]

Neil Woodford.

[Vernon Coaker]

Well, there you go—Neil Woodford. I have still never heard of him. We read about Terry Smith, Nick Train and Anthony Bolton, and millions of pounds of investors’ money. The money that we—hon. Members on both sides of the House—pay into savings, trust funds and pensions is put together and invested on our behalf by a system that has short-term interests and profit at its heart rather than the long-term benefit of communities. It cannot go on.

It cannot be right that my own brilliant BEIS Committee reported that the average FTSE 100 chief executive is on £4 million a year compared with the average worker on £30,000. It cannot carry on. All I wanted to hear was a Chancellor of the Exchequer who put at the heart of his Queen’s Speech contribution equality, a responsible capitalism, a change to the fast buck and a change to those people who seek to make money rather than putting people first. That is what I wanted to hear and it was seriously lacking.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

I listened carefully to the speeches made by the Chancellor of the Exchequer and the shadow Chancellor of the Exchequer. The shadow Chancellor said that there is too much inequality in the UK—I absolutely agree. As a one nation Conservative, I believe in equal opportunity for all, but I guess that the method of getting there is where we differ. In my view, we get there through a balance between free markets and capitalism, and a sensible amount of state intervention, to ensure that the free markets work for everybody, not just the privileged few. The difficulty is that, if we look at future challenges for the taxpayer, our scope for intervention will be very limited. Our current debt-to-GDP ratio is 80% of GDP. That is forecast to grow to 280% of GDP by 2060 unless we change our tax system. There are huge challenges ahead and huge burdens for the taxpayer, particularly in the areas of pensions, social care and healthcare. Free market opportunities will be more important than ever.

I agree with my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon) about the reduction in the number of capitalists in this country for various reasons. G. K. Chesterton once wrote:

“Too much capitalism does not mean too many capitalists, but too few capitalists.”

If we look at where we normally get capitalists from in our society, we see that it is SMEs—young businesses starting up and building—and people getting into either the stock market or the housing market. Of those two cohorts, SMEs in particular face bigger challenges than ever in today’s economy because of the imbalances and unfairness. As other Members have said, larger companies—the Amazons, Tescos and Starbucks of this world—are able to take competitive advantage of the tax system, and as a consequence, the growth rate of SME start-ups has started to falter. Their growth rate today is lower than it has been for the last 10 years.

We know how important SMEs are. There are 5.7 million of them in the UK, and 99% of all businesses in the UK are SMEs. They employ 60% of the private sector work- force, and they are more productive in their start-up years than the rest of the economy. It is hugely important that we support the dynamic creation of new businesses.

With limited room for intervention, we have to ensure that the playing field is fair and level for all businesses. As I said in my earlier intervention, one of the imbalances is between SMEs and banks, which are so important to them, when things go wrong. We need a proper resolution process. We have seen disgraceful treatment of SMEs by banks. Where do they go when things go wrong? The new Business Banking Resolution Service is promising, and I am working with the steering group, but it unfairly excludes 85% of businesses that could apply for resolution of historical complaints. That cannot be fair.

[Sir William Cash (Stone) (Con)]

Does my hon. Friend accept that, during the transition period, it is essential that we protect ourselves from legislation from the European Union on tax and business, which could do enormous damage to our vital national interests?

[Kevin Hollinrake]

My focus in this speech is SMEs, and I will stick to that, but my hon. Friend raises an interesting point.

If we are to have a fair and level playing field, we must ensure that our investment is spread more fairly across the regions. It is wrong that this country is firing on one cylinder when it could be firing on three or four. This is not about the north-south divide; it is London versus the rest of the country. For every £3 spent per capita in London, only £1 is spent in the regions. We need a fairer deal to help to level up our economy in the UK.

Finally, it is a shame on this country that we do not do more about tax avoidance. New rules are coming in to try to level the playing field, such as the diverted profits tax, but we must do more to ensure that everybody in the business environment pays their fair share of tax. That is how we build a fair and level playing field, encourage more SMEs to start up and scale up, and become a more productive economy. That is how we get a bit less capitalism, but a lot more capitalists.

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[Peter Dowd]

My hon. Friend refers to just some of the many thousands of workers who have been let down by this Tory Government. We all walk past people sleeping rough on the streets every day, but what have the Government done about that? Nothing. Despite endless promises of jam tomorrow, there looks to be little respite ahead under this Government. Their approach to this is writ large by the smirks on the faces of the members of the Government Front Bench.

Manufacturing output in August dropped at the fastest pace in seven years, with EU-based customers rerouting supply chains away from the UK in anticipation of 31 October. Consumer and business confidence is tumbling. Anecdotally, we know that a worrying proportion of businesses are moving their operations and investment elsewhere.

My right hon. Friend the shadow Chancellor said:

“We have heard the Prime Minister’s previous crude dismissal of British business. Now we are seeing his words become Government policy.”—[Official Report, 8 October 2019; Vol. 664, c. 1650.]

Businesses are responding in droves. The Centre for European Reform says that the economy is already £69 billion smaller as a result of Tory turmoil and uncertainty since the Brexit vote. That is their responsibility on their watch—nobody else’s. Time and again, they put party over country while the economy suffers. The Government’s false dichotomy of no deal versus a bad deal amounts to an attack on the economic wellbeing of our citizens. Our economy needs cast-iron guarantees of frictionless free trade and strong regulatory alignment with the European Union. It needs a targeted industrial strategy to turn the biggest threat of our time into an economic opportunity, but not with the Tories.

The only threat we face that is equal to the continuation of this Government is the climate emergency. We need a green industrial revolution: a rapid and far-reaching transformation of the UK’s infrastructure, from our homes to our transport and energy systems. That requires investment on a scale that makes the Government’s programme pale into insignificance. Labour is offering—

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Peter Dowd]

I am sorry, but I will not at this stage.

Labour is offering a national transformation fund and a national investment bank that would invest £500 billion of lending and spending over 10 years, with tackling climate change as a central mission—a concept alien to that lot over there. It will include targeted investment to develop and commercialise new technologies so that they are designed here, assembled here, installed by a well-paid unionised workforce here, and then exported to the rest of the world. It is a far-reaching programme of economic revival that will create the industries of the future here. This is a Government of yesterday. We are the Government of tomorrow.

With its wind and marine resources, the UK has some of the best potential in the world for renewable energy. Renewable energy should be to the UK what tech has been to California, but the Government’s failure to support these nascent industries has held us back. We should be building on our existing strengths, such as the automotive sector, which could, with the right support, lead the world in electric vehicle and battery production. At the Labour party conference, my hon. Friend the Member for Salford and Eccles (Rebecca Long Bailey), the shadow Business Secretary, announced a multibillion-pound package of investment to kick-start the electric revolution. That is the scale of targeted support that our automotive industry needs—not just green number plates. Today, she announced plans to create a carbon-neutral energy system by the 2030s, including insulation upgrades for every home in the UK and enough new solar panels to cover 22,000 thousand football pitches, including Anfield.

