Draft Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2024

Mark Garnier Excerpts

Monday 9th December 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

I think this is the fourth or fifth time that the Minister and I have met across a Committee room, and yet again I do not think we are going to have any problems at all. At the last of our meetings in one of these rooms, I asked her a number of questions, and I am incredibly grateful to her and her office for getting back to me so quickly. I think that illustrates the very good working relationship between the Opposition and the Government in this respect.

The Opposition are delighted with all these measures. I was struggling to work out some complicated questions in order to make the Minister work for her office, but the only one I could come up with is on the timeline. She made reference to some further statutory instruments that will be introduced, and it would be very helpful if we had an idea of the timeline for when the process will be completed.

Aside from that, we are very happy to support the draft regulations and I thank the Minister very much for all those acronyms—I am learning more and more each time we meet.

Draft Building Societies Act 1986 (Modifications) Order 2024

Mark Garnier Excerpts

Monday 9th December 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

This Committee may go on record as one of the swiftest yet!

It makes perfect sense to modify the Building Societies Act 1986 to bring it in line with the Companies Act 2006. We have no objection to the order. It is possible that it may only affect one building society, but none the less it would be fairly old-fashioned to have two separate sets of rules depending on which type of business we are discussing. We are behind the order, which makes a huge amount of sense. I will not take any more of the Committee’s time.

Question put and agreed to.

Draft Financial Services and Markets Act 2000 (Ombudsman Scheme) (Fees) Regulations 2024

Mark Garnier Excerpts

Monday 25th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

I think the Minister and I are going to have an outbreak of unanimity in just about everything we do; we have yet to find something we disagree on. Members will be aware that this legislation was originally due to be implemented in May, but we got caught up in a bit of a general election, which unfortunately did not go quite so well for us. The Opposition therefore fully support the instrument, as Members would imagine.

The Minister made a good point about why the regulations are incredibly important: there are far too many people gaming the system. To support what she was saying, banks incur a great deal of costs as a result, and those costs are inevitably reflected on to consumers; so although it sounds in the first instance like the claims management companies are doing everybody a favour, they are actually increasing the cost of financial services for absolutely everybody. We are therefore wholly supportive of this instrument.

I have a couple of questions. To make sure the instrument does not affect some people badly, can the Minister set out how the Treasury proposes to monitor the changes to ensure that they go according to plan and that, where there is a two-tier system, vulnerable people do not unwittingly find themselves not represented if they use a claims management company?

My other question is on a technicality, and the Minister may not know the answer. The first 10 claims are free of charge for professional representatives. After that, claims cost £250, reduced to £75 if they are successful. Can claims management companies put in class actions—for example, a claim for 1,000 people 10 times—hoping to get a lot of people covered, and thereby potentially increasing the return they could get for each claim, since it is a class action rather than an individual claim, or is the intention that each claim will be an individual case, rather than a group of cases? If the Minister does not know the answer to that now, she should feel free to write to me.

We have absolutely no intention of opposing the instrument. It is a fantastic piece of legislation, brought in by the previous Government, and it is good to see that it has survived the general election, unlike the Minister who signed it off in the first place.

Draft Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024 Draft Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Regulations 2024

Mark Garnier Excerpts

Tuesday 19th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

Thank you, Mr Efford, for chairing these proceedings.

I thank the Minister for going into quite a lot of detail on what is highly technical stuff. The Opposition welcome the changes. They continue the important work started by the previous Government to ensure that our legislative framework is fit for purpose after Brexit. Removing redundant EU references and aligning our investment fund regulations with UK priorities, we are streamlining oversight and maintaining stability in our financial markets. More of interest to the industry will be the clarity given in extending the temporary marketing permissions regime before the roll-out of the overseas funds regime.

As I said, we absolutely welcome the changes; but I do have a couple of questions, the first of which is on the application process for the funds. We are introducing landing slots for UCITS funds transitioning from the TMPR to the OFR. What steps are the Government taking to ensure that fund operators are fully prepared and supported to meet the deadlines to avoid any disruptions?

The other thing that is important for the future of the City and the growth agenda of the City is reciprocal access. While this is all about allowing access for European operators to come into the UK post Brexit—this may be a wider point to do with the growth agenda—what measures will the Government be taking to try to get reciprocal access for UK products to be marketed in the European Union?

Aside from those two questions, we are very happy with this move and will be supporting these measures.

