Finance (No. 2) Bill

Luke Evans Excerpts

2nd reading
Wednesday 17th April 2024 Commons Chamber

[Nigel Huddleston]

I could not disagree more with the hon. Member’s premise. If anybody has shown support for the sector, this Government have. We have shown huge support for the sector, in an appropriate and proportionate way, while also encouraging the industry to decarbonise. As I said, we are taking fiscally responsible decisions to extend the energy profits levy for one year. We are also providing confidence and certainty to businesses in the sector by legislating for an energy profits levy price floor. That is what is in the Bill. That will effectively abolish the energy profits levy if the six-month average for both oil and gas is at or below a set threshold. Doing so was the sector’s main ask in the 2024 spring Budget, and it could help to unlock around £9 billion in uncommitted investment spend, according to Offshore Energies UK, which welcomed the decision. I am sorry that he feels unable to welcome it as well.

Those measures will ensure that investment in our economy continues to grow. I will now outline some measures in the Bill’s property package. The Bill will cut the higher rate of capital gains tax on residential property from 28% to 24%, encouraging landlords and second home owners to sell their properties, which could increase revenues because there would be more transactions.

[Dr Luke Evans (Bosworth) (Con)]

The capital gains tax cut is very welcome, but will the Minister outline whether it will come into play retrospectively? Hypothetically, if a Labour Front Bencher happened to owe some capital gains tax, would they benefit from a Conservative tax cut?

[Nigel Huddleston]

I think I know where my hon. Friend is heading. Of course I cannot comment on individual tax situations. His point, though, is an important one: everybody should always pay the taxes that they owe. I think that principle is shared across the House. The measure will be implemented from 6 April 2024, so some people may be disappointed that there is no retrospectivity, but as I say, it will make more homes available to purchase for a variety of buyers, including first-time buyers.

We also need to ensure that the property system is fair and working as intended. The Government are clear that where policies are not meeting their policy objectives, we will take action. That is why we are abolishing multiple dwellings relief, a bulk purchase relief in the stamp duty and land tax regime, from 1 June 2024. That follows an external evaluation that found no strong evidence that the relief is meeting its original objective of supporting investment in the private rented sector, and because HMRC has recorded high and clear instances of its abuse. We are also amending rules to ensure that victims of domestic abuse are not unfairly penalised if they wish to buy their first homes anonymously, and that those in difficult circumstances do not face additional barriers to purchasing homes. We will ensure that registered providers of social housing in England and Northern Ireland are not liable for stamp duty land tax when purchasing property with a public subsidy, and exempt public bodies from the 15% anti-avoidance rate.

Finally, I turn to measures that will simplify and modernise our tax system, making it easier to engage with the tax system and closing loopholes that could be used for avoidance. The negative impacts of inefficient, complex taxes on both businesses and the wider economy cannot be overstated. That is why the Government are taking action to ensure that the system works for everyone. As a starting point, we are amending two primary VAT interest provisions in legislation to ensure that they apply to all cases intended by the policy. That will mean that the interest payments that HMRC recovers are correct, and it will save time and resources for HMRC and businesses.

The Government recognise that it is everyone’s responsibility to pay their fair share of tax to support our vital public services, so we are closing another anti-avoidance loophole—one that enables individuals to avoid tax by moving assets abroad via a company. That is one of 200 measures that we have undertaken since 2010 to close loopholes and reduce the tax gap, which now sits at just 4.8%—down from 7.5% under Labour. Yes, that is an inconvenient truth for the Opposition, who recently claimed to be so enthusiastic about tackling tax avoidance yet did not take the actions that we have taken when they were in power. Importantly, Labour failed to support the last Finance Bill, which included further measures to tackle tax avoidance. However, Labour was in good—or, rather, bad—company, because the Lib Dems and the SNP did not support it either.

It is not the first time that we have seen such—how should I put it?—distance between what the Opposition say and what they do. Recently, the Labour party even said that it would support our national insurance tax cuts, but when it came to the vote, I did not see a single Labour MP in the Aye Lobby with the Conservatives. Nor were there any Lib Dems, while SNP Members were in the No Lobby actively voting against tax cuts for their constituents.

The Government are getting on with delivering on our plan to cut taxes, grow the economy and boost investment, but the Labour party would put all that at risk and send us back to square one. Instead of taking the responsible decisions to back businesses, the Labour party wants to saddle them with new regulations. Labour’s so-called new deal for workers is in fact a bad deal for jobs, workers and businesses. The 70 new regulations from the deputy leader of the Labour party and the unions would ban flexible working, disincentivise small businesses from making new hires and unleash waves of low-threshold, zero-warning strikes.

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[James Murray]

I thank the hon. Gentleman for his mini-speech. I feel I may have touched a nerve. He talks about people being scared; yes, I think people are scared when they hear the Government making a £46 billion unfunded spending commitment and not saying how they will pay for it. When the previous Prime Minister made an unfunded tax cut commitment of a similar order of magnitude, we know what havoc that caused in the economy, and people are still paying the price in higher mortgage payments and rent payments. I will just say to the hon. Gentleman that I gave him a chance to rule out cuts to the NHS or the state pension, or tax rises elsewhere, to pay for this black hole. I am not quite sure if he did that—maybe he has not got the line from his boss in No. 10 Downing Street—but the truth is that until the Government rule those things out, people will rightly worry about the impact his unfunded commitment will have on the economy.

