Fuel Prices

Anne Marie Morris Excerpts

Tuesday 15th November 2011 Commons Chamber

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

I, like others, warmly congratulate my hon. Friend the Member for Harlow (Robert Halfon) on bringing this important debate to the House today.

In my constituency the car is essential really to all my constituents. We have three market towns and 14 villages, and although the bus companies do valiantly they cannot serve all my constituents, many of whom have to commute a long way—for 90 minutes or even longer—out of my constituency to find regular work. When there were difficulties with the buses in villages such as Hockliffe and Eggington there was enormous upset, because many people in those areas find motoring so expensive.

In rural areas, on average only 10% of people do not have a car, because they are so necessary, and more than half of households need two cars to get their families around.

[Anne Marie Morris (Newton Abbot) (Con)]

Is my hon. Friend aware that in rural constituencies such as ours the cost of filling up at the petrol pump comes to 10% of the wages of an individual on the lowest income? That is an enormous amount, and does he agree that it puts a particular burden on those living in rural communities?

[Andrew Selous]

My hon. Friend is absolutely right: that adds insult to injury.

The huge disparity in petrol prices experienced by so many of our constituents is extremely difficult. In addition, the disparity between the price of diesel and unleaded petrol concerns me greatly. Diesel used to be more expensive. We then had parity, and now diesel has shot up again. It is apparent that we have an inadequate supply of UK refining capacity for diesel in this country. We have to import much of our diesel from Russia, which causes particular problems given that around half of all car sales are of diesel vehicles.

Arch Cru Compensation Scheme

Anne Marie Morris Excerpts

Wednesday 19th October 2011 Westminster Hall

[Tom Greatrex]

My hon. Friend makes a very important point. I want to come on to the inadequacy of the payment deal—it is not a compensation deal—on the table at present, because there are serious questions to ask about that as well.

If what I have set out was Capita’s reputation among some in the industry, it is perhaps not surprising that Capita appears not to have known about the activity of the sub-funds investing in the very high-risk activity via the Guernsey cells; that Capita appears not to have been aware of the illiquidity in the fund by 2008; and that Capita appears not to have provided a proper sign-off for the accounts. I say “appear” because we do not know for certain the detail of the failings, because the FSA, in correspondence that it has copied to Members of Parliament, says that it is unable to provide details of its investigations.

Suffice it to say that those independent financial advisers who trusted the Capita brand worked on the basis of the CF Arch Cru marketing material, which Capita would have had responsibility for signing off and copies of which I have with me. It includes material headed “Going Well” from November 2008, by which time the FSA had, we know, started looking into Arch Cru. There is also a weekly update from 9 March 2009—four days before suspension of the fund. In approving tones, it boasts of cumulative decline year to year of 2.6% compared with double digit falls in most major traditional public asset houses. It says that all its UK funds retain a top five rank in their category. Those statements were issued to financial advisers just four days before the fund was suspended.

In addition to that type of material, the chief executive of Capita Finance Managers, Chris Addenbrooke, in Investment Adviser in September 2008, said:

“We’ve got the credibility to take on the ACD”—

authorised corporate director—

“role. Our clients see that as attractive.”

Given that material and comments such as that, there is no doubt that people thought that they were investing in something that was very different from what it turned out to be. It is apparent that at the very least there were serious shortcomings in the role of Capita as the ACD.

Secondly, there is the role of the FSA. Earlier this week, I spent some time with representatives of the FSA, discussing Arch Cru, and I am grateful for their time and their engagement in seeking to answer some of my questions, but serious questions remain for the FSA to answer. It was statutorily responsible for regulating Capita Financial Managers. Why did it not know or not appear to know what was happening with Arch Cru? I also spoke to people who had previously worked for the FSA. They said that the ARROW—advanced, risk-responsive operating framework—visit was not until late 2008 and that was not atypical given the risk matrix, which would have meant that the likely ARROW visits would have taken place only every 18 months approximately. I understand and accept that this matter can be complex.

[Anne Marie Morris (Newton Abbot) (Con)]

Is the hon. Gentleman making the point that this is not simply a matter of what the FSA did and whether it did it appropriately, inappropriately, negligently or otherwise, and that there was something fundamentally wrong with the processes of the regulatory regime that was operating at the time?

[Tom Greatrex]

I thank the hon. Lady for her intervention. There are two points: a point about what the FSA did in relation to Arch Cru, and a further point about the regulatory regime. As I said, with the FCA about to be set up, there is an important issue for the Government to deal with in that regard as well.