This is not just about avoiding a climate catastrophe. The green industrial revolution is about building the world we deserve, not the world that the Tories think we deserve. We will ensure that nothing is too good for the working people of this country. We can tackle climate change while transforming our economy so that it works for the many, not just the privileged few.

As my right hon. Friend the Leader of the Opposition has said, this is not the time for despair; it is the time for action. I hope the Chancellor—hope does spring eternal—will act by accepting amendment (g) so we can begin to rebuild our economy in the interests of the many, not the few. Under this Government of yesterday, I will not hold my breath.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Tuesday 1st October 2019 Commons Chamber

[Sajid Javid]

We are investing in York and investing throughout the country by creating a dynamic, free enterprise economy that is creating jobs. We have the lowest unemployment rate in our country in 45 years. I would think that a party that calls itself Labour would actually welcome that. In the hon. Lady’s own constituency, since 2010—since the Labour Government were kicked out—we have seen a fall of 12,300, or 64%, in the unemployment numbers. That is something she should welcome.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I welcome the introduction of the new business banking resolution service that will start to hear cases of historical problems later this year. In the previous Chancellor’s letter of 19 January, he stated that that scheme should carefully consider all cases that come before it. How is that possible when the research of the all-party parliamentary group on fair business banking determined that 85% of cases are excluded?

[The Economic Secretary to the Treasury (John Glen)]

I thank my hon. Friend for his question. He is a powerful advocate for this redress scheme and I thank him for the work that he has done. In our conversation on 10 September, I reiterated the Government’s position that the scheme should not reopen complaints that have sometimes gone multiple times through the courts, but I welcome the fact that the new scheme will give access to 99% of those claims going forward, and I will continue to engage with him where I can to provide solutions on individual cases.

Income Tax

Kevin Hollinrake Excerpts

Wednesday 3rd July 2019 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

The Minister said that he got support from businesses for tax relief. Well, that is not a surprise: when people are offered tax reliefs, they will accept them because it is cash in their pocket.

In a document published on 5 March last year, the Institute for Fiscal Studies said that our current tax system

“does not consistently deduct the cost of investment meaning that some investments are discouraged, some are incentivised and some are unaffected by the tax system.”

It went on to say that there should be

“a clear policy justification”,

which should be focused, and that we should ensure

“that the benefits outweigh the costs.”

The document also said:

“Too many reliefs have weak or poorly articulated policy aims”,

and that

“digging into the details and evaluating how each relief stacks up against a clearly stated tax design”

is important. It continued:

“The bar for introducing any new relief should be high.”

On the very same night, the Chartered Institute of Taxation and the Institute for Fiscal Studies had a debate about business tax reliefs, which asked whether they were

“corporate welfare or essential elements of the tax system”.

The question is, do we think they are an essential element of the tax system? In the debate on the Finance Bill, we raised these matters, but we were not able in any way to amend the law, which is regrettable. However, we did raise, in a sense, the whole question of tax reliefs, and it is a desperate shame to find ourselves here again debating the introduction of what amounts to another corporate tax relief, when so little has been done to sort out the scope of the scores of tax reliefs already in operation.

At the last count, the Government were responsible for managing 115 principal tax reliefs totalling £430 billion, as well as 80 minor tax reliefs totalling an estimated £690 million. However, alongside those, there are up to 235 reliefs in operation for which we have no cost data at all. I repeat: we are forgoing revenue on 235 tax reliefs, but Her Majesty’s Revenue and Customs does not count the cost. I find that quite remarkable. I cannot think of a single other policy area where the Treasury would be uninterested in Government expenditure.

Ministers tell us that the cost of these reliefs is negligible so there is no point making efforts to manage them more effectively. I do not believe that that holds water, especially when we consider that the Government regularly deprive citizens of small but essential sums of social security for the crime of being perhaps five minutes late to the jobcentre. Perhaps the Minister can explain why the Government can give away millions to large companies without counting the cost, while stripping the poorest in our society of the pounds and pence they need to survive. I ask that especially in the light of an interesting article by the Minister in The Sunday Times some weeks ago about our being one nation. It would be interesting to hear him comment on that. I agree with him that we have to bring the nation back together again, and that is an important part of this issue. I would also like to know what efforts the Government have made to improve the management of tax reliefs at HMRC. Will the Minister now commit to a moratorium on introducing further tax reliefs, unless the annual cost data on them can be collected and published by HMRC?

Turning to the measure before the House, it will not surprise anyone here that the pile of opaque and unaccountable tax reliefs is being added to, with yet another tax relief for businesses that does not necessarily fit the robust criteria set by the Institute for Fiscal Studies—criteria that this House should set in relation to the introduction of tax reliefs.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Gentleman was talking about the cost of tax reliefs. Has he worked out the cost to UK business and investment of imposing a policy that would requisition 10% of businesses that have more than 250 employees? I understand that that is Labour party policy.

[Peter Dowd]

I do not think it is a question of requisitioning; it is about a different approach and taking a different look at engaging workers in our economy. That is it—it is as simple as that. I appreciate and completely accept that the hon. Gentleman does not accept the concept, but that does not mean that the concept is wrong.

The Government boast about their corporation tax giveaways, but it is clear that even those billions, stripped from our public services, are not enough to satisfy their intentions in relation to corporate welfare. Furthermore, it seems that, in their rush to hand out giveaways, they have given no consideration to how this measure will fit into the already complex and convoluted system of capital allowances. It is not necessarily a question of saying whether I agree or disagree with these things; it is a question of saying we have a convoluted system—and it is incredibly complex. We do not have any review mechanisms of these reliefs, and we do not have any sunset clauses on them—in fact, we have debated that in Committee in the past, but the Government seem to have no response.

This new measure on structures and buildings allowances will, as the Minister said, provide relief for qualifying expenditure on new non-residential structures and buildings incurred on or after 29 October 2018 on a 2% per annum, straight-line basis. At the Finance Bill earlier this year, the Government blocked our attempts to require Ministers to publish details of the likely take-up of this new allowance across different-sized businesses.

Despite those concerns, the secondary legislation before us remains vague, with important definitions that would assist in addressing areas of ambiguity delayed and deferred to guidance. We have had lots of this deferral to guidance, secondary legislation and other things—potentially even tertiary legislation in due course. It really is not good enough. We need transparency and openness; we do not need to be told, “This is going to happen, but the detail may come a little later on.” Similarly, the decision by Ministers to delay finalising the details of this new allowance until June, when the final stages of the Finance Bill took place in January, is yet further evidence of the continued environment of uncertainty that business is forced to operate in under this Government.

