Oral Answers to Questions

Tulip Siddiq Excerpts

Tuesday 21st March 2023 Commons Chamber

[Victoria Atkins]

If I may, I will gently point out to the hon. Gentleman that the OBR has previously stated that it is too early to reach definitive conclusions. The Government are focused on seizing the opportunities provided by Brexit, including the world’s biggest zero-tariff, zero-quota trade deal. Indeed, Scotland itself will benefit from 71 new trade deals secured with non-EU countries and control of our fishing waters. I hope that the hon. Gentleman also welcomes the £8.6 million invested in Scotland’s festival economy at the Budget last week.

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

Now that the Windsor agreement has been reached, I am sure that the Minister will agree that there is ample opportunity to have a constructive working relationship with the European Union. In light of that, and for the sake of struggling British businesses, may I ask the Minister whether she will finally get behind Labour’s proposals for a bespoke veterinary agreement on the mutual recognition of professional qualifications and for a memorandum of understanding on regulatory co-operation for our financial services?

[Victoria Atkins]

I am very grateful to the hon. Lady for her question and I urge her to get behind our trade and co-operation agreement. As I say, it is the world’s largest zero-tariff, zero-quota deal. I am delighted to say that the Chief Secretary has just confirmed that we have signed the memorandum.

--- Later in debate ---

[Jeremy Hunt]

My hon. Friend is right. We have a very good solution to the Silicon Valley bank issue with the HSBC takeover. In the long run, we would like our brilliant tech superstar companies to have more choice about how they finance their expansion, and we will bring forward plans to make sure that happens.

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

On a point of order, Mr Speaker. The Minister said to me in her response that the Chief Secretary had just confirmed with her that we had signed the memorandum of understanding on regulatory co-operation with the EU. Could you please advise me whether she meant that both sides had signed and the agreement has been secured with the EU? I cannot find the details anywhere. Can you advise me where MPs are able to see the agreement?

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

Further to that point of order, Mr Speaker. I can confirm that we have always been ready to sign the MOU, from two years ago—[Interruption.] Well, we have made it very clear to the EU that we are ready to sign. It is a matter for it to come to the table, and we very much hope it will be able to do that. What happened was that as the Financial Secretary came to the Dispatch Box she did not quite hear exactly what I said, and for that I apologise on behalf of the Government. It was my fault.

Cash Acceptance

Tulip Siddiq Excerpts

Monday 20th March 2023 Westminster Hall

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

It is a pleasure to serve under your chairship, Ms Bardell. I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for bringing this important and timely debate to the House—I do not think it is necessary to be of a certain age to appreciate how important it is. Last year alone, there was a net loss of 797 banks and financial services shops providing cash and other services, while the latest Bank of England data, from July 2022, found that 35% of people have encountered a shop that does not accept cash. That should concern us all. I have had lots of representation from constituents in Hampstead and Kilburn who have found shops that will not accept cash, which has proven to be a real problem, as we have heard from Members across the House today. According to a recent report from the Royal Society of Arts, 10 million people depend on cash, and the pandemic, which saw an acceleration in the digitisation of payment services, has made it increasingly difficult for many to pay for the goods and services they need.

We know that a massive 3.8 million people in financial difficulty and 15 million people in total use cash for budgeting purposes. The need to protect cash services is only growing in importance, with data collected by the Post Office showing that the use of cash has risen in recent months. As the cost of living crisis deepens, the poorest in society are increasingly turning to cash, as has been reiterated many times in this debate, to manage their budgets on a week-by-week basis, and often day by day.

Of course, Labour welcomes the fact that the Financial Services and Markets Bill, on which the Minister and I both worked, and which is currently in the other place, will finally introduce protections for access to cash. However, we are worried that the Bill has some serious gaps: it fails to even mention cash acceptance, makes no commitment to protect free access to cash—something that Labour is concerned about—and does nothing to protect essential face-to-face banking services, on which the most vulnerable in our society depend for financial advice and support.

According to data collected by the consumer group Which?, there has been a notable decline in the provision of free-to-use ATMs in recent years. In January 2023, there were 12,000 fewer free-to-use ATMs in the UK than in August 2018—a huge decrease of nearly 24%. Does the Minister agree that with the poorest in society increasingly reliant on cash, forcing them to pay for access in the midst of the worst cost of living crisis on record risks further deepening financial exclusion in this country? Will he take action to address the problem? Which? has warned that if the Government do not make clear that their Bill will protect free cash withdrawals and deposits for consumers,

“the entire objective of…the Bill will be undermined.”

Cash acceptance is fundamental to securing the future of cash. There is little point in the most vulnerable having access to cash if they have nowhere to spend it. That is why the Labour party tabled an amendment to the Bill when it was in the Commons, which would have placed a duty on the FCA to collect data on cash acceptance. My colleagues in the House of Lords have been pushing the Government to empower the FCA to monitor and report on levels of cash acceptance across the UK. In his response, the Minister will likely say that we have to wait for the Government’s access to cash policy statement. If so, can he confirm when the statement will be published? Does he also agree that if his Government are committed to protecting the future of cash, there is no reason not to make protections for free access and an FCA remit on cash acceptance explicit in the Bill?

I want to turn briefly to the important and connected issue of protecting face-to-face banking services, which has been mentioned a few times in this debate. Again, analysis by Which? found that over half of the UK’s bank branches have closed since 2015. Additionally, at least 263 branches are expected to close by the end of the year. That will cut off countless people from essential services—I know that from listening to constituents in Hampstead and Kilburn.

Age UK has called for the Financial Services and Markets Bill to be amended to protect the in-person services that older people rely on, such as opening new accounts or applying for a loan, to ensure that banking services can meet their needs. It is not only older people who will struggle without support. Natalie Ceeney does amazing work and has already been mentioned. As chair of UK Finance’s Cash Action Group, she warned in evidence to the Public Bill Committee that there is significant overlap between the people who rely on access to cash—around 10 million UK adults—and those who need face-to-face support. She said,

“every time I meet a community, the debate goes very quickly from cash to banking. It all merges. The reason is we are talking about the same population.”––[Official Report, Financial Markets and Services Public Bill Committee, 19 October 2022; c. 49, Q98.]

She is completely right. It is the most vulnerable, people from deprived socioeconomic backgrounds and the older parts of society who rely on the extra face-to-face help, such as making or receiving payments or dealing with a standing order. Those are the people who will be left behind if the banking question is left unaddressed.

We also should not forget those without the digital skills needed to bank online, people in rural areas with poor internet connections, and the growing number of people who are simply unable to afford to pay for data or wi-fi as the cost of living crisis deepens. That is why I tabled amendments to the Bill that would give the FCA the powers it needs to protect essential in-person banking services. The Government did not vote for my proposal, but it is not too late for the Government to support the amendments in the Lords.

To be clear, we are not calling for banks to be prevented from closing branches that are no longer needed—far from it. Access to face-to-face services could be delivered through a shared banking hub or other models of community provision. We recognise that it is inevitable that payment and banking systems will continue to innovate. That is a good thing—online banking is a far more convenient way for people to manage their finances—but we have to ensure that the digital revolution that we are talking about does not further deepen financial exclusion in this country, and that will require protecting face-to-face services and putting in place a proper strategy for digital inclusion.

Banking hubs or other models of community provision will have to be part of the solution. Those spaces have the potential to tackle digital exclusion through their dedicated staff who can teach people how to bank online and provide internet access for those without it. However, only four banking hubs have been delivered, out of the underwhelming 38 promised. To ensure that no one is left behind, these services need to be protected in legislation.

If the Government are serious about securing the future of cash, they must listen to all the concerns raised both today and by many of their own Back Benchers during the Financial Services and Markets Bill debate. They must empower the FCA to monitor cash acceptance and protect free access to cash. I hope the Minister will be able to commit to that today, listen to the concerns voiced in this debate, and take heart from the fact that there are so many people in the Gallery who obviously care passionately about this important issue.

Silicon Valley Bank

Tulip Siddiq Excerpts

Monday 13th March 2023 Commons Chamber

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

I thank the Minister for giving me advance sight of his statement today. Labour welcomes the announcement by HSBC that it will be buying the UK arm of Silicon Valley Bank, or SVB UK, in a rescue deal. As the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), said over the weekend, the UK life sciences and tech sectors play an indispensable role in driving growth and innovation across the economy.

Now that those who bank with SVB UK have some certainty, the Government should examine how we got here in the first place. For example, when SVB UK was granted a separate banking licence last year, what assessment did the Treasury and Bank of England make of the significant liquidity risks arising from its deposit base being a small number of high-value corporate deposits?

The effects of the collapse of SVB are still being felt across the UK market and the Minister said in his statement that HSBC’s purchase of SVB has “supported confidence” in the UK financial system. What assessment has he made of the fact that London’s FTSE 100 was down today, while the UK bank index fell by almost 5% this morning and by more than 10% over the weekend? What will the disruptions in the banking sector mean for confidence, the wider economy and the ability of high-growth companies to access the credit that they need to thrive?

The Minister also said that disruption in the tech sector has been “forestalled”, but what reassurance can he provide today that, under HSBC’s ownership, the bank will continue to be able to support early-stage tech and life sciences businesses in the UK? He also said that HSBC has been given an exemption from certain ring-fencing requirements. Will that be a permanent exemption?

Perhaps the most important question, I am sure the Minister will agree, is this: how can we avoid this happening again? With inflation at record levels, the Bank of England has had to take steps to tackle rising prices, but Ministers must make an assessment of the risk that sharp changes to UK interest rates might pose to our financial system. It is time for the Government to launch a systemic review of the risks that sharply rising interest rates pose to the UK financial sector, and I hope the Chancellor will return to the House having made that assessment.

Finally, the events of this weekend further underline the importance of ensuring that UK start-ups have access to the patient capital that they need to grow, as proposed by the Labour party’s start-up review. I hope that the Minister will return to the House soon to update us with a broader assessment of the risks to the financial sector arising from sharply increasing rates, and with a plan to address the longer-term problems holding back growth and the provision of patient capital to our growing businesses.

Public Sector Exit Payments (Limitation) Bill

Tulip Siddiq Excerpts

2nd reading
Friday 3rd March 2023 Commons Chamber

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

We on the Labour Benches fully recognise the importance of achieving the best possible value for our taxpayers. I remind the hon. Member for Christchurch (Sir Christopher Chope) and everyone who has spoken in support of the Bill, however, that the Government introduced a public sector exit payment cap in 2020 and it did not work. The cap failed to provide value for the taxpayer, it had numerous unintended consequences, and it adversely affected dedicated, long-serving public servants who earned relatively low salaries, often less than £25,000 a year. Indeed, due to those failings, in March 2021—less than a year after introducing the regulations—the Government were forced to U-turn and revoke the cap.

Let me take each failing in turn. First, far from saving taxpayers money, the cap produced additional costs. Because the regulations treated payments under a settlement agreement, but not employment tribunal awards, as an exit payment, they created a perverse incentive for people to go to tribunal. An employment tribunal is a time-consuming and costly legal process for a public sector employer to go through, and I remind hon. Members that that cost is passed on to the taxpayer.

Secondly, the cap had other unintended consequences—for example, it did not take into account an individual pension contribution, so through no fault of their own, long-serving staff over the age of 55 who were facing redundancy were hit by the regulations. They were obliged to take their pension if they lost their job, so their final exit payment, when combined with their redundancy pay, could easily exceed the £95,000 cap under the regulations.

Finally, when they introduced the cap, the Government initially said that the regulations were designed to prevent large exit payments to so-called public sector fat cats, but in reality the cap hit low-paid workers hardest. Long-serving local government workers, who earned as little as £23,000, were pulled into the cap when their pensions were taken into account.

All that was foreseen by public sector unions, including Unison, Unite, GMB, Prospect and the Public and Commercial Services Union, when the cap was first proposed, but Ministers refused to listen. The unions were left with no choice but to take the Government to judicial review, which wasted more time and more taxpayers’ money, before the Government finally admitted that the cap had unintended consequences and should be revoked.

