Budget Resolutions

Tulip Siddiq Excerpts

Tuesday 12th March 2024 Commons Chamber

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

This Budget was the last gasp of a dying, desperate Government. It did nothing to address 14 years of Conservative economic failure and, as always with this Government, it is working people who pay the price.

Many Opposition Members have made powerful contributions to today’s debate, and I apologise for not being able to mention every single one. However, I pay tribute to my hon. Friend the Member for Huddersfield (Mr Sheerman), who said it was his last ever Budget speech today.

The British people are struggling with the highest tax burden in 70 years, and they still face further tax rises over the next five years—a point that was powerfully made by my hon. Friends the Members for Tamworth (Sarah Edwards) and for Newport West (Ruth Jones). Food prices are still 25% higher than they were two years ago. Rents are up by 10%, and a typical family will pay an extra £240 a month when remortgaging this year. Nothing the Chancellor said in last week’s Budget changes that. As much as he tries, he cannot hide from his Government’s record: 14 years of low investment, stagnant wages and poor productivity, the country in recession, wrecked public finances and an economy crippled by debt. The Chancellor tried to wash away the realities last week, but families in our constituencies cannot do the same. People feel worse off under the Conservatives because they are worse off.

As my hon. Friend the Member for Liverpool, Walton (Dan Carden) focused on, the Office for Budget Responsibility—not us—has now confirmed that this will be the worst Parliament on record for living standards. Let me repeat that, because it is worth repeating: this will be the worst Parliament on record for living standards. It is the only Parliament on record in which living standards have fallen. Real pay has gone up by just £17 a week over almost a decade and a half of this Conservative Government. When the Labour party was last in power, wages rose by £183 a week over 13 years. After 14 years of Conservative rule, people have less money in their pockets.

As my hon. Friend the Member for Bedford (Mohammad Yasin) touched on, the latest ONS figures show seven consecutive quarters of falling GDP per capita from the start of 2022. This is the longest period of economic stagnation in this country since the 1950s, and now, under this Prime Minister and this Chancellor, the country has fallen into recession. Government debt has almost tripled under the Conservatives from £1 trillion to just under £2.6 trillion.

Did last week’s Budget give the British people or British businesses any hope that the Government could turn things around? Absolutely not. Household disposable income is set to fall by £200 per person over the course of this Parliament. Real GDP per capita is expected to be lower at the end of this year than it was at the start of this Parliament, and borrowing has been revised up in the next five years of the forecast period. The Institute of Directors described the Chancellor’s efforts as an “unremarkable Budget for business”, and the British Retail Consortium has said that it

“will do nothing to turbo charge investment and growth in communities”.

This was a failed Budget from a failing Government.

[Sarah Edwards]

Does my hon. Friend agree that this Conservative Budget has confirmed that the next Government will receive the worst economic inheritance since the second world war? Does she agree that the Tories should listen to our constituents, call a general election now and stop taking a wrecking ball to the economy on their way out the door? [Interruption.]

[Tulip Siddiq]

I thank my hon. Friend for her intervention. Those on the Conservative Benches do not want to hear it, but if they have so much confidence in their record, why do they not do as she asks, call a general election and put a test to the public?

Unable to defend his own Government’s records and unable to offer any plan to get the country out of the economic mess that his party created, this Chancellor has resorted to undeliverable promises. When we thought things could not get any worse, the Chancellor bizarrely ended his Budget last week with a £46 billion unfunded tax plan to abolish national insurance. This would leave a gaping hole in the public finances, put family finances at risk and create huge uncertainty for our pensioners. This is even bigger than the unfunded tax cuts announced in the Conservatives’ mini-Budget that added hundreds of pounds to people’s mortgages, as my hon. Friend the Member for West Ham (Ms Brown) powerfully pointed out. I will be listening intently to the Minister’s response today, and I hope that he will set out how his Government would fill that gaping hole in the public finances to avoid rerunning the disastrous experiment that crashed the economy just 18 months ago.

[Fleur Anderson]

Does my hon. Friend agree that it is absurd that throughout today’s event the Government have been unable to confirm how they will pay for their unfunded £46 billion plan to abolish national insurance contributions? Where is the money coming from?

[Tulip Siddiq]

rose—

[Alan Brown]

I thank the hon. Lady for giving way. I asked earlier about what the Institute for Fiscal Studies has called a conspiracy of silence from both Labour and the Conservatives. Is Labour sticking with the baked-in £20 billion of future departmental cuts that are in the Budget, and if not, how is Labour going to pay for that?

[Tulip Siddiq]

rose—

[Mr Deputy Speaker (Sir Roger Gale)]

Order. I fully appreciate the orchestration, but it would be quite a good idea if one intervention was responded to before the next one was made.

[Tulip Siddiq]

Apologies, Mr Deputy Speaker. I will answer both interventions by saying that I know those on the Conservative Benches do not want to hear it, but if you make a pledge without the plan, you have to clarify where the money is coming from—[Laughter.] It is not a laughing matter. It is causing havoc in people’s finances.

