Future of Financial Services

Ben Lake Excerpts

Monday 9th November 2020 Commons Chamber

[Rishi Sunak]

The hon. Gentleman is absolutely right about the importance of credit unions in providing credit to those who need it. My hon. Friend the Economic Secretary recently hosted a roundtable to make sure the industry is getting the support it requires.

[Ben Lake (Ceredigion) (PC)]

The announcement of a sovereign green bond is to be welcomed as an important step forward in the financing of infrastructure and industry, and is essential to achieving net zero, but what sort of access will the Welsh Government have to this important source of green finance to ensure that projects and priorities that fall within its remit are adequately supported, given that the Chancellor seems to have ruled out empowering the Welsh Government to issue their own green bond?

Lockdown: Economic Support

Ben Lake Excerpts

Tuesday 3rd November 2020 Commons Chamber

[Steve Barclay]

My right hon. Friend makes an interesting point. She will know that in terms of the epidemiology and the guidance, that is for my right hon. Friend the Secretary of State for Health and Social Care, but she is right with these questions to point to the economic impact of the measures. That is something on which we continue to have close dialogue with colleagues in the Department of Health and Social Care to ensure that she gets the clarification she seeks.

[Ben Lake (Ceredigion) (PC)]

Yesterday, the Prime Minister stated in the House:

“The furlough scheme is a UK-wide scheme and will continue to be available wherever it is needed.”—[Official Report, 2 November 2020; Vol. 683, c. 54.]

Will the Minister therefore confirm whether the Prime Minister was right and that furlough support will be available to Wales in the future, should public health priorities require restrictions to be reintroduced? A simple yes or no will suffice.

[Steve Barclay]

Several times now I have quoted what was said. The Prime Minister said that the Government will always be there to provide support to all parts of the United Kingdom. It is worth taking a step back and looking at the fact that the UK-wide ability to act is how we have been able to provide so much support across the UK with schemes such as the furlough scheme, the self-employed scheme, the loans, extensions and so forth. It is our ability to act across the United Kingdom that has helped many businesses to weather the storm.

Covid-19: Economy Update

Ben Lake Excerpts

Thursday 22nd October 2020 Commons Chamber

[Rishi Sunak]

I can give my hon. Friend that assurance. He mentioned some numbers, and that is ultimately what it is about. We stand in this place and talk about many billions of pounds and policy, but often it is about the people and the jobs and livelihoods that we are trying to protect. I am delighted to hear that the 20,000 people he mentioned have benefited from the support that this Government have put in place, and I can give him and them the assurance that we will continue to do exactly that.

[Ben Lake (Ceredigion) (PC)]

As Wales enters a firebreak lockdown tomorrow evening, there are concerns that there will be a week-long gap in support between the end of the furlough scheme and the introduction of the new wage support scheme. It would be good if the Chancellor could consider giving Welsh businesses early access to that scheme. May I ask him to clarify the eligibility criteria, in particular whether seasonal workers will be eligible for support?

[Rishi Sunak]

There will not be any gap in support, I am pleased to tell the hon. Gentleman, because, as he knows, the CJRS runs all the way to the end of this month and the job support scheme starts on 1 November. There will be complete coverage and no interruption. We provided Barnett funding on the grants from the moment I announced them, so that is also available to the Welsh Government. With regard to the specific treatment of seasonal workers and the computation of the reference earnings, that is set out in the guidance for the CJRS and that will remain consistent in the new job support scheme.

Additional Covid-19 Restrictions: Fair Economic Support

Ben Lake Excerpts

Wednesday 21st October 2020 Commons Chamber

[Steve Barclay]

My hon. Friend is absolutely right, and we debated this yesterday. Much of the debate is about tier 3, but there are businesses that are feeling the impact in tier 2, and we are acutely aware of that and we are discussing that with business leaders. The key issue there is that we have taken toggling measures, for example, the cut in VAT and the extension of the loans. |As he knows, as a senior business figure himself, cash flow is a huge issue for businesses, and the Chancellor has been very keen to work constructively with all business leaders, the trade unions and others, and to consult widely. We have been willing to listen and to extend, for example, the loans that were available in order to pick up exactly the point my hon. Friend makes in terms of businesses in tier 3.

