Aggregates Levy (Investigation)
Sajid Javid Excerpts(11 years, 3 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
On 1 August 2013 the UK Government received notification from the European Commission that it had decided to open a formal investigation in relation to certain exemptions, exclusions and tax reliefs from the aggregates levy.
The Commission has raised no objections to most of the exemptions, exclusions, and tax reliefs from the levy and has made it clear that the levy in its entirety is not in question. Businesses commercially exploiting aggregate in the UK therefore have a continuing legal obligation to pay any levy due on their activities.
The Commission has, however, decided to open a formal investigation procedure to give further consideration to certain aspects of the exemptions, exclusions and reliefs provided under sections 17(3)(e), 17(3)(f)(i) and (ii), 17(4)(a), 17(4)(c)(i) and (ii), 17(4)(f), 18(2)(b), 18(3), and 30(1 )(b) of the Finance Act 2001, as amended. A copy of the Commission’s decision is being published on the HM Treasury website www.gov.uk/government/publications/aggregates-levy-european-commission-formal-investigation.
The Commission has raised a number of questions and has asked the Government for further explanations and evidence in relation to the exemptions, exclusions, and tax reliefs that remain under investigation but it has not made a final decision on whether any of those exemptions, exclusions and tax reliefs give rise to state aid. The Government are strongly of the view that the exemptions, exclusions, and tax reliefs in question do not give rise to state aid, and will provide further information to the Commission to support that view as part of the formal investigation process.
The Government are therefore only taking steps to suspend the application of those elements of the levy that now form the subject matter of the formal investigation because they are obliged to do so under article 108(3) of the treaty on the functioning of the European Union. A further announcement will be made as soon as reasonably practicable as to the details of the measures to be put in place to discharge the UK’s obligations under article 108(3).
Public Sector Debt
Sajid Javid Excerpts(11 years, 3 months ago)
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Sir Malcolm Bruce
To ask the Chancellor of the Exchequer if he will list all property and other chattels that have been bequeathed to the nation over the last decade for the purpose of reducing the national debt where the sale has been overseen by the Treasury Solicitor and from which the proceeds have been handed over to the Commissioners for the Reduction of the National Debt; and if, for each item bequeathed, he will give (a) a description and (b) how much was raised and handed over.
[Official Report, 11 July 2013, Vol. 566, c. 384W.]
Letter of correction from Sajid Javid:
An error has been identified in the written answer given to the right hon. Member for Gordon (Sir Malcolm Bruce) on 11 July 2013.
The full answer given was as follows:
Sajid Javid
A search of the Department's records has disclosed one case in which the Treasury Solicitor oversaw the realisation of property, with proceeds handed over to the Commissioners. That was a bequest which was realised in 2011 with the sale of property in Cambridgeshire. £45,900 was realised from the sale of the property.
The Treasury Solicitor will generally only become involved in bequests where it is executor. Generally, in cases where a bequest is made for the reduction of the national debt, HM Treasury will ask the executors of the will to realise the property themselves before transferring funds to the Commissioners. Over the last decade, sales of those properties have included property in Leicester (sold for £452,000), Leeds (£275,000), East Sussex (£240,000) and Merseyside (£143,000). Those bequests also included some chattels with a total value of £11,995, but further information on chattels would require a detailed search of paper files, and could be provided only at disproportionate cost.
The correct answer should have been:
Sajid Javid
The Treasury is not aware of any incidences in the last decade where the Treasury Solicitor oversaw the realisation of property for the purpose of the reduction of the national debt. The Treasury Solicitor will generally only become involved in bequests where it is executor. Generally, in cases where a bequest is made for the reduction of the national debt, HM Treasury will ask the executors of the will to realise the property themselves before transferring funds to the Commissioners. Over the last decade, sales of those properties have included property in Leicester (sold for £452,000), East Sussex (£240,000) and Merseyside (£143,000). Those bequests also included some chattels with a value of at least £10,455, but further information on chattels would require a detailed search of paper files, and could be provided only at disproportionate cost.
Oral Answers to Questions
Sajid Javid Excerpts(11 years, 4 months ago)
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Pat Glass (North West Durham) (Lab)
10. What recent assessment he has made of the effect of fiscal policy on family incomes.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have published distribution analysis for all our fiscal policies at each fiscal event, and we are the first Government to do so. The most recent assessment was at the 2013 spending review, and the analysis showed that the richest 20% of households continue to make the greatest contribution to reducing the deficit, both in cash terms and as a percentage of their income.
Kerry McCarthy
I thank the Minister for that reply, although he completely failed to talk about the real issue that I was hoping to raise: the extent to which ordinary families are being hit incredibly hard by the Government’s policies. We are hearing from Citizens Advice that inquiries about food banks have risen by 78% over the past six months, and one in four families is having to borrow to provide school uniforms. What are the Government doing about those real issues affecting real people?
Sajid Javid
I must say that if the hon. Lady is genuinely interested in the challenges that families face, she should recognise the causes: Labour’s recession, the deepest in our post-war history; Labour’s record budget deficit, the deepest in our post-war history; and Labour’s bank bail-outs, the largest the world has ever seen.
Stella Creasy
With working families’ incomes on average 1,500 quid down and millionaires taking tax cuts, does the Minister really think that we are all in this together?
Sajid Javid
As the hon. Lady has already heard, all millionaires will be paying a higher tax rate under this Government than they did for the whole 13 years that the Labour party was in power. She should also welcome the tax cut we provided for the lowest income families, 25 million people, with 2.7 million taken out of taxation altogether. I note that the Labour party has recently talked about reintroducing the 10p tax rate, which they abolished. Well, I have news for it: all those people are now paying a 0% tax rate on that income.
Pat Glass
The Times leads this morning on yet another banking scandal that has cost savers in this country billions of pounds. At the same time, bonuses in the financial sector have risen by 90% and ordinary families are really struggling. It is simply not working, so when will the Government step in and do something about the regular obscenities in the banking industry?
Sajid Javid
The hon. Lady should look up the facts. Bank bonuses reached their peak when the shadow Chancellor was City Minister; today they are almost one seventh of what they were at that time. The hon. Lady should welcome the measures we have taken to help working families. They have helped reduce interest rates and keep mortgage rates low, meaning that the average family with the average mortgage are paying £2,000 less per year than they did under the previous Government.
