Oral Answers to Questions

Oliver Heald Excerpts

Tuesday 19th March 2024 Commons Chamber

[Jeremy Hunt]

We listen very carefully to what the Climate Change Committee says, and we are absolutely committed to net zero. In fact, a Conservative Government passed the law requiring Governments to commit to net zero. The hon. Gentleman will know that we have just become the first major industrialised country to decarbonise by more than 50% since 1990. As well as the costs, we are also mindful of the economic opportunities, which is why we are investing billions of pounds in our clean energy transformation.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

My right hon. Friend will be aware that my constituency, which has Cambridge to the north, has fantastic new industries such as Johnson Matthey in Royston, which is at the forefront of hydrogen. We have pharma companies to the south and some of the best film studios in the world in Hertfordshire. Is he consciously trying to back those successful industries of the future so that our children and grandchildren have fantastic opportunities for the future?

[Jeremy Hunt]

That is absolutely what we are trying to do. Film and TV is a good example here, as it has now become an offshoot of the technology industry. Films such as “Barbie” have been filmed in Hertfordshire but have the look of the Californian sunshine; they can withstand the British rain because of the use of high-tech devices that simulate Californian sunshine, even in my right hon. and learned Friend’s constituency. What he sets out is our absolutely our plan and we will stick with it.

Building Societies Act 1986 (Amendment) Bill

Oliver Heald Excerpts

2nd reading
Friday 19th January 2024 Commons Chamber

[Julie Elliott]

I absolutely agree, but the bureaucracy of Government sometimes gets in the way of things happening.

The Bill will help level the playing field, enabling building societies to compete more fairly with banks. It will support them to lend more money in a safe and secure way. Over half of building society lending—55%—goes to first-time buyers. Crucially, as the building society sector directs a greater proportion of lending to first-time buyers than banks do—there is a theme here—that will benefit more people looking to get on to the housing ladder.

Modernisation of building society legislation is long overdue. There are some archaic requirements about the way building societies fund themselves that put them at a competitive disadvantage compared with banks. Competition in banking is good for consumers, and given that building societies drive innovation, particularly in supporting first-time buyers, strengthening the sector is a great route to supporting aspiration across the UK at the same time as supporting a sector that works co-operatively and mutually. Building societies work for the benefit of their members up and down the country, engaging in a system of co-operative banking for mutual benefit, not for profit.

We are lucky to have three building societies in my Sunderland Central constituency: Newcastle, Yorkshire and Nationwide building societies all have branches in Sunderland, so I see at first hand the excellent support they give to members. It is incredibly important to my constituents to have a branch that they can visit to talk through any financial issues and receive the support they need face to face. I see the work of building societies as both a strong British tradition and a strong Labour tradition. I am delighted to have the support of the Co-operative party and the Building Societies Association, which represent both traditions.

The first form of a building society was in 1775, when Richard Ketley brought people together in a pub—in what is now the constituency of my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) —to put money into a shared fund, collecting regular subscriptions until there were sufficient funds to be able to provide a house for one of them. They drew names, very much like the drawing of names for a private Member’s Bill, to decide which member would be the next beneficiary; this continued until all members of the group had a house. The arrangement required trust, hope and a commitment by the community that no one would be left behind.

At that time, most building societies were created as terminating societies, which meant that the building society terminated trade once all its members were housed, so many were created, housed their members and then disappeared. That practice continued until 1980. By 1825—50 years after the first building society was created—over 250 terminating building societies were in operation, although it took until 1845 for the first non-termination society to be formed: the Metropolitan Equitable.

In 1836, the first legislation dealing with the industry was introduced, recognising building societies for the first time in this House through the Regulation of Benefit Building Societies Act. The legislation, along with previous court cases, led to the formal recognition of the rights of building societies as entities, resulting in a boom in the sector. By 1860, the number of building societies had risen to almost 3,000. In 1874, the Building Societies Act was passed—an historic precursor to the Building Societies Act 1986, which I hope to amend through my Bill.