Then again, nothing would surprise me from this clown show of a Government. Less than a week after committing to a British ISA, the Chancellor has apparently U-turned and ditched the plan until after the election, because he has apparently just noticed that he has no idea how he is going to pay for it. Another U-turn, another uncosted announcement, another promise without a plan from this clueless Conservative Government.

Turning to the other tax cuts in the Budget, Labour has consistently said that we want to reduce the tax burden on working people. That is why, when the current Prime Minister wanted to increase national insurance two years ago, we opposed it. Let us be under no illusions: we support the measures announced last week to bring national insurance down by an additional 2%, but that does not change the fact that this Government have raised the tax burden to record levels and taxes are continuing to rise. Under the Chancellor’s plan, households will be £870 worse off on average. His decision to freeze tax thresholds will create 3.7 million taxpayers by 2028-29.

As my hon. Friend the Member for Nottingham South (Lilian Greenwood) pointed out, OBR figures show that, as a result of last week’s announcements, for every 10p extra that working people pay in tax under the Conservatives, they will get only 5p back. And the Government expect the British public to thank them for it! However the Chancellor tries to spin it, his Budget means that Britain will go into the next general election with taxes at their highest level since 1949.

Although we will always call out the Conservatives for pickpocketing the British taxpayer, we welcome their recent pickpocketing of Labour policies. Labour has long argued that people who make Britain their home should pay their taxes here. Bizarrely, however, the Prime Minister said that scrapping the non-dom status would somehow cost Britain money. Even more bizarrely, the Chancellor previously tried to argue that the non-dom status supports jobs and that reforming it would cause long-term damage to growth.

I hope the Economic Secretary to the Treasury will explain what caused this road to Damascus moment. Is he personally responsible for finally getting his party to listen to us about the importance of closing the non-dom loophole, which the OBR estimates will raise £3 billion a year? As my right hon. Friend the Member for Walsall South (Valerie Vaz) and my hon. Friend the Member for Wakefield (Simon Lightwood) said, Labour first called for the loophole to be closed two years ago, meaning that the Government have cost the country £6 billion that could have been spent on precious public services.

I do not deny that the Conservative party has come a long way since their opposition to our windfall tax on oil and gas producers but, even after yesterday’s announcement of a one-year extension, the Chancellor is leaving loopholes that mean the energy giants will still pay billions less in tax. Surely the Government have learned by now that they would save themselves a lot of time, and the country a lot of money, if they adopted Labour’s policies in full.

This exhausted and directionless Conservative Government are out of ideas and out of time. All they had to offer last week were unfunded promises and an ever growing tax burden on working people. In contrast, our offer to the country will be carefully costed and fully funded, and it will always put working people first. The Conservatives have failed on growth, failed on living standards and delivered only stagnation and chaos.

Labour’s economic plan will build on the pillars of stability, investment and reform: stability brought about by iron discipline and guarded by strong fiscal rules and robust economic institutions. [Interruption.] Conservative Members love chuntering, but they would hear our plan if they listened properly. Investment—we will work with the private sector so that we can lead the industries of the future and make work pay. Reform—starting with our planning system, we will take on vested interests to get Britain building again.

Britain deserves better, Britain deserves change and the British people deserve an election.

Draft Bank of England Levy (Amount of Levy Payable) Regulations 2024

Tulip Siddiq Excerpts

Tuesday 20th February 2024 General Committees

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

It is a pleasure to serve with you in the Chair, Ms Bardell. I am supportive of the plan to replace the current cash ratio deposit, as the Minister will probably know, and of the proposed mechanics of the levy. Therefore, Labour will support this statutory instrument.

I have some technical questions on the implementation, although I understand that the Minister might not be able to answer them now and I am happy to receive answers in writing if he wants to send them to me later. Will the Bank of England be determining, as part of its formal review, whether non-bank financial institutions should be considered eligible for the levy in future? If so, what is the timeline for that review? What discussions has the Treasury had with the Bank about the adoption of a rolling five-year budget to help eligible banks to plan their own budgets? I am sure the Minister has also heard time and again that it is the lack of planning that gives banks uncertainty, so any plans he has for a rolling five-year budget would be helpful to know.

Finally, I am sure the Minister will agree that providing the banking sector with certainty is essential to securing the confidence needed to incentivise investment in the real economy. Could he therefore provide clarity on whether this SI will come into force by the beginning of March?

Draft Bank of England Levy (Amount of Levy) Regulations 2024

Tulip Siddiq Excerpts

Tuesday 20th February 2024 General Committees

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

It is a pleasure to serve with you in the Chair, Ms Bardell. I am supportive of the plan to replace the current cash ratio deposit, as the Minister will probably know, and of the proposed mechanics of the levy. Therefore, Labour will support this statutory instrument.

I have some technical questions on the implementation, although I understand that the Minister might not be able to answer them now and I am happy to receive answers in writing if he wants to send them to me later. Will the Bank of England be determining, as part of its formal review, whether non-bank financial institutions should be considered eligible for the levy in future? If so, what is the timeline for that review? What discussions has the Treasury had with the Bank about the adoption of a rolling five-year budget to help eligible banks to plan their own budgets? I am sure the Minister has also heard time and again that it is the lack of planning that gives banks uncertainty, so any plans he has for a rolling five-year budget would be helpful to know.

