Alcohol Duty

Alun Cairns Excerpts

Monday 19th December 2022 Commons Chamber

[James Cartlidge]

I am glad that the right hon. Gentleman supports the principle of the reform package that will come into place next August. I hope Members across the House can do so. The cost obviously depends on what decision is made in the Budget next year. That is a matter for the Chancellor at the time. We know that that will be on 15 March, so there is not too long to wait.

The right hon. Gentleman made the point that it was not necessary to leave the European Union to make these changes. To be clear, EU law does not allow member states to differentiate beverages on qualitative characteristics such as whether the product is on draught. EU law actively discourages any attempt to support the on-trade through the duty system. That is also true for a system based on ABV; by and large, that would have been very difficult as well. The fact is that this is a radical reform and it has been made possible by Brexit.

[Alun Cairns (Vale of Glamorgan) (Con)]

I declare an interest as the chairman of the all-party parliamentary beer group, and someone who enjoys much of what we have been discussing. May I at least warmly welcome my hon. Friend’s statement? This will provide significant certainty to an industry that has experienced significant challenges over recent times, from the impact of weather on crops, to the impact on energy prices on the back of the fallout from covid. So this is a much needed platform on which the industry can build a strong future. It is looking forward with enthusiasm to the differential draught beer duty. That is an important principle. Come the Budget in March, will the Minister consider going much further that the 5% that has already been promised? The principle, and the Brexit dividend, can bring significant benefits to our pubs and beer industry across the country.

[James Cartlidge]

I am extremely grateful to my right hon. Friend for his comments. He has become the chairman of the all-party beer group, but we should remember the work of the former chairman, my hon. Friend the Member for Dudley South (Mike Wood). He cannot speak as he is a Whip, but he put in place all those sessions lobbying MPs and Ministers and making the case for beer. Much as we enjoy that, it is a major employer in this country. My right hon. Friend makes an important point about differential duty. To put that in context, the 5% cut to cider duty will be the biggest cut to cider duty since 1923, so it is significant. Of course I cannot from the Dispatch Box make decisions for the Budget next year, but it is not too far away and I am sure there will be plenty of chances for colleagues to engage up to then.

Economic Update

Alun Cairns Excerpts

Monday 17th October 2022 Commons Chamber

[Jeremy Hunt]

I entirely understand the concerns about second home ownership, and the Government have been looking at that policy in enormous detail over recent months. However, I gently say to the hon. Member that it would be wrong to be dismissive of the concerns of young people desperately trying to get onto the housing ladder, and the help that we are giving them with the stamp duty reforms will make a significant difference.

[Alun Cairns (Vale of Glamorgan) (Con)]

I pay tribute to the Chancellor for his statement and for the urgency with which he has acted. The energy price guarantee was welcomed across the House, although it was probably the policy that created the greatest uncertainty in the financial markets. Does he agree that, as he reviews the policy, there will continually be challenges in this area so long as Putin maintains his aggressive conflict in Ukraine?

[Jeremy Hunt]

Absolutely. I am very pleased that my right hon. Friend has made that point. We should remember that Putin’s gain is to try to turn economic instability into political instability, and we must not play along with it.

Economic Situation

Alun Cairns Excerpts

Wednesday 12th October 2022 Commons Chamber

[Chris Philp]

I am obviously not going to offer individual financial advice to constituents. What I would say is that there are about 2,300 mortgage products currently on the market. We are keen as a Government to help first-time buyers, particularly younger ones in their 20s and 30s, which is why stamp duty is being cut for cheaper purchases. The stamp duty threshold for first-buyers has been raised, from memory, to £425,000, which particularly helps with putting together a deposit, which cannot be mortgage-funded. In addition, we want to help people with the broader cost of living pressures, which makes it easier to find money to fund mortgages. That is what the energy price guarantee is designed to do, and it is what lower tax rates in general are designed to do, including the tax reductions that the Labour party voted for yesterday. It is what the cost of living package is designed to do—the £37 billion. By helping with the cost of living in general, we are obviously making mortgage costs a little easier to meet.

[Alun Cairns (Vale of Glamorgan) (Con)]

Yesterday, the International Monetary Fund underlined the position of the UK economy as the fastest growing in the G7. Despite the noises off, it further stated that the recent fiscal changes would add further to growth projections. That is in addition to the record low unemployment data that has been highlighted this week. Does my right hon. Friend agree that further changes need to be made in terms of supply-side reforms, which will continue the momentum of a growing economy, resulting in real jobs in my constituency and across the country?

