Coastal Tourism and Hospitality: Fiscal Support

Sally-Ann Hart Excerpts

Thursday 22nd February 2024 Westminster Hall

[Sally-Ann Hart (Hastings and Rye) (Con)]

It is a pleasure to serve under your chairship, Mrs Cummins. I congratulate my hon. Friend the Member for North Devon (Selaine Saxby) on securing today’s debate.

It is important to acknowledge the Government’s work following covid-19 to support and rebuild our tourism and hospitality sector, with reductions in VAT and business rates, the job retention scheme, business grants, and support for coastal communities with the recent news that holiday lets will be controlled this summer through a registration scheme and a planning permission requirement. I am delighted that the Government have taken that step, which is something I have raised directly with Ministers, think-tanks and through the APPG for coastal communities.

Despite all that support, coastal communities have significant underfunding challenges. My beautiful constituency of Hastings and Rye is a tourist hub, in 1066 Country. Based on the most recent figures for 1066 Country, tourism supports more than 12,600 jobs locally, with an estimated turnover of £550 million per year. However, like many other coastal communities, there is a lack of specific and targeted fiscal support.

Tourism has long been overlooked as an industry. I am delighted that the Minister was previously a tourism Minister, so has a great understanding of the industry. It is often described as a Cinderella industry, but is vital to the UK’s economic growth. UK-wide, tourism is recognised as an important part of rural and coastal economies and has huge potential for growth, particularly in the more deprived rural areas and coastal towns and villages, where there is untapped potential to generate tourism-related economic growth and employment.

Essential infrastructure, such as roads, public spaces and facilities catering to tourists, often suffers from neglect due to insufficient financial support. It is imperative that the Government prioritise strategic investment. It is great to see levelling-up funding going into many coastal areas, with Hastings and Rother receiving in total £80 million over the next few years. The tourism sector cannot thrive in this country without sufficient fiscal support. By investing in the upkeep and promotion of coastal areas, often by providing seed funding to leverage in private-sector investment, the Government can ensure the long-term sustainability of both the tourism sector and the unique identity of these areas.

Many businesses have felt the effect of the national minimum wage increases. That could be mitigated by temporary cuts to the lower rate of employment national insurance contributions to 10%, and/or an increase to the lower threshold. Additionally, permanently reducing the rate of VAT to 12.5% for hospitality businesses, as my hon. Friend the Member for North Devon said, would help them to recover and thrive without having to reduce employment or increase prices.

The Pragmatix report, “Communities on the Edge”, into which the APPG for coastal communities that I chair had significant input, made a number of recommendations to support the visitor economy, such as improving seasonal workers visa schemes for temporary hospitality workers and supporting the initiation of business mentorships for small coastal enterprises to share best practice and help with the digital transition. I encourage relevant Ministers to look at that report.

The hospitality and service industries sustained by the tourism sector are particularly crucial for the livelihoods of coastal residents. I thank all the hospitality and service workers and businesses in Hastings and Rye for their dedication and amazing hard work. Supporting tourism in coastal communities is not just an investment in the local economy: it is an investment in our residents. We have amazing hospitality businesses—I cannot go through them all because they are all so incredible. There are cafes, restaurants, pubs—so many things. I invite Members to come and see for themselves: Hastings and Rye is a fantastic place to visit.

Due to the seasonality of tourism in the UK, it is vital that the hospitality and tourism sector is properly supported through a replacement for the coastal communities fund for projects that specially tackled that issue. I emphasise that point: we need specific policy funding and a strategic plan for our coastal communities. Coastal communities need increased fiscal support, especially in the summer months, to combat the impact of seasonality, manage waste issues and over-congestion and provide a larger police presence due to antisocial behaviour in tourist hotspots such as Camber Sands, which on hot summer days might get 25,000 visitors coming at once. We therefore need a fairer funding formula for local authorities, the police and other public sector services. It is essential that we do not leave any of our coastal communities behind due to poor fiscal investment: we must prioritise them.

Independent School Fees: VAT

Sally-Ann Hart Excerpts

Wednesday 21st February 2024 Westminster Hall

[Sally-Ann Hart (Hastings and Rye) (Con)]

It is a pleasure to serve under your chairmanship, Mr Henderson. I congratulate my hon. Friend the Member for Northampton South (Andrew Lewer) on securing this important debate.

Labour’s plans to charge VAT and end business rate relief for independent schools is based on the politics of envy, from a party that wants to crush aspiration and ambition. Labour says its primary motivation is to generate revenue to invest in the state education system and that the policy might raise £1.7 billion for that purpose. Well, Labour had better get building more schools, because it intends to implement the policy as soon as the right hon. and learned Member for Holborn and St Pancras (Keir Starmer) enters Downing Street, with no consultation or risk analysis. What a nonsense. The policy will harm both the state and the independent sector, and there will be an exodus of pupils into an increasingly stretched state system, with some independent schools closing altogether.

We must not trust Labour with our schools. About 12 years ago, the OECD “Education at a Glance” report found that expenditure on schools as a percentage of GDP increased from 3.6% in 1995 to 4.5% in 2009. The OECD average was 4%. Billions of pounds of spending went into schools under the last Labour Government, but that huge increase in spending led to no improvement in student learning outcomes. UK teenagers slipped down the league tables in crucial subjects, while our schools became the most segregated in the world, with Britain’s immigrant children clustered in the most disadvantaged schools. Primary school class sizes were bigger only in places such as Turkey and Chile, and there was an alarming rise in children not in education, employment or training. Taxpayers failed to get value for money and Labour’s policies had little impact.

Labour will never understand that it is not just about money; it is about leadership and structure. We have some amazing headteachers in Hastings and Rye. I will not name them, but they know who they are, and they work best with the support of positive and effective Government policy, and with the support of their academy trusts. In Hastings and Rye, 32% of schools were rated as being good or outstanding in 2010, compared with 82% in 2022. There is more work to do, but it can be done, as we have seen from the Conservative Government’s record, without destroying our valuable independent sector.