Financial Services: Mansion House Speech

Mark Garnier Excerpts

Monday 18th November 2024 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I thank the Minister for advance sight of her statement, and I congratulate the Chancellor, via the Economic Secretary, on her maiden speech to Mansion House. It has gone down broadly very well, and we are pleased that she recognises the City for what it is. The Minister rightly points out that the UK hosts a competitive and global financial centre, but changes to regulation must not be burdensome, and they must be worked through properly with the industry. When and where the Government take steps to enhance the performance of that sector, they can be guaranteed of our support. As the Chancellor mentioned in her Mansion House speech, in a generous tribute to her predecessor, much of the regulation reform discussed today was started under a Conservative Chancellor. I therefore wish to put on record recognition for my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt) and the work he did in that area.

Before I turn to the substance of the statement, inevitably I will talk about the Budget. It is worth reminding the House of the most pressing parts of the Chancellor’s Budget, which she left out of her Mansion House speech. In her speech she mentioned the word growth no fewer than 41 times, but we have to look at the facts. When the Conservatives left government, we had the fastest growing economy in the G7, but now growth has halved. The Chancellor’s increase in national insurance means that businesses are picking up the tab to pay for Labour’s open tap on spending. She will no doubt have read the letter sent to her by 200 hospitality businesses, highlighting job losses across their sector and a wider range of sectors. Despite all her talk about growth, business groups and economists agree that Labour’s approach to the Budget is choking the momentum of our economy. Britain deserves a Government who back growth, empower investment and deliver prosperity. I hope that the Minister today will admit to the British public that while she talks about growth, her party’s plans to grow the economy fall short of an economic growth agenda.

On the substance of the reforms that the Minster has outlined today, we believe that the objectives that the Chancellor is attempting to achieve with her Mansion House reforms are broadly the right ones. First, it goes without saying that delivery of the reforms that the Conservatives started in government is to be welcomed, including the focus on growth; my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt) legislated to ensure that financial services and markets regulation has a secondary growth duty. It is regrettable that the Government could not publish the final version of the pension investment review or the pension Bill in time to accompany this statement.

As I turn to my questions, I should make it abundantly clear to the Minister and the House that these reforms must remain focused on delivering the best deal for pension savers. While additional investment is welcome, the pension market should not be treated as a Government cash cow for public investment if it loses sight of the paramount objective of delivering a secure return for savers. It is true that unlocking greater investment and delivering greater returns for pension savers can come together—both can happen at the same time—but I must push for the publication of the finer details of this policy. The emphasis must still be on pension savers. While greater investment and greater returns can come together, security in retirement is what the pension industry is all about.

Work to reconcile those two aims was furthered by my right hon. Friend the Member for Godalming and Ash when he announced reforms earlier this year, which included requiring pension funds to publicly disclose how much they invest in UK businesses compared with those overseas, and disallowing schemes that performed poorly for savers from taking on new business from employers. Can the Minister confirm that those reforms remain Government policy, and that nothing she is announcing today changes those policy strands?

Can the Minister set out a timeframe for the proposed mega-funds? Some 86 local authority pension funds will be consolidated into just eight. What are the criteria on which the Government have chosen eight? Why not one, 10 or 15? The Government note that the local government pension scheme in England and Wales has

“assets…split across 86 different administering authorities…with local government officials and councillors managing each fund.”

Can the Minister clarify whether each of the 86 local government pension funds will have a stake in each of the eight mega-funds, or will they each be allocated to just one mega-fund, thereby possibly distorting the risk profile of that pension fund?

The Government state that the consolidation into a handful of mega-funds will enable the funds to invest more in assets such as infrastructure. Can the Minster confirm whether the “infrastructure” that the Government mention in their press release refers to both public and private infrastructure projects? On the topic of infrastructure, what is the expected return on Government-owned infrastructure projects? Will pensioners ever be mandated to take lower returns to support the Government’s investment objectives? The Minister with responsibility for pensions, the hon. Member for Wycombe (Emma Reynolds), who is in her place, gave rise to some ambiguity about whether there will be mandating of pension fund investment in Government projects in her Financial Times article this morning. Furthermore, will the trustees overseeing these mega-funds be restricted by the Government as to what they can invest in, or will they be free to choose their investment and risk profiles?

The Government also state:

“A new independent review process will be established to ensure each of the 86 Administering Authorities is fit for purpose.”

Can the Minister give any further detail on that review? Who will be running it, for how long will it be running, and what is considered “fit for purpose”? How many of these funds would have to be considered not fit for purpose for the Government to reconsider the number of mega-funds?

To conclude, we support what the Government are trying to do with their reforms, many of which are ours, but questions remain about the detail of the policy. We will scrutinise the detail of the legislation when published. I finish as I started—by saying that the Government are talking about investment and growth, but have just delivered a Budget that downgrades growth and crowds out business investment. Those things are not compatible, and we urge the Government to put forward a workable plan for growth. They must not rely solely on the financial services sector to bail them out.