Finally, I am sure the Minister will agree that providing the banking sector with certainty is essential to securing the confidence needed to incentivise investment in the real economy. Could he therefore provide clarity on whether this SI will come into force by the beginning of March?

Oral Answers to Questions

Tulip Siddiq Excerpts

Tuesday 6th February 2024 Commons Chamber

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

The British public are still struggling with the Conservative cost of living crisis, and the Government are now forcing up council tax. Last week, for the first time in my life, a Conservative MP spoke for me when he said:

“There’s almost no point chopping £100 off tax bills nationally if you’re adding on to it with council tax.”

Labour Members agree with the hon. Member for Mansfield (Ben Bradley). Does the Chief Secretary agree with her hon. Friend and colleague?

[Laura Trott]

Council tax is a matter for councils, but we put in place a limit, which I do not believe existed under the previous Labour Government. More than that, the most difficult thing for councils and consumers more broadly is the £28 billion-worth of tax rises that Labour is planning in government.

Draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2024

Tulip Siddiq Excerpts

Monday 29th January 2024 General Committees

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

It is a pleasure to serve under you, Mr Twigg. I support the order, which designates the operation of a pensions dashboard as a regulated service; it must therefore be regulated by the FCA. The Opposition support any initiative that helps people to manage their finances and save for later life. The changes being debated are long overdue. Even though I support them, the Minister will not be surprised to know that I have some questions. International evidence and the DWP’s own impact assessment show that to reach their potential to help millions of people, dashboards must be incorporated into services that people already use, so how will the Government encourage firms to come forward to offer dashboards and ensure that they are regulated safely? When will the FCA publish its final rules? Does it expect commercial dashboards and the Money and Pension Service’s dashboard to be available at the same time?

Pension dashboards have already faced delays, as the Minister will know, and the Association of British Insurers has warned that the industry needs confidence that the existing timetable will stick to ensure effective delivery of this initiative. To what extent will pension dashboards rely on other parts of the Government? For example, will they rely on the Government’s One Login service and how will that affect the market for pension dashboards?

Some dashboards will present other financial data alongside pensions. That is one of the main benefits to consumers: to see all their finances in one place. As such, this statutory instrument is relevant to the Data Protection and Digital Information Bill as the smart data proposals in the Bill will enable the Government to create a framework for open finance and the digital verification proposals will make it easier for consumers to prove who they are online. Could the Minister reassure me that these related initiatives will not be considered in isolation and that he will take a holistic view of the legislation?

Building Societies Act 1986 (Amendment) Bill

Tulip Siddiq Excerpts

2nd reading
Friday 19th January 2024 Commons Chamber

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on bringing this important Bill to the House for debate. It is very lucky to get the first slot in the private Member’s Bill ballot, but it also takes a lot of work to find a Bill that generates such cross-party support and talks to such an important issue, as we have heard today. I hope you will indulge me for a minute, Madam Deputy Speaker, while I speak about the fabulous work that my hon. Friend has done in the House, because it is not often that we get to talk about and congratulate our comrades in quite this way.

My hon. Friend, who has been in the House since 2010, has done valuable work on the all-party parliamentary group on state pension inequality for women, which I am sure everyone will recognise. Before she was elected to the House, she worked closely with the National Asthma Campaign to ensure that life was easier for people who suffer from asthma, as I do. I commend her for that and for all the work she did with the GMB to change the law around the compensation paid to victims of asbestos-related diseases. This is, then, not the first piece of legislation she has worked on, but it is an important Bill and it shows how valued she is as a Member of the House.

I know how closely my hon. Friend has worked with civil servants, Ministers and the Treasury to produce a Bill that has such cross-party support and of which Treasury Ministers approve. From my dealings with them, I know that that is rare. I am delighted to say that the Opposition will back the Bill wholeheartedly today. I also acknowledge the important work of Labour’s sister party the Co-operative party, and the wider mutual sector, including the Building Societies Association and Nationwide. They have spent a great deal of time feeding into the Bill.

As has been said throughout the debate, building societies have a long and proud tradition of supporting working people to access affordable finance. The sector continues to play an invaluable role in promoting financial responsibility and resilience among its members, including by supporting young families to take their first step on to the housing ladder.

Building societies direct a greater proportion of their lending to first-time buyers than any other part of the financial services sector. They supported 70,000 first-time buyers in the first three quarters of 2023, and since 2020 building societies have supported 360,000 first-time buyers—that is more than £63 billion provided to help people to buy their first homes. The Bill is so important because it will empower societies across the UK to raise more funds and help our vulnerable constituents.

As my hon. Friend the Member for Sunderland Central set out in her compelling speech, her Bill could unlock significant additional lending capacity from building societies to support more working people to become homeowners. The hon. Member for Mid Norfolk (George Freeman) talked about how every £10 billion of new lending capacity, secured through the changes in the Bill, will potentially support an additional 20,000 first-time buyers. I agreed wholeheartedly with everything he said; dare I say, some of his comments sounded quite socialist—[Interruption.] I see he does not agree with me about that.