The Labour party will therefore not support the Bill today. I advise the Government to do the same to avoid further embarrassment.

High Income Child Benefit Charge

Tulip Siddiq Excerpts

Thursday 2nd February 2023 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Stringer. I am covering for my colleague who cannot be here today because of a constituency commitment. I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for bringing forward a really important debate today. He spoke compassionately about his constituents, who are clearly struggling, and I applaud him for bringing this matter to the House. He will be pleased to know that Labour always welcomes the opportunity to highlight the significant pressures that families are facing across the United Kingdom, including in my constituency, as the cost of living crisis gets worse.

We have heard how hundreds of thousands more families are being pulled into the high income child benefit charge. The hon. Member for Strangford (Jim Shannon) put it well when he said that a lot of them are not from wealthy families, yet they are still being pulled into that charge. It is sad that hard-working people are having to pay for the chaos caused in recent months, and for 12 years of economic failure.

I want the Minister to explain the fiscal drag of freezing the threshold for the high income child benefit charge. I am sure she will make the case that maintaining the threshold at £50,000 allows the Government to prioritise the majority of families, particularly the poorest households, and that she will talk about difficult choices that have to be made and how taxpayers’ money is best spent. We all agree with that, but the truth is that the current benefits system is not working for anyone, least of all the poorest. A report published by the Joseph Rowntree Foundation last week found that the benefit system is fundamentally “not fit for purpose” and has “trapped” millions of children and families in poverty.

Helping more people into good-quality work must be a priority of social security. Over 1 million people are out of work, despite wanting a job, and yet employers are struggling to fill over 1 million vacancies. I looked at the figures. Employment in the UK is lower now than it was before the pandemic, and the employment rate has had the biggest drop out of the major G7 economies.

A shocking 2.5 million of those who have fallen out of the workforce have done so because of ill health. We know that being out of work is bad for health. The longer someone is out of work for sickness reasons, the more difficult it is for them to return to a job. Unfortunately, it feels like nothing is being done to break that dangerous cycle. We cannot simply write people off. Only 4% of people in the employment and support allowance support group return to work each year. That is a huge waste of the potential of British people, who we know can contribute a lot to the economy.

The hon. Member for Dunfermline and West Fife (Douglas Chapman) wanted to know about Labour’s approach. We would take a very different approach to the benefits system. We would modernise jobcentres, turning them into new hubs that focus on work progression. They would be no longer just a conveyer belt to lower-paid work, but an escalator to well-paid, secure jobs.

I looked at the figures again. Only one in 10 older or disabled people who are out of work are receiving any support to find a job. That is because the Government impose programme after programme on local areas, regardless of their local economic needs. A massive £20 billion is being spent across 49 schemes, administered by nine different Government Departments. Even that statistic sounds so confusing.

The fragmented system is wasting taxpayers’ money and failing to get people into work. In contrast, when some limited local design has been allowed in pockets of the country, such as the inspirational “Working Well” initiative in Greater Manchester, there have been real successes in helping people get back into employment. That is why the Labour party will shift resources and power to the local level and guarantee local innovation in the design and delivery of employment support services.

We also want to address the hindrance to work in the social security system by empowering jobcentres to help to broker flexible working opportunities for those who have caring responsibilities. Crucially, we will reform the Access to Work scheme, for which the waiting list for an assessment has trebled. People now wait months for a decision, and overall the work capability assessment regime leaves too many people trapped in unemployment.

[Graham Stringer (in the Chair)]

Order. This is not a high-pressure debate and there is plenty of time, but the title is the high income child benefit charge. I am willing to relax and let the hon. Lady go a bit off-piste, but I think she is wandering quite a long way off the subject of the debate.

[Tulip Siddiq]

Apologies, Mr Stringer. You will be pleased to hear that I am on the last bit of my speech.

I ask the Minister to respond to the specific concerns raised today, especially in relation to the growing number of people pulled into the high income child benefit charge. I sincerely believe we need a proper plan to lift families out of poverty. We need to get our economy growing, and we need to offer opportunities for people in every part of the UK. I want to hear what the Minister has to say.

Financial Services and Markets Bill

Tulip Siddiq Excerpts

Report stage
Wednesday 7th December 2022 Commons Chamber

[Mr Deputy Speaker (Mr Nigel Evans)]

I am getting no indication that the Minister wants to comment on that, but the fact is that the Speaker has said time and again that he deprecates statements that should be made to the House first being made elsewhere, and I am sure the Minister will take that on board.

I call the shadow Minister.

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

The Opposition support the Bill, particularly the new secondary objectives for regulators on international competitiveness and long-term growth. It is a welcome first step in supporting the City to take advantage of opportunities outside the EU, such as creating a welcoming environment for new financial technologies and incentivising financial services to increase investments in domestic industries through reform of solvency II.

We were delighted when, after much pressure from the Labour party, the Minister decided to drop his dangerous policy of the intervention power. Despite repeated warnings from the Bank of England, business and the Labour party that he should not be putting the UK’s international competitiveness at risk by threatening our system of regulatory independence, the current Minister pushed on and told me it was a good thing. In my eyeline, I can see the hon. Member for North East Bedfordshire (Richard Fuller), who, when he was the Economic Secretary to the Treasury, said to me on Second Reading that it was right for Ministers to be able to intervene in such a way.

[Bim Afolami (Hitchin and Harpenden) (Con)]

On regulatory independence, notwithstanding the particular call-in power the hon. Lady is describing, would she agree that it is important for the elected Government and this House to be able to set the direction in which regulators are meant to go, and that if the regulators are not going in that direction, this House and the Government should be able to correct the direction they are going in?

[Tulip Siddiq]

I support much of what the hon. Member says, and I will come on to that a little later in my speech, but the call-in power is very different from what he is describing. Time and again, we warned Ministers that this would be detrimental to our regulatory independence, and they did not listen. However, if the hon. Member listens carefully, he will hear, when I come on to the next page of my speech, that I will address the valid points he is making.

In Committee, when I pushed the current Minister on why this dangerous intervention power was necessary, he told me that voices in the industry had told him we needed an “agile and flexible system”, which he claimed could only be brought about by this intervention power. After all of this from the three Economic Secretaries I have shadowed in 10 months, who kept pushing this dangerous intervention power, strangely enough the Government then dropped the policy: I just received an opaque letter, which did not really offer any proper explanation for why this Government have had a change of heart. If you do not mind my saying so, Mr Deputy Speaker, I thought about when I got a text from my crush in the sixth form telling me there would be no second date, without his actually telling me face to face why he did not want to see me again. I do wonder why, but I say to the Minister that I am grateful that he listened to the Labour party and has dropped the dangerous intervention power. I only wish he had done it sooner, so we could have saved some unnecessary damage to our global reputation.

While the intervention power was wholly inappropriate, we recognise that the Bill facilitates an unprecedented transfer of responsibilities from retained EU law to the regulators, and this does require democratic accountability. That is why I am glad the Government have listened to the concerns raised by me and others in Committee and have introduced new clause 17, which will allow regulators to be held to account against key metrics.

I hope the Minister will be able to commit to supporting new clause 10, tabled by my hon. Friend the Member for Blaenau Gwent (Nick Smith), to further strengthen the democratic accountability of regulators.

I was absolutely delighted that the hon. Member for West Worcestershire (Harriett Baldwin) was following my speeches at the Labour party conference so closely, where again and again I made the case for a new form of regulated personalised guidance. She has tabled new clause 11, which would create the space to do that, and I hope the Government will support her new clause.

[Mr Baron]

I hope the hon. Lady’s ex-crush realises what he has missed, but may I briefly pick up the point about democratic accountability when it comes to supervision of the regulators? I suggest that those regulators need to heed the advice of the professional bodies working in the sector. I raise again the issue of investment trusts. We have the Association of Investment Companies and many others saying that key information documents—a well-intentioned but misguided legacy of misguided EU regulation—are actually assessing risk incorrectly, to the detriment of investors. They are saying that now, and the FCA has control, yet we do not seem to be doing much about it. We are not making much progress on this issue, and meanwhile investors are being misled. Would she agree that we need to listen to the trade bodies as well?

[Tulip Siddiq]

I always want to listen to experts such as the trade bodies. The hon. Member has a wealth of knowledge in this area, and I accept what he is saying. Overall, the Labour party agrees with a lot of the policies in this Bill, which is why we have given it our wholehearted support. There are some missed opportunities that we feel could have been taken, and I think we could have strengthened our attractiveness for investments, as he is saying—I will come on to that later in my speech. I take his point, which is well made, and I hope the Minister will listen and will respond to it in his summing up.

Turning to my own amendments, I am worried about the lack of ambition in the Bill on strengthening fraud prevention. My new clause 1 would introduce the first national fraud strategy and data sharing arrangement for a decade. The National Audit Office, in its recent report, said that the Government simply do not understand the full scale of the fraud epidemic, despite the NAO calling for rapid action over five years ago. That is a damning statement. UK Finance has found that the Government’s failure to act on the fraud strategy and data sharing has seen the amount of money stolen from hard-working families’ and businesses’ bank accounts through fraud and scams hit a record high of £1.3 billion.

Despite that, in Committee, the Minister urged me to withdraw my new clause on the matter. He told me to be patient, and he told me that there would be a fraud strategy before Christmas. Now he is saying there will be one early next year, but how can we trust him not to kick the can further down the road? So I will be holding the Minister to account. There are only 24 days left until the end of the year, and people whose lives have been ruined by fraudsters cannot afford to be patient any longer.

Following our debate in Committee, leaders from across the financial services sector told me that the Government’s approach of placing data sharing responsibilities on the banks alone was stuck in the last century and allows tech-savvy criminals to get rich at the public’s expense. My new clause would put in place a data sharing arrangement that extends beyond just the banks to include social media companies, crypto-asset firms, payment system operators and other platforms that are exploited by criminals. If the Minister does not listen to the Labour party, I hope he will listen to the National Audit Office, businesses and victims of fraud, and finally give enforcement agencies the powers they need to crack down on criminals by voting for our new clause today. I also hope the Government will support my new clauses 2 and 3 and new clause 7, tabled by my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh); because we have spent a substantial amount of time speaking about free access to cash I will not elaborate too much on that, but she has our full support.

[Matt Rodda (Reading East) (Lab)]

My hon. Friend is making an excellent speech. Does she agree that new clause 3, on access to banking, is particularly important? For many disabled and elderly people and others with mobility issues, and indeed for small businesses, access to banking as a whole, as well as access to cash, is hugely important; that has been very evident in my constituency.

[Tulip Siddiq]

My hon. Friend is a doughty champion for his constituents. I will speak about that later, but I feel that we politicians have a duty on this: even if there has been a decline in the number of people using cash, there is still a small group of vulnerable people who do so, and they risk being excluded if we do not save free access to cash and face-to-face banking services. We have a duty to our vulnerable constituents, disabled constituents and those from black and minority ethnic backgrounds who still rely on cash.

[David Mundell]

I fully understand what the hon. Lady is saying, but it is not a small number of people: it was estimated in 2019 that 8 million people across the United Kingdom would struggle without access to cash.

[Tulip Siddiq]

I thank the right hon. Gentleman for his intervention. I welcome the fact that the Government have finally announced that they will bring forward access-to-cash legislation, but this Bill does nothing to protect face-to-face banking or free access to cash, which is our main concern and is what the most vulnerable in our society depend on.

Since 2015, on this Government’s watch nearly half of the UK’s bank branches have closed. It is inevitable that banking systems will continue to innovate—no one is denying that—but the failure to protect these services risks leaving millions of people behind. My amendment would empower the Financial Conduct Authority to review communities’ needs for and access to essential in-person banking services. To be clear, I am not saying banks should be prevented from closing underused branches—far from it. I explained this thoroughly in Committee but will say it briefly again now: vital face-to-face services could be delivered through a variety of models, such as shared banking hubs, which are already being set up across the country to provide cash services.