Road Fuel Duties

Anne Marie Morris Excerpts

Tuesday 13th September 2011 Westminster Hall

[Mr Donohoe]

The hon. Gentleman should know, as should all Members, that I would be the last person in this place to call for a revolution and civil disobedience.

There is absolutely no doubt, however, that the high fuel prices are at the point of driving people out of jobs, which is the most serious aspect of the matter. I shall give an example, which makes me angry, of the desperate situation of a nurse in my constituency. She has had to put up with a wage freeze for the next two years, her pension contributions have gone up, she has to pay double for parking at the hospital in Glasgow where she works, and she has to find £100 extra a month to get to and from work because of the high fuel prices. That proposition cannot feasibly be sustained for too long, but she cannot use public transport because of where she stays and where the hospital is. That problem must be looked at.

Regarding what the Government take per litre, I always remember a case from some years ago of a retailer who was determined to show the breakdown of the price of petrol and diesel. He was told that that was not the form, and the petrol company said that it would no longer supply him, for some obscure reason. When one considers that of the average 135p price of a litre of fuel, 81p is taken, one starts to understand the cost to the individual buying the petrol or the diesel. A good 60% goes on dealing with Government intervention in the form of fuel duty, and there is also VAT. Indeed, 20% VAT increases the price of petrol by 2.5%, putting something like 2.5p on it. In addition, outside of Government intervention in the price, there are the oil companies, and it is time to argue for a windfall tax on their profits. I know that there has already been a tax, which a lot of colleagues are very concerned about in relation to the oil companies’ continued investment, but I believe that the Government should look at the correlation between profit and price.

I have already argued that a significant portion of the price of petrol and diesel in this country is made up of the Government take, and I argue that it is higher than in most other European countries as a consequence of the high level of tax. Is there any opportunity to make the price cheaper? I am sure that the Economic Secretary will argue that in the present climate there is no leeway—no room for manoeuvre—but I suggest that there might be, and I shall come on to that later.

The reason for this debate is obvious: the price of fuel is crippling a great number of the people whom I represent and, I am sure, a great many of those represented by other Members here this morning. The Institute for Fiscal Studies has announced that the living standards of UK families will decline by more than 10% over the next three years, and it predicts that in real terms the typical household income will fall by 3.5% in the year to April, which will be the steepest drop since 1981. We understand that there is little room for offsetting falling living standards by cutting taxes, but the matter must be looked at. The level of tax and duties on petrol and diesel is cutting off the prospects of many struggling families and small businesses, and since I secured this debate I have had dozens of e-mails from small businesses with examples of just what it is doing to them.

The situation is also destroying job prospects, in particular among young people. I have already had a summit in my constituency, attended by the Secretaries of State for Work and Pensions and for Scotland. Youth unemployment is reaching levels that I never thought possible—it is as high as 70% in many areas. That cannot be sustainable and it is not helped at all by the cost of living today, particularly in more rural areas—I see that the hon. Members for Argyll and Bute (Mr Reid) and for Na h-Eileanan an Iar (Mr MacNeil) are present.

[Anne Marie Morris (Newton Abbot) (Con)]

I am delighted that the hon. Member for Central Ayrshire (Mr Donohoe) has brought this important topic for debate. Is he aware that the current Chief Secretary to the Treasury called in 2007 for a rural fuel discount scheme, and so may have a favourable view? Like the hon. Gentleman, I am concerned, because the south-west has a very rural community. Three quarters of the land is agricultural holdings, so a rural discount would be of great benefit.

[Mr Donohoe]

We will have to wait for the Economic Secretary’s response on that point. As an Opposition Member, I am not in a position to give any assurances.

We must consider the problems with the Government’s approach. Although they have frozen fuel tax duty for the next couple of years, we must take into account the fact that the freeze will be more than offset by the rise in inflation. As petrol is always an easy revenue raiser, it is widely expected that the Government will make up their losses, leaving the consumer no better off in the long term.

I will highlight three areas of concern. The first is environmental, the second is economic and the third involves the social impact of the road fuel duty. The removal of the duty differential will affect the green economy. The UK Sustainable Biodiesel Alliance has raised concerns about the Government’s decision to remove the 20p duty differential for biodiesel produced from used cooking oil by April 2012. I ask the Economic Secretary to consider that loss more closely. It does not stack up against the Government’s views on the green economy. Many see the impact of the removal of the duty differential for biodiesel as a disastrous blow for the growth of the green economy. Just outside my constituency is the company Stagecoach, which runs buses on biodiesel. It is highly successful, and particularly popular with youngsters, but it will come to an end if the differential is not maintained. Will the Minister clarify why on earth the Government, whom we have heard are the greenest Government ever, continue to consider it?

