(11 years, 10 months ago)
Commons ChamberI beg to move amendment 7, in page 2, line 3, at end insert—
‘(6A) In any agreement to give financial assistance in this section the Treasury or Secretary of State shall give reasonable consideration to clawback provisions which safeguard best value for the taxpayer.’.
With this it will be convenient to discuss the following:
Amendment 12, in clause 4, page 3, line 8, at end insert—
‘(f) the beneficial owners of any debt issued by a company receiving infrastructure assistance or one of their subsidiary companies,
(g) the beneficial owners of any company which has entered into an agreement to receive infrastructure assistance,
(h) for the purposes of this Act beneficial owner has the same meaning as that conferred by the Money Laundering Regulations 2007.’.
New clause 3—Customer due diligence measures
‘(1) Before any infrastructure assistance is given the Treasury must apply customer due diligence measures on any business requesting infrastructure assistance.
(2) For the purposes of this Act customer due diligence measures will have the same meaning as that conferred by the Money Laundering Regulations 2007.’.
Amendment 7, which stands in my name and those of my hon. Friends, seeks to ensure that the Bill provides a safeguard for taxpayers’ money. After all, £50 billion of guarantees could be underwritten for the private sector on pretty much any kind of scheme, and we heard fuzzy logic from the Minister earlier, when he said that infrastructure is not quite as defined as it appears in the Bill, and that some projects could be national and some foreign.
In some circumstances, underwriting can be beneficial and welcome—it can make schemes viable that were not viable previously and unlock infrastructure developments that might not otherwise take place, but in other circumstances there are disadvantages to underwriting. Underwriting means that gains from a private endeavour are privatised, but that any losses are socialised. The entrepreneur, the shareholder and the owner of a private company or project that benefits from the safety net provided by the taxpayer could profit well for many years if a scheme bears fruit, but if the scheme goes wrong and if there are failures in it, the losses fall on you, Mr Gale, on me, on hon. Members and, most importantly, on our constituents.
I make no apologies for standing up for the taxpayer’s best interests. It is important that we ensure that Ministers consider introducing clawback provisions that safeguard best value for taxpayers. The amendment is so unobjectionable that I cannot understand why the Government would object to it. The Opposition are simply saying that, in any agreement to give financial assistance, the Chancellor or Secretary of State
“shall give reasonable consideration to clawback provisions which safeguard the taxpayer.”
What do I mean by “clawback provisions”? Hon. Members who have served on the Public Accounts Committee will know that from time to time Governments have entered into contracts and sold privatised parts of the public sector. The purchasers have then gone on to make millions of pounds when they have sold on some of those assets. In this case, the guarantor has ended up facilitating a project, but the beneficiary of the guarantee went on to make significant sums.
We are simply saying that the Treasury needs to make sure that there are clauses in the underwriting contracts—the offers—that ensure that if significant gains are made in the long term, the taxpayer can have a share in some of the future profits. It is a basic principle—if the taxpayer helps to create profitability for a person and bears the risk of loss, that person can reasonably be expected to share some of the excess profits with the taxpayer. It is a basic principle of prudent stewardship of taxpayers’ money. It would also ensure that we deal with the question of moral hazard. We know that in some circumstances underwriting can cause difficulties if a scheme that might be shaky goes ahead as a result, which is of course a distortion of the market environment.
If schemes go ahead and make significant gains and provide future returns that are in excess of what might be expected, the taxpayer could have some rights to those. For example, in a prime executive housing site in central London developed thanks in part to the Government underwriting property market risks, the units may sell at multiples of expected initial prices, with vast profits for the developer. In the current situation, what would the taxpayer get? Foreign-owned energy companies want a pipeline stretching from our shores across the continent, which could well be underwritten by the provisions in the Bill. If we fund part of that as taxpayers, but the company makes significant long-term returns on the oil and gas, what should be the taxpayers’ share in that?