The pledge the hon. Gentleman was speaking about sounds like exactly the sort of pledge that the right hon. Member for South West Norfolk (Elizabeth Truss) would approve of, because it comes to almost exactly the same amount as her Government’s unfunded tax cuts. Of course, the previous Prime Minster has been touring the TV studios and talking to newspaper journalists in recent days, saying, among other things, that people who claim that she crashed the economy are

“either very stupid or very malevolent”.

I wonder if the Minister would like to intervene to say whether he shares that view. No? He is not leaping to his feet now. I would have thought he would; I would have thought that Treasury Ministers would want to put as much distance as possible between themselves and the previous Prime Minister. Instead, with their £46 billion unfunded commitment, they seem determined to be a tribute act. Frankly, whatever the previous Prime Minister says, people across Britain know what impact her time in office is having on all of us, as we face higher mortgages and higher rents as a direct consequence of her economic recklessness.

That is the context in which we are debating this Finance Bill. The context is one of a Government who are out of time, out of ideas and out of touch with reality, and of a country that is feeling the impact of 14 years of Conservative economic failure. Even a simple clause such as clause 2, which sets the main rates of income tax, highlights the impact on ordinary people of decisions taken by this Government. Although the basic and higher rates of income tax are unchanged by this Bill at 20% and 40%, the tax burden on working people is rising as a result of the income tax personal allowance and the higher rate threshold being frozen from 2021-22 to 2027-28. Those tax thresholds would ordinarily have risen this April, but instead they are in the middle of a six-year freeze. According to the Office for Budget Responsibility, which I assume the Minister has respect for, these freezes will create 3.7 million extra taxpayers by 2028-29 and mean that 2.7 million more people will be paying the higher rate.

The truth is that, even taking into account any reductions to national insurance rates, the freezes in thresholds and the rises in council tax mean that by the end of the forecast period, the average family will still be £870 worse off. As the Resolution Foundation noted at the time of Budget, despite the reductions in national insurance, there will still be a net rise of £20 billion a year by 2028-29 in personal taxes. It pointed out that those over the state pension age, who do not benefit from national insurance cuts, will be particularly badly hit, and will face an average tax rise of £960 a year. The reality has been summed up by Paul Johnson, the director of the Institute for Fiscal Studies, who said following the Budget:

“This remains a parliament of record tax rises.”

That is the record of the Conservatives in government.

[Dr Luke Evans]

There is a certain Leader of the Opposition who, when standing for their post, said that as part of their No. 1 pledge, which was for economic justice, they would increase income tax for the top 5% of earners and reverse corporation tax cuts. If the hon. Gentleman’s party was voted into government, would it stand by that pledge? That too would increase the tax burden significantly.

[James Murray]

I am sorry, but I did not quite follow the hon. Gentleman’s question. I can, however, respond to the general point that I think he was making. We have been very clear that this is a Parliament of record tax rises. The tax burden is set to be the highest in 70 years, and we think that the tax burden on working people should be lower. However, we would only ever support tax rises if they were responsible, and done on a basis of economic security and stability.

[Dr Evans]

Will the hon. Gentleman give way?

[James Murray]

I will make some progress, because I have made that point quite clearly.

The tax burden has been pushed to a record high, and we have also seen a record number of changes and U-turns on tax rates and reliefs under this Government. That applies not just to personal taxation, but to tax rates and reliefs relating to businesses. Let us consider the Chancellor’s approach to the rate of corporation tax, which the Bill sets at 25% in clause 12. In July 2022, during his leadership bid, the current Chancellor pledged to cut the headline rate of corporation tax from 19% to 15%, yet when he became Chancellor just three months later, one of his first acts was to U-turn on what he inherited and to commit to raising that tax from 19% to 25%. He has been typical of the Conservatives in lacking any certainty, predictability or consistency, and we know how damaging that is to businesses that are trying to make investment decisions.

As the shadow Chancellor set out, if we win the next general election, we will bring back certainty by capping the headline rate of corporation tax at its current rate of 25% for the whole of the next Parliament. We would take action if tax changes in other advanced economies threatened to undermine UK competitiveness. We believe that the current rate of 25%—the lowest in the G7—strikes the right balance between what our public finances need and keeping our corporation tax competitive in the global economy. We also recognise the importance of stability and predictability in the reliefs available to businesses. We have seen a great deal of chopping and changing in capital allowances in recent years—indeed, this is a rare example of a Finance Bill from this Government that does not change the annual investment allowance or expensing regime.

We have made it clear that if we win the next general election, we will publish a road map for business taxation in our first six months in office, to give businesses the stability, predictability, and long-term plan that is so important to those making investment decisions. We have been pushing for a proper windfall tax on the profits of oil and gas companies operating in the North sea. The Government, despite initial opposition, U-turned on that and adopted some of our proposals with the introduction of the energy profits levy. Ahead of the general election, we have set out our plans to make the windfall tax stronger, and to raise more revenue to support our country’s energy transition, but it is also right that we give as much certainty as possible to those companies affected.