I have two independent schools in my beautiful constituency of Hastings and Rye: Claremont and Buckswood. Buckswood boards about 50 pupils from 48 different countries and has 200 local day-school pupils. Both schools have lower fees for local children, and they have a diverse mix of children, which contributes to a rich cultural environment—one that would not normally be expected in a coastal community. Thos schools enrich our communities, to the benefit of all our residents.

[Gordon Henderson (in the Chair)]

I apologise to Munira Wilson and Jim Shannon for calling them earlier.

--- Later in debate ---

[Darren Henry (Broxtowe) (Con)]

It is pleasure to serve under your chairship, Mr Henderson. I thank my hon. Friend the Member for Northampton South (Andrew Lewer) for bringing forward this debate.

I will focus on the consequences of removing the current VAT exemption for independent schools. It is clear that this change would lead to a rise in school fees, as schools are forced to pass on the cost to parents in order to keep running. That would immediately mean that many parents, who may only just be able to afford the fees as they stand, would no longer be able to continue sending their children to private school. In fact, I calculated that one of my local Nottinghamshire high schools would lose around 20% of its children. Smaller schools would struggle to survive at that rate and may close. That would mean job losses and loss of choice for local parents regarding their child’s education.

I was recently contacted by my constituent, Dr Sharmini, a local school governor who is incredibly concerned about the potential change. She emphasised that it is not the most wealthy and their children who will be affected, but parents who work incredibly hard and make sacrifices to send their children to independent schools.

It is important to emphasise that this change would also have a knock-on effect on non-fee-paying schools, which would see an increase in pupils. That could mean larger class sizes and greater resources being required in non-fee-paying schools. It may also result in children having to move schools in very short time spans.

I am a veteran, and this is the sort of thing that would affect military families. They may have to move mid-school year, and they make good use of independent schools and boarding schools because of that. This change will have a large effect on the lives of children who will have to move. We are removing children from their teachers and friends, and for many that will be very distressing.

My team spoke with the head of a local private school in Nottinghamshire today. He had huge concerns about the use of the school’s facilities. As it stands, sports facilities and facilities such as halls are given over to a huge variety of local clubs at no cost. He stated that if VAT came in, the school would be forced to look at more economical ways of renting out those spaces and would not be financially able to continue lending them out for free.

That head also emphasised the difference between the big private boarding schools and smaller independent day schools. It is the small independent schools that will be hurt most by this change, and many may not survive the loss of students. The focus of all Members in this House must be on ensuring that every child has the best possible education; that is what I will be focusing on in Broxtowe.

[Sally-Ann Hart]

On a point of order, Mr Henderson. I neglected to say earlier that I might have an interest to declare, as my husband is a governor of an independent school.

[Gordon Henderson (in the Chair)]

Noted. Thank you.

--- Later in debate ---

[Nigel Huddleston]

My hon. Friend makes a really important point that has been repeated by many colleagues today. An introduction of 20% VAT can have two impacts: it will either push up prices or lead to cutting costs somehow. It is intuitively obvious that, if we push large numbers of pupils from the private sector into the state sector, it will inevitably put pressure on the state sector and therefore cost members of the public even more. The numbers suggested by the Opposition simply do not stack up. It is an ill thought out policy. The full knock-on impact has not been properly considered. VAT is an incredibly complex area. It is not simple to make blanket policy without considering the full impact.

Not every private school is some kind of Eton—a point made by my hon. Friend the Member for Worcester (Mr Walker) and several other hon. Members. There are exceptionally vulnerable people in very deprived areas of the country who rely on our private schools to provide the type of education they cannot get in the mainstream system.

[Sally-Ann Hart]

It is well known that many of our major independent schools such as Eton and Harrow give 100% bursaries to children from disadvantaged areas to give them a chance to skill up and to benefit for their own communities. That is amazing.

[Nigel Huddleston]

My hon. Friend is absolutely correct; the broader societal benefit of many of our private schools is considerable. That is one of the reasons why many, although not all, have charitable status. They provide all sorts of benefits, including through opening up for sports provision.

The Government are not alone in having concerns about Labour’s current policy. Labour’s own shadow Chief Secretary to the Treasury, the hon. Member for Bristol North West (Darren Jones), spoke out against its planned tax rise before he joined the Front Bench, telling students that he did not believe the policy would bring in the money that his party was promising. Of course, that has not stopped Labour from spending the money several times over already, and it does not have a plan to pay for the potential incremental costs.

I will bring my comments to a close, but I must express a slight disappointment: much as it is always a pleasure to have the hon. Member for Dulwich and West Norwood in this Chamber, I am normally faced in these debates by my opposite number, the hon. Member for Ealing North (James Murray). I must share an irony in that situation: I stand here today as a proud product of a comprehensive state school education nevertheless supporting the role of private schools in the UK and the principles of freedom of choice, aspiration, opportunity and social mobility.

My Labour counterpart is a product of the private school system yet is advocating a policy that could potentially restrict access to the very system from which he has himself benefited, as indeed have many Members on the Opposition Benches. I find that quite ironic and hypocritical, but I will never criticise somebody for the choices made by their parents. We do not do that on this side of the Chamber, but a little bit of humility in this debate might be appreciated. A good education for all is a priority for this Government, and I hope hon. Members from across the House will work with us to deliver it.

Economic Growth

Sally-Ann Hart Excerpts

Tuesday 14th November 2023 Commons Chamber

[Sally-Ann Hart (Hastings and Rye) (Con)]

I welcome the emphasis in the King’s Speech on improving the life chances of young people through the provision of academic and technical education, which is key to securing high and sustained economic growth in every part of the country, including beautiful Hastings and Rye.