The history of building societies has played an important role in the history of working people supporting each other in their mutual ambition of owning their own home, and in financial institutions serving the communities they represent. It is a trend that is even more prevalent today; as banks shut branches at an alarming rate, building societies are gradually taking a bigger share of branches in the community that remain open. Building societies now account for 28% of all high street branches in the UK, as opposed to only 14% 10 years ago. Although this may be caused by the closure of bank branches in the main, it shows a commitment to keep branches open by building societies, on which so many of my constituents rely. That face-to-face engagement, personal support and visibility is so important to many people. Branches are so much more accessible to those who have specific needs, especially in the digital age, where those with internet access often have the best opportunities and access to the best deals.

The original purpose of building societies embodies the famous phrase in clause 4 of the Labour party’s constitution, that

“by the strength of our common endeavour we achieve more than we achieve alone”,

with communities coming together to support each other and provide a strong and secure economic foundation for their collective futures. Families in Sunderland and across the country are struggling to find a secure home. Research by the Resolution Foundation shows that 80% of 25 to 34-year-olds would prefer to buy their own home than to rent. Home ownership is something many strive for, to provide financial security and ultimately to turn a house into a home. My Bill aims to support them in doing just that.

As I have said, it is quite clear that there is a housing crisis in this country, for homeowners and renters. We must at this point consider the damage done by the previous Prime Minister and her Chancellor, and the economic damage caused by her Government to the country, especially people with mortgages. I believe we also need reform in the rental sector to sort this out. The system is broken and is not working for people. The Bill will go some way towards making the housing ownership landscape easier for all.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

I support the Bill, as I hope do Members across all parties. It is good to see something that will, hopefully, strengthen the principle of mutuality. Does the hon. Lady agree that is an important principle to retain, and is she confident that her Bill will do that? Will it lead to a situation in which there is less desire among building societies to become banks?

[Julie Elliott]

I agree. Building societies were certainly part of my life when I was growing up. I got my first mortgage with a building society—a very long time ago, because I am getting old. The principle of mutuality is really important and does set building societies apart from banks. They are a very different model and serve communities in a much closer way than banks do.

By introducing welcome flexibility to a sector that does so much for first-time buyers and others, the Bill, although it does not directly provide provision for the building of homes or assure the retail customer of any extended product lines, does provide more room for the sector to work in, given that its use of finance is different from that of banks as it lends significant amounts of money to first-time buyers.

The building society sector is made up of 42 separate building societies and currently has almost 26 million members. It holds over £352 billion of mortgage assets and £313 billion of savings from individuals. It is not a small sector, but it is a sector that can grow.

Building societies face significant challenges. The Bill has the potential to unlock billions of pounds in additional lending capacity for them. It is estimated that for every £10 billion of new lending capacity, the sector could support an additional 20,000 mortgages. As we know, over half of building society lending goes to first-time buyers, so the potential impact of the Bill is huge. Since 2020, building societies in the north-east and Cumbria have lent £3.4 billion to first-time buyers. In the first nine months of last year, they supported nearly 4,000 first-time buyers—4,000 people who last year started their journey of home ownership, with all the financial security and benefits that brings. Increasing lending capacity is incredibly important in supporting hard-working people. It is essential to the UK’s future prosperity and desperately needed for economic growth.

I want briefly to run through the four clauses of the Bill and the impact the changes will have. It is not a standalone Bill; it amends the Building Societies Act 1986 by inserting new provisions. Clause 1 deals with funds that can be disregarded by a building society for the purpose of calculating its wholesale funding limit. The 1986 Act currently requires them to obtain at least 50% of funding from their members—from individual member deposits. The retention of this 50% minimum requirement ensures that the members remain the primary owners of building societies; it is what makes the sector so unique. The other 50% can come from external sources. This balance will not be changed, but there is a need to modernise the rules governing the sector in order for building societies to compete with banks on a level playing field.