Oral Answers to Questions

Luke Evans Excerpts

Tuesday 19th March 2024 Commons Chamber

[Nigel Huddleston]

Yes, absolutely, my hon. Friend has pointed out an important point on how we have had a laser focus on reducing the personal tax rates. Furthermore, the measures announced in the autumn statement and in the spring Budget will significantly add to economic activity, contributing about 200,000 full-time equivalent jobs to the economy, and I am sure that the whole House will welcome that.

[Dr Luke Evans (Bosworth) (Con)]

Pensioners can often struggle because they have a fixed income, so I was pleased that the Chancellor stuck with the triple lock last year, guaranteeing an increase of 10.1%. Will the Minister explain how the 8.5% rise that people will be getting in a couple of weeks’ time will make a difference to their living standards?

[Nigel Huddleston]

My hon. Friend makes an important point. It is the case that not only have the measures in the autumn statement and the spring Budget helped workers, but we have also focused on helping pensioners. Those on the new state pension will benefit to the tune of about £900 a year, which is significant, and the national insurance cuts will benefit the average worker —27 million employees—by £900 a year. Therefore, we have implemented a fair and balanced Budget and fair and balanced measures.

Oral Answers to Questions

Luke Evans Excerpts

Tuesday 6th February 2024 Commons Chamber

[Gareth Davies]

My hon. Friend has a long history as a great champion for community organisations. I will write to him on his specific question.

[Dr Luke Evans (Bosworth) (Con)]

17. What recent progress he has made on raising the level of the national living wage.

[The Chief Secretary to the Treasury (Laura Trott)]

The Government are committed to ending low pay. From 1 April 2024, the national living wage will increase by 9.8%, to £11.44. That represents an increase of more than £1,800 to the annual earnings of a full-time national living wage worker and it is expected to benefit about 2.7 million workers.

[Dr Luke Evans]

I congratulate the Government on increasing the national living wage, because that will make a huge difference. However, after speaking to not only those in the public sector, at the likes of my local Leicestershire County Council and Hinckley and Bosworth Borough Council, but small businesses in the private sector, I know that there is a trade-off, because they have to foot that wage bill. What steps can the Government take to make sure that those businesses and the public sector have the money to pass on to those who are earning so well?

[Laura Trott]

I thank my hon. Friend for his question, and I will take the two parts of it in turn. The Government continue to support businesses with the higher costs through a generous package of support. At the autumn statement, we showed our commitment to supporting small businesses by extending the 75% retail, hospitality and leisure relief, and by freezing the small business multiplier, which will protect more than 1 million properties from the multiplier increase. Yesterday, we announced a wide-ranging package of support worth £600 million for local councils, including £500 million of new funding for social care.

Oral Answers to Questions

Luke Evans Excerpts

Tuesday 14th November 2023 Commons Chamber

[Jeremy Hunt]

Can I say gently to the hon. Lady that interest rates have gone up by 3% in the UK since then? That is just above the United States and just below the eurozone, so this is a global phenomenon. There is no short cut to bringing down interest rates. We have to support the Bank of England as it bears down on inflation and then we can bring mortgage rates down.

[Dr Luke Evans (Bosworth) (Con)]

Will the Chancellor look at the red tape around the apprenticeship levy? Many businesses in my area, such as Asda, Amazon and DPD, all say that they want to take on more apprenticeships but that the red tape around how they spend the money is very difficult. This is something that he could change overnight, and really help to grow and boost our economy.

Cost of Living

Luke Evans Excerpts

Tuesday 16th May 2023 Commons Chamber

[Dr Luke Evans (Bosworth) (Con)]

rose—

[Mhairi Black]

Does the hon. Member want to intervene?

[Dr Evans]

Yes; I thank the hon. Lady for giving way. On covid having been part of the problem, would the SNP have spent more or less than the £400 billion that we had to spend to get us through the pandemic?

[Mhairi Black]

If the hon. Member had shown a bit of patience, he would have heard what I am about to say. [Interruption.] Give me two seconds; bear with me.

First, let us look at covid—this is for the hon. Member for Bosworth (Dr Evans). The Government awarded £10.5 billion-worth of pandemic-related contracts to companies in a VIP lane as part of no competitive process. That lane was dedicated to prioritising politically connected suppliers at the start of the pandemic. The New York Times has found that billions went to companies that had no prior medical experience. In fact, just down the corridor—I say “down the corridor”, but no one has seen her in a long time—we have Baroness Mone, who I think was last spotted on a yacht somewhere, so I think she is doing fine. She appears to have made a profit of nearly £30 million from personal protective equipment after she helped a company secure a place in that VIP lane—a company that the UK Government are now spending more than £10 million to sue after they discovered that the equipment was unusable.

This Government lost track of £4.5 billion of public money wasted through error and fraud during covid, and have no intention of finding those billions of pounds, but when a constituent finds that he was overpaid tax credits in 1999, they are unstoppable. They will hound people down; they will hunt them for £450 before they go after £4.5 billion, especially when a lot of it appears to have gone to their pals. This is a dangerous Government making bad decisions on top of a global pandemic. Mind you, we should not be surprised, given the fact that they seem to have been pished half the time at parties in No. 10.

