UK as a Financial Services Hub

Craig Tracey Excerpts

Wednesday 6th February 2019 Westminster Hall

[Bim Afolami]

I am really selling it. In fact, when I was canvassing at the last election, a voter told me that after they had looked me up, they said, “Oh, well this is probably the only seat in which being a lawyer and a banker is an advantage rather than a disadvantage.”

[Craig Tracey (North Warwickshire) (Con)]

My hon. Friend makes some important points about banking. Does he agree that the insurance sector has a massive role to play? It brings in £29.5 billion to the UK economy, including, as I am sure the Minister will appreciate, £12 billion in taxes. The critical point about the insurance industry is that it employs 300,000 people, two-thirds of whom live outside London, so the industry has an impact on all our constituencies.

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[Bim Afolami]

I completely agree that we need to make it easier for graduates to stay. My understanding is that the Home Secretary has extended the time in which graduates may search for a job in Britain—I think up to 12 months. I would like to see that go up further, and I think the Home Secretary is quite amenable to that. We have to be honest: if we are thinking about immigration caps and the like, we should not turn away graduates, who will often be the brains of new businesses. We should help as many of them as possible to stay here; I agree with my hon. Friend on that point.

Brexit obviously dominates Parliament and Whitehall at the moment. We are in fast-moving times, so I will offer no predictions, largely because by the time anyone sees this debate, they would be completely out of date. As things stand, the political declaration that sits alongside the withdrawal agreement explains that the UK will have access to the EU market, and vice versa, under an equivalence regime. That means that the usual equivalence assessment will need to be undertaken for UK firms in the EU market, and the UK will have a similar equivalence process for the EU. Let me explain the notion of equivalence for those who are not familiar with it, with reference to the European Union. Essentially, the EU may look at a set of regulations that govern a certain area of financial services, such as bank lending, and deem another country’s regulations equivalent to its own, thereby allowing firms based in that other country to sell products to customers—individuals and firms—in the European Union.

Our reliance on an equivalence regime leaves me with three questions. First, to what extent do the Government wish to align themselves with EU regulations at a time when the European Union is pushing ahead in a much more restrictive and onerous direction, in regulatory terms? In recent years we have seen the alternative investment fund managers directive, the cap on bankers’ bonuses, MiFID II and other regulations, which were often well intentioned but have tended to increase costs, reduce Europe’s competitiveness and increase complexity. That has made accessing financial services more expensive, more complicated and not necessarily any safer for the consumer. I believe that onslaught of complicated regulation has led in part to the poor productivity of financial services since 2008. Productivity has slowed by just over 2% in the past 10 years.

[Craig Tracey]

My hon. Friend is making a powerful case. His point about regulation is critical to ensuring our future success, which will be underpinned by proportional regulation. Does he agree that we need to give the regulator a function as a promoter of the industry? If it had to promote the industry across the world, it would have to understand better what it regulates. The rules that apply to insurance do not necessarily apply to banking; those industries are regulated very differently across the world. The promotion aspect is critical.

[Bim Afolami]

That is a very interesting and important point. My hon. Friend will correct me if I am wrong, but my understanding is that when the Financial Services Act 2012 came in, there was significant debate about whether it should have included a duty on the regulator to promote financial services, both in the UK and abroad. The decision was taken not to put that in statute at that time. The Government should revisit that decision. Giving the regulator such a duty would not be inimical to ensuring that we regulate the industry properly; it would just ensure a balance, and that the regulator considered the impact on consumers—firms and individuals—as much as other impacts.

Recently, the EU has made many changes to the way it treats all non-EU firms that seek to offer financial services to European customers. Changes to MiFID II and large clearing houses are being considered, and I believe the proposals being discussed include setting the bar higher for granting equivalence for firms classed as systemic. It is proposed that the European Securities and Markets Authority—let us just call it ESMA to avoid getting tied up—be given greater powers to oversee the activity of those firms, including powers to open investigations, conduct on-site inspections and the like. It is also proposed that ESMA be able temporarily to restrict or prohibit those firms’ activities in the EU.

In recent months, the EU has shown that it wants to be able to give its supervisory agencies, such as ESMA, greater extraterritorial reach, so they behave a bit more like American financial services regulators often do. The EU wants to ensure that ESMA plays a greater role in overseeing when national regulators can allow EU-based asset managers to outsource or delegate portfolio and risk-management activities to entities outside the EU. At the moment, as the Minister will appreciate, many asset management funds based in Luxembourg and Ireland delegate those activities to London. Some fear that the initial review that is under way is the precursor to the EU seeking to ban those outsourcing and delegation models altogether, although I gather that in recent days an agreement has been reached between British and European regulators—that is what it said in the Financial Times, at least. Perhaps the Minister can enlighten us about that.

Those rather technical points matter, because they show that the equivalence regime—the regime that we are going to rely on under the Brexit deal—is being considerably narrowed. In my judgment, that may make it harder for UK-based firms to sell services directly into the EU in future than it is for, say, Japanese and American firms to do so today. If the Minister’s answer is that the UK will seek in large part to copy the EU’s regulation, does that not make us highly vulnerable to aggressive regulatory behaviour from the EU27, who have already shown that they are very capable of designing regulations that are deliberately inimical to UK interests? Just as importantly, as we look further afield to the huge growth in opportunities for financial services in places such as Asia, how will we be competitive with the centres of Hong Kong, Singapore and New York and ensure that the UK is best placed to attract that business?

On the other hand, if the Minister’s answer is that the UK will seek to diverge from EU regulations where we can—obviously, that is a perfectly legitimate outcome—do the Government have a strategy setting out the areas in which we will seek to diverge, how we might do that and what the benefit will be, bearing in mind that the consequence will be reduced access to the European market in the areas in which we seek to diverge? In my view, we can take that path only if we shift to a regulatory model that significantly increases our relationships with and footprint in emerging markets in Asia and elsewhere. In those circumstances, we would shift more decisively to being a global financial centre, accepting that a certain chunk of European business will move away to the European Union. How do the Government envisage managing that shift and balancing those two approaches?

The Asian powerhouse countries have increasing financing needs, which include servicing $26 trillion of infrastructure spend, providing the backing for the Chinese-led belt and road initiative, and the internationalisation of the renminbi. Over the past 25 years, emerging economies’ share of global activity has risen from 40% to 60%, and their share of global trade has grown from a fifth to a third, yet their financial assets make up only 10% of the global financial system. Things will not stay that way for long, especially as savings rates keep increasing and the Asian economies concurrently get richer and richer. Growth in those countries far outstrips growth in Europe and the United States, and London is not necessarily the automatic choice for Asian financing. Singapore and Hong Kong are redoubling their efforts to ensure that they are the financial services centres that finance that Asian growth. How will we ensure that the UK is the global hub for that work?

I have spoken mostly about regulation—hon. Members are all still awake; I thank them for bearing with me—but tax policy is also a major part of this. The sad truth is that we are no longer internationally competitive on taxes for financial services. A report by UK Finance and PwC published in December 2018 states:

“On an overall basis, over half the profits (50.4%) from participant banks are paid in taxes”

in the UK. Some 43% of the taxes borne are not dependent on profit. In effect, they represent a fixed cost; the profitability of the bank is irrelevant. If we compare London with our major competitors—Frankfurt, New York, Singapore and Dubai—the overall tax burden for a model bank is highest in the UK, at just over 50% of commercial profit. In Frankfurt, that figure is 43%, in New York it is 34%, and in Singapore and Dubai it is 23%.