The Prudential Regulation Authority and the Financial Conduct Authority engaged with the sector on this issue in 2021. The conclusion of the Government’s consultation recommended the exclusion of some sources of funding from building societies’ wholesale funding limit calculations, as well as the modernisation elements that come later in the Bill. The recommendations were never implemented, which is why the Bill is needed.

Clause 1 will disregard the following from the 50% wholesale funding limit: Bank of England liquidity insurance facilities, debt instruments raised to meet the minimum regulatory requirement for own funds and eligible liabilities requirements, and sums received under sale and repurchase agreements, with a view to complying with Prudential Regulation Authority rules.

These changes will not dilute the unique ownership model under which building societies operate. They will not increase the financial risk to the sector, because these liquidity insurance facilities, the debt instruments and the sale and repurchase agreement sums will be effective tools at a time of national economic crisis to ensure that building societies remain comfortably solvent and active in the interests of their members. These changes will help to future-proof building societies from external factors, economic shocks or periods of financial stress.

The specified facilities and so on will be described in a statutory instrument laid by the Government of the day, which will provide additional detail to allow the funding disregards broadly described in subsection (2) to be activated. The Bill is designed so that any Government at any given time can react to the needs of the building society sector, the Bank of England and the Prudential Regulation Authority. Enabling such changes in regulation to be made by means of secondary legislation will make the sector much more sustainable and able to react to changes in circumstance.

The changes presented in the Bill formed part of the Edinburgh reforms. All the responses to the Government consultation were in support of these changes. Prudent lending is crucial to the UK’s economic growth. Making this change will make building societies safe, more secure, and competitive in the long term, without affecting their status as mutuals.

Clause 2 is about modernisation. It amends the 1986 Act to explicitly allow the option of real-time virtual member participation in building society meetings. The change presented in the Bill aligns the sector with modernisations made to company law by section 360A of the Companies Act 2006. It will allow virtual attendance and voting as part of hybrid meetings, making it clear that nothing in the 1986 Act precludes this. Allowing hybrid meetings will improve accessibility and will hopefully allow engagement from members who cannot currently travel to meetings, enabling a broader cross-section of members to participate.

Clause 3 is another modernising clause. In simple terms, it will enable the Treasury to introduce increased flexibility for societies in relation to common seals and the execution of documents, in line with companies. It reserves to the Treasury the right to make provision by regulations in future, upon which further consultation in the sector would be usual.

Finally, clause IV defines the territorial extent of the Bill, which covers all four nations, and specifies that the Bill

“comes into force at the end of the period of two months beginning with the day on which it is passed”—

the standard period set out in legislation.

The Bill has no implications for public funds, as the impact assessment shows, and does not contain any provisions that will require a money resolution or a Ways and Means resolution.

Ultimately, the Bill does a lot of things in a succinct way. It will enable the modernisation of the building society sector and brings it up to date; it will put the sector on a more level playing field with banks; and it will potentially allow them more scope for supporting their members or future members. The Bill has overwhelming support from the sector, including from the Building Societies Association, the representative body of the sector, and its members. The BSA was founded in 1869 and is now the voice of the sector, representing 42 building societies and seven credit unions, and serving 27 million members up and down the UK.

The sector has helped 3.5 million people to buy a home with mortgages totalling over £375 billion. That accounts for 23% of total outstanding mortgage balances in the UK. The building societies that the BSA represents account for 19% of cash savings in the UK, and 40% of all cash ISA balances. Across the country, the sector employs 51,500 people, both full-time and part-time, working in around 1,300 branches in the UK. The BSA contributed greatly to the consultation process in 2021, and I am proud that it supports the Bill. I also wish to thank His Majesty’s Treasury for the support it gave me in preparing for today’s Second Reading.

The Bill will make building societies lend on a similar basis to banks, freeing up more money to help more working people in the UK. It has the potential to unlock billions of pounds of additional lending capacity at a time when so many people need it. I commend it to the House.