The Chartered Institute of Taxation rightly criticised the Government over these new regulations, stating at the time of the 2018 Budget that

“it is neither sensible nor responsible for the government to introduce reliefs into the tax system at a time before they have consulted upon the scope and application of the relief or fully considered, and are therefore able to legislate for, the details of the relief.”

It concluded that these regulations will only complicate matters, particularly given that plant and machinery are excluded. That means that taxpayers are still required to identify the plant and machinery in buildings, with the same grey area that currently exists between buildings, fixtures, plant and machinery. The administration of this new allowance will be substantial and burdensome for businesses, flying in the face of the Government’s initial promise to simplify the tax system.

The demotion of much of the detail of this allowance to secondary legislation remains of great concern to the Opposition, particularly given that capital allowances are yet another means of extending tax breaks to large businesses, many of which do not necessarily need the relief. The reality is that many small and medium-sized businesses that desperately need support from the Government will struggle to access this relief without incurring substantial costs as a result of hiring tax experts to guide them through its complexities.

Rather than continuing this piecemeal approach, which seems only to confuse and deter businesses in need, Labour remains committed to carrying out a review of tax reliefs once in government to evaluate individual reliefs against their effectiveness and value for money. It seems that, again, this opaque Government will not commit either to a proper review of the measure before us or to a wider review of the full plethora of their corporate relief giveaways.

This is no way to run the country. Once again, the devil will be in the detail of the guidance that HMRC publishes, particularly when it comes to what constitutes qualifying expenditure, the definitions of terms such as “dwelling-house” and “mixed-use building”, and clarification of the treatment of successive leases and the new flexible rules in instances where expenditure is incurred after a building comes into use.

Although the Opposition remain sceptical about the introduction of yet another poorly-considered allowance on top of the 1,200 allowances that already exist—many of which have existed for decades without review—we will not be voting against the secondary legislation today. Instead, we will wait to scrutinise the guidance when HMRC publishes it later this year. [Interruption.] I can hear Ministers sniggering. A responsible Opposition will vote against something when they disagree with it and will support something when they agree with it. When we want to consider the detail, implications and other information that comes from the Government, we will hold back. That is what a responsible Opposition should do—not automatically vote against or support things willy-nilly—and that is what we are trying to do, because we are being responsible. Ministers can snigger at that responsible approach if they want to, but we will continue to be responsible, and we will continue to oppose this Government as and when we feel it is necessary to do so.

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[Jesse Norman]

Those companies’ return to profitability was the result of proper, prudent financial management. I remind the hon. Lady that in the specific case of the financial sector, the bank levy has taken billions of pounds a year more from the banks than the Labour tax that it replaced. I do not think her view has credibility.

The hon. Member for Bootle criticised the timetable, but it is designed specifically to keep uncertainty to a minimum. Far from the suggestion that it would create more uncertainty, the point of my saying that qualifying expenditure on new builds or renovations for which all contracts for the physical construction works were entered into on or before 29 October 2019 will be eligible for relief is precisely to give very clear direction to future investment. I do not agree with many of the points that he made.

[Kevin Hollinrake]

Does the Minister think that the hon. Member for Bootle understands how reliefs work? He said that it was about giving away millions of pounds to corporations. Actually, if a corporation invests on the back of a relief, it still costs that corporation money; it just makes the investment slightly more attractive.

[Jesse Norman]

My hon. Friend is right. The point of the relief we are giving through the structures and buildings allowance is precisely to level the playing field and to enable and encourage more business investment.

The hon. Members for Bootle and for Aberdeen North (Kirsty Blackman) asked about reviewing or monitoring. As they will be aware, the Treasury and HMRC continuously monitor tax reliefs according to the level of risk they pose, and they publish annual statistics on tax reliefs, including cost estimates where they are available.

I will now turn to the other points made by the hon. Lady. She says charitable organisations will be heavily affected. The statement that the acquirers of structures or buildings are asked to fill out consists of four factual pieces of information: first, what is the asset; secondly, when was it built; thirdly, when did it come into use; and, lastly, how much did it originally cost? That is not a heavy burden on any institution.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Tuesday 2nd July 2019 Commons Chamber

[Mr Hammond]

I think the hon. Gentleman has sketched a highly unlikely scenario, but I can answer his question. We have built up about £26 billion or £27 billion of fiscal headroom, and the purpose of that headroom is precisely to protect the UK economy from the immediate effects of a possible no-deal exit. I have no doubt whatsoever that in the event of a no-deal exit we will need all that money and more to respond to the immediate impacts of the consequent disruption, which will mean that no money will be available for longer-term tax cuts or spending increases.

Let me go further: the Government’s analysis suggests that in the event of a disruptive no-deal exit there would be a hit to the Exchequer of about £90 billion, and that will also have to be factored into future spending and tax decisions.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I certainly agree with my right hon. Friend that we need to be careful with our spending pledges, but I think that investment spending is different, particularly when the investment is in the north. Has my right hon. Friend had time to consider our letter of 29 April—signed by 80 parliamentarians—which calls for £120 billion of investment spending over 30 years and a bringing forward of the Northern Powerhouse Rail programme?

[Mr Hammond]

We are committed to investment in infrastructure. One of the things that I have done in my three years as Chancellor is move the balance of spending towards investment in economic infrastructure, and we now have the highest level of public capital investment for 40 years. We have a National Infrastructure Commission to set long-term guidance for the Government on how to invest in infrastructure investment, and that will be considered in the zero-based capital spending review that sits alongside the main spending review. However, I assure my hon. Friend that this Government are committed to investing in the productive capacity of the UK economy, because it is the only way to raise real wages and living standards, and that is what government is all about.

Disabled Access: Thirsk Station

Kevin Hollinrake Excerpts

Wednesday 26th June 2019 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I am grateful to you for granting this important debate, Mr Speaker, because train travel has never been more popular or important. Around 20,000 miles of railway track criss-cross our island, and altogether we made 1.8 billion rail journeys last year—a 3% rise on the previous year. I am a frequent rail user, boarding a train every week at York or Thirsk that whisks me to Westminster to represent my constituents, and then boarding another to return home to glorious North Yorkshire in time for my surgeries and visits at the weekend. Importantly, this week the Government legislated for a target of net zero carbon emissions by 2050. Using public transport is one way that we can help to tackle climate change and improve air quality.

[Jim Shannon (Strangford) (DUP)]

This week, most Members across the House took the decision to drive for that net zero carbon outcome for the UK, but that can be achieved only if more people make use of public transport. The fact that those who are disabled are precluded from using many railway stations, such as Thirsk, due to the lack of facilities is absurd. Does the hon. Gentleman agree that the Government must, in future policy relating to climate change targets, enable all people to travel on public transport, not just those who are able-bodied?

