Cost of Living: Fiscal Approach

Peter Grant Excerpts

Wednesday 25th May 2022 Westminster Hall

[Peter Grant (Glenrothes) (SNP)]

I am pleased to begin the summing up for this debate, Mr Twigg. I commend the hon. Member for Barnsley Central (Dan Jarvis) for securing the debate and for his introductory remarks. Given that he devoted a lot of his speech—a number of other Members have mentioned this—to the debt we owe public service workers, I hope I may crave Members’ indulgence for a few seconds to give a shout out to one public sector worker in particular. Dr Fiona De Soyza retires today after 37 years as an NHS doctor—31 and a half years at Leslie Medical Practice in my constituency. She is not planning to retire from the 38 years she has served so far as my wife. Obviously, I would rather be there, but my duty means that I have to be here.

The Bank of England Governor, Andrew Bailey, told the Treasury Committee that we should expect “apocalyptic” food price rises before the end of the year. Archie Norman, the chairman of Marks & Spencer, said that food prices could rise by 10% this year, on top of the increases that we had already started to see last year. There are warnings that schools will have to cut the size of school meals to keep their budgets under control. The Institute for Fiscal Studies has reminded us that there is not a single rate of inflation; everyone has their own rate of inflation, and the poorer someone is, the bigger that inflation rate is. That is because, the poorer someone is, the more of their household money, by necessity, is spent on the things that are now spiralling out of control. Someone on an MP’s salary does not have to spend three quarters of their money just to keep themselves and their family fed and warm. Someone on minimum wage—or below—does.

At the same time, the number of billionaires in the United Kingdom is the highest it has ever been. The wealthiest people in the United Kingdom saw their personal fortunes increase by 10% last year. We are very definitely not all in this together. While I have no question about the sincerity of all those who have spoken against Government policy today, I do need to gently point out to Labour colleagues that right now their party in Scotland is doing deals with the Tories, all over Scottish local government, to help the Tories have an influence that the voters of Scotland wanted to deny them at the ballot box in the first week of May. When we are talking about the iniquities of this Government at a UK level, why are some parties in Scotland putting the Tories into power to run, and all often probably ruin, local government services?

The Government’s response so far has been nothing short of shocking. First, they pretend it is nothing to do with Brexit. They say that it is partly caused by the war in Ukraine, and that there is no doubt that covid has had a significant impact. Then somebody called “global” seems to get the blame for everything the Government get wrong these days. We have got a Chancellor who increases the burden of taxation and thinks it is a tax cut; a Chancellor who thought it was silly to give money to people who are poor to help them pay their bills; a Chancellor who tweets figures showing that the economy is shrinking and says, “Isn’t it good that the economy is growing?”; a Chancellor who increases national insurance, knowing perfectly well that it will hit people who work for a living and benefit people who are able to make a fortune from investment and property ownership. I wonder who the Chancellor knows who might benefit from that.

Valid points were made about the inadequacy of mileage rates paid to a lot of public sector workers, but people who work in the private care sector very often do not even get those—they often have to pay their own mileage and drive on their own time between appointments. It is now widely leaked by the Government that there is an emergency package of support coming. We might even see a U-turn on the windfall tax, not because it is morally the right thing to do, but because they need something—anything—to keep the Prime Minister with his glass of beer off the front pages for the next couple of days. What an example! What a perfect metaphor for the utter iniquity of this Government that they will not spend money to help people because they need it, but they will spend public money on trying to keep the Prime Minister’s misconduct off the pages of the newspapers.

What could they be doing? The windfall tax has been mentioned, and I am quite happy to support that in principle—not just for oil and gas companies, as has been mentioned, but for anybody who has made huge profits through good luck during the last two desperate years. The Government could follow the example of Germany, which has cut fuel duty five times as much as the United Kingdom. It is giving a €300 payment to everybody, plus €100 for every child. Ireland is giving a €200 energy rebate for everybody—not a loan that they have to pay back, but a grant. Belgium cut VAT on energy to 6%. That was something the Government told us we were not allowed to do when we were part of the European Union. How come Belgium was able to do that?

Scotland, without even the full powers of a normal nation, will be increasing the Scottish child payment by the end of the year to £25 per child. That has been described by the Child Poverty Action Group as a “game changer”. The Scottish Government are currently spending more than £360 million above Barnett funding on benefits, including through seven new benefits that do not exist anywhere else in the UK. The Scottish Government were not set up to spend Scotland’s money fixing the failures of the United Kingdom Government, but all too often, that is what they are having to do.

Poverty is not an essential part of today’s life. Poverty is not inevitable in the United Kingdom today. The United Kingdom boasts about being one of the wealthiest nations—or collections of nations—anywhere in the world. Scotland certainly, and probably the United Kingdom in its entirety, is self-sufficient in energy. We could be self-sufficient in food if the food production and distribution system had not been so destroyed over the years. Energy companies are now warning that half of their customers will not be able to pay their bills by the end of the year. That is not essential; it is a deliberate political choice by a Government whose days are up.

--- Later in debate ---

[The Financial Secretary to the Treasury (Lucy Frazer)]

It is a pleasure to serve under your chairmanship, Mr Twigg. I thank the hon. Member for Barnsley Central (Dan Jarvis) for organising this important debate, and all Members for their valuable contributions.

Hon. Members have set out the concerns and struggles of their constituents. I assure hon. Members and their constituents that the Government absolutely recognise that families up and down the country are facing an unprecedented cost of living challenge at the moment. We understand that the cost of food is rising and that the cost of goods going up is hitting people’s pockets. It would be wrong of me to pretend that these issues are going to subside. We all know that the next few months are going to be difficult. I know that people are really worried. It would also be wrong of me to suggest that the Government can wave a magic wand and that there is some quick fix that no one has thought of to reverse all the price rises that are happening at the moment. These are global trends and they are driven by global challenges.

We recognise that these are serious issues facing our society, as the hon. Members for Barnsley Central and for Merthyr Tydfil and Rhymney (Gerald Jones) said. We are doing a significant amount. We have already done a significant amount to help the many families that hon. Members have spoken about. We have provided £22 billion of direct support to families grappling with the cost of living pressures, including the £1,000 that people on universal credit will get or the £1,000 that people on the national living wage will get, through the changes that we have made to those measures. Our support includes £9 billion of energy support to ensure that fuel duty is cut, and the council tax rebates of £150 for band A to D payers in England, as well as the warm home discount, which we have expanded to £150, and the £1 billion of household support that people are getting through their local authorities.

I recognise that it is important not just to talk about statistics or investment in global terms; we recognise that the cost of living pressures are affecting individual families. I listened very carefully to the hon. Member for Barnsley Central when he spoke about a public sector worker on universal credit who was struggling. I emphasise that a low-earning family with one adult working and two children under five will be £1,610 better off a year as a result of the recent changes we have made to national insurance contributions and the universal credit taper rate.

[Peter Grant]

Has the Minister bothered to work out how much of that £1,600 has disappeared in increased food and fuel bills since the announcement was made?

[Lucy Frazer]

Obviously, different people will experience different rises in the cost of living, depending on their circumstances. We absolutely recognise the rising cost of living, which is why we have already made a number of changes.

I will move on to the point that the hon. Member for Barnsley Central made about public sector pay, as did the hon. Members for Reading East (Matt Rodda) and for Glenrothes (Peter Grant) by analogy. I recognise the important work that public sector workers have been doing during the pandemic and in the ordinary course of business, helping to support our world-class public services. Hon. Members will know that last year’s spending review confirmed that public sector workers will see pay rises across the whole spending review period from 2022-23 to 2024-25. Pay for most frontline workforces, including nurses, teachers, the armed forces and police officers, is set through an independent pay review body. We will consider all recommendations from pay review bodies this summer, once those final reports are submitted. I also point out that many public sector workers will benefit from the increase in the national living wage that I mentioned. Two million people, many of them public sector workers, will benefit from that.

The approved mileage allowance payments, which the hon. Members for Barnsley Central and for Bolton South East (Yasmin Qureshi) raised, reflect all the running costs of a vehicle, including fuel and other vehicle expenses, such as servicing, insurance and depreciation; fuel is only about a third of the cost included in the rate. It is up to an employer what expenses they pay their employees. They do not have to use the allowance payment amounts, and can instead agree to reimburse the actual cost incurred. Individuals are not liable to pay tax on the difference as long as they can provide evidence of the expenditure. As with all taxes and allowances, we keep the rate under review.

The hon. Member for Barnsley Central talked about NHS car parking charges. I am pleased that he recognised that NHS staff working night shifts benefit from no car parking charges, as do disabled people, frequent out-patient attenders and parents of sick children staying overnight, but I am happy to look into the matter further with officials.

I listened carefully to the ideas raised by the hon. Members for Glasgow East (David Linden), for Kingston upon Hull West and Hessle (Emma Hardy), and for Easington (Grahame Morris). I have previously spoken to the hon. Member for Westmorland and Lonsdale (Tim Farron) about the housing issue he raised. I valued that conversation, and I thank him for raising those points again.