On the economic side, we risk the demise of the independent fuel sector. Retail Motor Industry Petrol told me that MRH, the UK’s largest independent forecourt operator, has highlighted the unfair pricing practices used against it by both hypermarket chains and oil companies. That is a concern. In addition, the four big supermarket chains are struggling with their own retail this year due to the downturn, which in turn is placing greater pressure on and compounding the problems of independent retailers.

Such relentless competition has been going on for some years. It is responsible for the closure of around 400 independent forecourts, and it continues. It will lead to a sparse population of fuel retailers, obliging motorists to drive great distances to top up their tanks, which is not sustainable. More than 6,000 garages have closed since 1998, which is a problem, as anybody knows who travels off motorways. Particularly in more rural areas, as I have seen at first hand, running out of fuel because there are no petrol or diesel stations is always a danger.

--- Later in debate ---

[Mr Reid]

I am grateful to the hon. Gentleman for his intervention. He is correct that there is no profiteering at the local filling station, although the distribution network, as he has indicated, might be another issue.

The high price obviously has a great impact on people’s living standards and on anyone trying to run a business on an island or in a remote rural area. I was therefore delighted when the Government announced their intention to pursue a pilot scheme under which there will be a 5p a litre fuel duty discount on many of the country’s islands, including all the islands of the Inner Hebrides and the Clyde. The Treasury is currently consulting filling station operators on the terms of the pilot scheme. Its original consultation proposals were met with significant concern by filling station operators, because they would have caused a cash-flow problem. I was pleased when the Government responded quickly to those concerns and revised their proposals in a way that removes the cash-flow problem.

The revised consultation proposals envisage two possible schemes—a distributor-based scheme and a retailer-based scheme. Of the two, it looks like the distributor-based scheme would be easier to operate, because the distributor has the resources to carry out the administration, which the small retailer would often find more difficult. I appreciate, however, the Government’s concern that a distributor-based scheme may fall foul of EU state aid rules and might not be approved by the European Commission. I hope that a distributor-based scheme can be devised that is acceptable to the Commission. If not, we would have to proceed with a retailer-based scheme.

The cash-flow problem in the original proposals has been overcome, but filling station operators are still concerned that it is not clear how they can prove to the Treasury that they are passing on the discount to the consumer. An essential principle of the scheme is that the 5p discount is passed on to the consumer. What retailers have asked me is whether the Government can provide clarity on how they should demonstrate that they are passing on the discount. That clarity would be welcomed because, as I say, the retailers are still not clear what they would have to do to comply with the scheme—and, of course, they are all keen to participate. If the islands’ pilot scheme is successful, as I am sure it will be, I would like it to be extended to remote areas of the mainland.

[Anne Marie Morris]

I absolutely endorse what my hon. Friend says, but some of the rebates that have been given in France, Portugal and so on are not limited just to the islands. The Government’s current view is that it is only in an island situation that such relief can be made available, but that does not seem valid.

[Mr Reid]

I wholeheartedly agree with my hon. Friend. As she said, other EU countries are operating a similar scheme, so I am sure that it can be successful here.

Private Finance Initiative

Anne Marie Morris Excerpts

Thursday 23rd June 2011 Westminster Hall

[Anne Marie Morris (Newton Abbot) (Con)]

I will endeavour to make my contribution brief. This has been a very valuable and worthwhile debate on a number of issues. We need to consider the PFI as quite a complex challenge. Although my hon. Friend the Minister is here to help us with some of the financial issues, it is a challenge not just for her but for her Cabinet colleagues, because it is not just the finances that need to be reviewed. There are issues of complexity that we need to deal with in trying to find a way forward. Those issues are not just about the way in which the contracts are currently structured. There is also an issue about cultural change, because much of what has happened has changed the way in which decisions are made and outcomes are delivered for patients in hospitals and children in schools. That is why, although I support the argument for a rebate, it is only part of the solution. It deals with the existing, financial challenge, but it does not deal with other issues. It is right that we should be looking for a different way to do things, but it is a very complicated challenge.

The PFI was always well intentioned as a concept. It was to deliver quality and it was to deliver projects on time and on budget. In many ways, it achieved that. We have 700 schools, hospitals, prisons and other infrastructure projects that would not exist or would not be in the pipeline but for this initiative. We have £67 billion-worth of expenditure signed off.

