Accountability in Financial Regulation

Marcus Fysh Excerpts

Thursday 9th February 2023 Commons Chamber

[Mr Marcus Fysh (Yeovil) (Con)]

It is a pleasure to be here for this last debate before recess to discuss such a crucial topic, and one that the House should find of the utmost interest. My background in finance comes from the self-regulatory age, but I have watched developments over the past 20 years with great interest.

The context is that the UK needs to raise its sights and raise its game to ensure a bright sovereign future. That necessitates taking significant and essential steps to make the UK competitive for the next generation as an independent country. For that, it must first complete Brexit by replacing the Northern Ireland protocol with sovereignty-compliant arrangements. That would reinstate the legal effects of the Good Friday agreement by removing the stain on the rights of the Unionist community in Northern Ireland. We should not shy away from using the Parliament Act on the Northern Ireland Protocol Bill, if necessary, to do the job of protecting the EU’s border on behalf of a reluctant EU. Secondly, we must address the small boats issue to control our borders by taking surgical steps to remove the effect of the European convention on human rights in cases of illegal arrival. Thirdly, we must remove all unnecessary EU-inherited law and replace what remains with regulations drafted in the common-law style that are appropriate for UK conditions and best able to enhance our future.

However, the reversion to our common-law approach, which will be a huge competitive advantage in the long term, will not be complete unless we address a significant problem that has crept into our system over the last decades, including, most significantly, for the financial industry. This is the problem of our regulators lacking sufficient accountability under the law. Almost all of those who spoke in the Lords debate on the Financial Services and Markets Bill agreed that this is a problem. We must seize the opportunity to fix it as part of its passage.

The Bill devolves the inherited EU rulebook to the regulators to manage and adjust, so that they can rewrite it quickly in the common-law style and remove unnecessary provisions. A major problem, however, is that at present there are no mechanics for ensuring that regulators draft clear rules and apply them predictably and consistently. Parliament, through the Treasury Committee, oversees the regulators at a high level. That Committee should be capable of ensuring that the rules are appropriately calibrated. In the Lords, a proposal to expand the arrangements to comprise a Joint Committee of both Houses has much to commend it. However, parliamentary oversight alone cannot address the validity of individual decisions. For that, the only solution is our judiciary, since only the courts or tribunals provide an independent review of regulatory action, using accepted methods of analysis and reasoning. Lord Lilley has tabled a number of what seem to be excellent amendments, which would resolve the overall problem. I wish to speak in favour of those amendments, and ask that they be adopted by the Government.

First, I should say what these proposals are not. They are not, it seems, designed to introduce yet another administrative fix in an attempt to insulate our regulators from our courts, tribunals and lawyers. The reason is that such fixes will not work here. No administrative solution could ever address the need for firms and senior managers to be able to question individual decisions in an independent forum where their arguments are properly heard. No quango can be set up to achieve such sophisticated levels of justice. Only the courts and tribunals can provide the solution. If we shunt aside our courts and tribunals, we will be ignoring the grain and the lessons from our entire political and administrative system.

Our political life in Parliament involves debate and finality, where distinctions are made as a result of arguments, and put to a vote. Our approach to matters of law is similar. Facts and arguments are presented to our courts or tribunals, leading to a final reasoned judgment. The quality of the reasoning behind those judgments means that our system is commonly accepted as providing world-leading justice. What our current arrangements do not recognise is that regulation is a form of law. It is not some sui generis thing that is exempt from legal discipline. Over the past few decades, regulation has become a core part of our legal arrangements, whether we like it or not, and regulation needs to be stitched properly into those arrangements so that it operates at the necessary levels of sophistication.

Without the availability of courts or tribunals, firms and senior managers who are subject to regulation and supervision inevitably feel that they are subject to arbitrary decision making. Their arguments, when they arise, currently have no way of being properly heard. Unfortunately that is where we are now, but how did we get here? The current system evolved while we were in the European Union. The critical disciplines found elsewhere in our legal system have not been developed to match the growth of regulation. Instead, our system relies on our unquestionably excellent regulators acting at their best at all times. However, no system is perfect, and without independent checks and balances over individual decision making, the system as a whole is weaker than it should be.

Of course, we do not want a system where firms are constantly questioning the proper judgments of our regulators. The regulators’ judgements need to be respected when validly formed and within reasonable bounds. Neither do we want an overly expensive or time-consuming process invoked more than occasionally, which soaks up the time of our regulators in unnecessary disputes. However, it would be a mistake to accept that those imperatives mean that we cannot and should not tolerate the involvement of our courts or tribunals in any meaningful way. That is to give up on building a system with the necessary disciplines, and would instead involve placing inordinate trust in an institution that we are about to endow with huge new powers. No Government are given such trust, and neither should our regulators be given it.

A blind faith approach would not only be an objectionable deviation from our constitutional principles; it would doom our financial markets gradually to decline in competitiveness, and trend towards the competitiveness of those systems that operate on the continental code-based legal systems. In fact, we would most likely do worse than those systems, since our administrative machine is not tuned to run such processes to the level of quality of the code-based systems. The core magnet of competitiveness for the UK is our common-law approach to the rule of law and the trust and confidence that that engenders, and that I, when I was the Minister responsible for exports, was keen to ensure was front and centre of our global export offer.

Lord Lilley’s proposals would enhance the way in which the upper tribunal considers appeals from regulatory enforcement decisions. Indeed, they would improve the quality of those decisions before they even reach the tribunal. There are amendments to make the internal review bodies to the regulators—the Regulatory Decisions Committee and the Enforcement Decision Making Committee—fully independent to ensure that most decisions emanating from the regulators will have been made properly, in accordance with desired common-law disciplines. Those cases would never get to the upper tribunal. When cases do get there, because a firm or senior manager believes there has been a fundamental failure of analysis by the regulators in respect of their own rules, the assessment would not be whether the rules are valid or necessary; it would merely be whether the firm or senior manager could have adjusted their conduct in advance to avoid the breach.