In Committee, the Minister was again very persuasive and convinced me to withdraw my new clause. He said he accepted the underlying need for action and that solutions would be brought to the table. I believed him, but despite warnings from Age UK, Which? and the Access to Cash Action Group—which does fantastic work in this area—that vulnerable people are at risk of being cut off from the services they desperately rely on, the Government have completely failed to engage on this important issue, and this time I will not be making the same mistake: I will not withdraw my new clauses. The Government need to demonstrate they will not simply abandon those who are struggling to bank online.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

I want to pledge my support for new clauses 2 and 3. In my constituency we have lost 13 to 15 banks since 2015, and we are more or less wholly reliant now on the Post Office to provide financial services in large parts of north Carmarthenshire. Worryingly, the new deal starting next year only lasts until 2025, and if that were to break down for whatever reason, there would be real issues in many communities.

[Tulip Siddiq]

The hon. Gentleman is right that this is not just about bank branch closures; it is also about pressures in the Post Office. It is possible to provide some of the services through the Post Office, but we have a duty to preserve some of the banking hubs to ensure that the Post Office does not get overwhelmed. I am sure the hon. Gentleman has travelled around his constituency, and anybody who walks around their constituency will see the need for bank branches, banking hubs and post offices for our most vulnerable constituents. I am also surprised that the Bill has so little to say on financial inclusion more broadly, despite my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) flying the flag for financial inclusion with her brilliant amendments.

The co-operative and mutual sector also plays an important role in delivering financial inclusion. The Bill’s measures fall short of the Labour and Co-operative parties’ shared ambition to double the size of that sector in the UK. That is why I have tabled new clauses 4 and 5 requiring the regulators to report on how they have considered mutual and co-operative business models. In Committee, the Minister said that given that appropriate arrangements are already in place for regulators to report, that the FCA and Prudential Regulation Authority already produce well combed-through annual reports and that there is no deficiency in the level of engagement with the sector, such a measure is simply unnecessary. The sector was shocked by the Minister’s ill-informed response. It pointed to the FCA’s most recent annual report, published in July, where there is not one mention of the needs of co-operatives, mutuals, building societies or credit unions, while in the latest PRA annual report, building societies are just lumped in with standard banks. Every single business leader that I have spoken to, from Nationwide to the firms represented by the Building Societies Association, have called for the FCA and the PRA to report separately on these specific business models. Either the Minister believes he understands the needs of British mutuals and co-operatives better than the sector itself or he should support my amendments.

What is perhaps most striking, however, is how little the Bill has to say about green finance. Over a year ago, the present Prime Minister promised to make the UK the world’s first green financial centre, but on Monday the CBI warned that the Government are “going backwards” on building a greener economy. CBI director-general Tony Danker said firms need more action from Government on green finance. I therefore hope the Minister will support my new clause 6 requiring the Treasury to publish an updated green finance strategy with a clearly defined green taxonomy, as well as new clause 24 tabled by the right hon. Member for Epsom and Ewell (Chris Grayling) introducing greater protections against deforestation. The Minister has said he is going to produce such a strategy imminently, but we look forward to hearing a timeline, because we are now very suspicious of the word “imminently” and want to hear clear dates and times.

In Committee, the Minister and his Conservative colleagues seemed astounded when I said that the Government and Minister were complacent about green finance. They took such issue with that that I felt I had to provide some evidence in my speech as to why I said it. The Government’s own independent Green Technical Advisory Group told them last month that they had to send a rapid market signal or we would risk falling further behind Europe, which launched its taxonomy back in 2020. In 2020 the Government legislated through a statutory instrument for a legal deadline of 1 January 2023 for the UK to establish the first set of green taxonomy criteria. That is less than a month away, so can the Minister tell me whether he is going to meet his own legal deadline? He is welcome to intervene on me if he thinks he is going to meet it.

The highlight of the Committee stage was when I received an early birthday present from the Minister: he gave me a copy of the “Global Green Finance Index” to read, which I read from cover to cover. It is scintillating. I thank him for the interesting read, but has the Minister read his Government’s own policy document, “Greening Finance”? If not, I have a copy here for him. The report says that the country is committed to consulting on the UK’s green taxonomy in the first quarter of 2022. No one will disagree that we are well beyond the first quarter of 2022. The reason I used the word complacent is that we are dealing with a Government who have missed their own deadlines and their own targets on green finance. If that is not complacency in action on green finance, I do not know what is.

[Vicky Ford (Chelmsford) (Con)]

I want to talk about new clause 17, especially in relation to the insurance sector.

The insurance sector is extremely important in my constituency. Insurers and insurance brokers based in Chelmsford are responsible for about 3,000 jobs in my constituency. In addition, Chelmsford is a major commuter city and many more of my constituents commute into London to work in the insurance sector. It is also a very important sector to the UK. The entire UK insurance industry accounts for 4% of our national GDP. The sector brings in an estimated total tax contribution in the region of £16.1 billion, or 2.2% of UK Government tax receipts for 2020. To put it another way, the insurance sector’s tax paid the salaries of every single nurse in the NHS in 2020-21. It is a really important sector and we do not discuss it often enough.

Insurance is also a very international business. Insurers and brokers based in Chelmsford have parent companies in the US, Switzerland, Japan and Australia. All have chosen to be in the UK as a centre for investment, and more international investment means more highly paid jobs supporting not only the City of London but local economies such as those in my constituency and beyond. That investment is under threat. It faces competition from other jurisdictions and the amendments we are debating today will help to show new and existing investors that the UK is open for business. It is a highly competitive global trading environment and London must keep pace with other parts of the world—they want our business. London remains a world-leading speciality insurance market. Three quarters of business booked in the UK comes from outside the UK and London. It is an export-led market. It is not replicated anywhere else in the world.

London retains a lead role thanks to its historical prominence. However, its market share has stagnated in the past decade. The UK needs a renewed focus on competitiveness and growth, and the amendments we are discussing today will help to ensure clear accountability and transparency in how we do that. It is not a theoretical risk that we will lose business to other countries. We have already lost out on new markets, investment and opportunities. Singapore copied the UK’s insurance-linked securities regime, a new form of insurance and risk transfer product. It recognised the quality of the UK’s legislation that this Government introduced in 2017, but when it implemented the regime, the Singapore regulator took a proportionate regulatory approach and that has encouraged many more new entrants. Singapore has approved 18 ILS vehicles in less time than it took the UK to do five. In 2021 alone, the UK lost out on over $700 million of foreign investment in ILS to Singapore, because its regulator is more agile and more proportionate, even though it has the same legislation.

There are also problems in just getting the day-to-day work done. The Bill Committee heard evidence from industry about how the FCA is sometimes taking nine months to authorise a chief executive coming from overseas to operate in the UK. That is just not good enough. I have also been told that not a single new insurance company has been set up in the UK in the last 15 years. Surely that is a clear sign that the UK is risking its position as the world’s leading insurance centre? Businesses face vital choices about where they place capital, income and people. Regulation is a key part of that decision-making process. That is why it is so welcome that the Government are introducing the new secondary objective on international competitiveness and economic growth. It is crucial. This is not a call for a race to the bottom in regulation. High regulatory standards are a strength of the UK system, but regulators across the world, from Australia, Hong Kong, Japan, Malaysia, Singapore and the EU, are all required to consider international competitiveness, so we should do so, too.

I congratulate the Minister and his officials on their work to date, especially on new clause 17. It is a very welcome recognition from the Government that there is a cultural problem with the regulators, that action is needed on the part of the regulators to address key issues regarding their performance, and that the Government have a key role in holding the regulators’ feet to the fire. The new clause introduces a power over the regulators’ reporting requirements by providing a mechanism through which to direct information to be published, but it is unclear how and in what circumstances His Majesty’s Treasury would use the powers within it. Can the Minister therefore confirm whether he intends to seek a report on the new international competitiveness and growth objective as soon as possible, given that it is a critical new objective for the regulators? Can the Minister also confirm that, in future reporting of the international competitiveness objective, he and other Ministers will impress upon the regulators the need to consider metrics specific to competitiveness, not just domestic competition, and that that must include comparative analysis of our regulators’ performance against competitor jurisdictions, as well as analysis of product and service innovations taking place in key markets?

The new clauses tabled by my hon. Friend the Member for North East Bedfordshire (Richard Fuller) go further on proposing a clear reporting criteria for the regulators to follow and on delivering international competitiveness and the growth objective. That would enable Parliament—I am looking at the Chair of the Treasury Committee, my hon. Friend the Member for West Worcestershire (Harriett Baldwin) here—to understand better how the regulators have been performing and the contribution they are making to facilitate our competitiveness and growth. In particular, new clauses 13 and 14 are designed to give the Government powers to require the publication of more performance metrics, including on new applications, authorised entities and persons. They already have some performance criteria, but the new clauses would extend that approach. It does not mean reinventing the wheel. Many are taken from the performance criteria of regulators in competitive jurisdictions. It would not compromise their independence, high standards, financial stability or consumer protection.

New clause 14 would add to the regulators’ authorisation key performance indicators outlined in the Financial Services and Markets Act 2000. It would require them to publish monitoring data related to the determination of authorisations. This is a real issue for many of those acting in financial services. It would reduce the compliance burden for firms that regularly need to give clear applications for approved individuals and would, in turn, promote the openness of the UK for highly skilled talent. I am nearly finished, Mr Deputy Speaker, but there are a few more I want to mention.

New clause 15 would require both the FCA and the PRA to publish an annual report setting out how they facilitated international competitiveness and growth against a range of data and analysis requirements. Instead of allowing the regulators to mark their own homework, it would enable Parliament to understand how the regulators are helping the UK to be more competitive and ensure that they undertake comparative analysis with other jurisdictions.

New clause 16 is targeted at achieving a more proportionate approach to wholesale and retail financial services. Although the regulators have a proportionality principle, it is clearly not working in practice. I have heard time and again from insurers in my Chelmsford constituency and others that the regulators have adopted a one-size-fits-all approach to regulations by treating all financial services, no matter the product or customer, as the same. This means that the regulators in insurance are spending time and effort on over-regulating sophisticated corporate entities with teams of professional advisers, which is really affecting their competitiveness. It would be much better for them to spend that time and effort on protecting individual retail customers, such as our constituents, when they are buying products online or on the high street. The wording of the new clause should be familiar to the Minister’s officials, because it is borrowed from the recommendation for a proportionality principle for all regulators, which was published in June of last year by the Government’s taskforce for innovation, growth and regulating reform.

Amendments 1 to 6 would ensure that the cost-benefit analysis panels are better equipped to undertake the necessary scrutiny of regulators’ work, and would ensure that they are independent from the regulators, that they can publish their recommendations, and that the regulators must respond to those recommendations. Again, this would mean that Parliament, industry and public see the data and avoid a situation in which the regulators are marking their own homework behind closed doors.

I understand that my hon. Friend the Member for North East Bedfordshire might not move the amendments, but they are all extremely serious. As I said, the industry makes such an important contribution to the tax income of this country and is key to funding our public services. It would be a tragedy to lose our international competitiveness and an industry that dates back to the Great Fire of London, so let us make sure that the Minister and the Treasury team can take the amendments into account.

--- Later in debate ---

[Andrew Griffith]

I again thank my hon. Friend, who did so much work on this Bill. It is absolutely right that the Government keep an open mind to new technologies, and my hon. Friend the Member for Devizes (Danny Kruger), who is always very thoughtful, talked about this, but we have to understand the risks. While the risks to consumers of scams in the crypto-space, among others, is extremely high and has been well telegraphed, when it comes to looking at different payment systems—with the power of distributed ledger technology to solve issues such as settlement to make our financial markets cleaner, faster and more efficient—it is absolutely right that the Government consider looking at that, and we will be looking to do more in that domain.

[Tulip Siddiq]

I thank the Minister for his response, and he is making encouraging noises about the forward strategy, which I look forward to seeing, but I have not yet heard him mention anything about data sharing. The fact is that frauds and scams have moved on from what they might have been in the past. Is he going to give some indication of whether there will be a data-sharing arrangement that goes beyond just banks and takes into account social media companies, crypto-asset firms and other platforms that criminals are exploiting, because our vulnerable constituents are falling prey to frauds and scams? It is no good just going back to the old ways on frauds and scams—I am sure he understands that—so could I hear a bit more about data sharing, please?