--- Later in debate ---

[George Freeman]

My hon. Friend makes an excellent point. I do not want to suggest that they are a total panacea; I am lauding and applauding Nationwide in Dereham because it is doing great work, but we need to make sure that the Bill is part of a broader approach. I hope that Treasury Ministers, thinking about the run-up to the Budget and looking ahead, will think about how we can encourage more choice, more competition and more presence from both building societies and banks. We need choice and competition in rural areas and other areas that are not well served as well as in areas that are.

The opportunity for rural renaissance was hit hard by the pandemic, as well as by the Ukraine war, with its impact on energy prices, Putin turning off the gas taps and the cost of living crisis that we have all experienced. It is in that context that the Bill represents a chink of light and has been hugely supported locally. I am delighted to have helped the hon. Member for Sunderland Central bring it to the House.

I want to say something about the banks, because over the 13 years for which I have been privileged to be the Member of Parliament for Mid Norfolk the closure of banks—a cause on which I remember fondly working with the former Prime Minister, my right hon. Friend the Member for South West Norfolk (Elizabeth Truss), in 2009—has gradually hit much of rural Norfolk. Everyone understands that we cannot have a hugely staffed bank branch in every village, but there is a contract at the heart of the state between citizens, Governments and operations such as banks that work under regulations. Banks are there to provide a service, too, and if they are not going to provide that service we need to look at who will.

[Sir Oliver Heald]

Given the number of people going into banks to do their business these days, it is not unreasonable that there should be some restructuring. I think the idea of banking hubs where all the main banks club together to ensure that there is a proper facility in a town or substantial village is a good idea. Does my hon. Friend think that it is important that they should take in cash and takings from small businesses, because they do not all do that?

[George Freeman]

I do. My right hon. and learned Friend amplifies exactly the point I was making. He is right that sparsely populated or rural areas will often require different solutions, in the same way as small rural schools require us to network and support them through multi-academy trusts. Similarly, we need to be imaginative in how we support cash access and banking and saving in rural areas. That touches on a deep problem that I have witnessed over many years: Whitehall tends to see these problems through an urban lens, and we need to think a bit about how rural areas often need a slightly different approach. I hope that the Bill and the cross-party support for it will help to encourage the Treasury to think about how we can do more to make this a moment to encourage greater choice and competition out in the market.

It is particularly sad that the banks have stepped back from the service I described over the two or three decades in which many of them have focused rather more on big, international and complex financial trading—the derivatives that led to quite a lot of problems we had back in the great crash. It is particularly sad in Norfolk given that it is where one of our great banks, Barclays, actually started, with the Gurney and Barclay families. The first bank had its roots in King’s Lynn docks. As people were required to pay duties, they required credit finance. I encourage anyone who has not been to King’s Lynn to go there, as it has a beautifully regenerated and refurbished Georgian dockyard, where they can see the plaque commemorating the first credit facility that became the great Barclays bank. It is particularly sad to see a bank such as Barclays step back from the place in which it started. Everyone has history, roots and heritage, and I am not such a romantic that I expect Barclays to put a bank in every Norfolk village, but I do think there is a responsibility on all these companies to make sure that the people they are there to serve are getting the service they need.

I wish, in particular, to highlight the importance of access to cash on high streets for small businesses, as it is becoming a serious problem. I know that the Minister understands it, and I am grateful for his acknowledgement of it. Across East Anglia, and I am sure this is happening elsewhere, we are seeing an increasing frequency of ATM raids, where JCBs are driven into banks and ATMs are taken out. However, that is the thin end of a bigger wedge, and many businesses in Dereham, Attleborough, Wymondham, Watton and Hingham are beginning to struggle with what to do with cash on a Monday morning, and many local people are struggling to find a bank they can access.

I know that many people wish to speak this morning, so I will not detain you or the House for too long, Madam Deputy Speaker, but I want to touch on mutuality, which my right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald) addressed earlier. We need to talk about, celebrate, champion and promote it more in this House. Some 300 years ago, we were writing the rule book for modern capitalism, defining the joint stock limited company and setting out the legal framework in English constitutional law, in common law, that drove the industrial revolution. We created limited liability companies, which allowed people to invest, raise money and back projects, and that was a key part of what this country did.