The basic and essential discipline intrinsic to the rule of law may require our regulators to enhance their legal teams to some degree by placing a handful of high-end lawyers at the top, who can ensure these disciplines are followed. However, the cost will be small. When that is done, adverse decisions in the upper tribunal should be few and far between. The consequence should be that firms and senior managers can go about their business of innovating, being entrepreneurial again, and driving enterprise, the UK economy and global growth by matching capital in the most efficient way with those who need it, on appropriate terms negotiated and supervised here.

The armies of compliance staff can be reduced in number and replaced by a smaller number of people applying thoughtful judgment against clear, or vaguer, rules that are nevertheless clear in their application as a result of guidance or case law precedent, using accepted common-law methods of legal reasoning. That will be in stark contrast to the regimes elsewhere in the world, which are overly bureaucratic or controlling, or unnecessarily litigious, because challenges are too easy to make and the standards are less exacting than those that our system, at its best, can deliver. In fact, the proposed changes are slight but their effects will be significant. They will introduce a discipline that will ripple through the regulators’ behaviours, because the regulators will know that there is someone ready to mark their homework—someone who is managing the rulebook and supervising and enforcing against it. Obviously, regulatory judgment is essential and, in some areas, the regulators cannot be expected to set out in advance how they intend to act. However, in such areas, there can nevertheless be a level of predictability, which means people know what they are expected to do.

Firms can apply more legal judgment when seeking to apply the regulators’ rules, but this method is highly effective, as is demonstrated by areas of the law that are dependent on high-level principles, such as the law of negligence. In the more judgment-based areas of financial regulation, the regulators’ rules will be more open-textured, but the general mischiefs that the regulators seek to prevent can nevertheless be made known in broad terms, and the regulators can apply their discretion to remove or dampen behaviours that they believe to be damaging.

Lord Bridges has proposed an alternative to the courts, comprising an Office for Budget Responsibility-style arrangement for the oversight of the regulators. However, that would merely introduce another bureaucracy without the discipline necessary to ensure that the regulators operate their rulebooks properly. In fact, we already have such a solution on the points that really matter. The Financial Regulators Complaints Commissioner already provides a vehicle for an examination of regulatory failings. The only shortcoming of the existing FRCC arrangements is that its recommendations are not binding. The FRCC investigated the London Capital & Finance debacle—a problem for many of our constituents—and made findings that were not criticised for their thoroughness, but were nevertheless ignored by the Financial Conduct Authority. There is no indication that the findings were incorrect or improperly reached. Lord Lilley’s amendments address the lack of a binding nature to the FRCC’s recommendations, and would allow the FRCC to play a more significant role in analysing regulatory failings, but direct supervision of regulatory action by our judiciary has its natural limits.

On average, only 10 such cases have been brought by firms against regulators annually over the past two decades. Almost all such cases occupy no more than a day of the upper tribunal’s time. Lord Lilley’s amendments would not turn that trickle into a torrent, but they would improve the quality of the resulting judgments, so that the market could follow the legal reasoning and reap the rewards of predictability sown there.

By far the greatest prize that will result from predictability for the market is a conversion of the many cases that smaller businesses and consumers bring before the Financial Ombudsman Service each year against firms. At present, the FOS is not required to apply legal reasoning in deciding its cases. That is a huge lost opportunity for firms and consumers, who would benefit from certainty in the application of regulatory rules. The Lilley amendments would harness that case flow by applying our common-law method to it, so that the beneficiary of a decision would be not just the individual claimant in a case, but the entire class of potential claimants. They would be able to follow the legal reasoning and decide whether they, too, had cause for redress.

Do not mistake me: I do not mean that the amendments would apply substantive common law to these disputes. Small businesses and consumers already benefit from statute, and from regulatory rules that require firms to treat their customers fairly, whatever the terms of a contract. It is essential that those substantive obligations of fairness remain fully in place for the protection of buyers of financial services.

The amendments would import an obligation to apply legal reasoning to what “fairness” means in the cases that come forward for decision. In that regard, the amendments take as their model our employment tribunals; since their introduction in the 1960s, they have, along with the obligation on employers to be fair at the point of dismissal, explained to employers what that means in practice. A settled body of employment practice has emerged from case law, and that is now essential to the orderly operation of labour markets. These amendments seek to emulate the success that employment tribunals have had in delivering inexpensive and illuminating justice to customers of financial services, and to ensure the orderly operation of financial markets. The amendments would achieve those goals in many ways.

The first-tier tribunal takes as its model the employment tribunals, which are a proven means of delivering, at low cost, the considered decision of a three-person panel—a lawyer and two market participants—as to what it means to treat a person fairly. They do so in a non-technical way, guiding the unrepresented person through the important points that go to make up fair treatment. Their decisions are properly reasoned, so other firms will have a clear guide to how they should treat their customers. No longer will firms be able to complain that it is impossible to build reliable compliance programmes around regulations as no one can agree on what they mean. In that critical respect, Lord Lilley’s amendments would implement to the full the Treasury Committee’s recommendation of October 2018.

The amendments appear to be modelled on three tried and tested, world-beating precedents: our common-law system, our employment tribunals and our construction adjudication. They deftly remove the unconstitutional unaccountability of our financial regulators by stitching them into their proper place in our legal system, without compromising the regulators’ autonomy. The regulators will be free to continue their important work, but they will do it to a higher standard. They will be more predictable and consistent in their actions. That will be a competitive advantage to us as we look to fulfil our new role in the world.

In conclusion, there is so much change coming to the financial world, including the digital tokenisation of assets, artificial intelligence and the advent of sovereign digital currencies, that it is essential that we make our regulatory structure as sure-footed and competitive as possible. These light-touch amendments present a huge opportunity, and I recommend them wholeheartedly to the Government.

Tackling Short-term and Long-term Cost of Living Increases

Marcus Fysh Excerpts

Tuesday 17th May 2022 Commons Chamber

[Mr Marcus Fysh (Yeovil) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

As a former global investment manager, I am very concerned about the trajectory of the global economy. Unfortunately, I do not think the UK is going to escape that. I am very concerned that the inflation regime around the world has changed substantially in the past couple of months. The deglobalisation that will be one of the impacts of what has happened through the Ukraine crisis will be a permanent feature and a permanent shift. We need to take account of it and be aware of what this House can do to help people with the cost of living in that environment. We know that the price of food is going to go up, but the price of fertiliser is going through the roof because supply has been disrupted to such an extent. We are in danger of being complacent about that and the change it will bring about.