The debate has been interesting because I have agreed with lots of the Members who have spoken. In fact, the hon. Member for Dover (Mrs Elphicke) even quoted the first Labour Prime Minister favourably. There are plenty of spaces on the Labour Benches if anyone ever wants to come across.

Building societies have never been more important in the UK’s economy and public life. As a result of the cost of living crisis, many families have, as has been noted, been forced to use their savings in the face of rising energy prices and food prices. But building societies have continued to support people to save and to build financial resilience during this very difficult period. They attracted £18.9 billion in cash savings during the first nine months of last year. They are bucking the trend of the decline in savings balances that we have seen across the wider sector. Building societies have proven resilient in the face of hardship.

Lots of Conservative Members spoke about the role that the sector played during the pandemic. Leeds building society, finding that the requests for mortgage deferrals had increased to 2,000 a day, increased its use of robotic process-automation technology to create a fully automated web form for customers. At Nationwide, a team of mortgage, technology and AI specialists trained the society’s virtual assistant, Arti, to handle common covid-related mortgage queries.

Such resilience has allowed the sector to support its members, whether through covid or the current cost of living crisis, which is why clause 1 of the Bill is so important. It will allow building societies to exclude from the funding limit funds accessed from the Bank of England in stress scenarios, types of loss-absorbing debt instruments, and sale and repurchase agreements. That will level the playing field with banks and provide an extra level of protection for buildings societies during times of financial crisis, so that they can continue to support their members for many decades to come.

As I mentioned, in recent years we have seen many building societies adapt to new challenges and adopt exciting technologies and digital ways of working. Principality building society has delivered an online mortgage payment holiday service in partnership with the fintech company Podium Solutions. The service allows members to access a mortgage holiday repayment calculator and an online application process to better understand their mortgage outcomes.

The changes introduced by clause 2, which would allow real-time virtual participation in annual general meetings, are long overdue. Building societies have proven time and time again their ability to innovate and adapt to changing consumer behaviour. I agree with what the hon. Member for Dover said about other places having moved on, but in Parliament we do it face to face. We should cater to changing consumer behaviours, and there is no reason to subject the sector to outdated restrictions that do not apply to the wider financial services sector.

Clause 3 paves the way for reducing the administrative burden in respect of executing documents. Similar provisions are already in place for banks. That is why I will enthusiastically support the Bill. Labour believes that further legislation is needed to level the playing field, secure the future of the sector and achieve our ambition of doubling the size of the mutual and co-operative sector, in which building societies play a critical part. That is why Labour has committed to requiring financial services regulators to report annually to Parliament on how they have considered the specific needs of mutuals, including building societies.

Labour recognises the Bill as an important step forward and will give it our full support today. I look forward to being on the same page as the Treasury Minister, he will be pleased to know. And a final word of congratulations to my hon. Friend the Member for Sunderland Central, who has done a tremendous job of putting together this important Bill.

Draft Public Offers and Admissions to Trading Regulations 2023 Draft Securitisation Regulations 2023 Draft Financial Services Act 2021 (Overseas Funds Regime and Recognition of Parts of Schemes) (Amendment and Modification) Regulations 2024 Draft Data Reporting Services Regulations 2023

Tulip Siddiq Excerpts

Wednesday 17th January 2024 General Committees

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

It is a pleasure to serve under you, Mr Vickers. I thank the Minister for setting out the four statutory instruments under debate today, and I agree with him about shortening the names of such instruments.

As the Minister will know, I did give my full support to the Financial Services and Markets Act, and I am wholly committed to protecting the international competitiveness of the sector. That is why we will be supporting the secondary legislation today.

The draft Public Offers and Admissions to Trading Regulations 2023 are a positive development, in my opinion. The UK’s attractiveness as a listing destination will benefit from a more flexible approach to prospectus rules. Likewise, the draft Securitisation Regulations 2023 are an important step forward in developing a securitisation market in the UK that contributes to growth in the real economy.

We also support the aims of the draft Financial Services Act 2021 (Overseas Funds Regime and Recognition of Parts of Schemes) (Amendment and Modification) Regulations 2024, as they will provide smoother market access for overseas funds that have been determined to be equivalent to the UK’s in relation to consumer protection.

Finally, I welcome the long-overdue establishment of a UK consolidated tape under the draft Data Reporting Services Regulations 2023. That will hopefully boost the international competitiveness of UK capital markets by improving efficiency and transparency, reducing trading costs and attracting more investment.

However, of course, the Minister will know that I have some questions for him on all of the legislation before us today, and I hope that he will be able to address some of my concerns. First, while the draft regulations will replace the prospectus regulation and create a new framework, the new prospectus regime is not expected to come into effect until 2025. In the meantime, the competitiveness of the UK’s public markets will continue to suffer.

In addition, in the Treasury’s initial review of the prospectus regime, the Government committed to introducing a new regime of regulatory deference for offers in the UK of securities listed on certain designated overseas stock markets. Despite that review being published almost two years ago, this draft statutory instrument fails to introduce a deference mechanism for prospectuses. Will the Minister please confirm whether such a regime remains under consideration and, if so, how it will be delivered and in what timescale?