Putting all that together, given the regulatory challenges I outlined and the tax challenges I have just set out, are we still sure that the UK is in a position to dominate international financial services for the next 30 years, as it has for the past 30 years? Our financial services sector helps productivity and growth in our real economy across the country. Financial services is one of the most productive sectors in British cities, and while the average output per worker in a British city was £59,000 a year in 2016, that figure was almost twice as much in financial services. It would be foolish, however, to suggest that our financial services sector fully penetrates into some of our poorest regions, or that it is used by some of the poorest people in our country. I refer hon. Members to my entry in the Register of Members’ Financial Interests, because I am a commissioner for the Financial Inclusion Commission, and we have been working on this issue since our landmark report on financial inclusion in 2015. Since then, the Treasury and the Government have taken on board most of the commission’s recommendations, and I commend them for that.

What does financial inclusion actually mean? In simple terms, it means belonging to a modern, mainstream financial system that is fit for purpose for everybody, regardless of their income. It is essential for anyone wanting to participate fairly and fully in everyday life. Without access to appropriate mainstream financial services, people end up paying more for goods and services, and have less choice. The payday lending market grew from £330 million in 2006 to £3.7 billion in 2012, and it is probably now worth more than £4 billion. We are a country of about 65 million people, and 13 million people in the UK do not have enough savings to support themselves for one month were they to experience a 25% cut in income—one month! We save less as a percentage of our income than any other country in the European Union.

I have talked about banking, insurance, Asia, and the belt and road initiative, but for the UK to be an effective financial services hub internationally, we must ensure that we are No. 1 in the world for financial inclusion. All our people need the chance to create and develop wealth and savings. There is no excuse for us not to use the talent of the world’s finest firms and individuals involved in financial and professional services in the UK, and for us not making true financial inclusion a reality for all our people.

[Craig Tracey]

I am really interested in this area, and I chair the all-party parliamentary group for insurance and financial services, which is considering that very point. Does my hon. Friend agree that although the internet and digital technology bring a lot of positives, they disproportionately disadvantage vulnerable people, who do not always have access to the face-to-face advice that they used to get on the high street, and who, as people are being driven online, do not always get the best deals?

[Bim Afolami]

Without wanting to out-APPG my hon. Friend, I am chair of the all-party group on credit unions, and one of the main purposes of credit unions is to provide that face-to-face advice. Credit unions are often active in places that banks left long ago. Providing that personal information that helps people to build up their savings is important.

Credit unions in the 10 most deprived communities in Britain are lending heavily, and they consider loans that few other lenders would consider because of the applicants’ credit scores, while also charging considerably less than any other type of financial service. Credit unions in the UK currently have £860 million out on loan, and that lending is predominantly focused on those at the bottom end of the income scale. Evidence shows that once people in deprived communities are given a chance to access credit on affordable terms, they start to see patterns of improvement in their credit profiles. Over time, those people will no longer necessarily need specialist financial advice from credit unions, because they will be able to bank with and access the mainstream financial services sector. Will the Minister agree to work with me on two aspects of credit unions? First, will he consider amending secondary legislation to broaden credit union lending powers, so that they are able to service more people from that vulnerable group? Secondly, will he work with the Bank of England to review capital requirements for credit unions, so that the sector can serve more people more effectively?

In conclusion, I would like the Minister to respond to the following points. First, what is the Government’s approach to adapting bank lending rules to enable more investment in the new economy with more intangible assets? Secondly, what is the Government’s blueprint for improving Britain’s attractiveness to people and firms in FinTech? Thirdly, what is the Government’s current thinking about their regulatory approach as we embark on our negotiations on a future trade agreement with the European Union, bearing in mind our need to be the No. 1 financial services hub for financing Asian investments and investments from the emerging world? Fourthly, how will the Government seek to bring down the tax burden on our financial services sector, given that we need to be more competitive on tax policy in coming years to counteract the uncertainty and destabilisation in the market? Finally, and perhaps most importantly, how will the Government seek to improve the penetration of financial services into our most disadvantaged communities, especially by helping credit unions to professionalise and expand?

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[Robert Neill (Bromley and Chislehurst) (Con)]

It is a pleasure to serve under your chairmanship, Mr Stringer, and I warmly congratulate my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) on securing this debate on an important topic. I am sorry that more hon. Members are not present, but I hope that the quality makes up for the quantity.

I am particularly keen to speak in this debate because I have a personal and constituency interest in this matter, and because it is critical to our country. About 36% of the working population of my constituency is employed in the financial or professional services sector, and that is about the 15th highest proportion in the country. Most of those people commute to London, although the European headquarters of Direct Line insurance—one of our principal insurance companies—is based in Bromley, and is the largest private sector employer in the borough. This issue matters for the prosperity of my communities, as well as impacting on the national picture.

This debate is important, but perhaps the reason why there are not more people here is that we have come to take it for granted that we are world leaders in financial services and the allied professional services that underpin them—of which more shortly. We take it for granted that the City will always be all right. I use the City as a shorthand for the broader financial services sector because, as my hon. Friend pointed out, only about half that sector’s output is generated in London, and many of the jobs are in fact based outside.

The idea that “the City will be okay” is something that we have to challenge a little. It will be okay, provided that it continues to have the right regulatory tax, fiscal and political environment to support it. It will be okay if we leave the European Union on sensible terms with a deal that protects the interests of our market access, but it will not necessarily be okay in the event of a catastrophic exit from the EU. Although larger firms will be able to manage come what may, smaller firms, which are often the innovators in this sector, will be more at risk. That makes it all the more important that we get it right for the City and the financial services sector as we leave the EU.

My hon. Friend properly referred to the contribution made by the financial services sector to the UK economy, and it is worth mentioning the report “Total tax contribution of UK financial services”, which was issued by the City of London Corporation, to which I pay the highest respect for its work to promote the sector nationally and internationally. The report, which was published in December 2018, highlighted the fact that the industry’s contribution to the Exchequer increased over the past year to £75 billion. That is 10.9%—nearly 11%—of the Government’s total tax receipts from all sources. It is 6.6% of the UK’s economic output. The number of jobs has already been referred to. This is a critical national economic and strategic asset, and Government policy must treat it as such.

It is worth saying that access to the European markets remains important, as it should do. My hon. Friend the Member for Hitchin and Harpenden is right to recognise that there are opportunities to be had from growing our contacts and trade with emerging economies. I was in Hong Kong in September at a legal conference looking at the opportunities for British law firms and their financial services clients, in relation to the belt and road initiative. No doubt there is much that can be done there, but at the moment, often, trade with China—particularly in the service sector—comes with strings attached, and perhaps a lack of transparency about access to the relevant sectors that would frankly not be acceptable in UK terms. The same applies with India, where there are great opportunities, but where there has so far been a marked reluctance about liberalisation in the service sector. As to my profession, as a lawyer, there is marked difficulty with India in getting liberalisation in the legal services sector. I hope that the Government will give more attention to that.

I was the sort of lawyer who became involved in the matters in question if regulatory procedures had not always been properly followed, whereas my hon. Friend was someone who made sure they were. What I have pointed out makes good, robust and internationally recognised regulatory frameworks all the more important. I previously had a spell working for Scottish Widows insurance, and as a trainee jobber, when such things existed, with Ackroyd and Smithers, who were then the leading gilts jobbers. It is an area of law in which I have always taken an interest, aside from its constituency importance for me.