Ensuring that young people have the knowledge and skills to succeed is especially important in Hastings and Rye—a coastal community that, like many others, is struggling with higher levels of educational and vocational deprivation, resulting in a local workforce whose skills do not adequately meet the local need, especially in our wonderful engineering and manufacturing businesses, such as Focus SB, Technoturn, General Dynamics, Marshall-Tufflex and Torr Scientific, to name but a few.

Academic education is not the only path for our young people and it is right to have equal focus and funding for technical and vocational skills. Skills are key to economic growth. They are a form of currency in the working world. In today’s ever-changing job market, employers are often more interested in hiring employees with a specific skillset rather than those who simply have a university degree. Therefore, the focus on apprenticeships is fantastic, but in coastal communities such as Hastings, these must centre on young people and SMEs.

We have an increasing number of NEETs—those not in education, employment or training. According to the Youth Futures Foundation, if we match the lowest NEET rate in the OECD, which is in the Netherlands, we could see a £69 billion boost in GDP. A focus on revenue funding for youth services, rather than on capital funding, is needed so that organisations, such as Xtrax and the Y Centre in my constituency, can do their thing.

Coastal communities have huge potential to become a resource—a coastal powerhouse—to the UK, rather than a problem to solve. It is fantastic that Hastings received £24 million in the town deal. Hastings and Rother both have levelling-up partnerships, and Hastings will receive an additional £20 million over the next 10 years, but our coastal communities also need a policy focus to unleash their potential and become a valuable powerhouse for the UK.

Our coastline and coastal communities should be at the forefront of nature-based solutions to climate change and renewable energy industries, including offshore wind developments, green hydrogen production and wave and tidal-stream energy. The Government should be ramping up investment in those areas, leveraging in private investment and boosting coastal communities.

Skills must evolve with the needs of the modern labour market and specific action is needed to generate new skills, to encourage more diversity of employment and to meet the needs of local employment opportunities. We have in Hastings and Rye, besides wonderful career opportunities in tourism and hospitality, an incredible engineering and manufacturing sector that wants to grow but that needs a skilled workforce. Through the towns fund, East Sussex Coast College has developed an important regional-scale project at its Ore campus that will improve skills provision in the new green and low-carbon technologies.

As regards recent announcements about education, the new advanced British standard will take the best of A-levels and T-levels and replace them, bringing together the technical and academic routes into a single qualification, which will widen the breadth of British school education. The proposed qualification will require a sea change in education thinking and will rely on the Treasury funding a new qualification for thousands of young people. The standard’s success will rely on Ministers encouraging the delivery of technical subjects at pre-16 levels, and the Government have cited the education models of many European countries as proof that we need the standard. However, a key feature of those countries’ models is technical education from the ages of 13 or 14, which has become a rarity in the UK.

That is why I am an advocate of the Baker Dearing Educational Trust’s university technical college sleeves. A decision by Ministers on the proposal for UTC sleeves within existing secondary schools is anticipated soon. Baker Dearing is aware of a significant number of large, highly regarded multi-academy trusts that wish to introduce the UTC sleeve model into at least one of their secondary schools, because they can see the benefit of that approach in improving student engagement, attendance and outcomes among certain pupil cohorts, and have witnessed the increasing interest in high-quality apprenticeships for leavers aged 18. All of that will contribute to economic growth.

Affordable housing is also key to economic growth for many reasons, not least that children and young people can access education and employment opportunities only if they have safe and secure homes.

Finally, improving transport connections and roads, and providing faster rail and bus services, is essential for Hastings and Rye and East Sussex as a whole to encourage and facilitate economic growth. Poor transport connectivity continues to blight Hastings and Rye, and it would help if Transport for the South East were made a statutory body.

[Several hon. Members rose—]

Non-Domestic Rating Bill

Sally-Ann Hart Excerpts

2nd reading
Monday 24th April 2023 Commons Chamber

[Sally-Ann Hart (Hastings and Rye) (Con)]

I would like to focus my remarks on our retail sector. The last few years have seen an acceleration in shop closures and job losses. The Centre for Retail Research found that more than 17,000 shops closed in 2022, equivalent to 47 a day and the highest total in five years. More than 5% of retail staff lost their jobs last year through insolvencies and store closures arising from rationalisation.

Retail, especially independent shops, is hugely important in beautiful Hastings and Rye, where over 30% of the local economy depends on the hospitality and tourism sectors. I know many local outlets have ceased to trade, and the town centre in Hastings is punctuated with empty or shuttered shop windows. Even key areas such as Robertson Street, which has seen something of a revival since the pandemic, now has prominent outlets closed and empty. Sadly, some businesses we lost were Hastings institutions, such as the fishmongers in Queens Arcade, which had been there for more than half a century. Others include the large Argos near Breeds Place, which remained empty for several years prior to the pandemic, and big names such as Game, in Priory Meadow. Several cafés across the town have also closed.

It would be unfair to say that all those business closures relate to the business rates system. Some are due to an increase in rent, on top of the increase in supply chain and energy costs caused by the pandemic and Russia’s invasion of Ukraine, but I have no doubt that business rates is a significant contributory factor to many business closures across the country. The business rates system has become disconnected from the realities of modern retail and retail real estate, which is why I am pleased the Government have decided to modernise it.

There are several positive measures in the Bill which will help our retail sector. A more frequent cycle of three years for revaluations will allow changes in economic conditions to feed through more rapidly into businesses’ liabilities. As long-term changes in the economy continue to manifest, accelerated by the aftermath of the pandemic, that will ensure the business rates system is more agile and responsive to change, while also improving fairness for ratepayers. However, it has been argued that annual revaluations would be most ideal, ensuring a highly responsive and up-to-date system. Perhaps the Minister can explain a bit more about that in her response.