[Kevin Hollinrake]

The hon. Gentleman is absolutely right. As I will say later, around 40% of stations do not have access for disabled people, and we know that disabled people are accounting for a greater and greater proportion of our population, so this is hugely important. I am grateful for his intervention.

We need to encourage train use for all users and facilitate access to stations. Trains allow us to commute and explore the length and breadth of our country, from Thurso in the very north of Scotland to St Ives in Cornwall, both of which, I must mention, are replete with step-free access for disabled passengers. This is the essence of the problem: these essentials cannot just be for those who are in the physical prime of their life. Trains and the 2,500 stations that they pass through should be made more accessible for everyone. Everyone, including disabled people, the elderly and parents pushing prams, should have the same opportunity to travel by train.

In particular, Thirsk railway station in my constituency is in need of accessibility improvements, which will make a real difference to people’s lives. As with most stations, trains travel through Thirsk extremely quickly—I have stood on the platform when trains come through at over 100 miles an hour—but Thirsk is unique in that it has an island ticket office and platforms stationed between the tracks. Concrete steps are the only way to access the ticket office and platforms. Passengers must reach the ticket office and both platforms by navigating a barrow crossing the high-speed railway line. This can be a very difficult and even traumatic experience for the elderly, disabled passengers, parents with pushchairs or people heaving heavy suitcases. Thirsk is not alone: 40% of railway stations in England, Scotland and Wales do not have step-free access, and research found that over a third of working-age disabled people had experienced problems using trains in the last year as a result of their disability. A solution is much needed.

The railway industry is on the right track: it is encouraging more people to travel by train using the disabled persons railcard; carriages have been adapted; and I regularly see ramps on platforms, and kindly staff going above and beyond to facilitate access for passengers. Information is also improving and becoming more widely available to disabled users. National Rail has published an access map online, which is a great resource for disabled passengers, but it also highlights the limited access they have to railway stations in my constituency. I quote the entry for Thirsk station:

“customers should note that access to all platforms is via a barrow crossing”—

--- Later in debate ---

Motion made, and Question proposed, That this House do now adjourn.—(Michelle Donelan.)

[Kevin Hollinrake]

The entry continues—

“which is reliant upon staff assistance, and cannot be accessed outside of staffed hours.”

Fortunately, we are starting from a good place in this debate, as improving access to our railway stations for disabled passengers is very much a key priority for the Government. As for further down the line, Network Rail is working towards an entirely accessible transport network by 2030, in which there will be assistance if physical infrastructure remains a barrier. That timetable will remind those of us who remember train travel before privatisation of the British Rail slogan, which is apt: “We’re getting there”.

I am grateful to my right hon. Friend the Transport Secretary and the Minister, whom I met to discuss these issues and our bid to the Access for All funding programme. Access for All is providing £300 million of additional funding to make 73 stations more accessible by 2024. Unfortunately, Thirsk is not one of them. I felt that our campaign was good, and was building up a head of steam. It had strong support from Graham Meiklejohn at TransPennine Express, Grand Central, Graham North for North Yorkshire County Council, Professor Abrahams of the Northallerton and Thirsk Rail Users Group, members of the public, and of course me. I am grateful to all those people, with whom I work very closely on this issue.

Our bid was unsuccessful. Apparently, we fell short on footfall. However, the number of users on these routes continues to increase. There was a 3.6% increase this year, and the population of Hambleton is expected to grow by 4% by 2035, which of course will mean more disabled and elderly people there. I am disappointed that our bid was unsuccessful, but to be fair I am not sure that we adequately highlighted the fact that there is no unaided access to any platform at Thirsk station. We need to revisit our bid, make it more compelling, and point out the growing issues at the station. According to the Rail Delivery Group, in 2018, there were 6,700 people using a disabled person’s railcard in my constituency. That is up from 4,200 in 2015—an increase of 59%. It is great that more people are saving money on their journeys, but what is the point of encouraging the use of that railcard if its users are deterred from using the train, or simply cannot access the platform?

According to the Office for National Statistics, nearly one in five people in England and Wales have some form of disability. Leonard Cheshire estimates that almost 45,000 journeys are made by disabled people at Thirsk station each year. The Equality Act 2010, which I know the Minister is very familiar with, urges the Secretary of State to make regulations to allow disabled persons to travel without unreasonable difficulty in safety and reasonable comfort. I call on the Minister, the Secretary of State and the Department for Transport to ensure that that can happen at Thirsk railway station.

I appreciate that funds are always in short supply; there is no magic money tree. Elected representatives, including my colleagues in the Department, must always consider those footing the bill—the taxpayer—and, of course, value for money. I am keen to work with the Department, TransPennine Express, local authorities and local enterprise partnerships to find a solution. I am very flexible in my approach to ensuring better access to the station. Rather than putting in two lifts, one on either side of the bridge, there is perhaps a business case for putting in a lift on one side of it, and for moving the ticket office on the platform to the other side. That would be a cheaper option. It would save us perhaps around £1 million in our bid. It will be interesting to see what further funding might be made available to facilitate that solution.

As I say, there are alternative cost-effective solutions. I would be keen to hear more from the Department about what can be done. I invite the Minister to Thirsk—it is always a pleasure for anyone to visit Thirsk—to meet the groups I mentioned and help develop a plan. Facilitating access is something we can all get on board with. I look forward to working with Ministers to develop a plan to improve disabled access at Thirsk station and, over time, to see better access to public transport for all.

[The Parliamentary Under-Secretary of State for Transport (Ms Nusrat Ghani)]

I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate and giving the House an opportunity to address the important subject of accessibility on the railway network. I recognise how important it is for his constituents to have access to the railway, not only to travel to and from work but to see family and friends and go about their daily lives. I must place on record what a strong advocate he has been for his constituents. I know that he is bitterly disappointed by the result of the bid, and I hope that he will allow me to try to explain it.

I see that my hon. Friend the Member for Hexham (Guy Opperman) is also in the Chamber. I believe that he was also very disappointed by the result, and that he, too, campaigned very boldly on behalf of his constituents. I hope that he will remain for the entire debate so that he can hear what more can be made available for his local stations.

Delivering a transport system that is truly accessible to all is of great importance to me. I know that my hon. Friend is aware of the Department for Transport’s inclusive transport strategy, which was published last July. I hope that he takes it as evidence of the Government’s commitment to action to safeguard and promote the rights of all disabled passengers. We do not deny that our strategy is ambitious, but we are determined to deliver it. We want disabled people to have the same access to transport as everyone else by 2030, and if physical infrastructure remains a barrier, assistance will play a role in guaranteeing those rights. I am always told that I am not allowed to repeat this, but I believe that ours is the only country to have such a bold strategy in place. An accessible transport network is central to the Government’s wider ambition to build a society that works for all.