[Chris Philp]

I am grateful to my right hon. Friend for mentioning the international comparisons again. The unemployment figure in the UK is 3.5%—inexplicably, Opposition Members have not asked about that—which is the lowest in my lifetime and compares favourably with that in France, where it is more than double, at 7.3%, and Italy, where it is 7.8%. Even in Canada, it is 5.2%, so our unemployment figures compare favourably internationally. As for the growth figures he asked about, if the three years are taken together, the figure is 11.7%, which heads the G7. That is nearly four times higher than Germany, at 3.9%, over double the figure for Japan, at 5.1%, and higher than the figures for France, Italy, Canada and the USA.

My right hon. Friend asked about supply-side reforms to help his constituents. He will hear a lot more about them in the coming weeks, both directly from Secretaries of State and from the Chancellor in the medium-term fiscal plan, to explain how we will get regulatory burdens off the back of businesses to help them to grow and create the jobs for his constituents that he rightly wants to see.

Alcohol Taxation

Alun Cairns Excerpts

Thursday 7th July 2022 Commons Chamber

[Alun Cairns (Vale of Glamorgan) (Con)]

I beg to move,

“That this House has considered Alcohol Duty and tax on alcohol.”

I am grateful to the hon. Member for Gateshead (Ian Mearns) and the Backbench Business Committee for selecting this important topic for consideration, and to all Members across the House who supported the case that it should be considered. This debate is hugely important to a large number of businesses across the country—the hospitality sector in general, brewers, vineyards, distillers and retailers, employing hundreds of thousands of people. A disproportionate amount of them will be small businesses with younger employees, so getting this policy right really matters.

I start by paying tribute to the Government for recognising this Brexit opportunity. Taxation and alcohol duty has been needlessly complicated for too long, yet the UK was tied to EU restrictions preventing change. The Government set out their intentions to review the structures in March 2020, followed by a consultation on their proposals in October last year. The Government’s stated aims are to make the system simpler, more economically rational and less distortive, and to reduce the administrative burden. It is fair to say that these positive intentions are included in the thrust of the proposals. The consultation is welcome because it creates the opportunity for hon. and right hon. Members, and the industry, to respond and to further develop the plans. My comments are aimed at encouraging the Minister to refine the proposals further now that the industry, consumers and officials have considered how they would work in practice.

On beer duty, there has rightly been a warm welcome for the lower duty on draught beer. There has also been a recognition that the proposed 5% reduction should also apply to kegs and casks of 20 litres rather than the 40 litres set out. There has been a strong indication from the Treasury that this may happen, and I ask the Minister to confirm her intentions. I would also press for a greater reduction than 5% a pint in order to further support the industry, and pubs in particular. New research published this week highlighted that England and Wales have 7,000 fewer pubs than just 10 years ago. We all recognise the important role pubs play in our community and society at large, and also in providing a watching influence on people who enjoy having a drink rather than their being encouraged by the cost incentive to drink at home.

The plan to widen the reduced rate from 2.8% to 3.4% ABV is also a positive move, but a minor adjustment to 3.5% would resonate much better, and enable the industry to innovate further. To help to protect smaller brewers from the larger operators who may simply adjust their recipes to take advantage, it is important that the relief that they currently receive under the small brewers relief fully applies at this level. It would also make this element competitive with EU directives, and provide further support to small businesses within the industry.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Member on bringing forward this debate on an important issue. The past few years have impacted greatly on local pubs, bars and restaurants—they are the ones who have suffered. At the same time, Tesco and Asda, to take just two examples, can sell exorbitant amounts of alcohol with low tax while others are left suffering. Does he feel that with the Government’s proposed steps, which he will speak about later—lowering alcohol taxation and encouraging people to support local—pubs can pick up the business they once had and have lost? Does he agree that that is a positive way forward?

[Alun Cairns]

The hon. Member makes an extremely important point. As I said, some people are encouraged to drink more at home by the discounted prices offered by the large retailers. I would add that in Scotland and Wales—I am not so familiar with the position in Northern Ireland—the retailers receive the extra differential with minimum alcohol pricing, in comparison with what is available in England. That gives some room for the Treasury to react positively to support the pubs and brewers, as he and I seek to underline.

