HMRC Impact Analysis: Customs

Chris Leslie Excerpts

Tuesday 8th October 2019 Commons Chamber

[Jesse Norman]

The way to respond to that is to remind the hon. Lady that when I was at the Department for Business, Energy and Industrial Strategy, I had extensive engagement with different industrial sectors, including the car industry. The same was true when I was at the Department for Transport. There is no doubt, as she will know, that the importers and exporters that are repeatedly crossing the borders will be affected by this. Of course, there are mitigations in place, and I hope she will help us to avoid those by supporting the deal.

[Mr Chris Leslie (Nottingham East) (IGC)]

To put this £15 billion figure in context, it is the equivalent of a 7% increase in corporation tax for those businesses and firms—or, to put it another way, the exact plan of the Labour leadership, were they to get into power and increase corporation tax. If the Minister shifts to the ideological fringes, he should not be surprised if he sacrifices any claim to be in the party of business.

[Jesse Norman]

I think most people would be surprised to hear me considered a member of the ideological fringes of any side of the political debate. We do not wish this country to have to incur this £7.5 billion cost, and we do not think it would be a good idea for the country to have a Labour Government who imposed twice that amount in corporation tax.

No-deal Brexit: Short Positions against the Pound

Chris Leslie Excerpts

Monday 30th September 2019 Commons Chamber

[Mr Clarke]

My hon. Friend is absolutely right. I am afraid we cannot get around the fact that we are now dealing with something very dangerous in terms of the division between the two parties: the division between economic rationality and a programme that would well-nigh destroy the free-market economy in this country. [Interruption.] Labour Members scoff and sneer, but the reality is that anyone looking at the prognosis from the Labour party conference last week—let alone the trillions of pounds of commitments that Labour is now adding up—will see that it would not only destroy our public finances, but would do massive damage to the competitiveness of British business, on which jobs and homes and mortgages depend.

[Mr Chris Leslie (Nottingham East) (IGC)]

Does the Minister accept the specific conclusions in the Office for Budget Responsibility’s fiscal risks report? In July, the OBR ran a stress test on a no-deal scenario, on the model of the International Monetary Fund. It predicted that sterling could depreciate by 10% immediately, because

“market participants judge that a fall in the pound is needed to compensate for the reduced competitiveness with the EU… inflation is initially higher, due to the weaker pound”,

which contributes to the UK’s entering “a year-long recession”. Does the Minister accept the OBR’s analysis, or does he believe that this is “a price worth paying”?

[Mr Clarke]

What I will say is that I believe we can avoid that scenario entirely if we get a good deal and leave the European Union according to plan, on 31 October. We are very clear about the fact that, in a scenario whereby we cannot get a deal through the House, we will deliver on the referendum mandate and leave the European Union. That is uncontested Government policy. We will ensure that we make the dynamic policy choices that will enable our economy to remain strong, robust and full of opportunity.

Oral Answers to Questions

Chris Leslie Excerpts

Tuesday 2nd July 2019 Commons Chamber

[Elizabeth Truss]

The reality is that the Scottish Government are now forecast to bring in lower rates of income tax than expected, because they have not followed through on our raising of the threshold to £50,000, so people in Scotland on £50,000 are now paying £1,500 more tax. The fact is that raising tax reduces incentives for people to get up the earnings ladder, reduces economic growth and means that we do not have the opportunities and funding for public services.

[Mr Chris Leslie (Nottingham East) (Change UK)]

As my hon. Friend the Member for Wirral South (Alison McGovern) said, the poorest, most vulnerable people in society, even those who are in work but struggling to make ends meet, will be hit particularly hard by a catastrophic no-deal Brexit. The Minister cannot get away with simply deflecting this into an attack, which I would share, on the economic policies of the Labour party. This is the clearest, most present danger facing our country, and surely she will not happily move towards a no-deal Brexit.

[Elizabeth Truss]

What the hon. Gentleman is missing is the fact that if we continue to delay Brexit, first, we would not be delivering on what British people voted for over three years ago; and secondly, there will be continued delay in our economy—a continued lack of investment—due to a lack of certainty.

Spring Statement

Chris Leslie Excerpts

Wednesday 13th March 2019 Commons Chamber

[Mr Hammond]

Yes. My right hon. Friend—perhaps unsurprisingly, given his constituency—is very interested in these issues, and I would be happy to meet him to go through the numbers. There are a number of moving parts underneath the headline number. Stamp duty in Wales has been devolved, which takes a significant chunk out of the total number. There is an overall slowdown in the market, which has an effect. We have also exempted first-time buyer purchases from stamp duty, which is a considerable chunk of the reduction he refers to, but I would be happy to talk him through the details.

