Oral Answers to Questions

Debate between Meg Hillier and Sajid Javid

Thursday 15th January 2015 Commons Chamber

[Sajid Javid]

My hon. Friend is right to raise the issue of trains and communications, which is why the Government have made a commitment to improve connectivity on trains. He may be aware that Network Rail is in the middle of a competition to work out the best solution to the problem. On Government support, my right hon. Friend the Secretary of State for Transport announced a few months back £53 million of funding for the programme, with money that Network Rail was supposed to return to the Government. I will also ask my right hon. Friend to give my hon. Friend an update.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The Secretary of State has taken some bold steps to push mobile telephone companies to increase coverage in not spots. However, even in areas such as mine in Shoreditch, with mobile coverage, wi-fi and broadband, there is a real issue about planning permission for buildings that are tall enough to allow other technologies to flourish. Will he update the House on conversations he is having or will be having with the Secretary of State for Communities and Local Government about changing planning permission to allow these other technologies to flourish?

[Sajid Javid]

The hon. Lady has raised an important issue. We are having ongoing discussions, and we have ongoing plans to improve the situation. As the hon. Lady may know, the deal that was announced last month with mobile phone operators included an agreement by the Government to give them access, at market prices, to Government-owned property on which we have the freehold, and I think that that is a positive step.

Crowdfunding and the FCA

Debate between Meg Hillier and Sajid Javid

Wednesday 18th December 2013 Westminster Hall

[The Financial Secretary to the Treasury (Sajid Javid)]

Welcome to the Chair, Mr Chope. I, too, congratulate the hon. Member for Huddersfield (Mr Sheerman) on securing this debate, and on the important work that he does as chair of the Westminster crowdfunding forum. I share his enthusiasm for crowdfunding and the peer-to-peer alternative funding platforms that he mentioned. I cannot think of a single thing he said that I disagree with; it is quite rare for me to say that to him. I say that not in a spirit of good will because it is close to Christmas, but because I thought he talked a lot of common sense. Clearly, he knows a lot about the issue, and I hope that he stays involved in it for a long time to come—it sounds like he will—because I think he can add great value to this area.

Small and medium-sized enterprises are a vital part of the UK economy and contribute significantly to economic growth, as we have just heard. In particular, access to finance is important to ensure that businesses reach their full potential. At times when there are greater constraints on credit, alternative finance markets, including crowdfunding, become even more crucial. That is why crowdfunding, though it may be a relatively new industry, is growing quickly.

[Meg Hillier]

May I draw the Minister’s attention to a donation-based crowdfunded organisation called Turning Earth in my constituency? It raised more than £13,000 through Crowdfunder and sells work spaces and classes in pottery. It says that, critically, the money levers in other money, because there is confidence in the community that the organisation will work. Does that not do something to tackle the asymmetry of banks, which are frankly letting down small businesses, and the challenge of funding small businesses?

[Sajid Javid]

The hon. Lady is right. There are examples of banks letting down small businesses. That shows the power of crowdfunding. I had not heard of Turning Earth before, but I am glad that she has brought it to my attention. I will take more interest in it now. If I heard her correctly, she mentioned that it has already raised £13 million—[Interruption.] Oh, £13,000. Well, that is an excellent start. There is great growth potential in that number.

Over the past two years, in total, more than £700 million has been lent through peer-to-peer platforms. There has been a 600% increase in equity platforms between 2012 and 2013, raising approximately £28 million this year. There has been significant growth in debt-based security platforms of more than 370% in a year, raising almost £26 million over the past three years.

The crowdfunding market has huge potential to expand much further, and the UK has a strong global position in crowdfunding investment. Like the hon. Member for Huddersfield, I am keen to ensure that we maintain and grow that position. As such, the Government have taken a number of steps to support this burgeoning industry. We have invested £30 million in peer-to-peer platforms through the business finance partnership: £20 million has been provided to Funding Circle, which facilitates loans to small businesses, and £10 million has been provided to Zopa, which has facilitated £432 million of lending since its launch in 2005.