[Andrew Griffith]

He does indeed understand that. We are addressing legal challenges to data sharing in the Economic Crime and Corporate Transparency Bill, which will introduce provisions to protect firms from civil liability. As was discussed earlier, it is important to regulate the online world, which my colleagues in the Department for Digital, Culture, Media and Sport are doing in the Online Safety Bill.

--- Later in debate ---

[Tulip Siddiq]

Despite some of the disappointments in the Bill, which I have outlined to the Minister in great detail, the Opposition support this important piece of legislation, as he will know. It will enable the UK to tailor financial services regulation from insurance to fintech to meet the needs of our economy. At the risk of sounding like an Oscar-winning speech, there are a few people whom I need to thank as well. People will know that, in Opposition, we do not have a whole team of civil servants working behind us. I must thank Mark Hudson in my team, who has worked really hard to make sure that I understand each and every aspect of the Bill. I wish to thank TheCityUK and UK Finance for their help and the Finance Innovation Lab for its advice on the Bill.

I thank, too, Lloyds, Santander, Barclays, HSBC, NatWest and Starling for setting out the dangers posed by the new forms of fraud, and the Building Societies Association and Nationwide for their help with my mutuals and co-operatives amendments. I also thank the Association of British Insurers, Phoenix, the Investment Association, Hargreaves Lansdown and TISA for their help on green finance and personalised financial guidance.

I also want to say thank you to all the Conservative MPs who served on our Committee, which, I think the Minister will agree, was a very good Committee, as we got through quite a lot of detail. I thank my hon. Friends the Members for Blaydon (Liz Twist), for Wallasey (Dame Angela Eagle), for Kingston upon Hull West and Hessle (Emma Hardy) and for Mitcham and Morden (Siobhain McDonagh) for their support on the Public Bill Committee and for their co-operation as well.

Finally, in my 10 months as shadow Economic Secretary to the Treasury, I have shadowed three Economic Secretaries, all of whom were very helpful when it came to this Bill. Let me just mention them. They are: the right hon. Member for Salisbury (John Glen), who is not in his place right now, but who was very helpful when I first took on the role; the hon. Member for North East Bedfordshire (Richard Fuller), who is also not in his place; and, of course, the current Minister whom I thank. This is a complex and wide-ranging Bill. The Minister and I spent an enormous amount of time together, but I think he will know that Labour supports both this Bill, and the opportunities for the City to thrive after we leave EU regulations. I hope the Minister knows that, overall, I have enjoyed working with him.

MONEY LAUNDERING AND TERRORIST FINANCING (HIGH-RISK COUNTRIES) (AMENDMENT) (NO. 3) REGULATIONS 2022

Tulip Siddiq Excerpts

Monday 5th December 2022 General Committees

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

It is a pleasure to serve with you in the Chair, Sir Gary. As the Minister will know, the Opposition are committed to supporting the global effort to combat money laundering and the financing of terrorism, and we will support the regulations today. However, I want to raise a couple of concerns about the UK’s compliance with the Financial Action Task Force’s high risk list.

As the Minister said, the regulations will update the UK’s list of high-risk countries, and he outlined those that will be added and those that will be taken off to reflect the changes made by the Financial Action Task Force in October. However, the Economic Crime and Corporate Transparency Bill, which is currently going through Parliament, would remove the need for parliamentary approval to update the high risk list. Does the Minster believe that it is appropriate to cut out parliamentary scrutiny in that way? I would appreciate an answer if he thinks that that is the right thing to do.

Does the Minister also believe that the UK Government should make its own independent assessment of countries that pose a high risk of money laundering, rather than just mirror the Financial Action Task Force? It is my understanding that there is no legal or practical reason for the UK not to diverge from the Financial Action Task Force and, for example, to add countries we deem to belong on our high risk list.

The Minister will know the fantastic work my right hon. Friend the Member for Barking (Dame Margaret Hodge) has done to highlight the dangers of illicit finance. She has proposed creating an additional kleptocurrency list—sorry, kleptocracy list; as the Minister will know, I have cryptocurrency on my mind—alongside the Financial Action Task Force list. That would enable the UK to designate on its own list countries that we think pose a significant threat.

The anti-corruption organisation Spotlight on Corruption has also warned that, despite Pakistan being one of five countries highlighted in the UK’s 2020 national risk assessment as posing a high risk of money laundering, it is now being removed from the list of high-risk countries. Will the Minister elaborate on whether he shares Spotlight on Corruption’s concerns regarding Pakistan? Might there be a case for not simply mirroring the Financial Action Task Force list? Should we instead have our own list so that we can add countries we deem dangerous or corrupt?

As I said, we will support the regulations, but I just want to hear a bit more about the Minister’s thinking as we pass this legislation through Parliament.

Energy (oil and gas) profits levy

Tulip Siddiq Excerpts

Tuesday 22nd November 2022 Commons Chamber

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

This week, we have heard lots of statistics and figures flying around. The OBR has estimated that real household disposable income per person will fall by 7% over the next two years. That is the biggest fall on record, taking incomes down to 2013 levels. We have heard that our tax burden is set to rise by around £30 billion more than originally forecast in March. It is the highest level since world war two. We have heard about inflation rising to 11.1 %, a 40-year high, with food prices rising by a staggering 16.4% in the year to October.

Just for a minute, I want to explore what these statistics and figures mean in practice to our constituents and to hard-working people across the country. They mean that a single mother on the South Kilburn estate in my constituency cannot afford to buy a Christmas present for her child. They mean that a hard-working nurse in my constituency who is already struggling to make ends meet and cannot afford her energy bills will be paying more tax. They mean a young carer who is already skipping meals because she cannot afford to eat will fall into more debt and may be pushed into the arms of unethical, unsecure credit loans. In all honesty, can Conservative Members really tell me that the measures outlined in their autumn statement will help vulnerable people such as those in my constituency? Do they think it is fair that my constituents have to bear the brunt of a Tory economic crisis that was built in Downing Street? I am sure the Minister and other Conservative Members will say—

[Jonathan Gullis]

Will the hon. Lady give way?

[Tulip Siddiq]

Yes, with pleasure.

[Jonathan Gullis]

In Labour’s plans, are there any plans for any tax cuts and, if there are, where are they?

--- Later in debate ---

[Tulip Siddiq]

I welcome the hon. Member’s intervention. If he listens carefully to my speech and pays careful attention, he will hear all our economic plans laid out, so please pay attention.

The Minister kept talking about how the Government have no choice and how they have made difficult decisions, but the truth is that there is always a choice, and if the Labour party were in government, we would be making fairer choices and better choices that would suit our constituents.

[Chris Grayling (Epsom and Ewell) (Con)]

If I am not mistaken, we have just increased substantially the national living wage, increased benefits in line with inflation and increased pensions in line with inflation, while, unfortunately and regrettably, putting up taxes on the wealthy. Exactly what does the hon. Lady not like about that?

[Tulip Siddiq]

The things we do not like about this Budget are the fact that the Government will still not impose a proper windfall tax, which I am coming to, will still not abolish non-dom status and will still not listen to us about private schools. If the right hon. Gentleman pays close attention and listens to my speech, he will learn about the things we do not like in his autumn statement.

[Imran Hussain (Bradford East) (Lab)]

My hon. Friend is making an excellent speech. Does she agree that, once we get past the smoke and mirrors of this autumn statement, it is nothing more than ideological austerity on steroids?

[Tulip Siddiq]

As always, my hon. Friend, who is a doughty champion for his constituents, speaks the truth, because when we examine the autumn statement carefully, we see what will actually happen to hard-working people in this country and how they are bearing the brunt of an economic crisis that Conservative Members created in Downing Street.

[Alexander Stafford]

Will the hon. Lady give way?

[Dr Liam Fox (North Somerset) (Con)]

Will the hon. Lady give way?

[Tulip Siddiq]

I will make a bit more progress, but I will come to the Members in a minute. I am happy to take interventions.

We of course welcome that, after months of kicking and screaming, the Government have decided to adopt Labour’s policy of strengthening the windfall tax on energy giants, but they are still leaving billions of pounds on the table by giving a tax break to companies drilling for new polluting fossil fuels. Labour would have raised over £10 billion more—£10 billion, at the time of a cost of living crisis, is an enormous amount—over the next three years than the Government’s proposal by closing that unfair loophole, taxing oil and gas at the same level as other countries such as Norway and backdating the tax to January of this year.

[Alexander Stafford]

The hon. Lady paints a grim picture of the situation—undeniably, there is a grim situation—but she seemed to forget that this Government have spent £400 billion on covid. I remember that, at about this time last year, she talked about choices when Labour was advocating for another lockdown, which would have done even more damage to our economy. When she talks about choices, does she not agree that spending £400 billion to save jobs, save lives and get us out of the covid situation was the best choice? Yes, we have to pay that money back and that is what we are doing now.

[Tulip Siddiq]

May I remind the hon. Gentleman that the Tories have been in government for 12 years now and may I remind him about everything that happened during covid, including burning personal protective equipment? Maybe he has forgotten about that, and maybe he has forgotten about the amount of fraud that took place during covid. I can send him the details because he looks incredulous. Maybe he does not know how much fraud there was during covid, but we will send that to him. I also remind the hon. Gentleman that, after 12 years of economic mismanagement by this Conservative Government, the UK is forecast to have the lowest growth in the G7 over the next two years, with growth stagnant over 2023 and 2024. That is not a record the Government should be proud of.

Let me return to the energy companies, because even they admit that they do not know what to do with their excessive profits. The Chancellor chose to protect that tax break for the energy giants and let the cost land on working people. He also chose to ignore Labour’s calls to scrap non-dom status, which is currently costing us more than £3 billion a year. Why will the Government not undertake that policy? If Labour was in government, we would be stretching every sinew to generate revenue for the hard-working people of our country.

[Peter Dowd]

When the Tories came to power in 2010, national debt was just under £1 trillion, yet I remind Conservative Members that it is now £2.4 trillion—so much for the party of sound finance.

[Tulip Siddiq]

As always, my hon. Friend is right, as is his point about how every time the Conservatives bring in a fiscal rule about lowering debt, they end up breaking it.

[Bim Afolami (Hitchin and Harpenden) (Con)]

May I ask for some clarity on the hon. Lady’s remarks about oil and gas? What exactly is the Labour party’s position on whether we should have more oil and gas? If it thinks that we do need oil and gas, what would it do to achieve that?

[Tulip Siddiq]

I am not quite sure what the hon. Gentleman means. Of course we need more oil and gas, but we have said clearly that we should make fairer choices and tax those who say that they have too much money as excessive profits. That is what we are saying, and the hon. Gentleman needs to listen carefully. Labour would also have ended the VAT exemption for private schools, which would raise £1.7 billion every year. That would have been a fairer and more effective way of fixing the Tory economic crisis and bringing the deficit down, instead of pushing the burden on to hard-working families.

[Jonathan Gullis]

rose—

[Tulip Siddiq]

I am afraid the hon. Gentleman has already had his chance.

What worries me is not just that the Government are failing to adopt fair and straightforward measures to fix the mess they caused, but the fact that there is no plan for growth. I was shocked to hear the Minister say how one of the principles is a plan for growth, because I heard nothing in the autumn statement about growth. We have heard from Conservative Members—I know they will keep repeating it—that this is due only to global factors.

[Aaron Bell (Newcastle-under-Lyme) (Con)]

On growth, the Government are protecting our investment in research and development, and innovation, which is a long-term route to growth. The hon. Lady said that the hon. Member for Bootle (Peter Dowd) was correct about the deficit and debt, and it is astonishing that we are still having to educate the Labour party, 12 years later, about the difference between deficit and debt. This Government inherited a £149 billion deficit, and every measure they took to try to put that right was opposed by those on the Opposition Benches. No wonder the debt increased when we inherited so big a deficit. It is a good job we got that deficit down, because otherwise we would not have been able to cope with covid in the way we did.