The small brewers relief has been proven to deliver major benefits. It enables small brewers to compete with larger operators and to innovate and generate new options for consumers. It will be replaced by the small producers relief to offer similar or common benefits to the wider sector and to prevent the current cliff edge. Again, the Government’s objectives are positive, but I am concerned that the proposed changes introduce significant complexity to the process. Moving from 5,000 hectolitres at a 50% discount, to a maximum of 2,500 hectolitres at a 50% discount, tapering up to a 100,000 hectolitre maximum at up to 8.5% ABV, along with a cash limit and an average ABV measure, is much more complex than it needs to be. It is hard enough to say, let alone follow the process. It also makes it much more unpredictable for the businesses we are seeking to encourage to innovate, to invest and to create wealth at the smaller end of the scale.

[John Penrose (Weston-super-Mare) (Con)]

I congratulate my right hon. Friend on securing this debate on an important issue, and he is making a powerful speech. I was particularly interested in his point about broadening the duty from brewers across to the wider sector. In particular, the cider sector is important in the west country. Thatchers Cider, based in my constituency, is complaining, both on its behalf and that of many other small producers, about the massive increase in complexity that this collective set of changes has introduced. It may be easier to understand at a high level, but Martin Thatcher has written to me saying that for individual firms the

“huge increase in red tape and bureaucracy brought in as a result of these proposals will result in a need for increased staff to manage monthly excise duty returns”,

and he goes on to talk about the increased costs of that burden. I hope my right hon. Friend will address that and persuade the Minister to respond.

[Alun Cairns]

I am grateful to my hon. Friend for his point. The significant advantage that the cider industry receives—the differential in taxation status— is testament to the campaigning that my hon. and right hon. Friends have done for the industry. Some have called for that to be addressed, but that is not proposed in the Government’s plans, and I am not suggesting that should change. He makes an extremely important point about the complexity. Even when there are potential advantages for some sectors over others, the complexity detracts from that. The simpler the process, the better that would be.

I hope that the Minister agrees that the current proposal is too complex, and a simplified approach would work much better. The principles or broad approach of this incentive are important. Why is there no similar support for UK vineyards as well, all of which in the UK are small operators? These businesses invest for many years before receiving a return on that investment. The quality of wine competes on par with traditional winemaking countries and wins.

Llanerch Vineyard and Glyndwr Vineyard in my constituency are excellent examples. They invest heavily, have long lead times, are excellent employers and are great visitor attractions. In reality, they are small operators, and extending either the principle of the small producers relief to include vineyards or simply increasing the current arrangement—albeit simplified from the 8.5% ABV limit—would make a major difference and provide significant advantage to wines made in England and Wales. Support for such vineyards in the UK would not pose risks or undermine the Treasury’s ambitions and can be met within the World Trade Organisation rules.

[Mims Davies (Mid Sussex) (Con)]

This issue has been specifically raised with me by Bolney Wine Estate, on which the duty particularly impacts, along with other nearby producers, such as Ridgeview, which is on the edge of my pitch in the constituency of my hon. Friend the Member for Lewes (Maria Caulfield), and Kingscote in East Grinstead. There is a collective ask across the English and Welsh wine industry, and I hope that the Minister, my right hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer) will be able to help these businesses to grow. They are small producers and tourist attractions, but above all they are businesses.

[Alun Cairns]

My hon. Friend makes an important point that underlines the issues that we have highlighted.

[John Spellar (Warley) (Lab)]

Will the right hon. Gentleman give way?

[Alun Cairns]

I have limited time, but I will give way briefly.

[John Spellar]

I thank the right hon. Gentleman for giving way. As a member of the Campaign for Real Ale, I welcome his comments about the brewing industry. If we get the reduction to 22%, it will be welcome. On wine, he rightly references British vineyards, which are a great success story. Is he concerned about our trading relationships with many of our strongest allies, particularly when the Government are undertaking a trade deal with Australia? Australian winemakers are seeking to diversify from their market in China and are concerned about the new complexities being introduced. Does he think that the Government ought to engage with the Governments of Australia and other similar countries where our trade and security relationships are important?

[Alun Cairns]

The right hon. Gentleman makes an extremely important point. That is important for businesses, as he recognises, and because of the international influence that such policies have. His wider experience, geographically and on security issues, is recognised on both sides of the House.

I warmly welcome the proposed abolition of the additional tax on sparkling wine, which is particularly helpful to producers in England and Wales. Some 70% of wines from the UK are sparkling and the current EU system works against them, particularly as smaller operators, so that is another Brexit dividend.