[Mr Chris Leslie (Nottingham East) (Ind)]

It is a fundamental mistake for the Chancellor to underestimate the impact of Brexit on his future forecasts. To dismiss the 3.2% collapse in the forecast for business investment is a strategic error that he is making for the future. We hear the Chancellor talk about a “deal dividend” and the shadow Chancellor talk about a “jobs-first Brexit”, but that is a mythology. Brexit in all forms will hit our business investment and our tax revenues and create austerity for a decade. Can the Chancellor and the shadow Chancellor stop treating this as business as usual?

[Mr Hammond]

While the hon. Gentleman is entitled to his point of view and often makes a valuable contribution to the debate, he has to be careful that he does not accidentally veer off-piste into “talking Britain down” syndrome. He talks about a collapse in business investment, but I hope he would agree that this is likely to be a cyclical reduction in business investment. If he talks to businesses, they will tell him that they are postponing investment decisions until they have greater clarity about the future. I agree; we cannot keep them hanging there forever. We need to give them clarity and certainty as quickly as possible. I believe we will do that in this House over the next few weeks, and when we do, I believe that the great majority of that investment—postponed, not cancelled—will flow back into our economy later this year.

Oral Answers to Questions

Chris Leslie Excerpts

Tuesday 5th March 2019 Commons Chamber

[Mr Hammond]

I think the hon. Lady is talking about radar interference problems with wind turbines, something I remember from my Ministry of Defence days. The Treasury and the Department for Business, Energy and Industrial Strategy will always argue robustly for protecting the economic potential of these technologies, but of course we have to look at our national security interests as well and get the balance right.

[Mr Chris Leslie (Nottingham East) (Ind)]

How on earth do people think that we are going to be improving the UK’s new technology position when we are on the brink in this House of committing to a disastrous Brexit that will undermine our research funding, stifle our skilled migration, hobble in some ways some of the developments in our pharmaceuticals and biotech sector, and wave goodbye to the European Medicines Agency? Is not the truth that actually our task is going to be to prevent a deterioration in our prospects as a country if we go down that route?

Finance (No. 3) Bill

Chris Leslie Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Tuesday 8th January 2019 Commons Chamber

[Mr Speaker]

Order. Just before I call the next Member, we must hear from the Minister, and the Opposition Front Bench should really have the chance, very briefly, to comment on its own lead new clause before we come to the vote.

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

I will be brief, Mr Speaker. I will want to move amendment 8, which stands in my name and in those of many hon. Members on both sides of the House. In many ways, it complements amendment 7, which was tabled by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper).

Amendment 8 would institute a commencement motion for the powers that the Treasury is seeking. Clause 89 might have been wrapped up as fairly minor and inconsequential, but essentially the Government are asking for pretty whopping permission to start legislating for no-deal arrangements. At this stage in the game, I really do not think that right hon. and hon. Members should be delegating our powers entirely to Ministers in this way without question. I know it is difficult for the right hon. Member for West Dorset (Sir Oliver Letwin) to rebel for a second time, on amendment 7, but I would like to persuade him to do so for a third time on amendment 8. A commencement motion is an important adjunct so that we can give the House and hon. Members the chance to express how they wish Brexit to go forward—so that we have the opportunity to express our view. A commencement motion would allow hon. Members the chance to do just that.

As things stand—certainly if the Government’s Brexit proposal is negatived next week—there could be 21 days or perhaps another seven days before anything is voteable on in this place. My own view is that before we start delegating powers to Ministers on these issues, or indeed on others, we need to start saying that enough is enough. Hon. Members need a chance to help to guide the way forward. There are many different views on these particular issues—the hon. Member for Grantham and Stamford (Nick Boles) has his particular preference and I have mine—but we need to provide for ourselves the time and the space to express them. Amendment 8 would simply provide for a commencement motion.

I hope that the Minister will recognise there is a strong cross-party opinion that we need now to give voice to Parliament. We cannot just drift into a no-deal situation. Parliament does want to take back control. He should concede and accept the amendment now.

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I am grateful to all right hon. and hon. Members for the debate.

Delivering the deal negotiated with the EU remains the Government’s central priority. It is neither our preference nor our expectation that we will leave the EU without a deal. However, as a responsible Government, we must prepare for all scenarios. In the Budget, we furthered that commitment by confirming an additional £500 million of funding in 2019-20, taking the total Government investment on preparing for EU exit to over £4 billion. At the Budget, to help to ensure that the tax system can continue to function under any EU exit outcome, we announced a series of modest, sensible provisions, which included a power to make necessary minor technical amendments to UK tax legislation. It also allowed, as we have heard, for the Government to introduce a carbon emissions tax to replace the EU emissions trading system in the event of no deal. By including those measures in the Finance Bill, our foremost motivation is to provide certainty to taxpayers—the kind of certainty that one would expect from any responsible Government.