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[Mhairi Black]

As someone has said behind me, for a start, I would say that I am totally against nuclear. [Interruption.] I am about to answer the hon. Member’s question, but that is exactly what he wants. On what the Scottish Government are doing, I am very proud of the coalition Government and the fact that they are investing their money in places that make sense—they are investing towards a just transition. The hon. Member will like this point: the only sector in the UK that has made profits comparable with Denmark’s wind sector is the arms industry, at €7.2 billion. There is a political decision for you: our Government would rather fund weapons that bring death and destruction than fund industries that might just help secure life on this planet in the future.

Political choices matter, not just in facing the problems of the day, but to plan for a future worth living for. Again, this dangerous Government are making bad decisions.

[Dr Luke Evans]

Will the hon. Lady give way?

[Mhairi Black]

No, I am on my last point, thanks. I want to address the Brexit-shaped elephant in the room—a Brexit that is shrinking our economy, limiting opportunity for our citizens and young people, and emboldening the worst in us. Just across the sea, a small, independent country such as Ireland, with a similar population to that of Scotland, has seen the highest economic growth of any country in Europe as part of an EU with access to the single market. In contrast, Brexit Britain is one of the poorest- performing economies, and we are closing ourselves off from the rest of the world. We cannot forget that this is a Brexit that is supported by the Tory party and the Labour party, that has been thriving off racist and bigoted dog-whistles, and that has cost us economically and, arguably, more so morally. It is a Trojan horse decked out in Union Jacks in the hope that we do not notice our food standards, our health and safety, our workers’ rights, and even our human rights eroding underneath it.

This is a Government that cannot afford to give £25 to the poorest in our society, but can afford to misplace £4.5 billion. This is a Government that force women to prove they have been raped before they can claim the benefits that they are entitled to. This is a Government that try to shame people—the sick and the disabled—into work, completely ignoring the fact that most people in poverty are in work. Most of the children who are growing up in poverty live in households where their parents work. The Government know that the minimum wage is not enough to live on, but instead of substantially raising it, they have decided, “Let’s rebrand it and hope that nobody notices. Let’s just call it a living wage, because surely nobody is paying that much attention.”

This is a Government that will applaud our key workers and our NHS, but draw the line at paying them fairly for all the work that they did. In fact, the Government go further than that: they now want to restrict the rights to strike and to protest for that fairer pay. They will hand millions of pounds over to their pals and their political chums. They will hand it via their WhatsApp groups and backroom deals, rather than raising standards in a country where living standards are sorely declining.

When I am asked, “Why do you support independence?”, the answer is, “All of the above”. I am tired of people in Scotland paying the price for disastrous decisions imposed by Governments who have no mandate in Scotland. The Scottish Government spend millions each year mitigating Tory policies. We defend people as best we can, and it works to an extent—no one in Scotland has endured the bedroom tax for instance, and child poverty rates in the UK are at their lowest in Scotland.

[Dr Luke Evans]

On child poverty, Bruce Adamson, who was Scotland’s Commissioner for Children and Young People, was asked, “Is Ms Sturgeon raising the bar or closing the attainment gap or opening opportunity for every child?” He turned around and said, “No, she is failing absolutely.” How does the hon. Lady respond to that?

[Mhairi Black]

I would respond to that by saying: give us the powers to be able to function. [Interruption.] If the hon. Gentleman just listens, he will hear that child poverty rates in the UK, as I said, are at their lowest in Scotland, where the Scottish Government are making a concerted effort to build a wellbeing economy. [Interruption.] I tell you what, if the hon. Gentleman wants to continue this back and forth, he should maybe have put in to speak in the debate, but I will leave him to google things on his phone for now.

The Scottish Government will always do what they can, but the truth is that one child growing up in poverty left to deal with the scars of poverty, which do not heal for a long time for a lot of people, is one too many. The Scottish Government have done and will continue to do all they can, but so long as 70% of financial powers—[Interruption.] The hon. Gentleman would benefit from listening to this bit. So long as 70% of financial powers and 85% of welfare powers are in the hands of him and his Government, it is not within the Scottish Parliament’s gift to solve these problems. In fact, I can think of one solution that would give Scotland the powers to act, and it begins with an i.

Whether it be the blatant profiteering during a global pandemic going unpunished, supermarkets keeping their prices high despite there no longer being a need for it or the eye-watering profits our private energy companies are enjoying, all while ordinary people cannot afford to cook hot meals, it could not be clearer: this is not a cost of living crisis; it is a cost of greed crisis. There is plenty to go about, it is just that few are hoarding it and this Government are helping them. This is a crisis made by the choices of this place. This place is the one that has the power—nowhere else. This is a crisis made by a dangerous Government making bad decisions.

Oral Answers to Questions

Luke Evans Excerpts

Tuesday 9th May 2023 Commons Chamber

[The Economic Secretary to the Treasury (Andrew Griffith)]

The Government are leading the way with the recently published green finance strategy, but that stands as part of a broader piece of work, unleashing productive finance into all parts of the economy and in particular funding the transition, which is capital intensive.

[Dr Luke Evans (Bosworth) (Con)]

I thank the Chancellor for two weeks ago meeting Leicestershire MPs and the senior leadership of the county council to discuss funding there. Of particular concern is the core funding of special educational needs and disabilities, social care and transport such as buses. What more can the Minister do to address the problems with county council funding that we have in Leicestershire?