[Tulip Siddiq]

I am not sure there was a question in that intervention. I thank the hon. Gentleman for his patronising lesson, but Labour Members do not need it. After 12 years of watching the Tories destroy the economy, I am afraid we do not need lessons from Conservative Members.

I am sure we will hear a lot today from Conservative Members about how only global factors are to blame for this country’s stagnant growth, but that is shameless. Everyone knows that Britain’s problems started long before covid, and long before Russia’s illegal invasion of Ukraine. Instead of endless Tory excuses, the public deserve an apology for being made to pay for the Government’s last Budget, which sent mortgage rates spiralling, and for 12 years of economic crisis from the Conservatives, which has left the UK completely exposed to external shocks, with inflation sky-high, wages stagnant and living standards in freefall.

When Labour was last in government—since the hon. Member for Newcastle-under-Lyme (Aaron Bell) mentioned it—the economy grew by an impressive 2.1%. Since 2010, under the Conservatives, growth has been 1.4%. Conservative Members speak about educating the Labour party, but perhaps they should educate themselves.

The Governor of the Bank of England told the Treasury Committee last week that the US economy has grown by 4.2% since the pandemic, and the GDP of eurozone countries is 2.1% higher, yet the UK economy is 0.7% smaller than at the start of the pandemic. Let us not just blame global factors. We are not performing well as a country, and let us be under no illusions: this Conservative economic crisis has been 12 years in the making.

After over a decade of stagnation, we are not recovering. Guess what? We are heading into a recession. This morning the OECD published its projections—these are not my projections but those of the OECD. First, it believes that the UK will have the lowest growth in the G20 over the next two years apart from Russia. Secondly, the UK is set to be the only OECD economy that will be smaller in 2024 than it was in 2019. Finally, it shows that we are the only G7 country that is currently poorer than it was before the pandemic.

Labour has a serious long-term plan to get our economy growing again, powered by the talent and effort of millions of working people and thousands of businesses. At the heart of that is our promise to invest in good jobs in British industries through our green prosperity plan. From the plumbers and builders needed to insulate homes, to engineers and operators for nuclear and wind, we will make Britain a world leader in the industries of the future, and ensure that people have the skills to benefit from those opportunities.

We are also pushing forward with our start-up review, which will untangle the problems holding new firms back, and help to make Britain the best place to start and grow a business. In government we will strive to fix business rates, and replace them with a fairer system that is fit for the digital economy and does not put our high street businesses at an unfair disadvantage. Our modern industrial strategy will support the sectors of the future, and an active working partnership with business. Finally, we will fix the holes in the Government’s failed Brexit deal so that our businesses can export more abroad.

Businesses across the country are supporting Labour’s plan for growth. [Interruption.] The hon. Member for Stoke-on-Trent North (Jonathan Gullis) is chuntering from a sedentary position, but he would do well to listen to the chair of Tesco, John Allan, who said that Labour is the only party with a plausible growth plan. The Federation of Small Businesses, which has endorsed our plan to fix business rates so that our high streets thrive, has warned that the Tories’ plans in the autumn statement were high on stealth creation but low on wealth creation.

[Jonathan Gullis]

rose—

[Tulip Siddiq]

The hon. Gentleman has had plenty of opportunities—no more giving way.

The Government’s failure to make fair choices and grow the economy has seen our public services starved of the resources they need. Not only have Conservative policies been bad for people who rely on public services; they are also economically illiterate. Weaker public services mean a weaker economy. As the OBR has set out, rising long-term sickness and a backlog of 7 million people waiting for NHS treatments is a toxic combination. It all adds up to a labour market that is more dysfunctional than at any time in recent history, with hundreds of people out of work because of long-term sickness under this Conservative Government.

[Paula Barker (Liverpool, Wavertree) (Lab)]

My hon. Friend is making an excellent speech. The role of Prime Minister requires transparency. It may be a matter of personal choice for people not to use our national health service that others so desperately rely on, but does my hon. Friend agree that, for many, it is particularly galling that we have a Prime Minister who does not use the national health service that his party broke?

[Tulip Siddiq]

I thank my hon. Friend for her intervention.

[Jonathan Gullis]

Why does it matter?

[Tulip Siddiq]

I hear the hon. Member chuntering, “Why does that matter?” It matters because people send us to this House to be their voice, and we are meant to represent the everyday struggles they face. If politicians do not know about the everyday struggles of the NHS, because they have never had to wait in A&E for 24 hours with their child, or hold on to the phone for six hours to get an appointment, they do not know what the NHS needs.

[Clive Lewis (Norwich South) (Lab)]

My hon. Friend is making a top-banana speech—it is fantastic. On public services, in Norwich and Norfolk we know that the two local authorities face a combined budget deficit of £60 million, which will have a massive impact on our ability to provide social care to an ageing population. We have heard much from the Government about support for public services, including the NHS, but does she agree that if social care is cut, it is the NHS that bleeds? Everyone knows that, yet the Government have failed to recognise it.

[Tulip Siddiq]

I thank my hon. Friend for his intervention. The Chancellor used to be Health Secretary, and when he left that role he said that one of his biggest regrets was not fixing the crisis in social care. It is surprising that, now he is Chancellor, he seems to have forgotten that for some reason. The Government have turned their back on all the people who need that care. My hon. Friend is a doughty champion for his constituency and he is absolutely right to point out the everyday struggles of his constituents.

We know that vacancies are a huge challenge facing the NHS right now in getting waiting lists back down. The Labour party has a plan to fix that with the biggest expansion in medical training in history, including thousands more places for nurses. The Royal College of Physicians estimates that our entire NHS expansion package will cost £1.6 billion a year. We could fund all of that and have some money left over by scrapping non-dom status. Why will the Government not accept that? A leaked email from the Chancellor reveals that he privately supports Labour’s flagship health plan to double the number of medical school places. We have seen that email. Why will he not put that into practice?

[Neale Hanvey]

The shadow Minister is making a forthright and passionate contribution. If I may, I urge some caution around Labour’s current policy to limit or restrict the number of migrant workers that the UK relies on. I worked in the NHS for more than 25 years and, for the latter part of that, much of our recruitment for specialist staff was from abroad because of successive Governments’ failure to plan. Will she take that on board?

[Tulip Siddiq]

I thank the hon. Member for his intervention. I will take that on board. When I was in hospital having my children, every single nurse who looked after me through a difficult labour was from abroad, and there has been a 96% drop in nurses coming to work in my local hospital. I absolutely agree with him; that is a fair point to make.

Speaking of children, I will turn briefly to childcare. There was no mention whatsoever of funding for childcare in the autumn statement. The lack of affordable options is keeping parents out of work—I am sure everyone recognises that—and having a devastating impact on our economy. Under the Conservatives, UK childcare costs have increased at twice the rate of wages, and for two thirds of families the cost of childcare is the same as or more than their monthly rent or mortgage payments. Those extortionate prices are simply unaffordable for many parents, and many people are being forced out of the labour market.

We know that 43% of mothers consider quitting work altogether and 1.7 million women are prevented from taking on more paid work due to childcare costs. That is terrible for productivity and detrimental to growth. Once again, whether it is NHS waiting times, cuts in rail investment or a lack of affordable childcare, the British people are paying the price for Tory economic incompetence through weaker public services.

The Tories have lost all claims to be the party of economic responsibility. The Conservatives have broken their own fiscal rules a total of 11 times since they came into government in 2010. They have spent 12 years weakening the economy, and they crashed the markets in the middle of a cost of living crisis, leaving working people like my constituents paying the price.

In government, Labour would do things differently. We would make fairer choices and treat taxpayers’ money with the respect it deserves. We would ensure that the single mother on the south Kilburn estate could buy her child a Christmas present, that the hard-working nurse could turn on her heating during the bitter winter months, and that the young carer I referred to could have three meals a day.

Our country is a great country. We have fantastic strengths. But because of the Government’s choices, we have been held back with 12 years of stagnant growth. It is clear that it is time for the grown-ups on the Opposition side of the House to take charge. It is time for a Labour Government.

Financial Services and Markets Bill (Ninth sitting)

Tulip Siddiq Excerpts

Committee stage
Thursday 3rd November 2022 Public Bill Committees

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

It is a pleasure to serve under your chairmanship again, Mr Sharma. I start by paying tribute to my hon. Friend the Member for Walthamstow, as others have done, for tabling the new clause and for her relentless work in the House to highlight the risks that unsecured credit poses to the most vulnerable in society, including many of my constituents in Kilburn. I also pay tribute to her successful campaign for better regulation of payday loans and companies. I am sure everyone has heard her speak on that campaign in the Chamber at some point.

As my hon. Friend the Member for Kingston upon Hull and Hessle said, we are disappointed that the Bill has failed to address buy now, pay later regulation. For years, the Government have promised to regulate the sector, but have not done so, which has left millions of consumers without protection. I recognise that many of my constituents, particularly the young, value buy now, pay later products, because they allow people to pay for expensive products over time. However, the products can also result in debt building up quickly and easily. That is why it is so important that the sector is properly regulated, as my hon. Friend the Member for Mitcham and Morden outlined.

An investigation by the FCA, the Woolard review, which reported in February last year, found that many consumers simply do not know that buy now, pay later products are a form of credit, which means that some people do not consider the risks associated with taking out such products and may not look at the products as carefully as they might have done otherwise. That should be deeply concerning to all of us here, and it has left the most vulnerable, financially excluded people at risk of getting trapped in a cycle of debt. The review made it clear that there is an urgent need to regulate all buy now, pay later products.

We are almost two years on from the review and nothing has been done—no action has been taken. The Government’s consultation concluded in June, and this Bill was the perfect opportunity to bring forward provisions to regulate the sector. Will the Minister explain why the Government have chosen not to do so? It is not just consumers who are in desperate need of regulation. As shadow City Minister, I have engaged with the main players in the buy now, pay later sector in recent months. They too have called on the Government for proper regulation to provide certainty for businesses and to keep bad actors out of the market. I hope the Minister will explain why his Government have chosen to leave consumers unprotected and have ignored calls from the sector by failing to include this regulation in the Bill today.

[The Economic Secretary to the Treasury (Andrew Griffith)]

It is a pleasure to serve under your chairmanship, Mr Sharma. It is always a pleasure to follow the hon. Member for Hampstead and Kilburn. I would like to add my recognition for what the hon. Member for Walthamstow has achieved, particularly when it comes to payday loans.

The debate on this clause is not about the ends. Rather, it is about the means and the best way of proceeding from here to an end that, as we heard from my hon. Friend the Member for West Worcestershire, is common to both sides of the Committee. However, there is a difference. The Government will not be supporting this amendment. I want to make it clear that we are trying to find the best path on which to proceed, and we are trying to get this important area right.

The amendment would require the Treasury to make regulations to bring buy now, pay later products into regulation within 28 days of the Bill’s passage. I contend that that would be breakneck speed. I hear and understand the frustration of colleagues that the legislation has taken a certain amount of time to mature, but it is also an innovative product and something that provides real utility to millions of people. It is important that we get this right.

The challenge for us in bringing forward appropriate regulations in this domain is that we must ensure we give no succour to the greater evil of informal or illegal credit. As we look to regulate the credit market, we have to acknowledge that what we do not regulate creates a floor, beneath which nefarious providers operate—for example, those whom the hon. Member for Walthamstow has been vigilant in cracking down on.

I understand the desire to move at pace, but I do not accept that nothing has happened. The FCA has significantly moved the dial on this, although there is more to do. It is our contention that we should do it in a thoughtful way and by consulting with the sector, which is supportive of endeavours to bring forward the right amount of legislation.

We also acknowledge that to many people credit can be a valued lifeline. Like the hon. Member for West Dunbartonshire, I remember being sent to do the weekly grocery shop, and that shop provided credit of a buy now, pay later form. As a growing family, and particularly at certain moments of the year, we had a more-than-average amount of groceries. It was a real lifeline. It was a way to spread the cost in a measured way. We should recognise that we must be very careful of the unintended consequences.

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[Tulip Siddiq]

I beg to move, That the clause be read a Second time.