The wider proposals for duty changes on wine also have positive intentions, but in practical terms, as they stand, they will leave more complexity in the system. The three current rates per bottle will be replaced by a total of 27 separate amounts per bottle, assuming that it applies to the labelled ABV. We must recognise that winemakers cannot dictate the specific level of ABV. It depends on seasonal factors, and the structure of taxation should take that into account.

The administrative burden will fall particularly hard on UK retailers, particularly specialist merchants that tend to carry small supplies of a wider range of products. For example, a small retailer could have a range of 2,000 to 3,000 different products. The variation between different vintages means that they would become swamped in red tape—a policy that runs against the positive intentions of the Minister and the Treasury. There would also be a need to take into account permitted tolerances.

The good news is that minor adjustments could achieve the Government’s objectives and simplify the structure for the industry. All wines fall within a spread of 8.5% to 15% ABV. Establishing such a spread and applying a common rate would simplify the process and give the Treasury the clarity it needs. For example, the industry believes that a rate of 12%—a 4% increase on current rate—would be a win for the Treasury and for it because of the reduced red tape. That demonstrates the earlier point about the cost of red tape.

It might sound logical to compromise—for example, to have just two splits instead of the high number of splits in the range of 8.5% to 15% ABV—but that would not work either. The complexity would remain and it would leave similar tolerance challenges. Taxing at one rate would help the Treasury to achieve its objective of providing clarity, as well as significantly supporting the industry.

[Mr Laurence Robertson (Tewkesbury) (Con)]

I entirely agree with my right hon. Friend, particularly on this point. A company in my constituency, Direct Wines, has stressed the dangers to its business if the changes go ahead. Does he agree that they should be delayed until we have had more chance to talk to people about how they will affect their business?

[Alun Cairns]

My hon. Friend makes an important point about the complexity of the system, particularly in relation to wines and the variation of ABV, which depends on circumstances. I am torn about delaying, because if we can get this right—the industry needs only minor changes—let us do it as quickly as possible. Clearly, however, we would not want the proposals for wine to be introduced as they stand, so if they have to remain, it would be better for them to be delayed. It is a challenge, and perhaps the Minister can indicate how long she expects it to take to see the changes.

These issues are technical and complex, but they are hugely important to industries that employ and entertain millions of people across the UK. Previous Chancellors have often made a name for themselves by working closely with the drinks industry on such technical issues and have delivered a huge boost to employment, investment and society at large. It has also gone down very well with the popular press when they got it right because of the popularity of the alcohol sector, and rightly so. This is an opportunity to do the same. The intentions are right and the structure is logical, but changes along the lines I have highlighted would ensure that this important industry can continue to develop, grow and deliver for all our constituents.

--- Later in debate ---

[Alun Cairns]

It has been a privilege to hold this debate and I am grateful to all Members who have contributed. I think it is obvious that right across the House there is strong support for the need for change and for the direction of travel that the Government have introduced, but also a recognition of the need for further change.

The hon. Member for St Albans (Daisy Cooper) highlighted the challenges to fortified wines, among other things. My hon. Friend the Member for Meon Valley (Mrs Drummond) talked about a range of issues, including the importance of the wine sector, particularly to her constituency, and the need to consider, as a key issue, one broad range of 8.5% to 15% ABV. The Minister said that 15 rates across five products would come down to just six rates. That is a positive step, but it does not recognise the 27 measures per bottle that would need to be on wine alone, the different rates that would apply, and the difficulty of predicting them.

My hon. Friend the Member for Dudley South (Mike Wood), who is clearly a champion of the beer industry, drew attention to the importance of the sector, as well as welcome nature of the changes and some adjustments that are needed in order to secure them. The hon. Member for Gordon (Richard Thomson) rightly highlighted the importance of duty on Scotch whisky and the impact that that has. He also, I would suggest, recognises the Brexit opportunity given to the Scotch whisky industry.

The fact that the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) highlighted some of the same issues as many Conservative Members draws attention to the consensus that exists across the House for change in this area. That needs to be along the lines that the Government are pursuing, but also in a way that really supports the industry, supports the Treasury in raising the revenue it needs, reduces red tape, and allows for innovation to take place. I am grateful to all hon. and right hon. Members for their contributions.

Question put and agreed to.

Resolved,

That this House has considered Alcohol Duty and tax on alcohol.

North Sea Oil and Gas Producers: Investment Allowances

Alun Cairns Excerpts

Monday 6th June 2022 Commons Chamber

[Lucy Frazer]

The hon. Lady mentions that Labour has been calling for this levy since January. She will know that January was not the right time to introduce it because we did not know then what the price cap would be. Ofgem estimated that in the week when this announcement was made. She will also know that in January, inflation was not at 9%. The Chancellor has taken this decision carefully, considering the circumstances and not just making policy on the basis of ideology.