I also have a question about the draft Securitisation Regulations 2023. This SI recognises simple, transparent and standardised—STS—equivalent securitisations from the EU and elsewhere. However, the EU does not recognise UK STS securitisations. What assessment has the Minister made of the impact of that? What steps is he taking to get an arrangement with the EU in the light of what I have said? Also, during the consultation on that SI, the Association for Financial Markets in Europe expressed concern regarding the lack of clarity of transitional provisions for legacy transactions. Is the Minister confident that the provisions for historical securitisations in the SI as drafted address such concerns?

On the draft Financial Services Act 2021 (Overseas Funds Regime and Recognition of Parts of Schemes) (Amendment and Modification) Regulations 2024, it is important to note that this SI is part of a wider set of measures to bring the overseas funds regime, or OFR, online. The regime will apply to funds from jurisdictions that the Treasury has deemed “equivalent”, so the OFR will only become operational once those decisions by the Treasury have been made. In the light of that, will the Minister set out when he expects the Treasury to take the equivalence decisions that would enable overseas funds to utilise the streamlined approach envisioned under the new overseas funds regime?

Finally, the draft Data Reporting Services Regulations 2023 will bring us into line with the EU, as the Minister said, but it is also consulting on a consolidated tape, or CT, so I have concerns that the UK is at risk of falling behind competitor jurisdictions. The FCA has consulted on a CT for bonds, but that is unlikely to be operational before mid-2025. It has not even begun consultations for an equities CT, and the UK does not have a pre or post-trade equities CT. By contrast, as the Minister will know, the EU is racing ahead on an equities CT, so the longer that change takes to deliver, the more that key public market listings will be lost to our competitors. The UK’s status as a global financial centre will be put at risk. Will the Minister talk a bit about how he will ensure that swifter progress is made on CT reform to support the UK’s international competitiveness?

I look forward to the Minister’s response. We will not oppose any of the draft SIs, but I would like some answers.

[Bim Afolami]

It will be a pleasure to answer the questions of the hon. Member for Hampstead and Kilburn. I will take them in turn, but before I get to them I will say that I have very much noted the comments of the hon. Lady and those of my right hon. and hon. Friends about the speed of implementation and that being key to what the House and the Committee want to see so that we get the changes we all need.

On the prospectus rules coming into force in 2025, the hon. Member for Hampstead and Kilburn will appreciate that this is a complicated set of changes. The Treasury and industry needed to ensure that what we are doing, when that is such a comprehensive piece of work, was the right thing and had the broad support of industry. We have got that, but I repeat that I will be working very hard to make sure that we implement these as quickly as possible. We are closely engaging with the FCA while it is beginning the complex process of reviewing its rules and changing them. The FCA is committed to completing this by the first half of 2025—not just completing the work but actually having new rules published. I will increase the speed of that if humanly possible.

On the point from the hon. Member for Hampstead and Kilburn about securitisation, I am always keen to talk with European Union friends and colleagues across a range of matters. Indeed, I will be visiting Brussels soon in order to discuss these issues and a range of others. I am happy to continue to do that. She also mentioned the legacy transactions point that was brought up by the Association for Financial Markets. We are confident that the regulations are appropriate, but I am very happy to meet with the Association if it would like to discuss any of its concerns.

On the OFR and the equivalence judgments, the answer is: very soon, I hope. I will be updating the hon. Lady and the House as soon as I possibly can, because I recognise that this is important. In relation to the consolidated tape, lots of different competitor jurisdictions are trying to do this work, which is part of the evidence that we are doing the right thing. I am confident that we are going to do this faster and more effectively than our competitors.

[Tulip Siddiq]

I appreciate the Minister’s responses, but the EU does not recognise the UK STS securitisations. Has the Minister made an assessment of that? He says that he is going to Brussels to speak to them, but has he not already started speaking to them, or is this the first time? That is quite an oversight, considering that they do not recognise those securitisations.

[Bim Afolami]

The hon. Lady will appreciate that across a range of different issues there are often political reasons why the European Union may or may not do things. We are committed to making sure that it operates in a sensible way when it comes to the UK, because we know that the UK’s financial services ecosystem, regulatory regime and market make it the leading financial services centre. But I will continue to engage with the EU on that basis. To her precise point, there are a range of different issues we are talking to the European Union about at all levels of Government. Financial services is included in that, and I will continue to have those conversations.

[Tulip Siddiq]

Can I ask the Minister to write to me after his visit to Brussels?

[Bim Afolami]

Of course.

Question put and agreed to.

DRAFT SECURITISATION REGULATIONS 2023

Resolved,

That the Committee has considered the draft Securitisation Regulations 2023.—(Bim Afolami.)