[John Glen]

I know my right hon. Friend the Chancellor welcomed that meeting on 25 April. The Government remain committed to improving the local government finance landscape, and in doing so they will work closely with local partners, including Leicestershire, and take stock of the challenges and opportunities across the sector. I thank my hon. Friend for his deep thinking into how improvements can be made.

Cost of Living Increases

Luke Evans Excerpts

Tuesday 25th April 2023 Commons Chamber

[Tulip Siddiq]

I assume that the hon. Gentleman is not proud of all the figures I am outlining and the high inflation that is coming up. The Conservatives can manipulate the stats all they want, but they cannot run away from the fact that we are falling behind our peers. That is not something I am proud of, and they should not be either.

Since 2020, the cost of a typical food shop is up by £700 a year. Clothing and footwear are up by £140. Household goods and services are up by £360. Transport is up by £800. [Interruption.] I do not know why Government Members are laughing; these are real figures that our constituents are dealing with. The essentials of housing, fuel and power are up by a shocking £1,480.

[Dr Luke Evans (Bosworth) (Con)]

Is the hon. Lady aware that the Government have subsidised people’s energy bills by about 50%, and if so, by how much would Labour subsidise them?

[Tulip Siddiq]

I will come to energy shortly. If the hon. Member were able to answer, I would ask him whether he thinks 50% is enough, because it is not enough. If he speaks to people on the ground, he will see how much they are struggling. The rising costs of everyday essentials mean that families across the country are making cutbacks just to stay afloat. That has been devastating for local economies, with communities losing the businesses and institutions that bind us together.

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[Tulip Siddiq]

I will make a bit of progress. We need a bold plan for growth that confronts the problems of the UK’s declining economy head on. That is why the Government must adopt Labour’s mission to secure the highest sustained growth in the G7, with job creation and productivity growth in every part of the country, making everyone, not just a few, better off. That may seem ambitious, but Britain has so much potential.

[Dr Luke Evans]

Will the hon. Lady give way?

[Tulip Siddiq]

I will give way one more time.

[Dr Evans]

I am grateful to the hon. Lady. The motion says that Labour will extend the windfall tax on oil and gas companies and

“further calls on the Government to cut business rates for small businesses”.

What values would the Labour Opposition propose?

[Tulip Siddiq]

I am just about to come to the part of my speech about the windfall tax and business rates, so if the hon. Gentleman listens carefully, he will hear. The talents and efforts of working people and British businesses mean that we lead the way in financial and legal services, and the tech and life sciences sectors. With a proper industrial strategy, the UK economy will not just lead the pack again, but communities written off by the Conservatives will have the backing they need to make their full contribution to our great nation. Labour will achieve that by forging a new covenant between Government and industry, bringing in public investment through our green prosperity plan to support new industries. That will include investment in areas such as fuel cell manufacturing, nuclear, hydrogen and home insulation to bring down energy prices and create well-paid jobs in the industries of the future across the UK, while fixing the holes in the Brexit deal and bringing in a proper supply chain strategy will help to tackle inflation and build the resilient trading economy we need to get ahead.

Labour will work in partnership with businesses to help people get the skills and opportunities they need. We will not leave potential untapped. We will fix the apprenticeship levy, improve local employment services and help first-time buyers get on the housing ladder through a comprehensive mortgage guarantee scheme to boost local living standards. Only Labour, through our plan to grow the economy, will create the conditions for a good life in every part of the country. We will create well-paid jobs, bring home ownership back within reach for young families and ensure that the NHS delivers for all.

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[John Glen]

My hon. Friend is right. I approach the job of government with a sense of humility about the challenge we face.

I recognise that we have made significant progress in recent months—that has been generally acknowledged. I will now set out where else we will make progress. Although it is welcome that wholesale energy prices have been falling, many families remain under significant pressure. The Government understand that. Food prices are contributing to headline inflation. Rising food prices, however, are not a unique issue to the UK, as my hon. Friend the Member for Wantage (David Johnston) pointed out. It is a problem that advanced economies are facing. For example, as he correctly pointed out, in Germany, food price inflation is above 22%. We are fully alive to the fact that some people remain in real distress. I want to assure Members and their constituents that we will always stand ready to help where we can.

[Dr Luke Evans]

Is it not about compassion in government? That is why pensioners on a fixed income and people on benefits will receive a 10% increase. Also, the fourth iteration of the household support fund is there directly to help the most vulnerable to get through those tough times.

[John Glen]

My hon. Friend is absolutely right. In a moment I will set out exactly what interventions we have made and how we are continuing to intervene to support the most vulnerable in our communities across the United Kingdom.

The best thing we can do to help people’s money go further is to deliver on our plan to halve inflation and grow the economy. In doing so, we will meet the Prime Minister’s five pledges to the British people. Three of those are economic—two of which I have mentioned—and reflect people’s priorities. Inflation makes us all poorer. It has to be tackled head-on, which is why, working closely with the Bank of England, we are bearing down on it. We are also growing the economy.

Oral Answers to Questions

Luke Evans Excerpts

Tuesday 21st March 2023 Commons Chamber

[Victoria Atkins]

If the hon. Gentleman would like to write to me about this, I will look into it, but I remind him that I issued a written ministerial statement recently, extending the deadlines precisely to help women in the situation he describes.