I was pleased to have an opportunity to discuss the specific issues at Thirsk with my hon. Friend back in April. The station was nominated for the additional funding that we are making available over the next five years for the Access for All programme, but it was not successful. As I explained to my hon. Friend when we met, the available funding was heavily over-subscribed. Other stations nominated in the Yorkshire and Humber area had a higher-weighted footfall, which made it difficult to justify Thirsk’s inclusion ahead of other busier stations in the region.

In the event of any future funding bids for Thirsk and, indeed, other stations—I ask my hon. Friend the Member for Hexham to reflect on this—the stations will need to be given a high priority by the industry. The bids will need to be compelling and to have local support, and, ideally, there will be match funding. In the case of most of the new Access for All projects announced in April, significant levels of third-party funding were included in the bids.

As my hon. Friend knows, step-free access is technically available throughout Thirsk station. However, customers must be aware that access to all platforms is via a barrow crossing, which is reliant on staff assistance and cannot be accessed outside staff hours. As my hon. Friend said in his speech, it is not the easiest space to be in for the able-bodied, let alone disabled people. That reflects the fact that most of our stations are Victorian. Those 19th-century stations were not built with the needs of 21st-century passengers in mind, which has left us with the huge task of opening up the rail network to disabled passengers.

[Kevin Hollinrake]

I understand that other stations are in a similar position, but how unusual is it for a station to provide no access to either platform, for either inbound or outbound trains, apart from a barrow crossing, because there is an island platform and an island ticket office?

[Ms Ghani]

Thirsk has particular, unique circumstances, but it is not the only station that is not fully accessible at all times, which is why I think it important to ensure that any bid for Thirsk is rated highly by the train operating company and also comes with match funding. However, I entirely accept that it is not the easiest place to be when trains are whizzing past at high speed.

We must recognise that 75% of journeys are through step-free stations, but that is not good enough; we want to ensure that even more journeys are accessible as well. That is why we continue the Access for All programme. The inclusive transport strategy included a commitment to extend our Access for All programme across control period 6 between 2019 and 2024, with an additional £300 million of funding from the public purse. Those funds will allow design work to restart on all the projects deferred by the 2016 Hendy review into Network Rail delivery and to include even more stations in the programme.

We asked the industry to nominate stations and received more than 300 nominations. Often these nominations were in partnership with local authorities and Members of Parliament, and we must not forget the important local councillors as well. Back in April, we announced that 73 stations would receive funding, including 46 new stations and 27 stations from CP5 deferred by Sir Peter Hendy.

I know that my hon. Friend the Member for Thirsk and Malton will be pleased to hear—I am also pleased to inform the House of this—that I have also made £20 million available for mid-tier Access for All projects. The criteria—[Interruption.] Yes, we will be waiting for those applications for stations to come in, but the criteria for selecting projects will be different from the main programme, as we will focus on stations where accessibility improvements can be delivered with up to £1 million of Government support alongside—I must stress this—significant third-party match funding.

Details of how this funding will be allocated are being finalised now, and we intend to open the nomination process shortly. I will write to all hon. Members to inform them when this happens, and of course I will drop a personal note to my hon. Friends to ensure that they do not miss the deadline for the application.

I want to reflect on the industry’s obligations. It is obliged to ensure that disabled passengers are supported. Each operator is required to have a disabled person’s protection policy in place as part of its licence to operate services; the policy sets out the services that disabled passengers can expect and what to do if things go wrong and commits the operator to meeting its legal obligations by making reasonable adjustments to its services to allow disabled people to use them—for example, by providing an accessible taxi free of charge to anyone unable to access a station.

The Office of Rail and Road recently consulted on revised disabled people’s protection policy guidance, and I have also encouraged the ORR to take enforcement action against train and station operators who are not meeting their disabled people’s protection policy obligations. Every disabled passenger should be confident that the assistance they have booked will be provided. The Department has worked with the Rail Delivery Group to create the new passenger assistance application, which will make it much easier for disabled passengers to book assistance. Many Members will have attended the event organised by the RDG last week to showcase this work.

We also support the ORR’s proposal to introduce a handover protocol as part of the revised disabled people’s protection policy guidance, and we have actively supported the establishment by the industry of an independent rail ombudsman with powers to deal with unresolved passenger complaints.

I hope that I have demonstrated that the Government are committed to improving access at stations for disabled passengers through both specific projects such as Access for All and improvements delivered as part of our wider commitment to improving the rail network. I hope that my hon. Friend the Member for Thirsk and Malton has been reassured that the Government remain committed to investment that will improve rail services and accessibility on the network, and I look forward to receiving an application on behalf of his station, Thirsk, in the next round of funding. I wish him and my hon. Friend the Member for Hexham well.

Question put and agreed to.

Mortgage Prisoners

Kevin Hollinrake Excerpts

Thursday 6th June 2019 Commons Chamber

[Gordon Marsden (Blackpool South) (Lab)]

Thank you very much, Mr Deputy Speaker.

It is a great pleasure and privilege to follow the hon. Member for Dover (Charlie Elphicke). I congratulate him not only on his speech here today but on the ten-minute rule Bill that he brought forward, which has given oxygen to this situation. I also pay tribute to the work of my hon. Friend the Member for Feltham and Heston (Seema Malhotra), who is unable to be here today, and of the hon. Member for Thirsk and Malton (Kevin Hollinrake), who is in his place and who, with his all-party parliamentary group, has done a great deal to take this matter forward.

This is a situation where Members are drawn into a little-known and complex subject—certainly, as far as I was concerned it was a complex subject—by the real-life experiences of constituents, and that was how I got involved. One of my constituents—I shall refer to her situation shortly—wrote to me about this. In February we had the first mortgage prisoners roundtable, if I can put it that way, in the Jubilee Room; I was there, as were other hon. Members present. They were a very mixed group of people whose lives had been shattered by the process of being mortgage prisoners for anything up to six, seven, eight or nine years. It was clear from that occasion that what the Government, and indeed the FCA, had done so far was inadequate. I subsequently met my constituent and other mortgage customers from in and around the north-west and heard their stories as well. As a result, we now have an all-party parliamentary group specifically dedicated to this issue. The hon. Member for Thirsk and Malton has also been taking it forward with his fair business banking APPG.

I also pay tribute to and thank—we do not often do this, but we should when it is required—individuals in the media. Cat McShane brought this matter to people’s attention in a “Panorama” programme. Hilary Osborne has written about it in The Guardian. William Turvill did a very lively and forensic assessment of Cerberus in The Mail on Sunday. In the other place, my right hon. Friend Lord McFall has taken a very distinct interest, given his previous honourable role in this House as Chair of the Treasury Committee.

