Alcohol Duty

Abena Oppong-Asare Excerpts

Monday 19th December 2022 Commons Chamber

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

I thank the Minister for advance sight of his statement. The Government have confirmed that they are freezing alcohol duty rates for six months. I know that the sector will welcome the announcement, especially given the difficulties that businesses are facing, whether they are producers, suppliers or hospitality venues. I must say, however, that it is absolutely laughable that the Government have announced the change in the name of certainty. We should call it what it is: a U-turn. The previous Chancellor announced a freeze, the current Chancellor scrapped it, and now it is back on.

How did we get here? In October 2020 the Government announced a call for evidence to seek views on how the alcohol duty system could be reformed. At the time, they said that they would make the system

“simpler, more economically rational and less administratively burdensome on businesses and HMRC.”

What we have seen since then, however, is indecision, U-turns and delays.

The Government finally published a response to the alcohol duty consultation in September this year. Then in the shambolic mini-Budget that crashed the British economy, the then Chancellor announced a freeze on alcohol duty that was due to come into force in February 2023. The new Chancellor scrapped the planned freeze, however, in October’s autumn statement—just a couple of months ago. We now have a screeching U-turn; the freeze is back in place.

We see again that the Government have no long-term plan for the British economy. They cannot provide the certainty that businesses and their hard-working employees need to plan for the tough winter ahead. They have left businesses and consumers out in the cold. They may not want to hear it, but that is the reality. They are unsure what regulatory systems will be in place in as little as two months.

Today, Labour found that more than 70,000 venues have had to reduce their opening hours due to the price of energy bills, which means that almost a third of pubs, bars and hotels are missing out on customers at the busiest and most profitable time of the year. Those businesses and producers of wine, beer, cider and spirits enrich our communities and boost our high streets. I recently popped into the Standard, a pub in my Erith and Thamesmead constituency, which is really struggling with soaring energy bills and the lack of Government support. It needs the Government to be on its side. The Government promised to tell the House what the new energy bills support scheme would look like before Christmas, but we have yet to hear anything from them. Only Labour has set out a long-term plan to get our economy growing again.

Looking to the future, we agree with the principles behind the alcohol duty review and we want the alcohol duty system to be made simpler and more consistent. We recognise that there is a balance to be struck between supporting businesses and consumers and protecting public health, and maintaining a source of revenue for the Exchequer, but this statement leaves many questions unanswered.

Can the Minister give an indication of his plans for duty reforms in the coming spring? Can he confirm whether the alcohol duty reform package will be implemented in full? If so, what impact assessment has been carried out on the impact of the transition to the new duty regime? I hope that he can provide some clarity. The alcohol sector and the businesses and jobs that it supports have suffered enough uncertainty and U-turns. These are major changes that will affect businesses and consumers in all our constituencies, so I hope that they will be properly thought through and that we will not see last-minute policy announcements and changes, as we have today.

[James Cartlidge]

I am grateful to the hon. Lady. To be clear, this is good news for every single part of our alcohol industry and for those who drink in our pubs. Crucially, it gives certainty to the industry. The hospitality industry employed 2.1 million people at the latest reckoning, so it is a huge part of our economy and we want to do what we can to support it.

The hon. Lady mentioned a U-turn. To be clear, we said that we would introduce a radical reform of alcohol duty, and we will introduce that reform. It will come into effect next August. That reform could not have happened if we had not left the European Union. It will introduce, for the very first time, differential duty rates on tap and in the supermarkets. The public want that, because they value their pubs and understand the importance of pubs to their communities. [Interruption.] The hon. Lady intervenes, having sat down. She talked about her local pub. Obviously, we want to assist her local pub, and all pubs up and down the country; that is why we have put in place an energy bill relief scheme worth £18.1 billion, which is a huge intervention.

The energy bill relief scheme is very generous, but it is expensive, and we need to ensure longer-term affordability and value for money for the taxpayer. That is why we are carrying out a review of the scheme, with the aim of reducing the public finances’ exposure to volatile international energy prices from April 2023. We will announce the outcome of the review in the new year to ensure that businesses have sufficient certainty about future support before the scheme ends in March 2023. We should remember that this energy-related support comes on the back of the enormous support that we put in place during the pandemic. There were grants, bounce back loans, and of course furlough for all staff working in the hospitality sector.

We are proceeding with this ambitious reform package next year. We felt that it was appropriate to give the sector certainty as soon as possible that it would face only one uprating. That is the right thing to do, and it shows that the Government are supporting the hospitality industry.

Covid-19: Economic Impact of Lockdowns

Abena Oppong-Asare Excerpts

Tuesday 29th November 2022 Westminster Hall

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to serve under your chairship, Mrs Murray. I congratulate the right hon. Member for Tatton (Esther McVey) on securing the debate, and thank hon. Members for their contributions. I am glad we have the opportunity to discuss this issue; I agree with the right hon. Lady that we need to have these frank and difficult discussions. The pandemic had a deep financial, economic impact. It is important to think about the future, and how we can grow our economy and improve living standards.

I was elected in December 2019, before the pandemic hit. I then saw at close hand the impact on people’s livelihoods and wellbeing, and I know that people are still struggling. A lot has happened since covid-19 first reached the UK: not one, but two toppled Governments; two Prime Ministers; the scandal of Downing Street Christmas parties; and more than 50 people issued with fixed penalty notices, including the current Prime Minister.

I want to take us back to 2020. On 23 January, the Foreign Office advised against all but essential travel to Wuhan, China, the epicentre of the outbreak. The first case of covid-19 in the UK was confirmed on 30 January, with cases steadily rising over the following weeks. On 6 March, the then Prime Minister said, during a visit to a lab in Bedfordshire,

“It looks to me as though there will be a substantial period of disruption when we have to deal with this outbreak.”

It was not until 23 March that the Prime Minister announced a lockdown—the introduction of new restrictions on everyday life and travel. We know that the delay in taking that decision risked many lives, harmed our economy and prolonged the pain. For the next 16 months, the Government yo-yoed in and out of lockdowns and new restrictions, with much dither and delay.

Some members of the Government thought it might be best to let the virus rip. The result was unclear messaging, decisions taken too late, and a death rate that was too high. The Government were too slow to lock down in March 2020, too slow to protect our care homes, too slow to save jobs and businesses, and too slow to get protective equipment to the frontline.

In the summer of 2020, the Government ignored warnings about the second wave. In September, a circuit breaker was introduced, against scientific advice, followed by a longer lockdown a month later. As my hon. Friend the Member for Blackley and Broughton (Graham Stringer) mentioned, in December, when the scientific advice was that national lockdown was necessary, the Government dithered for nearly two weeks and ended up cancelling Christmas at the last minute.

The current Prime Minister, who was then Chancellor, was not even in the country at that point. The Government shut down the economy at the height of the festive period, and was nowhere to be seen. He had to fly back from his California home after business leaders demanded that he plan a financial support package, following the mixed messages from Government. That indecision cost lives and livelihoods.

I pay tribute to our fantastic NHS and social care workers, without whom we would have really struggled. Many put themselves in harm’s way to slow the speed of the virus. I also pay tribute to the British people, who rose to the challenge and came together as communities to protect the most vulnerable. It was a time of national solidarity—a shared effort to face a challenge that most of us had never experienced before.

The right hon. Member for Tatton referred to the Labour party. Throughout that period, the Labour party called for quicker decision making and measures to protect jobs and businesses. The Government could have been provided targeted support for the hardest-hit sectors, fixed sick pay and eased the burden of business rates, whether that was on high street businesses, arts venues, café or hairdressers. So many businesses suffered from the lack of clear communication and decisive action.

We know that we were not all in it together. When much of the country was struggling, No. 10 was hosting parties. Sue Gray’s independent report said that senior leadership in No. 10

“must bear responsibility for this culture.”

It continued:

“At least some of the gatherings in question represent a serious failure to observe not just the high standards expected of those working at the heart”—

[Mrs Sheryll Murray (in the Chair)]

Order. I gently remind the shadow Minister that we are supposed to be debating the economic impact of the covid-19 lockdowns.

[Abena Oppong-Asare]

Thank you, Mrs Murray, but I do think this is important because, while we were going through the economic crisis, this is what was happening. This is what we need to look into when we learn lessons for the future.

[Mrs Sheryll Murray (in the Chair)]

Order. We are debating the economic impact of the covid-19 lockdowns.

[Abena Oppong-Asare]

I will take your comments on board, Mrs Murray.

We know that the impacts of covid-19—particularly the economic impacts—run deeper. Just this month, new information has been revealed detailing how some people, including a Tory peer, sought to use covid-19 and lockdowns for their own benefit. PPE Medpro was given £230 million in Government contracts after a referral to the VIP fast lane by a Tory peer. The extent of her involvement in PPE Medpro has now come to light, and tens of millions of pounds of taxpayers’ money ended up in offshore accounts. The protective equipment produced by PPE Medpro was substandard: 25 million surgical gowns, which cost the taxpayer £122 million, were rejected by the Department of Health and Social Care after technical inspection because they were completely unusable. We also know that £6.7 billion was wasted on covid payments to businesses and individuals fraudulently or by mistake.

The economic impact of covid-19 lockdowns was immense, and was exacerbated by dither and delay in Downing Street, and hard-working businesses, families and individuals suffered as a result. It has left us with an economy that lags behind the pack. Wages are lower in 2022 in real terms than when the Tories came to power in 2010, and business investment is 8% below its pre-pandemic peak. The mini Budget from the short-lived Prime Minister and Chancellor crashed our economy.

The economic facts speak for themselves. We are now the only G7 economy that is smaller than it was before the pandemic. Other countries are still dealing with the economic impacts of covid-19, but we are doing worse. We are at the back of the pack, lagging far behind. The Chancellor said he wants to address the impacts, but again the economic facts speak for themselves.

Perhaps I am being a bit unfair to the current Chancellor and Government. They have quite a task on their hands. After all, for the 12 years in which their party has been in Government, low growth and low ambition have held our country back. What would Labour do fix the mess and grow our economy in the aftermath of covid? Back in January, we proposed a windfall tax on oil and gas giants—on the profits of rising prices and war. The Government ignored our calls and instead pressed ahead with their own windfall tax, which amounts to a huge giveaway of public money to the very oil and gas companies that are making record profits. Under the scheme, some oil and gas companies will pay zero tax this year, despite record global profits.

[Ian Paisley]

I have listened carefully to the hon. Lady. Some of us who turned up to Parliament during that terrible time voted against the Government’s proposals. I think I voted against every single Government restriction except one. The hon. Lady and her party, I think, voted for them all. There is a bit of complicity here: if somebody’s hands are on the steering wheel and they keep driving in one direction, it is hard for them to say in hindsight, “Something different should have been done.” This grates on me just a little because there were opportunities all along the road to say, “There’s a different course of action that can be taken here.”

[Abena Oppong-Asare]

I want to be clear that the Labour party did raise concerns throughout the pandemic that the Government were not looking at the scientific advice, and they took late action to address and deal with it.

To conclude, as we look to recover from the pandemic, we need an ambitious plan for growth. That is what Labour has presented and that is what we will champion.

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

It is a pleasure to serve under your chairmanship, Mrs Murray, and it is always a pleasure to follow the hon. Member for Erith and Thamesmead (Abena Oppong-Asare).

I congratulate my right hon. Friend the Member for Tatton (Esther McVey) on securing this debate and on her ongoing work in this domain. We have had a wide-ranging debate. I will not respond to every point as many of them are for the inquiry chairman, Baroness Hallett, to answer. Members should be reassured that, within scope, she will look at the points they raised about the scientific and public health advice and the impact on health outcomes, education and civil liberties.

My right hon. Friend was quite right to lament the fact that we in Parliament did not have the opportunity to ask questions at the time. It is to her credit that she continues to bring back this issue so we can learn the lessons of lockdown, which she rightly referred to as a blunt instrument. I am sure that no Member would wish it to be repeated. She was also right to remind us that under Labour lockdowns would have been longer and more costly.

[Abena Oppong-Asare]

Will the Minister give way?

[Andrew Griffith]

I will not, because I would like to respond to as many points as possible. We have had a long debate about a wide-ranging set of consequences. We heard the hon. Lady’s perspective and, indeed, to the extent that it had a critique and a narrative it was that we did not lock down deeper, harder and for longer.

[Abena Oppong-Asare]

Will the Minister give way on that point?

[Andrew Griffith]

No, I have made it clear that I will not be giving way.

My hon. Friend the Member for North Wiltshire (James Gray) mentioned the impact on the hospitality sector. I represent a constituency with a significant hospitality sector, and we know that the sector was affected disproportionately during the lockdown. He and other Members understandably raised the ongoing impact of covid. One or two Members, although perhaps not enough, also mentioned the impact of the war in Ukraine, and I thank those who did for putting it in the right context. My hon. Friend raised the issue of one hospitality business in his constituency the energy bills of which have gone from £16,000 to £60,000 per month. Clearly, he is looking at the issues that people are facing, and we hear that.