The problems fall into at least four categories. First, the risk was overestimated, in part because of the public sector’s inability to deal with a very complex negotiation, as has been said. The consequence was that the taxpayer was lumbered with a very large part of the bill. As has been said, the amount of £210 billion is outstanding. By contrast, the investor is doing extraordinarily well. A number of figures have been cited, and I will add to that list. An EU think-tank tells me that 154 schemes are delivering a 50% return. That is huge. Clearly, therefore, one matter that we must consider is how we simplify not only future contracts, but the existing ones. I believe that we must consider renegotiating not just a chunk of money, but some of the terms.

[Mark Pawsey]

Does my hon. Friend agree that a justification for a rebate arises from the effect of the spending review on those Departments whose budgets have been reduced? If the PFI element remains fixed within the budget, by definition the non-PFI element has to reduce by a greater proportion, so budgets that may have been reduced by 2% could end up being reduced by 4%. It is entirely appropriate that those who are making the sums of money that we have heard about should bear their share of the burden of getting our country’s finances into order.

[Anne Marie Morris]

I agree. My argument is that that is part of the problem, rather than the totality of the problem. My second request is that we find a way of delivering transparency and better management of the contracts. One hospital was charged £333 to change a light bulb. I dare say that that changes the hospital’s decision about whether it will change many light bulbs. One school was charged £300 just to install an electrical socket. How many times will the school install a socket on that basis? One Army official was charged £103 for a 1-inch Land Rover screw that actually cost just over £2. That is not the right way of doing things.

[David Mowat]

The three examples that my hon. Friend has cited are powerful, but they represent procurement failures by the public sector procurement people involved and structural failures in the nature of the contract, because the contract did not have to specify, for example, exactly how light bulbs would be maintained. We have examples of multiple procurement failures. PFI is being used as a proxy for that. Those procurement failures can happen with any technique or contract.

[Anne Marie Morris]

My hon. Friend makes a valid point, which is why the issue is far more complicated than a rebate.

The risk is overestimated. Projects are not monitored, partly because there is no transparency. As has been said, the size of the debt has been hidden because it is off balance sheet. If we looked at the real national debt figure, then rather than £910 billion, we would probably be looking at £1.12 trillion.

I can perhaps best illustrate the distortion in the way in which public services are used by explaining what is happening in my constituency. There is a wonderful new build hospital in Newton Abbot. It was the winner of the 2007 HealthInvestor PFI deal of the year award. But what has happened? In that hospital, we are finding considerable underuse of facilities. Beds and consulting rooms are not being used as they might be. Why? The reason, as I understand it from individuals who have come to me to raise this concern, is that it is just too expensive to use those facilities rather than the cheaper facilities in neighbouring hospitals. I am pleased to say that the primary care trust has taken the matter up and is considering how better use of the facilities at Newton Abbot hospital can be made. However, it is an example of how behaviour can be changed.

The challenge, therefore, is not only to get the cost down. Reference has been made to what the Government are already doing. I am pleased that we have a PFI hit squad, which has already taken £4 billion out of the project list. I am minded to look very favourably on the concept of a rebate, but as I said, a rebate will not be enough. There are two aspects to trying to sort out the financial mess. One is the issue of maintenance. Clearly, there are ways of reducing maintenance costs under the contracts, and whatever saving comes out of any renegotiation needs to be shared with the taxpayer and the local community. The second aspect is the payback rates. We have heard many examples of the payback rates in this context being well above the payback rates for similar risks in the market. Those two issues need to be considered.

To return to where I started, one issue that we need to consider is the impact on what happens in other parts of Government. We need to consider our health care reforms, because many of the PFI contracts are currently held by the primary care trusts. Those PCTs will cease to exist in the not-too-distant future. As and when we see their demise, what will happen to those contracts? Is that an opportunity or a threat? That is a serious issue, which my right hon. Friend the Secretary of State for Health will need to consider in conjunction with the Treasury. We have heard about the examples of schools and the challenges for some of negotiating academy status because of existing PFI contracts. To conclude, this is a complex issue. It is not something that the Treasury can deal with alone. Some joined-up thinking needs to be applied to it across a number of Departments.

--- Later in debate ---

[Neil Carmichael]

I thank my hon. Friend for making a good point; I shall answer it later in some detail.