The hon. Member for York Central (Rachael Maskell) said that Labour restored people’s dignity, but the latest data shows that, compared with 2009-10, there are now 2 million fewer people in absolute poverty. The Chancellor, the Government and I are very proud of that statistic. I am very proud that, when Conservative Governments are in office—particularly this one—we have record unemployment, which allows people to earn a wage and support their families, whereas every single Labour Government has left office with unemployment higher than when they entered it.

I have set out a number of the measures that we have already taken to support people with the cost of living, which we absolutely recognise. We are also taking steps to boost the UK’s economy. I have not got time to go into all the measures today, but hon. Members know that the Chancellor has set out a long-term plan to boost the economy through capital, people and ideas, building on the progress that we have already made in in this area.

Taxes on Motor Fuel

Peter Grant Excerpts

Monday 23rd May 2022 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair, Ms Elliott. I thank my hon. Friend the Member for Gower (Tonia Antoniazzi) for her excellent introduction, which she delivered with panache, as always. I am sure she pleased the people who signed the petition by covering many of the issues they want to raise.

This is an important debate for my constituency. We have made vehicles in Ellesmere Port for more than 50 years, and we have one of the few remaining oil refineries in the country. Most importantly, people in my constituency overwhelmingly depend on private transport to get to work. Some 78% of people in Ellesmere Port and Neston use a private motor vehicle to get to work, which is about 15% above the national average. That is not just a reflection of our proud industrial heritage; it is probably more to do with the lack of a regular and affordable public transport service in the area.

Although fuel duty and VAT are the same at whatever pump in the country someone fills up at, their impact differs depending on where they live and what they do for a living. Shift workers are far less likely to be able to use public transport to get to work. To be honest, people with jobs that finish after about 6 pm in my constituency are lucky to find a bus to take them home. If a person has children they need to place in childcare or school on their way to work, or pick up them up from afterwards, they may well need a car. If they are in a job that requires a large amount of driving, that of course makes a huge difference to how much they have in their pocket at the end of the week. Taxi drivers are a particularly affected group, but as my hon. Friend the Member for Newport East (Jessica Morden) said, so are care workers. Of course, the Minister will have some reflections on that from her previous role.

Nor should we forget about the impact that fuel has on other costs that we as taxpayers have to meet, including police cars, ambulances and school transport. There are literally millions of miles travelled every day that end up paid for by the taxpayer. The cost is quite often met by local councils, which do not have a say in the amount of fuel duty raised in the first place. As the hon. Member for North Ayrshire and Arran (Patricia Gibson) rightly pointed out, fuel costs also play into wider inflationary pressures, particularly on food and other services that are delivered.

What someone does, and where they live, can make a huge difference to the impact of fuel duty, and I am afraid that that extends to some inexplicable variations in the price at the pump up and down the country. It might only be a couple of pence most of the time, but that can quickly add up, and I wonder why the average price is a couple of pence more around Ellesmere Port than it is in various other parts of the country, given that we are on the doorstep of a refinery.

On a related point—this is something my hon. Friend the Member for Gower mentioned earlier—the RAC Foundation has said that the 5p cut in fuel duty, which was introduced by the Chancellor in March, led to an average fuel price reduction of 3.3p per litre for unleaded and 2.6p per litre for diesel. In their defence, the representative bodies for the retailers claim that their members passed on the cut in full, but that prices were rising at the time. It might not be right to lay the blame entirely at the door of the retailers, but it is very difficult to get the level of transparency we need.

[Peter Grant (Glenrothes) (SNP)]

Does the hon. Gentleman recognise that the other issue is that retailers often have no choice as to which distributor or wholesaler they go to? If the wholesaler does not take any of the 5p duty cut off the wholesale price of fuel, the retailer is given a double whammy: they cannot cut the price, but they get flak from drivers who expect to see 5p coming off a litre of fuel.

[Justin Madders]

The hon. Member is right, and it goes to my point about needing greater transparency. It can often be difficult to know exactly where the 5p has disappeared to, but I think it beyond contention that our constituents are not seeing the full benefit of the fuel duty cuts. The key question that we need to ask is how these measures will help to put cash back into people’s pockets. The reason this debate is so important at the moment is because we have the biggest squeeze on living standards in a generation, and the steps that the Government have taken so far are woefully inadequate.

The rise in prices across the world is obviously largely out of our hands, so it is inevitable that people will look at what the Government can change to ensure that there is some respite for people, and that help reaches those who need it most. We have already discussed the windfall tax at length in this place, so I will not repeat the arguments on that, but it is the fairest and most effective way to get help to those who need it most in a fairly quick manner. As we have seen already, although reducing the cost of fuel can help, there is a risk that such a reduction might not be passed on in full, and that it will benefit only those who have a car in the first place. In the context of wildly fluctuating oil prices, those savings may not be felt by people at all.

On fluctuating oil prices—or, to be more accurate, increasing oil prices—we should remind ourselves that higher prices at the pump mean that the Government have an increased income from VAT. Research has indicated that because of the rising oil price this year, the Government’s VAT receipts on pump sales have gone up by an average of 7p per litre for petrol and 9p per litre for diesel, which is far more than the 5p per litre that has been taken off. Fuel duty cuts might be a sleight of hand that creates a good headline and the illusion that the Government are taking decisive action, but it could be that those cuts are being made up for by increased revenue elsewhere—revenue that comes out of the pockets of the same people who are meant to benefit from the cut in the first place.

This debate cannot really happen in isolation and away from the influence of the Treasury, and we must be realistic and acknowledge that it will always be the primary driver of these decisions, given the huge amount of revenue that fuel duty brings in. Sooner or later, however, the debate must move on from whether we take off 2p here or add 2p there, because if we are to meet our net zero targets and move away from reliance on fossil fuels, we must also move away from reliance on taxing those fuels that we currently tax. At the heart of this is a complicated dilemma about moving to a similar fuel duty system for electric vehicles, which may disincentivise people to change. If instead we decide to tax people by the mile—I know that has been suggested in some quarters—that may disproportionately impact some communities, as well as removing one of the major reasons for investing in an electric vehicle in the first place.

There is also the question of whether the infrastructure is in place to make reliance on electric vehicles realistic. I certainly see that in my area there is a long way to go in order to get a comprehensive charging structure in place. We know that many properties—some say at least one third, and possibly even higher—are not, and never will be, suitable for home charging. With the differential VAT rate for charging at home and at a filling station, that is a major inequality that needs addressing. I would suggest that it needs addressing now, before the tax taken from it becomes so high that it becomes impossible for us to wean ourselves off that too.

Those are debates for the future, however, and we now need more effective and rapid ways of putting more money into the pockets of those who need it the most. As I have said, the best proposal I have heard so far is the windfall tax, and with this being a debate on the cost of living crisis, it is very disappointing that not one Government Back Bencher has come to speak about this issue. It shows, I am afraid, just how out of touch the Conservative party is.

[Peter Grant (Glenrothes) (SNP)]

I am pleased to begin summing up this debate. Like the hon. Member for Ellesmere Port and Neston (Justin Madders), the most striking thing about it is that out of around 350 Conservative Members of Parliament, not a single one wants to come and defend the Government’s woeful lack of action on this element of the biggest cost of living crisis that most of us have ever seen—hopefully it is bigger than any that most of us will see again.

I recognise, the SNP recognises, and the Scottish Government certainly recognise, the need to move away from our dependence on fossil fuels. The Scottish Government’s record on the promotion of renewable energy stands up to comparison with anyone else in the world. It is a record that I am proud to have played my own tiny part in, as a former council leader. The simple fact remains, however, that for the foreseeable future we will still depend on petrol or diesel-powered vehicles for a lot of our everyday travel, public transport, and the delivery of goods on which our economy and communities depend. We cannot simply say that the way to deal with crippling increases in the prices of diesel and petrol is to stop using our cars, buses or trains that rely on diesel or other fossil fuels.

There is a massive contradiction here, in that Scotland remains one of the world’s largest producers of oil and gas—we are one of the most fuel-rich countries in the world. How can it be that a supplier country gets poorer when the price of the commodity goes up? Somebody, somewhere, is ripping Scotland off, and I have a pretty good idea as to who that might be.

How can it be, as the hon. Member for Ellesmere Port and Neston asked earlier, that his constituency, which is beside a major oil refinery, has to pay more for fuel than, for example, parts of London? The hon. Member should try looking at the price in the places where fuel is actually produced, and sometimes at the places where it comes ashore, because people in a lot of the more remote parts of Scotland get a double, or even triple, whammy. They have higher fuel prices to begin with, which is ridiculous when they are closer to where the fuel is produced than any of the rest of us, and because they are in sparsely populated areas, they must travel longer distances to get to school, work or a doctor’s appointment. Things that in a city such as Glasgow, London or Edinburgh can be done by walking half a mile, can be a two-hour journey in some parts of the highlands of Scotland. Although the roads might be in a decent condition, they are certainly not designed for fast, constant-speed travel, so fuel consumption per mile on those roads is vastly greater than on roads in more densely populated areas.