I am sure the hon. Lady will know that Labour has made £100 billion of spending commitments, with less than £10 billion fully funded. That would almost double our current borrowing. We Conservative Members are aiming to ensure that we are fiscally responsible with taxpayers’ money.

Let me respond to two other points that the hon. Lady made. First, she will remember that when the policy was announced, we said we had estimated that it would raise £5 billion for the package of measures that we had put forward to support people with the cost of living—as she said, that is what we are talking about today. Secondly, she mentioned the importance of reaching our net zero targets. She will know that the UK, under this Government, has already decarbonised faster than any G7 economy, and that there are many other tax levers for green energy, including the super deduction and research and development tax reliefs. She will know that we are consulting on broadening the emissions trading scheme and that we have committed £1 billion to a carbon capture and storage infrastructure fund, as well as £140 million to the industrial decarbonisation and hydrogen revenue support fund. We are ensuring that we tax extraordinary profits at the same time as protecting those who are struggling with the cost of living.

[Alun Cairns (Vale of Glamorgan) (Con)]

Two weeks ago, my right hon. Friend the Chancellor announced a package of support that is far more generous than what the Labour party ever proposed. It is focused on the immediate pressures that families are facing up and down the country. It is also funded by the energy profits levy, which focuses on and offers support and relief for future investment. Does my right hon. and learned Friend agree that we need not to only provide support in the immediate term, as the Chancellor demonstrated, but to look to the future energy security needs of the United Kingdom?

[Lucy Frazer]

My right hon. Friend makes an important point, and that is one reason why we set out the Prime Minister’s energy security strategy recently. My right hon. Friend also makes the important point that our package is more generous to those who are vulnerable. Under our package, the lowest-income households will receive double what Labour was proposing—£1,200, compared with £600. Hard-working families will receive £550 under our proposal compared with the £200 that they would have received under Labour’s proposal.

Economy Update

Alun Cairns Excerpts

Thursday 26th May 2022 Commons Chamber

[Rishi Sunak]

Well, we did act, and that is why there is already £21 billion of support to help people with the cost of living this year. We are adding £15 billion to that today, after having more certainty about what energy bills will be in the autumn, and that is why we have acted now.

[Alun Cairns (Vale of Glamorgan) (Con)]

The consumer champion and money saving expert Martin Lewis met the Chancellor on Monday, and he has published a series of requests that he was making upon the Chancellor. He has since stated:

“Wow just reading this back, I think he was listening!”

Will my right hon. Friend continue to meet consumer champions and respected individuals, such as Martin Lewis, who can provide independent assessments of policymaking and judgments on behalf of some of the most vulnerable in society? Does he further recognise that while we have two countries at war in Europe that are either large food producers or large energy providers, there will always be a time when we will not be able to answer everyone’s demands?

[Rishi Sunak]

My right hon. Friend makes some excellent points, particularly his macroeconomic point about the geopolitics that we are experiencing at the moment. I am happy to give him my assurance that I will continue to engage with consumer champions such as Martin Lewis. He has provided thoughtful and interesting suggestions, and I hope he will see that many of those have been met in the package we have announced today.

Prime Minister’s Chief of Staff Appointment

Alun Cairns Excerpts

Monday 7th February 2022 Commons Chamber

[Michael Ellis]

In the same way, if I may suggest, that the shadow Chancellor of the Duchy of Lancaster can also be the shadow Minister for the Cabinet Office, shadow Secretary of State for the future of work, shadow First Secretary of State, deputy Leader of the Opposition, deputy leader of the Labour party and Member of Parliament for Ashton-under-Lyne—highly accomplished appointments.

[Alun Cairns (Vale of Glamorgan) (Con)]

The appointees announced over the weekend are significant figures, but in any office restructuring, and particularly one such as 10 Downing Street, disruption is inevitable. What reassurance can my right hon. and learned Friend provide that that is taken into account and that the sole focus will be on delivering for the Government?

[Michael Ellis]

My right hon. Friend is quite right to raise that point. I assure him that the Prime Minister and Government’s entire focus is on delivering on the manifesto promises that resulted in the biggest Conservative election victory that we have seen since the 1980s. We are, have been and will continue delivering on them.