The economic priority during the pandemic was to stave off an economic depression, mass unemployment and the potential for rapidly deteriorating living standards. My right hon. Friend the Member for Tatton talked about GDP falling to its lowest level since 1709. We are fortunate that the economy is now growing, thanks not only to the productive and entrepreneurial nature of the British people but to the unprecedented level of support provided. Ours was one of the fastest growing economies in recent years and that continues to be the case, and we came out of lockdown earlier than many other countries.

As all Members recognise, the attempt to limit the spread of the virus did mean the implementation of restrictions. Alongside those restrictions, the Government provided support for individuals, families and businesses throughout the country that were impacted by the virus. The two things went hand in hand. The Government could not manage that unprecedented situation. It is easy with hindsight—we have talked a lot about hindsight —and many Members have empathised with that.

I am grateful for the support from the hon. Member for North Ayrshire and Arran (Patricia Gibson), who made some fair points about the uncertainty that was faced and the difficultly of the decisions. It is my belief that they were made in good faith and tried to do the best to protect people and the economy. We cannot know, but there is at least the possibility, which the hon. Lady raised, that the impacts could have been worse if it was not for the financial support in particular that was provided, along with the other measures.

For all too short a time I served alongside the hon. Member for Blackley and Broughton (Graham Stringer) on the Science and Technology Committee. He was a ferocious interrogator and—if I may say so—very wise in the early, almost contemporaneous analysis of the scientific advice. His contribution was largely about the scientific advice, so I hope he will forgive me if I do not respond more fully to him.

My hon. Friend the Member for Bolton West (Chris Green) reiterated how vital it is that we do not lock down Parliament again, and I support him in that. Lessons will be learned and must have been learned. We here all have a voice. The reason why we are here today is because we have a voice to protect our constituents and to protect the economy from the ravages of things such as the pandemic.

My hon. Friend the Member for Bolton West also talked about the compounding effect, not just of the pandemic. I am the first to acknowledge that the pandemic has an ongoing impact on the economy. The right hon. Member for East Antrim (Sammy Wilson) talked about “economic long covid”, which is certainly part of the context in which we sit today.

My hon. Friend the Member for Bolton West reminded us that at that time nobody anticipated—as I think he put it—Europe’s biggest oil producer invading Europe’s biggest food producer. That is one reason why the Government have once again come forward with an unprecedented level of support to get people through the winter and the energy crisis that we now face, with the same objectives as the generous support that was provided during the pandemic.

Along with other major economies, the UK is in the midst of a cost of living challenge that has been caused by global inflation as a result of the disruption of supply chains, as well as the increase in energy prices. This is a global challenge and we still see higher inflation in Germany, the Netherlands and Italy. We are acutely aware of the pressures that households and businesses face. Several Members said that having been so successful in protecting the economy, jobs and businesses, it is clearly vital—this is a shared objective of Government—that we continue to do so again this winter.

Going forward, we will continue to place our people and our businesses at the heart of our policies. We are happy to make interventions, and as we debate the economic consequences of covid that is something we can all take forward.

Finance Bill

Abena Oppong-Asare Excerpts

2nd reading
Monday 28th November 2022 Commons Chamber

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

May I put on the record my thanks to the emergency services for their work following the tragic deaths of two 16-year-old boys in my constituency, Charlie Bartolo and Kearne Solanke, which took place this weekend? My thoughts are with their family and friends who have been left behind, who will be coming to terms with their loss.

I am grateful for the opportunity to close this debate on behalf of the Opposition. Britain has so much potential, but right now the Tory economic crisis we face is holding us back. The Conservatives have been in power for 12 years, and what do they have to show for it? A crashed economy and the highest tax burden in 70 years. This Finance Bill fails to make fairer choices on tax, and it follows an autumn statement that failed to set out a plan to grow the economy. Labour will oppose the Bill today because it fails on three counts: it raises tax on working people at exactly the wrong time; it fails to take advantage of other sources of revenue and close loopholes that hit public finances; and it comes after an autumn statement that failed to set out a plan for growth and improve living standards.

I am grateful to hon. Friends for their contributions. Reflecting the concerns and frustrations of their constituents, they spoke powerfully about the need for change and for a new direction. I am particularly grateful to my hon. Friend the Member for Warwick and Leamington (Matt Western), who pointed out that we have the weakest growth in the G7 and the highest tax burden since world war two. The hon. Member for Leicester East (Claudia Webbe) spoke passionately about how the Bill will have a negative impact on her constituents. I was pleased to see the hon. Member for Amber Valley (Nigel Mills) supporting the call in Labour’s reasoned amendment to end non-dom status; I hope he will support the amendment tonight.

My hon. Friend the Member for Eltham (Clive Efford) spoke of the importance of addressing inequality. As my hon. Friend the Member for Ealing North (James Murray) put it, this Finance Bill is exactly that: a bill for working people to pay for the Government’s mess. [Hon. Members: “Rubbish!”] There have been 24 Tory tax rises during this Parliament, so it is not rubbish. The tax burden is the highest in 70 years, and now the Government want to introduce a new stealth tax to turn the screws on working people.

Let me remind the Government of what they have achieved so far. In real terms, wages are lower in 2022 than they were when the Tories came to power in 2010. Tory economic incompetence is doubling spending on the debt interest from last year, and business investment is 8% below its pre-pandemic peak. That is the Tories’ record in government—and what is their response to those challenges? To double down and load further costs on to our economy. This is what the OBR predicts their plans will achieve: real wages falling by 7% over the next two years, the UK falling behind the pack with the lowest growth in the G7 over the next two years, and real wages falling further—by 7%—over the next two years, leaving the average worker £40 worse off. The head of the Institute for Fiscal Studies described these numbers as “simply staggering”, and I quite agree. The Conservatives are presiding over a lost decade, with low growth and economic incompetence wiping out people’s wages and savings. As the Federation of Small Businesses put it, the autumn statement was

“high on stealth-creation and low on wealth-creation”

—or, to put it even more simply, the Conservatives are building a high-tax, low-growth economy.

The Government will say that they had no choice, but we know that that is not the case. There were so many options that they could have taken to raise revenues. Labour proposed a windfall tax on oil and gas giants, on the profits of rising energy prices and war, back in January. The Government ignored our calls and instead pressed ahead with their own “windfall tax”, which amounts to a huge giveaway of public money to the very oil and gas companies that are making record profits. [Interruption.] The Tories do not want to hear this, but these are the facts. Under that scheme, some oil and gas companies paid zero tax in the UK this year, despite record global profits. This tax break is set to cost taxpayers £8 billion over five years—£8 billion that could be spent helping those who most need it as we move into the winter months.

The list goes on. There were other, fairer choices that the Government could have made. They could have scrapped the non-dom status that costs taxpayers an extra £3.2 billion a year. They could have reversed their tax cut for banks and ended the tax breaks on bankers’ bonuses. They could have reconsidered the VAT exemption for private schools. We know that it did not have to be like this, and, as my hon. Friend the Member for Ealing North explained, Labour has a plan for growth that will get our economy firing on all cylinders. [Interruption.] I will tell the hon. Member for Southend West (Anna Firth) about it, if she wants to hear.

Our plan is to replace business rates to support our high streets, to implement a modern industrial strategy to help businesses to succeed, to introduce start-up reforms to make Britain the best place to grow a business, and to fix the holes in the Brexit deal so that we can export more. That will be complemented by our green prosperity plan, which will create jobs across the country. We will deliver greater self-sufficiency in renewable energy by doubling onshore wind, trebling solar and quadrupling offshore wind, thus reducing people’s energy bills and guaranteeing our energy security. We will create half a million jobs in renewable energy, and an additional half million by insulating 19 million homes over 10 years. 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.

Raising taxes on working people, failing to take fair choices and close loopholes, and an autumn statement with no plan for growth—our amendment sets out those three failures that will hold our economy back. The choice is clear: it is a choice between a “vicious cycle of stagnation” with this Conservative Government—and the House should not take my word for it; those are the words of the Prime Minister himself—and an ambitious plan for growth with Labour.

UK Infrastructure Bank Bill [ Lords ] (Second sitting)

Abena Oppong-Asare Excerpts

Committee stage
Tuesday 22nd November 2022 Public Bill Committees

[Richard Fuller (North East Bedfordshire) (Con)]

I beg to move amendment 14, in clause 9, page 4, line 14, at end insert—

“, and

(c) the effectiveness and scale of private and other third-party capital attracted to investments by the Bank.”

It is a particular pleasure to serve under your chairmanship, Mr Bone. Had you been with us this morning you would have witnessed a series of debates between the Minister, me and, on occasion, Opposition Members about the importance of the bank, with references to its ability to attract private capital from outside and to the importance of its achieving a financial return for its shareholders, who, I remind right hon. and hon. Members, are the taxpayers, through the choosing of the Government.

Amendment 14 relates to reviews of the bank’s effectiveness and impact. In previous discussions the Minister said—on balance, I think quite rightly—that there was sufficient power in the Government’s ability to provide a framework of strategic priorities and plans and, if necessary, to put directions in place for those objectives not to be included in the Bill. He said there was enough flexibility for the Government to provide a response by other means, which I accept.

In clause 9, however, we are trying to look at the bank’s effectiveness and impact. We are reviewing not just the bank’s homework but the directions provided by the Treasury and His Majesty’s Government over that period. That is underlined by subsection (1), which makes reference to “an independent person”. My amendment would amplify subsection (1)(b) by adding a specific provision on

“the effectiveness and scale of private and other third-party capital attracted to investments by the Bank.”

To reiterate some points that are relevant to the review —the hon. Member for Erith and Thamesmead has agreed with at least one of them, and perhaps more—there are concerns that the bank might spread itself too thinly with regard to where and how it might seek investments, all the way from early-stage investing, through growth capital, to mature investing. It is therefore important that the review by the independent person takes into consideration the efficiency of capital allocated between those various tasks or parts of the investing spectrum.

It is important that we understand the investment structures that are in place. What I have in mind—and I am interested to hear the Minister’s observations—is the fact that the bank is trying to attract external capital to achieve some of our climate change and levelling-up goals. For climate change goals, the backstop provider of the gap in any funding if the private sector does not provide, if we wish to achieve our policy objective, is the UK taxpayer. Right now, in the main Chamber Members are discussing the autumn statement. Members on both sides of the Committee are aware that we are pledging increases in taxation, expenditure and borrowing, notwithstanding additional pressures that achieving net zero will place on taxpayers. It is therefore crucial, if the bank is to play an effective role, that we are vigilant in understanding the burden left at the end of its efforts on the taxpayer, and we should seek to minimise it. My amendment seeks to put pressure on the independent person to look at that objective. Those are the main priorities of my amendment and I look forward to hearing the Minister’s response.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure, Mr Bone, to serve under your chairship. It is an honour to follow the hon. Member for North East Bedfordshire. As he has highlighted, we have come to a substantial and key clause.

As the hon. Gentleman briefly stated, the clause sets out requirements for reviews of the bank’s effectiveness and impact. In particular, it states:

“The Chancellor must appoint an independent person to carry out reviews of…the effectiveness of the Bank in delivering its objectives, and…its impact in relation to climate change and regional and local economic growth (including the extent to which its investments in particular projects or types of projects have encouraged additional investment in those projects or types of project by the private sector).”

The independent person must share those reports with the Treasury, which must then publish the reports and lay a copy before Parliament. I welcome that there will be performance reviews of the bank. Given the importance of its objectives, it is right that its ability to meet its aims is evaluated. We will get to the frequency of the reports later. I am sure I do not need to reveal to Committee members that we think the current proposed frequencies are inadequate.

Amendment 14, tabled by the hon. Member for North East Bedfordshire, would add a third element to the reports: the independent person would have to consider the effectiveness and scale of private and other third-party capital attracted to investments by the bank. We have already discussed the concept of additionality—the idea that the bank should be adding value and crowding in private sector investment. Clause 9(1)(b) already makes reference to additional investment, so I am confident that that is already covered by the Bill.

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

It is a pleasure to serve under your chairmanship, Mr Bone. I thank my hon. Friend the Member for North East Bedfordshire for his diligence in endeavouring to ensure that the Bill properly protects taxpayers’ interests and properly mobilises the private sector investment that the country depends on. I also thank him for trying his hardest to keep Ministers and this institution to account. I would never seek to do anything to discourage him.

However, in this case, I would like to join hands with the hon. Member for Erith and Thamesmead and, regrettably, confirm that it is my view that clause 9(1)(b), which already talks about the degree to which investments in particular projects or types of projects have encouraged additional investment in those projects or types of projects by the private sector, will go a long way to accomplishing what my hon. Friend wants. I am happy to write to him on what I consider to be the effectiveness of the clause and explore whether there is some value to be added in changing it, but it is my position, as it is that of the hon. Member for Erith and Thamesmead, that clause 9(1)(b) already does that.