That might be why it is noticeable how many dark colours there are towards the north end of the map on the page of the petition. My constituency is uncharacteristically dark—the last time I checked, Glenrothes and central Fife had 224 signatories. My constituents do not tend to get all that excited about Parliament’s online petitions, so that number is quite high. I guarantee that I have had at least that number of emails—probably more—about the fuel-price crisis, and the general cost of living crisis in just the last few weeks, never mind in the months that the petition has been live.

It is important to emphasise that a massive increase in the price of fuel means a massive increase in the price of everything else. Almost everything that we buy in the shops was delivered in vehicles that rely on fossil fuels. Although I welcome the much greater use of electric vehicles by some distribution companies and hauliers, and the attempts by some to introduce hydrogen fuels, the vast majority still rely on diesel to get food to supermarkets. If hauliers cannot afford fuel costs, prices on supermarket shelves will go up even more than before.

[Helen Morgan (North Shropshire) (LD)]

Does the hon. Gentleman agree that some hauliers are unable to pass increased fuel costs on to supermarkets, which have so much purchasing power, and are at risk of going out of business as a result? That puts our supply chain under pressure and threatens jobs in areas where hauliers are large employers.

[Peter Grant]

The hon. Lady is absolutely correct. Of course, if hauliers manage to pass those price rises on to supermarkets, the supermarkets get together and pass them on to the customers, which adds even further to inflation. The general answer to that point is that the United Kingdom’s food-distribution system is broken beyond repair. This is not the debate in which to discuss that, but the last few years have made it clear that that system is not fit for purpose and needs to be changed radically and quickly.

The Government’s response to the petition contains all the usual platitudes, and I look forward to the Minister repeating them when she gets to her feet. The response points out that the Government do not

“set the prices paid at the pump… The degree to which petrol pump prices respond to changes in crude oil prices is a commercial matter.”

Why? Is it not time that the Government started regulating the price of fuel at the pump, even temporarily, in the same way that they regulate—not all that effectively—domestic electricity and gas prices? If we know that somebody, somewhere is profiteering, is it not time for a regulator that can insist on the kind of open-book approach that the hon. Member for Ellesmere Port and Neston mentioned, so that we can identify where the profits have been made, and what parts of the supply chain are struggling? The few remaining independent fuel-station operators in the UK are seriously struggling. I do not think they are the ones that are profiteering, but somebody quite certainly is.

The Government’s excuse on the rate of VAT is extraordinary. Their response states that exceptions to the standard rate are possible, but

“these have always been limited by both legal and fiscal considerations.”

What legal considerations are those? The Government might have tried to use the excuse of “the Europeans won’t let us do it”, but as the hon. Member for Gower (Tonia Antoniazzi) pointed out, the Europeans seem to let everyone else do that, and it was just Britain that could not find a way of doing so within the limits of European law. We are not in the European Union any more. What has happened to taking back control? It is not Europe’s fault now—it never was—and the Government can no longer pretend that it is. They cannot pretend that it is anybody’s fault other than their own.

The Government also point out that there are “fiscal considerations”. We know that, but where were those fiscal considerations when the Government decided to spend massive amounts of public money on a scheme to deport people to Rwanda? To date, that scheme has not deported a single person—thank God. The Government cannot even tell us when—if ever—that scheme will have its desired impact of disrupting the business of people trafficking across the channel. When things will get the Government a headline on the front page of the Daily Mail, they can find the money, and “fiscal considerations” are suddenly not that important.

In January 2020, before the start of the pandemic, the average UK price for a litre of unleaded petrol was slightly more than £1.27 per litre, and the Government took 79.1p of that in tax. In April 2022—after the Government’s very generous new fuel duty price—the typical price was up to 161.7p per litre, and the Government’s tax take was 79.9p. Despite all the crowing about cutting fuel duty, the Government are taking more tax from the customer than before. As my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) pointed out, a significant part of the tax on fuel is VAT, which is a percentage of the net cost plus 20% of the duty added back on again.

Prices have now got so bad that energy firms are warning that 40% of their customers could plunge into fuel poverty before the end of the year. This is in the week the Chancellor tweeted that it was nice to see the economy still growing—in that tweet he copied numbers that told us the economy was shrinking. That was in National Numeracy Week, which I thought was quite appropriate. The Tories response to the general cost of living crisis seems to vary from, “Get a second job,” to, “Learn how to cook.” How utterly offensive that is to my constituents—to all our constituents.

It never takes the Government long to come up with a scheme that they think will get the headlines they want in the newspapers they want. If the political will was there, they would have already come up with a scheme. Whether that was a duty or a VAT regulator on a sliding scale, so that it reduced as the underlying price increased, they would have found ways to either permanently or temporarily reduce the tax burden on the fuel at the pump. They would have started making noises about regulating the price of fuel in the same way that they regulate the price of domestic electricity and gas. I bet if the Government started seriously to talk about regulating the price of fuel at the pump, the industry would sort itself out pretty quickly. The one thing that the big oil companies do not want is the public being allowed to see just how much of a profit they make at the expense of our hard-pressed constituents. They are allowed to make those excessive profits with the consent, and possibly even the connivance, of a Government that simply do not care.

--- Later in debate ---

[Helen Whately]

The hon. Member comes to exactly the next point that I was going to make in my speech. The petition called for a VAT reduction, as did the hon. Member for North Ayrshire and Arran (Patricia Gibson) when she intervened. Given that VAT is applied on top of fuel duty, the 5p duty cut on petrol and diesel also results in a VAT reduction. It effectively translates to a reduction of 6p per litre overall. That said, a VAT reduction is not generally the best way to provide help with fuel costs, particularly because it would not help many businesses, many of which already claim back VAT paid on fuel for business use. About 40% of fuel is used by businesses. If we had just focused on reducing VAT instead of fuel duty, that would have left businesses more exposed to fuel price increases, in turn impacting the cost of goods for consumers. Making the focus fuel duty rather than VAT means that businesses, as well as consumers, will benefit from that tax cut. Also, by helping businesses with the fuel duty cut, we ensure that the duty cut benefit flows through to people who do not own cars, as well as those who do, because of the importance across the supply chain of the cost of fuel.

[Peter Grant]

Did I mishear the Minister? Is she trying to persuade us that if we cut VAT on fuel, it will lead to an increase in costs to the customer somewhere else? Is that what she is trying to say?

[Helen Whately]

That is not what I just said; I said that if we particularly focused on reducing VAT on fuel, that would not result in a saving to many businesses, because businesses can claim back VAT. By cutting fuel duty, we are benefiting businesses and the whole supply chain, as well as consumers who buy fuel.

DRAFT ALTERNATIVE FINANCE (INCOME TAX, CAPITAL GAINS TAX AND CORPORATION TAX) ORDER 2022

Peter Grant Excerpts

Tuesday 17th May 2022 General Committees

[Peter Grant (Glenrothes) (SNP)]

It is a pleasure to serve on this Committee under your chairmanship, Sir Edward. I thank the Minister for his opening comments. I commend the comments of the hon. Member for Hampstead and Kilburn, with which I would almost entirely associate myself.

I have a few brief comments. I support the proposal, which moves in the right direction. There may be some other steps that could have been taken, as has been referred to. One thing that still grates with me a wee bit is that we talk about conventional and alternative finance. I think, if I was a Muslim, I would not think this was alternative finance—it would be entirely conventional. It may be different from the way we have traditionally done things in Britain, but it is becoming part of a different convention. I do not like terminology that appears to imply that one way of doing things is better and more intrinsically valuable than another.

Whether it is an individual or someone operating as a business, the fact that somebody follows the Muslim faith should never be a barrier to their being able to live their life to the full. There are a number of businesses in my constituency run by devout Muslims that make a significant contribution to the local economy and community. It is only right and proper that if they need to raise finance to expand their business or get over cash-flow difficulties, they should be able to do that in a way that is compliant with their deeply held religious beliefs and that does not put them at a disadvantage for taxation, consumer protection or regulatory purposes, compared with somebody who chooses a different method of financing. This order is another step in that direction, but there are still areas where Muslims and others who choose to follow Sharia law find themselves at a disadvantage. If there is no justification for that, we should legislate the disadvantages out of the system as soon as possible.

For that reason, I hope the Minister can tell us when similar steps will be taken in relation to stamp duty land tax and innovative finance individual savings accounts—ISAs. I am a great fan of ISAs—I have had them for almost as long as they have existed—but I did not realised until today that if I had been a Muslim, I probably would not have been allowed to do that because of the way they are set up. If they are deemed to be paying interest, it is prohibitive for somebody who is a Muslim. If there are other ways that ISAs can be set up to allow Muslims and other followers of Sharia law to participate in them, I do not see why we cannot change the law to allow that to happen.

If there were significant objections—if changes to the legislation would undermine the intention behind it—that would be a different matter, but I have not heard any. I have not heard any suggestion that carrying out our proposed reforms to SDLT would in any way go against the purpose of the legislation. If it allows the legislation to achieve its stated purpose while making it fairer for everybody, we should get on and take those steps.

I look forward to seeing further draft orders in the near future to address the issues I have raised, and which were picked up in the consultation responses to this order. I am happy to support this order, and I look forward to more on a similar theme before too long.