The digitalising business rates project will, I hope, modernise the business rates system, improve the targeting of rates relief, generate better data for central Government and local government and help to improve business rates compliance. Measures to support de-carbonisation and investment, including a relief for low-carbon heat networks and a new improvement relief, will ensure that, from April 2024, ratepayers will not see an increase in their rates bill for 12 months from qualifying improvements made to their property. That is important because businesses that improve their properties should not be penalised for it.

However, I have some concerns that the Bill does not go far enough to help small businesses. The move to the three-yearly valuations has a cost to the ratepayer. The Valuation Office Agency has imposed a corresponding duty to notify, which requires ratepayers to inform it of any changes made to a property within 60 days of the change. This new duty represents a significant administrative burden for businesses, particularly the small ones. Whenever a change is made to the property, the occupier must inform the VOA within 60 days, or be met, it seems, with punitive fines.

The VOA’s job is to determine a property’s rateable value. It appears that the imposition of the new duty is simply the VOA asking the ratepayer to do its job for it. Many small businesses will struggle with that additional burden. Perhaps most concerning is the lack of a corresponding duty for the VOA to respond to ratepayers’ requests. Although the ratepayer must notify the VOA within 60 days—with the threat of financial sanctions—the VOA may respond to the ratepayer at its leisure. That hardly seems fair.

I am concerned that the uniform business rate multiplier has risen to 51p, which is a significant increase from the 43p that it stood at on its introduction in 1990—admittedly, that is quite a long time ago. Although freezing the UBR is welcome, it is temporary and contrary to our promise in the 2019 Conservative manifesto to cut the burden of tax on businesses by reducing business rates. The Bill means there may be annual increases in the UBR by linking it to the consumer prices index. I would be grateful if the Minister could explain a bit more about that. We need to keep in mind that in 2019 voters were promised reduced business rates bills on SMEs. Can the Minister outline what has been done to lower the UBR? Can she explain how linking the UBR to inflation through the consumer prices index will help to reduce the tax burden on businesses?

Overall, the Bill is welcome as a positive step in the right direction. We must do all we can to protect our retail sector. The Conservative party is always the party for small businesses. I would like a business rates system that flexes with profit rather than one based on the value of a property—that would be fairer.

Public Sector Exit Payments (Limitation) Bill

Sally-Ann Hart Excerpts

2nd reading
Friday 3rd March 2023 Commons Chamber

[Sally-Ann Hart (Hastings and Rye) (Con)]

The Public Sector Exit Payments (Limitation) Bill, brought forward by my hon. Friend the Member for Christchurch (Sir Christopher Chope), has reached Second Reading today, and it does have merit in its endeavour to secure value for money for the taxpayer.

I understand that the Government believe that staff exits and exit payments have an important role to play as regards organisational changes in the public sector, and these exit payments need to be looked at through a rigorous process. After all, it is taxpayers’ money that is paying for such exit payments. I also understand that the Government are seeking to reduce the use of large exit payments in the public sector and are looking to develop guidance on it. There needs to be consistency and accountability about the use of such payments.

I note that the Government consultation closed in October 2022. During the last debate on the subject, the then Minister, my right hon. Friend the Member for North East Cambridgeshire (Steve Barclay), implied that the consultation would be brought forward. I hope that the Minister today might provide an update on the outcome of the consultation and the Government’s response. I draw attention to the merit of the Bill of my hon. Friend the Member for Christchurch.

Financial Services and Markets Bill

Sally-Ann Hart Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

To conclude, we welcome the Bill in principle, but there are real weaknesses in its drafting—primarily, the lack of parliamentary oversight and the missed opportunities in promoting green finance and tackling fraud.

[Sally-Ann Hart (Hastings and Rye) (Con)]

In 1215, the Magna Carta was written and signed into law by King John I of England. Although that important document did not guarantee freedom of speech, it was considered the cornerstone of liberty in England and began a tradition of civil rights in Britain that laid the foundations for our first Bill of Rights of 1689, which granted freedom of speech in Parliament.

That was the first time in history that any form of freedom of speech was codified in law. It was extremely influential throughout the western world, leading to the declaration of the rights of man in 1789—a fundamental document of the French revolution that provided for freedom of speech—and the US Bill of Rights in 1791. In 1948, the universal declaration of human rights was adopted virtually unanimously by the UN General Assembly, and urged member nations

“to promote a number of human, civil, economic, and social rights”,

including freedom of expression. Under article 10 of the Human Rights Act 1998,

“Everyone has the right to freedom of expression…subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society”.

Criminalising the incitement of violence or threats, for example, is widely considered a justifiable limit on freedom of expression.

What we cannot have are global tech firms, online payment services, banks and others deciding who they can censor because they do not like or are offended by the views of others. It is essential to have freedom of expression—it is essential to society—and we have to be able to express and discuss differing ideas and ideals to ensure that we have a full and therefore better understanding of the challenges we all face in this modern world.

Freedom of expression in the UK is under threat and must be protected. New clause 27 protects free speech and the exercise of free expression. It seeks to prohibit service refusal by financial service providers on grounds relating to lawful exercise of free expression by requiring providers to explain the reason for a refusal of service, allowing the Financial Conduct Authority to intervene, and creating a civil law remedy for affected customers. We should not allow a system where payment service providers or even high street banks can terminate the accounts of individuals or organisations on the basis of lawful speech if adequate notice is given. Britain has led the world for centuries on democracy and freedom of speech, and it needs to do so again against the global tech companies that want to impose their view of the world and stifle free speech.

Members may remember in early September media agitation surrounding PayPal’s decision to cancel the online payment accounts of the Daily Sceptic, the Free Speech Union and an individual’s personal accounts. Many of us here may not agree with the politics of these organisations or that individual, but it is fundamentally wrong that online payment accounts can be exited because the payment service provider or its staff do not agree with the opinions of the service user. We are not talking about hate speech, terrorism or crime—we have legislation to deal with that; we are talking about lawful speech.