In an age of globalised capitalism and high technology, we have a challenge to make sure that capital does not become disconnected from the people who are providing the money, the savers, and the people who need the money to build businesses. For capitalism to work, we need a connection between money, the people who are saving it and the people who are borrowing it. The last crash in the City was a clear example of what happens when a disconnection is allowed to get to crisis proportions, whereby people do not know where the money that they have deposited is going and people who buy a complex derivative bond do not know what it is built on or what is underpinning it. We then have a serious problem. I am not suggesting that we go back to an agrarian revolution of trading wheat for a lift on a cart into Dereham, but I think there is a real issue in our economy in respect of connected capitalism.

Conservative Members in particular, as card-carrying advocates for the market, need to continue to champion and make clear the fact that markets work when they have values, connection and people at the heart of them. When markets are completely disconnected, they have no sense of the requirements of the people putting the capital in or taking it out, they do not value that connection and regulators do not understand the importance of the bond of responsibility between people who are trading with each other.

Mutuality is a proud tradition at the heart of the old labour movement, but it is also a proud tradition in civic conservativism—it is Burke’s little platoons. In a spirit of cross-party philosophising on this Friday morning, perhaps I can put some wind in the sails of the movement for mutuality. I would love to see more mutuality in different sectors, such as in finance, banking and housing, where, clearly, the building societies have been a great reform—I would argue that the housing associations have also been a great Conservative reform in housing.

There are many examples of where we could blow on to the embers of mutuality and encourage more of it in different areas, particularly in some of our social care sectors and health provision. It should not be a stark choice between private profit and public state. There is a whole third sector of mutuality— membership organisations that can deliver public goods, with cost reimbursement and important disciplines of financial control that are not necessarily either public sector, with all the efficiency challenges that go with it, or private sector, with all the incentives for high profit. There is a whole raft of organisations out there that we could be deploying better—in health and care, but also in criminal justice and a whole range of areas where the state has struggled in the past few decades to achieve its stated objectives.

[George Freeman]

My hon. Friend makes an excellent point and encourages me to wrap up my philosophising. He is right—I am not at all anti-profit; it is about what is done with the profit. One of the geniuses of mutuality is that the profit is recycled back in to pursue the interests of those who put in the capital in the first place.

[Sir Oliver Heald]

I am grateful to my hon. Friend for giving way again—I must not keep trespassing on the House’s time, because I have a Bill coming up later. Does he agree that if we look at pension funds and the possibilities of extending that sort of approach into social care, there would be a lot in the idea of mutuality? Also, on the point about profit, if those funds were invested in national goods, such as important national infrastructure and things of that sort, we could all benefit, but of course it has a financial aspect to it as well.

[George Freeman]

Again, my right hon. and learned Friend makes the point even more eloquently than I was trying to do, and he is right. I make this point in all seriousness: in so many areas, such as infrastructure, as he says, I dream of a world in which people can put their own savings into mutual vehicles. I would love people to be able to invest in the Cambridge-Norwich railway development corporation to fund the regeneration of neglected stations, or to create and fund investment vehicles. There is a whole wealth of instruments, vehicles and bodies rooted in that fertile period of 18th and 19th-century English capitalism, and Scottish capitalism, too—the enlightenment in Edinburgh was a big part of it. We could draw on those models better in pursuit of many of our public sector objectives.

As I wrap up, I will return to the more mundane and practical issues. This is an important Bill for updating the law and giving building societies a chance to get back to where they were in the early ’90s. They were responsible for something like 60% of the market; they have dropped down to 20%. We want to help building societies compete and get back to providing their core service to help those who want to save in building societies, not banks, and first-time buyers who, particularly in my part of the world in Norfolk, do not have high salaries and are looking for a safe and reliable local building society that could hopefully help them acquire a local house built for them, rather than for commuters moving into Norfolk. We need to think about the people who are driving public services and the rural economy. For first-time buyers, this is an important measure.