Safe Hands Funeral Plans

Peter Grant Excerpts

Thursday 12th May 2022 Commons Chamber

[Peter Grant (Glenrothes) (SNP)]

I commend my hon. Friend for securing this debate. As an example of the kind of advertising that the company has been doing, it promised that customers’ money would be kept by an entirely separate and independent company. Is she aware that the trustees set up a company called SHFT Properties Ltd and that every single person who has ever been a director of that company was also a director of Safe Hands Plans Ltd? Does she share my frustration that directors of companies that repeatedly tell such blatant lies to con their customers are allowed to carry on as directors of other companies to this very day despite the chaos left behind in the wreckage, as has happened with Safe Hands Funeral Plans?

[Margaret Ferrier]

I thank my hon. Friend for his intervention—and I shall have more specific thanks to give him a little later in my speech. I completely agree with the points that he has made. I know that the Government intend to introduce legislation relating to economic crime and impropriety during the current Session, and I hope the Minister can confirm that it is something they are seriously considering.

I was particularly happy to note the FCA’s clear focus on consumer protections, and I fully agree with their approach in wishing to ensure that customers pay a fair price, that the plan meets their needs, that the money is looked after responsibly, and that they have all the information they need in order to make an informed decision. Unfortunately, however, that announcement is just too little, too late for many of Safe Hands’ customers.

Let me provide some context by explaining the way in which Safe Hands worked. Customers’ money was put into a trust and then reinvested. These funds are supposed to protect customer investments, and, indeed, that is how the plan was sold to my constituent Mr Hughes. The trust should have been overseen by independent trustees whose job is to make sure that funds are not misappropriated, and are ring-fenced from the funeral provider’s business assets. When Safe Hands suddenly left the market after withdrawing its application to be an approved seller under the upcoming FCA rules, administrators found a significant shortfall between the value of this trust and the cost of the funeral plans that it would need to finance.

Apparently, what the administrators found was that the trust’s assets had been wildly overvalued. What was even more concerning was that most of the assets were actually owned by third parties, as was mentioned by my hon. Friend the Member for Glenrothes (Peter Grant). Reports indicate that over £60 million of the trust’s reported £64 million valued assets were high-risk investments based offshore. If that is true, we are talking about fraudulent misappropriation of the trust’s assets. I will refrain from speculating on who might have benefited from all of this, which can only be described as a scam.

--- Later in debate ---

[The Economic Secretary to the Treasury (John Glen)]

I thank the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) for securing this important and timely debate on an incredibly emotive subject. I thank colleagues on both sides of the House for their contributions, including the hon. Members for Glenrothes (Peter Grant) and for Llanelli (Nia Griffith). I will specifically address the points raised by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), and I thank my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) for raising his constituent’s case.

I take this opportunity to remember our former colleague Sir David Amess. He was a friend to many of us here today, and he cared very much about helping people manage the financial impact of funerals. I thank hon. Members who have campaigned over the past few years in support of regulation. I recall conversations with Neil Gray, the former hon. Member for Airdrie and Shotts, who first tabled a private Member’s Bill to this effect in 2016.

Finally, I am grateful to hon. Members here today for the points they have raised. I think I will be able to address many of those points, and I will write to them on anything that I do not address.

As has been said, funerals are painful experiences, but they can also provide people with a degree of mental closure, because they help us to adjust to the reality of the loss of a loved one. We are all very much agreed that at such a moment mourners should be able to focus on their memories of their loved one and on their own emotions; no one should be consumed by money worries. Clearly, therefore, Safe Hands’ entering administration, as the hon. Lady accurately set out, is very distressing for its customers and their families. Obviously, she mentions eloquently the case of Mr Hughes and what he has experienced in recent weeks. Our thoughts should be with those who have recently lost someone close to them and now find themselves affected by Safe Hands’ failure. As has been mentioned, Dignity, one of the UK’s largest funeral plan providers, has stepped in to provide funerals on behalf of Safe Hands’ customers in the immediate period after the firm entered into administration. I echo the hon. Lady’s words in expressing gratitude that it has stepped up to the mark and agreed to do that for a further six months. I regret the fact that her constituent does not have clarity on exactly where that leaves him, but of course Safe Hands will be entering the administration process and that will need to be concluded before wider issues can be looked at. I met people from Dignity yesterday, along with my Treasury officials, and they reiterated their commitment for the next six months. It has been very welcome to see a funeral plan provider taking that responsibility for protecting the sector’s customers and upholding the industry’s reputation.

I had the privilege of meeting my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes), and members of the all-party group and of the industry a few weeks ago to discuss what was happening with this difficult case. Although the Financial Conduct Authority does not yet regulate funeral plan providers, it is supporting the industry and administrators as they look to find a longer-term solution for Safe Hands’ customers. I am very hopeful that customers will not need to wait too much longer before they see further progress on this longer-term approach. However, I strongly believe that what has happened to Safe Hands is clear evidence of the pressing need for a better-regulated funeral plan market that will provide customers with the stability they need at such a difficult time and will allow us, as Members of Parliament with constituents who have been affected by Safe Hands’ demise, the reassurance and confidence that we can see them not worry in future.

Although the sector provides a valuable service, there is still some distance to travel when it comes to ensuring that all funeral plan customers are shielded from harm. Indeed, major reports and work carried out by the Treasury and the FCA revealed examples of consumer detriment in the sector. As a result, last year, we legislated to bring providers and intermediaries within the regulatory remit of the FCA. That change means that from 29 July funeral plan providers will be subject to robust and enforceable standards for the first time. These standards will benefit consumers in a number of ways, for instance, by giving them clarity about what is covered by their plans, and ending high-pressure and misleading sales tactics. In addition, for the first time funeral plan customers will be able to access a redress scheme, which will be provided by the Financial Ombudsman Service. Ultimately, we believe a well-regulated market will promote effective competition and drive better long-term consumer outcomes. I recognise that this industry does have an important role to play; the demise of Safe Hands will be dealt with through the administration process and there may well then be further examination of what happened, but my determination is that we will get this regulation right and provide security to the industry. The vast majority of firms in the industry are doing the right thing at the moment and I am clear that once they have adjusted to that new regime, we will have confidence going forward.

The Government recognise that the new regulation presents a major change for providers, which is why we introduced an 18-month transition period before the new rules came into effect. That has given businesses time to take the right steps to familiarise themselves with the new requirements and prepare to adopt them.

We of course recognise that it is paramount that we minimise any disruption to customers as a result of the changes, which is why the FCA has said that providers that decide not to or cannot obtain authorisation should transfer their plans to a provider that will operate under the new rules. Alternatively, businesses should wind down in an orderly way before the regulation comes into force.

On that note, Members may be aware that last month the Government made a supplementary statutory instrument that will make it easier for funeral plan providers that seek to exit the market to transfer their existing funeral plan to a regulated funeral plan provider. I discussed that change with Dignity yesterday, and it welcomed it. It should ease the process for the relatively small number of people who find themselves subject to a plan the provider of which will not go into regulation: they will be able to port their plan to one of the bigger industry providers.

When we bring a sector into regulation for the first time, there is clearly a possibility that some providers will be unable to meet the authorisation threshold. In addition, the process may reveal that some businesses are unable to deliver on promises they have made to their customers.

[Peter Grant]

The Minister is understandably focusing on the new regulatory regime—I think he is aware of some of my concerns about the adequacy of the FCA as currently set up—but there should have been other regulation. Who should have been regulating the activities of the trust? Who should have prevented it from engaging in wildly speculative, insecure investments, directly against the promises that were made? Safe Hands Plans Ltd’s first two years of accounts contained demonstrably and obviously false statements, which were never picked up on by Companies House. Who should have been regulating that? Does the Minister accept that regardless of the changes to the regulation of funeral plan companies, there appear to have been serious regulatory failures elsewhere, again?

[John Glen]

The hon. Gentleman makes his points somewhat speculatively, but expresses some valid specific concerns about the journey that Safe Hands went on. Other investigations cannot take place until the administration process is concluded. The driver for the regulations that we are to introduce was the fear among Members from all parties a few years ago. The important thing is to give reassurance going forward. There will be a day of reckoning for the directors of Safe Hands, who will have to account for what happened, but the administration process must happen first. I cannot say any more on that, but the hon. Gentleman’s relevant points are noted.

I must stress that an inability to meet the new standards of regulation—because of issues with conduct, business models or trust arrangements—does not mean that the regulation is at fault; rather, by bringing the sector into regulation, we expose unsustainable practices that, left unchecked, could ultimately worsen and impact more consumers. As the famous adage says, sunlight is the best disinfectant. In this instance, by regulating we will turn the spotlight on businesses that operate with unworkable models, and will prevent consumer harm.

My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) asked about the low-interest loan scheme that we have been piloting with South Manchester Credit Union. I hope to visit Manchester in the week after next. My hon. Friend is absolutely right that there is a wider agenda in terms of affordable credit, and I am still very much committed to developing that instrument and making it widely available, alongside making other interventions in respect of credit unions that we can talk about when the financial services and markets Bill comes to the House shortly.