DRAFT FINANCIAL SERVICES ACT 2021 (OVERSEAS FUNDS REGIME AND RECOGNITION OF PARTS OF SCHEMES) (AMENDMENT AND MODIFICATION) REGULATIONS 2024

Resolved,

That the Committee has considered the draft Financial Services Act 2021 (Overseas Funds Regime and Recognition of Parts of Schemes) (Amendment and Modification) Regulations 2024.—(Bim Afolami.)

dRAFT DATA REPORTING SERVICES REGULATIONS 2023

Resolved,

That the Committee has considered the draft Data Reporting Services Regulations 2023.—(Bim Afolami)

Public Sector Pay 2024-25

Tulip Siddiq Excerpts

Wednesday 17th January 2024 Westminster Hall

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Robert. I congratulate my hon. Friend the Member for Cynon Valley (Beth Winter) on a passionate and well-argued debate, and I associate myself with her remarks about our friend Tony Lloyd. I first met Tony when I was an intern in Parliament nearly 22 years ago, I think. The way he was so nice to me sticks in my mind: he really showed the character of a public servant in being so nice to an unpaid, lowly intern. I am very sorry to hear that he has passed away. What a life he had—a real life of public service. My thoughts are with his family.

Working people have seen 14 years of low growth, stagnant wages and the highest tax burden in decades. What are they getting in return? On this Government’s watch, the average pay for workers is lower in value now than it was 14 years ago when the Government first came to power. The NHS, which we all love, is on its knees, with 7.5 million people waiting for treatment. Schools across the country face crumbling concrete as our children are forced into temporary classrooms.

My hon. Friend the Member for Liverpool, West Derby (Ian Byrne) and the hon. Member for Strangford (Jim Shannon) talked about how public services are broken but it is their constituents who are paying the price. My hon. Friend the Member for Liverpool, West Derby described how his constituents are facing food insecurity and skipping meals. I think you would agree, Sir Robert, that in 2024 in the United Kingdom, that is absolutely unacceptable for our constituents.

Call me old-fashioned, but I believe that it is the Government’s responsibility to ensure that quality public services are provided for the common good of the country. The sorry state of our public services and their recruitment and retention crisis are a result of 14 years of this Government. My neighbour and hon. Friend the Member for Brent Central (Dawn Butler) talked about the cost of living crisis in her constituency, the struggle that her constituents face, particularly in renting, and the fact that workers’ pay is now lower than in 2010. I believe that this is a direct result of the Government’s inability to grow the economy.

The Government like to talk about public service productivity, yet only yesterday the head of the National Audit Office, Gareth Davies, said:

“Parts of our infrastructure are crumbling…The public sector is finding it harder to retain staff…These factors and others have combined to leave public services with a productivity problem.”

Our constituents have suffered almost a decade and a half of stagnant public and private investment, and the cuts to public services are forcing them more and more into decline.

The Opposition would take a fresh approach to public services. We want to drive up standards in every state school, provide access to mental health support in every single school and recruit thousands of new teachers to ensure that their expertise is in every single classroom. We will get our NHS back on its feet with our plan to cut the waiting lists, and we will pay for it by removing the non-dom tax status. My hon. Friend the Member for Coventry South (Zarah Sultana) said that people who can afford to pay should be paying their fair share of tax; I fully agree. We will clear the backlog by offering 2 million more appointments every year, seven days a week.

We recognise that the current crisis in public services cannot be addressed through additional money alone. That is why the next Labour Government will fully transform the NHS. We need a health service that prevents illnesses and keeps people healthy and out of hospital in the first place. We will move care closer to our communities, guarantee mental health treatment where and when people need it and, most importantly, end the 8 am scramble to get a GP appointment. The next Labour Government will also use technology to overhaul every aspect of NHS delivery and deploy the power of artificial intelligence to spot diseases quickly.

We want to reform the outdated national curriculum to transform our schools with a greater focus on children’s creativity, speaking skills and the confidence to shatter the glass ceiling at source. Across our public sector, we want to provide a more dynamic, joined-up and strategic approach to government. We want to focus on Britain’s long-term national renewal. We understand that delivering fair and effective public sector pay and repairing and reforming our public services will require a strong and secure economy. That is why we set ourselves the ambitious mission of securing the highest growth in the G7.

[Dr Poulter]

The hon. Lady is making a number of points. On the specific issue of public sector pay, which is what this debate is actually about, could she please outline the Labour Front-Bench position? Does she agree with Opposition Back Benchers that public sector pay should go up this year by at least the rate of inflation, if not higher, and that there should be a long-term pay settlement of that type for the public sector?

[Tulip Siddiq]

I support the view that we have to make sure that we treat our public sector workers better. If we were in Government, Labour would ensure that the pay review bodies give greater weight to recruitment and retention issues. That is what we will consider when we are in Government—whenever the current Government decide that they want to call an election, so that we can put our views to the country. I notice that the hon. Gentleman is smiling, but the Government still have not given us a date; I will allow him another intervention if he can give me a date, but I do not think he will.

We will deliver a proper industrial strategy and higher investment, because we believe that if we can grow the economy, we can pay people properly. We want to cut planning red tape and get Britain building. We will transform our labour market with stronger workers’ rights. We want to get the economy growing again. We want to increase tax receipts and improve our public finances, so that we can invest in our public services and boost wages.