My hon. Friend the Member for North East Bedfordshire should be reassured that the Government are setting up this institution with great foresight as to how we keep it accountable. The mere fact that we are legislating at its inception for an independent review to be carried out is a very progressive thing. We are trying to ensure that all our arm’s length bodies are as effective as possible. Speaking personally, I think it would be an innovation for every other arm’s length body to have to have independent reviews at frequent intervals.

I hope that my hon. Friend will agree that the wording of the Bill is already sufficiently broad to cover what he is seeking and accept my assurances to explore whether it should be changed, and that he will not press his amendment to a vote.

--- Later in debate ---

[Richard Fuller]

That is very helpful. With that assurance from the Minister, I am happy to withdraw my amendment.

Amendment, by leave, withdrawn.

[Abena Oppong-Asare]

I beg to move amendment 23, in clause 9, page 4, line 14, at end insert—

“(c) the geographic spread of the businesses and bodies the Bank invests in, and

(d) the ownership of the businesses and bodies the Bank invests in.”.

This amendment requires reviews of the Bank’s effectiveness and impact to consider the location and ownership of the businesses and bodies it invests in.

It might be helpful if I give the background to the amendment. Labour wants to strengthen British industry, supply chains and our industrial strategy. That is why we have proposed amendment 23, which would require reviews of the bank to consider the geographic spread of the businesses and bodies that the bank invests in, and their ownership.

I was concerned to read research by Open Democracy that found that the bank has so far pledged nearly all its cash to firms with offshore owners, including some linked to tax havens and repressive regimes. That was an independent report, not carried out by my party, but by Open Democracy. We want the benefits of the UK Infrastructure Bank to be seen here in the UK, with home-grown renewables such as offshore wind, solar, nuclear, hydrogen and tidal power. We want to work with businesses to crowd in private funding and work with unions to ensure high-quality jobs. I am sure the whole Committee can agree on that.

We know that this could be a national enterprise. We have a world-leading offshore wind industry in Scotland and on the east coast, hydrogen in the north-west and Teesside, nuclear power in the south-east, and solar power in the south and midlands. That can only be realised if investment stays here in the UK. A lack of domestic champions has compromised our security and stalled progress.

[Richard Fuller]

Are the Opposition concerned that investments and co-investments in projects in the UK will come through funds that may be held in offshore trusts, or is the concern that the bank will be investing in projects offshore through offshore investment trusts?

[Abena Oppong-Asare]

The hon. Member asks an important question. I am sure that we agree that it is important to look at the geographical element of investments. This is not just a concern of Labour’s; the report I mentioned is by Open Democracy. Brilliant projects are taking place; I do not want to take anything away from them, but I want us to ensure that we are supporting businesses in the UK. That is really important. We all know from talking to our constituents that great investment could be used. That needs to be acknowledged, and that is why we tabled the amendment, which would ensure that reviews of the bank consider the geographic spread of the businesses that the bank invests in and their ownership.

[Andrew Griffith]

The Government do not support the amendment. The hon. Lady is quite right to raise the importance of the regional split, and we all aspire to higher standards of transparency in business investment. These investments will, of course, be highly transparent. We have talked before about the reporting to Parliament; we will talk later about the annual report and the frequency of reporting. I can assure the hon. Lady that it will not be possible to hide a physical investment in infrastructure. That is the very nature of the provisions. Where the bank has deployed its capital, and the nature of the investments, will be very transparent. Indeed, the report that she cites from Open Democracy rather proves that point. There is no deficiency of transparency if Open Democracy has been able fully to ascertain the ownership.

[Abena Oppong-Asare]

Open Democracy has done the research that the Government have not done to get that data. It spent significant time getting that data. It should not be left to organisations such as Open Democracy to get that information. That information should be easily accessible to us. This is taxpayers’ money, and I do not see how the amendment is unreasonable.

--- Later in debate ---

[Andrew Griffith]

The hon. Member sort of took the words out of my mouth. We will expect the UK Infrastructure Bank to make the regional nature of its investments clear. It has done so to date, and clearly it should do so going forward. Things that should happen do not necessarily need to be put into statute at every turn. There are lots of other ways of ensuring that the information is readily available.

[Abena Oppong-Asare]

I have no further comments, other than to urge Members to support our sensible amendment, which I think would benefit all our constituents across the country.

Question put, That the amendment be made.

--- Later in debate ---

[Richard Fuller]

One last time, Mr Bone.

This group, including my amendments 15 and 16, relates to the timing and frequency of reports that will be provided. My amendments focus on the start of the UK Infrastructure Bank’s existence. Essentially, my question is: does the Minister feel that there will be enough transparency and exposure around the bank as it sets up its guiding principles, begins its work, puts its board together and starts to put some flesh on the bones of its investment profile?

My concern is that we will be waiting a bit too long if we wait for seven years to have any influence at all on the way in which the bank is being structured and is moving. Will it be going in the right direction? Essentially, we will not know until the next decade, and that will be well on our way to the time at which Parliament has set the objective of achieving net zero.

Amendment 15 suggests that we should have a report within the first 12 months, and a second report after 24 months. Those two reports would provide independent understanding about what the board and the bank leadership itself are doing at such crucial stages. Amendment 16 tries to do something similar in clause 9(5). The Government propose that subsequent reports must be made every seven years, while my suggestion is that they should be every two years.

I am probably willing to concede to the Government that, after the first couple of years, my proposal would probably involve a bit too much oversight over the board. The board must be allowed to do its job, so someone looking over its shoulders every two years is probably a bit too much. I am therefore minded not to press that point, but I will be interested to hear the Government’s thinking, particularly on the first two reports.

[Abena Oppong-Asare]

I thank the hon. Member for North East Bedfordshire for his comments. I will speak briefly to amendments 21 and 22.

I share the hon. Member’s concerns, because the initial review of the bank will be published within seven years of the Bill coming into force, and subsequent reviews will be published at intervals of no more than seven years. Those timeframes are shocking, particularly given that the Government’s original intention was for the initial report to be published in 10 years’ time.

I point out to the Minister that the levelling up missions are due to be met by 2030 and the net zero target by 2050, so a review in seven years’ time would miss the first of those targets. I would be interested to hear from the Minister how, without that review, those targets will be met.

Amendment 21 would provide that the initial review would be published within four years of the Bill coming into force, while amendment 22 would see subsequent reviews published every five years. That would enable the bank to grow, improve and ensure that it is meeting its objectives. I noted that the hon. Member for North East Bedfordshire may not press his amendments, so hopefully he finds ours to be more appropriate.

[Andrew Griffith]

I thank both the well-meaning Members—my hon. Friend the Member for North East Bedfordshire and the hon. Member for Erith and Thamesmead—who seek to get the right interval of reviews, both in respect of the first and subsequent periods. The fact that both colleagues have ended up with different intervals suggests that this is not something that need be of doctrine or dogma.

[Abena Oppong-Asare]

I thank the Minister for pointing out that we have come up with different intervals, but I remind him that, obviously, the Government did that as well. Initially, they were looking to do the review every 10 years, but they have changed it to seven years, so there is scope to adapt and change, as under our amendments.

[Andrew Griffith]

There is indeed scope, but there is also interplay with other expected reviews to which the UK Investment Bank will be subject. While I oppose, fairly, all the amendments put forward, I undertake to come back on these points at subsequent stages.

--- Later in debate ---

[Abena Oppong-Asare]

The Minister is being generous with his time. I appreciate that he will take this matter away, but I remind him of the bank’s core function: to help us to meet our climate change targets by 2050. Several Back Benchers have already mentioned that. I urge the Minister to review the situation, because if we are going to meet the targets, particularly the 2030 targets, seven years will be far too long. Our proposal seems reasonable, so it would be helpful if the Minister would consider it and write to me about it.

[Andrew Griffith]

That is effectively what I am doing. The key point is that this is a novel institution. It has a great deal of runway, and it also has an awful lot of operationalising and scaling to do over the immediate period. I hope that no one wants to subject the bank to an excess of reviews during that initial period, as that would inevitably detract from its resources. None of that takes us away from any of the accountability measures we have talked about. I will write to the hon. Lady with a determination, or an explanation, regarding whether we can substitute a different interval in clause 9(5).

--- Later in debate ---

[Andrew Griffith]

Given the lively exchange of views about frequency, I think that members of the Committee are broadly familiar with the clause. The provision for regular independent and statutory reviews of the bank’s effectiveness in meeting its core objectives is important to ensure that it meets its objectives and delivers good value for the taxpayer. It is important that this is an independent review, independent of the bank itself and of HM Treasury. The review will look at the extent to which the bank has met its climate change and levelling-up objectives. In response to the points made by colleagues in the other place, it will also look at whether the bank has been suitably additional in the market. All of that is fundamental to the bank’s success.

We have talked about the review period. The statutory independent review will be in addition to the UKIB framework document, which will be reviewed after the Bill receives Royal Assent and at regular intervals thereafter, in addition to effectiveness reviews from the Cabinet Office, to which all public bodies are subject. The strategic review in 2024 will cover the general progress to date of the UKIB and its capital position, the implementation of the financial framework, the UKIB’s delegation limits and the return on equity. It will be additional to the financial framework, which will be reviewed from time to time after the strategic review. Given all of that and the debate about the period and my undertaking to come back on clause 9(5) and revisit what is the appropriate time, given colleagues’ concerns that seven years is too long, I recommend that the clause stand part of the Bill.

[Abena Oppong-Asare]

I am disappointed that the measures to strengthen clause 9 were not adopted. However, I welcome the fact that there will be reviews of the bank. Here and in the other place, concerns have been raised about the projects that the bank is financing, from their location to the level of additionality they provide. Reviews of the bank will certainly clear up the issues that need to resolved.

I hope that there will be opportunity for parliamentary scrutiny and discussion following report publications. I have noted—and I am sure the Minister is aware—that the Public Accounts Committee is currently conducting a review of the establishment of the UK Infrastructure Bank. It is a shame that the recommendations may not come early enough to influence the Bill, but its work demonstrates that the importance of evaluation. We have spoken about this topic at length today, so we will not oppose clause 9.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Amendments made: 6, in clause 10, page 4, line 32, at end insert—

““appropriate national authority” means—

(a) the Scottish Ministers,

(b) the Welsh Ministers, or

(c) the Department for Infrastructure in Northern Ireland.”

This amendment would define “appropriate national authority”.

Amendment 9, in clause 10, page 5, line 4, leave out the definition of “relevant public authorities” and insert—

““public authorities” means local authorities, Northern Ireland departments and any other person exercising functions of a public nature.”—(Andrew Griffith.)

See the explanatory statement for Amendment 8.

Clause 10

Interpretation

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

[The Chair]

With this it will be convenient to discuss the following:

Government amendment 7.

Clause 11 stand part.

--- Later in debate ---

[James Murray (Ealing North) (Lab/Co-op)]

It is a privilege to serve under your chairmanship, Mr Bone, and to speak to this important but uncontroversial aspect of the Bill. As we have heard, clause 10 concerns interpretation. We do not oppose the definition of “activities”, “financial assistance”, “infrastructure”, “local authority”, “objectives” or “relevant public authorities”.

Clause 11 is a short clause concerning the extent and commencement of the Bill, as well as providing its short title. It stipulates that the Act extends to England, Wales, Scotland and Northern Ireland. The legislation comes into force two months after the date on which it is passed, and it is to be cited as the UK Infrastructure Bank Act 2022. Government amendment 7 simply removes the privilege amendment inserted by the Lords, and is a procedural necessity that we have no reason to oppose.

Question put and agreed to.

Clause 10, as amended, accordingly ordered to stand part of the Bill.

Clause 11

Extent, Commencement and short title

Amendment made: 7, in clause 11, page 5, line 11, leave out subsection (4).—(Andrew Griffith.)

This amendment would remove the privilege amendment inserted by the House of Lords.

Clause 11, as amended, ordered to stand part of the Bill.

New Clause 1

Businesses and bodies the Bank invests in

“(1) The Bank must publish an annual report setting out—

(a) the geographical spread of businesses and bodies it invests in, and

(b) the ownership of the businesses and bodies it invests in.

(2) The Bank must prepare and publish a “Good Jobs” plan for all businesses and bodies it invests in, which requires the business or body to improve productivity, pay, jobs and living standards.”—(Abena Oppong-Asare.)

This new clause ensures that the Bank considers the location and ownership of the businesses and bodies it invests in and only invests in businesses and bodies who create “Good Jobs” plans to improve productivity, pay, jobs and living standards.

Brought up, and read the First time.