Let me turn to amendment 7, which was tabled by the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper). Prior to proceedings in the Committee of the whole House, which considered clause 89, I placed a list of changes envisioned under the clause in the House of Commons Library. Right hon. and hon. Members who have taken the trouble to review the list will see that they are indeed minor technical changes, and out of minor and technical changes, these are the most minor and technical. Since then, we have received no indication from any Member to the contrary. Clause 89 is simply prudent preparation to provide our taxpayers with the certainty they deserve.

As I made clear, the Government do not want or expect a no-deal scenario. That was why we negotiated the withdrawal agreement, which will see us leave the EU in a smooth and orderly way on 29 March and sets the framework of our future relationship. As we heard from my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) and my hon. Friend the Member for Grantham and Stamford (Nick Boles), the best way of avoiding a no-deal scenario, if that is of grave concern to Members, is to support the withdrawal agreement next week.

Leaving the EU: Economic Analysis

Chris Leslie Excerpts

Wednesday 28th November 2018 Commons Chamber

[Mr Speaker]

Ah, yes, the hon. Member for Nottingham East (Mr Leslie); he is a patient and laid-back fellow.

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

Thank you, Mr Speaker—I think.

On reflection, it was probably quite wise of the Chancellor not to come here to give this statement. He definitely owes the junior Minister a stiff drink afterwards, because he is not waving, but drowning, especially as in this dodgy prospectus he has essentially admitted that we will not know on what free trade agreement the country is being asked to vote on 11 December. Does he not realise that the reason so many Members will not buy the dodgy sales pitch he is peddling today is that nobody is convinced about this Brexit lottery and just being told “Have faith, keep your fingers crossed, go with us in this giant leap in the dark”?

[Mel Stride]

It is not a giant leap in the dark to have a political declaration that makes clear that the deal that both sides will pursue in good faith will have at its heart a deep free trade agreement between ourselves and the EU27 with no tariffs, no quotas, no additional charges and so on, and will give us an end to free movement, end our sending vast sums of money to the EU and see us free to go out and do deals with other countries around the world.

Oral Answers to Questions

Chris Leslie Excerpts

Tuesday 6th November 2018 Commons Chamber

[Robert Jenrick]

The plans set out in the Budget were designed exactly for parts of the country such as my hon. Friend’s constituency. The £28.8 billion national roads fund will provide the largest ever investment in our strategic roads, and more money for potholes and pinch points. The future high streets fund will enable small towns across the country, including in the midlands, to be transformed and become thriving communities once more.

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

How does the announcement in the Budget that non-NHS capital funding will actually fall in the coming years help the country’s productivity?

[Robert Jenrick]

The Budget announced the largest increase in capital spend in our economic infrastructure since the 1970s. Under this Government, investment in our economic infrastructure will be £460 million a week higher than under the last Labour Government.

Leaving the EU: Central Counterparty Clearing

Chris Leslie Excerpts

Thursday 1st November 2018 Commons Chamber

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

The title of this debate may encourage hon. Members to flee the Chamber, but I encourage them to leave via the House of Commons Library, which can explain why central counterparty clearing services are so incredibly central to the infrastructure that underpins business, corporate finance and the nature of our economy, and why Brexit could potentially have a significant effect on such services.

To give a sense of scale, the British economy is worth about $4 trillion. LCH, one of the biggest central counterparty clearing services, is owned by the London stock exchange, and this year alone it has cleared $812 trillion-worth of derivative contracts—largely interest rate swaps. That is a mind-boggling sum of money, and I am raising this issue today because it is an internationally important liquidity pool. The UK specialises in this facility, but with the UK leaving the European Union, the jurisdiction in which these CCP operations take place could well be fragmented, which could have a destabilising effect on the operation of central counterparty clearing services.

The question is: if we crash out of the European Union, or if we do not get the right sort of regulatory framework, what will happen to those trillions of dollars’ worth of derivative contracts? This is one of the most significant cliff-edge issues in Brexit, and it has not had anywhere near enough attention or coverage.

By way of background, I will provide an example of what a CCP operation does and what it clears. Imagine a construction company that is getting a big loan from a bank to build a housing estate, or whatever. That loan is quite a big liability for the business, and often the loan will come with a variable interest rate. In order to manage the liability, the construction company might want to swap that variable interest rate for something a little more predictable, a little more stable—perhaps a fixed-rate interest arrangement. Such interest rate swaps are now a common or garden part of corporate business finance. If we are talking about stability in the economy, such products, though complicated, are often the wiring behind the scenes. They really are important to how we stabilise our economy.