I do not agree with those on the Opposition Benches who, as ever, are saying that tax and spend is the way forward. We need to look at ways in which we can help out the Bank of England. It is not the Bank’s fault that its only tool is interest rates, but unless we in this House find ways of getting prices down for people now, the Bank of England, like the Federal Reserve in America, will have no choice but to keep jacking up interest rates to the point where demand is destroyed and recession is created. Very severe recession may ensue, and that is incredibly bad for budgets and for balancing them.

I welcome what our Front Benchers have tried to put forward through the Queen’s Speech—it is fine as far as it goes, and I appreciate the help that is there for people. I agree with my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) that a focus on regulatory reform is particularly welcome, but unless we take radical fiscal measures to reduce prices now, in a Bill next week or the week after, I am afraid that it will be too late and we will be tipped into severe recession later this year.

I therefore recommend that we look urgently at bringing forward measures to reduce VAT rates throughout the economy and reduce fuel duty. In essence, unless we try, right now, to keep price rises to 4% or 5%—otherwise, they might be plus 10%, plus 12% or plus 15%; we do not know what they will be—we will be in very serious trouble as a country. Inflation hurts most the people at the bottom end of the spectrum. I encourage the Government to target reforms at those people and to make price help available to them. To be honest, I do not think our side of politics has focused enough on what we can do about absolute prices. It is great to help people out, but subsidising higher prices just perpetuates the problem and makes it worse.

We have to look hard at some of these things. Yes, we need to look at investment, and I welcome what the Chancellor said about that. Energy investment is going to be particularly important. We need to focus on making sure we invest in domestic food production so that we get it firing on all cylinders. We need to be almost on a war footing in that respect, because it is that serious. We need to help people with prices and to get our economy moving. I fear that if we do not, we will come up against stagflation, which is very damaging to people’s house prices and, in the end, to everything, so we have to focus on that massively.

I come back to the point that growth is the key. I agree that we should try to limit spending and look at ways to reform administration and services—I welcome the talk of reforming the civil service—but at the end of the day budgets depend more than anything else on economic growth for tax revenue increases over time. I really fear that, unless we take action this day, we will be in for a rude awakening. We cannot let our constituents down.

[Several hon. Members rose—]

Health and Social Care Levy Bill

Marcus Fysh Excerpts

2nd reading
Tuesday 14th September 2021 Commons Chamber

[James Murray]

The right hon. Gentleman speaks about a tax rise 20 years ago, following a decade of wage growth, and it came with a plan for how the money would be invested. In stark contrast, this Government’s tax rise hits working people after a decade of stagnating wages, after we have been hit by a global pandemic and after years during which where people get their money from has changed. Above all, the Conservatives’ tax rise comes with no promise that it will clear the NHS waiting list backlog in this Parliament and no promise that any money will be seen by the social care sector.

Despite all that has been said, there is no guarantee in the Bill that social care will benefit from the Government’s tax rise. In fact, the Bill explicitly rules out any money going towards social care in the first year, and there is nothing to guarantee that a single penny of this new levy will ever go into the social care sector.

The Association of Directors of Adult Social Services realises this, and it said on Monday that

“it is not clear that there is any new money for adult social care to help improve care and support from April 1st next year… It will not add a single minute of extra care and support, or improve the quality of life for older people, disabled people and unpaid carers.”

As the association rightly points out, this could leave councils with no option other than to raise council tax. Indeed, the Government have admitted that they expect councils to cover increasing need and rising costs. Despite £8 billion having been cut from local council care budgets by a decade of Conservative Government, there is no money for councils that need it now.

In truth, this levy does not set out to fix the crisis in social care. It seeks only to be a political fix for the Prime Minister. I suspect Conservative Members know that, and I suspect the Prime Minister is noticing that his attempt at a political fix is quickly becoming a political headache.

Although some Conservative Members may be worried about how to explain to their constituents that they have broken their manifesto promise and still failed to fix social care, others have a different agenda. The hon. Member for Yeovil, as I mentioned earlier, has been reported as saying that he wants people with private social care insurance to get a rebate from the new tax. As my right hon. Friend the Member for Leicester South (Jonathan Ashworth), the shadow Health Secretary has said, this looks very much like a “slippery slope” towards a two-tier healthcare system and privatisation.

[Mr Marcus Fysh (Yeovil) (Con)]

My comments have been misreported. The origins of the Labour movement and the Liberal movement are in trade unions, co-operatives and friendly societies that came together to look after each other. What I am suggesting is that we get money into such systems to help people look after and pay for themselves in older age. There are myriad ways in which the system can be made much more progressive, and I am on their side in trying to make this more progressive than it is at the moment.

[James Murray]

As the hon. Gentleman is on our side, I look forward to him joining us in the Lobby this evening.

Will the Chief Secretary to the Treasury or the Financial Secretary to the Treasury put it unequivocally on the record that no rebate from the health and social care levy for those with private insurance will ever be entertained? A two-tier healthcare system is the very last thing we need. What the social care sector desperately needs is guaranteed funding and a plan to transform the sector. This Bill delivers neither.

--- Later in debate ---

[Jeremy Hunt]

I will make some progress, if I may.

The second trap is that we must not inadvertently sleepwalk into another Mid Staffs. People forget that when Mid Staffs happened, NHS budgets were actually going up. There was huge pressure to reduce waiting times and that ended up creating a targets culture in which numbers matter more than people. We have to be very careful that we do not make the same mistake again. I know that my right hon. Friend the Chief Secretary to the Treasury, who worked with me at the Department of Health and Social Care, understands that because of his commitment to patient safety.

The third trap involves social care funding. Although the settlement we are discussing is generous, if we are honest, in the next three years social care will not actually get as much money as it needs. The truth is that there is a risk that the NHS will continue to gobble up the lion’s share after that, which is why it is essential to ring-fence the amount of money that goes to social care after those three years.