Economic Update

Alun Cairns Excerpts

Thursday 3rd February 2022 Commons Chamber

[Rishi Sunak]

We have not heard from the hon. Lady’s party any plan to provide the funding that the NHS needs. We all know that the NHS is grappling with the recovery from covid. There is an unprecedented scale of backlogs to work through and the social care system needs urgent reform. The only way to grapple with those challenges is to provide the NHS and social care with a sustainable source of funding. That is what we are doing, it is the responsible and right approach, it is the progressive approach, it will benefit people in Scotland, Wales and Northern Ireland as well as England, and in the long run it will be the right thing for this country.

[Alun Cairns (Vale of Glamorgan) (Con)]

I congratulate my right hon. Friend on the comprehensive package of support that he has provided, which is fiscally responsible in the face of global energy-price volatility. My constituents will have the benefit and reassurance of the rebate on energy bills that the Chancellor has announced, but they will not have the reassurance of the council tax support he is making available in England. Will he at least encourage the Welsh Government to follow suit, so that my constituents have the same benefit as those in England, or even go a step further and insist that the benefit is passed on?

[Rishi Sunak]

I can confirm that the Welsh Administration will receive £175 million or so in Barnett consequentials, which will enable them to provide a similar discount. The Chief Secretary to the Treasury will speak to the Welsh Government later and will very much make the point that we would like to see that happen, to the benefit of all my right hon. Friend’s constituents and people throughout Wales.

Nuclear Energy (Financing) Bill (First sitting)

Alun Cairns Excerpts

Committee stage
Tuesday 16th November 2021 Public Bill Committees

[Matthew Pennycook]

Q Just to be very clear, because I think this has implications for the funding model, do you not think that that minority stake, and the potential force-out divestment by the Government, has any implications for the RAB funding model for Sizewell C?

Julia Pyke: I think that Sizewell C can raise money under the RAB model. How CGN intends to go forward with a financial investment in Sizewell C is a matter for CGN and the Government.

[Alun Cairns (Vale of Glamorgan) (Con)]

Q As we have highlighted, the benefits of the RAB model are that it reduces the cost of finance and provides financial certainty for any project—those are two key inhibitors in the development of new nuclear fleet. However, the construction of nuclear power stations is inherently uncertain because of the risk associated with it, and costing that risk is extremely difficult. Are you satisfied that the Bill gives the Minister the opportunity to assess the cost of that risk effectively? The alternative would be the failure of the RAB model, which would undermine the fleet generation that we would like to see.

Julia Pyke: I think that the Bill is a great framework under which there is a lot of detail to be developed, and we would expect more detail to be developed in relation to designation and the conditions of eligibility. While I could hardly deny that the cost of nuclear builds has had some uncertainty in some cases, what is not uncertain is whether nuclear works and the technology works. I think there are no cases worldwide of nuclear projects that have been abandoned for technical reasons. The industry knows how to make nuclear power stations work. So I think that there is a degree of uncertainty about the exact cost, but the whole point of building a replica of Hinkley is to minimise that uncertainty, benefit from all the lessons learned and get nuclear on to a stable, repeat-build footing.

David Powell: We designed our SMR BWRX-300 on the basis of proven technology. So we know very much the cost base for that technology, and it is really in our interest and that of investors to ensure that we can deliver to time and to budget on that. With respect to the build, we would obviously want to try to minimise any impact and risk of cost and schedule overruns, because we see this as building a fleet of smaller reactors out of a more modular-type approach.

[Alun Cairns]

Q Mr Waite, in asking you the same question, may I add a supplementary to gain greater context? Is the RAB model’s success dependent on an in-principle Government commitment to a fleet of nuclear power stations rather than just one or two?

Michael Waite: I do not think it is implicit, actually. We have heard about fleet benefits. What I think RAB does do, though, is ensure accessibility to the UK market for non-foreign-sovereign-owned entities. Under a CfD approach, frankly only large foreign Government-owned entities can stand that up-front cost. Then you are potentially delivering electrons, but you are delivering a foreign Government’s objectives and strategies rather than benefiting from the UK Government’s objectives.

[Alun Cairns]

Thank you.

[Dr Whitehead]

Q Ms Pyke, you mentioned that you are basically responsible for getting the money in for Sizewell C. What hurdle rate do you anticipate that the investments will come in at as a result of RAB?