It is right that the Government act to protect consumers, many of whom will be elderly or vulnerable, with a robust, proportionate regulatory framework. In addition, a well-regulated market will promote effective competition and drive better long-term outcomes for consumers. As I have said, Safe Hands customers can be assured that they will be covered for at least another six months. I encourage other providers and market participants to take further action, as Dignity has done, to protect consumers of firms that will not become authorised.

I assure the House that the Government and the Financial Conduct Authority continue to work closely with each other and with the sector—I have mentioned those two meetings that I have personally held, and meetings that my officials have held, with industry representatives—to ensure that that shift to regulation is as smooth as possible. I take account of the several valid points raised this afternoon. We all have a moral obligation to ensure that funeral plan customers and their loved ones receive the certainty that they need and deserve.

Question put and agreed to.

Financial Statement

Peter Grant Excerpts

Wednesday 23rd March 2022 Commons Chamber

[Rishi Sunak]

I am pleased that there are now 300,000 fewer children in absolute poverty compared with 2010. The best way to make sure that children do not grow up in poverty is to ensure that they do not grow up in a workless household, and there are 700,000 fewer of those today as a result of the actions of this and previous Conservative Governments.

[Peter Grant (Glenrothes) (SNP)]

The National Audit Office has found that, in a single year, Her Majesty’s Revenue and Customs allowed more than £300 million of fraudulent claims for research and development tax relief. We also know from other NAO reports that the Treasury is woefully bad at producing evidence to demonstrate that any of the tax relief policies actually deliver the required objectives. With that in mind, what assurance can we have that the announcement that the Chancellor has made today will lead to a genuine real-terms increase in R&D spend, and will not just become yet another taxpayer-funded get-rich-quick scheme?

[Rishi Sunak]

Government spending on R&D is increasing considerably over this Parliament, but the hon. Gentleman is right to point out some of the issues with our existing relief schemes. They do not work as well as they should. We are committed to tackling them. The final announcement will be made in the autumn for effect in the spring.

Bank Branch Closures

Peter Grant Excerpts

Wednesday 16th March 2022 Commons Chamber

[Lucy Frazer]

I am confident that banks will be carefully looking at how much it costs to run an ATM versus a people-staffed bank and will make those decisions accordingly, but we recognise the impact of branch closures on people and their communities, and the hon. Member for East Renfrewshire (Kirsten Oswald) talked about the importance of engagement with communities. Since 2017, the UK’s largest banks and building societies have been signed up to the access to banking standard, which commits them to ensuring that they inform customers about any branch closures, that they explain the reasons for the closure, and that they clearly outline customers’ options for continued access to banking services.

[Peter Grant (Glenrothes) (SNP)]

Will the Minister give way?

[Lucy Frazer]

I am going to carry on because the hon. Member for Airdrie and Shotts, who secured the debate, made many points and I want to respond to them.

The Financial Conduct Authority has also set out its expectations of firms when deciding whether to reduce the number of their physical branches or the number of free-to-use ATMs. FCA guidance states that firms are expected to carefully consider the impact of a planned closure on their customers’ everyday banking and cash needs.

The hon. Members for Strangford (Jim Shannon) and for Reading East (Matt Rodda) talked about the importance of going into a physical location for those such as the elderly and the disabled. As well as the innovations around mobile and online banking, there are alternative options to access everyday banking services via telephone banking and also, importantly, via the Post Office. The Post Office plays a significant role in servicing people’s everyday banking needs across the UK. The Post Office banking framework allows 99% of personal banking and 95% of business customers to deposit cheques, check their balance, and withdraw and deposit cash at the 11,500 Post Office branches right across the UK. As the hon. Member for Airdrie and Shotts pointed out, it is important that there is somewhere to take that cash, which is why the Post Office provides such an important service.

Cost of Living Increases

Peter Grant Excerpts

Wednesday 16th March 2022 Commons Chamber

[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to follow my hon. Friend the Member for Airdrie and Shotts (Ms Qaisar), who is a good friend and comrade. When she talked about loan sharks, it reminded me of the misleading adverts that we see on social media from debt companies, which I do regard as loan sharks, as they force people into trust deeds and other such things. I know the Minister used to be in the Treasury, so he will be familiar with some of these arguments. Certainly this is a matter that I will be taking up with the Government in future, because it must be tackled. If we are in a cost of living crisis and people see these misleading adverts on Facebook and other social media outlets, their lives could be made even worse.

I am told that repetition is not a vice. I was in a Westminster Hall debate this afternoon on in-work poverty, which was led by the hon. Member for Easington (Grahame Morris). It is worth reminding people that in-work poverty is at its highest ever level, disproportionately affecting lone parents, disabled people and carers. As the Joseph Rowntree Foundation has told us, 68% of working age adults in poverty are in a household where at least one adult is in work. Those are the highest figures ever recorded since 1996, when figures were first gathered on these issues.

I ask the Government to look specifically at in-work poverty. Far too many people in low-paid jobs do not have any opportunities to progress to better work and to better wages. Moreover, far too many of our fellow citizens are working in insecure jobs with unpredictable hours and unpredictable incomes.

I have a real concern about minimum wage rates, which some of my colleagues have also mentioned. A recent article on The Ferret website—the story was also covered by The Herald newspaper—outlined that an alarming number of the 10,000 jobs advertised on the Department for Work and Pensions website offered less than the national minimum wage. Burger King was advertising a post with a wage of £6 an hour; PizzaExpress, a wage of £6.56 an hour; and Farmfoods, a wage of £6.66 an hour. These companies made profits in the past couple of years—good profits, at that. I will be asking for an inquiry on why the DWP website is advertising jobs that pay less than the national minimum wage. It really is a scandal. Perhaps the DWP will refer itself to the national minimum wage compliance unit; it should, given that it is advertising jobs with these rates of pay. I hope that the Minister will respond to that point.

A number of Members on both sides of the Chamber have raised concerns about universal credit. Unfortunately, the hon. Member for Blackpool South (Scott Benton) is no longer in his place, but while he was speaking about universal credit, I looked at a parliamentary answer that I received from the Department for Work and Pensions, and it shows that 55% of Blackpool South constituents on universal credit have an average of £63 a month deducted from their benefit. In Stourbridge, 39% of people receiving tax credits get an average of £61 deducted as a result of tax credit overpayment.

Deductions from benefits really have to stop. Universal credit is supposed to be a subsistence-level benefit; it is supposed to be the amount of money that people require to eat, heat their home, and live a good life. If we deduct from universal credit, it leads to the spiral of debt that many hon. Members have spoken about.

The Government need to do a couple of things. This scandal of advances has to stop; there really should be an up-front grant. The all-party Select Committee on Work and Pensions unanimously agreed that there should be a starter payment two weeks after a claim. That is perfectly reasonable. It would stop the cycle of advances and debts.

Also, why are the Government pursuing tax credit debts that are over six years old? If the hon. Member for Edinburgh South (Ian Murray) wanted to sue me in the Scottish courts for a debt that was over six years old, the sheriff would immediately knock the case out, because it would be absurd; likewise if I were to sue the hon. Gentleman. So why are the Government pursuing tax credit overpayments that are decades old? It seems complete nonsense. I hope that the Government will sort that out.

The Minister is from the Department for Business, Energy and Industrial Strategy; one thing that he and his Department can do to sort out in-work poverty is introduce an employment Bill that ends insecure work, for example by seeking to eliminate zero-hours contracts, and that stops nonsensical practices. For example, employers are texting four individuals and telling them, “The first person who arrives gets the shift.” Employees then have to pay for transport to get to work, but they might not get the shift because someone else arrived two minutes before them. I hope that there will be an employment Bill, because we have been promised one since 2017. Five years on, it is still not here. Where is this mystical employment Bill? If the Government do not introduce it, perhaps they should support many of us who have brought forward employment legislation to address the plight of workers.

[Peter Grant (Glenrothes) (SNP)]

I was a bit reluctant to interrupt my hon. Friend, because he is making a fantastic speech, but may I give him an example that shows where the Government’s priorities lie? One group of employees who are traditionally low paid and in very insecure work are catering and cleaning staff. Does he recall that in the last Budget, the Chancellor claimed to have no choice but to impose a tax hike on people who are paid low wages to clean floors and dishes in casinos, but was at the same time able to announce a tax pay-back for the lucky people who own casinos? Is that not an example of where this Government’s true loyalties lie?

[Chris Stephens]

That is exactly where the Government’s priorities lie. Let us not forget that in-work poverty disproportionately affects carers as well, and that has to change.

I am conscious of time, but I hope the Government will respond positively to the points I have made. This is their crisis—the things I am pointing out are not to do with Ukraine or anything else. These things have been going on for 12 years, and the Government can immediately solve them.

--- Later in debate ---

[The Minister for Energy, Clean Growth and Climate Change (Greg Hands)]

I thank right hon. and hon. Members for taking part in this important debate. This Government recognise and understand the pressures people are facing with the cost of living. This is of course a deeply worrying time for many of our constituents, and we will continue to listen to people’s concerns, as we have done throughout the pandemic.

Wholesale energy prices have been rising due to global pressures. Let me add here the Government’s condemnation of Vladimir Putin’s invasion of Ukraine, with its inevitable impact on global energy prices, and the UK is not alone in feeling the pinch. However, I reiterate that energy security remains an absolute priority for the Government. We are confident that our security will be maintained as we transition to net zero. Indeed, many of the measures in going to net zero will help our energy security by reducing dependency on imported fossil fuels.