[Mr Fysh]

rose—

[Jeremy Hunt]

I am going to make some progress, if I may.

Finally, let me say this. We, as Conservatives, criticised the Labour party in the 2000s for pouring money into the NHS without a proper plan. We were wrong to say that the NHS did not need more money, but we were right to say that there needed to be a proper plan. We must learn the lessons of history; that is the least we can do for frontline workers in the NHS and care system.

--- Later in debate ---

[Mr Marcus Fysh (Yeovil) (Con)]

I will not speak for long now because I want to speak at the Committee stage later on.

We all want better health and social care and we understand that that comes with a cost. I am concerned that the plan does not make sufficient provision for allowing the discharge of patients from hospital into social care, which will be so critical when it comes to dealing with the backlog of cases. I want to work with the Government on trying to find ways of getting more money into social care earlier. We will get more money through the health provision for supporting the health needs of patients in residential care, but that is not the same thing. In the meantime, our adult social care system is creaking, with 30% more demand than there was before the pandemic. Many local government leaders are very worried about where they will find the money in the meantime to pay for this.

I rise to speak in support of those who will be affected by this national insurance rise. As we have heard, it is very broad based, but it is not the most progressive way to deal with this matter. I do not like the fact that this is the choice that we have made. It is wrong to be raising taxes at this point, particularly taxes on jobs and employment, when both are so central to spending in the economy. It is ordinary people having the confidence to go out and spend money that makes the most difference to our economic performance. At the end of the day, it is that economic performance that will grow the other tax revenue lines and it is those tax revenue lines that will make the most difference to how much money that we, as a nation, have to spend on these massively important priorities.

I want to compliment the Government, and the Prime Minister personally, for raising the issue of adult social care to the top of the national agenda, because they are absolutely right that we do need to sort this matter out. I also stand here for the people in that system now who are being short-changed in one way or another, whether it is on the services or on the way that the financing occurs. We need to work together, across the House if possible, to find innovative new ways of creating a long-term plan to get that service operating better.

[John Redwood]

Does my hon. Friend share my surprise that the Treasury can be precise in saying that it needs £12 billion from a new tax when it overstated the budget deficit by £90 billion last year, which shows that it does not have a clue about how much money will come in anyway?

[Mr Fysh]

My right hon. Friend makes a good point. Yes, it would have been great to have had more detailed context of where we can get to in this economic recovery so that we could know where we were in terms of revenue before we make such momentous changes that affect the aspirations and potential of so many people within the economy. We also need to look at whether this measure will increase costs and cost pressures within the system that we are trying to help. Many local authorities outsource provision of social care to private contractors, and these private businesses will be very much affected by these plans for the tax. We have also heard that the plan will mean that private providers cannot cross-subsidise their state provision of residential care places with private places, which could risk taking capacity out of the system at exactly the wrong moment when we want to get health and social care operating correctly. There are ways of making this measure more intergenerationally fair and I look forward to trying to work with the Government on different and innovative ways of doing that.

Going back to my original point, I think that we marry in haste and repent at leisure. Let me be clear that I am not referring to my own marriage; it is a very successful one and I love my wife dearly. None the less, it would have been much better to have had more time to think about all the ramifications of this Bill and the associated plan. I hope the Government will engage positively with our ideas about how we can evolve things whatever the outcome today.

Health and Social Care Levy Bill

Marcus Fysh Excerpts

Committee stage & 3rd reading
Tuesday 14th September 2021 Commons Chamber

[James Murray]

I thank the right hon. Gentleman for his intervention, but I do feel that there is a broad consensus across this country that those with the broadest shoulders should make more of a contribution. It is quite clear from the reaction that people have had to the Government’s proposed increase in national insurance and new levy that this is falling on working people and jobs rather than taking other sources of income from wealth into account.

I have just spoken about the massive impact that this will have on inequality between different regions of the country. I therefore ask Conservative Members to guess how many times last Tuesday, when the Prime Minister announced his approach here in the House of Commons, he used the phrase “levelling up” in that 90 minute statement. It was zero. Last Wednesday, when the Financial Secretary had to take the rap here on this tax rise, how many times did he use the phrase “levelling up” in a six-hour debate? Zero. The truth is that we are a very long way from the levelling-up agenda that we hear, or at least used to hear, so much about.

Of course it is not just workers and the self-employed who will feel the direct impact of the Government’s tax rise in this Bill. This tax rise will hit businesses that want to create jobs too. That is why we have tabled new clause 4 to show the impact it will have on businesses, and on small and medium-sized businesses in particular. There will be no point in the Financial Secretary denying the impact of this measure on businesses creating jobs: it is set out starkly in the Government’s own tax information impact note that he approved last week and that we have referred to several times today. I set out earlier how this note admits that the Government’s approach will impact business decisions around wage bills and recruitment. It goes on to explain how this measure

“is expected to have a significant impact on over 1.6 million employers who will be required to introduce this change.”

No wonder the Government have managed to unite business groups, workers and trade unions against their plans. At just the time when we need to see job growth, and when furlough is ending, the Government impose an extra flat cost on getting people into work. The Federation of Small Businesses has shown that this move could lead to 50,000 more people being left out of work. Yet again, small and medium-sized businesses least able to afford this tax rise will be hit hardest while online multinationals continue to dodge their tax on this Government’s watch.

The Government’s justification for much of the Bill is that they claim the levy will fix the crisis in social care. As we made clear on Second Reading, however, there is no plan to fix social care, nor even a mention of or reference to one, in this Bill. Fundamentally, despite all the rhetoric from the Prime Minister and the Chancellor, there is no guarantee that social care will benefit from the Government’s tax rise in any way at all. In the first year, the Bill explicitly rules out any money raised going toward social care. Beyond that, when the levy comes into force, it is entirely possible that not a single penny of any money raised will ever go towards the social care sector. I know that Treasury Ministers will deny that this is the case, so we ask them and Conservative Members to back our straightforward new clause 6. I note the Financial Secretary’s comment that the new clause would simply require the Chancellor to report transparently and straightforwardly on the share of the levy spent on social care each year so that we can all see what proportion of the money raised is going to the social care sector.