James Morris (Halesowen and Rowley Regis) (Con)
If it had not been for the Government’s council tax freeze, and if council tax had continued to rise on the trajectory set under the previous Government, the average bill would now be £200 higher. Does the Minister agree that the steps taken by the Government are helping hard-working families keep their council tax bills down?
Sajid Javid
My hon. Friend is absolutely right. That council tax freeze is helping families up and down the country, as are many other measures we have taken, such as the cap on rail fares.
Mark Garnier (Wyre Forest) (Con)
Household debt peaked in 2008 at 170% of household income. Since then it has come down, but households are still very vulnerable to rising interest rates. Does my hon. Friend agree that any fiscal policy must give comfort to the bond markets in order to help the Governor of the Bank of England keep interest rates low and mitigate the effect of rising rates on households?
Sajid Javid
My hon. Friend is obviously referring to the fact that when this Government came to office, we had the biggest deficit in our post-war history. The previous Government were borrowing £5,000 a second—£300,000 each and every minute. We have reduced that deficit by a third and, as my hon. Friend suggests, that has brought confidence, investment and jobs.
Andrea Leadsom (South Northamptonshire) (Con)
Does my hon. Friend worry, as I do, that the worst outcomes for children are in those families where nobody is working? If so, is he as delighted as I am that our economy has generated 1.25 million new private sector jobs since 2010, thereby improving the prospects of millions of children?
Sajid Javid
My hon. Friend correctly highlights that the best way out of poverty is through work. As she says, the private sector has generated almost 1.3 million jobs over the past three years. In fact, it is the fastest rate of job creation in the G7.
Susan Elan Jones (Clwyd South) (Lab)
17. The Chancellor said recently that he knew that times were tough and that family budgets were being squeezed. Why, therefore, did this Government choose to prioritise a tax cut for those on the 50% rate?
Sajid Javid
Perhaps the hon. Lady missed it, but we have made sure that the people who earn the most in our society are making the biggest contribution to the necessary measures we have to take to make sure that the country lives within its means. In each year of this Government, the richest will pay a higher tax rate than under the Government she supported.
Stephen Williams (Bristol West) (LD)
Does the Minister agree that, come next April, a family where both parents earn wages will be £1,400 better off than they were in 2010, and that a child of theirs who works on the minimum wage—perhaps in the city centre of my constituency—will be lifted out of income tax altogether?
Sajid Javid
My hon. Friend is absolutely right. That is a big boost to family incomes. In fact, someone on a minimum wage who is working full time will find that their tax bill is more than halved as a result of this Government’s policies.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The reality is that, because of this Government’s warped priorities, women are paying three times more than men to bring the deficit down. Will this all-male Treasury team explain how that is helping families manage the cost-of-living crisis?
Sajid Javid
The hon. Lady knows all about unemployment, because she is probably thinking about the record rise in unemployment that took place in her constituency during the last term of the Labour Government. That record rise included men and women. In all categories it has fallen under this Government, and today more people, including more women, are employed in Britain than at any time in our history.
George Freeman (Mid Norfolk) (Con)
Does my hon. Friend agree that the single most important contribution to household earnings is having a job? Has he seen the latest data that show that the claimant count is now lower than in May 2010, that there are 500,000 vacancies, and that five jobs are being created in the private sector for every one lost in the public sector, leading the ManpowerGroup to say that this is a “game-changing year” for the UK jobs market? Is it not the truth that plan A is working and plan B is redundant?
Sajid Javid
As always, my hon. Friend speaks the truth very eloquently. The economy is growing. Of course there is a lot more work to do, but there is plenty of evidence that we have turned a corner.
Yvonne Fovargue (Makerfield) (Lab)
3. What recent estimate he has made of the effect of fiscal policy on the level of child poverty.
Lilian Greenwood (Nottingham South) (Lab)
11. What recent estimate he has made of the effect of fiscal policy on the level of child poverty.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have protected vulnerable groups as far as possible while urgently taking action to tackle the record deficit we inherited. Work remains the best and the most immediate way out of poverty, and the Budget took action to support families and make the tax and welfare system simpler, including further increases in the income tax allowance to take 2.7 million people on low incomes out of tax altogether.
Yvonne Fovargue
The chief executive of Citizens Advice, commenting on the huge rise in inquiries about food banks, said:
“The combined impact of welfare upheaval, cuts to public spending, low wages and the high cost of living are putting unbearable pressure on many households, forcing them to seek emergency help putting food on the table.”
Is the Minister concerned by this evidence, which is backed up by the recent statistic showing that 300,000 children have been pushed into absolute poverty since this Government took office?
Sajid Javid
The hon. Lady did a lot of good work with Citizens Advice before she came to this House, so I think she shares with me a genuine interest in child poverty. If that is the case, she will recognise that the existing measure for child poverty is flawed. It is based on relative incomes and it produces perverse results. For example, according to that measure, during the previous recession—Labour’s recession, the deepest in our post-war history—child poverty fell by 300,000. The hon. Lady knows that that cannot be right, so if she wants to work with me to help develop a measure that actually works, I would welcome that.
Gavin Shuker
Despite the Minister’s divisive rhetoric about benefits, two thirds of all children living in poverty have one or more parents in work, not out of work. Does he not accept that his inaction on prices and wages is not just hammering those young people but hammering the rest of us as well?
Sajid Javid
Work remains the best and the most immediate way out of poverty. The hon. Gentleman will be concerned that his constituency saw a 72% rise in unemployment during Labour’s last term in office. It has now fallen under this Government. He is rightly concerned about workless households, so he should welcome the fact that the number of children living in workless households is at an all-time low—the lowest since records began in 1996.
Lilian Greenwood (Nottingham South) (Lab)
Thirty-two per cent. of Nottingham children live in poverty compared with a national average of 20%, and we have the worst affected local authority in the east midlands. For all the Government’s warm words on early intervention, the city’s early intervention grant has been cut by £2.8 million. Is it not the case that across the country this Government’s policies are making child poverty worse?