[Abena Oppong-Asare]

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

New clause 1 supports amendment 23. It would require the bank to publish an annual report setting out the geographical spread of the businesses and bodies it invests in, and their ownership. To be clear, amendment 23 required the independent review, conducted over longer time frames, to consider those points. Our new clause requires the bank to report annually on those matters.

Subsection (2) of new clause 1 would require the bank to publish and invest in a good jobs plan for all businesses and bodies, which requires the business or body to improve productivity, pay, jobs and living standards. Before the Minister objects, I will say that the wording might be familiar to members of the Committee, particularly Conservative members, because it is the same wording they voted to remove from the Bill earlier in Committee. The wording will be familiar to Conservative Committee members because it is the first mission of the Government’s levelling-up agenda. Given their voting record in this Committee so far, I am not sure it is something they are committed to any more, but I am sure they can agree that they want the UK Infrastructure Bank to create highly-skilled, well-paid jobs in their constituencies and across the country. I know that constituents in Erith and Thamesmead want to see better job opportunities, whether for young people or older people who are looking to reskill and retrain.

As I said earlier, we do not believe in growth for growth’s sake. We believe in growth because it creates jobs and improves living standards. With fairer choices, we see our economy growing again, powered by the talent and effort of millions of working people and thousands of our businesses. Our new clause would ensure that the bank plays its part in its mission, creating new industries across the country and working hand in hand with businesses to create jobs for the future. Before the Committee concludes, I want to take the opportunity to make some closing remarks and thank some people.

[The Chair]

Order. That is normally done after we finish this bit. Points of order are normally done at the end.

[Abena Oppong-Asare]

I am happy to do that, Mr Bone.

[Andrew Griffith]

New clause 1 would oblige the bank to publish an annual report addressing the geographical spread and ownership of the bodies the bank invests in, as well as a good jobs plan for all businesses and bodies it invests in, which requires the business or body to improve productivity, pay, jobs and living standards. It is similar to amendment 23, which has fallen, although it would require reporting after the event rather than a review. Many of my earlier points about amendment 23 remain pertinent. The bank already reports on its investments and will publish a summary in its annual report and accounts. The bank is capturing data on location in its deal assessments and will consider how best to report publicly on location for future investments.

As discussed earlier, the nature of an infrastructure investment means that it is difficult to hide. They tend to be fairly visible and tangible and we would all be able to work out exactly where those millions of pounds of capital had been deployed. I reassure hon. Members that the bank is subject to freedom of information requests in the usual way, which I understand is a painless process by which one can readily find out information. [Interruption.] The legislation was not brought in by this Government, so if it is deficient, it is not on our watch.

[Abena Oppong-Asare]

The Minister says that it is open to individuals to put in freedom of information requests. I do not understand why the Minister would encourage that when our new clause would make things a lot easier and more transparent. It takes a lot of time to do the paperwork associated with FOI requests, so the new clause would save staff from having to do that extra admin work. In setting up the bank, why does the Minister want it to take on those extra responsibilities? It makes no sense.

[Andrew Griffith]

It remains my contention that it is simply not necessary for this barnacle to be adhered to this particular ship as it steams out on its levelling-up mission across the UK, taking us on the path to net zero.

--- Later in debate ---

[Andrew Griffith]

Our position has been very consistent. I understand that it may not be the position of the Opposition, and it is no worse for that. Our position is that statute is not the be-all and end-all. The most important thing is that we get this bank up and running, delivering on its outcomes, and that we do so in good fashion, with the minimum, not maximum, amount of extra statute.

The new clause contains two elements, so I will turn briefly to the other point nested in it, which is the good jobs plan. The bank is already committed to pursuing good environmental, social, resilience and governance policy. We do not feel that adding extra statutory requirements in this particular case is the right decision. The bank will be reporting on the number of jobs created as one of its key performance indicators and will be working up measures on productivity as well as setting out the impact of its assessments, on which we will all hold it to account. With that, I ask the Opposition to withdraw their new clause.

[Abena Oppong-Asare]

I am afraid that I will not be withdrawing the new clause. It is a sensible new clause and I urge all members of the Committee to support it, so I wish to push it to a vote.

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

Division 10

Ayes: 6

Noes: 10

[Abena Oppong-Asare]

On a point of order, Mr Bone. I thank all members of the Committee for our robust debate. I am sure that we agree through our different channels that we want the best for this Bill and for our constituents. I hope people take on board the fact that we have been making recommendations that we feel are best for the country.

I thank the Minister for answering our questions. I am disappointed that some of our amendments have been voted against, but I accept that the Minister is going to look at some of our recommendations on some clauses, in terms of the annual review. That is very important. Seven years is a very long time.

I thank the hon. Member for North East Bedfordshire for his detailed analysis and his amendments. I thank the Chairs of both sittings, Mr Davies and Mr Bone, who have guided the Committee with skill. At times, you have been very firm, but rightly so. I thank the Clerks, Amna Bokhari and Bethan Harding, who have been invaluable. I thank colleagues, including my hon. Friend the Member for Ealing North and our Whip, my hon. Friend the Member for Blaydon, and look forward to seeing what comes out of this next.

[David Linden]

Further to that point of order, Mr Bone. Following the remarks of the hon. Member for Erith and Thamesmead, I thank all hon. Members for their contributions, and you as Chair, Mr Bone, and the Clerks and the officials. I thank in particular the hon. Member for North East Bedfordshire. I think we knew it was unlikely that he would sacrifice his position in the governing party by voting against the Government, but his amendments were helpful in provoking discussion. I know that a number of my colleagues on Bill Committees this afternoon will not have the luxury of finishing at 3 o’clock. On that basis, I thank everybody present for the speedy way in which the Bill has passed through the House and look forward to the further stages and to any remaining t’s being crossed and i’s dotted.

UK Infrastructure Bank Bill [ Lords ] (First sitting)

Abena Oppong-Asare Excerpts

Committee stage
Tuesday 22nd November 2022 Public Bill Committees

[Richard Fuller]

Amendment 10 would add paragraph (c) to subsection (3), with a requirement that bank objectives should include long-term return to shareholders. To be clear, the shareholders are UK taxpayers.

Amendment 11 would add paragraph (c) to subsection (6) on the importance of the bank having regard to its role in additionality. That refers to the role of the bank in using taxpayers’ money or the power of the UK Government’s balance sheet in attracting private capital.

Why are those two amendments so important? Let us be honest. Parliament passed the Climate Change Act 2019, containing the net-zero policy, which has the potential to waste billions of taxpayers’ money. It is a policy objective with no price tag attached. It is also the case that technologies are evolving, and economies of scale can be elusive.

The UK Infrastructure Bank mentioned three things in its strategic plan that it was interested in pursuing for investment. The first was the roll-out of electric vehicle charging points. Does any hon. Member, or the Minister, know how that can be done today economically? The second was the retrofit of buildings. Does any hon. Member know how that can be done, what the right technology would be and how it should be funded? Does the Minister know? The third was the scaling of storage technologies. Does anyone know the right technology to choose for that?

The answers to those questions are crucial, because we are going to devolve the decision making about how that taxpayers’ money is spent to the UK Infrastructure Bank. There are significant risks with those technologies, and the consequences for taxpayers’ money.

The bank talks a lot about its potential for crowding in money and private capital, but there is also great potential for crowding out private capital. It is very simple. We already have a significant amount of investor appetite in environmentally sound investments. The Minister has been very successful recently in his efforts with Solvency II to release potentially additional long-term, patient capital that can invest in the sorts of projects that the UK Infrastructure Bank seeks to invest in. What reassurance can we have that the UK Infrastructure Bank is doing the right thing by crowding in private capital, rather than by crowding out?

We also need to see a little more clarity from the bank about where it is going to sit on the spectrum of risk. I draw Committee members’ attention to page 26 in the UK Infrastructure Bank’s strategic plan. Under the heading “Barriers to private infrastructure investment”, it lists four segments for investing: R&D, emerging, high-growth and maturity. It then splatters itself over three of those four segments. What sort of focus for investing is that?

What does that tell us about how we should assess the way in which capital has been allocated according to risk? Should the bank be investing more in late-stage opportunities? Is the real risk that it should be investing at an earlier stage, to stimulate the growth of technologies after they have come out of research and development? It is not at all clear what the focus should be. That gets to the root of the question that I want to press the Minister on. How comfortable is he that we and the Government have control over how the bank will invest taxpayers’ money? Is he comfortable that there are sufficient constraints on the bank to prevent it from wandering off with its own sense of purpose? Should there be provisions in this Bill to tighten it a little further?

Finally, the reason for us to focus on this is the UK Infrastructure Bank itself says that it has a “triple bottom line”. Well amen to a Government body actually having a bottom line because too often public bodies do not even worry about the bottom line, but it has three: achieving policy objectives; crowding-in private capital; and generating a positive return. It is because they have stated three bottom lines, one of which was to generate a positive return, that I sought, under amendment 10, to add that to clause 2(3).

I finally make some reference to Government amendment 1, which relates to deleting references to

“the circular economy, and nature-based solutions”.

I am interested to hear what the Minister’s rationale for this is; maybe I can see a rationale but I want to hear if that is actually the Minister’s rationale. The principles of the circular economy and the principles of nature-based solutions have the merit of being quite specific in what is otherwise quite a general set of remits for the UK Infrastructure Bank. I guess that the Minister will say, “Well yes, that is right. However, there are lots of other things that it needs to focus on. If we pick those two, we should not pick others.” But I would be very interested to know the particular reasons why the Minister does not feel that those two should be included.

Finally, I note that Government amendment 2, which relates to everything I have said about the objectives around additionality and long-term returns for shareholders, would delete clause 2(6) completely. If so, I will obviously withdraw my amendment.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

Good morning, Mr Davies. It is a pleasure to serve under your chairship. Good morning to the rest of the Committee. I look forward to our debate today. I think that this will be a productive conversation. I also use this opportunity to formally congratulate the new Minister.

Before I turn to clause 2, I want to say in my opening remarks that Britain has so much potential, but right now we are facing—and I want to put this on record—a Tory economic crisis that is holding us back. To get our economy growing again, we will need to see investment in infrastructure projects and create highly-skilled, well-paid jobs and tackle climate change in a modern industrial strategy, working hand in hand with businesses.

I also want to put on record my reassurance to the hon. Member for North East Bedfordshire that Labour is well represented on these issues. Members will see that through our ideas and what we are proposing today, which will strengthen this Bill. Also, it is really important that we recognise that there has been a lost decade of broken Tory promises that have left much of the UK with second-rate infrastructure. That is why Labour supports strengthening the Bill, but much of the Bill as it stands relies on out-of-date thinking. That is why we are proposing amendments today.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

It is a pleasure to serve under your chairmanship, Mr Davies. In terms of investment in infrastructure, the last Labour Government did invest in hospitals and schools and, through the private finance initiative, left the country with bills that were 10 times the cost of building the hospitals. On reflection, does the hon. Lady believe that was a mistake?

[The Chair]

Order. We are in danger of drifting outside the scope of the amendment. Please do respond, but let us not have a general debate on this.

[Abena Oppong-Asare]

I thank the right hon. Member for Elmet and Rothwell for his comments. However, we have had a Tory Government for 12 years. We are in the middle of an economic crisis.

[Alec Shelbrooke]

Twenty-five billion pounds—

--- Later in debate ---

[Abena Oppong-Asare]

Inflation is at its highest point, but I do not want to be drawn into a discussion about that. I want to focus on the Bill and I want us all to have a mature conversation about it.

Clause 2 sets out the objectives and activities of the UK Infrastructure Bank. This is probably the meatiest part of the Bill, and I can see that we have several amendments to get through, so I want to make a start on that. Subsection (3) lays out the bank’s two objectives, which are to

“tackle climate change, including by supporting efforts to meet the target for 2050 set out in section 1 of the Climate Change Act 2008”

and

“to support regional and local economic growth.”

I welcome the bank’s first objective. With COP27, a climate conference that the Prime Minister had to be shamed into attending, ending just days ago, it is clear that there is still a way to go to ensure that our country’s emissions reach the targets enshrined in international law. I have to be honest: the Prime Minister does not get it. He is a fossil-fuel Prime Minister in a renewable age. His is a record of tax breaks for oil and gas giants and blocks on wind and solar power. It has left our energy bills higher and our country less secure. The UK Infrastructure Bank sets out to invest in projects that lower emissions, while the Government undermine those ambitions. It will be unsurprising to the Committee that Labour has no confidence that the Government will deliver the long-term investment that the country needs.

I also welcome the bank’s second objective. Labour wants to see prosperity shared and spread across the country, with the Government working in lockstep with businesses to produce the high-skilled jobs of the future—something that I will come to later. Amendment 10 would add a third objective for the bank:

“to create long term financial returns to its shareholder(s).”