Our generous tax reliefs, granted through the seed enterprise investment scheme, are widely used by equity platforms. Some platforms have reported that 80% of investors are using that scheme, which provides an important incentive for investors to invest in smaller, perhaps riskier businesses, allowing them to grow.

[Meg Hillier]

One of the FCA’s considerations is separating the sector into debt crowdfunding and equity crowdfunding. I represent Seedrs, which is based in Shoreditch and does a great deal of good work in this area. The sector is very diverse, so will the Minister comment on whether the Government desire to keep that diversity while ensuring that there is regulation, without making false divides and pigeonholing the diverse crowdfunding industry into the categories of debt, equity or, indeed, donations? Donations are not within the FCA’s remit at the moment.

--- Later in debate ---

[Sajid Javid]

I thank the hon. Lady for her intervention. I am just about to address regulation; that might help to answer her question. This is also a good opportunity to pay credit to Shoreditch as an area that is heavily involved in crowdfunding. It is a growing space, and I would like to see it continue to grow.

We listened to the peer-to-peer side of the industry when it asked about regulation. We are working with the FCA to regulate that side of the industry and develop a proportionate framework. The framework has been well received by the peer-to-peer industry. Although the equity and debt security side of the crowdfunding market is already captured by some regulation, it is keen for a more tailored framework. The platforms’ view is that regulation provides them with credibility and helps to attract investors. They actively lobbied the FCA for inclusion in the consultation, and we supported them to achieve that goal.

Although we recognise the importance of regulation for the industry at the request of the platforms, it is essential that regulation be proportionate, as all hon. Members have said, if we are to ensure that it does not stifle the market’s growth. The Government therefore continue to work with the platforms and the FCA to ensure that the optimum framework is implemented—a framework that satisfies the industry, provides increased certainty to investors, and enables the crowdfunding industry to continue on its upward trajectory.

Before I close, I would like to say that having proportionate regulation is also key to ensuring that there are no unnecessary barriers to entering the industry. One of the industry’s successes over the past few years has been the very light barriers to entry. The Government and the regulator are keen to ensure that we have regulation that is proportionate enough to achieve the objective of protecting consumers, both borrowers and lenders, without creating barriers to entry that make the industry grow at a slower pace or stifle growth.

[Meg Hillier]

I welcome the Minister’s comments, because some years ago I called for regulation, but not to such an extent that it might put people off. Perhaps he can write to us if he does not have this information. NANA in my constituency is a café run by older women that was funded through donations on Kickstarter. Nana is located in former toilets on Chatsworth road in Homerton, and people fund it by buying a tea towel or donating a cheque. At the moment, the FCA is not considering the regulation of that sector. Does the Minister have any information on whether regulation of the donation sector will at any point be considered by the FCA or the Government?

[Sajid Javid]

As the hon. Lady kindly suggests, I will write to her and take a closer look at what plans the FCA does or does not have.

Oral Answers to Questions

Debate between Meg Hillier and Sajid Javid

Tuesday 29th January 2013 Commons Chamber

[Sajid Javid]

That is a shocking reminder of the economic incompetence of the previous Government and of the damage that they did to our economic base. The revitalisation of manufacturing is important for the rebalancing of our economy. Keighley in west Yorkshire has an important manufacturing tradition, and it is benefiting from the manufacturing advisory service and from the £2.7 billion of regional growth money that is going to the entire nation. Also, the announcement in the autumn statement of more money for UKTI will benefit the help that UKTI gives in Yorkshire.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

T3. Today, we saw the Government unveil their “pile ’em high, teach ’em cheap” approach to child care, hot on the heels of cuts to tax credits for poor working families and cuts to child benefit. When is the Chancellor going to unveil his supposed plans for a tax benefit for child care? What are the Government doing to support working families?