[Dr Luke Evans (Bosworth) (Con)]

The Chancellor and I sat for three years on the Health Committee hearing evidence of just how restrictive the pension rules were for the likes of doctors. The fact that he has now been able to make that change is fantastic. Will he take that approach to dealing with some of the other red tape around retention and recruitment for other professions in the health service because, as the British Medical Association said, it is making a real difference?

[Jeremy Hunt]

Few people know as much about this issue as my hon. Friend, given his background in the NHS. He is right, and I know that my right hon. Friend the Secretary of State for Health and Social Care is looking closely at the issue of retention, which has an equally important role to play.

Co-operatives, Mutuals and Friendly Societies Bill

Luke Evans Excerpts

Friday 28th October 2022 Commons Chamber

[Sir Mark Hendrick (Preston) (Lab/Co-op)]

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

May I begin by thanking the former Minister, the hon. Member for North East Bedfordshire (Richard Fuller), who is in the Chamber, for his time and effort— I am also grateful to civil servants for their time and effort—and for our fruitful discussions, which have led me to introduce the Bill in the Chamber? While the Bill does not cover the whole scope of what I wanted to achieve, the fact that the Government are willing to give their support to a key part of my proposals and instruct the Law Commission to conduct a review of legislation affecting co-operatives, mutuals and friendly societies is, in my view, major progress.

I first became active in the co-operative movement 40 years ago, when I bought a £1 share in the Norwest Pioneers Co-operative Society in 1982. The society had evolved from the actions of the original Rochdale Pioneers in 1884, and set up what is generally regarded as the first successful co-operative retail venture. The society was set up in the harshest times, when 19th-century industrial capitalism was on the rise. It was an age of child labour, exploitation and poverty. Sometimes owners of cotton mills paid their workers in tokens, which could only be spent in shops owned by the mill owners. In those shops, the food was often adulterated, so those pioneers set up their first shop in Toad Lane in Rochdale. It was an explicit example of self-help, which started a movement that is now global.

Co-operative societies then mushroomed to form dozens of co-operatives in many Lancashire towns and cities until the 1930s, when the Manchester, Salford and Stockport societies amalgamated to form the North West Co-operative Society. In July 1982, what became the Norwest Co-operative Society merged with the Pioneers Co-operative Society to form the Norwest Pioneers. I bought a share later that year. I would never have dreamed that 40 years later I would have the opportunity to stand here and propose a new piece of legislation that could help to preserve and protect members’ assets accumulated, in many cases, over generations from potential predators who, in recent decades, have sought to take away those assets from members for their own personal profit and gain. That matters to me because co-operation and mutuality are about equity and fairness. The growth of co-operatives in the UK is an integral part of the levelling-up agenda; it can provide many thousands of new jobs in the economy; and it is complementary to the Government’s growth agenda.

Alongside investor-owned firms, co-operatives, mutual insurers and friendly societies have an important part to play in the biodiversity of our economy. These businesses share their origins in self-help movements that are relevant to the economic and social challenges that people face today.

[Dr Luke Evans (Bosworth) (Con)]

The hon. Gentleman is making a fantastic speech. In my constituency, in Hinckley and Bosworth we have several building societies spawned from the fact that we had shoe manufacturing there. Does the hon. Gentleman agree that it is fantastic to have a mix of options for people? These organisations will often pick up people who may not be able to get finance and support they need, but because they have that local community connection they are able to make that judgment and give people the support they need; that should be welcomed.

[Sir Mark Hendrick]

I agree and commend the hon. Gentleman for his comments. Co-operatives spring up from local communities; they are bottom-up, grassroots organisations—certainly not top-down.

As I said, alongside investor-owned firms, co-operatives, mutual insurers and friendly societies have an important part to play in the biodiversity of our economy. They need a business environment that facilitates this: Government policy that understands and supports the mutual business difference; and legislation that is up to date, flexible and permits co-operatives, mutuals and friendly societies to undertake their purpose of serving their members’ needs in the best way possible. Only by working in a modern and supportive business environment will co-operatives, mutuals and friendly societies be able to make a full contribution to the prosperity of our country by serving the interests of customers and citizens. Yet demutualisation remains a real and present threat to the mutual sector, which is, unfortunately, incentivised by the system.

My Bill is about giving mutuals the option to maintain mutual capital for the purpose it was intended. There is a fundamental distinction between the rights of members of a mutual society and members of an investor-owned company. Members of a company—shareholders—have the right both to a pro rata share of distributed profits, or dividends, based on their shareholding, and also to a pro rata share of the underlying value of the company. The more capital they own, the greater their share of the profits and of the value of the company. Members of a mutual society, by contrast, generally have neither of these rights, because in mutuals profits are generally not used as a mechanism for rewarding capital, and members of a mutual do not have any expectation of any entitlement to a share in the increased value of their society.

Since members of a mutual are not entitled to any share of its increased value, the amount by which the net asset value of a society exceeds the capital provided by members—commonly referred to as the “capital surplus on a solvent winding up”—has no specific owner. It is effectively a legacy asset, held by the society for future generations, and enables it to provide for, and invest in, its future. It is a core part of its mutual identity. It represents the trading surplus accumulated by previous generations of members participating in their society’s business, in which they were always content to have no personal share. By implication, it is held for the benefit of future generations. Societies were originally set up not to make a capital surplus to reward members, but to provide goods and services for those who need them; that was the purpose, and this was the basis upon which previous generations have taken part in the trade.