The relatively recent digitalisation of financial transactions has placed an unprecedented amount of power in the hands of online payment service providers such as PayPal, as well as banks, credit companies and online platforms. UK legislation must keep pace with these rapid technological changes and financial censorship must be prevented. As we switch to an increasingly cashless society, we must put in legislation to protect people from being punished by payment processors for expressing legal, but different views, no matter our politics.

New clause 27 is designed to ensure that the regulator has the ability to ensure that financial service providers cannot withdraw or withhold service from a customer on political grounds. The battle to preserve free speech in our society is something we must all fight for. Rising political polarisation is contributing to the threat to our freedom of expression, and the alternative—placing power in the hands of the easily offended—cannot be an option. This issue has to be of grave concern to us all, whatever our politics. I am grateful to the Minister for his assurances earlier, spelling out what he is going to do and his commitment to take this matter further. There are plenty of colleagues who will hold him to that.

[Nick Smith (Blaenau Gwent) (Lab)]

I rise in support of new clause 10, and I am pleased to have worked alongside the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown) on it, as fellow members of the Public Accounts Committee. Since 2017, I have worked with others supporting steelworker pensioners across Blaenau Gwent and the United Kingdom. Thousands of them fell victim to financial sharks. They were wrongly advised to move out of their defined benefit British Steel pension scheme. It took until last Monday, five years later, for the Financial Conduct Authority to announce a redress scheme. It was about time. The FCA righted those wrongs, but I think too late.

Early on in the campaign, I remember meeting the then chief executive of the FCA, now the Governor of the Bank of England, Andrew Bailey, where I was met with a lacklustre response. Along with my hon. Friend the Member for Aberavon (Stephen Kinnock) and other campaigners, I continued to press the FCA. In 2020, I wrote to its newly appointed chief executive, however Mr Rathi did not want to meet. He asked one of his directors to meet us instead.

Later, in 2021, frustrated with the FCA giving us the cold shoulder, I wrote to the Comptroller and Auditor General of the National Audit Office. I asked if it would please investigate the FCA’s oversight of this terrible scandal. Fair do’s, the NAO did that, and it published its full report in March this year. It observed that in the summer of 2017:

“The FCA had limited insight into…what was happening in the BSPS at the time of its restructure.”

There were terrible things going on.

Even more damning were the conclusions of the Public Accounts Committee. We found that:

“The FCA failed to take swift and effective action at all stages of the BSPS case.”

It failed

“to prevent consumers from being harmed”,

which makes clear the

“limitations with the FCA’s supervisory approach”.

The point is that the FCA took proper notice of this injustice only when Parliament, through the NAO and eventually the Public Accounts Committee, dug deep to investigate.

Of course, the BSPS case is not the only example of the FCA’s failure to protect consumers in recent years; I have heard many complaints from Members across the House. The scandals surrounding Blackmore Bond, Dolphin and Azure come to mind. Consumers are our financial sector. As long as the FCA fails to exercise its powers to protect ordinary workers, it will continue to fail our constituents. New clause 10 would require the FCA’s consumer panel to lay an official report before Parliament. We could then judge whether the regulator is fulfilling its duty to protect consumers.

During my 12 years in this House, I have learned many things, but one thing stands out: parliamentary scrutiny matters. I am pleased to have support from across the House for the new clause—from our Labour Treasury team, senior Conservative Members, the Liberal Democrat spokesperson, Treasury Committee members, other colleagues and fellow members of the Public Accounts Committee. By supporting our new clause, Britain’s consumers could be better heard, and our financial services sector would be all the better for it.

Co-operatives, Mutuals and Friendly Societies Bill

Sally-Ann Hart Excerpts

Friday 28th October 2022 Commons Chamber

[Sally-Ann Hart (Hastings and Rye) (Con)]

It is a pleasure to speak on this Bill, which was introduced in this House on 15 June by the hon. Member for Preston (Sir Mark Hendrick), and I congratulate him on that.

Essentially, the Co-operatives, Mutuals and Friendly Societies Bill aims to make it easier for co-operatives to get more investment while retaining their democratic structures, ensuring that they work in the interest of, and are owned by, their members. It also brings friendly societies law up to date and establishes tax neutrality for mutuals’ deferred shares.

I am proud of the work of mutuals such as the Hastings Mutual Insurance Company and the Hastings and East Sussex Building Society. The now de-registered Hastings Pier Charity in Hastings and Rye has done some great work locally. But I am not on an expert on them, so I did a bit of research before today. I was interested to learn that the term “mutual” is used as an umbrella term for several different ownership models. Mutuals are often described as being characterised by the extent to which members have democratic control of the business and share in its profits, in contrast to investor-controlled companies. This is a bit of a misleading distinction; all limited companies really operate for the benefit of their members—the shareholders who invest in a company limited by shares or the guarantors of a company limited by guarantee. These members are involved in the control of the business whether directly or through the scrutiny of the actions of the directors, or simply by buying and selling shares in response to the company’s performance.

The distinguishing characteristic of a mutual is that the organisation is owned by and run for the benefit of its members, who are actively and directly involved in the business—whether it is employees, suppliers, or the community or consumers that it serves—rather than being owned and controlled by outside investors.

Mutuals can be based on a variety of different legal structures. Even limited companies, partnerships and limited liability partnerships are essentially mutual because the partners own and run the business for their own benefit. There is also an incorporated legal structure, which is specifically mutual: the industrial and provident society. There are two types of these: co-operative societies and community benefit societies.

Co-operative societies operate for the benefit of their members, and distribute any surplus not reinvested in the business to those members. Community benefit societies conduct business for the benefit of their community. Any profits are not distributed among members, but returned to the community. They therefore provide a legal structure designed for social enterprise. However, not all co-operatives use those legal structures and many are, in fact, limited companies.