Labour wants to see the bank succeed. There is a global race for the jobs and industries of the future that, under the Tories, we will not win. We know that investment in green jobs, improved rail and other transport and modern infrastructure, such as broadband, have the potential for large returns and will boost our economy. We want the bank to crowd in private sector investment and help to provide confidence for investors and businesses innovating in new technologies. We also want the bank to have the freedom to invest in projects based on their ability to tackle climate change and grow our economy.

[Katherine Fletcher (South Ribble) (Con)]

It is a pleasure to serve under your chairmanship, Mr Davies. I am grateful for the opportunity to intervene. As recent data shows, the UK has decarbonised fastest in the whole of the G20 since 2010. Does the hon. Lady agree that a huge amount of that has been done with the investment of both public and private capital in the mechanisms to achieve it? And there is our world-leading legislation for net zero and even our commitment to reduce fossil-fuel cars. The idea that we are behind in the race on this is really for the birds.

[The Chair]

Order. Before the shadow Minister responds, let me just say that we do need to keep within the scope of this amendment, about creating long-term financial returns to the shareholder. I appreciate that I have allowed a certain amount of flexibility, and I respect what you are saying, but could we try to focus on the amendment rather than clause 2 stand part, which we will come to?

[Abena Oppong-Asare]

I thank the hon. Member for South Ribble for her comments, but I do not fully agree with her, because I feel that the Government have not done enough. There has also been a cancellation of Northern Powerhouse Rail and a dismal failure to invest properly in renewable energy and to take decisions on nuclear; there has been a lack of strategy and planning. That has happened under this Tory Government in the last 12 years.

The Government’s track record does not provide much confidence. The Government set up the Green Investment Bank 10 years ago and sold it to a private equity group five years ago, with the Public Accounts Committee concluding that the Government had focused on

“how much money could be gained from the sale over the continued delivery of GIB’s green objective.”

We would not want to encourage a similar short-lived path—

[The Chair]

Order. Shadow Minister, I think you are straying off the point of the amendment, if I may say so.

[Abena Oppong-Asare]

I do not believe I am, Mr Davies. This is very relevant to the clause.

[The Chair]

To this amendment?

[Abena Oppong-Asare]

Yes. I am just going to wrap up, Mr Davies; thank you. We would not want to encourage a similar short-lived path for the UK Infrastructure Bank. To achieve its objectives, it needs to be a long-lasting institution that supports businesses and improves investor confidence. We have a different third objective in mind for the bank, and I will explain that in Committee later today.

[Andrew Griffith]

I thank all those who have contributed to this grouping. If I may, I will speak to clause 2, the Government amendments, and then the amendments in the name of—

--- Later in debate ---

[Richard Fuller]

Yes. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Abena Oppong-Asare]

I beg to move amendment 17, in clause 2, page 1, line 14, at end insert—

“(c) to reduce economic inequalities within and between regions of the United Kingdom, and

(d) to improve productivity, pay, jobs, and living standards.”

This amendment clarifies that the Bank’s objective to support regional and local economic growth includes reducing economic inequalities within and between regions and improving productivity, pay, jobs, and living standards.

[The Chair]

With this it will be convenient to discuss amendment 18, in clause 2, page 1, line 14, at end insert

“, and

“(c) to support supply chain resilience and the United Kingdom’s industrial strategy”.

This amendment creates a third objective for the Bank to support UK supply chain resilience and industrial strategy.

[Abena Oppong-Asare]

As I have hinted, Labour Members believe that the bank’s objectives need expanding. My hon. Friend the Member for Ealing North will speak later about the bank’s climate objective and the ways in which it might achieve it. I will talk about the economic objective of the bank, which is to support regional and local economic growth. After a mini-Budget that crashed our economy and an autumn statement last week that papers over the cracks, the importance of that objective is as clear as day; but we believe in growth not for growth’s sake, but because it creates jobs and improves living standards. As a result of fairer choices, we could see our economy growing again, powered by the talent and effort of millions of working people and thousands of businesses.

Our amendment 17 would make it clear that the bank should support regional and local economic growth, both to reduce economic inequalities within and between the regions of the UK, and to improve productivity, pay, jobs, and living standards. In our constituencies we see the disparities between the regions. As it stands, the bank does not have to focus its investment on disadvantaged areas of the country that would most benefit from its support. The Prime Minister has boasted about moving money away from disadvantaged areas, and so-called levelling-up funds have so far funnelled money into Conservative constituencies, rather than focusing on areas that most need the support. On its own, therefore, clause 2(3)(b) is not a sufficient objective for the bank. It relies on the tired Conservative assumption that growth and prosperity will trickle down and be spread evenly, which we know is not true.

Amendment 17 is crucial to targeting the bank’s investments and ensuring that it creates lasting change. The Prime Minister, then Chancellor, argued in his strategic steer to the bank in March that it should support the Government’s ambition of addressing

“the deep spatial disparities across and within UK regions”.

Those are his words. I find it strange that when he outlined the bank’s objectives in the strategic steer, his description of the climate objective matched that in the Bill, but his description of the economic objective did not. He said that the bank’s objectives are to

“help tackle climate change, particularly meeting the government’s net zero emissions target by 2050”.

That all seems correct, and we can see it repeated near verbatim in clause 2(3)(a). However, in describing the second objective, the then Chancellor said that the bank should

“support regional and local economic growth through better connectedness, opportunities for new jobs and higher levels of productivity.”

That wording is not in the Bill. Will the Minister tell us whether the Government have abandoned those commitments? Why does the Bill include a watered-down version of that objective?

I note that in his letter yesterday, the Minister’s justification for Government amendment 2 was that

“with regards to the economic disparities component of”

clause 2(6),

“it could be overly restrictive where the Bank looks to invest in a deprived part of a relatively affluent region for example, as there are difficulties in drawing distinct boundaries on this issue.”

Before the Minister uses that as a reason to vote against our amendment 17, I hope that he will notice that the amendment has been worded specifically to avoid such restrictions: by addressing

“economic inequalities within and between regions of the United Kingdom”,

the bank will retain the freedom to target at any level. If their commitment still stands, I am sure that Conservatives will not oppose Labour’s efforts to put that in the Bill. The amendment would bring the Bill back into alignment with their stated objectives.

Amendment 18 would add a third objective for the bank:

“to support supply chain resilience and the United Kingdom’s industrial strategy”.

That seems reasonable. The Office for Budget Responsibility has said that the bank will have no effect on growth. With assets of 0.1% of GDP a year, the bank is dwarfed by its French and German counterparts, and the £12 billion of funding allocated over five years falls short of the £20 billion recommended by the National Infrastructure Commission. With their cancellation of Northern Powerhouse Rail and failed record on nuclear energy, the Government’s record on infrastructure is abysmal.

Labour has called for a strategic approach to infrastructure, and presented an industrial strategy that is based on evidence from around the world. Supported by the creation of a publicly owned Great British energy company, we would deliver self-sufficient renewable energy by doubling onshore wind, trebling solar and quadrupling offshore wind. We would create half a million jobs in renewable energy, and an additional half a million jobs by insulating 19 million homes over 10 years.

The importance of supply chain resilience has become particularly clear in the wake of the pandemic, and as concerns over energy security have come to the fore through the war in Ukraine. We are all concerned about it. We have an industrial strategy, and want the UK infrastructure bank to support and champion it. Our amendments 17 and 18 would clarify the objectives of the bank, and focus them on the challenges of the future.

[David Linden (Glasgow East) (SNP)]

Bore da, Mr Davies. It is a pleasure to serve under your chairmanship. Aside from one issue that I would split hairs about on amendment 17 —Scotland is not a region, but a nation, so the amendment should read “regions and nations of the United Kingdom”—I have another point to object to. The bank’s strategic objectives include tackling climate change, and it is vital that the Scottish Government’s climate change targets be reflected in the Bill, so I take a wee bit of issue with points made by the hon. Member for South Ribble about the UK’s “world-leading” climate change legislation; it legislates for net zero by 2050, whereas in Scotland it is 2045. I wanted to make that point on the record.

Given the significant overlap between the strategic objectives of the UK Infrastructure Bank and those of the Scottish National Investment Bank, a mechanism must be in place to ensure alignment on how the objectives are reached. I would be grateful if the Minister provided a little more clarity on that when he sums up. However, if His Majesty’s loyal Opposition intend to press the amendment to a vote, they can be assured of the support of the Scottish National party.

--- Later in debate ---

[The Chair]

My comments were about the previous discussion. The shadow Minister was in scope on her amendments. I call the shadow Minister.

[Abena Oppong-Asare]

Thank you, Mr Davies, for allowing me to speak on this matter. I fundamentally disagree with the Minister’s comments. The amendments that Labour put forward are reasonable. In this climate, given the situation with covid and Russia, we know that things are different, particularly in terms of regional inequalities. The Prime Minister also talked about regional inequalities. We have all seen the speech he gave in Tunbridge Wells.

[The Chair]

Order. The hon. Lady will have the final word, but the issue is whether these amendments are in order. Obviously, they were selected for debate, and the Minister was speaking to them. I know his comments were about whether comments made were in order, but if he could make his speech, I will then call the hon. Lady to respond, and she can make similar points. I call the Minister.

--- Later in debate ---

[Andrew Griffith]

The hon. Lady makes a very fair point on the valiant role of lawyers in keeping us all to account. The alternative, of course, is legislation that is clear and allows the appropriate degree of discretion. The Government contend that that is what this is.

The amendments by the hon. Member for Erith and Thamesmead would include in the bank’s objectives the improvement of pay and living standards. Economic growth in the long run is closely linked to supporting productivity, income and employment and living standards. It is implicit in the bank’s objectives. Including the amendments would make the objectives too wide-ranging for an infrastructure bank, as it could focus on anything relating to pay or standards, for example training programmes or household appliances, which do not come under economic infrastructure. For these reasons, we consider it preferable to keep the statutory objectives as they are—a balance between clarity and flexibility—while instead providing further recommendations as to the bank’s targets and areas of focus via more flexible mechanisms such as the strategic steer, which can be updated from time to time.

[Abena Oppong-Asare]

I thank the Minister for his comments. We agree that the legislation needs to be clear, but I think our approach is very different. I do not want to repeat what I have already said, but I want to highlight that addressing economic inequalities, particularly between regions, is really important,. We think the amendments would help the bank retain its freedom while reaching targets at any level. For this reason, we will push the amendments to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Andrew Griffith]

The amendments broaden the definition of “public authority” used in relation to the bank’s capacity to lend. The drafting as is broadly meets the policy aims and would allow the bank to lend to local authorities and to the Northern Ireland Executive. However, given that primary legislation can be a blunt instrument, we do not want inadvertently and by implication to preclude the bank from investing in other public authorities. I hope that all members of Committee can agree on that.

Other public authorities could include existing public bodies, as well as new public bodies created in the future by local authorities or Government Departments.

[Abena Oppong-Asare]

I thank the Minister for his explanation of the amendments.

Clause 2(4) describes the activities of the bank, as the Minister explained, and sets out that in addition to funding private infrastructure projects, it can provide financial support to local government. Government amendment 8 seeks to clarify that the bank can provide loans to public authorities other than local authorities and Northern Ireland Departments. Amendment 9 to clause 10 would achieve the same purpose. It would clarify that the Bill considers public authorities to be local authorities, Northern Ireland Departments and any other person exercising functions of a public nature.

I am grateful to the Minister for his letter of yesterday that set out the reasons for the Government amendments, which we will not oppose.

Amendment 8 agreed to.

[Andrew Griffith]

I beg to move amendment 1, in clause 2, page 1, line 23, leave out from “includes” to “technologies” on line 24.

This amendment would remove the reference to “structures underpinning the circular economy, and nature-based solutions,” from the definition of “infrastructure”.

--- Later in debate ---

[Andrew Griffith]

My hon. Friend makes a very wise and informed point. The UK Infrastructure Bank is not the only intervention that the Government make; the British Business Bank has a broad portfolio of ways to support the sector. I hope that between the two of them, with the strategic steer perhaps being used as a vehicle to align them, every outcome that my hon. Friend seeks can be properly covered. Again, he makes a strong point about confidence and capability, and about how we resource against different types of investment.

The bank is required under the clause to update its strategic plan to ensure that it reflects the changes when a strategic steer is issued, once per Parliament. That will ensure that the will of Parliament is satisfied within a reasonable timeframe. Given that the bank is ultimately owned by the Government and the taxpayer, it is right that we retain a power to issue the bank with a strategic steer to set out its priorities, which is why I support the clause.

[Abena Oppong-Asare]

I thank the Minister for his explanation of the clause, which lays out the bank’s strategic priorities and plans. It is largely administrative and requires the Treasury to prepare a statement of strategic priorities for the bank, which must be laid before Parliament and can be revised or replaced.