[Ben Lake (Ceredigion) (PC)]

The Minister mentioned earlier that he will meet the Finance Ministers of Wales, Scotland and Northern Ireland later this afternoon. Is he in a position to tell the House whether he expects further support packages for Wales to be announced at that meeting ahead of the two-week firebreak that will come in on Friday?

[Steve Barclay]

We have a long-standing and established methodology in terms of support across the United Kingdom through the Barnett process that allows the broad shoulders of the United Kingdom—[Interruption.] I suspect that the hon. Member for Glasgow North (Patrick Grady) wants to come in on that point, so I will give way. It will be done through the Barnett process, but there are some specific issues raised, such as the guarantee, which we have discussed previously.

Areas with Additional Public Health Restrictions: Economic Support

Ben Lake Excerpts

Tuesday 6th October 2020 Commons Chamber

[Steve Barclay]

My hon. Friend is right that the youth investment fund is a very important allocation—£500 million was allocated in September 2019 under the fund. However, he speaks to a more fundamental point, which is that many of those most affected by covid’s economic consequences are the young, who tend to concentrate in areas such as hospitality that are most impacted. That is why the Chancellor has set out measures such as the £2 billion for the kickstart scheme, the tripling of traineeships, the £2,000 for apprentices and the doubling of work coaches. We recognise that it is not just the number of young people whose jobs go, but the length of time that they are out of the labour market that is absolutely crucial. Both of those are key areas of focus and I look forward to working with him in our response on them.

[Ben Lake (Ceredigion) (PC) [V]]

Further to the question asked by the hon. Member for High Peak (Robert Largan), what consideration have the Government given to the impact of local lockdowns on businesses and supply chains located beyond the lockdown areas? What support will be made available to businesses that are materially impacted by restrictions imposed elsewhere?

[Steve Barclay]

As I said to my hon. Friend the Member for High Peak (Robert Largan), it is absolutely valid for colleagues across the House to raise the wider impact. That is partly why we gave the guarantee on Barnett consequentials, which has meant that the Welsh Government have benefited to the tune of £4 billion. It is why we are engaging very closely with the Welsh Government, among others, on shaping our response, and why the Chancellor set out, through the winter plan, the package of additional measures, building on his plan for jobs—the £30 billion that was announced in July. We recognise that it is not only the areas most affected by lockdown that have pressures in terms of retaining jobs or cash flow challenges; the winter plan spoke to the issue much more widely across all parts of the United Kingdom.

The Economy

Ben Lake Excerpts

Thursday 24th September 2020 Commons Chamber

[Rishi Sunak]

I thank my hon. Friend for her comments, and she is right: the Government must respond with agility as the virus and our economy evolve over the coming weeks and months, and we will continue to do that. I very much sympathise with her and those in the events industry, given the difficulties they are experiencing. I know that conversations are ongoing with the Business Secretary about what can be done to best ensure that, at some point in the future, we can return to what we all want, which is the thriving industry her constituency wants to see.

[Ben Lake (Ceredigion) (PC)]

The Chancellor mentioned that the existing self-employed support grant will be extended on similar terms and conditions to the new jobs support scheme, but can he tell the self-employed in rural areas such as Ceredigion, who represent almost 30% of the workforce, whether he has changed the terms and conditions in such a way as to ensure that those who have been excluded from support so far will now get the help they deserve?

[Rishi Sunak]

The eligibility conditions will remain as they are, with refinements to make sure that businesses are still trading over the winter and to recognise that they have suffered and are suffering an impact on revenues through coronavirus. The reasons for those eligibility criteria are well documented and have been discussed in this House many times, so I will not recap exactly why they are there, but it is worth bearing in mind that the extension of this support means that we have provided more support to 2.5 million self-employed people, which is considerably more than any other country has and for a longer duration.

Support for Self-employed and Freelance Workers

Ben Lake Excerpts

Thursday 17th September 2020 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

I join others in congratulating my hon. Friend the Member for Brighton, Pavilion (Caroline Lucas) on securing the debate this afternoon and on drawing attention not only to the pivotal role of self-employed people across the UK but to the need for further Government support for them in this time of crisis. This is particularly the case in Wales, where self-employed rates in rural areas such as Ceredigion are far above the UK and Welsh averages. In the previous debate, my right hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts) rightly noted the need for sector-specific extensions to the furlough scheme, and I would argue that a similar targeted approach is urgently required to support self-employed and freelance workers, especially those working in the creative, tourism and hospitality sectors, and also in the events sector, which in Ceredigion has been particularly hit this summer, with the cancellation of dozens of local agricultural shows, carnivals, weddings and eisteddfodau.