In recent times, central counterparty clearing facilities have developed to make sure that companies do not necessarily have to make these arrangements bilaterally with one another, because they can clear them through a central fund that has an insurance buffer arrangement in case of default on such contracts. Companies such as LCH can go through a number of layers in order to cope with the default. We saw a recent default scenario in Norway, where an energy trader was overexposed and a CCP arrangement absorbed much of that default shock and prevented contagion that could have had wider ramifications around the world. This certainly operated in respect of Lehman Brothers and others in the financial crisis. Since then, policymakers worldwide have recognised that CCP is a really important pillar of our financial stability mechanisms. So these are important insurance policies and this is an international pool of liquidity, and London and the UK are right at the heart of those operations.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend is drawing attention to an important set of issues of which I was not fully aware. He would probably agree that we cannot have an “It’ll be alright on the night” approach from the Government to such complex arrangements—we need surety on them. Was he interested, as I was, to see Commissioner Barnier talking earlier about how there had been misleading press reports about a deal on financial services and about many of these matters being close to being agreed, and saying that that was not the case?

[Mr Leslie]

My hon. Friend rightly takes us to the more contemporary story about what is happening with these, because Brexit has put everything in limbo. Will these CCP operations be able to continue to service the vast majority of euro-denominated interest rate swaps or derivative products? The European Union had been developing new supervisory arrangements that would have included the UK. Brexit came along and of course those have all now been put into abeyance because the UK may be taken out of those jurisdictions. Time has ticked on and we are now five months, perhaps less, away from the moment of change, yet we still do not have any certainty about what will happen. However, we have heard various rumours.

Last week, the Governor of the Bank of England, Mark Carney, highlighted £41 trillion-worth of outstanding contracts that could be forcibly voided—that could fall out of legal certainty—if we do not get some sort of arrangement put in place. Earlier in the week, EU Commissioner and Vice-President Valdis Dombrovskis indicated that the EU might allow the UK CCPs after Brexit to operate on a temporary basis, with some strict conditionality. Of course we saw the report in The Times today that perhaps in the negotiations there was some sort of sense in which UK financial services companies, including these CCPs, would be able to operate on an equivalence basis, which is not as good as the arrangements we have, where we are around the table and able to make the rules on regulations. We would be a rule taker, but of course we may be allowed access to European markets—and, potentially, vice versa. The danger with that is that it is precarious and it could be switched off at a moment’s notice if policymakers fell out, for whatever reason.

As my hon. Friend has pointed out, today Commissioner Barnier poured a big old dose of cold water all over that, saying, “You should not believe everything you read in the paper.” He reiterated that it was really in the hands of the EU to decide whether equivalence continued. This would not be an ideal situation at all, and the risk is that we would need to see CCP clearing services develop rapidly in other jurisdictions in Europe. Of course the Americans will have their arrangements, but that could start to undermine the centrality of the UK. That would be a great pity, because the UK has expertise and a relatively good regulatory approach, working with our European colleagues.

So the main question I want to put to the Minister is: what is the Government’s attitude to the future, long-term, stable, permanent regulation environment? Are we going to align ourselves closely or in harmony with the EU regulatory framework for central counterparty clearing arrangements? If that is the case, it would be useful to know that that is British Government policy at this stage, because that might then enable something to be built on equivalence. We could possibly move to a position in which the UK still has a say in the regulatory arrangements.

In my view, the public should be given a chance to think again about this whole thing and, if they want, there should be a people’s vote so that the option to remain is still viable. Nothing has been decided that should prevent that from happening. If we are to leave the European Union, it would not be a good thing to do so and put all these things up in the air. We should not fragment the financial safety regulatory arrangements and potentially put businesses, jobs and livelihoods at risk.

[Kerry McCarthy (Bristol East) (Lab)]

I used to do this sort of thing for a living as a derivatives lawyer, although that is not something to which I own up very often these days. I was working in the City at the time of preparations for the millennium bug, and when the euro came in I was involved in cleaning up the mess after the Barings collapse. With the millennium bug in particular, people said afterwards that it was a big fuss about nothing and that it was totally alarmist and exaggerated for people to say that it was going to cause chaos. What they did not realise was how much work had to go on behind the scenes to make sure that that chaos did not happen. There is a real danger of complacency with situations like the current one, with people thinking that it will all sort itself out. Does my hon. Friend agree?