The benign regulatory environment is something we need to watch, as we leave the EU. My hon. Friend is right to say that sometimes EU regulators have been difficult to deal with, from our perspective. Equally, however, dealing outside the EU, with a proper free trade agreement with third countries, to include financial services, will not be without challenges. I am secretary of the all-party parliamentary group on financial markets and services and have just come from a breakfast meeting with the group to discuss the prospects of a free trade agreement in services with the United States. There are real regulatory obstacles—not least having to deal with not one regulator but, in relation to the insurance sector, for example, 50 state insurance regulators as well as a national regulator. With banks, would one be dealing with the federal regulator, the regulator in New York or the state regulator in Chicago?

There is a multiplicity of issues to be addressed, which is why it is critical that we leave the EU with a deal, and with a transition period in which we could maintain all the good aspects of market access to the EU and have time to sort out arrangements and opportunities with non-EU countries. Let us be honest and not kid ourselves—those complexities will not be sorted out overnight. It will take time, and to benefit we must be patient about how we go about things.

[Craig Tracey]

My hon. Friend is right that we need to get regulation that works, but an issue put to me by the insurance industry is that a Norway-plus model would not work for the insurance market as a whole, as we would not all be working to the same rules. The insurance rules are set at EU level, rather than on a global scale, so we need to look at the different facets of financial services, to ensure that they work for the whole market.

[Robert Neill]

That is perfectly true, and the need for the deal and for a time to thrash out our future relationships is all the more important because of it. There is not a simple scenario in which the sector works on a one-size-fits-all basis. The same thing applies to the legal services sector, which is a critical underpinning. It is worth remembering that with respect to financial flows, EU financial services trade with the UK between 2016-17 and the current time increased from £29 billion to £33 billion. That dwarfs the figure for trade with our next largest partner, the United States; it is only half, at £16 billion. The seven largest financial services markets added together—the US, Japan, Switzerland, Canada, China, India and Australia—come to only £26 billion, which is less than our financial services trade with the EU. That is why, at the same time as we look at the opportunities for opening out elsewhere, it is critical to maintain EU access, which has also been important to foreign inward investment into UK financial services as a gateway into EU markets.

It is worth bearing in mind that across measures of competitiveness London ranks as the top city and has the highest volume of financial services foreign direct investment globally. However, that is because of our current advantageous position, which we need to maintain. An important part of that advantageous position is the underpinning that legal services and the legal system give to the financial sector. I am concerned that although the Government have uttered warm words and issued advice to practitioners in the sector, real uncertainties would remain, should we leave the EU without a proper deal.

Some of the areas in question are similar to areas of concern in direct financial services, such as the loss of passporting rights, and the need to operate with a form of equivalence. However, the situation for legal services is even more stark, in some respects, because the establishment directive would go, as would mutual recognition of professional qualifications. That would not enable us to use the fly in, fly out arrangements that are so critical to enabling international law firms to advise their clients in real time while deals are going through. That needs to be dealt with, which is why, again, a transitional arrangement is critical.

The other critical point in that context is that unless we have a deal—if we leave without one—we will lose the existing arrangements for the mutual recognition and enforcement of UK court judgments in EU countries and vice versa. That is vital for contractual certainty and continuity. A contract is worthless if it cannot be enforced, and if it cannot be enforced through the judgment of a court there are no other means to do so. It is vital to find means to maintain that. TheCityUK has pointed out that losing it would mean profound difficulties in relation, for example, to insurance contracts—which would not be of value if we were to leave without the ability to enforce them in the event of default—and, significantly, uncleared derivatives. The derivatives market is particularly important to the UK. It is an area of expertise where, as my hon. Friend the Member for Hitchin and Harpenden said, financial services are not just about figures, but are relevant to real business. Most business work is now underpinned in one way or another by a form of financial instrument being traded, particularly in any significant commercial deal. That has been described as the plumbing of the business system, so anything that threatens the derivatives trade operating out of the City, and what relies on it, would be extremely dangerous.

There have been some areas of progress. I was pleased when the European Securities and Markets Authority agreed a memorandum of understanding with the Bank of England in relation to central counterparties and the central securities depository, which enables that issue of central clearing to continue. However, that is one part of a much more complex structure. There are other areas on which I hope for assurances that the Government are determined to see the issue as central to our negotiations. Those things are largely part of the future state negotiations, but we have to have a deal to get into those future state negotiations to begin with. That cannot be emphasised too strongly.

I also want to emphasise the fact that financial services and many aspects of legal services depend on the free flow of data to underpin them. At the moment that is available to us, in relation to our EU counterparties. However, unless—at least until a future state agreement is achieved—there is regulatory alignment on data sharing, we risk disruption to those data flows. That will severely disrupt the circumstances in which we could guarantee that trades could be carried out and completed. Again, insurance and uncleared derivatives are particularly vulnerable to disruption of data flows.

The City believes that an EU-level solution is the optimal one, and I hope the Government will reassure us that it is their intention to press for that, for the same reason as we spoke of before—the complexities of dealing with the 27 on bilateral agreements would be daunting to say the least, and would cause more delay, which would deter people from writing contracts while that period of uncertainty persisted. I know that a temporary solution to protect data flows is currently under discussion, relating to a non-enforcement period between regulators under what is known as a “safe harbour” precedent, but that is not guaranteed. I hope the Minister will be able to update us on progress and assure us that this, too, remains a very high priority for the UK Government.

Getting global regulation right and making it business-friendly, as my hon. Friend the Member for Hitchin and Harpenden said, is critical. Of course, the City of London Corporation provides the secretariat for the International Regulatory Strategy Group, which is a practitioner-led body comprising the leading UK financial and professional services figures. The key test of global regulation is not necessarily its quantity, but its quality and effectiveness. Thus far, the UK has been a world leader in that, and it is important that we continue to make that central to our policy.

My hon. Friend mentioned FinTech, and I am very pleased that he did, because I have constituents, including one of my councillors, working in the FinTech sector and there are real opportunities there. The ability to retain young talent in the UK is critical here; that applies also to young lawyers and to young professionals right across the board, so it is vital that we have a regime for immigration that not only does that in practice, but sets the right tone.

That is why I am pleased that we have scrapped the £65 fee for the settled status scheme; I rather regret that we ever had it to start with. I have in my constituency many EU-national professionals, working in the City of London, the west end and other sectors. They have been settled with their families in places such as Chislehurst and Bromley—commuter land—for many years, and the suggestion that they were going to have to pay to remain somewhere where they had already put down their roots and that they regarded as home sent the wrong signals. I am pleased that the Government thought twice about that, and I hope that can be reflected in the tone of our approach to our EU friends and neighbours hereafter.

However, we must bear in mind that it goes beyond that. International workers make up 40% of the City’s workforce and 35% of London’s finance and insurance jobs. Many of those are EU nationals; others will come from elsewhere, but having that welcoming and open approach is critical. Successful market economies are only successful if they have that open and broadminded approach, and it is important that we as the UK Parliament recognise and articulate that as strongly as we can.

Finally, sometimes people think that financial services are purely about profit; they see the City purely in terms of big financial institutions. The City of London does a great deal to encourage responsible business practice as well, and the two do not need to be separate. The financial services sector is one of the most active and engaged in corporate community investment across the country, as I see in some of the firms based in my constituency or where constituents of mine work.

New research that the City of London Corporation has published indicates that financial and professional services firms gave £535 million in cash and in-kind donations to various forms of community investment in 2017. It is worth saying that although a flourishing financial services sector is important to the economy, its leaders and the practitioners I know from my constituency also want to ensure that they pay their fair share not only to the Exchequer, but in kind to the communities that they serve. That is not separate from the day-to-day workings of our economy and our lives, but central to it, and I hope that this debate helps to bring that home.

