Family Businesses
Andrew Griffith Excerpts(4 months, 2 weeks ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Andrew Griffith (Arundel and South Downs) (Con)
When he was seeking the votes of small business owners last summer, the Prime Minister said:
“Small businesses are the lifeblood of our communities.”
He said that business is
“the beating heart of our economy”
and told small business owners in Southampton that Labour would deliver the stability that businesses need to thrive. The Prime Minister, the Chancellor and the Business Secretary all looked businesses in the eye and said that they had their back, but at the very first opportunity, Labour unleashed the biggest attack on business in a generation. It gave its union paymasters a blank cheque to craft an employment Bill that will make it impossible for businesses to grow. It gave us the jobs tax, the family business death tax, and business rate hikes up and down the high street. Business owners across this country are enduring a horror show reminiscent of the darkest days of the 1970s.
It is no wonder how we got here. Not one single person around the Cabinet table has serious experience of business. They do not understand what it means to take the risks that create growth. They do not understand the responsibility that business owners take on when they decide to employ people; what it is like to worry, day and night, about whether they can make payroll at the end of next month. They just do not get it.
Today we have heard some excellent contributions from Conservative Members, my colleagues, who do get it—who understand what it takes. My hon. Friend the Member for Beaconsfield (Joy Morrissey) reminded us that it is businesses that create jobs, not warm words from the Government. My hon. Friend the Member for Bromsgrove (Bradley Thomas) told us that the Government are in denial about the impact of the changes, the choices they have made and the tax increases—we have heard that again and again today.
My right hon. Friend the Member for Tatton (Esther McVey) reminded us that family businesses are the breeding grounds of entrepreneurs—how right that is. My hon. Friend the Member for Dumfries and Galloway (John Cooper) reminded us that when it comes to business, Britain’s got talent. Businesses provide so many people, including myself, with their all-important first job, but they are being crushed by what my hon. Friend the Member for Hinckley and Bosworth (Dr Evans) rightly called today’s toxic concoction of changes.
My hon. Friend the Member for Bridgwater (Sir Ashley Fox), as a former and fully qualified solicitor, reminded us of the devastating impact of the employment Bill, which he has studied. My hon. Friend the Member for Meriden and Solihull East (Saqib Bhatti) talked about how family businesses are people’s hopes, dreams and ambitions. My hon. Friend the Member for South Northamptonshire (Sarah Bool) reminded us that, right now, businesses are cutting apprenticeships, pubs are closing and high streets are being damaged, and that once again, Labour is not working. My neighbour and hon. Friend the Member for Farnham and Bordon (Gregory Stafford) reminded us that Labour sees business as nothing more than a cash cow to fund its spending sprees, and my hon. Friend the Member for Keighley and Ilkley (Robbie Moore) talked about how growth cannot be magicked out of thin air, however much this Government try.
Family businesses are founded on solid principles and self-reliance. My hon. Friend the Member for Kingswinford and South Staffordshire (Mike Wood) brought his experience of business to bear on this debate —it is not Government that create, but business owners working hard, day in and day out. My hon. Friend the Member for Bromley and Biggin Hill (Peter Fortune) reminded us that, just seven short months in, the Bank of England is halving growth forecasts, the cost of living is rising and unemployment is going up, all on this Government’s watch.
Finally, my hon. Friend the Member for West Suffolk (Nick Timothy) reminded us why we are really here today. We are here today because Labour broke its election promises. It has increased spending by £76 billion a year—eight times what was in its manifesto—and it is business that is paying the price. Business is not an abstraction; it is our pubs, our cafés, our restaurants and bars, our clothes shops and our newsagents. They are very real, and they are in very real danger. For many of them, the choices the Government have made will be terminal. The British Retail Consortium, the British Chambers of Commerce, UKHospitality, the Federation of Small Businesses and Family Business UK are all ringing the alarm bells, but this Government are not listening, and we have heard that across this House, including from the other parties here today.
The Institute for Fiscal Studies has said that Labour’s job tax will hit the lowest-paid the hardest, as firms are forced to make the toughest of decisions to survive, but for what end? It is to fund pay rises for train drivers, to give away the Chagos islands and to finance Red Ed’s mad windmill obsession.
Andrew Griffith
I will not, as time is limited.
Yesterday, the Conservatives successfully amended the national insurance Bill in the other place to mitigate the worst of Labour’s job tax. In winding up, will the Minister confirm that the Government will respect that amendment to exempt hospices, care providers, GPs, pharmacies, small charities and special educational needs and disabilities providers from the worst ravages of Labour’s job tax?
Let me be entirely clear, for the benefit of every one of our constituents, that these are choices that Labour has made, and they are not choices that will lead to growth. One archetypal small business is the family-owned pub, and we can all think of a family-owned pub that we have come to love. Thousands of them will fall victim to this Government’s anti-business agenda. That is not to mention the Government’s tax on the staff behind the bar, a Bill to ban banter, a threat to end even those cheeky cigarettes outside and even a power for the Business Secretary to shrink the size of the British pint.
The Government are giving themselves unchecked powers that could see the great British pint vanquished as part of their Trojan horse, EU surrender product regulation Bill. The hon. Member for Ealing North (James Murray), who has returned to his place, says that the Government have no plans to ban the pint. If that is the case, will they support our amendment 38 to save the pint?
Daisy Cooper
The shadow Minister was in the Chamber when I spoke earlier. Does he not agree that it is the Weights and Measures Act 1985 that protects our pint and that we should not be scaremongering that our pint is in anyway at risk?
Andrew Griffith
I deeply regret that if the hon. Lady reads the Bill, she will find that it precisely confers those powers on the Secretary of State, but she can join with those on our Benches in the other place by supporting the amendment. The Government can make clear today whether they are scaremongering or whether we should all be deeply concerned. By backing the amendment, they can remove that live risk to the British pint. [Interruption.] They can back the amendment any time they want.
The bravery—I will be kind—of those sat on the Government Benches is impressive. Every single one of them will have to look their constituency business owners in the eye. Every single one will have to face constituents as they lose their livelihoods. The choices that this Government have made will put thousands of employers in the red and some out of business for good. Hundreds of thousands of jobs will be lost. For just one second, I ask Labour Members to put themselves in the position of an employer, telling their long-standing staff that they can no longer afford to keep them on.
Those on the Government Benches do not understand business. Their interests are with their union paymasters, not the workers who will lose their jobs. They are petrified of celebrating success and supporting wealth creators. This is a Government who are taking business for granted. It is devastating our economy, and we will all pay the price.
Budget Responsibility Bill
Andrew Griffith ExcerptsWednesday 4th September 2024
(10 months, 1 week ago)
Commons ChamberRead Full debate Budget Responsibility Act 2024 View all Budget Responsibility Act 2024 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Committee of the whole House Amendments as at 4 September 2024 - (4 Sep 2024)
Nigel Huddleston
Thank you very much, Madam Chair. May I first take the opportunity to congratulate you on your election? I promise to try not to try your patience over the coming weeks, years and so on, but we will see how things go.
I wish primarily to speak today to amendment 9 and, of course, consequential amendment 10, which effectively seek to ensure that the fiscal lock proposed in the Bill should also include any changes to the fiscal rules and would require the Office for Budget Responsibility to produce a report on their effect on public finances. The Office for Budget Responsibility was of course constructed by a Conservative Chancellor following the poor forecasting record of the previous Labour Government. Between 2000 and 2010, the then Labour Government’s forecasts for economic growth were out by an average of £13 billion, and their forecasts for the budget deficit three years ahead were out by an average of £40 billion. Their forecasts therefore lacked credibility, and to re-establish confidence and credibility the OBR was created by the Conservative Government.
Labour lacked economic credibility in the past, and I am afraid it still lacks it now. The facts simply do not stand up the false claim that the Government have inherited the worst economic circumstances since the second world war; they transparently have not. Contrary to the rewriting of history that the current Labour Government are attempting, when we took over from Labour back in 2010, inflation was 3.4%. When they took over from us, it was 2.2%. The annual deficit is half what we inherited in 2010, unemployment is about half what it was in 2010, and we handed Labour the fastest economic growth in the G7. The dominant political and economic narrative since the second world war is in fact, as has been widely commented on, that every single Labour Government end up with unemployment higher at the end of their time in power than when they took over from the Conservatives preceding them.