[Mr Leslie]

I do agree, and I do not think that the work is being done. Frankly, there should be more leadership. We are in a rudderless situation right now. We have a lot of regulators—the Bank of England, the European Securities and Markets Authority and others—but they are of course subservient to the political policy makers, and although I hope that those policy makers are apprised of these issues and know the scale, I am not that confident that they are or that it is high up their agenda. I am not sure that I have heard the Prime Minister talk about these issues, let alone the Chancellor of the Exchequer. Perhaps the Minister will be able to enlighten us on that.

I shall come to an eventual conclusion by explaining why there might be a number of problems. Firms are currently discussing a lot of contracts that are not yet cleared. If we do not have the option of central counterparty clearing—in particular from the European side in respect of whether they can access London—what stability risks will be generated in those scenarios? Will we lose liquidity? If we do, will we see costs going up for businesses? When costs go up for businesses, will they be passed on to customers? That would have a drag effect on the worldwide economy.

The issue for those contracts that are already cleared—that are already in existence—is whether they will still be extant after 29 March, because if a whole load of existing contracts are in place, whether in Europe or wherever, many will have clauses that require notice to be given if their legal validity is due to expire. It could be six months or nine months, but we are now certainly coming into the period in which the holders of those contracts will have to start to give notice and to say, “We are not certain that these existing financial contracts will be viable or in place, because of the risk of falling into legal no man’s land after 29 March.” There is a clear and present risk to the stability not just of our economy or Europe’s economy, but of the worldwide economy. Although this can seem a very dry topic, everybody should stay focused on the hundreds of trillions of pounds-worth of value that might have an effect on the wider economy.

Will the Minister say what we are going to do to come to a swift conclusion—certainly within the next few weeks—on this issue? I know that the UK has made an offer to the EU to allow temporary access to UK firms. The question is obviously whether that is going to be reciprocal, but if we are to offer that, are we going to legislate for it and put that guarantee into law? That could be done right now. I really want to find out the Treasury’s plan. Do we know that the Government care and are taking an interest in the stability of the UK and EU economies, and in businesses, jobs and the livelihoods of all our constituents, who will undoubtedly be affected by this issue?

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

I congratulate the hon. Member for Nottingham East (Mr Leslie) on securing this debate and thank him for what he said. He set out very clearly the risks and the need for clarification. I am very happy to give him the answers to the questions that he has posed in his thoughtful and helpful speech.

I, first, wish to acknowledge the issue of no deal and to clarify from the outset that the Government firmly believe that it is in the interests of the EU and the UK to strike a deal. That remains the clear goal on both sides and we are confident that that will be achieved. I reassure the hon. Gentleman and the whole House that an enormous amount of work and dialogue is going on at all levels in order to understand the issues that exist on both sides.

Our proposal for the future UK-EU relationship in financial services seeks to be both negotiable and ambitious. It is founded on preserving the economic benefits of the most important financial services traded between us and on ensuring stable institutional processes for governing the relationship into the future. That is the best way to protect financial stability and open markets, and it is in the interests of businesses and consumers on both sides. Just for clarification, under our plan, we would build on the EU’s existing equivalence regimes but expand their scope to recognise business activities that are in the interests of both the EU and the UK but not covered by the existing regime.

[Mr Leslie]

Just stepping back from the specifics, on the policy stance of the UK Government, are we intending to remain in lock-step with our European neighbours in terms of the regulatory approach that we take—as a matter of philosophy? The Americans would perhaps like us to depart from that, but it feels to me important, for our existing market access, that a commitment is given to preserve some of the harmonies that we already have.

EU Customs Union and Draft Withdrawal Agreement: Cost

Chris Leslie Excerpts

Monday 22nd October 2018 Commons Chamber

[John Glen]

There is no expectation that this Government will seek to pay more money to the EU. We are in negotiation, as has been set out. We have made considerable progress. We have a small number of items to resolve, but the intention is to get the best possible deal for the British taxpayer in the national interest.

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

Will the Minister break it gently to the right hon. Member for Wokingham (John Redwood) that, if we stay in the customs union and the single market—and, quite frankly, if we remain in the European Union—we will save our constituents that £81 billion that will be lost to them otherwise? That is not my calculation, but the Minister’s—the Treasury’s own calculations and forecasts from last December say that our constituents will be £81 billion worse off if we leave on the WTO terms of the right hon. Gentleman.

[John Glen]

I have to say to the hon. Gentleman that I am not sure that my right hon. Friend the Member for Wokingham (John Redwood) has a lot of faith in the Treasury on this, so I feel there is little point in taking that figure back to him.