Julia Pyke: RAB is designed to attract low-cost capital, and the cost of capital will be set competitively. We anticipate a competition, which should drive down the cost of capital, between equity investors. We also anticipate that the cost of debt, which will actually be the majority cost of the project, will be set competitively. We do not have a hurdle rate, and deciding that hurdle rate will obviously be in part a matter for Government in terms of what will offer value for money. The Government’s impact assessment talks about example hurdle rates and we anticipate that the return will be somewhere in the region of the Thames Tideway tunnel rate, plus possibly some premium for it being nuclear, which is a novel asset class for private sector money in the UK.

Financial Services Bill

Alun Cairns Excerpts

Monday 26th April 2021 Commons Chamber

[Alun Cairns (Vale of Glamorgan) (Con)]

Thank you, Mr Deputy Speaker, for calling me to contribute to this debate on the amendments made in the other place. There is no doubt that the Bill represents a major step in our post-Brexit world, enabling us to take responsibility for our own financial services regulation. This is an area of the economy that is important to us all for several reasons, including the revenue the sector raises for public services, the jobs it creates and the impact it has on our financial stability and global presence. My right hon. Friend the Chancellor and my hon. Friend the Economic Secretary have rightly set ambitious targets and objectives to develop the sector for the United Kingdom.

We all know the impact the big bang had in the 1980s, elevating the UK to a leading global position in this field, but it is fair to say also that some challenges stem from such radical change, and that is why I am pleased that, at the heart of the Bill, is recognition of the need to enhance our prudential standards and commitments to maintain the highest regulatory standards. Lords amendments 16 to 19 are welcome in that they extend the reach of the Prudential Regulation Authority and the Financial Conduct Authority to take account of our climate change commitments. That shows how serious the Government are about contributing to our regulatory standards and expectations and enhancing our reputation globally in our attitude to both climate change and strong financial regulation. Lords amendment 7 and the string of amendments relating to the Proceeds of Crime Act 2002 are also welcome, updating legislation to ensure that it remains fit for purpose in the fight against market abuse and the fight against crime, and recognising the status of legislative consent, specifically in relation to Northern Ireland.

In the limited time available, I will focus on Lords amendment 8, which relates to people who are trapped with their current inactive mortgage providers—mortgage prisoners. We need to recognise the seriousness of the issue and the circumstances in which people find themselves. I, like many Members across the House, have constituents paying higher interest rates on their mortgages than would otherwise be necessary. Although I am optimistic about the economy, it is fair to say that there remains much uncertainty, and developing solutions for people in this situation, who could save thousands of pounds, deserves full and proper consideration.

It has been suggested that there are 250,000 people in this situation, although others challenge that by highlighting that many can already switch providers—that is absolutely true—and others are restricted because of arrears and myriad complex reasons. Whatever the data says, the reality is that an individual paying over the odds inevitably wants to gain a better deal or the best deal possible, and we, as Members of Parliament, have an obligation to give support in a range of ways. However, in doing so, we must also recognise the hardship and complexity of individual cases.

In spite of recognising that solutions need to be developed and worked through and recognising the positive motives of those who tabled Lords amendment 8, I do not think it would achieve what many believe or claim it would. It is simplistic in its drafting and it would be merely a short-term fix. I want to see long-term solutions to the challenges for these individuals and families. Even consumer commentators and London School of Economics research recognises that it would be only a short-term stopgap, not the longer-term answer we would like to see. Intervention in the market for some people would create issues and set precedents that may not have been fully thought through. Ultimately, we need to be working to gain market solutions that will be the long-term answer that people deserve. I welcome the comments made by the Minister in his introductory remarks from the Dispatch Box. He absolutely recognises the challenges that people face. The commitment to work with the Financial Conduct Authority is excellent news that offers the potential of a long-term solution. However, an effective market solution would not be the one-size-fits-all-approach that the amendment suggests.

We must also recognise the complexity that the Minister and the Financial Conduct Authority will have to deal with because of the unique circumstances in which each and every individual finds themselves. The reality is that answering those serious issues, with far-reaching effects on the families tied in such circumstances, requires a number of solutions that genuinely reflect the complexity of those individuals’ circumstances. The amendment has been presented as a simple answer, but, as I said, it requires much more work and study. I am grateful that the Minister responded to the calls from across the House that clearly build on the work he has been pursuing up to this stage. I ask the Minister to continue to respond to those Members supporting the amendment by asking them to recognise the complexity of the situation.