[Tulip Siddiq]

I thank the Opposition spokesperson for his comments. I think he welcomed the news, although I am not quite sure. He spoke a lot about the ex-Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), who did a lot of work in this space. I remind the House that the ex-Chancellor said that there was

“Much to welcome in the Chancellor’s Mansion House speech today.”

The Opposition have said that these are “broadly” good reforms; I thought I would remind the Opposition spokesperson of that. I also remind him that we are not interested in sticking-plaster politics. We have a long-term vision for the economy, which is why we are looking at using the national wealth fund and the industrial strategy to ensure that we grow the economy.

I will answer a few of the hon. Gentleman’s questions, but if I do not get to all his pension questions, the Minister with responsibility for pensions is happy to meet him. I point out that our public services are crumbling, and that we inherited a £22 billion fiscal black hole from the previous Government. We had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability in order to allow businesses to thrive. He pointed out that hospitality businesses were contacting him. More than half of employers will see either a cut to or no change in their national insurance bills. To support the hospitality industry, we are permanently cutting business rates for retail, hospitality and leisure from 2026. That comes alongside a 40% relief on business rate bills next year for thousands of premises.

We are committed to delivering economic growth by boosting investment and rebuilding Britain, which is exactly what our Budget did. The interim report of the pensions investment review, which the hon. Gentleman had a lot of questions about, put forward proposals to drive scale and consolidation in the defined contribution workplace market. The Local Government Pension Scheme is still consulting. The final version will come out in spring next year, but as I said, the Minister for pensions is happy to speak to him. There is international industry consensus that the scale and consolidation benefit investment and savers, and that these measures could unlock around £80 billion of productive investment.

On the hon. Gentleman’s questions about the reforms taking autonomy away from local authorities, under the proposals in the consultation, each administrating authority would retain control over the most impactful decisions by setting their investment objectives and strategic asset allocation. The consultation proposes that implementation of the chosen strategy be delegated to investment experts in the asset pool, who are best placed to execute the investment objectives to meet the desired investment outcomes. I hope that reassures him that we will not take autonomy away from the authorities.

The hon. Gentleman talked about the overall package of boosting UK economic growth and benefiting pension scheme members. The objectives are complementary. Driving consolidation and tackling waste in the pension system ensures that schemes can achieve the necessary economies of scale and efficiencies to pursue diversified investment strategies. I reassure him that assets such as infrastructure and private equity are seen as part of the balanced portfolio, and can enhance savers’ returns. They will boost economic growth, so he does not need to worry about that, and we will benefit the communities where pension savers live.

The hon. Gentleman spoke a lot about what the previous Government did. They talked a lot about pensions, but they actually never did anything. We have shown in the first few months of a new Labour Government that we mean business, and we have our action ready to go. By next spring, he will see the full details in the Bill.

Draft Local Loans (Increase of Limit) Order 2024

Mark Garnier Excerpts

Wednesday 13th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is exciting—fantastic—for me to start my new job as a shadow Treasury Minister on something so utterly uncontroversial. Obviously, we will support this; there is no question about that. But I would like to make a couple of points.

It is interesting to see that the Public Works Loan Board amount, on a year-by-year basis, has now gone up to pre-pandemic levels, and that we have come back up quite quickly. It is also worth bearing in mind that that was around the time when the new rules were introduced about prudence; it will be interesting to see whether there is any explanation as to why that has happened now. It could be perfectly harmless, but it is important for monitoring.

I have three principal questions. First, the Minister mentioned the rules that were brought in. Can the Government confirm that they will remain committed to those new rules? That is very important. They were there to avoid speculative investment, and we want the money to be properly used to benefit local communities, albeit at a commercial rate of return. It is important to make sure that speculation does not come into this, so can he confirm that?

Will the Government also confirm that they intend to closely monitor how councils are borrowing? That is important because some well-meaning district councils may make some slightly unwise decisions. What metrics will the Government use to make sure that local authorities are borrowing prudently in accordance with the rules, so that we can understand how that is being monitored? Finally, what steps are being taken to manage debts effectively, ensuring that they do not hinder future potential borrowing requirements or place tighter strain on local authorities that may or may not be struggling with tight budgets for one reason or another?

We are keen to support the order; it is a perfectly reasonable thing and it is important for us to support our local authorities. Some are incredibly innovative and a lot of the money is used to support local communities at a commercial rate of return. We see nothing wrong with that, but I will be grateful if the Minister can help me with those questions. It looks as if we may be finished within five minutes.