Oral Answers to Questions

Craig Tracey Excerpts

Tuesday 6th November 2018 Commons Chamber

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

The hon. Gentleman obviously missed the Chancellor’s speech at the Conservative party conference, in which he announced the creation of a special area of economic activity at Toton, just south of Nottingham, which we expect to become one of the UK’s leading areas of economic growth. We also announced in the Budget an increase in the transforming cities fund, which will directly benefit Nottingham.

[Craig Tracey (North Warwickshire) (Con)]

T5. I welcome the announcement in last week’s Budget of investment in our high streets, which will be particularly welcome in Bedworth in my constituency. I had meetings with local businesses recently on this very issue, and particularly on their frustrations at the lack of ambition of the local borough council. Can the Minister advise how local councils such as Nuneaton and Bedworth can best take advantage of this excellent opportunity?

[Mel Stride]

I recognise the huge amount of work my hon. Friend has put into the issue of revitalising our high streets, and his representations to me and other colleagues. The £675 million future high streets fund will be bid for on a competitive basis through local authorities, so it is very important that all Members encourage their local authorities to come forward with their bids.

Mental Health: Absence from Work

Craig Tracey Excerpts

Wednesday 17th October 2018 Westminster Hall

[Craig Tracey (North Warwickshire) (Con)]

I beg to move,

That this House has considered the financial effect of absence from work due to mental health problems.

It is a pleasure to serve under your chairmanship, Mr Betts. World Mental Health Day took place a week ago, and I am pleased to have secured this debate on such an important issue so close to the marking of that day. It is hugely encouraging that in the last couple of years the world has woken up to the realities of mental illness. According to the mental health charity Mind, in the UK alone, one in six workers is affected.

The issues and challenges surrounding those suffering and recovering from mental ill health have become better understood and, as a result, its prominence as a public policy issue has grown considerably. NHS England’s five year forward view dashboard provides statistical evidence of the Government’s investment in mental health services, with a total planned spend of £11.9 billion in this financial year. Encouragingly, over the last two years, there has been a total real-terms increase of 3.7%. However, despite that investment, the Government’s landmark independent review of mental health and employers last year showed that 300,000 people in the UK lose their jobs every year as a result of long-term mental health issues, and that nearly 13% of all sickness absence days in the UK can be attributed to a mental health condition.

The workplace needs to be at the forefront of better policy to secure better outcomes for sufferers. Today, I intend to focus on the financial effect that absence from work because of mental health has on the individual, their employer and, in turn, the economy. Eighteen months ago, I led a debate in this very Chamber on employers’ role in improving work outcomes for people with long-term health problems. One of the most telling pieces of information that I discovered was from the research at that time by the Mental Health Foundation, which found that 45% of working people with a diagnosed mental health problem had not disclosed it to their employer in the past five years. Of those who had felt able to tell their employer, only half reported mainly positive consequences. Someone who took part in the research concisely summed up the reality in a single line, which I am sure rings true with people here today. They said

“no one is able to say, ‘I have a mental health problem and I can’t come to work today’.”

At the time I was encouraged to hear of the review carried out by Lord Dennis Stevenson and Paul Farmer, entitled “Thriving at Work: a review of mental health and employers”. On publication, the report set out a mental health vision for our country by 2027. The report proposed that all organisations

“whatever their size, will be equipped with the awareness and tools to not only address but prevent mental ill health caused or worsened by work”;

that they would be

“equipped to support individuals with a mental health condition to thrive, from recruitment and throughout the organisation”;

and that they would also be

“aware of how to get access to timely help to reduce sickness absence caused by mental ill health”.

It is well documented that one in four people is affected by a mental health problem—the effects of which are wide-ranging—at some point in their life. Those problems can affect an individual’s physical health, their relationships, their financial resilience and their work life. Mental health problems are also linked to other illnesses and fluctuate significantly. Often, people suffering from mental ill health find themselves needing to take a period away from work to recover, which may lead to a significant reduction in income. That reduction often means that people fall behind on their bills, rely increasingly on credit or run down their savings, which can also have the effect of prolonging their illness further.

Not only is supporting those affected by mental health issues the right thing to do, but it makes total economic sense. A joint study soon to be published by Mind and the Chartered Insurance Institute puts the annual cost of mental ill health to employers in the UK at as much as £42 billion, with the total cost to the UK economy estimated to be £99 billion. Those costs come from presenteeism—when individuals are at work but significantly less productive because of their condition—as well as from sickness absence and staff turnover. With such a significant impact, it stands to reason that if we are to improve the mental health outcomes of our society, we need to focus on supporting the workplace to help drive that.

The Stevenson-Farmer review highlighted the fact that the average return on investment of workplace mental health interventions is £4.20 for every pound spent. Clearly, we need to look at ways in which companies can develop preventive strategies to secure the right work-life balance and develop a holistic understanding of wellness, while also encouraging staff to look after both their physical and mental wellbeing. It is reassuring to see therefore that a range of tools are already available to assist employers. Training managers and empowering HR professionals, who can then give line managers the support they need, should be a priority for employers large and small across the country. A critical point to return to is that if employees do not feel able to disclose a health problem, employers cannot hope to put in the right support for them. The earlier open and supportive conversations take place between an employer and an employee, the more effective the support will be.

As a former insurance professional and chairman of the all-party parliamentary group for insurance and financial services, I emphasise the role that health and protection insurance benefits can play to support employers in identifying the solutions that work best for their workforce. From my ongoing conversations with all parts of the insurance industry, it is clear to me that it is constantly working to improve understanding of medical conditions, as well as the availability of existing and new treatments, while helping customers manage the financial risks of their medical condition. The growth in resources offered by insurance companies to support firms and workers experiencing mental health difficulties is testament to how seriously those issues are taken by the industry. As an example, AXA PPP healthcare has teamed up with a health tech start-up, BioBeats, to help employees manage stress and fatigue through wearable technology.

We need to remember that for many of us, the workplace is where we spend most of our time. Employers of all sizes and from all sectors should be prepared to support their staff through periods of crisis when they are unable to work as a result of mental ill health, by providing preventive measures and access to early rehabilitation, and offering them a financial safety net if they need to be off for longer periods of time. Insurance products such as income protection can—and do—help with that, producing results than benefit employees as well as employers. However, there remains a need to raise awareness among employers and the workforce about the need for, and availability of, insurance solutions in the workplace. To aid that, there needs to be a conversation with Government about how we can incentivise employers to take up covers such as income protection for their workforce. The new Single Financial Guidance Body should be at the forefront of that as it has the potential to place a significant focus on improving greater financial resilience as well as improving awareness of protection.

Our mind is our most valuable asset, and like any asset, we need to make sure that it is properly taken care of. As the Government’s review demonstrated, the UK can ill afford the productivity cost of poor mental health. Moreover, the cost to individuals is difficult to calculate. While the insurance industry has made progress in helping to support its customers and employees through mental health struggles, that will work only if people feel supported enough to seek the help that they need while at work.

There is a huge incentive for employers, for the Government and for the industry to work together to better improve policy, minimise the financial impact of sickness absence because of mental health problems, promote sustainable recovery and, in turn, improve productivity. I look forward to hearing colleagues’ contributions and the Minister’s response.

--- Later in debate ---

[Craig Tracey]

I thank every Member here for their contribution and for the general spirit of the debate. It has been conducted in the way that I hoped it would be. It is clear that we all want to see progress on this matter.

The hon. Member for Strangford (Jim Shannon) made some excellent comments, as usual. His arguments complemented those that I put forward, particularly on the role that companies can play. However, it is important that we give companies the tools—whether through Government action, insurance products or whatever else—to allow them to play that role. He also mentioned a critical point about encouraging people to come forward and share their health issues.