The British public should not be taken for fools. Just because Labour keeps claiming something, that does not mean that it suddenly becomes true, which is why clarity over plans and rules is so important. The fiscal rules are of course restrictions on fiscal policy set by the Government to constrain their own decisions on spending and taxes. The fiscal rules set by the previous Government said that the debt to GDP ratio should be falling within a five-year horizon, and that the ratio of the annual budget deficit to GDP should be below 3% by the end of the same period. Labour’s manifesto for the election proposed the following fiscal rules: balancing the current budget, so that day-to-day costs are met by revenues, and that debt must be falling as a share of the economy by the fifth year of the forecast. On the surface, therefore, the debt rules appear to be broadly the same under the new Government. The Government have even said that they have an “ironclad” commitment to reduce Government debt. It is therefore critical what definition of debt is used for the fiscal rules. Clearly, any changes to the fiscal rules are financially significant decisions because they affect how much the Government can borrow and spend.
On Second Reading, the Exchequer Secretary to the Treasury said:
“Our fiscal rules are non-negotiable.”—[Official Report, 30 July 2024; Vol. 752, c. 1263.]
Great, but why then has the Chancellor repeatedly failed to rule out that she will change the definition of debt in her fiscal rules to allow, presumably, for massive borrowing? The Government cannot run from the scrutiny that they should be subjected to if they are considering making such a change. We believe that our amendment requiring an OBR report on changes to the fiscal rules is entirely consistent with the Government’s stated policy intent, and should therefore be fairly uncontentious. After all, on Second Reading, the Chief Secretary to the Treasury said that
“the announcement of a fiscally significant measure should always be accompanied by an independent assessment of its economic and fiscal implications, in order to support transparency and accountability.”—[Official Report, 30 July 2024; Vol. 752, c. 1211.]
We agree, and not accepting our amendment would be contrary to those goals, because clearly changing the fiscal rules would be a fiscally significant measure in anybody’s book. Furthermore, the Chief Secretary said that
“fiscal discipline and sound money is the bedrock of our plans.”—[Official Report, 30 July 2024; Vol. 752, c. 1213.]
Well, changing the fiscal rules would be changing the foundations and that bedrock.
Transparency and clarity are important in relation to the public finances, because Ministers should never forget that it is not their money that they are spending; it is the public’s money. The public have a right to know how their money is being spent, and government is about making difficult choices with limited resources. With Government spending being above £1.2 trillion per year, the British public recognise that the Government clearly have choices. It is not an endless supply of money, but it is a very, very large amount. In the last few weeks, the new Labour Government chose to spend the public’s money on pay settlements for their union friends rather than on supporting pensioners. Those settlements are estimated to cost about £10 billion. They also chose to spend £8.3 billion on a public energy company and £7.3 billion on a national wealth fund, so far from inheriting a £22-billion black hole, they have actually just spent £25 billion creating one within their first few weeks of coming to power.
Andrew Griffith (Arundel and South Downs) (Con)
My hon. Friend is making a fantastic speech on the importance of being responsible with our public finances. Much of the Bill is concerned with responsibility and transparency. Does he know whether the Government published an impact assessment when they took away the winter fuel allowance?
Nigel Huddleston
I thank my hon. Friend for that point. My understanding is that the Government have not published an impact assessment, as would normally be the case for something with such a significant impact. I think that speaks to the whole narrative that we are hearing from the Government: claiming one thing when the facts speak differently. As I said, far from inheriting a £22 billion black hole, they have actually spent, or committed to spending, an additional £25 billion. That is a choice that they made, so the claim that the Labour Government are having to take the winter fuel allowance away from millions of pensioners as a response to unexpected financial constraints simply does not stack up against the facts, or indeed the words of the Chancellor herself, who on 25 March 2014—yes, a decade ago—said:
“We are the party who have said that we will cut the winter fuel allowance for the richest pensioners and means-test that benefit to save money”.—[Official Report, 25 March 2014; Vol. 578, c. 174.]
That is a direct quote in Hansard from the current Chancellor, so no, the Government’s restriction of winter fuel payments is not a response to financial circumstance; it is a long-established, clearly stated Labour policy intent—a deliberate policy choice, but a policy that they conveniently forgot to tell the public about in the run-up to the last election.
I hope, however, that the Government can be straight with the public on this point about the fiscal rules, accept the amendment that we are proposing, and provide assurance to all Members and the outside world that there is no sleight of hand here. We want the Bill to work as they say it is intended to, and to include financially significant decisions, such as on the levels of Government borrowing and the fiscal rules. I would therefore appreciate it if the Chief Secretary to the Treasury confirmed in his wind-up that the Government do not intend to change the definition of debt in their fiscal rules or practise some accounting trick to hide the level of Government borrowing, and that they do indeed wish to be clear and transparent about the public finances. If Labour Members vote against our amendment, it will merely prove that they are planning to change their fiscal rules in the Budget to borrow more money, increase debt, and run away from independent OBR scrutiny—the very opposite of the stated intent of the Bill.
The Chairman of Ways and Means (Ms Ghani)
A very strong maiden speech, without a script in hand—your parents will be proud.
Andrew Griffith
It is a delight as ever to serve under your chairmanship, Ms Ghani. I congratulate the hon. Member for Loughborough (Dr Sandher) on his maiden speech and his kind comments about his predecessor Jane Hunt, a great colleague of this House. It was one of my great pleasures in my previous role as Minister for science and research to visit the fine university he now represents; I wish him and them well, and I wish him all the best of luck with those on his Front Bench in procuring the financial support he seeks.
This is a disreputable Bill, if we are brutally honest. It is a piece of political theatre, which all of us on both sides of this House should think very strongly about giving our support to. This history of this place is of legislation made in haste, which this House subsequently repents at leisure. I say this in all seriousness and in the spirit of this place: at a time when there is low trust in politics, did our constituents—did the hon. Gentleman’s constituents, when they trooped to the ballot box and returned him to this place only weeks ago—seriously expect that our role would be to give away even more of our responsibilities? Can any of us, hand on heart, say that our constituents know what and who the OBR is? Did the electors of Bristol North West, Hampstead and Highgate, Richmond Park or, indeed, Arundel and South Downs send us to this place only to give away our duties and responsibility to the unnamed, unknown and unelected officials—well-meaning, no doubt—of the Office for Budget Responsibility? Hands on the face of a stopped clock are sometimes more accurate than the OBR forecasts, as they are at least correct twice a day for sure.
In truth, this legislation, put together at breakneck speed, has more holes than a Swiss cheese. If we look at clause 1(3), who decides the “costing”? Proposed new section 4A exempts any measure that is intended, at the time of its introduction, to be temporary. Members of this House will be familiar with the fact that income tax itself, one of the largest ever fiscal measures, was intended to be temporary; perhaps the Minister will address that fact when he winds up. Income tax was introduced by Pitt the Younger in 1799 as a temporary measure. Well, here we are, 225 years later, and that temporary measure is still going extremely strong.
Who defines what is and is not a fiscal measure—a measure with a potential impact on the GDP of this country? Many things decided in this House will have a direct or indirect impact on the GDP of this country; the decision by Tony Blair to take us to war without a vote in this House undoubtedly had an impact on our GDP. Decisions to introduce a four-day working week—if this House so chooses to make them, as is its right—would have a material impact on the GDP of this country. The Centre for Business and Economic Research estimates that every bank holiday costs this country a sum approaching £3.6 billion. Three, four, five or six bank holidays add up to a 1% impact on GDP, which I speculate may be the threshold for the OBR to intervene.
On trade deals, if those on the Government Benches fulfilled their ambition to realign with Europe—to federate and once again abrogate our trade to Europe—that would potentially have a material fiscal impact on GDP. There are very few domains of this House—very few of the decisions that our constituents have sent us here to legislate and decide on their behalf—that would not potentially fall foul of this rule.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
I will delight the hon. Gentleman, because, as I am sure he saw on the amendment paper, I have tabled an amendment that would look at trade deals. One of the reasons why I felt compelled to do that, and explore this question that he raises about the economic impact, is that while he was in government and, indeed, a Treasury Minister, the Government did not publish any information for the very trade deals he is talking about. I will always welcome a sinner who repenteth but, for the avoidance of doubt, is he saying that he now believes there should be independent scrutiny of things such as the trade and co-operation agreement?