As the hon. Member for Sunderland Central said in introducing the Bill, increasing lending capacity is in itself a huge step forward. I think the figure is £10 billion of extra lending capacity, which will allow the provision of another 20,000 mortgages. That is hugely important, particularly for first-time buyers. I conclude by genuinely congratulating and thanking the hon. Lady for bringing the Bill forward, the Government for working with her and us on it, and all those who have helped. The Bill strikes a small but important blow and sends a key signal that building societies are back. We want to support and help them as part of a broader commitment to civic, small, local-platoon connected capital that can help people in communities up and down this country to save and withdraw money in the way they need, which will support the local economies on which the national economy is built.

National Insurance Contributions Increase

Oliver Heald Excerpts

Tuesday 8th March 2022 Commons Chamber

[Rachel Reeves]

Politics is about choices; the hon. Lady makes an important point. This Government are making the choice to increase taxes on ordinary working people and those who employ them, while on the Opposition Benches, we say that those who have benefited from the high energy prices should pay a bit more in tax to relieve the pressure on ordinary working people. We have a Conservative Minister who goes on the TV and radio and says that energy companies and the North sea oil and gas companies are struggling right now. Tell that to my constituents, the hon. Lady’s constituents and all our constituents who are struggling to pay the bills, while the profits keep coming in for the big oil and gas producers.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

Does the hon. Lady not agree that what she is saying is all smoke and mirrors? If a tax is put in for one year, that will not pay for the continuing costs over future years. What she is doing is simply misleading the public.

[Rachel Reeves]

If we raised those taxes now on North sea oil and gas companies, we could bring in money that could be used to relieve pressure now. I think that the right hon. and learned Gentleman’s constituents in North East Hertfordshire would be pretty pleased to have money off their bills this year, rather than the buy now, pay later scheme that we get from this Chancellor.

Why is the Chancellor not listening? The Conservatives’ rise in national insurance will hit almost 30 million working people. The TUC rightly argues that it is wrong to hit young and low-paid workers while “leaving the wealthy untouched”. The British Chambers of Commerce describes the Government’s policy as

“a drag anchor on jobs growth”.

The CBI put it bluntly and said that it will

“hurt a business’s ability to hire staff”.

On Sunday, the Federation of Small Businesses warned:

“Slamming small firms with a jobs tax hike will put the brakes on investment, upskilling and growth within communities most affected by the pandemic.”

The Chancellor must know what business organisations and trade unions are saying. We can only conclude that he is consciously disregarding their experience and views. We know from research by the National Institute of Economic and Social Research that job-intensive sectors will be disproportionately hit hard. The Conservatives have deliberately designed a tax hike that will hit people working in hotels, restaurants, transport, retail and wholesale especially hard.

--- Later in debate ---

[Mr Clarke]

I entirely agree with what my hon. Friend has said, and it is a reflection of the fact that we have taken sensible measured steps against what has been a recurring series of unprecedented challenges—the financial crisis, our exit from the European Union, covid, and now the backdrop of conflict in Ukraine. All these things have had a major impact on the world around us, but our focus has consistently been on supporting people to do the right thing and to protect their finances.

[Sir Oliver Heald]

Will the Minister give way?

[Mr Clarke]

I should make some progress, but I will take one more intervention.

[Sir Oliver Heald]

Does my right hon. Friend agree that the rise in the national living wage should not be ignored and is important in helping people at the bottom of the income spectrum? It is right to take such measures, but the Opposition’s asking for more money the whole time but not being prepared to put in any resource is a ridiculous smoke and mirrors job.