I also thank the Opposition Front-Benchers for their comments—particularly the hon. Member for Motherwell and Wishaw (Marion Fellows), who shared her experience. Only if people come forward and share their experiences will others understand that they are not the only ones to have such feelings. That can happen to us all, and such case studies are the best way to help us to progress. No strategy will work without people coming forward; it is a two-way street. I will particularly reflect on the hon. Lady’s comments about teaching resilience, particularly to younger people. That is important, not only in these matters but throughout their lives in general.

I also thank the Minister. We are all pleased to hear that good progress is being made and that good, positive steps are being taken. I appreciate as well as anybody that there is no quick fix to this issue, but the Government are taking it forward and driving it. Steps such as getting more people into work are critical to doing that. However, the more people in work, the greater the potential for people to suffer from these difficulties. It is important to recognise the issue and provide solutions and tools to enable business to combat it.

It is key that we, as Back-Bench Members, continue to push this issue and encourage the Government to keep it at the forefront of their thinking. At the end of the day, tackling it will bring a benefit not only to employers and the people affected but to the overall success of our economy and our country.

Question put and agreed to.

Resolved,

That this House has considered the financial effect of absence from work due to mental health problems.

High Speed 2

Craig Tracey Excerpts

Wednesday 12th September 2018 Westminster Hall

[Craig Tracey (North Warwickshire) (Con)]

I congratulate my hon. Friend on securing the debate. I, too, voted against HS2, as I am sure he is aware, because we have probably the most affected constituencies in the country, given phases 1 and 2. If HS2 were to be scrapped, as he suggests, with potential savings of £50 billion, is he aware of the great British transport competition, which I recently launched in conjunction with the Taxpayers’ Alliance to identify how the money could be better spent across the country rather than in narrow swathes? Will he recommend to his constituents that they take part in the competition?

[Mr George Howarth (in the Chair)]

Order. Before Sir William continues his speech, I remind Members that a lot of people want to speak in the debate and I am sure that there will be interventions, which I hope can be kept brief, because otherwise it inhibits my ability to call everyone who wants to speak.

--- Later in debate ---

[Sir William Cash]

As I expected, the hon. Gentleman makes another extremely sound point. The reality is that people are affected by the indirect consequences. People talk about the number of jobs being created. I will come on to that as well, because many other projects could be put in place that would create an equal or greater number of jobs.

[Craig Tracey]

I give credit to the Minister, whom I have found extremely helpful in dealing with compensation claims. However, HS2 Ltd is spending more money on consultants to squeeze people down on price than it actually saves by doing so. It is a false economy.

[Sir William Cash]

That is an extremely important point. I am sure that those listening to the debate will take note of it, as will the Minister.

Those linked to the construction of the project—the brainchild of no less a genius than the hapless Lord Adonis—seem to admit that there has never been a structured estimate of costs for phase 1 of the track. Mr Tim Smart, the chief engineer, told the High Speed Rail Bill Select Committee on 23 April that HS2 Ltd was unable to provide detailed cost estimates for parts of the project because it relied on its cost model as a guide to the entire project cost. Also, in evidence given to the High Speed Rail Bill Select Committee in the House of Lords, Lord Berkeley, the chairman of the Rail Freight Group, the representative body for rail freight in the UK, estimated that the cost of the Euston to Old Oak Common section—a mere seven miles—was more than £6 billion. We have to get real. That is based on the cost estimates and data from other projects using the rail method of measurement and commissioned by Network Rail.

I understand that that estimate was not challenged by HS2 Ltd, which appeared not to have any reliable costings. Unbelievably, that makes each mile of the planned route worth almost £1 billion. For the same price the UK could buy two new aircraft carriers, each costing about £3 billion, or 10 state-of-the-art NHS hospitals, or invest in local infrastructure in roads and so on.

The Treasury’s Infrastructure and Projects Authority has given HS2 an amber to red rating for each of the past six years, meaning that there is a high risk that it will not deliver value for money. A confidential report commissioned by the IPA and released in December 2016 also warned that the costs were likely to end up being between 20% and 60% over HS2’s £56 billion budget, which it says would be classified as “failed” by any internationally recognised definition. It also warned that HS2 was

“highly likely to significantly overspend”

by 20% to 60%, which would increase the cost to as much as £90 billion.

The Government assert that the scheme will bring benefits to the wider economy through an enlarged labour market and greater commuting capacity, but they admit that those benefits cannot be achieved by building HS2 alone, depending almost entirely on more spending not accounted for in the HS2 budget. The National Audit Office wrote a critical report in June further highlighting that the £55.7 billion funding package does not cover all the funding needed to deliver the promised growth and regeneration benefits.

The Public Accounts Committee also highlighted that issue in its September 2016 follow-up report, recommending that the Government

“seek assurances from the relevant local authorities that they have plans in place to identify sources of funding and financing”.

That means going out to other people and asking for more taxpayers’ money. Furthermore, politicians in Greater Manchester and the West Midlands combined authority have published HS2 strategies, with the West Midlands combined authority estimating that its HS2 local growth plan will cost £3.3 billion. However, it is by no means clear where that money will come from.

Aside from the fact that HS2 apparently cannot generate growth without more—unaccounted for—money being pumped into local communities, in September 2013 a report by KPMG suggested that although some communities would gain from a high-speed train line, it would result in economic losses in others, for which the Government would inevitably be asked to compensate. That remains the case.

The project has not yet left the station and the runaway costs are already out of control. If the situation was not so serious, I would congratulate the HS2 executives for their role in constructing the most amazing gravy train ever built in the UK, with one quarter of HS2 staff paid more than £100,000 in the last year, and the chief executive taking home £600,000. By way of contrast, Andrew Haines, the chief executive at Network Rail, is paid about £20,000 less than that. People can say what they like about our current network, but the fact that the HS2 boss is paid more than the head of a network that actually exists demonstrates a grotesque lack of control over finances.

Unfortunately, those are only the costs we know about. In 2018 The Sunday Times reported that a whistleblower who worked for HS2 Ltd as head of property said that staff were told to

“falsify figures, mislead parliament and cover up ‘petrifying’ overspends”

with regard to the budget for buying lands and buildings. I believe that there are already grounds under the Inquires Act 2005 for a full public inquiry into the scheme, as there were over Stafford hospital—an inquiry that I called for, and which my hon. Friend the Member for Stafford was associated with as well. That inquiry changed the whole nature of the health service. A full 2005 Act inquiry into HS2, the engineering projects that go with it and its significant impact on our public finances is well worth calling for.

Before that, I would hope for, and I am calling for, Select Committee inquiries to review HS2, particularly by the Transport Committee, which has today severely criticised the Department for Transport over the east coast rail project. By comparison with HS2, that project is a walk in the park. HS2 needs far more scrutiny than it is getting and the High Speed Rail Bill Select Committee report could have gone much further in exposing the lack of planning and spiralling costs of the failing project. However, a number of people do need to be praised for their forensic scrutiny, and I repeat my praise for my right hon. Friend the Member for Chesham and Amersham.

The planned route cuts right through my constituency. Baldwin’s Gate, Bar Hill, Whitmore and Madeley are in a rural area of outstanding natural beauty. The proposed scheme slices it in two, with two viaducts at the River Lea valley and Meece brook valley, and two tunnels along the way, meaning that there will be an enormous amount of construction work in a delicate area. The environmental damage is not limited to Stone; the scheme cuts right through the country. The Woodland Trust has called it

“the biggest single threat from development to ancient woodland”

in the UK, with 98 ancient woods threatened with loss or damage from phases 1 and 2 of the project.