We continue to work closely with key industry organisations including Ofgem and National Grid Gas to monitor both supply and demand. As well as ensuring security of supply, we are also working to ensure that consumers get a fair deal.

Let me turn to points raised in the debate, first by Back-Bench Members. My hon. Friend the Member for Tiverton and Honiton (Neil Parish), in a sound speech, called for more nuclear power and reminded us of Labour’s failures in the past. In 1997, the Labour party manifesto said

“We see no economic case for…nuclear power stations.”

Secondly, he rightly spoke against hydrocarbon imports from Russia. Thirdly, he spoke about heating oil—as we heard, heating oil prices are a concern on both sides of the House at the moment—and raised a few points about whether the prices charged can be justified. A recent Competition and Markets Authority investigation did not show any sign of profiteering, but, if he has evidence of unfair or sharp practices, he should please let me or others in the Department or the Treasury know.

The right hon. Member for Dundee East (Stewart Hosie) had done his homework. He spoke of the impacts of bills and other changes. However, he also needs to consider other aspects of Government action, such as the 12-year freeze in retail fuel prices and the increase in the national living wage from £8.91 to £9.50, which will put an extra £1,000 a year into the pockets of someone on that.

[Peter Grant]

Will the Minister give way?

[Greg Hands]

I will respond first to the debate. If I have time, I will take interventions.

My hon. Friend the Member for Blackpool South (Scott Benton) said that there were more universal credit recipients in his constituency than in any other in the UK—a startling fact for his constituency—and said how much his constituents are benefiting from the changes in the UC taper rate as well as the increases in the national living wage, which he supported. On green levies, we announced in the heat and building strategy an affordability call for evidence on where to put those levies. We will take decisions on that later this year. His support for nuclear was well made, particularly coming from his part of the world near Springfields.

The hon. Members for Airdrie and Shotts (Ms Qaisar) and for West Dunbartonshire (Martin Docherty-Hughes) gave a selective account of Scottish Government actions. But Scotland is benefiting hugely from the broad shoulders of the United Kingdom and the UK taxpayer in particular. What would really hammer his constituents is separation and the immediate huge budget deficit, which would be easily the largest in the western world. Either taxes would have to rise or Scottish public services would be cut.

My hon. Friend the Member for Stourbridge (Suzanne Webb) praised the £9.1 billion package to help those with increased energy bills and spoke about how to reduce our dependence as well as the importance of the transition to renewables. That is the answer. She also praised the Government for the 500% increase in the proportion of our electricity that comes from renewables since 2010.

The hon. Member for Glasgow South West (Chris Stephens) made some important points about in-work poverty, but the best route out of poverty is work itself. I heard no mention from him of yesterday’s amazing figures, with the number of unemployed falling below pre-pandemic levels for the first time and another strong increase in employees on the payroll in February.

Oral Answers to Questions

Peter Grant Excerpts

Tuesday 15th March 2022 Commons Chamber

[Mr Clarke]

With respect to the hon. Lady, of whom I am a great admirer, that is an unfair characterisation of the success of the scheme. It clearly needs to be situated in the wider context. In fact, the British economy has performed much better than anyone expected when the scheme was set up. There are robust processes in place that make sure that we genuinely are adding additional value. So work coaches have to certify that the people on the scheme are eligible for it and would have been unlikely to find work without it. Employers need to demonstrate how the jobs created are additional. Finally, it is important to contrast this scheme with the last Labour Government’s future jobs fund, which reached its total far more slowly and was far less effective. This scheme has got 130,000 and rising young people into work. It has been a great success.

[Peter Grant (Glenrothes) (SNP)]

It is interesting that the Minister can call kickstart such a resounding success, given that last month the Public Accounts Committee said that the Department that runs the scheme does not know what success looks like because it launched the scheme without any idea as to what the success criteria would be. It also has no way of knowing whether the young people who are referred to kickstart jobs are the right young people and it is not properly evaluating the longer term support that employers give to those young people. Does the Minister agree with the PAC report, which was endorsed by a Committee consisting of a majority of Conservative MPs?

[Mr Clarke]

No, I do not agree with that report. It is an unfair characterisation of a response that was put in place at pace to meet an unprecedented crisis in our employment market. The wider success of our policy on youth employment is best measured by the fact that in January there were 500,000 more employees aged under 25 than there were in January 2021. The kickstart programme has played its full part in helping to make that possible.

Public Service Pensions and Judicial Offices Bill [Lords]

Peter Grant Excerpts

Report stage
Tuesday 22nd February 2022 Commons Chamber

[Robert Jenrick (Newark) (Con)]

I rise to speak to new clause 1, which is in my name. The new clause empowers the Secretary of State to issue guidance to authorities that administer public sector pensions schemes that they may not make investments that conflict with the United Kingdom’s foreign and defence policy.

The new clause will resolve a long-standing issue that arose out of the Public Service Pensions Act 2013 and the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016. The issue was whether the Secretary of State had, under their general power to issue guidance provided under the 2013 Act, the ability to guide those who administer pension schemes, particularly local government pension schemes, away from making investment decisions that were contrary to the United Kingdom’s foreign and defence policy.

In 2020, the Supreme Court found by a split decision that the 2013 Act did not confer on the Secretary of State the necessary power to issue that guidance. The purpose of the new clause is to change that by explicitly laying out in law the Secretary of State’s power to offer the guidance to administrators of pension schemes within the public sector, including the local government pension schemes, that investment decisions—by which I mean both investments into a position and divestments from a position—should not conflict with UK foreign and defence policy.

There are multiple reasons for doing that. First and foremost, public service pension schemes that are paid for by the taxpayer by one means or another and underwritten by the state are clearly the preserve of the UK Government and, as such, it is perfectly legitimate that the UK Government have a say in regulating how public pension schemes manage the money that is provided to them by we the taxpayers of the country.

[Peter Grant (Glenrothes) (SNP)]

May I just probe the right hon. Gentleman’s last point a wee bit? My bank account is stuffed full of what was previously taxpayers’ money. Neither I nor my wife have had any significant income for years that did not come one way or another from the taxpayer. Is he suggesting that the Government should have some say as to how the bank can invest my money to make sure that I get it back when I need it? Is he suggesting that the private pensions that I am lucky enough to have should be subject to Government direction as to where they do and do not invest?

[Robert Jenrick]

I shall come on in a moment to my own personal views with respect to boycott, divestment and sanctions, but this new clause has no bearing on the actions of private citizens. This is about public sector pension schemes. The broader issue, which I will mention in a moment with respect to tackling BDS within public institutions and the public sector, is all about the public sector; it is not about limiting the freedom of speech or action of the individual.

--- Later in debate ---

[Robert Jenrick]

I agree strongly with both my hon. Friend’s points. On his second point, the motion before Wirral Council is to ask its pensions officer to be the arbitrator of which business it should or should not be investing in within Israel and within settlements. Pity this poor individual, who, instead of going about his normal work as a respectable, hard-working local government officer, must suddenly spend hours, days, weeks or months attempting to understand the intricacies of the Israel-Palestine question and provide advice to a committee of local councillors. It is frankly an absurdity and an abuse of that individual. We should not be seeing this. These questions should rightly be taken forward by the United Kingdom Government.

BDS is ultimately yesterday’s war. In the middle east today things are rapidly changing, and thank goodness for that. As a result of the Abraham accords, we see Arab nations—Gulf states—coming forward to recognise the state of Israel and work with it through science, technology, education and commerce. If Bahrain, the United Arab Emirates, Jordan, Egypt and other nations can do this—even those countries, such as Saudi Arabia, that have not explicitly recognised the state of Israel but are none the less working with it on security matters and other issues—then we as a country should not be tolerating this kind of activity, and certainly not within the public sector. I urge hon. and right hon. Members across the House to support the new clause. I am grateful to the Government for indicating their support. I hope that in the Queen’s Speech later in the spring we will see a wider BDS Bill that makes the UK one of the first countries in the world to really grapple with this issue.

[Peter Grant]

As I said on Second Reading and in Committee, the SNP supports the intention behind this Bill and we will support it on Third Reading. The intention is to clear up a mess of the Government’s making. I also repeat that, as I said in Committee, I do not have any doubts at all about the sincerity of the Ministers who have led for the Government at various stages of the Bill. I am convinced that they want to get it right and to finish up with an Act that is as fair to everyone as it is possible to be. However, my concern with the Bill currently before us is that even after the Government’s amendments are added in, sizeable numbers of current or former public sector employees will lose out. Given where we have been forced to start from and the scale of the mess that the Government made of this previously, I am not sure that it would ever be possible to produce a Bill that would be fair to absolutely everyone, but the Bill as it stands can still be improved. To that end, we will support such amendments as Opposition Front Benchers want to press to a vote, particularly new clauses 8 and 9.

