Oral Answers to Questions

Debate between Andrew Selous and Greg Clark

Tuesday 8th July 2014 Commons Chamber

[Greg Clark]

The hon. Lady and I share an enthusiasm for directly elected mayors. If we look around the world and at the example of London, and now Liverpool and Bristol, we see that it makes a difference to have someone with a mandate who can speak for the whole city. That is not the current Government’s policy, but various members of the Government have made statements in recent days that might form part of a future Government’s plans.

[Andrew Selous (South West Bedfordshire) (Con)]

7. Is the Minister aware that the devolving of power, which has led to funding the smarter routes to employment project, the Woodside link road and the Leighton-Linslade engineering construction skills centre in my constituency, very much reflects the local priorities to improve skills, create more jobs and spread prosperity as widely as possible?

[Greg Clark]

I agree with my hon. Friend. He elucidates the principle of the deals. It makes no sense for people in Whitehall to claim to know what is needed in a very local sense across the country. It is far better to give local people and local businesses the opportunity to make those decisions and to bring in private investment. You get a bigger bang for your buck that way.

Oral Answers to Questions

Debate between Andrew Selous and Greg Clark

Tuesday 15th October 2013 Commons Chamber

[The Minister of State, Cabinet Office (Greg Clark)]

Returning officers are entitled under the Representation of the People Act 1983 to receive payments for administering election polls, as those responsibilities fall outside their local authority duties.

[Andrew Selous]

These are some of the highest paid public servants in the land, sometimes on salaries of about £200,000. How can we continue to justify paying these people extra sums of £30,000 or so just to do another task, for which their salary should be more than enough to compensate them?

[Greg Clark]

My hon. Friend makes an excellent point, and I look forward to meeting him next week to discuss these matters further. Before the previous Government left office they increased the fees to returning officers, allowing fees to be paid uncapped for multiple constituencies. We in this Government froze those fees from that time. I look forward to our discussions and to hearing my hon. Friend’s views, which I know he has thoroughly researched.

Finance Bill

Debate between Andrew Selous and Greg Clark

Tuesday 2nd July 2013 Commons Chamber

[Greg Clark]

I shall come to that. The hon. Gentleman professed not to recognise the problem that existed. As I have said, given the position that he enjoys, I would expect him to be aware of the long-standing damage to the competitiveness of an industry that employs people in his constituency. There are some very distinguished firms in his constituency. The Nottingham office of Brewin Dolphin has been there for 150 years, and I think that it is a vital component of our regional economy. These are valuable jobs, and they exist throughout the country.

The British investment management industry has a strong reputation internationally, yet—here we come to the reason for the reform—since 2000, countries such as Luxembourg and Ireland have increased their market share of domiciled funds dramatically in comparison with the United Kingdom. In fact, the UK’s share of EU domiciled funds has dwindled to less than half that of Luxembourg and has been overtaken by Ireland.

What is the reason for that? It cannot be because the reputation of British fund management has declined, as many of the funds domiciled elsewhere in Europe are in fact managed remotely by fund managers within the UK. It cannot be because the fundamental competitiveness of UK financial services has declined, because we have maintained, and very often increased, our market share in other parts of the financial services industry. For example, twice as many euros are traded in the UK than in the entire eurozone. One of the principal reasons for this competitive decline is a consequence—unintended, I am sure—of a change in the tax system that was made in 1999, and whose effect everyone agrees has been deleterious.

Schedule 19 to the Finance Act 1999 imposed a special stamp duty reserve tax—SDRT—on the investment management industry when fund managers match investors leaving a fund and surrendering their units with those joining the fund and purchasing the units. Because the fund manager is not buying any UK shares, no stamp duty reserve tax is payable, but schedule 19 imposes a tax of 0.5% on the fund manager, as if the shares have been bought. Of course, whenever a fund manager buys UK shares within a fund, full stamp duty is paid. As well as being complex and burdensome—requiring frequent tax calculations and returns to be sent to HMRC—there is a major flaw with schedule 19. Anyone who does not wish to pay schedule 19 can simply invest in otherwise identical funds, have them managed by a UK fund manager, but have them domiciled elsewhere, and that is what has happened in recent years. Such a non-UK fund could hold exactly the same equities as a UK fund, and that is happening in large numbers. It could be managed by a UK fund manager, but the investor would—by investing in a fund in Luxembourg or Ireland, for instance—not need to pay schedule 19.