Andrew Griffith
It is good to have a proper debate. I certainly think that if we want and seek good government—which, like the human condition, is not a perfect state, but a state that we should seek constantly to perfect—the highest levels of transparency and the very important exercise in Government publishing of impact assessments when they make material decisions, as required by Cabinet Office guidance, are things that the whole House should join hands and agree on. It is one of the reasons why I asked my colleague, my hon. Friend the Member for Droitwich and Evesham (Nigel Huddleston), whether the Government had published an impact assessment on their callous decision to withdraw the winter fuel allowance from so many pensioners. The hon. Member for Walthamstow (Ms Creasy) will well know that the process of trade deals undergoes extensive scrutiny in this House, and I took one of those trade deals through that process of scrutiny in a former life.
I will conclude, because I simply want to alert hon. Members to what they are potentially doing as they seek to support this Bill. It is not for partisan or political advantage, but about the important role of Parliament, which has been litigated many times in this Chamber and in debate.
Graham Stringer (Blackley and Middleton South) (Lab)
Unsurprisingly, I have listened to the hon. Gentleman’s speeches on a number of occasions, and I agree with quite a lot of what he is saying about transparency. Does he agree that the burden of his argument is that we cannot make a Government behave better or govern more effectively by quango? This quango was set up by George Osborne to trap an incoming Labour Government and restrict and slow them down, and it is an odd thing that we see this quango being gilded.
Andrew Griffith
As ever, the hon. Member makes an important and weighty contribution. He is exactly right about the direction of travel. On both sides of the House, we will all find our own particular point on the envelope when it comes to the balance around organisations that can hold us to account and, in particular, hold a mirror to Government and ensure that this House acts with the best, most accurate and well-meaning data.
My core point is that we are sent here by our constituents. I again congratulate the hon. Member for Loughborough, who has been sent here on behalf of his constituents and has given a fine speech today, but I do not believe—he may intervene and correct me—that the citizens of Loughborough, whether they voted for Jane Hunt or for him, intended that one of the very first actions he and we would take as legislators would be to award more of our powers and place more fetters on ourselves. This is the right Chamber for accountability. We should hold ourselves to account; we have a number of ways in which to do that to ourselves. The hon. Member for Blackley and Middleton South (Graham Stringer) makes a very real point about quangos, arm’s length bodies and how we hold ourselves to account.
That is my point. I understand that many colleagues wish to get in. I support the amendment put forward by my hon. Friend the Member for Droitwich and Evesham, because it is quite right that we have rules. I was an accountant by training, and the first thing we learn—whether someone is an accountant or in performance sport—is that we play by the rules as they are; we do not seek to rig the rules in our favour.
Ms Creasy
It is a pleasure to speak in the same debate as the maiden speech given by my hon. Friend the Member for Loughborough (Dr Sandher). I am sure other speeches are coming that will show just how impressive the new generation of MPs is across the House.
It is also a joy to follow the hon. Member for Arundel and South Downs (Andrew Griffith), because I have always enjoyed the experience of listening to him. When he was a Treasury Minister in the previous Government, I watched him, debated with him and tried to encourage him to take on the buy now, pay later lenders—that is related to what I will say about legal loan sharking. But I have to be honest: being lectured by former Conservative Ministers about fiscal probity is a bit like being lectured by Toad of Toad Hall about safe driving, given the experiences of many of our constituents, which have led to the need for this legislation.
I put on record my support for this legislation, because frankly anybody who has had to renegotiate a mortgage since the Liz Truss Budget knows exactly why it is needed and why we must protect the British public from the consequences of bad decision making at a national level. As we saw in many examples under the previous Administration, the public have paid the price for that and will continue to do so.
Andrew Griffith
Of course, the legislation does not fetter previous Governments, but it would fetter the discretion of the hon. Lady’s own Front Benchers. In that context, does she not have the same confidence in her Front Bench that many others seem to enjoy?
Ms Creasy
I am a bit disappointed that the hon. Member did not seek to call me Ratty. I am also quite struck by the fact that he, a former Conservative Treasury Minister, rises not to hold himself accountable for the consequences of decisions made by the previous Government, or indeed to defend them, but simply to say, “You will be held to a higher fiscal standard.” We on the Labour Benches welcome a higher fiscal standard; that is the purpose of the legislation. Political decisions will still be made, but we will make them with the benefit of independent information. He will know that there were many debates in the previous Parliament, and indeed in those before it, in which independent information about and verification of the economic impact of policies mattered but were missing. Indeed, he mentions trade deals, which are an example of where we did not have independent information. I will comment on that only briefly, because my amendment has not been selected—he will be as disappointed as I am about that.
Andrew Griffith
The Minister can answer this briefly as well. Could he confirm that he has no plans to change the fiscal rules?
Darren Jones
The hon. Gentleman is enjoying himself, but he knows the answer: wait for the Budget.
The amendments from the official Opposition are therefore not necessary. To answer the question from the shadow Financial Secretary, the hon. Member for Droitwich and Evesham (Nigel Huddleston), as I have been invited to do so, the Chancellor has already confirmed that the Government will set out the precise details of our fiscal rules at the Budget on 30 October, alongside an updated OBR forecast.
amendments 6 and 7, tabled by my hon. Friend the Member for Walthamstow (Ms Creasy), focus on the definition of “fiscally significant” measures to which the fiscal lock will apply. They would extend the definition to include measures that have a cumulative effect on public sector net debt or contingent liabilities. I welcome my hon. Friend highlighting this issue, on which I know she has worked for many years. The draft charter text states that measures will trigger the lock when the combined costing is at least 1% of GDP in any year, and specifically:
“The costing of a measure is the direct impact of a policy decision on the public finances”.
It is difficult to set and interpret a threshold consistently for contingent liabilities as they can often be large in maximum exposure, but low in expected or reasonable worst-case losses. Effective management of contingent liabilities is important, and transparency is key to good fiscal management. The Government plan to announce new significant contingent liabilities at fiscal events to make sure there is transparency with Parliament. We will of course continue to notify Parliament of new contingent liabilities, as set out in “Managing Public Money”.
The amendments would also place a condition on policies with a cumulative impact on public sector net debt, and my hon. Friend noted public-private partnerships as an example. She was referring to PFI and PF2 models, which the previous Government had no longer proceeded with, and there has been no change to this policy. As the Chancellor said in her Mais lecture earlier this year, we will also report on wider measures of public sector assets and liabilities at fiscal events to ensure transparency across the whole balance sheet, which includes non-debt liabilities. Reporting transparently on the Government’s stock of contingent liabilities is key to ensuring we do not take excessive risk. I can therefore confirm today that the Government will publish a report on our contingent liabilities. I expect the contingent liability central capability to do this in early 2025. Having said all that, I recognise the issues my hon. Friend raises, and I will arrange to meet her to discuss them further.
Moving on to the Liberal Democrat amendments, amendment 2 was tabled by the hon. Member for Richmond Park (Sarah Olney). As she said, it would enable the OBR to notify the independent adviser on Ministers’ interests if the fiscal lock was triggered. I remind hon. Members that the purpose of this Bill is to ensure that never again do we find ourselves in a situation, like at the 2022 Liz Truss mini-Budget, in which fiscally significant measures are announced without accompanying OBR analysis. If a future Government were to act in this way, the Bill provides a clear remedy. The OBR is empowered to independently notify the Treasury Committee and to produce its own report. This would be available for full scrutiny by stakeholders and Parliament, which would be able to hold Ministers to account in the normal way. We therefore do not consider the amendment necessary.
Amendment 1, also tabled by the Liberal Democrats, would broaden the definition of fiscally significant measures to cover anything that is likely to have an impact on the cost of Government borrowing, interest rates or economic growth. The Bill is focused on preventing irresponsible large-scale fiscal announcements that could undermine macroeconomic stability, such as at the mini-Budget. To support that, we need clear and robust legal frameworks that ensure the provisions are triggered only when appropriate. This requires precise definitions that everyone, including the OBR in particular, can understand clearly and work with practically. It would therefore not be helpful, in the Government’s view, to have a broader, vaguer definition that might repeatedly trigger the fiscal lock under many different circumstances.
Amendments 3 and 4 would require the Treasury to consult the OBR and the Treasury Committee before the charter can be updated for the purposes of the fiscal lock, and to publish a report on the outcome of any such consultations. It is of course important that the views of the OBR and of Parliament are taken into account when making changes to the charter. However, I hope the hon. Member will accept that it will not be necessary to set out this specific process in primary legislation, because the Bill already includes an important safeguard on the fiscal lock, which is the requirement that any changes to the charter for budget responsibility are published in draft at least 28 days before they are laid in the Commons. That will ensure that the OBR, the Treasury Committee, this Parliament and all stakeholders will have a clear opportunity to make representations to the Treasury and to publish their views, as they see fit.
