2019 Loan Charge
Debate between Lord Johnson of Marylebone and Steve Baker(6 years, 1 month ago)
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Mr Baker
The Minister will have heard my hon. Friend’s point, which I endorse.
The loan charge should apply from Royal Assent onwards. In other words, it should be prospective—a case I have made many times—not retroactive or retrospective. HMRC should be more proactive in advising that such schemes are likely to end in tax charges in the future, and perhaps far into the future. More steps should be taken against promoters and introducers of such schemes. They are the ones profiting from this misery. Finally, the issue of employment status and IR35 requires action at last, to bring the uncertainty to an end.
Joseph Johnson (Orpington) (Con)
My hon. Friend wants further action taken against the promoters of these schemes. Does he agree that we also need to take action against the Queen’s counsel who peddled rinky-dink advice that encouraged many of our constituents—including some of mine—to participate in these schemes, in the belief that a QC’s opinion rendered them beyond the reach of HMRC?
Mr Baker
My hon. Friend makes a very good point. I hesitate to trespass far beyond my expertise, but I make the point that it is often thought that the opinion of a QC determines the truth. That is not the case. QCs and barristers argue among themselves in court, and the court determines the facts. I am often struck by people relying on the opinions of lawyers when what they actually need is the judgment of a court.
Industrial Strategy
Debate between Lord Johnson of Marylebone and Steve Baker(8 years, 2 months ago)
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Joseph Johnson
I thank the hon. Gentleman for his observations. I will take a look at the statistics that he mentions. The car industry is just one example of advanced manufacturing in which we excel at the moment.
Mr Baker
I hope that the Minister will join me in celebrating this country’s excellence in not only manufacturing, but research in Formula 1. We have a number of teams in the UK. We are also the world’s second biggest aerospace manufacturer after the mighty United States. We do tremendously well, and Opposition Members are far too downbeat.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I welcome interventions, but when Members see the speaking time drop down to five minutes, they will understand, won’t they?
Eurozone Financial Assistance
Debate between Lord Johnson of Marylebone and Steve Baker
Steve Baker (Wycombe) (Con)
I would say gently to my hon. Friend that only a few years ago the banking crisis was not foreseen, and the same people who did not foresee that are still giving us advice. We are probably in far worse trouble than is generally accepted.
Joseph Johnson
My hon. Friend is perhaps right to caution me. It never pays to be too optimistic.
More importantly, the coalition Government, who came into power in May 2010, deserve to be congratulated not only on limiting our exposure to the temporary funds—we are on the hook for just one, not both of them—but on successfully capping our exposure. We have been kept out of the €440 billion European financial stabilisation facility, as well as what will be the permanent successor vehicle, the European stability mechanism, which, as mentioned, is due to come into existence in 2013.
That said, we would be wrong to kid ourselves that Britain can shield itself completely from the affairs of the eurozone, and I would suggest that Schadenfreude, in the Chamber or elsewhere, at the turmoil in the euro fringe might be short-sighted. First, our banks remain fragile. People who read the Financial Times will know that 14 British banks and building societies were this morning downgraded by Moody’s, and there were particularly negative outlooks for Barclays and HSBC. The UK banking sector’s exposure to the so-called PIIG economies—Portugal, Ireland, Italy and Greece—alone amounts to about £211 billion, which is the equivalent of about 4.7% of UK bank assets, according to Capital Economics. UK banks can ill afford fresh write-downs that would force them to raise expensive new funds at a difficult time in the capital markets, and a further leg-down in the eurozone financial crisis would certainly not help the Government in their laudable efforts, under Project Merlin, to push the banks to lend more and at reasonable terms to capital-starved businesses in the UK.
The second transmission channel of pain in the eurozone will come in the form of reduced lending to UK consumers and businesses by eurozone periphery banks located in the UK. Irish banks account for about 3% of household loans in the UK, and about 7% of corporate loans. Spanish banks play an even more important role. Through Santander, which owns Abbey, Alliance & Leicester and Bradford & Bingley, Spain accounts for 14% of household loans in the UK. If troubles at home force these eurozone banks to rein back their lending, especially overseas, credit conditions in the UK could clearly start to worsen again. We should think hard about that before expressing any Schadenfreude at what is happening on the continent.
Furthermore, distress will be felt at home through the trade channel. At a time when domestic sources of growth are under pressure and few and far between, the UK’s trade links with continental Europe are of pivotal importance. Although Spain and Portugal might be less significant as trading partners than Ireland, the PIIG economies together account for 14% of UK exports, compared with Germany’s 9% and the 16% of UK exports that go to Asia. A wave of defaults, or at the very least a considerable weakening of the euro, would not only hit demand in these countries, but damage UK export competitiveness—a linchpin of the Government’s economic strategy.
The Government are right to limit our financial exposure to future bail-out mechanisms, and need to be congratulated on having done so successfully, but it should go without saying that we still have much at stake in the success of these future bail-out mechanisms. We cannot wash our hands of them. The health of the UK banking system, the extent to which the UK economy is dependent on credit extended to UK companies by eurozone banks and the UK’s own need to earn a living from exports make it abundantly in the UK’s interests to wish our European partners every success in tackling the crisis through future eurozone-only arrangements. Anyone taking pleasure in the discomfort of our European partners might be in for a nasty surprise.
Royal Assent