Sajid Javid
I have taken five questions from Opposition Members so far, and not one of them has mentioned plan B; I wonder why. It is not very nice for Mr B. The best way to deal with poverty is by tackling the causes of poverty, and work remains the best way out of poverty. The hon. Lady should welcome the fact that jobs are growing at a record rate in our country, with 1.3 million jobs generated in the private sector in three years and more people employed than at any other time in our history.
Paul Uppal (Wolverhampton South West) (Con)
By any modern measure, my childhood was one of poverty, and strictly speaking I was homeless. The route out of poverty was provided by the creation of a sound economic environment and a belief in economic optimism. Does the Minister agree that that is as pertinent today as it was 30 years ago?
Sajid Javid
I absolutely agree with my hon. Friend. One of the many things we share in common, apart from both being west midlands MPs, is that by the official measure I was also homeless as a child. I agree with his assessment that the best way out of poverty is through work and a growing economy.
Stephen Mosley (City of Chester) (Con)
Another excellent way out of poverty is giving children from disadvantaged backgrounds the best education possible. How many children are benefiting from the £2.5 billion that has been put into the pupil premium, which will, in the long term, boost their educational chances and their chances of obtaining work?
Sajid Javid
My hon. Friend is absolutely right to raise education as another way of tackling the causes of poverty. Thousands of children up and down the country are benefiting from the pupil premium and the further educational reforms that are taking place, not least the focus we put on apprenticeships.
Andrew Selous (South West Bedfordshire) (Con)
Is not the real truth about child poverty the fact that median hourly pay rose by only 0.3% a year between 2003 and 2008? The only real answer for the United Kingdom economy is for it to be a high-skill, high-value-added economy. Our school reforms, and in particular our poverty-busting university technical colleges, are the answer to the problem.
Mr Speaker
The question is about fiscal policy, so a very brief reply will suffice. We are grateful to the Minister.
Sajid Javid
Despite taking action to ensure the country starts living within its means again, the Government have found money in their budget, because of their fiscal policy, to spend on schools and education, and ensure we increase skills. That includes building more university technology colleges and pledging more funding to do so.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
21. According to the Institute for Fiscal Studies, by 2020 an additional 1.1 million children will be living in poverty, which will completely wipe out the reduction in the number of children living in poverty made under Labour. Why do the Government’s choices give tax breaks to millionaires and send more children into poverty?
Sajid Javid
I am sure the hon. Lady knows that the best way out of poverty is through increased pay and employment. I therefore do not understand why she does not welcome the fact that jobs are being created at a record rate throughout the economy, including in her constituency where I note that during Labour’s last term, youth unemployment rocketed by 120%. It is down by 14% under this Government.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
My hon. Friend is right to say that the way out of poverty is to work. Does he agree that by reskilling people we can ensure that British people fill highly skilled jobs, and not rely on mass immigration to fill the skills gap?
Sajid Javid
I agree with my hon. Friend. The best way to get more British people into British jobs is to ensure they have the skills to do those jobs. That is exactly what the Government are focused on.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Families up and down the UK who are struggling with the cost of living simply will not recognise the rosy picture that the Minister is painting. Is the reality not shown in a recent report from the Child Poverty Action Group and the Joseph Rowntree Foundation, which states that changes brought in by this Government mean that families on low wages now have less than they need for a minimum acceptable living standard? That failure is on this Minister’s watch. Is it a record he is proud of?
Sajid Javid
It is not clear what the hon. Lady is proposing. Is she saying that she is against some of the changes we have made on welfare? Is she pledging more spending, more borrowing, and more debt? The Labour party need a policy on those issues. Our policies are clear: to deal with poverty we are focused on trying to generate even more growth. The economy has turned a corner; there is more to do but jobs are being generated in Britain at a record rate.
Mr Dave Watts (St Helens North) (Lab)
4. Whether he plans to introduce a land tax.
Emma Reynolds (Wolverhampton North East) (Lab)
16. What recent progress has been made on implementation of the national infrastructure plan.
The Economic Secretary to the Treasury (Sajid Javid)
The Government will invest £300 billion over the next Parliament on infrastructure projects, including a pipeline worth more than £100 billion, and covering investment in transport, schools, science, housing and flood defences.
Emma Reynolds
Since the Government took office, tens of thousands of jobs have been lost in the construction sector. I am deeply concerned that more than 80% of the Treasury’s infrastructure projects have not yet even started. Can the Minister explain to the House why there has been such a delay and what he will do to kick-start the process?
Sajid Javid
It is interesting that the hon. Lady did not mention the Armitt review, which was set up by the shadow Chancellor. Perhaps it is because Mr Armitt concluded that there was an economic crisis when this Government took office and she does not want to draw attention to it. However, she will be reassured to know that the Government take infrastructure investment very seriously. It is a top priority, which is why public investment under this Government is higher in each year of this Parliament than under the previous Government’s plans, as well as being higher as a percentage of national income.
Harriett Baldwin (West Worcestershire) (Con)
A crucial part of our national infrastructure is broadband for the 21st century. Will the Minister join me in congratulating Worcestershire county council on its excellent plans to put 90% of homes and businesses on superfast broadband?
Sajid Javid
My hon. Friend is right to draw attention to what is a hugely important plan for the residents of Worcestershire, which includes my constituents in Bromsgrove. We are right to make that investment, because it will make a real difference.
Lindsay Roy (Glenrothes) (Lab)
18. What estimate he has made of the annual value of the reduction in the additional rate of income tax to 45% to a person earning £1 million per annum.
Blanefield (Landfill Tax Liability)
Sajid Javid Excerpts(11 years, 4 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
I congratulate the right hon. Member for Stirling (Mrs McGuire) on securing the debate and representing her constituents with such passion and eloquence. The households she has referred to have come into very difficult circumstances though no fault of their own, as she has said. I am sure that every Member present can appreciate the pressures and stress that the situation is causing everyone involved. It is absolutely right that the right hon. Lady has brought this issue to the Chamber’s attention and allowed us to give it the consideration it deserves.
I will begin by reiterating some of the facts of the case. I will then provide some further background about the current legislation in this area. Finally, I will suggest what I believe is the best course of action for the right hon. Lady and her constituents.