Although mutual ownership models may not be appropriate for all businesses, evidence shows that mutual models can form the basis for high-performing, profitable businesses, and deliver genuine business advantage. For example, mutual ownership can help to ensure that decisions are focused on the long-term sustainability of the business. Employee-owned mutuals often involve some form of employee engagement and participation, allowing employees a say in the running of the company. This can help to align the interests of management and employees, increase motivation and job satisfaction, and can be a means to raise new capital without going public.

Mutual ownership models and social enterprises offer a way for communities to share the wealth that businesses create more widely in the community, and, indeed, for communities to come together to solve problems. In Hastings and Rye, we have a number of successful and evolving social enterprises, including White Rock Neighbourhood Ventures, which is a joint venture between three social enterprise organisations: Meanwhile Space CIC, Jericho Road Solutions and Heart of Hastings CLT.

White Rock Neighbourhood Ventures owns Rock House, which was redeveloped as a mixed-use project, breathing new life into a previously underused building situated in the White Rock area of Hastings town centre. It is a large building and is home to living space, work space and a community hub. The redevelopment was funded by a number of organisations, including Big Issue Invest, Jericho Road Solutions, and the Government, through the former Ministry of Housing, Communities and Local Government, now the Department for Levelling Up, Housing and Communities. Rock House fosters creative enterprise and has generated jobs and self-employment, and is a real social enterprise asset to Hastings.

The Bill’s proposed legislative measures involving share capital and non-distributable capital surplus would enable significant new investment, innovation and development to take place in a wide range of co-operatives for the purpose of greater economic, environmental and social impact. The current legislation governing the raising of capital for co-operatives is rather inflexible; the Bill would enable co-operatives to raise more money by issuing equity shares that are repayable at the option of the society, rather than being withdrawable at the option of the members. By introducing repayable shares, it would enable co-operatives to raise amounts in excess of the current £100,000 holding limit for withdrawable shares. It would provide legal certainty as to whether co-operatives can choose to repay non-withdrawable shares. It would also give co-operative societies the option of adopting a statutory provision guaranteeing that their residual capital surpluses are non-distributable among members. However, the provisions would not interfere with co-operative societies’ ability to pass profits on to members or to pay interest on share capital.

The accumulation and reinvestment of capital surplus is a feature of the co-operative model, as recognised internationally and in UK policy. For this reason, most co-operative societies include non-distributable capital surplus provisions in their rules. The issue is that these rules-based provisions fall short of the permanent legal guarantee sought by many co-operative entrepreneurs, investors and policymakers.

This legislative change would have a number of economic benefits. It would create better conditions for investment and asset growth in co-operative societies by setting the right boundaries and engaging with the appropriate motivations of entrepreneurs, members and investors, and by preventing perverse incentives to destroy co-operative value, such as unnecessary demutualisation; it would boost business investment by committing more capital surplus to reinvestment in economically, environmentally and socially productive enterprise; and it would give co-operative entrepreneurs more optimal choices of legal form, enabling innovation and impact to take place in the social economy.

These changes have the potential to lead to large capital-driven co-operative societies raising millions of pounds more each year in equity, which could then be used to invest in important initiatives, tackling issues such as decarbonisation, technology and the current cost of living crisis. This is compassionate capitalism at its best. The Bill has much merit, and it deserves our support.

Financial Services and Markets Bill (First sitting)

Sally-Ann Hart Excerpts

Committee stage
Wednesday 19th October 2022 Public Bill Committees

[Shaun Bailey (West Bromwich West) (Con)]

I am chair of the all-party parliamentary group on financial resilience.

[Sally-Ann Hart (Hastings and Rye) (Con)]

My husband and two sons work in financial services.

[The Chair]

Anybody else? No.

We will now hear oral evidence from Sheldon Mills, interim executive director of strategy and competition at the Financial Conduct Authority; Sarah Pritchard, executive director of markets at the Financial Conduct Authority; and Victoria Saporta, executive director of prudential policy at the Prudential Regulation Authority. Before calling the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme order that the Committee agreed. For this panel, we have until 10.10 am. Will the witnesses please introduce themselves for the record?

Sarah Pritchard: I am Sarah Pritchard, the executive director of markets at the Financial Conduct Authority.

Sheldon Mills: I am Sheldon Mills, the executive director for consumers and competition at the Financial Conduct Authority.

Victoria Saporta: I am Vicky Saporta, the executive director of prudential policy at the Prudential Regulation Authority.

--- Later in debate ---

[Peter Grant]

Q Are those comments made within the context that achieving a permanent change in net zero targets is not optional? It is absolutely necessary.

David Postings: The banking industry is 100% behind that transition, but the transition is the important point, not just greening the balance sheets of the firms.

Emma Reynolds: May I add to that? There is a huge commitment from financial services, and we also represent related professional services, in playing a part in enabling the transition to net zero. Financial services and financial regulators are an important part of a much broader picture, which is why green finance is actually led by the Department for Business, Energy and Industrial Strategy, not His Majesty’s Treasury. It is about not just the supply of green finance, but the demand for such products. If we have a transition to net zero, it has to be about every sector pursuing a transition. Financial services has a critical role to play, but that has to be done in tandem with the transition in other sectors too.

[Sally-Ann Hart]

Q Good morning. Looking at the culture in the regulatory system and the culture of the regulators, do you think our regulators need a culture change? For example, do they need more commercial experience? We are looking at rules. There is a need for speed. Speed is of the essence when trying to make decisions or make things happen. Is that something we need to focus on?