Finally, I turn to our new clause 7. Nothing could sum up the intrinsic unfairness at the heart of this Bill more than the case that this new clause points towards. The unfairness of the Government’s approach is impossible to ignore when we realise that this tax rise, raising money the Government claim will go towards social care, will not see those with the broadest shoulders paying their fair share but instead hit low-paid social care workers themselves. Our new clause asks the Government to be transparent and honest about this by requiring the Chancellor to report on how much revenue the levy raises from those working in the social care sector. This Government’s choices to raise national insurance, to cut universal credit and to freeze personal allowances mean that a social care worker will pay £1,108 more in tax a year. The Chancellor once clapped for key workers; now he is taxing key workers. This will hit working people hard, and we will not let voters forget it.

[Mr Fysh]

My intention with amendment 7, which I have tabled with esteemed colleagues, was to try to get the Government to focus on a way of looking at the future costs of social care and how to finance them more creatively. I have to ask: if not now, when?

We know that the most powerful way to address costs in the future is to provide for them in the present and to have the power of compounding investment returns over a period of years to meet the liabilities that people have. I am passionate about encouraging the Government to look at ways to encourage people across the board, with progressive incentives in different ways, to make provision for themselves with support from the state.

People think that they pay a contribution into national insurance that rolls up over time and gives them an entitlement to a pot of money—I have heard constituent after constituent talk about that—when we in this place know that that is not in fact the case. In fact, my right hon. Friend the Minister confirmed that that is not the Treasury’s view and that national insurance is a tax collected in-year that must be spent in-year.

There is a big opportunity for reform and innovation that could be useful and get very much back to the ethos behind the Beveridge report and the origins that I spoke to in the Second Reading debate. There was a radical movement trying to help individuals and groups provide for each other. Lloyd George and the Liberal Government’s 1911 Act was about getting national aid into the system in a creative way. I think there is an opportunity for us to talk as one whole House about innovating for the modern world in that way. What was wrong with some of those older schemes and co-operatives, friendly societies and such things in the old days was that sometimes people ran off with the money. That was one reason why there was a need to put more of a national embrace around it and administer it that way. In the modern world, we can do it differently.

All I was trying to do with the amendment was give scope for the Government to think about applying some of the funds from an element of national insurance or something related to it—that is, the levy, which clause 2 sets out—to help incentivise such pooled saving schemes. That is not necessarily insurance or private insurance with a middleman; it could be national schemes or community schemes that are properly co-operative and very low-cost. There are many modern approaches to that in the digital world, such as digital autonomous organisations, where there are no middlemen at all and people do not have to rely on a contract.

That was the pure intent of my amendment, so I am a little disappointed that the Government do not seem to want to engage with it. I urge my right hon. Friend and those on the Treasury Bench to think about ways we might do that in the future, because I can see it as a useful evolution of the policy that might bring people from all parts of the House together in the way I have been describing.

[Dr Poulter]

I am sympathetic to the point that my hon. Friend is making. In principle it is a very good point, but the practicalities are that the moment we move towards the system that he is advocating, we have to clearly define what is health and what is social care, and that makes the integration of the two systems much more challenging. In the context of better integrating health and social care, has he considered that practical element in putting forward this proposal?

[Mr Fysh]

I thank my hon. Friend for his intervention. The truth is that, yes, I have thought about that, and I must emphasise that I am thinking about this measure only in terms of social care costs and liabilities. We have heard how residential care living costs will be excluded from the funding produced by the levy. Pooled savings schemes or liability defrayal schemes could easily include such elements and make a really big difference. I am not talking about the costs of healthcare in the healthcare system.

There are ways in which the healthcare system could look at insuring itself against particular outcomes. Sometimes, unfortunate things happen in neonatology, for example, which have a long liability tail in younger people living with healthcare needs. Those are targeted things, but that is completely separate from the present need to get money into social care. That is what I am talking about, and such a scheme could get money into social care more quickly than the plan that we have heard to date.

[Dr Murrison]

I have been listening carefully to my hon. Friend and what he has said has a great deal of merit. Does he agree, however, that while the Government’s aim is to integrate health and social care, which arguably have been divorced one from the other since 1948, to the great detriment of the people we represent, the system he suggests might exacerbate that problem? That would be in contrast to the provisions of clause 2, which leave it up the Treasury to decide how moneys raised by the levy should be apportioned. Surely it is better that the Treasury can do that so that it can facilitate the integration of health and those elements of social care that relate to care as opposed to residential costs.

[Mr Fysh]

I do not think that the amendment would remove any of the Treasury’s discretion in clause 2; all it would do is specify that moneys raised could be used either in the current year or against future years’ costs. The Treasury would govern how such schemes worked and how to achieve that integration.

Since I was elected, I have been passionate about the integration of health and social care, and I anticipate that, through such an amendment, the Government could help to get money into the system to help it work well. I hope that the Government will reconsider their request for me to withdraw the amendment. I would love them to adopt it. It would be no skin off their nose to do so; the amendment would just give them a bit more flexibility in the Bill. I look forward to hearing my right hon. Friend the Minister’s response.

This is a probing amendment, and I cannot be confident that the Labour party will support it, perhaps because of their slight misunderstanding of its purpose, so this might not be the time to force the Government’s hand. However, it could be a useful evolution of the national insurance policy, given the direction in which the Government want to go on that.

[Stephen Flynn (Aberdeen South) (SNP)]

It is a remarkable feat indeed that the Government have managed to unite the left-wing press, the right-wing press, the Unionist press, the nationalist press, pressure groups in favour of ending poverty and pressure groups who want to see businesses excel, all in condemnation of the Bill. Although I do not think anyone in the House doubts that it will once again sail through the voting Lobbies this evening, I would like to put in my two cents for what little it is worth. In that regard, I commend the amendments in my name and those of my learned colleagues.