One of the issues I raised on Second Reading has certainly come to pass: the extraordinary number of amendments the Government had had to table to their own legislation during its passage through the House of Lords. We now know that including the 61 amendments they tabled in Committee and the 28 further amendments tabled today, by the time the Bill gets its Third Reading later on the Government will have had to amend their own legislation no fewer than 212 times. In fact, Members who attended the Bill Committee will have seen the spectacle of the Government tying themselves in knots trying to remove two entire clauses from the Bill and replace them with two entirely new clauses. It was only the speedy intervention of the Clerks and the Chair that prevented the Government from presenting us with a Bill that had all four clauses included despite the fact that some of them were completely contradictory to the others. Eventually the Government had to whip their own Members to vote down two clauses that the Minister had already moved, presumably by mistake.

That incident served only to highlight what many of us on the Opposition Benches have been saying from the beginning—that the Government still cannot reassure us that they are genuinely fully in control of this Bill. I worry that they are very quickly running out of last chances to put it right. There is still a danger that the Bill that receives its Third Reading later today will have flaws and weaknesses that neither the Government nor anybody else have spotted yet. Most of today’s Government amendments are part of the process of picking up flaws or ambiguities in the original Bill, and we will not oppose them. We have some concerns about new clause 7, which provides for a lessening of parliamentary scrutiny in some cases. The Minister has not yet convinced me that that is an appropriate thing to do. I hope that when he winds up he will explain why new clause 7 is appropriate and why, in some cases, parliamentary scrutiny should be diluted in any way.

As I indicated earlier, we will support new clauses 8 and 9 in the name of the hon. Member for Hampstead and Kilburn (Tulip Siddiq). New clause 8 would provide a means of compensating scheme members who, through no fault of their own, stand to lose out as a result of the Bill. The Bill rights a wrong for a very large number of people in public pension schemes but goes in the opposite direction for some, and we should not forget about them. The new clause does not commit the Government, or indeed the scheme employers, to any additional expenditure, but it would require the Chancellor of the Exchequer at least to recognise that this is an issue and to look at whether there are realistic and reasonable ways of resolving it.

New clause 9 would require the Government to review how the Bill operates in the real world—as opposed to the assessment, as with any Bill, before discussions on it began—with regard to equalities. Given how many substantial changes the Government have already had to make to the Bill, it is prudent to accept that, once it comes into force, it might have consequences that the Government have not foreseen, which the new clause would attempt to protect against.

New clause 1, in the name of the right hon. Member for Newark (Robert Jenrick), is a different matter altogether, and the SNP is minded to oppose it. We have heard some of the arguments in favour of it—they are similar to comments made on Second Reading—which simply do not wash. I will not get into an argument now about the BDS movement. If the Government genuinely think that that organisation is a threat to peace and stability in the middle east or elsewhere, they could bring forward legislation to address it—they have had over two years of this Parliament to do so, and they still have time—but this is not the Bill for that.

[Richard Burgon (Leeds East) (Lab)]

Does the hon. Gentleman share my concerns that the new clause tabled by the right hon. Member for Newark (Robert Jenrick) risks barring ethical investment decisions across the board—for example, in relation to Saudi Arabia? Given that future Governments might decide to support regimes that abuse trade unionists, for example—as we have seen in Colombia in recent years, or in Chile in the past—the new clause would be not only anti-democratic but would risk ethical investment decisions and human rights policies around the world.

[Peter Grant]

The hon. Member is absolutely right. If the new clause was intended purely to limit the activities of the BDS movement as a precursor to possible further restrictions later on, a very different new clause would have been tabled, and it might have been possible to word it in a way that we would not have significant problems with, but this new clause is far too wide. It could give the Secretary of State—any Secretary of State—the power to prevent any public pension fund from considering any kind of ethical, sustainability or other factors simply because they decide that they are contrary to UK foreign or defence policy.

[Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)]

The hon. Gentleman is making an interesting argument about why the new clause is too wide. Is there not also the problem that it risks investments themselves due to a chilling effect for investors who might not withdraw from an investment when it is economically advisable to do so because of fear of breaking the rules under the new clause, so we could end up with the devaluation of pension schemes?

[Peter Grant]

I will come on to that later. We need to remember, in all of this, that the trustees of any pension scheme have an absolute fiduciary duty to those who rely on the performance of the fund for their current or future pension. We do not want anything that ties their hands, such as someone saying they should go only for very low-yield investments because that person has objections to the activities of companies that might give a higher yield. There are times when we must question whether it is right to put trustees under that kind of pressure. It is also wrong to suggest that pension trustees, in addition to or instead of their absolute duty to pension scheme members, should have some kind of duty to be a mouthpiece for the British Foreign and Commonwealth Office or the British Ministry of Defence. They are not an arm of Government; these are legally independent trustees, and they have to have that legal independence properly protected.

--- Later in debate ---

[Stephen Crabb]

I am listening closely to the hon. Member’s argument, but I am afraid I just do not accept the points he is trying to string together in what is a fairly strange argument. The reason this amendment is so important and the reason we do not expect council chambers to be dabbling in foreign, defence or security policy is precisely that they are not given the competences over those policies. It is the same for the Welsh Senedd, and the Scottish Government have a limited number of competences. Yes, we want them to exercise their powers fully in those areas where they are given competence, but it is a complete diversion of activity and attention to say that we want councils to be getting involved in incredibly sensitive and complicated subjects of the kind that my right hon. Friend the Member for Newark (Robert Jenrick) has already described.

[Peter Grant]

I certainly cannot agree with the right hon. Gentleman. As I have made perfectly clear, how the British system works is that Ministers have the authority to take policy decisions, and Parliament is right to hold Ministers to account for that. Parliament has the ultimate right to decide what becomes law. If nobody else is allowed to discuss it, and councils are not allowed to express views in the interests of the people they are there to represent, the whole system starts to fall flat on its face.

It is as plain as the nose on my or anyone else’s face that decisions on foreign policy can easily have a disproportionate impact on residents in some parts of these islands. Certainly, decisions on defence policy can have a significantly greater impact on some places than others. Remember that councils are directly democratically elected by local people to represent their views. Are we suggesting that they should not be allowed to debate matters of foreign policy simply because they do not have the right to take the final decision? If that is what Government Members are saying, why is it that almost every Tory MP who pops up on their hindlegs at Prime Minister’s questions to ask a planted question invites the Prime Minister to interfere in local democratic decision making? We have had two examples today, with the right hon. Member for Newark expressing his views on possible decisions by councils that, with respect, are nothing to do with him, because they are not the council area he represents.

I do not know whether Wirral Council or Hertfordshire will take the right decision, but I am happy to trust the good people of the Wirral and Hertfordshire to sort out councillors who get it wrong too often. That is what local elections are about. I do not like to see the Government, having substantially stripped back the powers of local authorities, then deciding to give local authorities the power to take decisions they agree with, but taking away the power for local authorities to do things that might go in a different direction.

Among all this, we are losing sight of the vital fact that as a matter of law, the trustees of a pension fund are a completely different organisation and a completely different entity in most cases from the organisation whose current and former employees are members of that fund. My wife has for many years been a trustee of the Fife Council pension fund, as well as having clocked up nearly 30 years as a councillor. The decisions that the trustees of the pension fund make are completely different from the decisions many of the same people will take as members of Fife Council. Nobody believes that the decisions of the pension fund reflect the views of the council; the council is not allowed to try to whip pension trustees, for example.

[Robert Jenrick]

Will the hon. Member give way?

[Peter Grant]

I will give way once more, but I am aware of the time.

--- Later in debate ---

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I am keen that we do not just have a whole debate about BDS. I want the amendments to be addressed, and there are a few other speakers trying to get in.

[Peter Grant]

I made the point much earlier that the amendment is not about BDS; BDS is not mentioned anywhere in it. Going back to the question of whose money it is, we can go round in constitutional or legalistic circles, but morally that money belongs to the people who rely on it for their pensions. If members of the pension scheme want to make strong representations to their trustees, saying, “I do not want to profit in my pension from investments that benefit countries that act in breach of international law”, why is it such a bad thing for pension scheme members to be allowed to make those representations to the trustees? Why is it such a bad thing for the trustees to be allowed to say, “At the request of our members, we will take a decision that might not deliver quite such a high yield for the pensioners, but the pensioners are happy to accept that, because they will be comfortable in their consciences about where the money is going and where the profits are coming from”?

We cannot support new clause 1, and we are minded to divide the House on it later. My final point is that every pension fund trustee has a duty entirely to look after the interests of their pensioners and future pensioners. I do not want to see anything being done that gets in the way of that. We will support the Bill on Third Reading, but I hope it will come to Third Reading without new clause 1 included. The fundamental point is that the £17 billion mistake was made by the Government. If we eventually pass the Bill into law to be an Act of Parliament that makes pensioners or their employing authorities pick up part of that tab, it has not done enough. I fear that by tonight we will still have a Bill that has not done enough and that the Government will not be made to take full responsibility for a mistake entirely of their making.

[John McDonnell (Hayes and Harlington) (Lab)]

I declare an interest in that I am a member of the local government pension scheme. I want to address the amendments standing in my name—new clause 10 and amendments 22 and 24—but I would also like to comment on new clause 1.