In the brief amount of time I have available to me this afternoon, I want to echo others in urging the Government to look again at helping the individuals and businesses who have been unable to access any support thus far. I welcome the UK Government’s self-employed income support scheme, but, as has already been noted, almost 3 million self-employed workers were excluded from it, many of whom live in Ceredigion and work in a range of sectors and different circumstances. Composers and architects, newly employed workers and small business owners have all been excluded from support after falling foul of the scheme’s criteria, perhaps by submitting PAYE details a few weeks after the cut-off date or because they have earned too much in previous years.

Another hurdle that needs to be addressed, which has punished far too many, is the requirement to prove that at least 50% of an individual’s income comes from self-employment. That criterion especially disadvantages freelancers in the arts and creative sector, who draw their income from a range of sources. Just as devastating was the exclusion from both the coronavirus job retention scheme and the self-employed income support scheme of newly self-employed workers and those limited company directors who are paid through PAYE on an annual basis.

I am talking here about individuals and businesses who have seen their income completely disappear in recent months and who have little prospect of any work for months to come, and I therefore urge the Government to take action to address these issues, to extend the support to prevent a jobs crisis over the winter, and to look again at the rules so as to help those who have thus far been excluded through no fault of their own to get some support.

The Economy

Ben Lake Excerpts

Wednesday 8th July 2020 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

Diolch yn fawr, Madam Deputy Speaker, for calling me to speak in this important debate.

It is a pleasure to follow the hon. Member for High Peak (Robert Largan). I agree with him that some of the measures in today’s statement were bold. I would highlight the cut in VAT to 5% for the tourism and hospitality sectors. That is, of course, a long-standing Plaid Cymru policy. I never thought I would stand in this place and thank a Conservative Chancellor for the temporary implementation of Plaid Cymru policy, but there we are. I do thank him nevertheless.

I also put on the record my support for the measures on youth employment. They are particularly important for Wales, where employees under the age of 25 were almost three times as likely to be working in sectors that were shut down than those of any other age group. Of course, 18% of female employees worked in shut-down sectors, compared with 14% of male employees. In welcoming those measures, I note that the fundamental challenges facing the UK economy, including low productivity and regional inequality, have been exacerbated by the covid-19 crisis.

To address those long-term problems, I pressed the case for a review of existing tax reliefs and further innovation funding during the Finance Bill debate. Today, I fear that an opportunity has been missed to increase R&D credit, as well as to review reliefs such as the enterprise investment scheme to ensure that taxpayers’ money is adequately supporting private investment in the marginalised areas of the UK. I note only that 46% of public R&D funding is spent between London, Oxford and Cambridge.

I had hoped to see some measures to address that issue. What is more, the statement might have talked a little more about the future shape of the economy. Despite the ravages of covid-19, we have an opportunity to facilitate a green transition and to address some of the fundamental issues of the pre-covid economy that I mentioned earlier—low productivity, low wages and low growth.

What I would argue is the long overdue support for home insulation is another measure that I welcome. In doing so, I say to the Minister that I hope the measure will utilise the fantastic nature of Welsh wool, particularly given the difficulties that the British wool industry is facing.

With research showing that just 1% of the global fiscal response to covid-19 is going to green projects, today was a clear opportunity for the Government to set out their environmental credentials and to lead by example. Instead, the £3 billion promised pales in comparison with the example of Germany, where a third of its €130 billion stimulus is targeted directly at lowering emissions. I am conscious that the Chancellor suggested in his speech that a third phase to the economic response will focus on efforts to rebuild the economy, so I very much hope that such issues will be addressed at that point.

To conclude, the Chancellor explained that the current phase—the second phase, which we are addressing today—is about jobs, and measures on jobs being placed at the heart of the economic recovery. In that respect, I note that economic recovery is intertwined with the success of containing any outbreaks of the virus. As such, we need to explore ways to introduce targeted furlough schemes and business support schemes to support local lockdowns, which recent events suggest will become the norm.