Amendment 5, tabled by the hon. Member for North Herefordshire (Ellie Chowns), would require the OBR to take net zero targets into account when preparing a report on fiscally significant announcements. Strong legal frameworks are already in place in the Climate Change Act 2008 to support the transition to net zero in 2050. The Act legislates for interim five-year carbon budgets, and requires the Government to report on those periodically. Parliament and its Select Committees already scrutinise that in great detail. The Green Book, the Treasury’s guidance on how to appraise policies, projects and programmes, requires Departments to assess the climate and environmental impacts of policy proposals, with major bids and proposals at fiscal events being assessed accordingly in that way. We therefore do not consider the amendment to be necessary.
Treasury
Andrew Griffith Excerpts(1 year, 8 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Andrew Griffith
I am also happy to give my right hon. Friend the assurance that she seeks. She has been very patient and tolerant. I understand her and her constituents’ frustrations, but there will be no further delays. After having consulted earlier this year, we intend to look at how we can improve and reform the anti-money laundering procedures.
[Official Report, 18 October 2023, Vol. 738, c. 120WH.]
Letter of correction from the Economic Secretary to the Treasury, the hon. Member for Arundel and South Downs (Andrew Griffith):
An error has been identified in my response to the debate secured by my right hon. Friend the Member for Rochester and Strood (Kelly Tolhurst).
The correct response should have been:
Andrew Griffith
I am also happy to give my right hon. Friend the assurance that she seeks. She has been very patient and tolerant. I understand her and her constituents’ frustrations, but there will be no further delays. Through consultation this year, we intend to look at how we can improve and reform the anti-money laundering procedures.
Public Sector Exit Payments (Limitation) Bill
Andrew Griffith ExcerptsFriday 20th October 2023
(1 year, 8 months ago)
Commons ChamberRead Full debate Public Sector Exit Payments (Limitation) Bill 2022-23 View all Public Sector Exit Payments (Limitation) Bill 2022-23 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Economic Secretary to the Treasury (Andrew Griffith)
Thank you, Mr Deputy Speaker, and I thank my hon. Friend the Member for Christchurch (Sir Christopher Chope) for raising this important topic. If I may say so in passing, we did not debate today his thoughts about children’s clothing, but I am very happy to meet him about that on behalf of my Treasury colleagues.
My hon. Friend and indeed I and all my colleagues believe passionately in people keeping more of what they earn. To do that, we need to ensure that Government money is spent as if it is our own. We need to ensure it is always spent prudently and delivers the maximum return possible for ordinary taxpayers. It is also true, and I hope he would join me in recognising, that many of our public sector workers are a source of real pride to this country—from our healthcare workers in the NHS to our armed forces on the front line and those local government officials who do such important work for our local communities. Their services are paid for by the taxpayer, and indeed they are taxpayers themselves, and all of us seek to take a responsible and balanced approach to the conditions offered to public sector workers. We as a Government have sought to do that in every pay round. For the 2023-24 round, we accepted the headline pay recommendations of the independent pay review bodies in full for the armed forces, teachers, prison officers, the police, the judiciary, medical workforces and senior civil servants. For most workforces, accepting these recommendations has resulted in the highest pay uplifts for three decades, providing a fair reward for workers and a fair deal for taxpayers and employers alike.
Exit payments, such as for redundancy, are an aspect of this. They help employers to make necessary organisational change, just as regularly happens in the private sector, and they support individuals and uphold employment law as they leave employment. However, my hon. Friend is absolutely right that the taxpayer ultimately foots the bill for these individual payments. They can be many times larger than average earnings elsewhere in the public sector, and it is absolutely right—I hope to have support for this across the House—that we look at how fair and how proportionate these payments are, particularly at a time when it falls to the Government to make difficult but responsible decisions about the public finances. The Government share his concern about the overall level of spending on exit payments, particularly the number of very large exit payments made to individuals in recent years. That is why we are committed to limiting large exit payments and making provision for the recovery of those payments when that is appropriate.
Philip Davies (Shipley) (Con)
Can the Minister also give an assurance that large exit payments will never be agreed for public sector workers facing disciplinary proceedings who choose to leave instead of facing those disciplinary proceedings? Can he assure me that no big exit payments will be given in those circumstances?
Andrew Griffith
I thank my hon. Friend, who is a doughty champion of the value of taxpayers’ money, and he makes a very important point. The commitment I can give goes rather more broadly than that, which is that the Government will seek to make sure that any exit payments always offer value for money and that every pound of taxpayers’ money should be well spent. In responding ultimately to the consultation that the Government conducted almost a year ago, I will ensure that the point he raised is fully addressed.
Sir Christopher Chope
My hon. Friend says that the Government are committed to doing something, but we are now in 2023, and it was in 2015 that the Government first resolved that something must be done about obscenely high public sector exit payments in excess of 95k. In the intervening period, the Government have been all over the place, and I wonder whether the Minister could tell me the result of the most recent action, which was a consultation paper in August 2022. The closing date for that was 17 October 2022, more than a year ago. What has happened to that?
Andrew Griffith
My hon. Friend makes a fair point about the pace with which the Government have been able to proceed. I will write to him, following his important intervention, with the latest on the prognosis for that. I hope he will also recognise that it is not correct to say that the Government have done nothing. The Chief Secretary to the Treasury, my right hon. Friend the Member for Salisbury (John Glen) is, as we speak, leading an important piece of work about productivity across all public sector spending. All my colleagues in government are endeavouring every day to ensure that every pound of Government money is well spent. My hon. Friend will recall—this is why it is so important to get this right—that past attempts have not always delivered the desired results.
In 2020, the Government laid legislation—notwithstanding his own prolific endeavours on this, I know that my hon. Friend is not in general a big advocate of the Government constantly legislating—but in 2020 the Government legislated to introduce a cap on payments. That was subsequently withdrawn following unintended consequences, and the risk of overriding and conflicting with people’s contractual entitlements. Let me be clear: my hon. Friend is absolutely right in his intention.
Sir Christopher Chope
The Minister says that he will write to me—I always love receiving letters, particularly from him—but the Government have known that this Bill has been on the Order Paper. It was introduced in June last year, and in August last year the Government issued a consultation paper and said, “Everybody must respond to this paper by 17 October 2022”, thereby indicating some sense of urgency. What has happened to the response to that consultation? Surely the Minister can give an answer now, rather than saying that he will write to me later.
Andrew Griffith
As so often is the case, it is sometimes better to be right than to be quick. Given that the Government absolutely understand and share my hon. Friend’s concerns, it is much better that when they bring forward that response to the consultation, we celebrate. I acknowledge today the first anniversary of the closing date for that, and it would indeed be unfortunate for there to be a second anniversary. Notwithstanding that, it is not the case that the Government are not making progress on this matter, and if my hon. Friend really supports the cause that he has so nobly championed over so many years, chronicling the period since 2015 that he talked about, we must do it right. We are dealing with a complex interplay between existing public sector arrangements, consultation with impacted bodies, including the unions, and the potential role of legislation. I said I will write to my hon. Friend. He will have to contain his excitement as to the specifics of my letter, but it will follow in due course.
Sir Christopher Chope
Only “in due course”—it is not being promised for next week, even. Perhaps it will be next year sometime? Will my hon. Friend accept my interpretation of what has happened, which is that we have had eight years since the Government committed to doing this, and the score now is eight to the blob and nil to the ordinary people of this country, who are the taxpayers.
Andrew Griffith
I will not accept that construction, but what I will accept is my hon. Friend’s entreaties that every day it is the duty of this Government—indeed, it is the proud philosophy of this party—to spend taxpayers’ money wisely. There are many, many ways in which we can do that. I have referred to the productivity review by right hon. Friend the Chief Secretary. Local government has a significant responsibility. Local government was not in scope of that consultation, but separate guidance has been given to local government, and it is the duty of us all to ensure, for example, that the many arm’s length bodies that are so important to the delivery of government in this country are entirely responsible with their pay arrangements. The Government have also separately legislated and taken action to curtail the use of non-disclosure agreements and confidentiality agreements that prevent the transparency of daylight and oxygen intruding into this space, and that is an important measure, too.
To conclude—unless my hon. Friend the Member for Christchurch wants to intervene further—this is a very important topic. The Government and my hon. Friend are at one in terms of the destination. I understand that he would like more velocity in reaching that destination. As I say, not only will I write to him, but I am happy to meet him or other colleagues on this important Bill that seeks to achieve the right balance of fairness between those who serve our community in the public sector and protecting the interests of the taxpayer.