The National Infrastructure Commission has suggested that, in addition to the £56 billion that HS2 is projected to cost, £43 billion in additional funding will be needed to improve local transport links in cities outside London to allow people to make full use of the service. That is a combined total of £99 billion, yet in today’s poll 85% of people say they want the Government to spend that £99 billion on improving the capacity of existing railways instead of building HS2. The population in the west midlands will go up by more than a third, and improvements in local infrastructure are needed.

One of the questions in the poll revealed the London-centric nature of the proposal. Some 58% of Londoners support the construction of HS2, whereas only 20% of those in the north-east back it. Why are we continuing to back a failing scheme, supposedly planned for the benefit of those outside of London, if they do not even want it?

The case against HS2 has been well and thoroughly made. Perhaps less obvious have been the alternative policies we could pursue if the Government were to begin to roll back.

[Craig Tracey]

Has my hon. Friend found, as I have, that getting north to south is not what our constituents want? What they want is to be able to get from villages into towns, and from towns into cities.

[Sir William Cash]

My hon. Friend is absolutely right. The whole concept is completely flawed. In addition, if we travel down from our constituencies in Staffordshire—from Stoke-on-Trent, Wolverhampton or wherever—it takes around one hour 20 minutes or less. We do not need to travel at any greater speed than that. As I have already pointed out, HS2 is not even going to connect with Birmingham New Street. It is a completely crazy project.

On the basis of rail passenger growth on the west coast main line, it is accepted that there is a need to add capacity to meet future demand. The Government have dismissed upgrades to the current rail network and claim that HS2 is

“the best way of getting ahead of current demand on our core transport network.”

That might be true—if the demand were for poor management and a shoddy business case. In reality, capacity could be increased in far more cost-effective ways.

The length of trains could be increased from eight carriages to 12 on the existing main line network. That could be achieved by lengthening station platforms. The speed of existing trains could be increased, which would reduce the time benefit of HS2 compared with traditional rail. That would probably involve engineering solutions to remove bottlenecks on the existing line. The height of trains could be doubled, as has been successfully done on the continent and elsewhere in the world, which would increase capacity. All those solutions and many more would be immeasurably cheaper than HS2, but those small gains together would create a step change in the capacity and efficiency of the network.

If the Government really are bent on spending such a large sum, it is far from clear why it has to be on HS2. Shuttling along at 250 mph is quick compared with the west coast main line, but painfully slow when one considers the trains in development today. By contrast, Richard Branson’s 750 mph Hyperloop One is aiming to operate at nearly three times the speed of HS2. There are those who believe that the country should be focusing on new innovation rather than rebuilding yesterday’s technology. There may be some suggestion that the Hyperloop is a fantasy for the future, but that is what they said about aircraft, and it is the kind of innovative thinking that has to be examined in its own right. The HS2 project is out of time and increasingly obsolete. We need to be more innovative and to spread the improvements in rail infrastructure across the country as a whole.

I want to highlight the Great British Transport Competition from the TaxPayers Alliance—mentioned by my hon. Friend the Member for North Warwickshire (Craig Tracey)—which seeks to identify alternatives. It was launched last week with the support of my hon. Friend and is seeking bids from across the country for transport projects that might be more deserving of the colossal sums being funnelled into HS2. There have already been around 50 bids for alternative schemes, which will be judged on their benefit to the local and wider economies, their ability to deliver value for money, the level of public support and the impact on the environment—in short, all the categories on which HS2 fails miserably. I encourage colleagues from all sides to enter the competition and to suggest better destinations for taxpayers’ money than this enormous white elephant.

It is clear that more money needs to be spent on infrastructure, but that needs to be on worthwhile projects—for example, the capacity of existing railways and the repair and maintenance of roads other than motorways. That includes, of course, dealing with potholes, which might seem far removed from HS2, but anyone who travels anywhere around the country in rural areas will know that potholes are the biggest issue of all. In my constituency and where I live, potholes are a massive issue and there is no money available at the moment.

When I had a word with a very senior member of the defence establishment yesterday, he was quite emphatic that he would much rather have the money spent on defence. Members of the Defence Committee and many other Members have also made that clear. Furthermore, we could help to reduce our debt and spend more on the national health service and other public services.

When the public do not support HS2, when environmental groups are up in arms and when it now appears that half the Cabinet want to chuck it, it is time to call it a day. The Chancellor needs to stop throwing money down a black hole and to put the brakes on this vanity project before it leaves the station. I and others have said on many occasions that this is a white elephant, but it is perfectly clear that it is not only a white elephant; it is a dying white elephant—or it certainly should be. I now believe there are grounds for a full review by the Transport Committee and others, as appropriate, and for a full inquiry under the 2005 Act into this disastrous project.

Financial Guidance and Claims Bill [Lords]

Craig Tracey Excerpts

3rd reading: House of Commons & Report: 3rd sitting: House of Commons
Tuesday 24th April 2018 Commons Chamber

[Craig Tracey (North Warwickshire) (Con)]

First, I should like to declare an interest as the current chair of the all-party parliamentary group on insurance and financial services. I welcome the Bill, because it will tackle some of the important issues that my constituents talk about. It includes a commitment to ban cold calling relating to pensions and to the creation of a single financial guidance body—an SFGB. I know that this approach also has the broad support of the insurance and financial services industry, but it is important that the SFGB should work with all stakeholders to fulfil its objective and of course ensure good consumer outcomes. With the Bill, we have an excellent opportunity to improve financial resilience by promoting early intervention to help to prepare people for income shocks and life events. These preparations include planning ahead for care and understanding the benefits of protection products such as income protection insurance, critical illness insurance and life insurance.

There is a lot in the Bill that I could talk about, but given the time constraints, I want specifically to speak against new clause 8, which seeks to put a duty on the Financial Conduct Authority to ban unsolicited direct approaches by claims management services. I agree with the Government that the Information Commissioner’s Office is best placed to implement any ban and that existing legislation means that data gained illegally is already restricted. However, I agree that there is an urgent need for reform relating to claims management companies.

Previously, there have been calls for the FCA to assume responsibility for CMCs, so the fact that the Government have taken action on this is to be warmly welcomed. The Association of British Insurers has stated:

“Confirmation of tougher regulation of claims management companies cannot come soon enough for people who are plagued by unsolicited calls and texts. Disreputable firms are fuelling a compensation culture that contributes to higher insurance costs for many.”

Last year alone, there was a total of 752 authorised personal injury CMCs, more than in any other claims sector, including PPI. Measures in the Bill will go some way towards tackling bad practice in the personal injury claims market, which has been costly for insurance companies, put up premiums for consumers and frequently delivered outcomes in which claimants’ interests were not put first.

Added to some of the measures in the forthcoming Civil Liability Bill, such as tackling the high frequency of whiplash claims, this Bill will help to ensure the success of the Government’s wider efforts to tackle these problem areas. It is therefore encouraging that the insurance industry has expressed confidence in the FCA’s more robust regulatory regime and its ability to properly oversee these firms, citing two significant benefits, both of which will play a vital role in addressing the problems associated with this sector.

First, a strong regime based on understanding the business models of individual CMCs will prevent firms that do not offer good value to consumers from operating. Secondly, personal accountability for senior managers of CMCs will ensure that when a firm struck off, its directors cannot simply resurface as a new CMC, as is currently happening. It is anticipated that, as a result of this change, consumers will be given more information about the services that CMCs offer and more transparency about the fee structure. It is therefore important that the improved regulation of CMCs should be implemented alongside the personal injury reform proposed in the Civil Liability Bill. It can only be good news for consumers when their interests are put above all others.