As the Minister said, the Chancellor—the now Prime Minister—put the strategic steer in place on 18 March. As I have already highlighted, the strategic steer included some plans that Labour do not oppose; indeed, we want to see some of them in the Bill, rather than in policy documents with ambiguous legal status. The Government must recognise that point, which is evidenced by the energy efficiency amendment that they introduced in the Lords. The Chancellor stated in the March strategic steer that

“I’d encourage you to prioritise opportunities that align with the government’s renewed focus on energy security. Examples of relevant opportunities may include helping to bring forward low carbon energy projects that accelerate the UK’s transition to clean energy and improve the energy efficiency of buildings and homes.”

It was rightly pointed out in the other place that the Bill did not include energy efficiency measures. In recognition of that, the Government introduced an amendment on energy efficiency, which Labour welcomed.

I anticipate that in much of the Committee’s proceedings, the Government will assure us that many of our asks are covered by the strategic steer or the framework document. However, if that is the case, will they put them in the Bill, as they did with energy efficiency? If they are firm commitments then they should be in the legislation itself. We are here to scrutinise the Bill, but so many key elements of it seem to be relegated to documents that are not amendable and are legally ambiguous. Labour does not oppose clause 3, but it would be useful if the Minister could clarify the legal status of the various documents that interact with the Bill.

I want to echo some of the comments made by the hon. Member for North East Bedfordshire. In terms of the skills required, I too am worried about the bank being spread thin. I appreciate that the Minister has made comments about competency and capability with respect to particular investments, but it is important that at this stage—while we can—we look at how we can clarify the legal status of the various documents that interact with the Bill.

[Andrew Griffith]

I thank the hon. Lady and I reiterate that, in general, our differences are to do not with outcome, but with process and how prescriptive one should be when putting things into legislation. Philosophically, the Conservative party does not think it is always right to be over-prescriptive; the objective is to provide a flexible and agile tool that can be responsive and deliver the outcomes that we seek. Passing laws in itself does not change the outcome.

[Andrew Griffith]

The hon. Member for Erith and Thamesmead asked me to clarify. Of course we do not put everything in legislation; that is just not the way that we work. As we have committed to doing on the strategic steer, we bring things to Parliament to provide the opportunity to debate and discuss them. How this will work will be laid down in the Bill itself. As I have explained, the strategic steer can be issued from time to time—once per Parliament. Its legal status is that the body itself must have regard to it and then respond by setting its own strategic plans.

[Abena Oppong-Asare]

I appreciate the time that the Minister has given me to intervene on this point. He said that we do not always put things down in legislation, but that has been done already with the energy efficiency measures. All I am saying is that if these are firm commitments, then I do not understand why they cannot be laid down in the Bill. That would avoid confusion at a later stage, and it is important that we get this right.

[Andrew Griffith]

I feel I have addressed this point a number of times. There is just a difference between us as to the degree to which we should embellish primary legislation, which is hard to change and inflexible to respond to circumstances. That remains the position in the House. If the hon. Member for Erith and Thamesmead and her party are successful in obtaining a majority in a future election, she will have the opportunity to provide the strategic steer, which I assure her the UK Infrastructure Bank will have regard to under this framework. Perhaps we can then reassemble, and she will have the opportunity to hang whichever baubles she would like to on this particular Christmas tree.

Question put and agreed to.

Clause 3, as amended, accordingly ordered to stand part of the Bill.

Clause 4

Directions

--- Later in debate ---

[Andrew Griffith]

Clause 5 gives the Treasury the power to provide the bank with financial assistance to enable it to deliver on its objectives. Financial assistance is defined in clause 10 to include

“assistance provided by way of loan, guarantee, indemnity, participation in equity financing and any other kind of financial assistance”,

whether given on an actual or contingent basis. The bank has been operating on an interim basis so far, with £22 billion of capitalisation from the Treasury, using existing powers derived from the Infrastructure (Financial Assistance) Act 2012 and sections 50 and 51 of the United Kingdom Internal Market Act 2020. However, we believe that a specific spending power is important in ensuring that the bank is an enduring institution.

Normally, the bank borrows from the Debt Management Office through voted loans via the Treasury’s supply funding. However, subsection (2) will make it possible for the bank to receive money paid directly out of the National Loans Fund, with the terms and conditions and interest rates of any such loans being determined by the Treasury. This removes the need for the Treasury to act as an intermediary in lending money from the National Loans Fund, while still maintaining control over the terms and conditions of direct loans. That is consistent with the approach taken by the Green Investment Bank when that was established.

Clause 6 provides for the bank, each year, to provide to the Treasury a copy of its annual report and accounts, and for the Treasury to lay these before Parliament. This will ensure the direct accessibility of the accounts by Parliament. This is a common clause for arm’s length bodies; it was in the legislation for the Advance Research and Invention Agency, the Green Investment Bank and the Bank of England. We expect the bank to publish its annual report and accounts for 2021-22 before the end of this calendar year—I believe they will be laid in the immediate future. The annual report and accounts will cover, as is standard, the bank’s progress on its success criteria, which I am sure will be of interest to my hon. Friend the Member for North East Bedfordshire, including its key performance indicators, its compliance with financial services regulation and its financial accounts.

[Abena Oppong-Asare]

As the Minister highlighted, clause 5 concerns financial assistance to the bank and clause 6 concerns the bank’s annual accounts and reports. The Minister has already provided a detailed summary, so I am not going to repeat what he has said. As he mentioned, clause 5 allows for the Treasury to provide financial assistance to the bank for the purpose of helping the bank deliver its objectives. Clause 6 requires the bank’s directors to comply with section 441 of the Companies Act 2006, delivering the Treasury a copy of its accounts and reports each financial year. As the Minister has outlined already, such clauses are commonly used. These are clearly technical and administrative requirements, and we will not object to them.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Clause 6 ordered to stand part of the Bill.

Clause 7

Directors: appointment and tenure

[Richard Fuller]

I beg to move amendment 12, clause 7, page 3, line 20, leave out “fourteen” and insert “eight”.

Oral Answers to Questions

Abena Oppong-Asare Excerpts

Tuesday 15th November 2022 Commons Chamber

[Mr Speaker]

I call the shadow Minister, Abena Oppong-Asare.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

The Government allow offshore wind but are still banning onshore wind. Ending the ban would give us a vital tool to reach net zero, make Britain a clean energy superpower, and open up new investment and growth opportunities. Keeping the onshore wind ban will make energy bills £16 billion higher between now and 2030. Why on earth are Ministers undermining green growth and cheaper energy by maintaining the self-defeating ban on onshore wind?

[James Cartlidge]

The Government are committed to delivering cheaper, cleaner and more secure power. That is why we included onshore wind in the latest auction round for contracts for difference, which have delivered a 50% technology cost reduction since 2015. The Government recognise the range of community views on onshore wind, and it is important that we strike the right balance between community interests and securing a clean, green energy system for the future. That is why we have committed to consulting on developing local partnerships for supportive communities in England who wish to host new onshore wind infrastructure.

Cryptoassets: Regulation

Abena Oppong-Asare Excerpts

Wednesday 7th September 2022 Westminster Hall

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to serve under your chairship, Ms Rees.

I congratulate the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) on securing this important debate and on setting out in detail many important issues, particularly a number of matters that he raised around fraud and things that the Government can do. He has significant expertise in this area, as is evident from what he has presented in today’s debate and the fact that he chairs the all-party parliamentary group on blockchain. I thank other hon. Members who have taken part in the debate, particularly the hon. Members for Rother Valley (Alexander Stafford) and for Strangford (Jim Shannon), who raised a number of issues, such as fraud. I also thank those who have made interventions, raising consumer protection issues.

I welcome the opportunity to debate the important issue of cryptocurrencies and cryptoassets, and the Government’s regulatory approach to the industry. This debate is well overdue. In recent years, crypto has entered the mainstream, with an estimated 2.3 million people in the UK owning cryptoassets and the number of companies trading in crypto likely to grow further over the coming years, so this is a good moment to reflect on both the benefits and risks of cryptoassets and related technologies.

Many early advocates of crypto believed that it could lead to the end of central banking, the replacement of the dollar and fiat money by Bitcoin—or digital gold—and an upending of the regulation of markets and of the potential surveillance of consumers. However, crypto supporters have so far been disappointed. Like many utopian projects, this had collided with the realities of geopolitics, corporate power and illicit finance. I echo the comments made by the hon. Member for West Dunbartonshire. With reports that Russian oligarchs may have converted their assets into cryptocurrencies to avoid sanctions, many are rightly questioning whether crypto has a future at all.

In recent months, we have seen a huge crash in the value of many of the leading cryptoassets. During the recent period of crypto market turmoil, Bitcoin, Ethereum and other coins have collapsed, putting millions of UK consumers’ savings at risk. Research published by crypto trading platform Gemini found that the number of people investing in crypto has rocketed in the last 12 months, and as many as one in five people in the UK has lost money in the crypto crash. Despite this, the Government are wilfully using out-of-date data, which estimates that only 3.9% to 4.4% of British adults own crypto. I am not sure whether the Minister has more up-to-date stats. Not only that, but the Government have so far failed to properly regulate the crypto sector and protect consumers. They also have no idea how many people have been affected by the current crypto crisis, so there is clearly a desperate need for a clear strategy on the regulation of cryptoassets and blockchain technology.

Labour believes that we do not need to choose between a total crackdown on ownership of cryptocurrencies and the wild west approach advocated by some. Properly regulated blockchain technology has the potential to transform our economy and the financial services sector. Many innovative companies are embracing different forms of blockchain technology to improve transparency in order to finance and create highly skilled, high-productivity jobs across the UK. This has the potential to reduce inequalities, with £69.6 million having been invested in financial technology companies based outside London and the south-east in 2021 alone, driving efficiency in all sorts of industries.

I am afraid, however, that so far the Government have risked undermining the reputation of the sector. In the absence of a comprehensive strategy regime, the UK has become a centre for illicit crypto activity. According to research by Chainalysis, which is a global leader in blockchain research, cryptocurrency-based crime, such as terrorist financing, money laundering, fraud and scams, hit a new all-time high in 2021, with illicit activity in the UK estimated to be worth more than £500 million; that is really alarming. Despite the pressure from Labour and the financial sector, the Treasury has yet to acknowledge the scale of the threat, and the FCA has identified more than 230 unregistered cryptoasset firms operating in the UK right now. Many companies have not even applied for anti-money laundering or “know your customer” checks, yet they face little or no sanction from the Government. That has allowed some firms to exploit anonymity-enhancing technology to protect the identity of criminals and individuals linked to hostile states such as Russia.

As several Members have mentioned, there is a rise in crypto-related scams in the UK, which is very concerning, and reports of digital asset fraud were up 50% in 2021 compared with the previous year. I suspect there is even more such fraud now.

[Dr Cameron]

On the point that the shadow Minister is making, it is important that the Minister addresses the issue of potential sanctions evasion via digital currency. Also, I pay tribute to the fact that Ukraine is now one of the countries that uses most crypto, and during this horrendous wartime experience it has been able to support its economy and its troops—buying military supplies and supporting those on the frontline—through crypto. There is a mixed picture, but one that has to be addressed.

[Abena Oppong-Asare]

I support the hon. Member’s comments about Ukraine. I am not saying that using crypto should be scrapped, but the Government need to take more action to address the fact that there are issues related to the growth in fraud and in activity that is damaging to the UK. Too often, the Government have stood by and let firms responsible for these scams trade with impunity. They have continued to delay the introduction of stronger rules on the advertisement and marketing of cryptocurrency products. A survey by investment platform AJ Bell found that many crypto investors are simply unaware of the high-risk nature of their investments.

[Martin Docherty-Hughes]

I hope the hon. Lady agrees that, as I said in my speech, we have existing legislation that we should be pushing to the fore while we wait on new regulation. I take the point made by my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) about Ukraine and cryptocurrency in that state, but there is clearly a high rate of scamming in relation to the raising of cryptocurrency for the Ukrainian Government and their campaign against the Russian Federation. Sometimes, people might not be giving their money to Ukraine; they might be giving it to some scammer in North Korea, or in the Russian Federation, who says they are raising money for Ukraine.

[Abena Oppong-Asare]

The hon. Member makes an important point—he has expertise in the area—and there needs to be some sort of action from the Government to ensure that there is an overall strategy to address the issue. Some companies are doing good work, but they are not aware of the high risks, which links with what the hon. Gentleman has just said about the high rate of scamming. The high rate of scamming is worrying, particularly as many investors have sunk a huge proportion of their savings into crypto. Half do not have an individual savings account while four in 10 do not even have a pension. The serious collapse in crypto risks not only wiping out the life savings of many people, but significantly disabling the UK’s financial market. I am sure none of us wants that to happen.

The Government responded to their consultation on the regulatory approach to cryptoassets, stablecoins and distributed ledger technology in April, and there are measures to bring stablecoins into the regulatory perimeter in the upcoming Financial Services and Markets Bill. We will of course scrutinise the Bill carefully and look closely at what progress is being made through Parliament, but I have a number of questions to ask the Minister, particularly in relation to this debate.