Although I am challenging the Minister—in, I hope, a positive way—I want to recognise the changes that he has introduced so far. The changes to mortgage affordability assessments have had a significant impact. They have made a major change, and there is the prospect of supporting a group of people with a more effective market-based answer than that offered by the amendment. That is the type of solution that we need as a long-term answer. I want to act to support mortgage prisoners, but I do not think that the amendment achieves that. There are many people in very many different circumstances, and I do not think that it recognises all the circumstances that exist. It will not deliver what many people believe it will achieve. There are myriad complex situations.

I would also say that it will take time for the amendment to become effective, even if it was passed today. I say to the Minister that we can use this time to come up with alternative long-term solutions. I had not expected the Minister’s response at the Dispatch Box, which commits to doubling his efforts with the Financial Conduct Authority and even setting a specific timescale. That recognises the urgency of this while managing expectations of the challenges and work that they are committed to doing. We are using the time, as I was planning to call for it to be used, to come up with long-term answers rather than the short-term fix that Lords amendment 8 claims to provide.

[Alison Thewliss (Glasgow Central) (SNP) [V]]

I very much support Lords amendment 1 on the duty of care. As the Minister will recall, we have raised this during the previous stages of the Bill, in Committee and on the Floor of the House. We think that a financial services duty of care has never been more needed than it is just now, given the difficulties that people have had in the past year with the impact of coronavirus and long covid. The Minister’s proposals are really for consultation, to kick the can down the road until August 2022, giving our constituents quite some time before they can get the duty of care that I think we would all agree they deserve.

In particular, the amendment would help those suffering not just from the effects of covid but from cancer, which is why it is supported by Macmillan Cancer Support. Four out of five people with cancer are affected financially, being on average £570 a month worse off as a result of their diagnosis. Without support to manage this financial impact, money worries can spiral out of control. Macmillan estimates that more than a third of people with cancer, 39%, are severely financially impacted by their diagnosis and of those almost one in three had to take a loan or go into credit card debt. Macmillan’s clear ambition is that every person affected by cancer can rely on their financial services provider to give the support they need to cope with the financial impact of a diagnosis.

At the moment, there is a clear gap in the service. Only 11% of people tell their bank about a diagnosis. Why is that? Is it because they do not think that they will get a fair hearing? Is it because they do not want to admit something like that to their bank because they fear some sort of negative consequence? That tells me that the rules as they stand are not working. It is a patchwork. Someone might have the good luck to have a financial services provider who is understanding, but that is not good guidance and it does not help everybody.

People support there being a duty of care. Research by the Financial Services Consumer Panel found that 92% of consumers, 99% of sole traders and 97% of small and micro businesses believe it is important that there is a duty of care in financial services. Health issues could have an impact on them, because they would affect their business and its viability going forward. The duty of care is also supported by Age UK, the Alzheimer’s Society, Fair by Design, the Money and Pensions Service, StepChange Debt Charity, Surviving Economic Abuse and The Money Charity. They believe in it because a duty of care can lead to the necessary change in culture and practice. Customers should be easily able to access forbearance from their provider, including flexibility on mortgage payments and interest freezes on credit cards or loans, without it damaging their credit files. If we put that in place, it would prevent long-term harm and financial exclusion.

There should be a clearer path to compensation when things go wrong because a provider has failed in its duty of care. That leads to a standard that people can expect and we can hold to account people who do not meet that standard. It would make a real difference were the Government to take this on, and it is hugely disappointing that they do not wish to do so today. I suppose there is still hope that the Government could change their mind right now and do this, but kicking the can around until 2022, when perhaps something will happen, does not help people here and now. I urge the Government to consider that and see whether there is any way they can bring it forward more quickly. Lots of the evidence on this issue already exists so we do not need to go into further consultation to prove the evidence that is clearly there.



In other areas the evidence is slightly more contentious and disputed, such as Lords amendment 8 on mortgage prisoners. The number of people affected seems to be part of the contention. The Minister said that he follows the facts and the evidence, but in reality he is disregarding some of the facts and evidence that do not suit his position. As the right hon. Member for Wolverhampton South East (Mr McFadden) said, the evidence is disputed. Although there may be up to 250,000 people stuck on that standard variable rate, many of them have also paid considerably over the odds in their mortgage payments.

There is also a degree of geographical impact. As a result of the location of Northern Rock, 14% of those affected are in the north-east, 16% in the north-west, 12% in Yorkshire and Humberside, and 11% in Scotland. That bears consideration, because this issue has a disproportionate impact on a large and significant group of people and their families, particularly in the context of covid and the challenges that many will be facing, which have deepened this year. It is incumbent on the Government to bring forward some kind of solution.