As the right hon. Lady has explained, the residents under discussion live in properties that were built on the grounds of a former Victorian printworks. Following a recent inspection by the Scottish Environment Protection Agency, the land on which those properties were built has been deemed contaminated. The law now requires that this land be remediated.
As the right hon. Lady has explained, the liability for that remediation is laid out in the contaminated land regime. In the first instance, it is right that the polluter will be held liable to cover the cost of remediation. However, as we have heard, in this instance the original polluter—namely the Victorian printworks—is no longer in existence. In the absence of the original polluter, the responsibility for carrying out the remediation works, under the Environmental Protection Act 1990, falls to the current landowner.
It is worth making it clear that in about 90% of cases involving contaminated land, the land will be remediated when the site is redeveloped for future use, as stipulated under planning policy. In most instances, the liability will fall on a company or business, which will be better placed to cover the costs of remediation. In the small percentage of remaining cases, however, the costs of remediating the land will fall on owner-occupiers.
Of course, in most circumstances the value of the land will rise once it has been decontaminated. In this respect, the logic of the law is to ensure that the landowner, who will be set to gain from the increase in the value of the land, should also be the person liable for the costs of the clean-up. Unfortunately, in the instance under discussion, this means that the liability is set to fall on 13 households, to which absolutely no blame can be attached.
As the right hon. Lady will be aware, the landfill tax aims to reduce the environmental damage caused by sending waste to landfill. In increasing the cost of landfill, the tax also aims to encourage more sustainable waste technologies, such as recycling. At a national level the tax has been successful in achieving those goals. Waste material is increasingly being diverted away from landfill towards reuse or recycling. The tax has also been successful in ensuring that the environmental damage associated with the disposal of such waste is properly reflected in the landfill price.
As the right hon. Lady acknowledges, the tax is designed to ensure that the polluter pays, and she is right to point out that in this particular instance the original polluter will not be paying. I am sympathetic to the argument. However, it will not be possible for the contaminated waste in this instance to be exempt from landfill tax, as the right hon. Lady proposes. It may be useful, in explaining why such action is not possible, to set out how the landfill tax currently operates.
Under the current system, the tax liability falls on the landfill operator, not the person delivering the waste. Those landfill operators must check the content of the waste to determine what rate of tax to apply. There is, however, no requirement on the site operator to satisfy themselves as to the origin of the waste or the type of business, local authority or private individual that has delivered it to them. Therefore, introducing an exemption, as requested, would require a fundamental change to the structure of the tax. It would also place an excessive future burden on all landfill operators, who would be forced to check and verify the origin of each item of waste that had been sent for disposal at their site.
It is also worth remembering that a change such as that suggested by the right hon. Lady would be legislatively complex. It would require amendments to primary legislation. That would mean, first, that it could not be made with the haste required for the right hon. Lady’s constituents to benefit; and secondly, that it could create a more complex law on landfill. As hon. Members will unfortunately be only too well aware, complexity in any tax can increase the opportunity for evasion. While she has suggested changes to the current legislation, for wholly the right reasons, certain unscrupulous individuals or businesses may well seek to use such an exemption for wholly the wrong reasons to reduce their own tax liabilities. So while I acknowledge and sympathise with the real difficulties that these households, in particular, are facing, it would be extremely difficult for the Government to alter national policy to benefit her constituents without creating unintended issues for landfill policy as a whole.
I therefore believe that this is an issue that would be best resolved at a local level. As the right hon. Lady may know, the national legislation sets out the framework that explains how responsibility for covering the costs of remediation should work and how they are determined. As she said, it is the local authority’s responsibility to apportion the liability. It is my understanding that in this instance the issue of determining who should bear responsibility for remediation of the land was performed by Stirling council’s legal services department.
Mrs McGuire
I do not think that anybody is disputing the role of the local authority in this. It has carried out that role and within its responsibilities it has made a substantial and significant contribution to the costs. The issue that I wish to raise with the Minister lies directly within his jurisdiction. It is about the liability of individuals to bear the responsibility of this—an unintended consequence of previous legislation. I would have hoped that he would be able to be creative in thinking of ways in which these individuals would not have to be liable.
Sajid Javid
I can assure the right hon. Lady that I have looked at this very carefully. She will already have heard some of the reasons why it is extremely difficult to make such a change, even if it were desired, because it would require a change in primary legislation within the time needed to benefit these individuals.
I understand that, as the right hon. Lady said, Stirling council has put forward a £125,000 grant towards the remediation costs. I also understand that it has promised to consider any additional hardship in accordance with the statutory guidance. On top of that, my officials at the Treasury have recently been in touch with their equivalents at Stirling council, and it is their understanding that loans secured against the property’s resale value may also be offered to affected households. I therefore urge the right hon. Lady to continue to pursue this issue with Stirling council on behalf of her constituents. I have asked my officials to explore what additional support the local authority may be able to provide. She asked whether I would meet her to discuss this issue in further detail, and of course I would be happy to do so.
I completely understand the right hon. Lady’s frustration about this issue, and I entirely sympathise with all the households involved. This is not a situation that any home owner would want to go through, nor one that any hon. Member would want any of their constituents to go through.
I hope that both the right hon. Lady and the home owners involved will understand why I do not believe that an intervention at national level is the answer. I also hope that with her help, and that of the local authority and Treasury officials, those home owners will be able to resolve the issue locally.
Question put and agreed to.
Equitable Life Payment Scheme
Sajid Javid Excerpts(11 years, 4 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
As of 31 August 2013 the scheme has made payments totalling £734 million. The scheme has also published a further progress report, which can be found at:
http://equitablelifepaymentscheme.independent.gov.uk/.
The scheme has now contacted all the eligible individual policyholders it can trace. Any holders of an individual non with-profits annuity or with-profits annuity who have not been contacted by the scheme should call the scheme on 0300 0200 150 to confirm the eligibility of their policy and be advised of the next steps they should take.
The scheme has also started making payments to those who bought their Equitable Life policy through a company pension scheme, with circa 148,000 payments already made to this group. All the traced company pension schemes have been written to by the payment scheme to begin the process of data exchange. As a result of this, agreements have been completed that cover circa 95% of policyholders, with data covering 65% sent to the scheme. Trustees who have not yet provided data have been asked to do so as soon as possible. On receipt of data from company pension scheme trustees, payments are being issued by the scheme.