Why have the Government introduced legislation relating only to stablecoins, and not a comprehensive regime for crypto more broadly? It is simply not good enough that they will not even consult on such a regime until later this year, as the stats show that urgent action is needed. If we do not have a comprehensive framework to address the risks and opportunities presented by cryptoassets, we risk falling behind our global competitors in the crypto space, including the US and the EU, which has just agreed a comprehensive regime for regulating the cryptocurrency industry.

How will the Government crack down on misleading advertising promotions, beyond regulated stablecoins? Members from across the House have discussed fraud today, and the Government need to take responsible action on it. I do not want consumers to be left to deal with it and take responsibility for it. Does the Minister accept that the Government have failed to address money laundering and fraud in this sector, and have allowed criminals to get rich at the public’s expense?

How will the Government ensure that enforcement agencies have the powers they need to crack down on digitally savvy criminals operating through electronic money institutions and cryptoasset firms? The industry is fast-moving at the moment, so does the Minister believe that there is the necessary capability and expertise in the Financial Conduct Authority and other agencies to deal with crypto? Labour is calling for greater powers for regulators and enforcement agencies to crack down on anonymity-enhancing technology, misleading advertising and the criminals operating in the crypto space.

The Government have ignored these serious and important issues for far too long, and the former Chancellor, the right hon. Member for Richmond (Yorks) (Rishi Sunak), seemed more interested in his NFT gimmick than a proper regulatory strategy. We still do not know the cost of that project, despite responses to parliamentary questions confirming that the Treasury holds that information. Perhaps the Minister can shed some light today on what that information is. The lack of transparency on how much taxpayers’ money has been thrown down the drain on that gimmick is frankly shocking, but hardly surprising from this Government.

A Labour Government would be serious about attracting fintech companies to the UK and safely harnessing the progressive potential of blockchain technology. To do that properly, we need thorough and thoughtful regulation of the sector, and I look forward to the Minister setting out how the Government intend to do that.

--- Later in debate ---

[Richard Fuller]

The hon. Lady is right to mention the importance of bringing people together. I will refer to that. May I also take the opportunity to re-emphasise the work that her APPG is currently doing on regulation for consumer protection in this space? There are multiple participants and interests, so I echo her point.

At the forefront of this is something that we have talked a lot about when it comes to the culture. We have highly driven entrepreneurs with great skills. Having their teams in the UK enables us to build the wealth and experience that can power further discoveries and growth in a constructive way.

As is always the case with innovation, there are risks that need to be managed. For one, cryptoassets can be used to hide ill-gotten gains through corruption or organised crime. Since January 2020, cryptoasset firms operating in the UK have been subject to the money laundering regulations. We recently brought forward legislation to implement the financial action taskforce travel rule for the transfer of cryptoassets.

Cryptoasset firms must conduct customer due diligence checks, just as banks do, including sanctions screenings. Through the Economic Crime (Transparency and Enforcement) Bill, we will give law enforcement new powers to seize and recover cryptoassets. As would be expected of a global financial centre, we will put a very robust system in place, and will never compromise on our high standards. That was the key point made by the SNP spokesman, the hon. Member for Glenrothes (Peter Grant).

Separately, there are legitimate concerns, highlighted by the hon. Member for West Dunbartonshire and echoed by my hon. Friend the Member for Rother Valley (Alexander Stafford), about the energy intensiveness in the process of creating some types of cryptoassets. As a global centre for green finance, we are already looking closely at energy usage associated with certain crypto technologies, and I will take away the point the hon. Member for West Dunbartonshire made about carbon neutral data centres regulation.

We have also said that we will seek to protect consumers by legislating to bring certain cryptoassets into the scope of financial promotions regulation, because it is essential that investors understand the risks they are taking and that there is more transparency from firms. I know that some firms are concerned about the way in which this regime might be implemented, to the possible detriment of UK firms. We are looking very seriously at that issue.

I say in reply to the hon. Member for Erith and Thamesmead that the UK’s approach on a lot to do with financial services is to have an agile system that relies robustly on the regulators to write their rules as things are brought within the regulatory perimeter. That underpins our approach. It underpins the work in the new Financial Services and Markets Bill, and that is distinct from the perhaps more legalistic approach of the European Union trying to define in statute right from the start what the regulations should be. In the United Kingdom we trust regulators to work at speed and effectively to write the rule books that are right at that point in time.

[Abena Oppong-Asare]

I thank the Minister for his answers. He said that it is the regulator’s responsibility to address this, but the Government also need to take responsibility. I would be grateful if the Minister could let us know whether the Government will produce a comprehensive framework. Can he also tell us what work the Government have done to check that the FCA has the capacity and expertise to look into this?

[Richard Fuller]

I am grateful to the hon. Lady for emphasising those additional points. She will know that the Bill that we are discussing in the House later today will bring stablecoin within the regulatory perimeter. There are two other aspects of cryptoassets that I think she is referring to. One is central bank digital currencies, on which there will be a consultation towards the latter part of this year. The other is the broader aspect of cryptoassets, which has been part of the discussion today. That will be consulted on, both by Her Majesty’s Treasury and the FCA, in the months ahead.

The hon. Lady’s second point was about the resources available, and the skills in the FCA. I have full confidence in both of those. The FCA has had increasing resources; I meet its head regularly and discuss these matters with them, so I am confident that the resources and the skills are in place.

[Abena Oppong-Asare]

Will the hon. Gentleman give way?

[Richard Fuller]

I am conscious of time, and I have a few more things to say. I have mentioned a few of the known risks that we face, and they present real challenges. We will, however, be better placed to shape the sector and lead it to social and economic good if we actively engage with it from the outset, and that is what the Government are doing. The role of the Government is to be on the front foot to achieve a global advantage. To do that, we in Government must provide a solid framework, so that decision makers can take decisions in a risky environment, and we are bringing forward a number of reforms, through carefully tailored regulation. Informed by the sector, and after a consultation that is open to anyone, we will create a dynamic regulatory landscape; that is how we will tackle issues ranging from fraud to volatility and environmental considerations.

The Government are legislating to bring certain stablecoins, where they are used for payment, within the regulatory perimeter by expanding the payments and e-money regulatory frameworks. Increased competition between stablecoins and existing UK payment systems could lead to lower costs and improved services in the long run. Through the Financial Services and Markets Bill, we will build into our regulatory framework an ability to harness those benefits of stablecoins. At the same time, we will protect consumers by ensuring that the face value of stablecoins is backed by the underlying funds, and that consumer funds will be safeguarded if a stablecoin provider becomes insolvent.

In the first instance, we wanted to focus on areas of immediate potential and concern, but the market has changed sufficiently for us to look at regulating a broader set of cryptoassets. Earlier this year, we committed to consulting on this broader regulation, including the trading of unbacked cryptoassets such as Bitcoin. We will continue dynamic engagement with industry; for example, the FCA’s recent CryptoSprints brought together over 100 industry participants to discuss future regulation. We know how important it is that there remains strong co-ordination between the UK authorities as we develop the regime; that is why the Cryptoassets Taskforce, launched in 2018, continues to have a vital role in informing where regulation can drive forward UK objectives.

As we build a regulatory regime that delivers safe, sustainable and—I hope—value-creating innovation, we will ensure that we are at the cutting edge of legal innovation, so that the UK has a strong legal foundation for this technology. Following a request from the Government, the Law Commission recently published new proposals for reforming property law relating to digital assets and smart contracts. The Government have asked the Law Commission to consider the legal status of decentralised autonomous organisations, which the hon. Member for West Dunbartonshire referred to. They are a new form of online, decentralised organisational structure. We are exploring ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market in the United Kingdom.

We are undertaking this work because we have a choice: the UK can either be a spectator as this technology transforms aspects of life, or we can become the best place in the world to start and scale crypto technologies. The Government choose the latter course. We want the UK to be the dominant global hub for crypto technologies, and so will build on the strengths of our thriving fintech sector, creating new jobs, developing groundbreaking new products and services—

Motion lapsed (Standing Order No. 10(6)).

Financial Services and Markets Bill

Abena Oppong-Asare Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

I am grateful for the opportunity to close the debate on behalf of the Opposition. As my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq) said, we broadly support this important Bill.

We recognise that regulatory divergence from the EU will produce opportunities for the sector, such as through Solvency II reform and making sure that the UK is a welcoming environment for fintech. We also support the principle of a secondary objective on international competitiveness and growth. Labour is committed to supporting the City to retain its competitiveness on a world stage and supporting the UK to remain a global financial centre outside the EU. This should not, however, mean any compromise on financial stability or consumer protections.

I also want to echo my hon. Friend’s point about recent Government infighting. This has undermined confidence in the City just when the sector needs clear direction on post-Brexit reform. The new Prime Minister’s off-the-cuff policy announcements during the summer and threats to abolish our world-leading regulators have left our financial services in a state of uncertainty. The Government must provide the City with the certainty it needs to thrive and to take advantage of opportunities outside the EU. I therefore hope that the Minister will use this opportunity to inform the House, the wider public and the financial services sector whether the Government plan to radically alter this legislation in the coming weeks and months.

While we will support the Bill, there are a number of issues that we believe the Government have yet to address. My hon. Friend raised a number of these important questions in her speech, which I hope the Minister will address in his closing remarks, including whether regulators will be held to account on the advancement of long-term growth in the real economy, and how the Bill will address the decline in the UK’s financial services exports to the EU.

I take this opportunity to thank the hon. Member for Salisbury (John Glen) for the work he did on this Bill. I, along with my hon. Friend the Member for Hampstead and Kilburn and the rest of our team, know that he was always communicative with the Opposition despite our differences and he was always respectful in his delivery. It is also pleasing to see the former Chancellor the right hon. Member for Richmond (Yorks) (Rishi Sunak) speaking in this debate, which shows that he is still taking this Bill very seriously.

I thank hon. Members on all sides of this House for their contributions. I am particularly grateful to my hon. Friend the Member for Feltham and Heston (Seema Malhotra), who talked about how mortgage prisoners are impacted by the SVR. I hope that the Minister will take up the invitation to meet her, as she certainly has a lot of knowledge in this area.

My hon. Friend the Member for Edmonton (Kate Osamor) spoke about how small and medium-sized businesses, such as hairdressers and nail salons, rely on cash payments and how her constituency is one of the most cash-deprived. The right hon. Member for South Northamptonshire (Dame Andrea Leadsom) referenced the need for free access to cash, and highlighted the points raised by Opposition Members. I hope that on this vital topic we can find common ground to resolve this issue in the best interests of all our constituents.

My right hon. Friend the Member for Hayes and Harlington (John McDonnell) and my hon. Friends the Members for Kingston upon Hull West and Hessle (Emma Hardy) and for Blaenau Gwent (Nick Smith) all raised concerns about the FCA. I am sure the Minister will agree that holding bad actors to account is very important, and I look forward to his comments in his summing up.

My hon. Friend the Member for Walthamstow (Stella Creasy) made a particularly important point about how those using buy now, pay later lenders are drowning under the cost of living crisis. The wishy-washy intervention planned for 2023 will just be far too late. We need swift action right now, and my hon. Friend pointed out that there is a lack of strong will from the Government in this area.

My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) spoke passionately about the closure of bank branches in her constituency and the impact this is having on elderly and disabled constituents.

All the contributions from across the House were really valuable, but I want to raise a number of additional issues, such as cryptocurrencies. First, clauses 21 and 22 will bring stablecoins, a type of cryptoasset, into the scope of regulation when used as a form of payment, which as the Minister has said, will pave the way for their use in the UK as a recognised form of payment. He and I discussed this in Westminster Hall this morning, but the recent collapse in the value of cryptoassets, including several stablecoins, has put millions of UK consumers’ savings at risk.

The crypto trading platform Gemini has estimated that as many as one in five people in the UK could have lost money in the crash. Does the Minister agree that the crisis in crypto demonstrates that so-called stablecoins are not necessarily stable? How did the recent collapse in the value of cryptocurrencies inform the Treasury’s approach to clauses 21 and 22 of the Bill?

Will the Minister explain why the Government have opted to bring only stablecoins within the regulations? For example, the EU just agreed to a comprehensive regime for regulating the entire cryptocurrency industry, while the UK will not even consult on a comprehensive regime until later this year. In the absence of a comprehensive regulatory regime, the UK has become a centre for illicit crypto activity. According to Chainalysis, a global leader in blockchain research, cryptocurrency-based crime, such as terrorist financing, money laundering, fraud and scams, hit a new all-time high in 2021, with illicit activity in the UK estimated to be worth more than £500 million.

Meanwhile, misleading advertising and marketing of cryptocurrency projects is on the rise. In the absence of a comprehensive regulatory regime, how will the Government crackdown on illicit activity and misleading advertising and promotions, beyond the regulated stablecoins? Finally, how do the Government foresee the regulated stablecoins interacting with the future of central bank digital currency?