As I have said, this is an excellent Bill, but I would like to propose a couple of areas in which I think it could be strengthened, and I ask the Minister to take them into consideration when summing up. First, it would be useful if he clarified the exact scope of the services that the SFGB will provide for consumers. There is a great opportunity to look at how the Department for Work and Pensions could work with the financial services industry to make guidance a recognised norm and to look at ways to support interventions that could improve the retirement process, such as the introduction of a mid-life MOT.

Secondly, will the Minister provide a timeline for the introduction of the FSGB and tell us when the FCA will assume responsibility for CMCs? Swift action is necessary, particularly in relation to CMCs, given the drastic spike in claims relating to gastric illnesses by people who have been on holiday. It is no coincidence that this surge has coincided with CMCs preparing for the deadline for bringing PPI claims and the introduction of measures to tackle whiplash claim frequency.

The Opposition amendments to this part of the Bill are unnecessary. The Government are committed to banning cold calling in relation to pensions and by CMCs. Moreover, they and the SFGB will keep cold calling under review. If the Minister will give consideration in his summing up to the points I have made, I will have no hesitation in supporting the Government through the Bill’s remaining stages.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

I rise to speak to the three amendments in my name. According to a recent Bank of England survey, the average level of household debt, excluding mortgages, is £8,000. While everybody should be able to access basic debt advice, people on low incomes with much higher levels of debt, at higher rates of interest, clearly need significant support. Unlike in the United States, it is difficult to work out with any certainty where such people are living in the UK, beyond relying on an individual to approach their local citizens advice bureau or another advice service.

At present, the new financial guidance body will not have access to data to allow for a detailed mapping of debt at a local level. Indeed, it will not have access to a full picture of the activity of banks and other lenders in our communities. There is no requirement on banks, payday lenders and other financial services providers to be fully transparent about the services in each of our constituencies—specifically where they lend, what rate they lend at, and the types of loan that they offer. Were that data available to public bodies, it would allow for the accurate mapping of who is lending and what is being loaned. Banks and other lenders do hold such data down to postcode level, and such data are released in the United States. Many British lenders that are active in the US are used to releasing that information, which allows public bodies to map the activities of banks and other lenders.

My amendments 1 and 2 would allow the single financial guidance body to facilitate the release of that information by lenders in an anonymised form so that we could know where debt is concentrated and what types of credit are used in different areas. That would allow for better, more strategic responses to the household debt crisis with which the House is familiar. The data would help to inform where to target the debt advice funding that the SFGB will dispense, encourage more engagement between mainstream lenders, and allow the community finance sector to scale up the provision of affordable credit in areas where there are specific problems. Indeed, such data would reveal market gaps and the communities excluded from mainstream credit.

Fair access to financial goods and services is a basic requirement for full engagement in modern society, but Thamesmead, an estate of 55,000 people in south-east London, has not been home to a mainstream bank branch for a long while. Charities report anecdotally that high-cost credit lenders such as doorstep or payday lenders are very active. More and more bank branches are being closed by the big banks, which is leaving whole communities, some in the poorest areas of our country, without a single mainstream bank branch. Thamesmead is not an isolated example.

At the same time, rumours persist that the big banks want to pull the plug on free cash machines. Which? has reported that over 200 communities in Britain already have poor ATM provision or no cash machines at all. The combination of a lack of access to cash machines and to mainstream bank branches could create the space for a much bigger increase in the activities of high-cost credit companies, doorstep or payday lenders or, worst of all, illegal loan sharks, as a response to the needs of people in such communities for short-term loans. We need to know where the other Thamesmeads are across the country so that charities, community banks and credit unions can be supported by the financial guidance body and other statutory bodies to target financial exclusion in such areas by signposting people to responsible financial providers.

In 2015, when considering this specific problem, the Financial Inclusion Commission, which was set up by the Government, argued for a much wider level of data disclosure to develop a greater understanding of the problem. It said specifically:

“If lenders were required to disclose data by postcode on credit applications and rejections, policymakers would be better able to understand the scale and shape of the low income credit gap.”

Since the financial crisis, banks and other lenders have withdrawn from higher-risk lending and raised the threshold for accessing mainstream credit. In turn, this has restricted the credit available to those with low credit scores, leaving them at the mercy of higher-cost lenders to bridge their income gap. Surely part of the long-term solution to the household debt crisis is to make it easier for low-cost credit providers and other alternatives.

It is true, as Ministers have previously suggested in Committee and in a letter to me, that there are other sources of data on debt. The Office for National Statistics and the Bank of England publish data on lending, but only at UK level—the data is not broken down by constituency or by area. StepChange, too, publishes some data on lending, as does the Money Advice Service, but the Minister might not be aware that it publishes only estimates of the number of people who are over-indebted.

I would not dream of criticising the Money Advice Service, but its data on lending does not go anywhere like far enough to meet the recommendations of the Financial Inclusion Commission. The Money Advice Service does not routinely collect information about the extent of debt problems at the most local level. Its last significant report was back in March 2016, and it set out estimates of the number of over-indebted households down to local authority level, not postcode level, which is what we need. The Money Advice Service data are estimates based on survey work, not actual individuals who take out loans.

I should be clear that some lending data is already released. The coalition Government, to their credit, required the British Bankers Association, which is now UK Finance, and the Council of Mortgage Lenders voluntarily to publish some data by postcode, primarily to try to tackle the challenges that small businesses were facing when accessing credit.

There are problems with the data. For example, it does not include high-cost, short-term credit—payday lenders. Additionally, it does not disclose lending levels or rates at postcode level. Some details of loan applications and credit providers’ registers are not released either, so a full picture of the level of lending at a postcode level has not yet been able to emerge.

At the moment, the data is released voluntarily. Legal underpinning is needed so that more statutory bodies working in this field can more easily negotiate improvements in data. Specifically in this context, for example, the single financial guidance body should be able better to negotiate the release of the data that it needs.

I say this gently to the Economic Secretary, who will be very helpful to me tomorrow, but efforts to re-engage the Treasury in getting UK Finance to improve the usefulness of the data its members release have not had much success recently. At the very least, I hope he will be willing to join me in meeting national groups operating in this field to hear their concerns about the data, and perhaps he might be willing to use his leverage to get at least small improvements in that area.

In the United States, the Community Reinvestment Act means that banks and other lenders have to report what they are lending, where to and at what rate. The disclosure requirements are critical as they enable independent, informed assessments of what the banks are doing. Crucially, they keep the banks honest. Before the CRA, access to credit was scarce in deprived areas, and that lack of access contributed to and prolonged the decline and deprivation in such communities.

Financial Guidance and Claims Bill [ Lords ] (Third sitting)

Craig Tracey Excerpts

Tuesday 6th February 2018 Public Bill Committees

[Jack Dromey]

Perhaps I will emulate the fleetness of parliamentary foot of my hon. Friend the Member for Harrow West.

I will start with a rather bizarre example, which is of no consequence to me personally. Ironically, as we were getting ready for Committee last week, I had a cold call. Out of the blue, the individual concerned said, “I understand you’ve had a car accident,” to which I replied, “Yes. How did you know?” She said, “We’re here to help you.” I then said, “Actually, the car accident was 38 years ago. I pulled up at a pedestrian crossing and somebody ran into the back of my car.” She said, “Oh. I’m not sure we can help you with those circumstances.”

To make a more serious point, the new clause would require the FCA to ban cold calling for claims management companies. Critically, it would also ban the use by those companies of any data obtained by cold calling. Together, those provisions would make cold calling for CMCs illegal and would cut off the revenue stream to cold callers by preventing CMCs from using their data. The new clause would also allow the FCA to set up appropriate penalties for any breach of either of those bans, which would come into effect with the passing of the Bill.