Business Banking: Undesignated Client Accounts
Andrew Griffith Excerpts(1 year, 8 months ago)
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The Economic Secretary to the Treasury (Andrew Griffith)
It is a pleasure to serve under your chairmanship, Mrs Cummins. I thank my right hon. Friend the Member for Rochester and Strood (Kelly Tolhurst) for highlighting this important issue. She has been tenacious, and I convey my distress at the frustration suffered. The industry is an historic one and is important to us. She and I have worked together in the past to support the small and medium-sized enterprises of this great nation, but not until today had I realised the importance of the yacht broking industry. I also know about her passion for sailing, which is reflected in her role as patron of the Medway and Swale Boating Association. I am sure that all her members are metaphorically, and probably physically, cheering her on today. I reassure her that I share her concern about the issue.
Earlier this year the Treasury requested that the FCA lead a review into the wider matter of de-banking, to ensure that the sector was not overreaching itself through the unfair denial of banking services—in one case, based on a customer’s political beliefs. That is not the matter before us, but it highlights my concern, and the action that I took then is replicated when we find other instances in the financial sector. A bank account, as we know, is a vital part of the way in which we operate in society.
We try to get the balance right with a commitment, which I know my right hon. Friend understands, to tackling illicit finance. It is important that we get that balance right and do not put a disproportionate burden on legitimate businesses and customers. Indeed, the world of financial regulation is fraught with well-intentioned regulations that nevertheless have deleterious unintended consequences. This is an example. Pooled client accounts have many virtues. They protect customers so that when a firm fails, their deposits and moneys are segregated. They are a vital part of how we protect consumers. It is a concern that we see banks perhaps having a misperception about the risk of those accounts and the regulation.
It is wrong—I am happy to share this with my right hon. Friend—to say that pooled client accounts are not eligible for simplified due diligence. Last year, my predecessor wrote to the chair of UK Finance, the relevant industry body, to reiterate the importance of that when it came to looking at the Joint Money Laundering Steering Group, the industry group that deals with that. My predecessor convened a roundtable with banks and the Association of Brokers and Yacht Agents to help to develop and improve mutual understanding and iron out the issues.
Banks can apply simplified due diligence to pooled client accounts where they assess the risk of money laundering and terrorist finance to be low. My right hon. Friend gave us some really good examples of that. I am not sure that there are many Russian oligarchs sailing up and down; delightful though Medway and Swale Boating Association is, I am not sure it is the destination of choice for illicit ill-gotten gains. We will, at my right hon. Friend’s urging, continue to work to improve the guidance notes and work with the industry to make sure we can achieve the objectives that she talks about.
I am also happy to give my right hon. Friend the assurance that she seeks. She has been very patient and tolerant. I understand her and her constituents’ frustrations, but there will be no further delays. After having consulted earlier this year, we intend to look at how we can improve and reform the anti-money laundering procedures. As I say, we are dealing here with the law of unintended consequences. I believe that we can reconcile both objectives through better guidance and greater clarity and, where necessary, adjusting the regulations.
My message to those banks and financial intermediaries is that they should continue to engage. I know that they also do so with my noble Friend Baroness Penn. I hope that by so doing, and with that collaborative approach, we will “chart a route”—someone has been getting creative—to an effective resolution that steers us into calmer waters and that, once we are through this, it will be plain sailing.
Question put and agreed to.
Local Bank Branch Closures
Andrew Griffith Excerpts(1 year, 10 months ago)
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The Economic Secretary to the Treasury (Andrew Griffith)
I thank the contributors on both sides of the House, including my hon. Friends the Members for Dewsbury (Mark Eastwood) and for Broxtowe (Darren Henry), and of course the hon. Member for East Dunbartonshire (Amy Callaghan) for securing this debate, which has rightly given her constituents a voice on something that they feel very strongly about. I know there is real strength of feeling across the House about this subject, but it falls to me to be clear that the nature of banking is changing.
As in so many other areas of the modern world, the long-term trend, whether we like it or not, is towards greater use of digital or telephone services. According to UK Finance, last year only a third of UK adults had carried out any banking activities face to face in a branch. The hon. Lady talked about Kirkintilloch, but 94% of those who use that branch also use the app, mobile or telephone services. The bank asserts—whether this is right or not I do not know—that fewer than 10 people were regularly using the branch. In the same period of time last year, nine out of 10 UK adults banked online or through a mobile app. More than nine in 10 of us are now using contactless payment methods, including throughout this House, and only 6% of people are now solely using cash. That is not limited to any particular demographic: 80% of adults aged between 65 and 74 use online and mobile banking as well, and less than a third of that age group regularly use a branch.
Peter Grant
Given that the Minister and most of his ministerial colleagues are so fond of online services everywhere else, can he explain why in these first two days back in Parliament Members have spent about three hours doing nothing while trooping through the Lobbies to vote when we could have on voted online in about two minutes flat? Why is doing things in person the right thing to do here but the wrong thing to do everywhere else?
Andrew Griffith
In the interest of time I will stick to the topic, but I am delighted that the hon. Member is here in person, as indeed are you, Mr Deputy Speaker.
Change is not comfortable, but it does happen. Let us consider payphones. It would not surprise me if Hansard had records of similar debates about the decline of payphones. At one point, at their peak in the 1990s, there were almost 100,000 payphones in this country. Today there is just a fraction of that number. Technology has moved on, and nearly everybody has access to either a landline or a mobile phone.
By the same token, it would make little sense to force a business to keep a physical branch open when developments in the market mean that eyeballs and footfall have moved elsewhere. Nor would our high streets be particularly well served by bank branches gathering dust and lying essentially unused. We need to find new uses for them—perhaps the aspiration of the hon. Member for East Dunbartonshire for independence will produce new uses for these bank branches—in the same way that so many of our communities and villages today have a Blacksmith’s Arms public house.
Brendan O’Hara
What responsibility, if any, does the Minister think the Government have for these closures? This idea that we can all be digital by default might work well in London, Glasgow, Edinburgh or wherever, but digital by default does not work in rural communities. There needs to be a solution for those who cannot access these systems, as he would have us all do.
Andrew Griffith
This Government take responsibility, and I was just about to explain how, for the first time, we have taken the statutory right to protect the use of cash. That has been on the statute book for a number of weeks after the House passed the Financial Services and Markets Act 2023. It is also why we support the very rigorous guidance given by the Financial Conduct Authority in cases where bank branches are closing.
Andrew Griffith
I will take an intervention. We are on the Adjournment and should be mindful of time.
Jim Shannon
Rural communities are probably the larger part of my constituency, and I have lost 12 or 13 rural banks. Every one of them was a focal point for customers, which hits on the important point made by the hon. Member for Argyll and Bute (Brendan O’Hara). At the same time, every one of those banks has made extra profit and extra fees, which just does not add up. Why not keep them open and share some of that dividend with all the customers who need the banks?
Andrew Griffith
The hon. Gentleman is working his way towards one of the potential answers. Colleagues have mentioned the banking hubs. When a bank seeks to close a branch, the FCA process normally includes consultation with the local Member of Parliament. The financial sector now has a consumer duty to think about putting customers’ needs first, which is one of their weighty duties. As we deal with this significant change, a number of alternatives are in place. One is the local post office, and I believe there are still nine post offices in East Dunbartonshire. As the banks’ business traffic coalesces, they can help to support the economics of a post office in a particular area. That is one opportunity. Some 99% of personal banking customers can transact in their local post office, and there are over 11,000 post offices across the United Kingdom.
Drew Hendry
A few moments ago, the Minister mentioned the Government’s move to protect the right to use cash. What is the point of that right if people cannot access cash in their community?
Andrew Griffith
I do not know whether the hon. Gentleman is deliberately failing to understand, but the protection of access to cash and the ability to deposit cash—that is important if we want businesses to continue to use and accept cash—has a requirement that people will have easy, convenient access to a free ATM within 3 miles in rural areas and within 1 mile in urban areas. That is the guidance we issued a matter of weeks ago.
Andrew Griffith
I will take one final intervention, but hon. Members would learn more if they allowed me to make some progress.
Chris Stephens
I thank the Minister for being most generous; as he knows, I have been trying to intervene for a while. There is an important issue about free ATMs and those that charge. Is he monitoring that? When a branch closes, there is clear behaviour whereby the ATMs around and about start charging.
