Financial Exclusion: Access to Cash

Debate between Bim Afolami and Peter Aldous

Tuesday 21st May 2019 Westminster Hall

[Bim Afolami (Hitchin and Harpenden) (Con)]

I thank the hon. Member for Feltham and Heston (Seema Malhotra) for bringing this debate forward. I speak as chair of the APPG on credit unions and as a fellow member of the Financial Inclusion Commission. When I first came to this place two years ago, I visited a credit union just outside my constituency that serves several of my constituents. A lady there said something very important to me. She said, “Bim, it is very expensive to be poor.” I really thought about that, and everything I have seen in the past couple of years has confirmed my sense of the facts. We have already heard that 39% of people have no savings. When people have very little cash—or, should I say, money, resources, or assets—it can often cost them so much to do things and to borrow money. They can quickly fall beneath the waterline. That is one reason why credit unions are so important, and I echo the things that have already been said about promoting credit unions.

Financial education has not particularly come up in the debate. I lose track of the number of times that people have said over the past five, 10 or 15 years, “We need to promote financial education in schools. People need to learn better habits. They need to be able to manage their money more effectively. They need to understand how mortgages work, how credit cards work, what annual percentage rate is and what interest is”, yet we never do anything. Will the Minister respond to that in his remarks? I know he is not the Education Secretary—at least, not yet.

[Peter Aldous (Waveney) (Con)]

Does my hon. Friend know something?

[Bim Afolami]

I do not say that with any knowledge at all.

2019 Loan Charge

Debate between Bim Afolami and Peter Aldous

Tuesday 20th November 2018 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a pleasure to serve under your chairmanship, Mr Walker. I congratulate my hon. Friend the Member for Wycombe (Mr Baker) on securing this debate, which gives us the opportunity to highlight the devastating impact that the 2019 loan charge is having on many individuals.

My constituent who has been affected by the loan charge is at his wits’ end. His family life has been turned upside down and, as he sees it, he has no alternative but to declare himself bankrupt. He is not a wealthy man. He is not a professional footballer; he is an IT contractor. When he and others were made redundant by BT, they were introduced to financial advisers who set up these schemes for them. He and they acted in good faith, only following the advice given so as to be IR35 compliant.

I want to highlight two issues. My first concern is that HMRC is pursuing the easy targets—individuals who have acted in good faith, are not well off and do not have their own bespoke financial advisers and accountants. My understanding is that the Glasgow Rangers Football Club case, on which the 2019 loan charge is based, concluded that the tax liability fell on the employers. That raises the question why HMRC is not pursuing the client organisations, agencies and umbrella groups that have benefited significantly from setting up these arrangements.

[Bim Afolami (Hitchin and Harpenden) (Con)]

I agree with my hon. Friend’s focus on the individuals involved. Does he agree that the retrospective nature of the measure is not just a matter for the rule of law in the abstract, but that it undermines the trust of those people and their families and communities in our Government and our legal system, and will do so for generations to come?

[Peter Aldous]

I thank my hon. Friend for his intervention—he has a crystal ball, because he has foretold the next item in my speech.

The people affected have become a target. They are vulnerable people. They are not well paid and do not receive many of the benefits and protections that payroll employees do: sick pay, holiday pay and maternity and paternity leave. I would be grateful if my hon. Friend the Minister could advise us when he sums up the debate of whether the impact assessment has looked at the personal circumstances of the individuals who are being pursued, whether they are able to pay and what the impact will be on their lives.

My second point, which my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) foretold, is that the basis on which the 2019 loan charge has been introduced and many individuals are now being pursued is that it is retrospective. It undermines the cornerstone of taxation, which is that a Government should not seek to impose or increase a tax charge on income earned, gains realised or transactions concluded at a time before the legislation was announced.