I turn next to the history of the PFI. It goes back much further than 1992. The United States has been using PFI schemes for decades because it wanted private money to be used to provide public utilities, roads and so on. The PFI has a history in the US, in many parts of Europe and in most regions of the world. We have plenty of experience of it. There is much activity in that sector that we can draw upon in order to improve the way in which it works. That is the key point.

PFI schemes have recently become far too complicated. As was pointed out earlier, in many of the original schemes things were simply designed, built and then maintained. More recently, however, we have been throwing in services and all sorts of extras. As a result, the process has become complicated; indeed, many of us have used that word today. That is largely because we have confused the original concept of the PFI by adding on services and so on. There is nothing wrong with that, but it brings me to the fact that we must get the procurement systems right. To do that, we must specify much more clearly what is wanted. Local authorities have to learn to do that, as must the health service; it is a question of commissioning. My hon. Friend, who represents a beautiful Cornish seat—it is in Cornwall, is it not?

[Anne Marie Morris]

It is in Devon.

[Neil Carmichael]

Devon: it gets better! My hon. Friend made that point rather well. It certainly needs to be considered, as specifying and procurement are critical.

We also need to understand value for money. Most PFI schemes under the previous Government did not seem to do so. The next big task is to define value for money. That will be helped if we get the data right and if we understand the systems in each project. Many people talk about the difficulties of PFI schemes in hospitals. I am not surprised, given that many hospitals cannot even tell you the cost of an operation. We need more data. If we have much more information about what is happening, it will inform the debate about value for money.

Another big problem is the lack of accountability in the decision-making process. I said that it is important to specify and procure properly, but if we do not hold those who do the specifying or procuring properly to account we will have only ourselves to blame. We need systems to ensure that specifications are clear and all-inclusive and produce the right procurement. We then need to ensure the right attitude to procurement, a point made by my hon. Friend the Member for Warrington South (David Mowat).

Motoring Fuel Costs

Anne Marie Morris Excerpts

Tuesday 14th June 2011 Westminster Hall

[Robert Halfon]

I agree that that should happen. I also have another proposal, which I will set out later. I congratulate the hon. Gentleman on his work on fuel prices in a debate in the main Chamber some months ago.

[Anne Marie Morris (Newton Abbot) (Con)]

My hon. Friend is being very generous in giving way.

Although the focus has very much been on the individual motorist, we have spoken a little about small business. If we combine the issues of rural businesses and micro-businesses, they are the ones that are badly hit. That is where we need the economy to grow. As for the range of prices, my hon. Friend talked about an average of £1.36 a litre, but in fact it is between £1.30 and £1.51, mostly in rural areas.

[Robert Halfon]

My hon. Friend is right. I will set out in a minute what the Federation of Small Businesses says about how the fuel price is crushing business and economic growth.

In total, my town is spending at least £63 million a year on petrol, of which about £40 million is tax. That does not even include gas and electricity bills, which are spiralling out of control. The budget of my local council is only £13.5 million a year. Imagine if people could keep even a fraction of that money in their pockets, to spend on the local economy, rather than giving it away to big oil companies, foreign countries and, dare I say it, the Treasury. However, I welcome what the Chancellor has done so far. When he refused to implement Labour’s petrol tax of 4p in April, and cut duty by 1p, he saved Harlow motorists at least £2.5 million every year, putting fuel into the tank of the British economy when we need it most.

Finance (No. 3) Bill

Anne Marie Morris Excerpts

Tuesday 26th April 2011 Commons Chamber

[Anne Marie Morris (Newton Abbot) (Con)]

I welcome the Finance Bill, which will reform the economy, deliver real growth for business and create jobs. One of the very special parts of the Bill is what it does for the very smallest businesses, as they are going to be the key to re-growth in our economy. I am sure that the House is well aware that two thirds of our businesses are so small that they have fewer than five employees and a turnover of less than £250,000. They may represent only 15% of our economy but they are vital because, first, all our successful businesses have to start somewhere, and it must be there, and, secondly, without those very small businesses—whether it is the plumber or the electrician—some of our rural communities and some deprived urban communities would find it difficult to keep economically active. For these very small businesses, I am pleased to see a mandate for growth.

I shall elaborate on some of the provisions mentioned by my right hon. Friend the Chief Secretary and look at what they deliver and how they might be developed in future. Businesses rates are, for me, one of the most important issues and the subject of many complaints from small businesses in my constituency. I am delighted that the small business rate relief has been extended for a further year, and pleased that half a million businesses will benefit. In the south-west, which is my part of the country, 68% of businesses will see some economic benefit from that relief.