Everything that the hon. Member for Dover said about the way in which this process has gone forward without proper due diligence is true. An estimated £9 billion of Northern Rock mortgages remain with the Treasury, and any decision on their future will inevitably affect tens of thousands of customers. In my view, taken from whatever I have been able to glean from the numerous written questions that I have put to the Treasury, there has not been proper due diligence throughout this process. I will explain later why I think that has been the case.

The proposals by the FCA that have been discussed, and will no doubt be touched on by the Minister, only give lenders the option to apply the modified assessment; they will not introduce an obligation. That is the point that we have heard regarding the situation with Tesco. There is the freedom to dine at the Ritz—to dine with responsible lenders—but this will not affect the cowboys and the vulture funds. As the figures show, they will still represent the main problem for the Government and for all the people who are involved with this matter. Other borrowers who had borrowed from now-defunct lenders found that their mortgage had been sold off to unregulated private equity firms that did not offer mortgages and so could not provide affordable deals.

Right from the beginning, this process was flawed and took little account of the position of the people we are talking about. Mortgagees with active lenders have been paying thousands of pounds more due to the ever-increasing gap between the standard value rate and the more competitive market rate. Those who now have a mortgage with an unregulated vulture fund are often forced to pay an even higher rate. This is a double whammy for constituents in places like Blackpool where there are lots of small businesses affected in the way the hon. Member for Dover mentioned, as well as ordinary residents.

Those are some of the issues that the Government need to get a handle on very urgently. A separate issue has been raised with Members of the House by the ME Group about people who were mis-sold their mortgages in the first place. It may well have a point, but that matter will have to go down the compensation route with the Financial Ombudsman Service or the FCA.

I did my best to try to get some further information out of the Government through a number of questions. One question that I posed to the Minister on 13 May was to ask

“what discussions…he and…Ministers…have had with the Financial Conduct Authority on whether Cerberus Capital Management is a fit and proper organisation to purchase mortgage loans from UK banks and his Department via UKAR.”

I must pay tribute to the industry of the person who drafted the reply, because it had eight paragraphs, but all I got was obfuscation of a very high order. The actual question was never responded to. I am afraid that the other questions that I and other hon. Members have asked have also shed more heat than light. Some of the replies that I have had seem to have a standard template that starts off by saying:

“Customers have always been protected in UKAR asset sales.”

It is fairly obvious that that is for the birds. This is another example:

“Whether to offer customers new mortgage products is a commercial decision for lenders and government does not intervene in individual cases.”

If there was ever a better definition of laissez-faire arrogance in a parliamentary question, I would like to see it. This shows that there is a clear and present danger, in market terms, that without intervention UKAR will carry on selling off NR loans to unregulated providers, and that will simply perpetuate the problem that we are all concerned about.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

In the Minister’s response to the hon. Gentleman’s question about why the loans were sold to an inactive lender, or a non-regulated entity, he said that no bids were received from an active lender. Would another option have been not to sell that debt at all, rather than to sell it to an inactive, unregulated lender that could not provide a service to the people who are subject to these loans?

[Mr Deputy Speaker (Sir Lindsay Hoyle)]

Order. I suggest that Members stick to around eight minutes, because the people who will be punished will be those like your good self, Mr Hollinrake.

--- Later in debate ---

[Bob Stewart]

Mr Deputy Speaker is such a great man. I thought I was being told off earlier.

My comments will be short because I have spoken about this matter and the associated problems many times in the nine years for which I have been a Member of Parliament. Colleagues on both sides of the House are nodding. Why the heck has this matter not been sorted out? We are meant to sort these matters out—we are meant to be the people who legislate to get such injustices sorted and done. We have failed collectively to do that.

In particular, I want to raise the matter of the injustice done to my constituents—to the D’Eye family. Dean, my friend, is somewhere around, but I am not allowed to point him out. An injustice was done to him and his family by these banks. I am referring to Dunbar Bank, part of the Zurich group, and also the Royal Bank of Scotland’s Global Restructuring Group. I just cannot understand it. Decent people run these associations and they are actually—dare I use the word—screwing people utterly and completely, and it is immoral.

[Kevin Hollinrake]

indicated assent.

[Stephen Kerr (Stirling) (Con)]

indicated assent.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I thank you, Madam Deputy Speaker, for calling me to speak in this debate. May I first draw the House’s attention to an interest that I have in this matter, in respect of the head office of our business? The debt is owned by Promontaria, which is a division of Cerberus. It is less happy about that than I am, because it is a very low rate. Our business is not under pressure as the rate is half a per cent over base. We are suffering no financial detriment for that, but I think that it is right that I point out that connection.

It is a pleasure to follow my gallant and hon. Friend the Member for Beckenham (Bob Stewart). I was very touched by his moving words, particularly at the start of his speech. He has done a lot of fine work on this subject, and has spoken in just about every debate on it. I have spoken on this matter, too. My hon. Friend the Member for Dover (Charlie Elphicke) has also done a lot of work in bringing forward these really important issues. He has done a lot of work on the Treasury Committee and has been a great supporter of the all-party group, as has the hon. Member for Feltham and Heston (Seema Malhotra).

After listening to all the excellent contributions today, I have to ask why on earth we let them get away with it. There was unsustainable lending prior to the great financial crash—irresponsible lending to businesses and consumers. I am talking about 120% loan to value and non-status mortgages. These bankers were chasing businesses around, and upping the ante in terms of the deals that they were trying to do, particularly in commercial property. They created the conditions for the crash that followed. They started to bundle up subprime debt and selling it on. They caused the financial crash. Then they went back to these consumers and these businesses and say, “I’m sorry but your business is no longer sustainable.” But that was due to the recession—the recession that they created. They created the situation with mortgage prisoners. There are 140,000 mortgage prisoners, including tens of thousands of small and medium-sized businesses. And it is not just about the businesses themselves; it is about the lives behind those businesses. As other hon. Members have said, it is about the families and the jobs that rely on those businesses. Imagine being a business owner, as I have been for 27 years, and one day having to go back to your wife and children to explain that your business no longer exists—all you have worked for all your life. Can anybody imagine having to have that conversation? These are the conversations that the people represented by all-party parliamentary group are having to have.

McKinsey came along and said, “Here is a great idea. We’ll solve this problem by having bad banks.” But this means that the bankers are incentivised yet again—once to over-lend to businesses and consumers, and again to put these businesses inside the “bad banks”. Of course, that is all funded by the taxpayer. But there is no incentive for the banks to look after the businesses or consumers, or to nurture them through a difficult time. The incentive is simply to push them into these bad banks, and that is when we—the taxpayers—have to take over. The situation is driven purely by the banks themselves.

Andrew Bailey said himself in a letter to the Treasury Committee:

“The UK’s unique mortgage market coupled with the impact of the financial crisis has created the conditions for mortgage prisoners.”

The bankers did this from start to finish.