[Mr Clarke]

It is, and my right hon. and learned Friend is precisely right because, in the end, it is poorest who will lose out the most if we lose control either of our public spending or of inflation. To illustrate, a 1 percentage point rise in both inflation and interest rates would increase spending on debt interest by nearly £23 billion a year, and that threat is not a notional one. In January 2021 we spent £1.6 billion on servicing our debt, but in January this year we spent £6.1 billion. We cannot fund increases in spending on our health service and social care by increasing borrowing. Members will surely agree that to leave ourselves vulnerable at this time by further increasing our debt burden would be highly irresponsible. These are not always easy choices, but we will be the ones to reconcile the need to reduce our debt burden with the growing pressures on the state, and that means responsible choices about taxation.

Conduct of the Right Hon. Member for Uxbridge and South Ruislip

Oliver Heald Excerpts

Tuesday 30th November 2021 Commons Chamber

[Lee Anderson]

Thank you, Madam Deputy Speaker. I am going to apologise to the SNP, and we can clear this up straightaway. I apologise about the Gibraltar comments. I have spoken to some of my constituents who would like to see some of the MPs breathalysed next time they get off an aeroplane in Gibraltar. That will clear it up straightaway.

Now, all this nonsense from the SNP is in sharp contrast to our Prime Minister, who has got Brexit done by leaving the EU, delivered a £36 billion package to sort out the national health service and social care, delivered the fastest vaccination—

[Sir Oliver Heald (North East Hertfordshire) (Con)]

Does my hon. Friend not think it was a bit rich for the hon. Member for Motherwell and Wishaw (Marion Fellows) to start talking about public spending in constituencies served by Conservative Members when we have some of the poorest constituencies in the country voting Conservative these days because the working people trust this Prime Minister?

[Lee Anderson]

I thank my right hon. and learned Friend for his sensible intervention. I only have to look at my constituency, Ashfield, one of the poorest in the country, and at neighbouring Bolsover, Don Valley and Rother Valley—all those places have had millions of pounds of investment. The Prime Minister has also launched our plan for jobs, helping people get back into work. We are cutting taxes, we are boosting wages—we are helping working families.

I am going to stop picking on the SNP, because I want to talk about the massed ranks of the Labour party. I am struggling to see them at the moment. Despite pretending to be bothered, they could not be bothered to turn up today. They seem to think that there is a war raging in France at the moment and that it is acceptable for thousands of illegal migrants to cross our channel every single day. They really need to get a grip.

Another sign that the Labour party has lost the plot is that it wants to replace our armed forces with “human security services”—a shift from the classic armed forces to a gender balanced, ethnically diverse human security services tasked with dampening down violence. Imagine that, Madam Deputy Speaker: a peace-loving British tank—

VAT (Listed Properties)

Oliver Heald Excerpts

Wednesday 4th March 2020 Westminster Hall

[Craig Mackinlay]

The hon. Member shows his great wealth and breadth of experience of international VAT matters, and I stand educated.

I want to do everything that I can to help preserve our great medieval towns. Listed properties are not grand ancestral piles; a huge majority are very modest properties that are owned and loved by normal people. Private listed property owners are protecting the vast majority of Britain’s built heritage out of their own pocket, but the costs for doing repairs and renovations have risen sharply in recent years.

[Sir Oliver Heald (North East Hertfordshire) (Con)]

Does my hon. Friend agree that one of the great challenges with climate change and pollution is tackling some of the problems with the heating and insulation of such properties? If they are listed, there are features that have to be protected in the process, so it is an expensive business. It is very much in the national interest that these changes should be made, and it is only right that the Treasury should consider whether previous concessions could be reintroduced.

[Craig Mackinlay]

My right hon. Friend makes a very good point. There have been certain schemes over the years for wood pellet-type boilers, and grants have been available, but he highlights the unique features of older properties. It is often not feasible or possible to put in a cheap, efficient gas boiler, which other property owners might be able to do.

I turn to the obvious desire to insulate homes and make them more energy efficient. It is a very reasonable desire, because a lot of listed properties are draughty and old and do not have modern insulation. They are expensive to heat, which adds to the costs of being a listed property owner.