Will my right hon. Friends and the Treasury team look carefully at business rates in future? An awful lot more needs to be done. Issues such as turnover are relevant criteria. It is not uncommon for me to walk into a pub and to be told by the publican that the way in which the business rates have been calculated is biased against small pubs. It is not uncommon for me to walk into a small retail business and to be told, “This used to be the high street but it’s not any longer, and I feel that my business rates are disproportionate and inappropriate.” A shake-up of business rates is needed.

I welcome the reduction of fuel duty by 1p and the removal of the escalator. Without that, the projection from the Federation of Small Businesses that all small businesses would find their bills going up by £2,000 in six months would have become a reality. To me, that reduction is crucial. I am sure that those on the Opposition Benches would be the first to say, “But at the pump, prices don’t seem to have come down.” My response is that they would have been an awful lot higher but for these changes. We need to consider how to ensure that those who are delivering petrol at the retail end are passing on those reductions to the customer. A number of people have expressed concern that the help that we as a Government are giving has not been passed on to the consumer.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

If I follow the hon. Lady’s logic correctly, she welcomes a policy, the results of which, she admits, have not been passed on to the customer, so what benefit have most of her constituents received from the fuel duty cuts?

[Anne Marie Morris]

They are 6p a litre better off than they might otherwise have been. The challenge that we face is the retailer, but I do not believe that the Opposition would have been able to do anything different. That is another aspect that needs to be looked at going forward. But we digress. Let us move on to some of the other issues facing small businesses, such as income tax and national insurance.

For many small businesses, national insurance is a headache and it is one of the key reasons why they will not take on new employees. We have the largest tax code in the world. One of the things that I am pleased to see predicted for the future, though not in the Bill, is a move to simplify tax and to consider combining income tax and national insurance. That would be a great step forward and a huge saving in administrative time and burden for very small businesses. I was sad to see that the NI holiday was not extended further for existing businesses, a matter that I have raised with the Treasury team on a number of occasions. If in future we could find a way of combining income tax and national insurance, that would be a good step forward.

I am pleased that corporation tax is coming down to 26%, and I am pleased to see a move to deliver the lowest corporation tax in the G7. That is extremely good news. Given that my mandate is to shout loud for the very smallest businesses, it would have been even better for the small companies rate to have come down further. I appreciate that it has already come down to 20%, which is a good move, but anything further that can be done going forward would be welcomed. The special provision to increase the SME rate of research and development tax credit to 200% is extremely welcome. I thank the Treasury team very much for that as it will make a significant difference.

The crucial challenge for many small businesses is finding investment, so I am particularly pleased to see entrepreneur relief changes which will increase the capital gains tax lifetime limit to £10 million. That is a hugely welcome step. I am pleased that the enterprise investment scheme has been also been developed so that the income tax relief has moved from 20% to 30%, and the eligibility criteria have changed so that larger businesses will be included in EIS. However, I would be grateful if the ministerial team would look at how we can extend EIS so that it attracts investment for the very smallest businesses. At present it is much more geared towards a small or medium-sized business and corporations. It is not intended for a sole trader or a partnership. If we could come up with EIS-lite in some form, that would be extraordinarily helpful.

In summary, I am delighted to see the focus on the smallest of businesses. I sincerely hope that that will be a trend to be welcomed for the future. One thought I have for the Treasury team is that, going forward, we might look more closely at a specific definition of a micro-business, a small business and a medium-sized business. If we did that, as happens in other countries, we might find that the Treasury team had a little more flexibility to give particular help to the very smallest businesses, from which growth will ultimately stem.

Fuel Prices

Anne Marie Morris Excerpts

Tuesday 15th February 2011 Westminster Hall

[Miss McIntosh]

When the Minister responds to the debate, he may want to touch on that issue. Also, when I come to put my case for a rural rebate, I will acknowledge that there might be problems with regard to the EU directive in this sector.

[Anne Marie Morris (Newton Abbot) (Con)]

I wonder whether my hon. Friend has examined the impact of rising fuel prices on micro-businesses. In our rural communities, micro-businesses are key, and the Federation of Small Businesses has estimated that rising prices will cost each one of these businesses, which are already sorely pressed, an extra £2,000 every six months.

[Miss McIntosh]

Some 6,000 small businesses in Thirsk, Malton and Filey will be affected, and I congratulate the FSB on its excellent campaign.