On the debate about whether or not this is public money, I thought, as a member of the local government pension scheme, that the Supreme Court was pretty clear that this is not public money in the sense that would enable the Government to issue guidance. However, I have to say that new clause 1 goes further than guidance; it actually includes directions as well. I work on the basis, as I did when I was employed in local government, that the money I earned and the money forgone to invest in my pension scheme was my earned income; it was not public money under the control of the Government.

I think there is a lesson for us all here in that I believe that only in extremis—only in extremis—should the state interfere in one’s own privately earned income. I say that because, in the pension scheme regimes we have at the moment, we have an element of representative democracy with the trustees often being representatives of the workforce and other experts. That reassures me that, as a member of the pension fund, I have an element of say in what those trustees do, if they are appointed, and that enables me and other members of the pension fund to exercise an element of control over decision making, but also to exercise an element of conscience.

DRAFT MONEY LAUNDERING AND TERRORIST FINANCING (AMENDMENT) REGULATIONS 2022

Peter Grant Excerpts

Monday 7th February 2022 General Committees

[Peter Grant (Glenrothes) (SNP)]

It is a pleasure to see you in the Chair this afternoon, Mr Robertson. I commend the hon. Member for Hampstead and Kilburn on a powerful speech. I will not repeat many of her points, but I must pick up on the Minister’s use of the phrase “hostile environment”—it is still an untasteful phrase for many people on both sides of the House, given its connotations about being hostile to people rather than to crime.

In all good faith, the Minister says that that the Government are making the United Kingdom a hostile environment for dirty money and money laundering, but that is not what independent commentators, either in the UK or elsewhere, are saying. Will he explain the Government’s evidence that they are correct and that everyone else has got it wrong? It certainly seems to me that a lot of people are eyeing up London in particular, and other parts of the UK to some extent, as an attractive place to hide their money. Remember: money does not have to be hidden forever; it can just be kept for a limited time within the confines of a legitimate organisation. Where it goes after that can always be explained away.

I agree that any legislation around public disclosure must strike a balance between an individual’s right to privacy and the need for public authorities to protect all of us against serious and organised crime. Consider the seriousness of the crimes we are talking about here. We are not just talking about somebody pilfering a couple of hundred quid from the cash box; we are talking about people who are stealing literally billions of pounds and then using that to fund acts of mass murder either in the United Kingdom or elsewhere. This is a genuine, serious threat to us all, and that means, sadly, that the balance of rights may come down a bit further on an authoritarian “requirement to disclose” regime than we would all ideally like.

I regularly get stuck at the airport going through security checks; I have missed flights because I turned up with an hour to get through security and did not make it. I do not like it, but when we think about the alternatives, perhaps missing a flight sometimes is not such a bad idea. Perhaps not getting the right to the degree of privacy that we might like is something that needs to be considered sometimes, if it means that the real thugs cannot hide behind that right to privacy.

My biggest concern with the Government’s approach to money laundering and terrorist financing is that they are going far too slowly. They are not doing enough. A lot of what should be getting done just does not seem to be getting done at all. The hon. Member for Hampstead and Kilburn has already mentioned some of the compelling evidence that has been presented to the Government in the past that does not seem to have gone anywhere.

On a couple of occasions in the Chamber recently—once during a debate on the Finance Bill and once, I think, during an urgent question—the Government have attempted to explain why their economic crime Bill has not been seen yet. At one point, they claimed that there was not enough parliamentary time. Two hours after they said that, the business of the House collapsed more than half a day short of its allotted time; there was not enough business to keep Members talking for the full day. That was the second time that that had happened in the space of three weeks, and it suggests to me that there is not a lack of parliamentary time but a significant lack of political will.

I am going to get the Minister in trouble by keeping on saying this, but I think he is genuine; I think he genuinely and sincerely wants that legislation brought forward, but it is clear that there are powerful forces at work behind the scenes in this Government to prevent that. We can only speculate about why that might be, but when we look, for example, at the comments from the Centre for American Progress, which said that uprooting

“Kremlin-linked oligarchs will be a challenge given the close ties between Russian money and the United Kingdom’s ruling conservative party,”

we really have to wonder what kinds of forces are at work behind the scenes preventing these reforms from coming into place.

While the Minister correctly points out the registration process that is required for a lot of kinds of trusts, the registration requirements for companies are non-existent. There does not need to be a blind trust for someone to be able to set up a network of legitimate-looking companies in the United Kingdom and use them to launder money to their heart’s content. As my hon. Friend the Member for Glasgow Central (Alison Thewliss) pointed out recently, there are cases where people have been able to be registered as directors or as people with significant controlling interests in companies in the United Kingdom when they have not been born yet. That is the degree of examination that goes into checking who is setting up businesses in the United Kingdom.

We have to remember that although a lot of well-informed commentators understand that having a company registration number in the United Kingdom means nothing, a lot of innocent victims do not. They think that if a company is registered at Companies House, it means something—it is a guarantee of integrity—in exactly the same way as a lot of innocent victims thought that the Financial Conduct Authority logo on somebody’s literature meant that they could be trusted, when all too often it proved that they could not be trusted at all.

Finally, let me pick up on something else that the hon. Member for Hampstead and Kilburn said. I have a concern that if someone—especially one of the organisations with an excellent track record in identifying fraud and corruption in our financial services sector—has to prove that they have evidence of misconduct before they are allowed to look at anything, it is a bit like the police saying, “We’re not going to investigate that reported crime because there’s no evidence that a crime was ever committed.”

I have raised a number of individual cases directly with the Minister, and he has been very supportive of my attempts to get to the bottom of them. No offence to him, but I have had a lot more information, and often a lot more direct help, provided to me and my constituents by non-governmental organisations such as Transparency Task Force. That is not because the Minister does not want to do it; it is probably not his job. However, determined, well-informed private individuals —especially those who have worked in the industry before, and sometimes those who helped to bury the bodies and know where they are likely to be—can be very effective at weeding out the information that criminals have tried to keep hidden. We need to be very careful about preventing those people from being able to go about the work that they have been doing for so long.

Clearly, there must be protections for people’s right of privacy. The right of privacy in a trust is fair enough as long as people do the things that they do not bother to do when setting up a company—for example, proving that the child for whose benefit the trust has been set up actually exists. There are people who are registered as company directors at Companies House who do not exist. As long as that continues, regulations such as these, welcome though they might be, are a drop in the ocean of fraud that threatens to engulf the City of London.

--- Later in debate ---

[John Glen]

I will endeavour to cover the points raised by the hon. Members for Hampstead and Kilburn, for Glenrothes, and for Wallasey. I acknowledge that a number of those points refer to the broader canvas of economic crime and I shall try to deal succinctly with those, respecting the fact that the Treasury Committee published a report last week, on which the Government will reflect and respond in due course. There is an obligation and, indeed, a determination on my part to bring forward a broader money laundering SI later this year.

It is the Government’s view that this amendment will assist in ensuring that the money laundering regulations operate as effectively as possible and continue to protect the financial system from the threat posed by money laundering and terrorist financing, and that will allow the UK to continue to play its part in the fight against economic crime.

The hon. Member for Hampstead and Kilburn mentioned several points made by Transparency International and other organisations about access to trust information. The SI will extend the existing exclusion for insurance trusts to exclude all healthcare policies in trust and will clarify how the exclusion applies to certain retirement policies and life policies with temporary disablement cover. The SI also adds a new exclusion for trusts created in the course of opening child bank accounts. Indeed, the regulations set out 23 different exclusions: this is not an exhaustive list, but it includes pension trusts, insurance trusts, registrable charitable trusts and trusts meeting certain legislative requirements.

When the trust service was set up, the register of beneficial ownership of trusts—the trust registration service—was established five years ago. We have now seen 200,000 taxable trusts registered. It is the case that it is perfectly legitimate for some of those trusts to be excluded. There is a matter of the legitimate privacy for some of the trustees, but that does not prevent law enforcement or regulated entities from being able to access them.

I think that there is a question here about the IT service. The hon. Members for Wallasey and for Hampstead and Kilburn mentioned that. It is clear that HMRC has had an enormous task over the last two years to deliver some pretty complex interventions. The regulations simply give an extension on those registration deadlines. I am not convinced that there is an enduring IT problem in HMRC; there is an administrative necessity consequential to a particular failure.

The hon. Member for Glenrothes picked me up on the use of certain language. It was not my intention to be provocative, but it is my sincere wish to convey the absolute frustration that we feel and our desire to shut down loopholes that allow bad actors to enter our financial system.

[Peter Grant]

I do not have an issue with the Minister’s use of the phrase “hostile environment”. I was making the point that, as the phrase has been previously used in respect of people whom we should have made welcome, it loses a lot of its impact when used in its correct context.

[John Glen]

That is a reasonable observation. I think, however, that the hon. Gentleman’s frustration echoes mine; I have been in this job over four years, and I was before the Treasury Committee on 29 November referring to some of these imperatives, which had been thrown into focus by the FATF report in December 2018. We need to make further interventions. I cannot prejudge the outcome or the business managers, as I think the hon. Member for Wallasey knows, but the point is that this is an absolute imperative from where I stand in the Treasury. We do need this legislation to deal with the broader issues that are outstanding.