Not all bankers are bad, but people should be held to account when this kind of malpractice and mistreatment occurs. Yet, as far as I am aware only one bank has been fined and banned from the sector. Nobody else has been sanctioned for these issues, despite the fact that many people who are responsible are earning millions of pounds in jobs—still within the financial sector. Of course, we pay; the taxpayer pays. Mortgage prisoners and small businesses pay millions as taxpayers, and they are the people who pick up the tab.

The Treasury does fine work in many different areas and I have great regard for the Minister, but I cannot understand how we can suddenly decide to make things worse by selling the debts taken from the banks, putting them into a bad bank, putting them into UKAR and then selling that off to a vulture fund. These vulture funds really should be renamed vampire funds because vultures pick at the carcases of dead animals whereas vampires suck the blood out of things. These funds are sucking the blood out of mortgage prisoners and small businesses. Many of these mortgage prisoners are not even behind with their payments. They are still managing to keep going, despite the fact that they are paying higher interest rates, yet these vampire funds are sucking the blood out of them. These are unregulated and inactive lenders, meaning that the borrower has nowhere to go.

My constituent Mr Pearson wrote to me to say that he was with Northern Rock. He borrowed the money in good faith, and was persuaded to take out an interest-only loan. That debt was later sold on to what is now Landmark. He has moved into my constituency but his property is in Dewsbury, and Landmark says, “No, you can’t rent that property out now.” He cannot go on a repayment mortgage, so his loan will expire in 10 years and he will have £98,000 of debts, but he has no way of dealing with the issue. He is totally locked in. How can we countenance a situation where we would allow his debt to be sold on to an unregulated entity on that basis? It is not just about money for the people in this situation. As Mr Pearson says, it is about his mental health and the stress of the situation. It is also about his life chances, because he cannot move on with his life as a consequence of the action of that institution.

We look at this stuff in such a short-term way. Okay, we might have moved a problem out of the Treasury, off the taxpayers’ books and got some money back from it, but surely the problems will return in other areas of the economy, putting pressure on public services—mental health pressures, housing benefit or other things. We take a short-term view of how we should deal with these things.

It is similar with businesses. In 2008, yes many businesses were struggling, but had we supported them through a patient capital approach over the next few years, many of those businesses would have got through the recession and would still be trading today, and jobs would have been created off the back of them. It seems we cannot take the patient capital approach we need.

Why do we not tackle our banks and hold them responsible for what they do? I have asked the Treasury and the Minister about a simple requirement on business lending for banks to treat customers fairly and reasonably in that lending relationship. No such requirement exists at the moment. Business lending is not regulated to any extent. When I ask for a simple requirement for a “fair and reasonable” test in contracts between business borrowers and banks, I am told, “No, because it might stem the flow of lending”. I simply do not accept that in any shape or form. Other countries have a better relationship between their consumers and their banks and their businesses, and their banks and their economies seem to grow fine and their business lending seems to prosper. The Government are a champion for the consumer in many areas. I would like us to be a champion for the consumer in these areas too.

We must find solutions, but whatever solutions we adopt, the banks must pay for them. Yes, there should be an obligation on lenders to provide mortgage prisoners with an alternative option. Perhaps, as the Co-operative Bank has suggested, central Government should become a lender: a centralised lender in a flexible lending environment in which mortgage prisoners can move to a better deal paid for by the banks. We should surely ban the sale of debt to unregulated and inactive lenders. I cannot imagine why we would not do that. If we think it is right to regulate mortgage lending, why would we allow that debt to be sold to an unregulated lender?

Perhaps we could regulate the interest rate that companies such as Cerberus and other entities charge consumers. That is all within our capability. The FCA has said quite clearly that these changes to the relationship are a matter for Parliament, so it is down to us to deal with it. Of course, we have moved forward in terms of a resolution scheme between banks and businesses—with the dispute resolution service—and much of that I attribute to the hard work of the Minister, but there are limitations with that. Ultimately, we believe a financial services tribunal is a much better solution, but the all-party group is engaging with that process.

Sooner or later, as has happened in Australia, we have got to push for a royal commission or public inquiry. I know the Minister thinks it would cost hundreds of millions of pounds and take years, but the royal commission in Australia took 15 months, cost £40 million and resulted in eight resignations of chief executives and chairs of big banks. The problems here are no less than the problems in Australia. We have to get to the bottom of what happened and hold people to account, but we cannot do that without a proper overarching investigation into what happened.

I will close with the regulator. As many others have said, the FCA is far too timid. It let the Royal Bank of Scotland off the hook. Phase 2 of its inquiry into RBS’s conduct was supposed to name names, but it has backed off from doing that, which is inexcusable. It is a similar story with Lloyds Bank and its disgraceful treatment of whistleblower Sally Masterton. She was discredited, constructively dismissed and prevented from working with the police in a fraud inquiry, despite being vital to that investigation. Five years later, it admits that it mistreated Sally Masterton, yet the FCA does nothing. It has not investigated that disgraceful mistreatment, and that cannot be right. I am afraid it starts with us. We must change our approach. That will change the culture of the regulator, and then we will see a change in culture in our banks.

--- Later in debate ---

[John Glen]

That is a reasonable point to make. This intervention has to be meaningful and it has to deal with the problem of mortgage prisoners. I am very clear about that, and we in the Treasury will need to look carefully at how we evaluate this. As I was saying, I see plenty of innovation across the mortgage market and I look forward to seeing what affordable options lenders can offer to mortgage prisoners who are looking to switch.

Let me turn to the Government’s sales of mortgage books to purchasers that are not active lenders. Much of this afternoon’s debate has focused on the firms that purchase these mortgage books. It is regrettable that the Government have not received any reasonable bids from active lenders, with feedback suggesting that they have limited appetite for these loans. However, I would like to make it clear to the House that the administrators of these mortgage books must be FCA-regulated, regardless of whether they are active lenders. Any consumer whose mortgage is held by one of these firms has full recourse to FCA protections, including treatment in accordance with the FCA’s “treating customers fairly” principles, and the ability to complain to the Financial Ombudsman Service.

I have heard the comments about borrowers having their reversion rates drastically increased. To safeguard against this during asset sales, the Government have put in place contractual protections that have been enhanced to ensure that the terms and conditions of the original loans are honoured and, in the latest asset sale, to ensure that future rate rises are in line with the rates charged by the largest active lenders. This means that a customer will be treated broadly the same as if their mortgage was with an active lender, with payments in accordance with their original contract terms.

[Kevin Hollinrake]

Will the Minister give way?

[John Glen]

I am running short of time, but I will give way to the chair of the APPG.

--- Later in debate ---

[Kevin Hollinrake]

The FCA’s own consultation on this states that where firms sit outside the FCA’s regulatory remit, the solution is more challenging. So whatever the Minister says, the FCA believes that we will be making the situation in which a debt is sold on to an unregulated inactive lender more challenging.