The impact on farmers—across north Yorkshire, farming is often the main business, and it certainly is in my constituency—of rising fuel prices has been catastrophic. That issue has pushed up the cost of producing livestock and the cost of taking livestock to market. Moreover, for those who train racehorses across North Yorkshire, many of whom are based in Thirsk and Malton, rising fuel prices have pushed up the cost of feeding the horses and the cost of transporting horses and jockeys to races.

Funding Formula

Anne Marie Morris Excerpts

Tuesday 18th January 2011 Westminster Hall

[Anne Marie Morris (Newton Abbot) (Con)]

This is a timely debate, and I am grateful to my hon. Friend the Member for South West Bedfordshire (Andrew Selous) for securing it. I will keep my comments brief to assist one more Member to speak.

Public funding effectively comes in two chunks. The largest is spending through central Departments; the smaller comes through the grant formula for local government. The emphasis today has been on the application of the Barnett formula to the local government grant, but the reality is that Barnett has had a creep effect and has become the default mechanism for making decisions even in mainstream Departments. Reforming Barnett is about reforming it as it is applied not just in local government but elsewhere.

The particular problem in my south-western constituency of Newton Abbot, in Devon, is that we are one of the largest regions in the country. Consequently, we have huge transport challenges, but the sparsity effect is not taken into account when funding formulae are determined for our local authorities. Some 20% of the south-west is rural, and it is a well-known and well-researched fact that our rural deprivation is high, which carries a heavy cost: 22% of people in the south-west live on the state pension, the highest number in the country as a whole. We all know the impact of the elderly on local government spending. In the south-west, 10% of people are over 75. I am pleased to say that they have a high life expectancy, but unfortunately that does not help the coffers.

We were fortunate this time around. Devon county council suffered a spending power cut of only 1.77%; in Teignbridge, my district authority, it was 5.89%. For that, I am grateful, but looking forward, the issue must be addressed. As I said, Departments have used Barnett when considering health funding and other devolved sums of money, and as a result, the south-west has fallen down the league tables. In 2009-10, the south-west was allocated only £42 billion across Departments, the third lowest regional spend in England. It has caused an awful lot of problems. We have 12.5% of the population, yet only 12% of the spend, even before aggravating factors are considered.

Children in Devon are particularly underfunded. We are 146th of 152 in the spending league tables. It has been calculated that in health care, we are £12 million short of the figure that would have been fair. We have the lowest spend per head in England on transport infrastructure, yet we are extremely rural and 14% of the population have no car. I urge the Minister to consider seriously the request for a needs-based formula, as it is clearly the way forward. I commend the proposal made by my hon. Friend the Member for South West Bedfordshire.

Independent Financial Advisers (Regulation)

Anne Marie Morris Excerpts

Monday 29th November 2010 Commons Chamber

[Anne Marie Morris (Newton Abbot) (Con)]

I will make my comments brief because I am conscious that we are short of time. In my constituency, I have more than 50 very small independent financial advisers, a number of whom have come to speak to me about this issue because they are very concerned about the future of advice in our very needy constituency, which has four towns and 30 tiny villages. Those people serve the financial needs of the community.

We need to consider the increasing overall need. Students are increasingly going to need help to sort out how to finance their education. People in or out of work are increasingly going to have deal with redundancy and will want to know what to do when they suddenly get that lump of money to keep them in health. People will want to know what to do with a small inheritance should they be so lucky to get one. For the elderly, the change in pension provision is extraordinary and we will have to help people to deal with pension auto-enrolment—should they fall out of it or stay with it? There is much to consider and much help is needed.

Of course there are IFAs who have a bad reputation. Some sold products when it was inappropriate to do so just to maximise commission, some sold badly performing products and others mis-sold precipice bonds, which was unforgivable. With a cost of £45 million a year to the consumer, we need to address this issue, but what can we do? The retail distribution review is absolutely welcome, but we must strike a balance. We must get something affordable and the FSA must enable IFAs to remain in business while protecting consumers. How can we do that? The Government have said that 50% of IFAs in the profession would already comply, so what of the other 50%? Clearly, there is an issue and we need to make sure that more of those people stay in rather than fewer; otherwise, the predicted savings to consumers of £1.8 billion will not be made. That is not what this Government are all about, so we need to consider a different way of proceeding.

I spent 30 years in a profession that has parallels with this one and I should like to draw the House’s attention to some parallels that might help the Minister. In my time as a lawyer, I looked at the changes that the Law Society wanted to bring about when it considered introducing continuous professional development for older members of the profession. Instead of putting 35 hours in place immediately, the number of hours was slowly ramped up over a five-year period. The scheme did not just enable people to have out-of-office time; study time in the office and in the evening counted as well, which was helpful. I suggest the Minister looks at that system. We need to look at a modular approach for exams and at distance learning. As one of my hon. Friends pointed out earlier, we need to look at qualifications that are relevant to the business the individual is practising.