Seen through the lens of investor-ownership, a capital surplus is a tempting asset—a windfall or unearned profit —which, if mutual members were to be replaced by investor-shareholders, could be shared out among those shareholders. Capturing this asset is the usual incentive for a “demutualisation”, which is when a capital surplus or legacy asset is divided up between shareholders—when the mutual agreement between the former members, whereby they engaged in their society on the basis that they would not personally profit from its trade, is broken up. In short, it is when a mutual purpose for the common good is replaced by a profit-driven purpose for private benefit.

In UK law there is no generic or principled recognition of the value to wider society of mutuality or of the legacy asset of a mutual society. As a result, the ability to access legacy assets actively incentivises demutualisation.

[Sir Mark Hendrick]

I thank the hon. Member for his intervention. Actually, I will come to that later in my speech.

Provided that the relevant formal procedures are completed, including securing consent from a statutory minimum threshold of members, a demutualisation cannot be stopped. That threshold has been changed from time to time for different types of mutual societies to make demutualisation less likely, but those measures provide only partial protection. There is currently no statutory mechanism for ensuring that surpluses, which previous generations never intended to be a private reward for anybody, remain committed to that wider public purpose.

At the moment, legislation governing mutuals can incentivise demutualisation by permitting those legacy assets to be distributed. Legacy assets have often been built up over many generations of membership and can constitute a significant part of the working capital of the business. Current members typically have not contributed to that capital base but have enjoyed the benefits of previous years of successful trading. Most demutualisation attempts succeed, assisted by a significant power imbalance between the boards of mutuals and members.

The example of Liverpool Victoria last year shows that demutualisation attempts can, however, be defeated, even when proposed by a mutual’s board. We should be wary of the interests that private equity is showing in mutuals across the world, attracted by the prospect of acquiring significant assets built up by generations of members. At present, it is not possible for an existing society, or those setting up a new society, to proscribe demutualisation. That leaves mutuals vulnerable to those simply aiming to liberate those legacy assets, sharing them out among people as they choose, and converting the business into an investor-owned company. That has resulted in much of the UK building society sector being lost and their businesses either failing or transferring to non-UK ownership. That has been bad for mutuality and bad for the economy, given the damage that it has caused to corporate diversity.

Demutualised former building societies were mostly absorbed into banks that failed during the financial crisis. None of the demutualised former building societies continued for long as an independent bank. They became part of larger listed banking groups or, in the cases of Northern Rock and Bradford & Bingley, failed in the financial crisis and were later nationalised. Moreover, those demutualisations converted some of the largest building societies at the time. The argument for demutualisation has proved to be bogus. It has not delivered the strong independent businesses that it was supposed to do, and the need for more capital is soon forgotten as the newly proprietary entities are generally merged into larger firms.

Diversity of ownership types and business models creates a corresponding diversity in forms of corporate governance, risk appetite and management, incentive structures, policies and practices, and corporate behaviours and outcomes. It also offers a wider choice for consumers and enhances competition that derives in part from the juxtaposition of different business models.

Legislation is needed to help UK mutuals to preserve their legacy for the purposes for which they were intended, to maintain and encourage greater corporate diversity, and to build a more resilient economy. Mutuals need to be able to incorporate appropriate measures into their constitutions which have a statutory basis, either at the point of establishment or thereafter, with an appropriate level of member approval. This will be even more important if the legislative reforms for co-operative and community benefit societies explained above are taken forward. To optimise the successful implementation of new legislation, properly recognising legacy assets for the benefits they bring will be an important ingredient for building confidence.

Many jurisdictions have acted to preserve mutual ownership by ensuring that assets are used only for the purpose for which they were intended. That ensures they cannot be distributed to members or third parties, and thus disincentivises demutualisation. Mergers, dissolutions and transfers of business are still permitted, so this arrangement does not hamper the evolution of business in any way. Ideally, such measures will be universal, but in some legal traditions that is considered problematic as it arguably alters members’ ownership right retrospectively. It is not desirable to cut and paste legislation between different traditions, so solutions are required that respect the culture of different legal frameworks. To deal with that, simple legislation can be introduced in common law jurisdictions that would give every mutual the right to choose a constitution that preserves legacy assets for the purpose they were intended.

My Bill does that. My Bill disincentivises the raiding of legacy assets. Voluntary legislation will ensure that legacy assets are preserved for the purpose for which they were intended. It empowers mutual members to decide what should happen to assets on a solvent dissolution. It would match the best legislation that exists in many other countries. My Bill also: introduces a voluntary power to enable a mutual to choose a constitutional change, so that its legacy assets would be non-distributable; details precisely the destination of any capital surplus on a solvent winding up; outlines the procedures necessary to include such provisions in a mutual’s rules; and inserts a statutory provision for the relevant rules to be unalterable. My Bill will define the capital surplus as the amount remaining after deducting a mutual’s total liabilities from its assets, including repayment of members’ capital.

[Dr Luke Evans]

The hon. Gentleman is making a fantastic speech on how to protect from demutualisation, but it seems a very defensive way of looking at things. Will the Bill provide a chance for new innovations and further capital to be brought into the sector to help its members?