Andrew Griffith
I would be interested to see evidence of that. The paid-for ATMs simply do not count in any way towards the provision of free access to cash. In the constituency of the hon. Member for East Dunbartonshire, there are 51 free-to-use ATMs. Only those, not the ones that charge for withdrawals, will count towards that condition of making sure our communities have decent and continued access to cash.
I understand that access to cash is just one thing and that an ATM does not provide the full range of banking services—the post offices do—but we have started to talk about banking hubs and more than 80 have been announced to date. I know that relatively few have been delivered but they are a relatively novel feature. If hon. Members who are to have a banking hub would like to see that delivery, they should work with their local planning authorities, as the biggest single impediment to opening these new banking hubs is getting through the planning process. I know that my right hon. Friend the Member for Pendle (Andrew Stephenson) is looking forward to a banking hub in his constituency. I made it a priority earlier this year to visit London’s first banking hub, in Acton, and I recently visited the Brixham hub. The hon. Member for Ealing Central and Acton (Dr Huq) is certainly not a Conservative, but I will be happy to work with colleagues to put in place these state-of-the-art hubs, which allow people not just to withdraw and deposit cash, but to carry out a much wider range of community banking services. That is very important.
Amy Callaghan
If the Minister wants to grow the frustration, that is fine; it feels as though that is becoming a common pattern. It feels as though the Government and the Minister are trying to place this into the hands of everyone else to deal with and that there is a lack of Government intervention to try to solve this problem.
Andrew Griffith
Nothing could be further from the truth. This Government have, for the first time in history, legislated for citizens of this country, including our good friends in Scotland, to have a legal, statutory right to access to cash. Moreover, we have brought forward the practical, sustainable alternative of banking hubs, to protect the ability of communities to access a wider range of banking services. We have conducted agreements for almost every bank in the country and in Scotland to be able to conduct their business through the post office network, thereby helping and saving the post offices in the communities too.
I think I have been clear. I understand that change is happening and people are not always comfortable with change. We are in the middle of a big technological shift. We all agree that people should have access to good-quality banking services. I contend that the Government are taking the appropriate action and taking this matter extremely seriously.
Question put and agreed to.
Oral Answers to Questions
Andrew Griffith Excerpts(1 year, 10 months ago)
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Fleur Anderson (Putney) (Lab)
The Economic Secretary to the Treasury (Andrew Griffith)
Over the course of 2022, high inflation from Putin’s illegal invasion of Ukraine saw interest rates increase across most western economies. The path to lower rates is through low inflation, which is why the Prime Minister made halving inflation one of our five priorities for this year. I am pleased that the latest Bank of England forecast shows that we are on track.
Fleur Anderson
Mortgage and associated rental costs are soaring in Putney, Roehampton and Southfields, and the Government like to claim it is all due to global shocks or the war in Ukraine, but the latest Bank of England data from July shows that the cost of lending to buy a home remains higher in the UK than in Germany, Italy or France. Will the Minister finally concede that this difference is because those countries did not have the devastating growth plan or mini-Budget last year, and that it is because of this Government’s wider economic failure that my constituents face these costs?
Andrew Griffith
I am glad that the hon. Lady’s constituents, among many others, will benefit both from our mortgage interest support and from there being almost double the number of mortgage products on the market now than in October 2022. I repeat the comment of my colleague, the Exchequer Secretary to the Treasury: if the hon. Lady is so worried about her constituents, what better way of helping them with the cost of living than to do away with the Mayor’s ULEZ tax?
Anthony Browne (South Cambridgeshire) (Con)
In the UK, homebuyers are overwhelmingly dependent on short-term fixed rate mortgages of just two, three or five years, which means that in times of rising interest rates, as we have at the moment, they are hard hit by massively increasing mortgage bills. In most other countries, homebuyers have long-term fixed rate mortgages of 10 or 20 years, or of the entire length of the mortgage. Does my hon. Friend agree that the regulators should ensure a level playing field between short-term and long-term mortgages to give homebuyers a free choice of the sort of mortgage they want, so they can choose to have greater protection against rate rises if they want?
Andrew Griffith
My hon. Friend has great knowledge of these matters. It was a privilege to work with him and the sector on how we can offer consumers and homebuyers more choice. That choice includes the opportunity of long-term fixed-rate mortgages, and my officials and I continue to work on how we can reduce frictions and barriers to those mortgages.
Darren Jones (Bristol North West) (Lab)
It is estimated that 140,000 households will face a rise in their mortgage bills this month. If someone in a random constituency, say Mid Bedfordshire, were to remortgage their house in the next six months, they could pay an average of £300 more per month compared with before the disastrous Tory mini-Budget this time last year. What can the Chancellor and his team do to reassure the country that, if the Conservatives were to win the next election, they would not just mess up the economy all over again?
Andrew Griffith
I am sure the constituents of Mid Bedfordshire will be very pleased to know that more than 90% of mortgage providers have signed up to our mortgage charter, which offers the opportunity for relief, to term-out mortgages and to have interest-free periods, if they face adversity at this time when interest rates are high across the world. What will not help the constituents of Mid Bedfordshire is unfunded spending promises that we know will push up the cost of borrowing and defer the point at which inflation falls.
Darren Jones
That is a bit rich from the Government, and it is no answer whatsoever to the people of Mid Bedfordshire who will not be able to afford to pay their bills over the coming months. It is one year ago today that the former Tory Prime Minister took a huge ideological gamble and sabotaged Britain’s economy. They crashed the pound, put pensions in peril and exploded a Tory mortgage bombshell under the homes of millions of working people. Will the Minister take this opportunity to apologise to the British people, on behalf of the Conservative party, for wrecking their hopes and aspirations?
Andrew Griffith
I welcome the hon. Gentleman to his position. He has had a feisty morning reading his Walworth Road brief. Let me offer him the opportunity to correct the record, because Labour has spent the past 12 months talking down our economy but it is now larger than it was when we entered covid and it has recovered and grown faster than the economies of both France and Germany.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Marco Longhi (Dudley North) (Con)
The Economic Secretary to the Treasury (Andrew Griffith)
The Government have been clear that debanking customers on the basis of political views is unacceptable. During recess I met banking executives to discuss debanking and lawful freedom of expression, and they have committed to comply with the changes I published on 21 July. In parallel, the Financial Conduct Authority is conducting an urgent review of debanking practices, which will report back to the Chancellor in the next couple of weeks.
Marco Longhi
Last week the Met Police chief finally seemed to confirm that the job of the police should be to police and not to seek to align themselves with entities or ideologies. Does the Minister agree with me that banks and the corporate world should follow that example and focus their efforts on their core business, rather than play the sinister cancelling agenda of the woke brigade that saw Nigel Farage have his account wrongfully closed?
Andrew Griffith
My hon. Friend represents the views of his constituents in this place clearly. He is quite right; although they are private entities, banks benefit from a privileged place in society and they should focus on doing their core functions brilliantly, treating customers fairly and making a sustainable return for shareholders, rather than taking sides on politically contentious matters.
Jim Shannon (Strangford) (DUP)
Today it is because some people may have a different political view; tomorrow it could be the fact that someone has a different religious viewpoint. I am a Christian, and as chair of the all-party parliamentary group for international freedom of religion or belief, I stand up for those with Christian beliefs, those with other beliefs and those with no beliefs, because I believe sincerely that they have a right to have that belief. If ever the day came when banks censured anybody because they had a different religious belief, I would stand up against that. Does the Minister agree?
Andrew Griffith
Let me be clear: yes, the Government agree with that. No one should be debarred from access to banking facilities in our society because of a lawfully expressed view. If he and other hon. Members wish to make representations, the Financial Conduct Authority is currently conducting a review of this matter.
Caroline Ansell (Eastbourne) (Con)
Nigel Mills (Amber Valley) (Con)
The Economic Secretary to the Treasury (Andrew Griffith)
At Mansion House, the Government presented a series of pension reforms that will increase returns for savers and enable the financial sector to unlock capital for some of the UK’s most promising industries. The Department continues work to build on the initial package of measures and will set out further details in the autumn.
Nigel Mills
I thank the Minister for his answer and welcome those measures. Have the Government considered what more can be done to unlock surpluses in defined-benefit schemes to allow employers to use that money more effectively, rather than having it end up going into insurance companies on buy-outs? There is a huge tax penalty on unlocking surpluses. Is there a way of relieving that to encourage the money to be invested more efficiently?
Andrew Griffith
My hon. Friend makes an important point. With the right precautions, it is right that we look at that to incentivise employers to deliver the highest returns for pension savers.