Let me express the disappointment felt on the Opposition Benches that the Bill has failed adequately to address financial exclusion. My hon. Friend the Member for Hampstead and Kilburn has already touched on the need to address digital exclusion by protecting access to essential face-to-face banking services, and the Bill has failed to promote financial diversity and resilience by removing the regulatory barriers faced by mutuals, building societies and co-operatives. In addition to my hon. Friend’s important points, the Bill does nothing to address the poverty premium—the extra costs that poorer people pay for essential services such as insurance, loans or credit cards—and right now, those people will be feeling the impact of that.

Labour believes that everyone should have access to the financial services they need, whether that is saving schemes or insurance, and regardless of their income or circumstances. All too often, the most vulnerable in our society are unable to afford or are denied access to financial products and services that meet their needs. If the Government are serious about building a strong future for our financial services outside the EU, they should recognise that the Bill is an opportunity to rethink how financial resilience, inclusion and wellbeing issues are tackled in the UK. I hope the Minister will address those points in his response.

I realise that time is pressing, and I want to give the Minister the opportunity to respond to all the issues raised today. In conclusion, although Labour Members support the Bill, which will enable the UK to tailor financial services regulation to meet the needs of our economy, we will be pushing for bolder, more radical action in a number of areas including green finance, financial inclusion and economic crime, to make Brexit work for our financial services and the wider economy.

Energy (Oil and Gas) Profits Levy Bill

Abena Oppong-Asare Excerpts

2nd reading
Monday 11th July 2022 Commons Chamber

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to respond on Second Reading on behalf of the official Opposition. I thank all hon. Members; this has been a good debate with many interesting contributions from across the Chamber. I particularly congratulate my hon. Friend the Member for Wakefield (Simon Lightwood) on his excellent maiden speech—isn’t it great to see Wakefield turn red again? I know that he will be a great champion for Wakefield and his constituents, and I look forward to hearing many more of his speeches. I also thank the hon. Members for Waveney (Peter Aldous), for Bath (Wera Hobhouse) and for Aberdeen South (Stephen Flynn), who made interesting speeches; it is good to hear them supporting Labour’s policy.

The message that we have heard loud and clear from hon. Members today is that the Tory cost of living crisis is far from over. In fact, the financial pressures that many people are facing grow larger and larger. Food, fuel and energy bills continue to rise and families across the country are already worrying about the winter that lies ahead, as we all see reflected in the emails that we get from our constituents across the country. As my hon. Friend the Member for Wakefield mentioned, in that context, we are finally considering this long-overdue Bill, seven months after my hon. Friend the Member for Leeds West (Rachel Reeves), the shadow Chancellor, set out Labour’s plan for a windfall tax on oil and gas producers—I repeat: seven months.

As my hon. Friend the Member for Ealing North (James Murray) said, since Labour first called for the windfall tax on oil and gas producers, energy bills for typical households have risen by a shocking £700, inflation has rocketed to its highest level in 40 years, and, of course, people’s taxes have gone up as the Government have pressed ahead with the national insurance increase. In that period, oil and gas producers’ profits have soared. Indeed, we estimate that between Labour first calling for the windfall tax in January and the former Chancellor and soon-to-be former Prime Minister finally accepting our arguments at the end of May, nearly £2 billion of tax revenue could have been raised to help people with the cost of living crisis. In that time, Conservative MPs voted against our plans for a windfall tax not once, not twice, but three times. Ministers repeatedly claimed that such a plan would not work. Famously, the current Chancellor said that oil and gas producers were “already struggling”; I would be very interested to hear from the Chancellor whether he has changed his mind about that.

It is shameful that it took the Government so long to come to their senses and finally do the right thing. That is yet more evidence, if we needed it after last week, that this Government are on their last legs, out of touch, out of ideas and now truly out of time. With the windfall tax and with so many other issues, it is Labour that leads and the Conservative party that follows. We are relieved that the Government are finally legislating for a windfall tax, and we will not oppose the Bill today, but there are several areas of concern for us.

Several hon. Members have mentioned the Bill’s tax break for oil and gas producers. We simply do not think it right that the Bill will hand back money to the same companies that are supposed to be contributing their fair share to tackling the cost of living crisis. As my hon. Friend the Member for Ealing North said, for every £100 that an oil and gas company invests in the North sea, it will receive £91.25 from the taxpayer. How is that right? I compare that with the £25 that companies receive for investing for renewable energy, which is set to fall even further. A third or more of the revenue from the windfall tax will be handed straight back to oil and gas producers. How can it be right that we are subsidising oil and gas projects, which companies have said would happen anyway, to this level? It is an insult to families who are struggling and it makes a mockery of our climate commitments.

I turn to electricity generation and the excess profits in the electricity sector.

[Stephen Flynn]

The hon. Member is making a very passionate case. A similar question was asked earlier of her Front-Bench colleague, the hon. Member for Ealing North (James Murray), but I would be keen to know when shadow Ministers last met industry representatives in Aberdeen to discuss their views on the matter. I ask out of interest.

[Abena Oppong-Asare]

As the hon. Member knows, Labour has been consulting regularly with organisations and stakeholders about the matter. We are willing to meet anybody who would like to meet us. Our door is open.

We called for the windfall tax months ago and are glad to see that the Government are taking it forward, but I have to say that they have been all over the place on the issue. In May, it was suggested that the Chancellor had asked the Treasury to draw up plans for a windfall tax on excess profits by electricity generators. I really wish that the Government had been vocal on the issue when Labour raised it months ago. As hon. Members will know, the price of electricity is closely linked to the price of gas; electricity prices have therefore been pushed up, although the costs of generating electricity from renewable sources have not changed. That is leading to significant profits for the sector. It was reported that such a windfall tax could raise up to £10 billion, but the Bill says nothing about the electricity generation sector.

As the Government have gone quiet on wider plans to decouple electricity prices from the price of gas, I would be grateful if the Financial Secretary would shed some light today on the Government’s plans for the electricity generation sector. It is clear that the market needs urgent reform so that it delivers for consumers and businesses. I hope that she can tell us why the Government are delaying bringing forward an energy market reform Bill that will finally break the link between gas and electricity prices.

Hon. Members have mentioned the support announced alongside the windfall tax. Of course it is a relief to our constituents that the Government have finally brought forward payments to help with energy bills and have scrapped their proposed “buy now, pay later” scheme, but we think it simply wrong that owners of multiple properties will receive the £400 payment for each and every property that they own and live in. There are surely far better uses for the money than that, so I urge the Government to think again.

Although we will support it today because we have long argued for a windfall tax on oil and gas producers to help people with soaring energy bills, we know that the Bill will not be enough. It is simply not ambitious enough. We need a long-term plan to guarantee the UK’s energy security and bring down bills for families. We have called for an acceleration of home-grown renewables and new nuclear, a plan to double onshore wind capacity and reform our broken energy system, and a national mission to retrofit 19 million homes to save households an average of £400 a year on their bills.

[Alan Brown]

Will the hon. Lady give way?

[Abena Oppong-Asare]

I think that I have already been very generous.

Given the crisis facing the Conservative party, I do not have much confidence in them to deliver these essential priorities for Britain. While they spend the summer arguing among themselves, we on this side of the House will continue to provide the leadership that our country needs, just as we have with the windfall tax. We will stand up for families through the cost of living crisis, we will back British businesses and we will provide economic security for our country.

Alcohol Taxation

Abena Oppong-Asare Excerpts

Thursday 7th July 2022 Commons Chamber

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

I congratulate the right hon. Member for Vale of Glamorgan (Alun Cairns) on securing this Backbench Business debate. He covered all the points very well.

Despite the strange situation in which we find ourselves, I welcome this opportunity to debate the principles behind the taxation of alcohol and the details of the Government’s alcohol duty review. I am glad the Government have managed to find a Minister to respond to this debate, and I welcome her to her place. We will see whether the review survives the change of Government.

Over recent months, I have engaged with representatives across the alcohol sector on these significant changes. The alcohol duty review represents the biggest change to alcohol duty in decades, so it is welcome that the House has had the opportunity to consider the changes in advance of legislation, for which I thank the right hon. Member for Vale of Glamorgan.

I also thank all the other hon. Members who have contributed. Many of them spoke on behalf of alcohol producers and retailers in their constituency. It is clear that our great many breweries, cider makers, distilleries, wine shops and other alcohol-related businesses play an important role in supporting local jobs and economies, and we all know the importance of pubs to our local communities. It is good that hon. Members have been able to champion these businesses today.

Before addressing the specific issues, I will set out the principles that Labour believes should guide the changes. We agree that the alcohol duty system should be simplified and should be more consistent. For this reason, we welcome the principles behind the alcohol duty review, but we believe careful consideration should be given to individual changes. We recognise that there is a balance to be struck between supporting businesses and consumers, protecting public health and maintaining an important source of revenue for the Exchequer. Importantly, the Treasury must make sure there are no unintended consequences as it seeks to make these changes—we have heard about some of those unintended consequences in this debate. We also believe that special attention should be given to ensuring that small domestic producers are able to compete with global players across the industry.

I will now turn to some of the specific proposals for each category of product. The Government are proposing significant changes to wine duty. Currently, wine is taxed by volume, rather than by strength, and the Treasury states that there are a number of anomalies and distortions in the current system. The alcohol duty review therefore proposes that all wine products will be taxed in reference to their ABV. It also proposes abolishing the different rates for still and sparkling wine, which will benefit English sparkling wine producers. Some hon. Members have raised some of the issues of complexity in relation to wine duty, and I have also heard these concerns directly from the industry. The Wine and Spirit Trade Association says that the proposed system will replace one band with 27 bands, resulting in a significant increase in red tape for businesses throughout the supply chain. That is likely to cause particular problems for small and medium-sized enterprises, including SME importers and retailers. I hope the Minister is aware of these concerns, and I am sure all hon. Members would be interested to hear from her about any changes the Treasury is considering to mitigate the impact on the wine industry. We believe that the Government should set out a comprehensive assessment of the impact that these proposals will have on the regulatory burden faced by businesses in the wine sector and the steps the Government intend to take to mitigate them.

The Government’s overall proposals for beer duty are relatively minor, as the current system is already based on the ABV of the product. The reduced rate for products below 2.8% is being widened and will now include products of up to 3.5%. I note this has been welcomed by the Campaign for Real Ale, which says that it will incentivise the production of lower-strength beers. However, the Society of Independent Brewers has raised concerns that this change may allow large brewers to undercut small brewers, so will the Minister look into this? The alcohol duty review also announced the Government’s intention to introduce a new draught duty discount of 5% for draught products sold in large containers. Labour welcomes that proposal as an important way to support pubs as they recover from several very difficult years during the pandemic. However, there are concerns that the proposal to set 40 litres as the minimum container size risks excluding small brewers and small community pubs, which often use 20-litre or 30-litre containers. We believe the Government should set out how many small brewers would benefit at different minimum sizes of containers. Will the Minister address that in her wind-up?

The alcohol duty review states that cider duty is not a well-structured tax, as high-strength ciders currently pay proportionately less duty than those at lower ABV. The review also directly links that to high rates of problem drinking associated with very strong white ciders. However, the review continues to treat cider favourably, with a rate less than half that of beer. We do recognise cider making’s importance to many rural communities, but is the Minister concerned that the proposed changes will not go far enough in tackling the problem drinking associated with very strong ciders? Will she set out what assessment the Treasury has made of the public health impact of different rates of duty on high-alcohol cider, given it makes up a disproportionate amount of alcohol-related harm?

Spirit distillers, particularly the Scotch whisky industry, make a very important contribution to the UK economy and are an important export for the UK. I urge the Government to work with this industry to ensure it remains competitive. The Government are not making significant changes to the structure of spirits duty, but we welcome their reducing the duty on spirits below 22% to encourage the development of lower-strength spirit-based drinks.

Finally, I wish to say a few words about the proposal for a new small producers relief. Labour introduced a small brewers relief in 2002 and is proud of the effect that it has in supporting small brewers and creating the vibrant UK beer scene that we know exists. We therefore support proposals to extend the scheme to other producers, but believe that the Treasury should work closely with representatives of small brewers and cider makers to ensure that it continues to work effectively, because, as Members will know, the devil is always in the detail.

I have also had concerns from the wine and spirits industry that the proposed small producers relief will not apply to products above 8.5% ABV. The Government need to explain why they are excluding small distillers and small English and Welsh wine makers from this relief and what assessment they have made of the merits of including them.

To end my remarks, I look forward to hearing from the Minister on all the important points that I have raised. These are major changes that will affect businesses and consumers, and they deserve careful consideration. We will be scrutinising the forthcoming legislation closely, and I look forward to debating the issues again in the future.