Emma Reynolds: I certainly think there is room for a more commercial mindset in the regulators. This is not just about regulation by the way; it is about operational efficiency. One of the things we have been working on is delays in authorisations for senior managers, which can slow things down. There are other authorisations as well. We are encouraging the regulators to have a more commercial mindset and to be aware of the businesses’ priorities. It is not just about regulation; it is about how efficient they are. If, for example, you want to bring in a senior manager to a bank or other institution in the UK and it takes you 18 months to 2 years, you could be doing that elsewhere, and that puts us at a competitive disadvantage. So, absolutely, we think that there is room for improvement in having a commercial mindset in the regulator.

[Sally-Ann Hart]

Q And more speed and less regulation.

Emma Reynolds: Proportionate regulation and—we have not got into the cost-benefit analysis panels—careful consideration of the benefits of regulation to make sure that the costs and burdens of regulation do not outweigh the benefit.

David Postings: I agree with Emma. To give a couple of examples, the cost-benefit analysis of the consumer duty had costs but no benefits—no financial benefits. The intent in the Bill to ensure that the FCA and FOS are aligned is really important as well, because it is very difficult for a financial services firm to operate in an environment where we are not clear what the rules are when it comes to interpretation down the line. That makes people cautious, which can add to financial exclusion. The point that Emma made about authorisations is also really valid: there are still significant businesses awaiting authorisation post Brexit from large foreign institutions.

[Sally-Ann Hart]

Q That causes serious hold-up and affects our economic growth.

Emma Reynolds: And our competitiveness. If that can be done more quickly in another jurisdiction, business might well go there to set up or expand.

David Postings: Fundamentally, what we want is a competitive UK. We are only a small island off the mainland of Europe, but we want to generate big tax revenues to support growth in the economy. Anything we can do to help that is vital. Good, strong regulation is a key aspect of that. A nimble, commercially minded set of regulators to set that stronger regulation is vital.

[Andrew Griffith]

Q We have a few minutes left. One perception is that this is about the City of London. Your members, I assume, hail from all parts of the UK, creating employment and wealth in Edinburgh, Glasgow and some of our other great cities. Will you expand on that a little for the Committee?

Emma Reynolds: Sure. We represent the financial and related professional services industry, which employs 2.2 million people, and two thirds are outside London, contrary the characterisation that financial services are mainly in the City of London. We are the biggest net exporting industry, and more than 40% of our exports come from outside London.

David Postings: Yes, we produce higher-paid jobs, and there are big concentrations in Glasgow, Belfast, the north-east, the north-west and down on the south coast. It is a thriving industry and one that we need to support and nurture.

[The Chair]

We have two minutes left. Any quick questions for a quick response?

[Sally-Ann Hart]

Q Very quickly, the hon. Member for Mitcham and Morden raised the issue of access to cash and the reduction in banking services. The Bill contains substantial provisions to safeguard access to cash and halt the decline in banking closures and free-to-use ATMs. Do they go far enough? Will the Bill work?

David Postings: Absolutely it will work. This is something that we have been working on. We kicked this off as an industry 18 months ago. I have worked with the Treasury, the FCA and the consumer groups for the past 18 months on this. The aim is to make sure that cash provision for the most vulnerable—indeed, for all of society—is protected. The Bill will absolutely do that—through cashback without purchase, ATMs that are free for consumers to use, post office counters and shared banking hubs. Twenty-five shared banking hubs have been announced so far, and that number will increase. All that will provide the right level of cash access going forward. The banks will be subject to LINK as a body to decide what goes where, based on detailed local analysis, and then there is an operating company that banks own, which will implement the solution.

[Sally-Ann Hart]

Q Is there anything you want to add, Ms Reynolds?

Emma Reynolds: No. I defer to David. UK Finance provided leadership in this area—that is where the expertise sits.

[The Chair]

Order. I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank the witnesses on behalf of the Committee.

Examination of Witness

Chris Hemsley gave evidence.

--- Later in debate ---

[Emma Hardy]

Q Do you support data-sharing agreements and things like that?

Chris Hemsley: Indeed. We have work under way to encourage and support that.

[Sally-Ann Hart]

Q PayPal Europe decided to exit accounts, including those of the Free Speech Union and the Daily Sceptic, and although PayPal reinstated the affected accounts, what happened raised concerns about the protection of freedom of speech in the UK. Are the regulators—you and the FCA—able to address the apparently unchecked ability of financial service operators, such as PayPal, to effect private economic sanctions and censorship in the UK through denial of service actions? Are legislative safeguards needed in the Bill, or in other relevant legislation?

Chris Hemsley: This is principally a matter for the FCA, so it might be best for me to follow up on it in writing, and potentially with the FCA.

[Sally-Ann Hart]

That would be good.

Chris Hemsley: The PSR’s powers allow us to make sure that people have fair access to payment systems. The access to a particular payment firm’s services would be something for the FCA. I am happy to take that away and make sure that the Committee has a reply.

[Sally-Ann Hart]

Q That would be helpful. Even though they are part of the temporary permissions regime, should operators such as PayPal be subject to the UK’s Financial Ombudsman Service, so that dissatisfied customers can seek redress?

Chris Hemsley: Again, that is more for the FCA, but I can offer you a general view. It is in everyone’s interests that the same risks and regulations apply to people carrying out payments business, including payment systems and payment firms. That is my general answer, but perhaps I could pick that up in correspondence, given that it falls principally to the FCA.

[Sally-Ann Hart]

That would be great; thank you. Maybe we can take that up with the FCA.

[The Chair]

Order. I am afraid that that brings us to the end of the allotted time for this panel. On behalf of the Committee, I thank our witness.

Examination of Witnesses

Charlotte Clark and Karen Northey gave evidence.

National Insurance Contributions (Increase of Thresholds) Bill

Sally-Ann Hart Excerpts

2nd reading
Thursday 24th March 2022 Commons Chamber

[Mr Clarke]

My right hon. Friend is absolutely right in saying that we want a simpler tax system, and we want to make sure that the burden of tax is lower. In the end, the tax system should be an incentive that rewards work, and that is what our measures today continue to support. On the point raised by my hon. Friend the Member for Rushcliffe (Ruth Edwards), 70% of all workers will have their NICs cut by more than the amount they will pay through the new health and social care levy.