My concern is that with statutory sick pay at less than £100 a week at the moment, many people will face a difficult decision if they are asked to self-isolate—a choice between doing the right thing for public health and putting enough food on the table for their family. That is an unnecessary risk, which could undermine not only the efficacy of local lockdowns but any wider economic recovery. I hope that the Minister and the Government will give further consideration to those points.

Oral Answers to Questions

Ben Lake Excerpts

Tuesday 7th July 2020 Commons Chamber

[Jesse Norman]

My hon. Friend will know, of course, that we published a code of practice to encourage all parties involved in a landlord-tenant situation to work together to ensure equity and swift recovery. More widely, we have made available over £330 billion of guarantees through the coronavirus business interruption loan scheme, the large business interruption loan scheme, and the corporate financing facility. But of course I would be happy to continue to discuss this issue with him.

[Ben Lake (Ceredigion) (PC)]

What plans he has to issue a green bond.

[The Economic Secretary to the Treasury (John Glen)]

The Government have been carefully considering the potential issuance of a UK sovereign green bond. At present, we have no plans to do that, but we continue to monitor the case for one, and we will keep it under urgent review.

[Ben Lake]

I am glad that the Government will keep this matter under consideration because, as evidenced recently by Quebec, green bonds can be effective in raising capital investment and investment for operational expenditure to further the green transition. Will the Government also consider enabling the Welsh Government to issue such a bond to help the effort for a greener economy?

[John Glen]

Clearly, debt and the handling of it is a significant challenge for the Government at this time. The core gilt programme is the most stable and cost-effective way of dealing with our financing needs. The hon. Gentleman makes a reasonable point. We will continue to look constructively at all options and at the changing environment as a consequence of this crisis.

Finance Bill

Ben Lake Excerpts

Report stage & Report: 2nd sitting & Report: 2nd sitting: House of Commons
Thursday 2nd July 2020 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

Diolch, Madam Deputy Speaker, for calling me to contribute to this important debate, the importance of which is perhaps not reflected in the attendance in the Chamber today, but as the shadow Minister, the hon. Member for Houghton and Sunderland South (Bridget Phillipson) rightly said in her opening remarks, reviews of tax reliefs tend to be important not just for improving the transparency of their effectiveness but, as the hon. Member for Thirsk and Malton (Kevin Hollinrake) said in relation to the enterprise investment scheme and the future fund, for their transformative impacts on policy. I agree with him that one of the key things that we need to consider as we move ahead is how we can encourage greater investment, especially equity investment, in regions other than London. I hope to dwell a little on that point later in my remarks.

It is a pleasure to follow my hon. Friend the Member for Aberdeen South (Stephen Flynn), who not only laid out effectively the inefficiencies of the tax reliefs system but raised the important question, which I would like to address, of whether reliefs achieve their economic objectives in the current climate and context, as we try to rebuild or at least begin to consider how we can rebuild after covid-19. Tax reliefs will have an important part to play, and it will be vital that they are channelled to those who will rebuild the economy.

I wish to speak at greater length to amendment 1 and new clause 17, both of which are tabled in my name. Both are probing amendments. I seek to probe the Government’s commitment to levelling up every nation and region of the UK by requiring them to report on the differential territorial impacts of the changes that the Bill introduces to certain reliefs and tax incentives.

Most hon. Members will welcome the Conservatives’ efforts to see balanced economic growth throughout the UK and in particular to move away from what I consider to be a hub-and-spoke approach to economic development. Over the past decade, the Government have mainly concentrated on improving connectivity between rural areas and smaller towns and the supposed economic engines of the larger cities, as opposed to incentivising and supporting economic growth in those areas themselves.

Such a centralised model has inevitably concentrated economic activity in London and the south-east. As a consequence, Wales’ potential and that of other regions and nations of the UK has been overlooked. That is perhaps most apparent when we consider the way in which public funding for certain development has been allocated. Between 2001 and 2017, London R&D funding per head totalled almost twice the UK average— £3,900 per head compared with a national average of £2,300. What is more, the trend worsened in that time. The share of the core research budget spend across the three cities of Oxford, Cambridge and London—also known as the golden triangle—rose from 42.1% in 2002-03 to 46% in 2017-18.