Stephanie Peacock (Barnsley East) (Lab)
The Government have to date taken £4.4 billion from the mineworkers’ pension scheme. The then cross-party Business, Energy and Industrial Strategy Committee concluded that the Government should not be “profiting from mineworkers’ pensions.” How does the Secretary of State justify their continued profiteering?
Andrew Griffith
I am not familiar with the issue that the hon. Lady speaks about. I would be very happy to meet her to understand it in more detail.
Katherine Fletcher (South Ribble) (Con)
Craig Tracey (North Warwickshire) (Con)
The Economic Secretary to the Treasury (Andrew Griffith)
During the summer, we announced that we have given directions to the Financial Conduct Authority in respect of access to cash: it should be no more than 1 mile in an urban area, and no more than 3 miles in my hon. Friend’s rural constituency of North Warwickshire. That is the first time that the statutory right of access to cash has existed in law.
Mary Glindon (North Tyneside) (Lab)
Caroline Lucas (Brighton, Pavilion) (Green)
Will the Chancellor consider introducing a windfall tax on banks’ excess profits? The profits of the big four banks for the first half of this year were up 700% compared with 2020, yet the Bank of England is forecast to pay out as much as £42 billion in interest on reserves to banks in 2023, at the same time as the Government have cut the level of surcharge on banks’ profits by 60%.
Andrew Griffith
With millions of British jobs dependent on financial services, including an estimated 20,000 jobs in Brighton and Hove, I hope the hon. Lady will join me in celebrating a sustainably profitable financial sector. It is only that that gives us the ability to invest in skills and technology.
Harriett Baldwin (West Worcestershire) (Con)
Will the Economic Secretary update the House on the progress he is making to enable our constituents to access personalised financial guidance if they are among the 93% of our constituents who cannot afford regulated financial advice?
Andrew Griffith
My hon. Friend, the Chair of the Treasury Committee, makes a really important point about what is called the advice gap. Treasury officials, the FCA and I are consulting on that, and I will publish an update this autumn.
Richard Thomson (Gordon) (SNP)
It has been revealed that Integrated Debt Services, a company set up by the UK Government to recover personal debt, saw its profits increase by a staggering 132% last year. Do Ministers think it is right that this company should be able to profit to that extent out of the misery of the cost of living crisis?
Sir Stephen Timms (East Ham) (Lab)
I welcome the new focus on engaging pension funds with productive investment, after many years when regulation has pushed the funds into Government gilts instead, but does the Minister have proposals specifically to secure those investments for UK businesses rather than their going overseas?
Andrew Griffith
The right hon. Member makes a significant contribution to the debate about the nation’s pension funds. Our objective to increase investment—to drive increased returns for pension savers, but also to benefit the wider economy—stops short of mandating. There is a philosophical difference between this side of the House and the Opposition. We do not believe it is right for the Chancellor to tell pension funds where to invest, but it is our job to knock down barriers, frictions and impedances to pension funds investing in brilliant British companies.
Mr David Davis (Haltemprice and Howden) (Con)
The Economic Secretary told my hon. Friend the Member for North Warwickshire (Craig Tracey) that he is going to underwrite the statutory right of access to cash, but 6,000 bank branches will have closed by the end of the year, leaving only 4,000 in place, and 15,000 ATMs have closed in the last five years. How is he going to make sure that this actually happens, rather than it just being an empty promise?
Andrew Griffith
The FCA has significant sanctions in respect of the closure of ATMs that would leave communities without the right of free access to cash. On the closure of bank branches, we are seeing a significant change, and I hope my right hon. Friend would respect the fact that technology is changing and consumer patterns are changing. During the recess, I had the privilege of visiting the excellent community banking hub in Brixham, which I think is a brilliant opportunity. There should be more than 100 on their way, and that is my objective.
Mr Gregory Campbell (East Londonderry) (DUP)
Does the Chancellor accept that many people see income tax rates at the moment as exceptionally punitive, and does he also accept that there is a need to move as quickly as possible into a growth-based economy and to supercharge our economy in the United Kingdom?
Bob Blackman (Harrow East) (Con)
As we want to expand our financial services industry not only in this country but abroad, we need to build confidence among consumers that the right thing to do is invest. Does my hon. Friend therefore agree that it is vital that regulators respond to and deal with complaints to them and actually impose sanctions against those who breach the regulations?
Andrew Griffith
Yes, I agree with my hon. Friend on this matter. It is one reason why we have beefed up the role of the financial regulators review commissioner, and we will also be requiring the regulators to publish regular operating metrics on their performance, to give consumers the trust they need.
Nick Smith (Blaenau Gwent) (Lab)
Back in 2017, both the Treasury and the Financial Conduct Authority knew there were problems with the prepaid funeral plan market. Since then, my constituent Gary Godwin of Nantyglo lost over £6,000 to the collapse of a company called Safe Hands. Across the UK, thousands more have lost millions of pounds altogether. Will the Minister please meet me to discuss this scandal and Mr Godwin’s case?
Andrew Griffith
Yes, I will be very happy to meet the hon. Gentleman. What happened with Safe Hands is a scandal, and that is why we have enlarged the regulatory perimeter to bring those who seek to sell funeral plans within the regulatory conduct.
Stephen Crabb (Preseli Pembrokeshire) (Con)
Over the summer ports have been bidding to the Government’s infrastructure fund to help them get ready for the delivery of the new floating offshore wind industry. May I encourage Ministers to look favourably on the bids from the Celtic sea ports of Milford Haven and Port Talbot, because those two ports are key to unlocking the enormous economic benefits of this new clean energy industry?
Credit Unions and the Cost of Living
Andrew Griffith Excerpts(1 year, 11 months ago)
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The Economic Secretary to the Treasury (Andrew Griffith)
It is a pleasure to serve under your chairmanship, Dr Huq. I congratulate the hon. Member for Livingston (Hannah Bardell) on a thorough and thoughtful contribution to this subject. She said that one of her objectives was to raise awareness, and she should feel that she has fully achieved that. I also congratulate the West Lothian Credit Union, which I understand will be celebrating a quarter of a century since its establishment this year. All my colleagues in the Treasury and I send our congratulations to that very important institution, which does great work.
As the Economic Secretary, I am committed to supporting the credit union sector. From helping people to set aside savings—the hon. Member talked about the work done with employers as well as in schools to help to promote the savings habit—to probably its most vital role of offering credit at affordable rates, the Government really value the unique role played by credit unions for all their members, and particularly the financial inclusion agenda. The reach of credit unions is significant. There are 385 of them—not quite enough for one for every constituency, but would that not be lovely? I share the hon. Lady’s goal of having more credit unions, seeing those we have being even more successful and wanting to grow the number of users. There are 83 in Scotland, which, in this respect, is punching above its weight. Together, credit unions represent more than 2 million members and have assets of more than £4.5 billion.
The hon. Lady is right that recent cost of living challenges have proven that the trust placed in the credit union sector by their members, the Government and regulators is well deserved. That trust will be vital as people across the country continue to face cost of living pressures and must stretch every pound as far as possible. People’s money needs to work hard for them.
We know that there are global challenges, and we are not alone in facing challenging levels of inflation: in May, core inflation was higher in more than half of the countries in the EU than in the UK. Inflation erodes living standards for households, and particularly for the most vulnerable in society. That is why it is right that the Government continue to make it one of our priorities—this is one of the Prime Minister’s priorities—to halve inflation by the end of the year, and we will not hesitate to do what it takes to achieve that. Access to affordable, inclusive credit, such as that provided by credit unions, can make a real difference.
Hannah Bardell
Does the Minister agree that when the chips were down during the financial crisis of 2008, the Government had no choice but to step in and save the banks, but that it is now time for the banks to step up and help people who need to borrow and those who need help?
Andrew Griffith
The hon. Lady is right that people need help. Across the House, we all support that. The Chancellor has made it very clear, with the mortgage compact and in the conversations that he and I have had with all of the banking sector, that now is the time to ensure that people have fair products and that, wherever the banks are able to do so, they pass on the benefits of that.
That is one reason why it is important that we have genuine diversity and competition in the sector. Credit unions play such an important role, alongside co-operatives, mutuals and other forms of financial institution, because they are often rooted in place, people or the community. The Government are firmly on the side of credit unions, and I will try to support them. We are taking action to help them wherever there are legislative levers, although they are not the only answer. We amended the Credit Unions Act 1979 through the Financial Services and Markets Act 2023 to allow credit unions across the United Kingdom to offer a wider range of products and services. That allows them to grow, diversify, build their resilience and offer more products to their customers.