In contrast, the current broken economic model has driven down people’s wages and undermined their security. The Government have failed to deliver growth and have weakened our public services. My hon. Friend the Member for Sheffield, Hallam (Olivia Blake) made a powerful speech about the recruitment and retention crisis, and about how public services are in a state of collapse. That is not what we want to see in our constituencies. We want to get the economy firing on all cylinders; we want to repair our public services, so that they work for communities; and we want the public sector workforce across the country to work properly. I want to hear what the Minister has to say about the fact that the economy is broken. What is his plan to grow it, so that our constituents can have a better life in the future?

Finance Bill

Tulip Siddiq Excerpts

Committee of the whole House
Wednesday 10th January 2024 Commons Chamber

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I rise to speak to the clauses relating to VAT and excise, beginning with clause 25, which restores the full tax rebate for machines and appliances that use non-gas heavy oils and bio-blends for commercial heating purposes. The Government have said that this is to correct an anomaly brought about by the April 2022 changes to the Hydrocarbon Oil Duties Act 1979, which mean that machines using kerosene have benefited from a full rebate while those using other types of heavy oil were made ineligible for lower duty rates when used for heating.

The Government have said that their April 2022 tax changes were intended to reduce the use of gas fuels and to make progress against the UK’s climate commitments. However, perversely, under the current system companies receive a tax penalty for using next-generation renewable fuels such as hydrotreated vegetable oil for heating, instead of kerosene, despite the fact that HVO produces nearly 90% less greenhouse gas emissions. I therefore support clause 25, which seeks to correct that unintended error and restore equivalent tax treatment for the use of non-gas heavy fuels for commercial heating. However, let us be clear: the correction will have a limited impact on businesses across the UK facing rocketing heating bills as the cold starts to bite this winter.

We also know that it is often the scandalous lack of grid connections that forces many businesses, particularly in rural areas of Scotland, to operate their machines off grid, using heavy oils and biofuels. Changing tax incentives, although significant, will not deliver the overhaul our energy system needs to become a clean energy superpower. After 13 years of mismanagement, our energy grid is on its knees, with new developments forced to wait up to 15 years for a new connection and more than £200 billion of privately funded energy projects stuck in limbo.

Labour will prioritise reforming the grid, overseeing the largest upgrade to our national transmission infrastructure in a generation and accelerating connections for those who are forced off grid. We cannot afford to keep dragging our feet any longer. The Government claim they are serious about delivering the transition and boosting the use of clean energy sources, but the neglect of our grid infrastructure has been shocking. We know that the significant increase in both clean power generation and clean industry that the UK will need to reach net zero will require four times as much grid infrastructure in the next seven years as has been built in the past 30. Although the Opposition do not oppose clause 25, which is a welcome correction, ensuring that tax incentives for non-gas heavy fuels remain consistent is the bare minimum we should be expecting from the Government on this vital issue.

I move on to clause 27, which seeks to clarify UK primacy on VAT and excise law following the passage of the Retained EU Law (Revocation and Reform) Bill. The Government’s draft legislation seeks to ensure that in relation to VAT and excise law it will no longer be possible for any UK Act of Parliament or domestic subordinate legislation to be quashed or disapplied on the basis that it was incompatible with retained EU law. The Government state that this measure will

“ensure the stability of the VAT and excise regime”,

providing legal certainty for businesses. Labour, unsurprisingly, supports the objective of this legislation; ensuring that firms have clarity over how the VAT and excise regimes should be interpreted following the UK’s departure from the EU is crucial to retaining business confidence. However, following the Government’s public consultation, which concluded in November, it remains entirely unclear whether the measure achieves its stated objective of reducing the complexity for businesses of interpreting the VAT regime.

In its consultation response, the Chartered Institute of Taxation highlighted a number of concerns about the proposals, pointing out that the significant complexity in interpreting this draft legislation risks undermining the certainty it seeks to deliver. Specifically, the CIOT points out that the distinction drawn in the legislation between disapplication and the quashing of UK law as a result of EU law, and interpretation,

“might in practice be insufficient to achieve the desired result”.

Consultation feedback also pointed out that the measures in clause 27 do not make it clear how far higher courts are intended to be bound by prior case law from the Court of Justice of the EU, thus creating uncertainty for businesses and advisers.

Although taking a “bespoke UK approach” to VAT and excise legislation is welcome in principle, the draft legislation also fails to address the fact that the removal of the reliance on EU provisions will create significant gaps in UK legislation where our domestic rule book did not fully transpose EU directives. It is not just tax experts that have sought to draw attention to this issue through the Government’s consultation; the industry body for the banking and finance sector, UK Finance, has warned over and over again that the draft legislation

“does not appear to adequately address”

the complexity of the VAT landscape

“thereby sustaining a high degree of uncertainty for industry and the prospect of settled interpretations of VAT law being disturbed.”

The trade body pointed out that although EU VAT law includes a clear VAT exemption for intermediary services in connection with bank accounts, the exemption has not been implemented in UK law. With business no longer able to rely on the direct effect of EU law, material changes to VAT exemptions in the financial services sector will come into effect. That is just one example from my own shadow brief, but it highlights the additional uncertainty that this “clarifying” draft legislation has already created for business. Despite the clear message from tax experts and industry in the consultation, it seems that the proposals are at best problematic. It is of particular concern that the Government seem to have ignored that feedback and ploughed on, with not a single amendment made to the draft legislation.