[Sir Oliver Heald]

My hon. Friend will be aware that North East Hertfordshire is one of the constituencies that has a high number of listed properties, many of them modest. Does he agree that the situation in urban areas is different from that in rural areas? If someone lives in a rural area with a significant number of listed buildings, there has to be some sort of level playing field to try to help them make the relevant changes.

[Craig Mackinlay]

My right hon. Friend makes a perfect point about country living, as opposed to living in towns, because cheaper piped gas is often not available. People might have Calor-style units in their garden, or they might rely on solid fuels such as coal. We had discussions, dare I say, with the Government last week and advanced various measures that I cannot say I fully agree with at this time.

In 2012, we got to the point where the zero VAT rating for authorised alterations to listed properties was removed. The owners of 500,000 listed buildings across the country, 98% of which are privately owned, then suffered a potential increase of 20% in anything that they do to keep their properties in a good state of repair. As listed property owners often say, an individual never really owns a listed property, but is merely borrowing it.

Before the 2012 Budget, the zero VAT rating was available as long as people had applied for the proper listed property consent with the local authority. As hon. Members know, such consent is often costly to obtain and requires input from specialists, including architects and building control, the navigation of the local planning system and a variety of interpretations by conservation officers. All of that is on a scale that is wholly different from that of people who do not live in listed properties, and such requirements all add costs—even before having the bespoke works required.

The all-party parliamentary group on listed properties, of which I have been the chairman, is currently being re-established. It has evidence that the addition of VAT reduced the number of recorded works being carried out to protect and maintain listed properties by some 30% in the first four years, between 2012 and 2016. There was a notable and recorded drop in applications for proper conservation works. One can only guess what was happening. Were people simply not bothering to go through the process? Owing to the extra cost, were they simply deciding to make do with where they were? There was a full 75% drop in applications over just three years, subsequent to the change in the VAT rules.

These works will be of ongoing economic benefit, often creating a new home where one did not exist before or converting an older property into a business premises. They are positive goods that would perhaps take pressure away from new builds on green spaces. I have spoken to many listed property owners who face financial hardship. Many have been forced to sell their home as a result of costs increasing by 20%. It has to be said that a tax on listed buildings is not a tax on the wealthy, but a tax on attempts to protect our cultural heritage.

I secured the debate to join thousands of listed property owners in calling on the Government to introduce a form of VAT relief. Preferably, let us go back to where we were: a reduction from the 20% rate back to zero, which would be a great place to be. That will be possible in the post-Brexit world, but we are currently in our implementation period, so 5% could be achieved at the Budget next week.

Maintaining listed buildings has a lot more in common with other kinds of building work that has a lower rate of VAT. Some energy-efficient measures qualify for the 5% rate—obviously a restriction was introduced recently, which seemed rather perverse. Converting houses into flats, and renovating empty properties that have lain empty for two years qualify for a lower VAT rate of 5%. The Government and Treasury quite rightly want to encourage bringing such properties into use, and that nudge effect is advanced through the lower VAT rate.

Of course, the biggest anomaly of all—a correct anomaly, in my view—is that we have had a zero VAT rating on new builds since we became a member of the EU. There is a long history to this type of debate, going back to the 1940s. We had the Town and Country Planning Acts 1944 and 1947, which implemented the listing system that we know today. Even back then, the Government knew that they were imposing upon listed property owners a new range of probably unwelcome regulations, and that they had to give something in return. The something in return was a zero VAT rating or, before 1972, sales tax exemptions for this type of work. It is essential that we have a lower rate of VAT on listed properties, because we want to give people the opportunity to make the necessary improvements to this country’s built heritage.

In the 2012 debate—that year’s Budget did not go down too well, because there were quite a few VAT measures in it—the then Prime Minister, David Cameron, said that the reason for the change was to prevent an exemption for a

“big swimming pool in a listed Tudor house”.—[Official Report, 18 April 2012; Vol. 543, c. 319.]

That was a fairly thin argument, because I do not think it was taken up by too many of the 500,000 listed property owners. If such behaviour was going on, we could have exempted that from the zero VAT rating in isolation.