[The Chair]

With this, it will be convenient to discuss new clause 5—Essential banking services access policy statement—

“(1) The Treasury must lay before the House of Commons an essential banking services access policy statement within six months of the passing of this Act.

(2) An ‘essential banking services access policy statement’ is a statement of the policies of His Majesty’s Government in relation to the provision of adequate levels of access to essential in-person banking services in the United Kingdom.

(3) ‘Essential in-person banking services’ include services which are delivered face-to-face, and may include those provided in banks, banking hubs, or other service models.

(4) The policies mentioned in sub-section (2) may include those which relate to—

(a) ensuring adequate availability of essential in-person banking services;

(b) ensuring adequate provision of support for online banking training and internet access, for the purposes of ensuring access to online banking; and

(c) expectations of maximum geographical distances service users should be expected to travel to access essential in-person banking services in rural areas.

(5) The FCA must have regard to the essential banking services access policy statement when fulfilling its functions.”

This new clause would require the Treasury to publish a policy statement setting out its policies in relation to the provision of essential in-person banking services, including policies relating to availability of essential in-person banking services, support for online banking, and maximum distances people can expect to travel to access services.

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[Tulip Siddiq]

I would like to say from the outset that I will push new clauses 4 and 5 to the vote.

New clause 4 would require the Treasury and the FCA to conduct and publish a review of the community need for, and access to, essential in-person banking services, and enable the FCA to ensure that areas in need of such services receive them, and to make sure that banking services have a minimum level of access.

New clause 5 would require the Treasury to publish a policy statement setting out its policies in relation to the provision of essential in-person banking services, including policies relating to availability of such services, support for online banking and maximum distances that people can expect to travel to access banking services.

Of course Labour welcomes the fact that, after years and years, we finally have a Bill that introduces protection for access to cash. However, the Bill has some serious gaps that we are concerned about. We have already debated in a previous sitting the Government’s failure to guarantee free access to cash, but this Bill also does nothing to protect essential face-to-face banking services, which the most vulnerable people in our society depend on for financial advice and support.

Analysis published by the consumer group Which? found that almost half the UK’s bank branches have closed since 2015. That has cut off countless people from essential services. In its written evidence to us, Age UK called for the Bill to be amended to protect the in-person services that older people rely on, such as the facility to open a new account or apply for a loan, to ensure that banking services can meet their needs.

However, it is not just older people who struggle without support. Natalie Ceeney, chair of the Cash Action Group, who many Committee members will know, warned us at our evidence session of the significant overlap between those who rely on access to cash—around 10 million British adults—and those who need face-to-face support. She said that

“every time I meet a community, the debate goes very quickly from cash to banking. It all merges. The reason is we are talking about the same population.”––[Official Report, Financial Services and Markets Public Bill Committee, 19 October 2022; c. 49, Q98.]

She is completely right: it is the most vulnerable, the poorer people in society and the older members of society, who depend on that extra face-to-face help, for instance in making or receiving payments, or dealing with a standing order. These are the people who will be left behind if this question about banking is left completely unaddressed. Nor should we forget those without the digital skills needed to bank online, people in rural areas with poor internet connection, or the growing number who cannot afford to pay for data or wi-fi as the cost of living crisis deepens.

As the FCA warned in its written evidence to us, the powers granted to the regulator by this Bill do not extend to the provision of wider banking services beyond cash access. That is why I hope the Minister will today commit to supporting new clauses 4 and 5, which will give the FCA the powers it needs to protect essential in-person banking services.

Just to be clear, Labour is not calling for banks to be prevented from closing branches that are no longer needed—far from it. Access to face-to-face services could be delivered through a shared banking hub or other models of community provision. We also recognise that banking systems will inevitably continue to innovate, which is a good thing. Online banking is a far more convenient way for people to make payments and manage their finances. However, we must ensure—indeed, as constituency MPs we have a duty to ensure—that the digital revolution does not further deepen financial exclusion in this country.

That would require protecting face-to-face services and putting in place a proper strategy for digital exclusion and inclusion. Banking hubs or other models of community provision must be part of that solution. These spaces have the potential to tackle digital exclusion through their dedicated staff, who can teach people how to bank online and provide internet access for those without it. I was delighted to hear this week’s announcement from the Cash Action Group that the sector will be launching additional banking hubs on a voluntary basis, but if we want to ensure that no one is left behind—the most vulnerable in our society—these services must be protected by legislation. I ask the Minister to support these two new clauses.

[Siobhain McDonagh]

I rise to support new clauses 4 and 5, which we know are supported by our constituents. No matter what kind of constituency we represent, whether it is wealthy, rural or urban, people are desperate for face-to-face services. Recently, in Mitcham town centre, Barclays and Halifax have closed. I stood outside both branches for a week during their opening hours, asking customers why they wanted face-to-face services and if they used online banking. In both cases, about 50% of customers had no access to online services, either because they did not know how to access them or were too frightened to use them because they were concerned about being scammed. That is an enormous concern, but it is completely rational and understandable, when we consider how many people are scammed.

This is about those quintessentially un-financial market issues of community and human contact. The closure of our banks and building societies is symptomatic of so much more—of our town centres being destroyed, of people feeling excluded from progress and the new society, and even of their feelings of loneliness. I am not suggesting that it is the banks’ job to resolve issues of loneliness, but we can talk about these issues as much as we like; people crave human contact to give them the confidence to use financial services and their bank accounts.

The branch staff do an enormous amount for our communities by protecting some of our most vulnerable constituents from doing things they really should not do, such as giving their life savings to people who they have never met who have offered to marry them. So much goes on in our banks and building societies, but it is only through the closure of banks in my town centre that I have understood what is really happening. Banks are retreating from branches on the high street but also from phone services. The number of banks that will allow people to do things by phone is reducing. Anyone here who has tried to contact their bank by phone knows that unless they have a significant amount of credit on their phone, they will not get through any time soon.

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[Tulip Siddiq]

The Minister mentions the FCA, and I also want to take the chance to respond to the earlier comments by the hon. Member for Wimbledon. I am not endorsing a specific model—this is something to consider—but the proposed banking hub could work in exactly the same way as the current banking hub model, which is funded by the sector and regulated by the FCA, which also ensures that sites provide in-person services as well. If the Minister is willing to talk further on the provisions in the new clause—the hon. Member for Wimbledon was generous in suggesting that he would do so—I would be happy to explore banking hub models with him.

[Andrew Griffith]

There is a great deal of good evolution. I suspect that members on both sides of the Committee would say that it has come quite late in the process, but nevertheless there has been evolution in the banking hub solution—that dynamic, sector-led initiative—as well as the work of the Post Office, which offers in-person facilities for a wide range of, if not all, transactions. There may be a gradient of availability, but post offices that offer a certain range of services to deal with the most common and frequently made transactions are almost ubiquitous. The need to travel for more complex needs would not be an unsurprising feature in this market.

I welcome the initiatives developed by the Cash Action Group, Natalie Ceeney and UK Finance, and implemented by LINK, which are making the local assessments to determine where shared solutions are most appropriate. The industry has committed to shared bank hubs in 29 locations across the UK. Yesterday, it committed to a further four, in Luton, Surrey, Prestatyn, and Welling in south-east London. There is a good rate of change coming now, albeit from a low base.

The Government’s perspective is that while many people need and prefer to use in-person banking services, at this time it would not be proportionate to legislate to intervene in the market. Instead, we want to see the impact of closures understood, considered and mitigated wherever possible by the array of initiatives that have been put forward. I will continue to work with the sector, the FCA and other stakeholders from both sides—I mentioned some earlier—on this important issue.

--- Later in debate ---

[Andrew Griffith]

Ultimately, the banks are downstream of the widespread issue that is the change in consumer behaviour. We have heard both in evidence and in comments made in Committee that 86% of transactions are now digital. The use case of going to a bank branch has evolved rapidly in my lifetime and the lifetime of all Committee members. That is the ultimate macro issue that we are dealing with. Is that issue understood? I think it is.

Solutions could be brought to the table, in terms of both a greater toolkit for the FCA and greater prominence and scrutiny of the FCA as it uses the existing toolkit and the new powers in the Bill. There are also industry-led solutions, which having perhaps started slowly are increasing at greater pace. Proportionality is about giving those developing trends time to mature to see what models can be developed, while accepting the underlying need for action.

I therefore ask the hon. Member for Hampstead and Kilburn to withdraw the motion.

[Tulip Siddiq]

After listening to contributions from Members on both sides of the Committee, I would like to have a conversation with the Minister about the new clause. I will bring it back at a later stage, but for now I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 6

National strategy on financial fraud

“(1) The Treasury must lay before the House of Commons a national strategy for the purpose of detecting, preventing and investigating fraud and associated financial crime within six months of the passing of this Act.

(2) In preparing the strategy, the Treasury must consult—

(a) the Secretary of State for the Home Office,

(b) the National Economic Crime Centre,

(c) law enforcement bodies which the Treasury considers relevant to the strategy,

(d) relevant regulators,

(e) financial services stakeholders,

(f) digital platforms, telecommunications companies, financial technology companies, and social media companies.

(3) The strategy must include arrangements for a data-sharing agreement involving—

(a) relevant law enforcement agencies,

(b) relevant regulators,

(c) financial services stakeholders,

(d) telecommunications stakeholders, and

(e) technology-based communication platforms,

for the purposes of detecting, preventing and investigating fraud and associated financial crime and, in particular, tracking stolen money which may pass through mule bank accounts or platforms operated by other financial services stakeholders.

(4) In this section ‘fraud and associated financial crime’ includes, but is not limited to authorised push payment fraud, unauthorised facility takeover fraud, and online and offline identity fraud.

(5) In this section, ‘financial services stakeholders’ includes banks, building societies, credit unions, investment firms, Electric Money Institutions, virtual asset providers and exchanges, and payment system operators.”—(Tulip Siddiq.)

This new clause would require the Treasury to publish a national strategy for the detection, prevention and investigation of fraud and associated financial crime, after having consulted relevant stakeholders. The strategy must include arrangements for a data sharing agreement between law enforcement agencies, regulators and others to track stolen money.

Brought up, and read the First time.

[Tulip Siddiq]

I beg to move, That the clause be read a Second time.

We fully support the provisions in the Bill that enhance the protection for victims of authorised push payment scams, but we feel that an opportunity has been wasted to do something on fraud prevention. UK Finance, the financial services trade body, recently published data that revealed that the amount of money stolen directly from hard-working families and businesses’ bank accounts through fraud and scams hit a record high of £1.3 billion in 2021. That is bad enough at the best of times, but even worse during a cost of living crisis. We need to get to grips with new types of fraud such as identity theft and online scams, which have seen criminals get rich at the public’s expense, with people’s life savings stolen and their economic security put at risk.

The current approach to fraud will always leave law enforcement agencies one step behind the criminals, who are exploiting new financial technologies and bank accounts to steal and hide the public’s money. The Opposition want to see enforcement agencies given the powers that they need to crack down on digitally savvy criminals, and to track stolen money through payment system operators, electronic money institutions and cryptoasset firms. If the Government are serious about tackling fraud, they will support our new clause to allow regulators and enforcement agencies to pursue criminals and bring them to justice wherever they hide their stolen money, and to protect people’s financial security.

New clause 6 would put in place a single, dedicated national strategy to tackle fraud. It would deliver a co-ordinated, interagency response across the Treasury, the Home Office, the National Economic Crime Centre, law enforcement agencies, the major banks and wider partners in financial services, telecommunications and social media centres. It would put in place a data-sharing agreement to help investigators and the sector prevent fraud and track stolen money. That agreement would extend beyond the banks to include social media companies, fintechs, payment system operators and other platforms that are exploited by tech savvy criminals. That is important, because for too long, tackling fraud has been solely the banks’ responsibility. That approach is completely outdated.