[Sir Mark Hendrick]

I thank the hon. Gentleman again for intervening. One proposal I did not take up and put to the Government was the idea of a new share for co-operatives that would allow them to develop in a way that they have not been able to before. Unfortunately, the Government are not at the moment able to do that, but it would bring in the additional capital to encourage the growth he talks about. I understand from the Government that it will be considered as part of a Law Commission review of the sector. The issue is on the agenda; it is just not included in the Bill at the moment.

My Bill will introduce new provisions to maintain the destination of the capital surplus to ensure that where a mutual’s rules make the capital surplus non-distributable, any resolution to convert it into, amalgamate with or transfer engagements to a company shall also include a provision to transfer the capital surplus, as provided by the rules in the event of a solvent winding up. With the support of the House, we will be able to incorporate sensible amendments that ensure that this legislation works for the co-operative and mutual sector, and fits in with the Government’s stated policy objectives.

In finishing, I would like to thank the Minister and his officials for their time devoted to holding discussions and their help in re-drafting parts of my Bill to our mutual satisfaction. I thank Peter Hunt and Mutuo for their help, advice and expertise throughout the time we have been working together on the Bill, and I thank the Co-operative party and the co-operative societies, mutuals and friendly societies that have engaged with me to give me the encouragement and enthusiasm to get to this stage. I look forward to working with parliamentarians from across the House to get the Bill through the forthcoming stages required to bring it into law.

Before I sit down, Mr Speaker, I would like to declare an interest as a Co-operative Member of Parliament and as a member of a co-operative society.

--- Later in debate ---

[Dr Luke Evans (Bosworth) (Con)]

Similarly to my hon. Friend the Member for Warrington South (Andy Carter), if I had walked down Hinckley high street earlier this week and told people that I would be talking about the Co-operatives, Mutuals and Friendly Societies Bill this Friday, they would have looked at me aghast or blankly and said, “What’s he talking about?” because they would have had no idea. I want to put this in perspective: what does it mean to the people of Hinckley and Bosworth? In considering that question, we can see how far these mutuals have come.

I, too, have a local Co-op card, because in my area we have multiple Co-ops, including one in Newbold Verdon, two in Desford, and one in Earl Shilton—they really are part of the fabric of Leicestershire.

[Chris Clarkson]

Does my hon. Friend agree that anybody putting money into the local economy in my constituency is a good thing?

[Dr Evans]

It is absolutely fantastic, and even better when it is just down the road if you are in your pyjamas. The main thing is not to forget the card so you can support the economy.

It goes a little further than that. I began to think about the other things that could be tied up with mutuals. I was a doctor before I came to Parliament, and had a lot of dealings—I still do, and declare an interest—with them. I have investments with the Wesleyan Assurance Society, which began in Birmingham in 1841, supporting doctors with investments and financial products. Both professionally and in the local community, we can see the effect that mutuals have. It goes further than that. In my constituency, the Hinckley & Rugby Building Society was formed in 1983 when two societies joined, but there has been a society in place since 1961. It is in the top 20 building societies, with assets of £830 million, and more than 50,000 users and customers, many of whom are based in my local area. It emerged from the need to support our local industries, particularly lacemakers and shoemakers. It is still there today, providing products for people who might not be able to secure them on the open market.

[Andy Carter]

My hon. Friend is generous in accepting interventions. As he knows, I grew up in his constituency. One of the first things my mum and dad did was open an account at the Earl Shilton Building Society, and I still have that account today. I think that they put in £2—today, having not put any money in, it is worth about £4,000. That is certainly a demonstration of the value of local building societies and the role they play in local communities.

[Dr Evans]

My hon. Friend is absolutely right. When I was young, I was given a small account with the Nationwide Building Society. It was common for previous generations to do that. We seem to have lost the sense of what building societies and mutuals can provide in our community. That is why it is good that the Bill has been introduced, so that it can provide a forward-thinking ability not only to defend them but to set them up for the future.

We can see the tangible difference that these societies can make. The Hinckley & Rugby Building Society supported a cricket match in Earl Shilton, as well as Leicestershire Cares, giving money back and investing it to make our communities better.

I will not dwell on the impact of the Bill, because what it is trying to do has already been highlighted. The provisions that would be put in place would not interfere with the ability of co-operatives to give profit to members or pay interest on share capital. I am keen to see, as I hinted in my intervention—and as has been followed up by my hon. Friend the Member for North East Bedfordshire (Richard Fuller)—how we can turn this into an industry that is fit for the future and drives innovation in the sector. The measure is a starting framework that can provide for that. If the Law Commission review is correct and forward thinking, we can restore the impact of mutuals on society that I had the pleasure of seeing as I grew up, and now have the pleasure of representing in my area. Long may they live.

Economic Responsibility and a Plan for Growth

Luke Evans Excerpts

Wednesday 19th October 2022 Commons Chamber

[Andrew Griffith]

No. Treasury officials will lead a review regarding the appropriate measures to support households and businesses with their energy needs beyond April, but without the taxpayer picking up an inappropriate share of the burden.

[Dr Luke Evans (Bosworth) (Con)]

The energy plan means that the most vulnerable get up to £1,200 in support. When it comes to the review in April, will the Minister ensure that the most vulnerable people are again at the forefront of getting that support?

[Andrew Griffith]

Yes.