The process of identifying, tracing and contacting the estates of deceased policyholders has been completed. Payments to all those estates that have responded to the scheme will continue over the coming months.
Money Transfer Accounts
Sajid Javid Excerpts(11 years, 5 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
I am grateful for this opportunity to speak under your chairmanship, Mr Bayley. I, too, add my thanks and congratulations to the hon. Member for Bethnal Green and Bow (Rushanara Ali) for securing this important debate. We have had a number of discussions on this issue already, and I look forward to continuing to have those discussions with her. I know that this is a very important issue for her and for all of us in this Chamber and beyond, and I welcome this opportunity to respond.
This issue is of concern to Ministers across Government and to hon. Members on both sides of the House, because a healthy, functioning remittance sector is crucial for the thousands of our constituents up and down the country who use such services to send money abroad. If you will allow me, Mr Bayley, I would like to speak for a moment about my gran. My gran—my mother’s mother—has been receiving remittances regularly for more than 50 years, since my parents first arrived in our great country and settled, first, in Rochdale. She continues to receive the benefit of remittances. When I first visited her while I was growing up, one of the things that I noticed was that she lives in a very remote village in Pakistan that has no bank. I think that the nearest bank is at least 10 miles away. She is unbanked. There were only a few remitters, at least to begin with, many years ago, that could get money to my gran. I mention that only to show that, at a very personal level, I do understand this issue and how important it is in Britain and particularly to British individuals such as myself, who are from an ethnic minority background.
The sector plays a crucial role in supporting the economies of all the developing countries that have been mentioned today that receive these funds. We all want to see a healthy remittance sector, but we also want to see a legitimate remittance sector. Our banks and regulators have a real responsibility to ensure that they are not inadvertently facilitating any kind of criminal activity. That could be money laundering, drug trafficking or the financing of terrorism, some of which we have heard about today. All are activities that pose real threats not just to UK citizens, but to global security. Of course, there is a fine balance to be struck between managing those risks and ensuring that essential services are still available to families in the UK. I would like to reassure hon. Members that we are committed to getting the balance right. This afternoon, I will set out some of the steps that this Government are taking towards ensuring a robust and sustainable remittance sector.
We recognise the role of Government in effectively supervising and regulating the money service business sector to help to drive up standards in this area. Last year, we strengthened the Money Laundering Regulations 2007, with a particular view to helping Her Majesty’s Revenue and Customs, as the relevant regulator, to strengthen its supervision, and HMRC is making every attempt to close down those businesses that are engaging in criminal activity and tarnishing the sector as a whole. Last month, it worked closely with the Metropolitan police and the Serious Organised Crime Agency to target organised criminals operating in this sector. However, in the longer term, proactive solutions must be found to avoid the need for such action in the future. The best way to achieve that is by creating a remittance sector in the UK that is trusted by all stakeholders and with which all banks can feel confident about doing business.
I have spoken with several of the leading high street banks—including, of course, Barclays—during the last few days. Some have expressed important concerns on the structural features of the sector and particularly on the issues surrounding transparency. I can confirm that I am looking urgently into what measures the Government might be able to take, and speaking to all relevant authorities to look at what options are open to us to try to allay as far as possible some of the concerns that those banks have expressed.
Separately, work has already been under way for some time through Project Quaver, led by HMRC and SOCA, on developing a healthy and sustainable sector. That project brings together the Government, law enforcement, regulators and industry to help banks and money service businesses to understand the risks that come from abuse of this sector, and to strengthen their compliance.
However, we recognise that having effective anti-money laundering and counter-terrorist financing procedures in place is not only essential to preventing, detecting and disrupting illicit finance. They provide the confidence for foreign investment and stable economic growth in many of the developing countries that have been mentioned. Developing effective regimes requires effective co-operation between the public sector and the private sector to understand and mitigate the threat of illicit finance, so under the UK presidency, the G8 has this year committed to launch a public-private sector dialogue on illicit finance, which will be held in Namibia in September of this year. That will not only help to tackle the issue of robust regimes in the traditional financial sectors, but address the opportunities and the risks posed by new payment methods, such as mobile money services. By bringing together private sector experts from around the world and Ministers and officials, the dialogue will be a unique opportunity to leverage expertise and drive reform that meets the specific needs that countries face, particularly in sub-Saharan Africa.
Sajid Javid
I will give way first to the hon. Member for Cardiff West (Kevin Brennan).
Kevin Brennan
I am sure that some very good initiatives are being developed, but will the Minister be able, in his remarks this afternoon, to give any direct comfort to the businesses that hon. Members here are concerned may go out of business in the next few weeks?
Sajid Javid
I will, but before I respond fully, I will give way to the hon. Member for Cardiff South and Penarth (Stephen Doughty) as well.
Stephen Doughty
I thank the Minister for being very generous about interventions. Again, I am very interested to hear what is going on at international level—dialogues and so on at the G8—but, echoing the comments of my hon. Friend the Member for Cardiff West (Kevin Brennan), we want to know what will happen in the next couple of weeks, given what is happening on 12 August. I do not want to betray any confidences, but Barclays was offering a meeting at its headquarters. Will we see a meeting of the key stakeholders—the banks, the non-governmental organisations and the diaspora communities—in the next fortnight?
Sajid Javid
I think that both hon. Gentlemen knew that I was coming to this issue next. I am referring to the immediate effect of Barclays’ decision. I recognise that some of the things that I mentioned a moment ago, although very welcome, are long-term projects. In the short term, the Government are committed to doing everything that they can to minimise the impact on individuals and businesses in the UK of any immediate changes in this market. I understand that businesses in this sector will face challenges. That is why we are committed to working with the banks, trade associations and money service businesses to try to find solutions that do not mean extensive business closures. However, the truth is that we do not know what the full impact of some of the decisions that have been discussed here today will be. We are monitoring the situation and will continue to do so in the course of the next few months.