Mike Haley, the chief executive of CIFAS, said in evidence to the Committee:

“Provisions that facilitate greater data and intelligence sharing, particularly on suspicions of fraud and financial crime, would have the biggest impact in helping to prevent this type of crime. It is a crime that is at scale and at speed in the online environment. To be able to share the mobile numbers that are being used, the devices and the IP addresses at speed across the whole of the environment—payment providers, fintechs and telcos—would be enormously powerful. This is a volume crime, and we need to have prevention at the core of any national strategy. That would have a massive positive impact.”––[Official Report, Financial Services and Markets Public Bill Committee, 19 October 2022; c. 68, Q129.]

The new clause would facilitate that sharing. Does the Minister agree with Mike Haley? If so, will he commit the Government to introducing a fraud strategy with data sharing at its heart?

I am sure, because I have heard the Minister speak so many times in this Committee, that he will tell us to be patient; he will say that change is coming. However, the millions of people who have fallen—or will fall—victim to fraud cannot afford to be patient any more. We cannot drag our feet over this. Scams will continue to rise, and countless more lives will be destroyed or lost. We need to make sure that the outdated way of tackling fraud is challenged once and for all. I ask the Minister to support the new clause.

[Dame Angela Eagle]

It is a pleasure to talk about this extremely important issue. The Treasury Committee produced a long and detailed report on this issue, with a series of recommendations. I hope that the Government will work cross-departmentally to put those into effect. Data sharing certainly featured in our views in that inquiry.

It is hard to contemplate the size of the explosion in fraud, how little of it is captured, and how few of the perpetrators are brought to justice. That is partly because of the massive number of chances for fraudulent activity to be perpetrated, which have come with changes in access to banking and digital capacity. They range from push frauds, fraudulent emptying of bank accounts and credit card cloning, all the way through to the text messages that we all get regularly on our phones.

The text messages tell us, for example, that we have recently been near someone who has covid—the message is purportedly from the NHS—and we need to give them our banking details so we can pay £1.75 for access to a PCR test. We have all seen them. I am getting a load now on energy support—probably everyone is getting them—which say that the Government’s support for energy bills has to be applied for and that we have to give these people our banking details. These are very plausible texts, which many people fall for. There are phone calls as well, purportedly from the bank, and emails too. This is a sophisticated level of fraud that is psychologically very well organised.

--- Later in debate ---

[Andrew Griffith]

I would never want to be unworthy in the hon. Lady’s eyes, so I am distressed that my offer to build consensus about how the police could best deploy their resources has, at this first stage, been rebuffed.

I ask the hon. Member for Hampstead and Kilburn to withdraw the motion.

[Tulip Siddiq]

The Minister was doing so well and I was hoping we could go through this sitting without hearing the Conservatives say the word “woke” once, but unluckily that has now been crossed off my bingo sheet.

I will press the new clause to a vote, because I want to hold the Minister to account and ensure he does not push this commitment too far down the road, and because every person in the sector I have spoken to has stressed the importance of legislative change when it comes to data sharing.

Question put, That the clause be read a Second time.

Financial Services and Markets Bill (Eighth sitting)

Tulip Siddiq Excerpts

Committee stage
Tuesday 1st November 2022 Public Bill Committees

[Andrew Griffith]

Clause 62 enables and requires the Payment Systems Regulator to take action to improve the reimbursement of victims of authorised push payment scams, or APP scams as they are commonly known. APP scams occur when someone is tricked into sending their money to a fraudster. Almost 200,000 cases of these scams were recorded in 2021, with known losses to victims totalling £583 million. Sadly, fraudsters often target the most vulnerable people in our society.

Under the European regulatory system that we have inherited, there is no statutory or regulatory requirement for payment service providers to reimburse victims of these scams. We need to do better and we can do better for victims of fraud in the UK.

Although the creation of a voluntary industry reimbursement code has improved matters, reimbursement outcomes for victims have been inconsistent and only around half the money stolen is being reimbursed. As a result, many victims are left facing significant losses; in the worst cases, victims lose their life savings.

We recognise these issues and so clause 62 does two things. First, it removes legal barriers in retained EU law that currently prevent regulatory action by the PSR. That will finally enable the PSR to mandate reimbursement in any payment system under its supervision.

The PSR has the relevant expertise, powers and objectives to tackle this crucial issue. However, regulation 90 of the Payment Service Regulations 2017, which form part of retained EU law, prevents the PSR from using its powers to require reimbursement. Therefore, clause 62(11) amends regulation 90 of the 2017 regulations to remove the existing legislative barrier to regulatory action. That will enable the PSR to use its relevant powers in relation to APP scam reimbursement across any payment system designated for regulation by the PSR.

Secondly, clause 62 places a specific duty on the PSR to take action in relation to the faster payments service. This service is the main UK instant payment system and is currently the payment system within which the highest volume of APP fraud is committed. Therefore, action is needed in this regard as a priority.

Clause 62 places a duty on the PSR to consult on a draft of the regulatory requirement in relation to the faster payments service within two months of this legislation coming into force, and the PSR must impose the requirement within six months of the clause coming into force. In 2021, 97% of APP scams occurred across the faster payments service, because it is the UK’s main payment system for instant consumer-bank transfers. Therefore, by requiring the PSR to take action in relation to the faster payments service, the legislation will improve outcomes in the vast majority of APP scam cases.

As a result of the clause and subsequent regulatory action, consumers will be more consistently and comprehensively protected when they fall victim to an APP scam. This is a vital measure to ensure that customers are protected amid the growing threat posed by APP fraud.

I therefore recommend that the clause stand part of the Bill.

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

Labour fully supports clause 62, which enhances protection for victims of authorised push payment schemes, but we are deeply disappointed that the Bill does nothing to strengthen fraud prevention.

When asked about fraud in February, the former Chancellor, the right hon. Member for Spelthorne (Kwasi Kwarteng), claimed that fraud and scams are not something that

“people experience in their daily lives”,

which is tone-deaf. Essentially, he dismissed crime as inconsequential. In the real world, countless lives have been destroyed by fraud and scams, and I am sure the Minister will have examples from constituents in his inbox. There is a new Chancellor now, but the lack of ambition in this Bill on fraud shows that the Government’s approach to fraud remains the same. We will debate my new clause 6 on broader strategies for tackling fraud later, but I want to focus on the inadequacies of the provisions in clause 62.

UK Finance has estimated that the amount of money stolen directly from the bank accounts of hard-working families and businesses through fraud and scams has hit a record high of £1.3 billion. That is bad at the best of times, but it is even worse in the midst of a deepening cost of living crisis. That is because the Government have failed to get to grips with new types of fraud, such as identity theft and online scams, which have seen people’s life savings stolen and their economic security put at risk. I ask the Minister to explain why his Government continue to fail to take fraud seriously and continue to push responsibility on to just the banks. For example, the Bill ignores the fact that digitally savvy criminals are increasingly exploiting a range of financial institutions, such as payment system operators, electric money institutions and crypto asset firms, to scam the public.

In its written evidence to the Committee, Santander UK stated:

“Bringing crypto-exchanges into the scope of the Payment Systems Regulator’s powers to mandate reimbursement for APP fraud would be consistent with the principle of ‘same risk, same regulation’ and would introduce important new protections for consumers in area where risk of fraud is significant.”

I ask the Minister to explain why clause 62 completely ignores the emerging fraud and scam risk that EMIs and crypto asset firms pose to the public. What is his response to Santander’s evidence? Barclays similarly asked for clause 62 to be amended to expand the reimbursement protections beyond faster payments scheme payments to cover payments made over other relevant payment schemes or systems. Will the Minister explain why the Bill provides only for the reimbursement of fraud victims who send money using the faster payments system and why other payment systems have not been included in the scope of the Bill?

[Emma Hardy]

In reading the written evidence, there was an interesting cautionary tale from Mobile UK about how the banks introduced two-factor authentication through SMS without speaking to it. It found that fraudsters had worked out that they could get a one-time code by having a duplicate SIM card and intercepting the code sent from the bank, which immediately made me slightly worried about using two-factor authentication text message schemes. Mobile UK was able to find a way around that, but it highlights the need to involve as many stakeholders as possible when looking at fraud.

Mobile UK’s evidence was damning. Its conclusion stated:

“The mobile sector is committed to fighting fraud; the banking sector is clearly also committed, but, from the fraudsters point of view, this is a very low risk crime, as the chances of being pursued are very slim. This has to change.”

I recognise that some of these points are outside the scope of the Bill, as they would involve policing, investment and national crime agencies, but there are lots more things that could be done in the Bill to deal with fraud.

In its written evidence, Barclays said it welcomed that all payments made over FPS are covered by the new protection, but that it

“would note there are other relevant commonly used payment schemes and systems that should benefit from the same protection—for example, the CHAPs payment scheme, and ‘on us’ payments… The Bill should therefore be amended to give the PSR power to require participants in other payment schemes to reimburse scam victims.”

That seems to be incredibly sensible advice from Barclays.

It was echoed in the evidence given by Which?:

“to avoid gaps in protections the PSR should also be required to work with other regulators to introduce reimbursement requirements, including for payments made between accounts held with the same bank or payment provider (which are regulated by the FCA) and for the CHAPs payment system used for high-value transactions”.

That is exactly the same as what Barclays said.

There seems to be a lot of consensus among consumer representative groups such as Which? and in the banking sector about broadening out the provisions, looking at other ways in which fraudsters are working, and dealing with the issues raised by Mobile UK. At the moment, the people who are committing these frauds seem to be getting away with it.

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[Andrew Griffith]

I give way to the hon. Lady.

[Tulip Siddiq]

UK Finance found that fraud has hit a new high under this Government. Is the Minister going to blame the EU, once again, for that record high? Would he like me to send him the UK Finance report?

[Andrew Griffith]

I am sorely tempted, but I will resist the urge to rise to that.

If my officials can find the report to which the hon. Member for Wallasey refers, I will look at it, and outwith the Bill, I will ensure that our efforts are equal to the task. I accept that fraud is rising, and in particular that this level of fraud is rising. That is facilitated by both online technology—there are other measures outwith the Bill to tackle and police the unregulated online world—and, as we heard earlier, the shift from cash, which suffered from its own forms of fraud and theft, into a more digital world.

[Andrew Griffith]

I can confirm to the Committee that, because the measure relates to all payment systems that fall within the remit of the Payment Systems Regulator, the measure is not confined solely to fast payment. Fast payment makes up about 97% of reported fraud—those are UK Finance figures—so of course it makes sense for it to be the first in our sights, but the clause will follow fraud and payment systems as they evolve. That is its whole purpose. It is not confined simply to the faster payment system. If that is the understanding that Barclays and Which? have, we should correct it, because any of the PSR-designated platforms are in scope.

[Tulip Siddiq]

The Bill provides for the reimbursement of fraud victims who send money using the faster payment system. Is the Minister saying that other payment systems are included in the scope of the Bill?

[Andrew Griffith]

Yes. If that is not correct, I will write to members of the Committee, but my understanding is that all the measures that we have been talking about cover the scope of the Payment Systems Regulator.

Question put and agreed to.

Clause 62 accordingly ordered to stand part of the Bill.

Clause 63

Credit unions

Question proposed, That the clause stand part of the Bill.

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[Andrew Griffith]

The Government are a strong supporter of the mutuals sector, and recognise the unique role that credit unions play in their communities. Clause 63 introduces schedule 14, which makes amendments to the Credit Unions Act 1979—a particularly good year—to allow credit unions in Great Britain to offer a wider range of products and services, thereby supporting the growth, diversification and development of the sector.

The Credit Unions Act 1979 sets out the regulatory framework for credit unions and specifies the products and services that they can provide. Schedule 14 adds proposed new subsection (3ZZA) to section 1 of the Act, introducing a new optional object, or objective, for credit unions, which specifies additional products and services that they may now choose to offer. The services included are hire purchase agreements, conditional sale agreements, and insurance distribution services. When the Association of British Credit Unions Ltd consulted the sector in 2019, those were the additional products and services that credit unions wanted to be able to offer their members. In order to offer those additional products and services, credit unions must obtain permission from the Prudential Regulation Authority or the Financial Conduct Authority in the same way as other providers, and of course secure approval from their members.