We set out Vision 2025, in consultation with stakeholders, to deliver on the sector’s priorities. That includes such things as offering hire purchase agreements, conditional sale agreements and distributing insurance services. The hon. Member for Livingston said that the West Lothian Credit Union offers funeral plans. Many people want to access that sector to give them some peace of mind, so I was genuinely interested to hear that. I will ensure that we seek the right legislative framework for that.
The 2023 Act also makes amendments to support best practice in corporate governance, including a legal requirement for credit unions to submit annual accounts to the Financial Conduct Authority. It gives credit unions permission to temporarily lend to or borrow from each other. That is about designing more financial resilience for a sector that we are on the side of and want to see grow.
The hon. Lady mentioned a number of initiatives. We are providing Fair4All Finance—that little tongue twister—which is an independent not-for-profit organisation, with significant amounts of money from the dormant assets funds. We are piloting no-interest loan schemes—another product that will be delivered hand in hand with credit unions. Credit unions, with their roots in the community and communities of interest, are a very good way of delivering that, and I will continue to work with them. There is about £145 million, in aggregate, from the dormant assets scheme.
The hon. Lady also talked about financial literacy, and a key priority as we go forward is what we can do about the real challenges of that. Wherever possible, it makes sense to work upstream and try to tackle problem debt before people get into it, because it can be a terrible place to be trapped. We are doing a lot of work on that.
Finally, as well as providing credit, credit unions are obliged to focus on financial inclusion. They have a role of advocacy in helping their members to take steps to accumulate savings. Even a small amount of savings can provide the resilience for exactly what the hon. Lady talked about: unexpected bills, white goods that fail, or perhaps the cost of a child’s uniform and a school trip falling in the same month. Even a small amount of savings can help to build financial resilience, and the Government are very supportive of that. We have the Help to Save scheme to try to help those in work and on universal credit to build a savings habit, and obviously the ISA programme is a strong part of that. Again, credit unions distribute cash ISAs as a very simple product that does not get anybody into difficulties with their tax.
I thank and congratulate the hon. Lady and those who contributed to the debate, including the hon. Member for Barnsley East (Stephanie Peacock). Across the House, we can always challenge ourselves to do more on this issue.
Stephanie Peacock
The Community First Credit Union in my constituency raised some issues with me about the operation of the eligible loan deduction scheme by the Department for Work and Pensions and some of the work that the Government do with credit unions. I wonder whether I could write to the Minister, because he might be able to look into some of those issues for me.
Andrew Griffith
I would be happy to do so. I support anything that removes a point of friction and allows credit unions to do their important work. Regardless of whether it is me or one of my colleagues in the DWP, we will certainly take that forward and do what we can to support the hon. Member.
We value the work of credit unions. In seeking this debate, the hon. Member for Livingston has built a good level of awareness, and there is consensus that we can and should do more. That is the Government’s policy, and we are very keen to engage with the sector. Maybe one day there will be an opportunity to meet or have a call with the wonderful West Lothian Credit Union, and I am certainly happy to do so. The hon. Lady has done a magnificent job of putting the credit union on the Treasury’s radar, and I will be interested in following its continued success over the years.
Question put and agreed to.
Covid-19 Pandemic: Fiscal Policies
Andrew Griffith Excerpts(1 year, 11 months ago)
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The Economic Secretary to the Treasury (Andrew Griffith)
I congratulate the hon. Member for City of Durham (Mary Kelly Foy) on securing this evening’s debate.
In debating the Government’s fiscal policies, as in so many things, it is all important to set out the context. When the Government were first elected, it was in the immediate wake of the global financial crisis. It was also after we inherited a situation that had led to the Labour Chief Secretary to the Treasury leaving a note—we all remember that note—that said, “There is, I am afraid, no money left.”
In the years preceding the covid-19 pandemic, the Government’s fiscal strategy—the only fiscal strategy—was to reduce the deficit and debt that Labour had left us. As a long-standing finance director myself before coming to this place, I know that Government need to live within their means and show responsibility when entrusted with people’s hard-earned money. That was the time to repair the nation’s finances—before a storm would strike. When the deficit reached 7.5% of GDP in 2008-09, Government decisions supported its reduction to 2.7% of GDP by 2019-20. That approach developed the financial buffers to help absorb the impact of future economic shocks, such as we saw in the pandemic. Yet despite that period, and rather belying what the hon. Lady said, we have still been able to provide departmental spending today that will be around £75 billion a year more, in real terms, by 2027 than in 2010.
It is no wonder, then, that at the time when we took that approach, it received the support of Parliament. It was in line with the recommendations then for best practice. For example, the 2017 fiscal risks report of the independent Office for Budget Responsibility said that
“the public finances need to be managed prudently during more favourable times to ensure that when these shocks do crystallise they do not put the public finances onto an unsustainable path.”
That was why, when the pandemic hit, we were well placed to borrow to provide quick, decisive and consistent support to households and businesses throughout the country, which at that time had significant support from Members on both sides of the House. Estimates from the International Monetary Fund showed that the UK’s discretionary fiscal expansion in response to covid-19—the support that we gave households—was one of the largest and most comprehensive financial support packages globally.
To fund that response, we had to borrow an additional £313 billion—a huge amount of money—across 2021 and 2022, but we could not have done that had we not made the difficult decisions. Had we not acted, the cost to the country would have been far higher. Members will remember the support that we provided, including the furlough scheme, which supported nearly 12 million jobs in total, holding our economy together in incredibly tough times. I note that some 420,000 of those jobs were in the north-east, and that since the pandemic has ended the north-east has had the third-highest increase in employee numbers relative to pre-pandemic levels. The economy in the north-east has been one of the fastest growing.
I also note that, as is sadly so often the case on such occasions, the hon. Member for City of Durham had no alternative plans to lay out. I do not know whether she agrees with the North of Tyne Mayor, Jamie Driscoll, who today said, in respect of the right hon. and learned Member for Holborn and St Pancras (Keir Starmer):
“You’ve U-turned on so many promises…in fact, a list of broken promises too long to repeat in this letter.”
I do not know whether she has seen the letter from Jamie Driscoll, or whether she agrees with the right hon. Member for Ashton-under-Lyne (Angela Rayner) or the right hon. and learned Member for Holborn and St Pancras on an issue like the two child policy. Our policy is clear. I do not think that it is appropriate for the Opposition to hold two policies simultaneously in respect of the two child policy.
When we look back on the pandemic, and on our fiscal approaches both during and in the run-up to it, the Government believe that we can be confident that we acted responsibly. We took difficult decisions on the back of the financial situation that we inherited, allowing us, when that terrible pandemic broke above our heads, to protect livelihoods up and down the country, and ensuring that we could afford to do so and could bounce back afterwards, as we have done subsequently. That was, and remains, sound, responsible fiscal policy.
I understand that not every Member of this House will agree with the decisions taken. I hope that the hon. Member for City of Durham will recognise that many people on both sides of this House did their best in those most difficult times.
Mary Kelly Foy
I am quite surprised and confused. I gave statistics about how many deaths there were, and specialists across the board, including the United Nations, have pointed out the damage done by the austerity programme. I have no idea why you mentioned the two child limit. It would have been really helpful if you had stuck to the point of my debate.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. The hon. Lady knows that she must not address the Minister directly.
Andrew Griffith
I will not delay us on the two child policy—the Labour party’s two-policy policy. Perhaps it was a detour too far for the hon. Lady. I made that point just to illustrate that these are difficult decisions for those on both sides of the House, as it turns out.
I recognise the hon. Lady’s passion and congratulate her again on securing the debate. It is clearly a topic that she rightly feels strongly about, and I apologise if I have not fully addressed all her concerns. It is of course a topic that the independent inquiry is addressing, and I, and I expect the House, look forward to hearing the outcome of that inquiry in due course.
Question put and agreed to.
Points of Order
Andrew Griffith Excerpts(2 years ago)
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Madam Deputy Speaker (Dame Rosie Winterton)
I thank the hon. Gentleman for his point of order. From what he has said, I can understand his concern. Miraculously, he has managed to raise his point of order when he has a Treasury Minister right in front of him, and I have a feeling that Ministers may well take back his comments.
Madam Deputy Speaker
The Minister is nodding in agreement, so I think the hon. Gentleman has succeeded in raising his case effectively. We will leave it at that.