Stephen Pound (Ealing North) (Lab)
I am extremely grateful to the Minister for giving way; he is being very generous. In terms of immediacy, does he not agree with this point? My constituent George Boateng has contacted me to say that an entire parallel industry—the so-called hawala system—exists now and is totally and utterly unregulated, and we could end up with a situation in which we have a sort of reverse Gresham’s law: we end up losing money transfer that is legitimate and regulated and going into a completely unregulated system. Surely that cannot be anyone’s intention.
Sajid Javid
The hon. Gentleman raises a fair point. He is correct, to the extent that if individuals cannot find a legitimate alternative that can reach the parts of countries they want to reach at a reasonable cost, they may be tempted to use illegitimate means, which makes the issue all the more important. I accept his general point.
We are committed to ensuring that commercial decisions taken by banks do not inhibit individuals in the UK from remitting money to families abroad, but, once again, there may be challenges. Individuals might need to approach firms other than those with which they are used to dealing. There may be increased charges. Remittance flows to some countries may be affected, specifically those with less developed or non-existent banking sectors, such as Somalia, as we heard from the hon. Member for Cardiff South and Penarth. I share his concern.
Rushanara Ali
I was encouraged to hear the Minister’s reference to his personal experience—his family experience —but I am disappointed at the lack of focus in his response on the fact that we need an urgent solution. I appreciated his time before the debate thinking through a constructive way forward. I hope that he will use the last 10 minutes to talk about how he will get his officials, the FCA and interested parties to use their insights to look at how we can solve the problem. He would be commended for making that happen. Across Government —in DFID as well as in the Foreign Office and his Department—and in his party and my party, there are grave concerns, which have been expressed in the debate. I hope he will use the last 10 minutes to focus on action and delivery, because he will be commended for that.
Sajid Javid
The hon. Lady is absolutely right to set that challenge and say that we should focus on action and delivery, and that is what I believe we are doing. I am sure she understands that there is no magic bullet or overnight solution that can be provided by any Government. As we heard today, this is a complex matter. The hon. Member for Nottingham East (Chris Leslie) recognised in his remarks that the banks have legitimate concerns. Other regulatory authorities are involved and hon. Members have mentioned the United States. Whatever the solutions, they may not be perfect and we may not get back to the world as it was before in this space. There will probably be changes to the structure of the industry. I hope she will be reassured, as I make further remarks, that we take the issue seriously.
The hon. Lady mentioned DFID, which I was coming to. I have discussed the recent bank actions with DFID officials and my right hon. Friend the Secretary of State for International Development. Initial indications do not suggest a significant impact on the economies of developing countries or their humanitarian situation. The Government will however assess the impact of market restructuring on developing countries and work with private sector and aid partners to mitigate any negative repercussions. The Secretary of State confirmed that the provision of UK Government aid will not be affected. My hon. Friend the Member for North West Norfolk (Mr Bellingham), who has great experience in development, talked about the work of DFID. It has said that it will commission an independent research report to understand the impacts of the recent bank actions on development outcomes in recipient countries.
Rushanara Ali
I thank the Minister for being generous. Can he explain what evidence DFID used to come to that conclusion? I have not been given any evidence, nor have my hon. Friends or other hon. Members. DFID should be looking at how to improve this important industry, because we want to end aid dependency. It is scandalous that DFID is being so complacent and commissioning a research project, when businesses will go bust in the next month. Will he press DFID to take urgent action with him? I accept that there are no magic wands, but there have been constructive suggestions in the debate, which I ask him to take forward and lead on. He will be commended for coming up with a solution.
Sajid Javid
I assure the hon. Lady that DFID takes the issue as seriously as other parts of Government and Members here today do. DFID, the FCO and the Treasury are working closely on it, because it affects all three Departments.
Simon Danczuk
If the Minister does not give a clear indication this afternoon that there will be a round-table meeting of which Government are part, everybody will leave with the impression that the Government support big business, but not small businesses.
Sajid Javid
I will come to that point before I finish, but, given the questions asked today, let me say a few words about Barclays.
When I met Antony Jenkins, Barclays chief executive, we discussed its recent decision to end its relationship with a number of money services businesses in the UK and I tried better to understand its perspective. Although we did not discuss decisions taken on individual firms, I was reassured to understand that the recent review of its customers in the sector is being conducted on a case-by-case basis. I was also reassured that it is working with firms to manage the impact of its decision. He confirmed that Barclays will consider on a case-by-case basis extensions to any initial notice period it has given companies, particularly where those companies can show that they are in active discussions with other banks that may take their business.
Sajid Javid
I do not have much time. A number of questions were raised by hon. Members, but I will give way very briefly.
Barry Gardiner
Without wishing to betray any confidence that Barclays relayed at the meeting with me and my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty), it is clear that it has decided not to continue to do business with certain remittance companies, and, despite what the Minister has said about the assurances he received from the chief executive, that was made very clear to us in the meeting. The matter is much more urgent that the Minister is acknowledging.
Sajid Javid
I take those points on board. The hon. Gentleman is right to suggest that Barclays has made the decision. It is however showing flexibility over the timing of closing certain accounts, and that flexibility is better than no flexibility.
I shall turn to a few questions raised by hon. Members. The hon. Member for Bethnal Green and Bow asked whether I had received representations from the large money transfer companies. I have not received any representations from such companies. She also suggested—if I understood her correctly—that the banks’ behaviour could be anti-competitive. There is no evidence that banks are acting in concert or are distorting competition. They appear to have acted in accordance with their commercial interests and their desire to minimise risk.
The hon. Member for Rochdale (Simon Danczuk) asked why larger organisations, such as Western Union, are not affected by the decisions of the banks and whether the banks would benefit from the withdrawal of some services. The short answer to why some larger institutions are not affected is that their internal compliance procedures are in many cases similar to what the banks themselves adopt internally; in many cases, they spend more resources on compliance and transparency issues, which they are clearly in a better position to afford than smaller operators; and in many cases they are regulated differently. All companies are supervised by HMRC, but there is a difference between a company registered with the FCA and one fully authorised with it, and banks take that into account.