As colleagues across the Chamber will recognise, new clause 1 seeks to get the Government to provide an equality impact assessment of the effect of this Bill, by age, on people’s wealth or income. The reason they will not accept that, despite the polite remarks of the Minister, as always, is that such an equality impact assessment would put in black and white what all the pressure groups are telling us. Indeed, much of what we have heard from Members across the Chamber throughout today and last week is that the Bill, in its entirety, will hammer the youngest and those who work the hardest in society, but not necessarily those in the south-east of England who have the most to give.

I heard a remark earlier that about 50% of the income that will be generated by this Bill will come from those under the age of 45. It will be coming primarily from younger people, who are the very people whose horizons have been shortened by Brexit, and whose job opportunities, career opportunities and educational opportunities have been hammered by the pandemic. What the Government are seeking to do is impose further challenges to their lives. It is an unforgivable act, but one that they are going to push through with no contrition whatsoever, as far as I can see, and in the knowledge that they also plan to cut universal credit in the coming weeks—a double whammy on those in society who can least afford to face the real challenges in front of them, and an abdication of responsibility of the highest order.

However, it is not just individuals, young people, working people or families who will be hammered by this tax; it is also businesses. That takes me nicely to our new clause 2, which involves trying to get the Government to do an economic impact assessment of these policies. However, they will not do that either, because they know what the outcome would be, as we see in the language being used by business groups. The Federation of Small Businesses has been absolutely clearcut about its expectation that the proposal will force 50,000 into unemployment. It is a disaster for business.

The Tory party was once, when I was growing up anyway, regarded as the party of business. What has happened? Why are we in a situation now in which not only have the Government forced through Brexit in the middle of a pandemic—and businesses are having to deal with the challenges of exporting goods and the shortages of supplies, to pay back bounce back loans before they have even had the opportunity to bounce back, and to deal with the fact that furlough is going to end despite the clear uncertainty facing them—but they are seeking to impose a jobs tax? Where is the justification for that? I encourage any Government Member to rise to their feet and disagree with anything I have said, but they will not because they know that we are right in this regard.

Northern Ireland Protocol

Marcus Fysh Excerpts

Thursday 15th July 2021 Commons Chamber

[Mr Marcus Fysh (Yeovil) (Con) [V]]

This debate is about the future and we should focus on that, not the past. Article 6 of the Northern Ireland protocol states that the Joint Committee of the EU and the UK shall adopt appropriate facilitations that will aid the functioning of the UK’s internal market. The EU could agree to expand the trusted trader scheme. It could agree to use the simplifications that are available under its union customs code. It could agree that the performance of SPS checks and controls should in the main take place within firms’ facilities. It could agree product-by-product agreements that could streamline the need for checks based on mutual recognition, such as the EU has with nations such as New Zealand. That is possible and can be made even more secure, as we have heard, by concepts such as mutual enforcement. There is no need for regulatory alignment by the UK and that will not be accepted in either the short or the long term.

Insisting on alignment unreasonably stops the reaching of agreement on facilitation, which is the EU’s legal obligation. Diversion of trade, as we have heard, is contrary both to the terms of the Northern Ireland protocol and to the spirit of the Good Friday agreement. So is the now explicitly stated aim of the previous Prime Minister of the Republic of Ireland to use the EU’s diversion of trade in Northern Ireland as a means to achieve a united Ireland. Many in the world are aware of the EU’s regular attempts at regulatory imperialism and do not find it reasonable. I ask: is this reasonable in the context of Northern Ireland and the sensitivity there of needing to respect all communities’ desires?

Would it be reasonable for Canada to insist that the US aligned to Canada’s regulations in order to enable Alaskan goods to move into the Yukon or British Columbia? Would it be reasonable to hope that such a policy would lead to Alaska being united with Canada? I would say no, as I hope most reasonable people in the world would.

I hope the EU will change its stance, be reasonable and make the Northern Ireland protocol work, while respecting the fact that the UK will, as a sovereign nation, not take its regulation from the EU. If it will not do so, the UK would be within its rights and have no real world option other than, in good faith, to take realistic and reasonable unilateral action to implement facilitations, in the interests of all in the island of Ireland, which help the EU and the UK to preserve their internal markets.

Oral Answers to Questions

Marcus Fysh Excerpts

Tuesday 27th April 2021 Commons Chamber

[Kemi Badenoch]

The Government recognise the challenging circumstances facing the aviation industry, which the hon. Member described. The industry can draw on the package of measures announced by the Chancellor, including not just the furlough scheme but schemes to raise capital, flexibilities with tax bills and employment support. The aerospace sector and aviation customers are being supported with over £11 billion made available through loan guarantees, support for exporters, the Bank of England’s covid corporate financing facility and grants for research and development. In addition, the renewed airport and ground operations support scheme, which the Chancellor announced in his Budget, will provide support for eligible businesses in England with their fixed costs for a further six months up to the equivalent of their business rate liabilities for the first half of 2021-22.

[Mr Marcus Fysh (Yeovil) (Con)]

What steps his Department is taking to encourage business investment.

[The Chancellor of the Exchequer (Rishi Sunak)]

Stimulating private sector investment will be key to our economic recovery. The recent Budget announced multiple policies to help achieve that, including freeports, the Help to Grow programme, the future fund breakthrough, the life sciences investment partnership, consultations on reforming R&D tax credits and, of course, our radical new super deduction to support business investment as we recover from the coronavirus.

[Mr Fysh [V]]

I thank my right hon. Friend and the whole Treasury team for the extensive package of support and investment incentives over the past year; I know that businesses and employees in Yeovil are incredibly grateful for that. There is a very welcome focus in the defence review on local prosperity in procurement decisions. Will he work with me to ensure that Leonardo and our wonderful local supply chain for the helicopter industry can take full advantage of that into the future?

[Rishi Sunak]

I thank my hon. Friend for all the advice and support he has provided for me and the team over the past year as we have sought to develop policies that will help businesses, including Leonardo in his constituency, which I know he champions. He is right to highlight the opportunities of better procurement, particularly for our defence supply chain, and I look forward to working with him and colleagues to ensure that we can support his local businesses and many others across the United Kingdom.