[Sally-Ann Hart (Hastings and Rye) (Con)]

My right hon. Friend will know that my beautiful constituency of Hastings and Rye has residents with some of the worst levels of deprivation in the country, and I obviously welcome this Bill on their behalf. Will he confirm for the residents of Hastings and Rye that this Government’s interventions have helped the poorest households the most through measures such as cutting the universal credit taper rate last year, increasing the national insurance thresholds, permanently increasing the local housing allowance for housing benefit and increasing the national living wage? Can he confirm that this will benefit my residents in Hastings and Rye?

[Mr Clarke]

I thank my hon. Friend for her question. She is a fantastic champion for Hastings and Rye, which I recognise is a part of the south-east that perfectly demonstrates that communities face very significant challenges in all parts of the United Kingdom. Sometimes the levelling up question is seen as the north and the midlands against the south, but her constituency is a very good demonstration of why communities in the south-east also need support. She is absolutely right in what she says. This is a Government with a strong track record of delivering for people who need the most help. It is worth noting in that regard that, as a result of the Bill, over 2 million people will be taken out of paying class 1 and class 4 NICs and the health and social care levy altogether, including, of course, in Hastings and Rye.

--- Later in debate ---

[James Murray]

We have had a number of comments about what is within the scope of this debate, and I suspect that issue is rather out of scope. I will focus on national insurance and the Chancellor’s spring statement yesterday, and matters related directly to that.

Following the spring statement and the package announced by the Chancellor yesterday, Torsten Bell, chief executive of the Resolution Foundation, stated:

“This package only makes sense if:

- your only test for policy choices was can you prove you’re a tax cutter

- you’ve already announced a rise in National Insurance.”

Overnight analysis by the Resolution Foundation has set out the stark truth that considering all income tax changes to thresholds and rates announced by the Chancellor, seven in eight workers will pay more in income tax and national insurance in 2024-25.

[Sally-Ann Hart]

If the Opposition had to plan for a spring statement, would they rule out raising income tax?

[James Murray]

We have made it very clear that we believe in a fair taxation system. The key point for us in the Chancellor’s package is that he is raising taxes for working people, while ruling out measures such as our one-off windfall tax on the profits of North sea oil and gas producers. That is not a fair taxation system.

The inescapable truth is that whatever the Chancellor puts on his Instagram account, he has left Britain facing the highest tax burden in 70 years. As Paul Johnson, director of the Institute for Fiscal Studies said yesterday:

“almost all workers will be paying more tax on their earnings in 2025 than they would have been paying without this Parliament’s reforms to income tax and NICs, despite the tax cutting measures announced today.”

The Institute for Fiscal Studies has calculated that median earners on around £27,500 can expect, even after the increase in national insurance thresholds, to be £400 worse off in the coming financial year. The Office for Budget Responsibility has confirmed that this year will see the biggest hit to incomes on record. That will be the true legacy of this Chancellor, not the phoney tax-cutting image that he has been so desperate to cultivate.

Although today we are debating national insurance thresholds, and the impact that will have on people’s lives, there is much more that the Chancellor simply failed to address in his spring statement. We have been repeatedly pushing the Chancellor to levy a one-off windfall tax on North sea oil and gas producers’ profits, to help fund a one-off cut to people’s energy bills. Our plans would cut everyone’s bill by £200 and would do so by £600 for the 9 million households facing the toughest squeeze.

--- Later in debate ---

[Richard Drax]

I entirely concur. Yes, inflation is now spiralling to 7%, I think, and more across the rest of the world. Inflation has a very negative effect on the economy, on what we can afford to buy and on the value of our money. It has to be countered.

Given that the cost of living is spiralling and that taxes are the highest for 70 years, I urge the Government to go further. As they know full well, lower taxes generate more cash. That point is proven, and we Conservatives have fervently followed it for as long as I recall. Why? Again, as Treasury Benchers know, low taxes are a force for good—both for the individual, who is far better placed to decide where to spend their money, and for the private sector, which can better invest in their businesses, employ more staff and sustain a profit—an ugly word for Labour Members. Let us not forget that it is the tax from those profits that pays for the public sector.

[Sally-Ann Hart]

Will my hon. Friend confirm that every single Labour Government have raised taxes rather than lowered them and have left this country in such a situation that every single Conservative Government have had to get the economy back on track?

[Richard Drax]

I totally concur with that comment. Regrettably, Labour will do it again and again and again —that is what socialism is all about.

Economic Update

Sally-Ann Hart Excerpts

Thursday 3rd February 2022 Commons Chamber

[Sally-Ann Hart (Hastings and Rye) (Con)]

I join my colleagues on these Government Benches, and I am sure many secretly on the Opposition Benches, in thanking my right hon. Friend for his measures today. As he is aware, we have some real deprivation in my beautiful constituency of Hastings and Rye. Can he confirm that the measures announced by him today target support to the most vulnerable and disadvantaged in my constituency, are more generous as well as more financially sensible than Labour’s uncosted plans, and will reach the families who most need help now?

[Rishi Sunak]

My hon. Friend is absolutely right. Getting cash to people who need it quickly is paramount in this circumstance. That is why the £150 will go to those in her constituency in council tax bands A to D in April, which will provide immediate relief. As she said, this is a financially responsible approach to this problem, because we do have to continue getting our borrowing and debt down so that the plan we have put in place maintains us on our path. It is actually important to recognise—I have made this point before—that one of the reasons why I care about getting our borrowing and debt to better levels is so that we have the resilience to respond to shocks exactly like this, and that is why it is important that we do rebuild such resilience.