[John Glen]

My hon. Friend made reference in his speech to the distinction between business debts and mortgage debts, but I will clarify my remarks on that specific point to him in writing.

In these sales, the Government also stipulate that there must be no financial barriers put in place to harm a consumer’s ability to switch to a new deal with another lender. Once this FCA rule change is implemented, consumers will be in a better position to change their mortgage, provided that they are up to date with their payments and meet lenders’ risk appetites.

Let me also address the point that was raised regarding the sale of commercial loan portfolios to third parties. Since the financial crisis, it has been clear that the standards of behaviour across the financial sector must improve—I have said it in all the debates that we have held in the 17 months that I have been in office—and that banks must work to restore the trust that businesses have in their institutions.

I concede that I have some differences with my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) over some of his assertions about what would be the best solution, but we have tried to work co-operatively where there is common ground, and that work is going forward. I am pleased that banks are now committed, through the standards of lending practice, to ensuring that third parties who buy loans have demonstrated that customers will be treated fairly, and to allowing customers to complain to the original lender if there is a dispute that cannot be resolved. That will help to ensure that all businesses can resolve disputes if they arise.

I thank my hon. Friend the Member for Dover for calling this debate. I have tried to address the points that have been raised. I believe it is right that the Government and the regulator introduced more stringent rules after the financial crisis. Rigorous affordability assessments are an important factor in ensuring that a borrower has the means to pay back their loan, as well as maintaining the financial stability of the UK. Unfortunately, however, a minority of borrowers have since found that they can no longer pass those strengthened affordability assessments, despite being up-to-date with their repayments. That is why the Treasury did act, and is working with the FCA to remove the regulatory barrier.

I recognise the urgency associated with securing this solution, and I am urgently working to ensure that the FCA delivers on both what it wants to deliver and what we have asked it to deliver.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Tuesday 21st May 2019 Commons Chamber

[Mr Hammond]

That is a matter for the Departments concerned. As the hon. Lady knows, there is a legal obligation to pay the national living wage, and we have put additional resources into ensuring that that obligation is enforced. We encourage employers to pay higher rates than the national living wage when they are able to, and we will continue to do so.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

When Sally Masterton discovered a £1 billion fraud at Lloyds Bank the bank discredited her, constructively dismissed her and prevented her from working with the police investigation. Five years later Lloyds apologised for her mistreatment but nobody at the bank has been formally investigated or sanctioned for this mistreatment. Will the Minister use his powers to instruct the Financial Conduct Authority to carry out that investigation?

[The Economic Secretary to the Treasury (John Glen)]

As my hon. Friend knows, the FCA is conducting two investigations into the events at HBOS Reading and Lloyds has instructed Linda Dobbs to look into who knew what when. It is absolutely clear now that such circumstances could not be repeated given the action we have taken with the senior managers regime, but I look forward to the outcome of those reviews and we will be taking action accordingly.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Tuesday 9th April 2019 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

High street banks are regulated, but the loans they provide to SMEs are not. There is not even a requirement to treat such a customer fairly and reasonably. In the absence of regulation, should there be a clearer warning about the lack of protection if things go wrong?

[John Glen]

As my hon. Friend knows through his excellent work with the dispute resolution service, there are some avenues for businesses to go down. Many—virtually all—lenders have now signed up to the standards of lending practice, and that, alongside the expansion of the Financial Ombudsman Service’s jurisdiction, gives businesses the assurance they need.

--- Later in debate ---

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

It is indeed incumbent on HMRC to take its duty of care towards customers—particularly vulnerable customers —very seriously, and I am confident that it does just that. There is a dedicated helpline for those who have been affected by the loan charge, and a vulnerable customers team provides one-to-one support. We recently announced that we would extend the needs enhanced support service to those who are subject to open investigations of their tax returns.

The hon. Lady mentioned promoters. My right hon. Friend the Chancellor has already mentioned that more than 100 investigations of companies that promote tax avoidance are currently taking place. Other litigations in respect of offences relating to the disclosure of tax avoidance schemes have resulted in wins for HMRC. In the Hyrax case, which was concluded recently, it was found that the promoter was not behaving appropriately, and about £40 million worth of tax is likely to be recouped as a consequence.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Will we continue to invest in the northern powerhouse, and, in particular, will we fully fund the Transport for the North plan for a TransPennine rail upgrade?

[Mr Philip Hammond]

As I said in my recent spring statement, the Government remain committed to the northern powerhouse and to Northern Powerhouse Rail, and I am working on the TransPennine rail upgrade with my right hon. Friend the Transport Secretary.

Clydesdale Bank and SMEs

Kevin Hollinrake Excerpts

Tuesday 19th March 2019 Commons Chamber

[John Glen]

I thank the hon. Gentleman for his comments. I always listen very carefully to the constructive way that he presents his case.

Let me address the hon. Gentleman’s three core questions. First, the historical review process has been as set out, but there is discretion within that. I know that there will be a lively discussion at the first board meeting about how the handling of past cases will be considered. In terms of the disputes over how to resolve this, the role of the Financial Ombudsman Service is being expanded. Its representatives were in Parliament last week offering access to colleagues across the House, and I have visited them to examine what they are doing to recruit the extra resources needed to deal with this extra category. I think that this will work; I would not have made the decision otherwise. The other key consideration I have to balance is about the rapidity and efficiency with which the vast majority of cases—we are talking about 99% of businesses with a turnover of up to £6.5 million—will be able to get a resolution. That is why I think that the ombudsman service is the right way to go forward.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I thank the Minister for all the work he has done in this area. I do feel that we are making progress, but, understandably, the jury is out until we get to the place we need to be. I also thank the hon. Member for Lanark and Hamilton East (Angela Crawley) for tabling such an important question today. There are many issues with this. The case concerned follows a typical pattern. Over 10,000 of these tailored business loans were sold to businesses. It may be impossible for these businesses to refinance because of the exit fees. Personal guarantees were then required, and finance was withdrawn despite the fact that the businesses had never missed a payment. The FCA has looked at this and has said that these cases should be considered by the new dispute resolution scheme, which is good news for many people. I ask the Minister to impress on UK Finance that it makes sure that it suspends any proceedings in any of these cases until they have been reviewed.

[John Glen]

Again, I thank my hon. Friend for the work he has done in this area. I met representatives of UK Finance just a few hours ago, and I am aware of his correspondence overnight on this issue as he joins the board imminently. The key concern I would have is the extrapolation of one case, or a few celebrated cases—tragic cases—to say that they are normative of practices across the sector as a whole. He smiles because he knows that is a conversation we have had frequently. This historical dispute resolution mechanism is not designed as some sop, but as a meaningful mechanism to interrogate wrongdoing in the past and seek resolution for those individuals who remain dissatisfied.