The hon. Member for Rochdale and others, including the hon. Member for Nottingham East, asked whether we were having discussions with the US. We work closely with the US Treasury and State Department at all times on all regulatory matters, including money transfer. It is important to point out that since many transfers are ultimately in US dollars, there is a US interest. Lastly, I asked the British Bankers Association for a round-table meeting and it has agreed. We will have one, the Government will of course take part and I look forward to it.
Hugh Bayley (in the Chair)
I thank all hon. Members for co-operating on the time limit.
Alcohol Fraud
Sajid Javid Excerpts(11 years, 5 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
I can inform the House that the Government are today publishing the response to the 2012 consultation on legislative measures to tackle alcohol fraud.
Alcohol fraud is a serious problem which HMRC estimates leads to revenue losses of approximately £1.2 billion a year. It also has a detrimental impact on the legitimate businesses attempting to compete in this sector. This is why the Government consulted last year on potential measures to deal with this problem. Measures covered by the consultation included beer fiscal marks, supply chain legislation and a registration scheme for alcohol wholesalers. The consultation also explored alternatives to these options that could assist HMRC’s enforcement strategy.
The responses to the consultation highlighted the potential anti-fraud benefits but also some considerable impacts the proposed measures might have on legitimate alcohol supply chains. After fully examining the case for and against the proposed measures, the Government have decided not to proceed with beer fiscal marks or supply-chain legislation at this time.
Compelling evidence was provided on beer fiscal marks to show that, although it could be a useful tool to counter trade in illicit products, the costs of affixing stamps to goods could be significant for the UK brewing industry and particularly for legitimate importers and exporters. Therefore, the Government will not be proceeding with the introduction of beer fiscal marks at this time to allow exploration of other, less burdensome options to address alcohol fraud.
Regarding supply-chain legislation, the consultation highlighted issues regarding the practicality and cost of introducing new “track and trace” systems across the brewing industry, as well as concerns regarding the likely effectiveness of the measure. The Government do not therefore intend to legislate for this measure at this time, but wishes to continue to explore available and emerging technologies that could help to secure alcohol supply chains. The Government will also consult shortly on new proposals to strengthen due diligence obligations of excise businesses throughout the supply-chain.
The Government note the positive response across all sectors towards the option to register alcohol wholesalers and can also see that there could be benefits in authorising this part of the supply chain, which is frequently the point at which illicit products are distributed. The Government wish to consult further with relevant sectors informally over the summer of 2013 to refine the design of a registration scheme, and fully understand the costs, benefits and implications if it were introduced. This will also include seeking views on the specific powers and sanctions that would be essential if the scheme is to be effective. The outcome of this further work will inform the Government’s future decision on whether to proceed with wholesaler registration.
The consultation also considered a large number of alternative measures, including many proposed by industry. The Government intend to progress a wider programme of change to policy and enforcement to strengthen the current “Tackling Alcohol Fraud” strategy. Full details of that programme, will be published shortly but will include steps to increase collaboration with industry and between enforcement agencies; measures aimed at tightening controls in the existing excise regulatory system; dealing more robustly with those found holding or moving illicit goods, and increasing co-operation with other EU member states.
A copy of the full response to the consultation will be available online on the GOV.UKsite at:
https://www.gov.uk/government/publications?publication_filter_option=consultations.
Northern Rock (Asset Management) plc
Sajid Javid Excerpts(11 years, 5 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
On 11 December 2012, I informed Parliament via a written ministerial statement—Official Report, column 20WS, that UK Asset Resolution (UKAR) had identified a pool of unsecured loans in the Northern Rock Asset Management (NRAM) portfolio where the loan documentation was not compliant with Consumer Credit Act requirements.
As a result, UKAR’s board commissioned Deloitte to conduct an enquiry into the specific circumstances of the issue, and any implications for UKAR’s broader internal procedures and controls. Deloitte has concluded that the defects in CCA regulated loan letters and statements were created in 2008, before UKAR was established. The summary of the report, along with the recommendations on strengthening risk functions, is being published on UKAR’s website today. UKAR’s board has accepted all of Deloitte’s recommendations and has tasked senior management to develop an implementation plan, which the UKAR board will hold senior management to account on delivering.
The link to the report can be found here: http://www.ukar. co.uk/media-centre/press-releases/2013.
Gift Aid
Sajid Javid Excerpts(11 years, 6 months ago)
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The Economic Secretary to the Treasury (Sajid Javid)
Following the announcement at Budget 2013 that the Government are looking to improve the way gift aid works on digital donations, HM Treasury is today publishing a consultation document—“Gift Aid and Digital Giving”. This document focuses on how to increase the level of gift aid take up on digital donations, such as those made online or by text message, as well as other improvements to gift aid.
This Government recognise the important work of charities in our society and have improved the support charities receive through the tax system with a variety of reliefs. Gift aid alone was worth over £1 billion to charities last year, and with the rapid growth in digital donations, the Government want to ensure that gift aid take up remains high.
The consultation seeks views on how intermediaries might collect gift aid on behalf of charities and how the wording of the gift aid declaration might be improved. It also invites thoughts on a database of universal gift aid declarations and wider improvements to gift aid.
The consultation closes on Friday 20 September 2013.
Co-operatives
Sajid Javid Excerpts(11 years, 6 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Economic Secretary to the Treasury (Sajid Javid)
It is always a pleasure to serve under your chairmanship, Mr Hollobone, and I congratulate the hon. Member for Islwyn (Chris Evans) both on securing this very important debate and on putting forward his case so eloquently. He entered Parliament in May 2010 and he has already made an outstanding mark. I would like to respond to the issues raised by hon. Members, and I will try my best to capture them all, including some of the questions from the shadow Minister, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell).
As many hon. Members will be aware, the Government’s approach to mutuals was set out in the coalition agreement, where we committed to “promote mutuals” and “foster diversity” in the UK economy. That commitment, made in the Government’s founding document, underscores the importance that we attach to the sector. I would like to talk this afternoon about the contribution that the co-operative and mutual sectors make to the economy, and, I hope, to reassure all hon. Members of our determination to support them in their efforts.