Oral Answers to Questions

Marcus Fysh Excerpts

Tuesday 26th January 2021 Commons Chamber

[Rishi Sunak]

I am happy to tell the hon. Lady that my right hon. Friend the Financial Secretary to the Treasury met the authors of the report back in December and is considering it alongside all the other submissions that we receive at the Treasury.

[Mr Marcus Fysh (Yeovil) (Con) [V]]

What will my right hon. Friend do to make the UK a more attractive destination for investment and capital formation, to encourage the jobs and opportunities of the future that people rely on the private sector to provide?

[Rishi Sunak]

My hon. Friend is right about needing the private sector to drive growth and create jobs. I am pleased to tell him that the Prime Minister and I chaired the first meeting of the Build Back Better Business Council, where we outlined our plans to invest in infrastructure, innovation and skills alongside businesses. We have also established a new Office for Investment, led by Lord Grimstone, which is charged with securing high-value investment opportunities, and I look forward to hearing from him ideas that we can productively take forward.

Finance Bill

Marcus Fysh Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution
Monday 27th April 2020 Commons Chamber

[Mr Marcus Fysh (Yeovil) (Con) [V]]

It is a pleasure to reopen proceedings. I welcome this Finance Bill and I support the Government in dealing with this most difficult challenge of covid-19 and the lockdown that has been required. It is right that we protect the NHS and increase its capacity; I am proud of the part that Somerset has played in that, with firms such as Numatic, Oscar Mayer and others doing a brilliant job, helping to manufacture PPE, get meals out and get involved with ventilator production and with looking for vaccines and treatments.

Test and trace is clearly the way to go, and it is right that we stay locked down for a few more weeks, because we absolutely need to avoid a second lockdown, which would be a proper catastrophe for the economy. It is worth buying time now to be able to control the virus’s spread, so that we can spring back with confidence about our health, our travel and our interactions with others.

However, the scale of the downturn that we are in globally even now makes lifting the lockdown as soon as possible of critical importance. At that time, a new Budget and a new Bill will be needed, for incentive for research and development, for investment and reinvention. I believe that the multi-year scope and huge scale of this downturn mean that it will not be V shaped.

The scale of the destruction of consumption and supply that is going on and the crisis in real demand, which is seen in things such as unemployment—for example, in the United States they are now expecting 30% unemployment by the summer—mean that it is a massive challenge. Just expanding the money supply does not conjure up that demand. We are seeing major problems in the oil markets; money is being printed to support them, but nevertheless, large swathes of oil production around the world will be taken out and there will be major debt crises in emerging markets coming down the road.

The other problem we have seen with massive monetary easing is that it destroys the mechanism of the markets for discovery of prices of different types of assets. We have a massive challenge coming down the line. However, as I said, I support these measures to keep the economy from its heart attack; even if those immense problems are being stored up for the future, there is really nothing else to be done about it.

It is right that we support those who genuinely cannot work through this crisis, but the furlough is creating some of its own issues and it cannot be afforded forever. We need to incentivise people to get back to work and companies to get back into operation as soon as we can.

The other thing to understand is that it is massively important that we maintain confidence in markets in our public finances. At 100% borrowing as a percentage of GDP, it really makes a difference whether we are paying 1% or 5% on the debt service: 5% would give us a very big problem and would see 25% to 30% of Government spending going on debt service. It is an unpalatable choice that we and nations around the world will face about how to deal with that—whether to go for some element of inflation, whether more monetisation is the order of day, whether there might even have to be debt forgiveness, such as happened in the 1930s, or whether we have extra taxation. The point is that all those things are massively challenging and are, in one way or another, an assault on the value of money. Maintaining confidence in money itself will be one of our key tasks.

We need our economy here to be ready to spring out, powered by research and development and reinvention. We need to be open to trade and innovation. We must not be seduced by the sirens of protectionism that led us into a terrible place a century ago. We must, as a nation, pursue a US trade deal. We must pursue deals with all nations around the world, and we must not be scared into thinking that we need to be protectionist at all costs. I want to say to people in Somerset: you are doing a brilliant job—keep going. We need to come out of this in the right way, and everything you do now is going towards that.

Economy and Jobs

Marcus Fysh Excerpts

Monday 20th January 2020 Commons Chamber

[Mr Marcus Fysh (Yeovil) (Con)]

It is a great pleasure to follow my hon. Friend the Member for Eastbourne (Caroline Ansell). It is wonderful to see her back in this place, and to follow so many great colleagues, including new Members who have given us amazing demonstrations of their pride in and passion for their areas. It is interesting to hear some of the passion from new Opposition Members as well. I think the one thing that unites everybody who comes to this House, across both sides of the Chamber, is the genuine desire to see their areas improve. We might have different ways of trying to get from A to B, but I think most of us in this place want a better life for the people who live in our areas.

On election day, I was flabbergasted and moved by just how many people in one of my toughest areas—one of the more deprived parts of south-west England—were telling me that they would vote Conservative. They backed us in the election, and we owe it to them to back ourselves to make that difference for people. We now have a huge opportunity and a mandate for radical change. I think that a lot of people wanted to see that change in their lives when we had the Brexit vote as well, and we have a duty to make that a reality for them.

I was really proud of the people of Yeovil for choosing an optimistic and forward-looking approach, rather than the backward-looking way of socialism. Capitalism is the way forward that has been proven, over many years and in many different parts of the world, to be the best deliverer of better conditions for people. It is wonderful to see that optimism is back, because capitalism depends on optimism. It depends on people believing in each other’s ability to fulfil their part of a bargain, whether that is doing a deal, knowing they can get help if they need to climb the famous Conservative ladder, or retiring knowing that their children will have the same opportunities that they had—or even better. We owe it to people to really drill down into what can improve their lives.

Competitiveness is very important in the current global environment. We are in a challenging world. We have interest rates at next to zero, or below zero in many cases. That zero-bound, as it is known, presents a lot of challenges for policy makers to make sure that investment occurs in a way that is productive, because we do not want to be using such low interest rates to be investing in unproductive things. That is something we really need to watch out for.