Detailed guidance is needed to address the significant issues that have already been raised regarding clause 27 and to ensure it meets its objectives. Labour will not oppose the measure as we remain supportive of it in principle, but urgent clarity is needed as it will come into effect from the beginning of this year. The shock that a Government measure designed to provide “legal certainty and stability” has raised more questions than answers has slightly worn off for those of us obliged to follow the circus on the Government Benches on a daily basis.

To conclude, we will not oppose the two clauses, but the detail of the proposals continues to raise questions about the competence of the Government. From being able to afford low-carbon fuel and avoid crippling heating bills to having certainty over the VAT regime, UK businesses deserve far better. After 13 years of leadership, we need a Government who can provide the confidence that businesses desperately need, using the clean energy sources of the future to drive growth and investment across the country.

[Sir Mike Penning (Hemel Hempstead) (Con)]

It is a pleasure to have sat through the Committee stage of the Bill and to hear the Government talk about the advantages we have from Brexit. I am pleased to hear that the Government have looked, and continue to look, extensively at the taxation system—in particular at the interpretation of VAT, as mentioned in this clause.

One interpretation of VAT in this country massively affects people who are visually impaired and those who cannot read, perhaps because of dyslexia: there is no VAT on books, but the Treasury apply VAT at 5% to audiobooks. If that interpretation of VAT is to be taken as far as it possibly can, I am disappointed that disabled people are not being protected within the structure of the Bill, in the way that they have been for many years.

Years ago, when I was disabilities Minister, I was told that VAT changes could not happen because we were in the EU. We are no longer in the EU and we can set our VAT rates as we would like. It would be fundamentally good if the Government came forward with an interpretation of VAT that said that people who rely on audiobooks, through no fault of their own, do not have to be penalised by VAT at 5%. I am not talking only about the visually impaired—I declare an interest: I am dyslexic and rely on audiobooks, although not completely. People who do not read Braille are being punished as well.

The Government continue to look at new taxation rules and new ways of making sure that people do not get around the taxation system, and it is clear that they are looking at the implementation of VAT. What better spring present for those who rely on audiobooks than for the Minister to say that he will meet me, talk about the issue further and perhaps look at the early-day motion in my name?

Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) (No. 2) Regulations 2023

Tulip Siddiq Excerpts

Monday 8th January 2024 General Committees

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

It is a pleasure to serve under your chairship, Ms Fovargue. We support the regulations, which amend the list of high-risk third countries to reflect the changes made to the Financial Action Task Force list.

I heard what the Minister said about the Cayman Islands and its progress, and have just one question to ask him about it. It is welcome that, five years after the Sanctions and Anti-Money Laundering Act 2018 legislated for public registers in the overseas territories, the Cayman Islands has finally announced that it will introduce company registers, but I worry that the registers will not be made fully public. There will be a filter that allows access only by those who can demonstrate a “legitimate interest”. Does the Minister share my concern? Will he work with his counterparts in the Cayman Islands and the other overseas territories to ensure that they raise their standards where they may be lacking?

[Bim Afolami]

I thank the shadow Minister for supporting the regulations. It is incumbent on me to make two key points to address her question about the Cayman Islands. First, a country’s being taken off the list reflects that it has now satisfied what the Financial Action Task Force has set out for it, that it has worked hard and has evidenced how it is doing that. The point about ownership lists and whether a legitimate interest is required is a fair and interesting one, but it has not triggered the Financial Action Task Force to say that the Cayman Islands is not largely compliant. That is the first point. The second is that this is always evolving and no country in the world is perfect. Illicit activity is a scourge that we are trying to remove from our financial system, so we continue to work with the Cayman Islands to make sure it does everything it can.

[Tulip Siddiq]

I draw the Minister’s attention to Transparency International’s warning that the requirement to demonstrate a legitimate interest could limit access for civil society organisations and journalists, who in recent years have been key in uncovering corruption and money laundering. That is my point when I ask about access to the registers. Does he share my concerns about that?

[Bim Afolami]

I am happy to look into that. The UK and various overseas territories, not just one in particular but across the whole landscape, have been working at official level technically to improve access and visibility in terms of beneficial ownership. The UK, when Lord Cameron was Prime Minister, was a leader in doing that internationally, and we will continue that work. I am happy to continue discussing with the hon. Lady what more we can do in respect of the Cayman Islands.

I listened carefully to the hon. Lady’s speech, and it is the Government’s view that the amendment will ensure that UK legislation remains up to date and in line with international standards. It is clear that money obtained through corruption or criminality is not welcome in the UK and should not be welcome anywhere. That is why we are playing such a leading part in the Financial Action Task Force.

The new procedure for dealing with the problem will enable regulations to allow the UK to automatically reflect changes agreed by the Financial Action Task Force in our own list. In the event that the Government choose to deviate from the list, such updates will need to proceed through a draft affirmative SI.