First, however, I turn to the Co-operative Group itself, as raised by the hon. Member for Islwyn and other hon. Members. As the hon. Gentleman will be aware, the Co-op is at the forefront of the mutuals sector, with more than 4,800 retail trading outlets and an annual turnover of more than £13 billion. Clearly, the Co-operative bank is an important part of the Co-operative Group. I was pleased to see last month that the group has committed to strengthening the bank’s position, including through a commitment to inject capital. It would not be appropriate for me to say more, other than that the group is rightly taking action and strengthening its banking arm through that recapitalisation.
I turn to the co-operative sector as a whole. The Government have made it clear that the co-operative sector is of great importance to the UK economy. That case was made especially well by the hon. Member for Corby (Andy Sawford). In fact, co-operatives are ingrained in our culture. As we have heard, the first recorded co-op in the world was set up in Scotland in 1761. Building on those foundations, the birth of the modern co-operative movement can be credited to the Rochdale pioneers, no less, in the mid-19th century, as we heard so well from the hon. Member for Rochdale (Simon Danczuk). He correctly said that I am a Rochdale boy, and it is something that fills me with great pride. There are people in this world who do not know where Rochdale is—however shocking that sounds—but when they are told that it is the home of the co-operative movement, they immediately recognise the town’s importance. I am sure that the hon. Gentleman would agree.
From those humble beginnings, a thriving co-operative sector has blossomed. The UK now has more than 6,000 independent co-ops, and there is a co-op in every single postcode area. Those organisations provide valuable services across a wide variety of industries, including agriculture, finance and energy production. However, we should also remember that although co-operatives focus on serving their members, they are also businesses. The co-op sector in the UK had an overall turnover of well over £36 billion in 2012, which is why, in line with the Government’s commitment to promote mutuals, we have taken steps to support the sector and to enable it to thrive further.
Last January, my right hon. Friend the Prime Minister announced the co-operatives consolidation Bill, which will be introduced to Parliament in December this year. Although the Bill will not contain any new legislation, it will put all co-op legislation in one place, reducing complexity and making it easier for new co-operatives to be set up. I know that that will be welcomed by the co-operative movement.
In addition, we will consult very shortly on a further package of measures to support the co-op sector, including making insolvency procedures available to co-ops, so that a troubled co-op has more chance of being rescued. The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) rightly raised the issue of football supporters’ trusts. As he will know, the Football Association is concerned about the inability of those trusts to go into administration. The changes that we propose in the consultation will hopefully help to satisfy that requirement, and help that sector of mutuals—football supporters’ trusts and others—to thrive further. We will also consult on raising the amount of withdrawable share capital that an individual member can invest in one society, so that co-ops can more easily raise capital from their members.
A very important subsection of co-ops, as we heard, is the credit union sector, which provides a mutually owned option for customers looking to save, take out loans, or, in some cases, to get current accounts and even mortgages. We have heard many Members today speak about the sector eloquently, including the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), the hon. Member for Islwyn, and the hon. Member for Walthamstow (Stella Creasy).
We have taken a number of specific measures to support the sector. Most visibly, the Department for Work and Pensions co-ordinated a recent feasibility study to examine the future of credit unions. It was announced only last week that the Government will take forward the study’s findings. That includes the Department for Work and Pensions making a further investment of up to £38 million over the next three years in credit unions, with the aim of supporting the credit union sector to provide sustainable financial services for up to 1 million additional people.
The feasibility study also proposed raising the maximum interest rate that a credit union can charge to 3% a month. The Government have announced that we will take that proposal forward, and it will apply from April 2014. That will enable credit unions to break even on the low-value, short-term loans that are the most expensive to issue, and to become more stable over the long term. That will be an alternative, as we have heard from some hon. Members today, to other avenues for borrowing for short-term loans, such as payday loans.
Stella Creasy
It is fantastic to hear the Minister supporting credit unions doing short-term lending. If he recognises that credit unions can do short-term lending at capped rates, why does he not think that payday lenders could lend at capped rates and introduce a cap on the cost of credit?
Sajid Javid
The hon. Lady will know that we have rightly given the power to an independent regulator to set capped rates, if it thinks that is appropriate in future. That is the correct way to deal with the issue.
In the interests of time, I must plough on. If we are to consider the wider mutuals sector, we should also consider building societies, which remain another key focus for the Government. We set out our approach to applying the recommendations of the Independent Commission on Banking on building societies in “The future of building societies” consultation paper. The consultation closed last year, and we are now considering how best to treat building societies in line with our aims. We will set out our proposed approach in due course.
Several other questions were asked, and before I conclude, I will try to answer some of them as best I can. A number of hon. Members raised the issue of co-ops in the energy sector. The Department of Energy and Climate Change published a call for evidence on community energy in June 2013, and it will publish a community energy strategy for autumn 2013. That highlights the Government’s commitment to supporting community energy projects.
A number of hon. Members raised the issue of housing. I agree that the co-operative sector has an important role to play in housing, particularly because, between 1997 and 2010, we saw a decline in social housing in our country of more than 421,000 units. I think that the co-operative sector can make a contribution to turning that around, and it will benefit from Government funds that have already been made available, in particular, for affordable housing.
The hon. Member for Islwyn raised the issue of Northern Rock. We believe that the sale was in the best interests of the taxpayer, securing the long-term future of Northern Rock plc and increasing competition in the banking sector. The decision to proceed with the sale was based on the advice that the Government received from United Kingdom Financial Investments Ltd and independent advisers, having considered all bids and all other potential options.
Finally, in the interests of time, I will just address one more issue about the use of the name “co-op”, which was a good point made by the hon. Member for Rochdale. That is something, as he rightly identified, that is being looked at by the Department for Business, Innovation and Skills. I am aware that very strong representations have been made to the Secretary of State for Business, Innovation and Skills, not least by Ed Mayo of Co-operatives UK. The Business Secretary has committed to looking into the matter further and to making an announcement shortly.
In conclusion, I reiterate the Government’s support for the co-operative sector, and I thank all hon. Members who have taken part in today’s debate, especially the hon. Member for Islwyn for making his case so well.
Mr Philip Hollobone (in the Chair)
Order. All good things must come to an end. I thank all hon. Members who took part in the debate and I ask those who are not staying for the next debate to leave quickly and quietly, because we are moving on to the important topic of selective licensing of landlords on the basis of poor housing standards.