The UK economy is doing really well, and we should celebrate that. We heard earlier about the wonderful employment performance. We can always do better; we should not rest on our laurels at all. We should look at some of the problems that the European economy is having at the moment, including the persistent problems in the banking system. Despite the low interest rates and the quantitative easing that has been used, à l’outrance, to buy up corporate bonds, the situation is still very fragile. We should not underestimate how resilient we need to make our own economy to be able to resist the vicissitudes of economic fortune that may or may not occur. It is brilliant, in that context, that we have managed to bring Labour’s deficit down so that we are not adding to the national debt in the way that we were when we took over back in 2010.

At a granular level in our constituencies, there are big areas where we need to perform better and to improve things. I am very keen on what is in the Queen’s Speech and was in our manifesto about reform of business rates. That is particularly important because our high streets are struggling. Going back to Yeovil, we heard only earlier today that the national department store chain Beales is now in administration. It is has a big facility in Yeovil that I would like to persist there, even if it looks difficult at the moment. The company has cited business rates as one of the big factors. We need to make sure that our towns fund is well funded and gets into all areas of the country, not just the north, because many in the south-west feel left behind too. We depend on that and the future high streets fund for investment in our cattle market site and at Glovers Walk. Without help with the basic infrastructure and reconstruction of those sites, which is quite difficult, it is hard to regenerate our main town.

[Mr Holden]

Does my hon. Friend agree that the increase in the business rates discount is an important measure that the Government are taking to help small businesses not only in his constituency but across the country?

[Mr Fysh]

My hon. Friend makes a very good point and he is absolutely right. Increasing that to 33% really is a big deal for smaller businesses. We need to reform the whole system and try to use that to devolve the ability to invest locally raised taxes in our local economies and have them compete with each other. That can create the dynamism in our economy to really grow and create jobs into the future.

We need to invest in roads in the south-west. We need to follow through on the dualling of the A303. We should be starting that this year on the Sparkford to Ilchester section, but we need to make sure that the Stonehenge tunnel is funded, because the value for money of the whole project depends on that.

[Ben Everitt (Milton Keynes North) (Con)]

Does my hon. Friend agree that, while the Government are still seemingly committed to the £106 billion total cost of HS2, consideration might be given to reallocating some, if not all, of that funding to the Stonehenge tunnel and other local infrastructure improvements that would benefit my constituency and many others?

[Mr Fysh]

My hon. Friend makes a good point. The Government have some interesting judgments to make. I would not want to gainsay, but there is a strong rationale for investing throughout our country that needs to be put before Ministers. I hope he will do the same for his area.

It is important that we get proper skills development into our regional areas, and I want to mention our further education colleges in Yeovil. Yeovil College is a particularly good example of a top-performing college that is able to improve the life chances of people in regional areas. Often, when there is not a university in an area, further education colleges are the only opportunity that people have to change their skill level and skill type, so that they can change jobs and take advantage of job creation.

The helicopter industry is very important to the Yeovil sub-regional area. Leonardo, based in my constituency, is a military helicopter manufacturer and the only end-to-end aerospace manufacturer left in the UK. It supports more than 10,000 jobs in the supply chain, which is incredibly important. The Government have said that they want to reform defence procurement. When we are looking at value for money, we must consider the holistic impact on a community of having such a big employer with such big projects. It makes a huge difference. We cannot just look at the headline costs; we have to look at all the consequential costs and the value throughout the community.

[Mark Menzies]

My hon. Friend makes the point well, and that is something I touched on in my speech. It is also about the technologies that emerge from investment in the helicopter sector, which can be reinvested in future programmes.

[Mr Fysh]

My hon. Friend is right. It is important that we keep these sovereign capabilities in our aerospace sector, whether it is fixed-wing aircraft, such as in his constituency, or rotary-wing. There is an interesting opportunity at the moment to review whether the AW149, which is a Leonardo product, could replace the Puma fleet, which is ageing and a little unsafe. That is a perfect opportunity to militarise a civil product that is produced in Italy and allow the factory in Yeovil to become a military centre of excellence for Leonardo worldwide. I know that the company is keen to pursue that, but we need the Government to play their part.

I want to say a bit more about trade. The helicopter industry is one of our big exporters, and it is one of the reasons why Yeovil exports more than anywhere else in the south-west apart from Swindon and Bristol, so our trading conditions are of particular importance. We owe it to people to make good on our manifesto promises on trade. We need to ensure that we take a holistic approach to our trade negotiations. We need to ensure that we are negotiating with not only the EU but the US and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership countries. It is by being able to have flexibility in our intentions for regulation and tariffs that we can do different deals around the world and get the best out of all of them.

I am a firm believer that unless we put the potential deals on the table, the EU will prove a very hard negotiator, and it is only by doing these things simultaneously that we can get the best out of all our trade opportunities. Trade—free trade—is so important not just for the opportunities it can create for more exports, but for massively reducing costs for our domestic industries. Getting goods into our economy more cheaply is how we can improve our export growth, our domestic economic performance and our job creation.

Clearly there are some challenges when it comes to trade. We need to make sure that intermediate products we import do not have tariffs put on them. Interestingly, when the Government do the review of tariff schedules that we would have in the context of any deal, it is massively important that we do not automatically think we should keep our tariffs high and then have to cut them again. We could have an agreement that we might apply a lower tariff, even if our bound tariff rate is higher, for a period of time at a zero rate, and tell our trading partners and prospective ones that if they want that situation to continue, they need to finalise a trade deal with us.

There are many other things that we need to talk about on trade. We have heard a lot about level playing field provisions and what the Government might or might not do with them in the context of the EU negotiations, but we need to make sure that we do not just give that up. These are normal provisions that would come into pretty much any trade agreement, and most of them are modelled on the existing WTO agreements on the technical barriers to trade. We should not be afraid of signing up to them, but we must not have dynamic harmonisation of our regulations. We must co-operate and look for equivalence in what we do, but we must not be a rule-taker. It is only by being independent and able to do our own thing that the people of this country will maintain their confidence in us and in our ability to pursue our own destiny. They backed us; we now need to back ourselves to do the best for our people and improve opportunities throughout the country.