I wholeheartedly support the comments that have been made about experience and the idea of grandfathering. I was formerly a professional mentor, and with the European Mentoring and Coaching Council I looked at how we might develop qualifications and accredit people already in a profession. We looked at a framework model that enabled people to qualify when rules changed. I certainly commend that to the Minister.

The point about the big bang in 2013 when everything will change is absolutely right. That is not an appropriate way forward. I hope the Minister recognises that the businesses we are talking about are microbusinesses. Costs are crucial. Fees for IFAs have gone up by 4.8% this year, and I hope he is not thinking about the national financial advice service, at a cost of £50 million to the industry, replacing in any way the financial advisers who will undoubtedly fall out of the system.

National Insurance Contributions Bill

Anne Marie Morris Excerpts

Tuesday 23rd November 2010 Commons Chamber

[Anne Marie Morris (Newton Abbot) (Con)]

I am delighted to have the opportunity to contribute to this debate and I offer my wholehearted support to the Government for this excellent Bill.

On part 1 and the increases in rates, a point that has not been made but that is worthy of comment concerns the timing. Opposition Members had considered the increase when we were at a flaky stage in the recovery of the economy and when there was concern that there might be a double-dip recession. To move the timing from June of this year to April of next year is to be commended and it is absolutely the right and responsible thing to do.

My speech will focus principally on part 2 and the so-called “holiday” for new businesses, a provision that I wholeheartedly support. It is absolutely right that new businesses should be given a helping hand, particularly now. I am fortunate that my constituency of Newton Abbot is in Devon and therefore in the south-west, which means that my new businesses will benefit from these new measures. The Government estimate the benefit across the country at £940 million. That is well worth having and I am delighted to see Opposition Members supporting it. The cost in the grand scheme of things is relatively small and the administration costs of £12 million can be set against the overall administrative costs for this tax, which stand at £1.54 billion. The estimated benefit for individual businesses will be £2,000 per business with a rough administration cost of £166. That strikes me as very good value for money.

I want to take up a point that has been made by a number of Members on both sides of the House. In my view and, clearly, that of others, micro-businesses desperately need help. In the south-west, 91% of businesses employ only five people—small businesses that are a large part of the business community. In my part of the world, issues will arise because of the changes to the public sector, so helping micro-businesses will be very important because it is more likely than not that, because of their sheer number, they will take on those who are made redundant and the NEETs, as we call them—those not in employment, education or training—who clearly need a helping hand.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Has the hon. Lady realised that the proposed holiday does not apply to existing small businesses?

[Anne Marie Morris]

I thank the shadow Minister, but that is precisely my point. I would like to ask the Treasury and the Treasury team to extend the provision to those businesses in the fullness of time.

In particular, we should clarify what we mean by a micro-business. The European Union defines it as a business with 10 employees and a turnover of less than £2 million. For my money, that is a very big business. In my part of the world, micro-businesses are really very small. The hon. Member for Dundee East (Stewart Hosie), who is no longer with us, suggested that we might think about a small business of two employees that was considering adding one extra employee. The point was that it is a big step for a sole trader or husband and wife team to take on that extra member of staff, and it is there that we need the help.

I suggest that the Treasury urgently considers extending the provision to micro-businesses, not in this Bill but in a future Budget. I cannot see why micro-businesses should not be covered across the country rather than in regions. My plea is that micro-businesses, which are different to small businesses, should be properly represented and that we should consider what we in this Parliament mean by a micro-business rather than necessarily taking the European definition. We should also consider what help we can give them.

As for the point made by the hon. Member for Ilford South (Mike Gapes), it is not just about tax assistance, but about regulatory assistance. Some very small businesses are drowning in legislation, much of which is simply not appropriate for them.

[Justin Tomlinson (North Swindon) (Con)]

My hon. Friend is making some excellent points, which, as someone who used to own a small business, I recognise. Micro-businesses also have the opportunity to take on apprentices, and we should encourage small businesses to take advantage of that.

[Anne Marie Morris]

I thank my hon. Friend for that contribution and I absolutely agree.

I ask the Treasury team and the Minister, after the successful outcome of this measure, urgently to consider extending it in the next Budget to micro-businesses and to introduce a proper definition of a micro-business. I think that they need particular help and support.