Perhaps just as relevant to this debate is how public spending on transport infrastructure is allocated. I note that per-head spending in London in the past decade has averaged nearly three times that spent in the rest of the UK. During the same period, the city has received five times the average per-head spend on culture. It is perhaps unsurprising, therefore, given that disparity, that the golden triangle of London, the south-east of England and the east of England also attracts the lion’s share of venture capital. Indeed, the region received 73% of all venture capital between 2016 and 2018, according to the British Private Equity and Venture Capital Association. When we reflect on this concentration of venture capital in one region of the UK, as with R&D, not only are the failings of past economic development policy laid bare, but it is difficult to deny a popular saying in Ceredigion, “I’r pant y rhed y dŵr”—or in English, “To the hollow the water runs”.

It is clear that as the world moves increasingly to a knowledge-driven economy, expenditure on R&D will be vital not only as a source of innovation that can be commercialised to form the basis of the next generation of business, but as a means of equipping people with the requisite skills for the new economy and, as my hon. Friend the Member for Aberdeen South said, the post-covid economy. It follows, therefore, that the economy of any nation or region that does not receive the right level of support will be hindered in its attempt to adjust to the challenges of tomorrow. Government support for R&D is essential for Wales in particular, to address problems that range from a low-wage economy to a looming demographic time bomb, while also building an economic platform to take advantage of trends, including automation, that could otherwise cause quite a serious long-term social risk.

New clause 17 would require the Chancellor to report on the geographical impact of changes to several tax rules, including R&D expenditure credit. It would ensure that the UK Government consider how different geographic areas benefit from taxpayer-funded reliefs so that the financial incentives can be better tailored to overcome the UK’s chronic regional inequalities. I have previously drawn attention to the concentration of R&D funding in the golden triangle, but assessments might also provoke a debate within Government about how public spending on other priorities is allocated.

In a similar vein, my amendment 1 would require the Government to consider the unsustainable concentration of private investment in one region of the UK at the expense of the devolved nations and other regions of England. As the UK Government narrow the applicability of the enterprise investment scheme, they need to consider how that will affect firms in different areas of the UK. The EIS benefits us in a great many ways—the hon. Member for Thirsk and Malton outlined them effectively in his remarks. The ways in which the UK Government can encourage the establishment in the devolved nations of venture capital funds, and therefore private investment, is so important. The geographic disparities to which I have already referred are reflected in the EIS. To pick just one example, between 2015 and 2018, only 210 Welsh firms benefited from EIS, receiving just 1.3% of the total investment. By contrast, to pick on the golden triangle again, that area received 67% of all investment. The average UK business angel investment per firm has been some 40% greater than that in Wales.

Modern advanced economies such as Germany, the Netherlands and even the USA have ensured a better geographic spread of economic prosperity, so the Government’s intention to address this policy failure is to be welcomed. However, we must make sure that the rhetoric is backed up by the reality and that the measures designed to realise such lofty ambitions are fit for purpose. My amendment and new clause would require the Government to report on the effectiveness of some tax relief schemes in this regard, and I hope that the Minister can give them some serious consideration.

[The Financial Secretary to the Treasury (Jesse Norman)]

I am grateful to everyone who has contributed to this short but interesting debate. As colleagues have noted, when we think about tax transparency, we are in what might these days be referred to as a niche area of taxation—technical, but no less important. In some respects, it is more important that we do not get lost in the detail but can come back and talk about the issues more widely. If I may, I will address the different clauses and then come to the specific points raised in the debate.

New clause 27 would require the Government to review all

“tax reliefs contained in this Act”.

It states that the review must contain

“the number of tax reliefs…the effect on taxation revenue of each of the tax reliefs…and…an assessment of the efficacy of systems for designing, monitoring and evaluating the effect of the tax reliefs.”

It asks the Government to publish the number of tax reliefs in the Bill and their effect on taxation revenue.