Why should this matter? [Interruption.] I think the shadow Chief Secretary should take an interest, since he was not aware of the problem to which this is the solution. What are the advantages of having funds domiciled in the UK? First, there are advantages in terms of jobs, particularly in the regional economy. While fund managers can operate from anywhere, most jobs in fund management come from ancillary services and the professional services associated with them. These are high-value jobs in IT, legal services and accountancy support, and they are typically in the jurisdictions in which the funds are domiciled.

Secondly, there are advantages in terms of tax revenue. Although schedule 19 imposes SDRT on fund managers matching investors for UK funds, the Exchequer would be advantaged by having more funds domiciled in the UK, as that would involve the paying of income tax, national insurance, VAT, business rates and other taxes by people who would be employed here, rather than in Luxembourg, Ireland and other countries, and corporation tax by the companies supplying ancillary services.

Finally, who pays? It is pensioners who pay. Schedule 19 does not come out of the pay of fund managers. It is a cost of business that is invariably passed on to UK investors. It comes out of the returns and lessens the funds that are otherwise available.

[Andrew Selous (South West Bedfordshire) (Con)]

My right hon. Friend is making an excellent speech and I am listening with great interest. Is there not a further point in that, given that the Government have just started rolling out auto-enrolment, many lower paid workers across the country have a real interest in the health of the fund management industries for their pensions, and probably want their money managed in the UK rather than Luxembourg?

[Greg Clark]

My hon. Friend makes an excellent point. He is absolutely right. Already 81% of investors in UK funds are pension funds or insurers, meaning that people’s income in retirement is impaired and fewer funds are available for investment in the real economy. Two-thirds of individuals approaching retirement are contributing to a pension fund from where these charges are taken, and the introduction of automatic enrolment will mean that many more ordinary working people will be saving into a pension for the first time and will be affected.

So there is a double imperative to act now to correct this situation in which funds are moving from being domiciled by choice in this country to overseas. First, any continuing loss of competitiveness by the UK fund management industry risks destroying, possibly for ever, the critical mass and prominent global position that the industry has had. Secondly, we are on the cusp of a once-in-a-generation opportunity for the UK fund management industry, and, with it, the UK economy, because in July the EU’s alternative investment fund managers directive comes into force, creating a much more effective single market across Europe in fund management. It is estimated that €250 billion of funds may be available for the UK, and other competitors, to play host to. That is to say nothing of the significant growth shown in the emerging economies, where a burgeoning middle class is looking to make investments for which the EU is an attractive home.

Oral Answers to Questions

Debate between Andrew Selous and Greg Clark

Tuesday 12th March 2013 Commons Chamber

[Greg Clark]

My hon. Friend raises a very important point. The review is under the auspices of the Financial Services Authority, and each bank has had to appoint independent reviewers who are themselves accountable to the FCA. It is absolutely crucial that the objectivity they bring to bear cannot be compromised, and I have given the FSA clear feedback that it should have that in mind during the review.

[Andrew Selous (South West Bedfordshire) (Con)]

4. What steps he has taken to increase the amount of (a) lending and (b) equity financing to the real economy.

Oral Answers to Questions

Debate between Andrew Selous and Greg Clark

Tuesday 11th December 2012 Commons Chamber

[Greg Clark]

The hon. Lady was a Minister in the last Government, and she will know that in her own constituency there are fewer young unemployed people now than there were in the last year of the Government of whom she was a member. I am surprised that she has not taken the opportunity to refer to the fact that the rate of youth unemployment in Hackney South and Shoreditch has fallen by 20% over the last 12 months.

[Andrew Selous (South West Bedfordshire) (Con)]

May I tell my right hon. Friend that under the last two Labour Governments, the youth unemployment claimant count in South West Bedfordshire rose by 180%, whereas it has fallen by 6% since we have been in office? Does that not show that, in difficult times, although there is, of course, further to go, we are moving in the right direction?

[Greg Clark]

My hon. Friend is absolutely right. That is why it is important for us to maintain the course, pay down the deficit and build confidence in the labour market. We know what happened under the previous Government: in their last two years, long-term youth unemployment doubled.

Oral Answers to Questions

Debate between Andrew Selous and Greg Clark

Monday 30th April 2012 Commons Chamber

[Greg Clark]

I cannot imagine such a thing. How a community chooses to represent itself and with what images and emblems seems to me the epitome of local choice.

[Andrew Selous (South West Bedfordshire) (Con)]

15. What contribution to economic growth he expects his planning reforms to deliver.