Schedule 14 also grants the Treasury a power to add further products or services to the new object via a statutory instrument. That will ensure that the Government can continue to support credit unions in Great Britain to expand into other areas. The schedule also adds proposed new section 11E to the 1979 Act, which makes provision in relation to those new products and services. It caps the interest that a credit union can charge on hire purchase agreements and conditional sale agreements at 3% per month. That cap already applies to loans offered by credit unions.

The schedule gives the Government the power to amend the cap in the future via secondary legislation. The Government already have that power in relation to other credit union products and services. It allows the cap to keep pace with changes in the economic environment and allows credit unions to offer hire purchase agreements, or conditional sale agreements, to corporate members, subject to member agreement. The aggregate outstanding balance that can be owed to corporate members is capped at 10% of a credit union’s total aggregate balance under those agreements.

The Bill also makes provision for a credit union’s ability to lend to and borrow from other credit unions. Section 11 of the 1979 Act will be amended to clarify that credit unions may offer loans to other credit unions, regardless of whether they have a membership link. That will further support the growth, diversification and development of the sector.

The Bill introduces a requirement for credit unions to submit annual returns to the FCA, and to be subject to the “year of account” provisions in the Co-operative and Community Benefit Societies Act 2014. Those amendments will ensure greater regulatory oversight and support good corporate governance practices. Together, clause 63 and schedule 14 will support the credit union sector to grow sustainably for years to come, and help them to expand their reach as providers of affordable credit. I therefore recommend that clause 63 and schedule 14 stand part of the Bill.

[Tulip Siddiq]

Clause 63 contains some welcome and long-overdue provisions, such as enabling credit unions to offer a wide range of products. However, I do not think the Bill does much to address the outdated regulatory regime facing credit unions as a whole. We will discuss Labour’s proposals to address that, and the barriers facing the wider co-operative and mutual financial services sector, when we debate new clauses 7 and 8.

However, for now, I will push the Minister on some of the areas where the Building Societies Association—and others—has called for bolder action in its written submission to the Committee. First, why do clause 63 and schedule 12 not relax the same-household requirements for family members? Secondly, why does the Bill fail to restrict access to the register of members, in line with best practice for the protection of members’ personal data?

[Martin Docherty-Hughes]

I agree with the official Opposition on clause 63. I must say, we have talked about 1979, but I would mention 1977, when the Dalmuir Credit Union was opened, and I was number 501 with a membership card, around the age of six, on the church hall stage.

I am very aware of the good works that credit unions such as Dalmuir, Dumbarton and Vale of Leven do in my constituency, and, I am sure, across other Members’ constituencies, but I share the concerns expressed by the official Opposition about the existing infrastructure. I hope that the Minister can say something to alleviate concerns about that existing framework—not only for credit unions but for other local banks, which have been diminished over the past couple of years—and about how the legislation helps to grow this sector of mutual financial support in local communities. We know our banks and post offices are closing, but the credit unions, especially, can be a good cause on which we can all agree.

--- Later in debate ---

[Emma Hardy]

As well as my campaign for financial inclusion, I am sure Members will have heard me talk about flooding. I have not tabled an amendment to the clause, but I might be minded to in order to have a further conversation in future.

The clause addresses reinsurance for acts of terrorism. Has the Minister explored looking at reinsurance for acts of flooding? We have the Flood Re scheme, as I am sure he is aware, but that only applied up to 2007 and properties built after that are not included, nor does it apply to businesses. With this welcome move to consider reinsurance for acts of terrorism, has the Minister thought about other aspects, specifically flooding?

[Tulip Siddiq]

We welcome clause 64. I support the principle of the Treasury guaranteeing support for reinsurance in the event of a terrorist attack, but how will the provisions in the clause ensure that the taxpayer is adequately protected from such risks? How will the Treasury hold any public sector body to account regarding the requirements in the clause? Will the Minister provide some detail on the role of the accounting officer, in terms of ensuring that public sector bodies have sufficient oversight of the requirements of the clause?

[Andrew Griffith]

On the point about flooding, that is simply outwith the scope of the Bill. The Flood Re scheme is the responsibility of the Department for Environment, Food and Rural Affairs, and it is not something that falls under this Bill or the Acts I have mentioned.

The role of the accounting officer is the same as colloquially accepted in any public body—the person responsible for maintaining financial records and owning that liability. The governance remains with the board of directors of the relevant body and the duty to the taxpayer is exactly the same as it would be. The clause effectively gives step-in rights or the power to direct in particular circumstances. It does not alter where the core cost and liability start and should remain.

Question put and agreed to.

Clause 64 accordingly ordered to stand part of the Bill.

Clause 65

Banking Act 2009: miscellaneous amendments

Question proposed, That the clause stand part of the Bill.

[Andrew Griffith]

First, I shall speak to new clause 13 and Government amendment 23, which appear in my name, before speaking to clauses 65 to 73 and Government amendments 5 to 8, which also appear in my name.

New clause 13 adds the chair of the Payment Systems Regulator to the board of the FCA. Since the PSR was established in 2014, the roles of the PSR chair and the FCA chair were performed by the same person. As a result, the PSR chair has always been on the FCA board. However, the FCA chair and the PSR chair roles will now be performed by separate individuals, following the appointment of Ashley Alder as the FCA chair in July 2022. The composition of the FCA board is set out in the Financial Services and Markets Act 2000, and the new clause adds the PSR chair to the FCA board. This will help continued effective co-operation between the FCA and the PSR. Government amendment 23 provides for those changes to come into effect two months after Royal Assent.

Clause 65 makes five minor but necessary technical amendments to the Banking Act 2009, to ensure that it continues to function as intended. Clause 66 sets out a small number of definitions to ensure that the provisions of the Bill are interpreted correctly.

Turning to clause 67, the Bill makes a number of changes to the matters that the regulators must consider when they consult on rules. In particular, the Bill introduces a new growth and international competitiveness objective and a new regulatory principle to consider the Government’s net zero target. The clause allows the regulators to fulfil their obligations to consider such matters in consultations that are published before the Bill receives Royal Assent. That means that the regulators can begin acting to meet all their new consultation obligations in this Bill as soon as they are ready to do so, avoiding any unnecessary delays to important regulatory reforms.

Government amendments 5, 6 and 7, which appear in my name, widen the effect of clause 67 to include any obligation to consult introduced by the Bill. That includes, for example, the obligation for the FCA and the PRA to consult their cost-benefit analysis panels.

Clause 68 provides for any expenditure incurred under the Bill to be paid out of money provided by Parliament in the usual way. Clause 69 empowers the Treasury to make consequential changes to other legislation, to ensure that the provisions in this Bill function effectively where they interact with existing legislation. The Treasury will be required to use the affirmative procedure to make consequential provisions that amend, repeal or revoke any provision of primary legislation. That will ensure that there is appropriate parliamentary scrutiny of the exercise of this power.

Clause 70 provides for powers delegated by the Bill to be exercised by statutory instrument. The clause also allows the Treasury to make regulations under this Bill that include ambulatory references to rules and other instruments. Government amendment 8 makes a technical change to clause 70 to ensure that the power to restate and modify saved legislation can rely on the power to make ambulatory references provided for by the clause.

Clauses 71 to 73 are technical in nature. Respectively, they set out the territorial extent of the Bill, when provisions in the Bill will come into force, and the short title of the Bill. I therefore recommend that clauses 65 to 73 stand part of the Bill, and commend Government amendments 5, 6, 7, 8 and 23 and new clause 13 to the Committee.

[Tulip Siddiq]

I will go through the clauses in this group and ask my questions in turn.

Clause 65 will give the Treasury powers to consider whether a payment system using digital settlement assets or a digital settlement asset service provider is likely to threaten financial stability and should therefore be considered for recognition. How will the Treasury consult the Bank of England when making such a decision? How will the Treasury ensure that the Bank has the expertise it needs to have effective oversight of the operators of a new digital settlement asset or recognised payment system?

I understand that clause 67 and associated Government amendments 5, 6 and 7 would mean that all consultation duties arising from the Bill can be met by consultations made before commencement. The Minister can correct me if my understanding is wrong, but will the Government ensure that this does not result in consultations becoming mere tick-box exercises, with no real impact on the design or implementation of the reforms?

We welcome new clause 13, which will enable better integration across the Payment Systems Regulator and the FCA. What does the Minister hope to achieve with this provision, and how will the FCA and the Payment Systems Regulator be held to account against it? I just want a bit more detail from the Minister on this clause. How will the Treasury guarantee that there are adequate safeguards in place to ensure that the chair of the Payment Systems Regulator does not influence FCA decisions where it may not be appropriate?

Finally, the Minister might not be aware of this, but there are rumours in the press that the Government were exploring merging the Payment Systems Regulator and the FCA. They might just be rumours, but that would be an absolute disaster for consumer protection, so will the Minister, if he has heard these rumours—or if he is the source of them—confirm that the Government have no plans to merge the regulators?

[Andrew Griffith]

I will write to the hon. Lady about digital settlement assets, in order to try and fully understand what she was pushing at with her question.

On clause 67 and the amendment, the propensity to consult in this space is extremely prevalent, because of the need and desire to get the practitioner and the consumer voice fully represented. Indeed, the hon. Lady and I could both spend a large proportion of our lives responding to the many consultations that are held. However, I have seen no evidence whatever that those consultations are merely tick-box exercises, and I can assure her that that is not the intention. I look forward to engaging with those consultations as we go through this, as they are a fundamental part of the regulatory structure.

On new clause 13 and the chair of the PSR being on the FCA board, I think the hon. Lady mostly welcomed that as an opportunity for the two regulators to work closely together. As I explained, that is de facto the status quo. To the extent that there were any conflicts, I would expect the responsibility to manage and police those conflicts to lie primarily with the chair of the board, as it would in any board. That said, I want a Payment Systems Regulator and a Financial Conduct Authority that work hand in hand, cheek by jowl. I do not anticipate many examples of where we would see conflicts. What we want is effective close working together, as more and more of the systemic risk in the financial system sits with payment service providers.

I have not seen rumours of a PSR and FCA merger. Of course, the PSR effectively emerged from the FCA. It is certainly not my intention to merge them, nor am I aware of any proposals to do so. If anything, by establishing the PSR chair as a separate body or separate person, those two organisations are actually become strong siblings rather than being forced together. That is my understanding.

[Tulip Siddiq]

The rumours were in the press and the sector was quite worried about it. I appreciate the Minister’s clarification of his position.

Question put and agreed to.

Clause 65 accordingly ordered to stand part of the Bill.

Clause 66 ordered to stand part of the Bill.

Clause 67

Pre-commencement consultation

Amendments made: 5, in clause 67, page 81, line 2, leave out “relevant”.

This amendment, read with Amendments 6 and 7, broadens the effect of clause 67 so that it applies to all consultation duties arising under the Bill rather than only those duties specifically mentioned in subsection (3) of that clause.

Amendment 6, in clause 67, page 81, line 7, leave out “relevant”.

See the explanatory statement for Amendment 5.

Amendment 7, in clause 67, page 81, line 9, leave out subsection (3).—(Andrew Griffith.)

See the explanatory statement for Amendment 5.

Clause 67, as amended, ordered to stand part of the Bill.

Clauses 68 and 69 ordered to stand part of the Bill.

Clause 70

Regulations

Amendment made: 8, in clause 70, page 82, line 17, at end insert

“, except so far as making provision by virtue of section 4(1)”.—(Andrew Griffith.)

This amendment ensures that clause 4(1) of the Bill (power to restate and modify saved legislation) is within the scope of clause 70 for the purpose of being able to rely on the powers in clause 70, when making regulations by virtue of clause 4(1).

Clause 70, as amended, ordered to stand part of the Bill.

Clause 71 ordered to stand part of the Bill.

Clause 72

Commencement

Amendment made: 23, in clause 72, page 82, line 35, at end insert—

“(aa) section (Chair of the Payment Systems Regulator as member of the FCA Board);”.—(Andrew Griffith.)

This amendment provides for NC13 to come into force two months after Royal Assent.

Clause 72, as amended, ordered to stand part of the Bill.

Clause 73 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Joy Morrissey.)