As the House may be aware, the Government already publish tax changes and estimates of the Exchequer impacts of policy changes in the Budget documents at each fiscal event. Moreover, Her Majesty’s Revenue and Customs monitors the effect on taxation revenue of tax reliefs after they are introduced and issues an annual tax relief statistics publication—I am sure that is closely scrutinised by all Members—which includes estimates of the costs of tax reliefs. Building on this, HMRC is also undertaking a project to expand its published costs information. I remind the House that in May HMRC published cost estimates for a further 47 previously uncosted reliefs.

New clause 27 also asks for an assessment of the efficacy of systems for designing, monitoring and evaluating the effect of a relief. As the House will know, the Government consult on new tax reliefs and proposed changes to tax reliefs, bringing in external expertise as part of the policy making cycle wherever possible. Officials are constantly working on ways to improve the policy on development, administration and continuing management of reliefs. As colleagues will know, the Government, and particularly the Treasury, keep all reliefs under review.

The Government also do evaluations of different forms. This work has included evaluations of a number of significant reliefs—some 15 since 2015. These include our R&D tax credits and entrepreneurs relief, on both of which I will say a few words later. In 2015, HMRC published an evaluation of R&D tax credits. In 2017, it commissioned an evaluation of entrepreneurs relief that led to a series of reforms, most recently the significant reduction of its lifetime at spring Budget 2020, which is legislated for in this Bill. The hon. Member for Aberdeen South (Stephen Flynn) picked up on the point about entrepreneurs relief, which he somehow regards as “the tail wagging the dog”. What he calls “the tail wagging the dog” other people would call consultation across Parliament and discussion with stakeholders. Since the measure resulted in a 90% reduction in the scope of the relief, I do not think he can claim that there is any lack of ambition in it.

HMRC will continue to monitor and evaluate reliefs and will bring forward a pipeline of further evaluations in due course. It will also consider a proposal to which I have already said I am quite sympathetic—I thank the hon. Member for Houghton and Sunderland South (Bridget Phillipson); we have discussed this before: a more systematic evaluation programme for reliefs. In the light of all this, the Government do not believe that the new clause is necessary.

New clause 2 would require the Chancellor of the Exchequer to review the impacts of the reduction in the lifetime of entrepreneurs relief that is being legislated for in this Bill within six months of Royal Assent, and specifically to review the impacts on business investment, employment and productivity in the constituent nations and English regions of the United Kingdom. I would first highlight to hon. Members that the Government have already conducted an internal review of this relief that built on the 2017 independent research commissioned by HMRC. That review considered the distributional effects and benefits of the relief against its cost in order to better understand the targeting of the relief. This, in turn, has been used to inform the reform that is being legislated for in this Bill. It ensures that the majority of entrepreneurs are unaffected. A lot of the concern about entrepreneurs relief historically has been that it is not well targeted, and this measure greatly improves the targeting. Unfortunately, the effects of the changes to the relief will not be visible in six months’ time, and for that reason I urge the House to reject new clause 2.

New clause 4 concerns the structures and buildings allowance. It would require the Chancellor to review the impacts of clause 30, which makes miscellaneous amendments to the SBA, within six months of the passing of the Finance Act. Specifically, it would require the Chancellor to review the impacts on business investment, employment, productivity and energy efficiency. Again, I reassure Members that both HMRC and the Treasury already monitor tax reliefs according to the level of risk that they are deemed to pose. It is in the nature of a structures and buildings allowance that it is configured to reflect the fact that it can take many years to erect new buildings. Claims under the SBA are ordinarily settled when businesses bring buildings into use and submit tax returns at year end. For that reason, it would be neither possible nor appropriate to try to draw conclusions on the productivity or energy efficiency impacts of these changes within such a short period.

New clause 17 would require the Government, within 12 months, to assess and report on the geographical effects of changes to business reliefs across a variety of areas. There is a concern, which I recognise, that there are geographical disparities that reflect the historical evolution of our economy in different areas. It is by no means a uniform picture, even outside London.

HMRC does not routinely require businesses to provide geographical information about where expenditure is incurred as part of claims for the R&D expenditure credit, structures and buildings allowance or intangible fixed assets. To do that, changes would be required that would create additional burdens on businesses. Those claiming the reliefs, of course, could only provide information after the year end. For that reason, it would not be possible for HMRC to have information within the 12 months stated in the amendment, even if the amendment were passed. It is not capable of being fulfilled.