Cold calling is not just a social nuisance; it is often a direct threat to consumers’ financial wellbeing. It is often an invitation—or, more exactly, an inducement—to criminal activity. There are now 2.6 million cold calls every month. That number has increased by 180% in the last year. Whatever the Information Commissioner’s Office is doing is not working, and the problem continues to grow rapidly.

A Which? report from November 2016 found that in 17 of the 18 cities surveyed, more than a third of all private phone calls were nuisance calls, and that four in 10 people in the Scottish sample were intimidated by the calls. Older people are particularly vulnerable to cold callers. I have seen that personally: a 99-year-old woman was cold called four times, and on one of those occasions she suffered serious consequences as a result. Like her, more than 11 million pensioners are targeted annually by cold callers. Fraudsters make 250 million calls a years—equivalent to eight every second. For some, they are a danger. They prey on some of the most vulnerable people in society.

There is sadly no better example of that than the British Steel workers in Port Talbot. When a deal was struck last year to keep Tata Steel UK afloat, members of the £15 billion British Steel pension fund were given the option to shift their assured benefits to the Pension Protection Fund, join a new retirement scheme backed by Tata or transfer to personal pension funds. However, that led to what has been called a “feeding frenzy” at the site, as dodgy introducers preyed on workers, who were more than likely confused about the position of their pension, and may not have had the financial education to make such an important decision themselves.

[Craig Tracey (North Warwickshire) (Con)]

We all agree that cold calling is a huge issue, but the problem with the new clause is that it seeks to place the burden of establishing when cold calling is taking place on the FCA. Does the hon. Gentleman agree that that approach would divert resources away from what it should be doing—ensuring that the right business models are in place and that there is better transparency for consumers?

[Jack Dromey]

Given the evidence of huge growth in cold calling and the consequences that individuals can pay as a result—I will give a tragic example in a moment—our strong view is that the time has come to send an unmistakeable message: a ban on cold calling, full stop.

I will give an example in relation to Port Talbot and the consequences I referred to last week. The Pensions Advisory Service was eventually asked to go down to Port Talbot, some months after the crisis developed. It told me only last week the heartbreaking story of that shift supervisor who had worked for British Steel all his life. He burst into tears and said, “Wrongly advised, I made the wrong decision.” He also said, “I’ll never, ever forgive myself, because the 20 people on my shift who I supervised all followed my example.”

The evidence is powerful and compelling, and I do not think for one moment the Government would argue against it. The question is: what do we now do about it? The introducer concerned at Port Talbot—I have often described them as vultures—bought meals for workers in local pubs and convinced them to transfer their pensions, often into totally unsuitable schemes, where some could have lost up to six figures from the total of their pension.

The Financial Conduct Authority is probing concerns about pension changes that appear to have affected about 130,000 members of the Tata retirement fund. South Wales police are now investigating. That is a clear example from the world of work where dodgy practices have been used, with a negative and often serious impact on workers’ finances. Our new clause would stop all unsolicited real-time approaches by, on behalf of, or for the benefit of companies carrying out claims management services.

There is a huge and rising number of claims for alleged holiday sickness. In July and August 2016 alone, one operator took 750,000 British, 800,000 German and 375,000 Scandinavian customers to Spain. The Scandinavians lodged 39 claims for holiday sickness—essentially, food poisoning—the Germans 114 and the British about 4,000. It is not only pensions where cold calling has had a negative impact. It is also commonplace for claims management companies to use it to harvest cases of road traffic accidents as well as for holiday sickness, where sadly, the UK has become the world leader.

The Association of British Travel Agents said there were about 35,000 claims for holiday sickness in 2016: a 500% rise since 2013. About one in five Britons—19%, or about 9.5 million people—has been approached about making a compensation claim for holiday sickness. As a result, hoteliers in the markets affected are now threatening significant price increases, and some are even considering withdrawing the all-inclusive product from UK holidaymakers entirely. The great majority of honest holidaymakers may suffer as a consequence of the wrongdoing of a small minority, encouraged by cold calling.

A total ban on cold calling would likely lead to a fall in the harvesting of false holiday sickness claims. In the words of Lord Sharkey in the other place a ban is necessary to deal with the “omnipresent menace” of cold calls. Baroness Altmann has said:

“People need protection from this nuisance now. They shouldn’t have to wait still more years for a ban....Direct approaches to people on their mobiles or home phones should have no place in the modern world of business.”

That kind of thing not only costs our travel industry a huge amount and raises prices for everyone but directly encourages criminal acts on a larger scale, and it is welcome that there have been some early prosecutions accordingly.

Business of the House

Craig Tracey Excerpts

Thursday 11th January 2018 Commons Chamber

[Paul Maynard]

The hon. Lady has raised an important issue in her constituency already in this Chamber, but I urge her to go further and secure an Adjournment debate to raise it more fully, because it sounds as though it deserves it.

[Craig Tracey (North Warwickshire) (Con)]

Given the challenges NHS services regularly face during the winter, and the excellent cost-effective contribution that local GP surgeries can make in easing pressure at accident and emergency departments in particular, may we have an urgent debate on the support the Government can give to ensure that GPs surgeries are fully equipped to give the required primary care?

[Paul Maynard]

My hon. Friend makes an important point about how we need to ensure that we manage rising demand, with 2.9 million more attendances at A&E since 2010. Clearly, we have a dynamically changing healthcare demand pattern, so it is important that we do all we can in our local communities to manage that demand better. GPs have a key role to play in that, and he makes an important point that I hope can be added to further in this Chamber.

Oral Answers to Questions

Craig Tracey Excerpts

Tuesday 18th July 2017 Commons Chamber

[Mr Philip Hammond]

As the hon. Lady may know, I take a clear view about the confidentiality of conversations between Cabinet Ministers—[Laughter.] While I have had many conversations with my right hon. Friend the Secretary of State for Transport, I make it a rule that it is for departmental Secretaries of State to make announcements when appropriate.

[Craig Tracey (North Warwickshire) (Con)]

Does my right hon. Friend agree that lowering corporation tax to 19% has incentivised business investment in North Warwickshire and Bedworth by companies such as Aldi, which has its headquarters there, and throughout the UK?

[Mel Stride]

My hon. Friend is right, and he is rightly a champion of business in his constituency. There is no doubt that lower taxes create wealth and in turn pay for the public services that we all desire—contrary to the party opposite. I share one exchange with the House—when my hon. Friend the Member for North East Somerset (Mr Rees-Mogg) asked the shadow Chief Secretary if he was

“aware that tax as a percentage of GDP is going to be at its highest level since Harold Wilson was Prime Minister?”,

his response was:

“Let me put it like this: if we had a Labour Government, the percentage would be even higher.”—[Official Report, 18 April 2017; Vol. 624, c. 579.]

Balancing the Public Finances

Craig Tracey Excerpts

Tuesday 11th July 2017 Westminster Hall

[Mr Harper]

My hon. Friend is absolutely right. If we let the public finances get out of control, interest rates would rise and hard-pressed families who are having to make difficult decisions would see the cost of their mortgages and other debts go up, which would not make their lives any easier at all.

Let us consider the impact of controlling the public finances on the real economy. If we look at growth, at how fast the economy has grown over the past seven years, we see that our economic performance among the G7 largest countries in the world has been second only to that of the United States. Interestingly, we have grown our economy at almost double the rate of our nearest neighbour, France. In 2014 and 2016 we were the fastest growing G7 country, and the joint fastest in 2015. That is an impressive record. I mention that because our political opponents often pretend that balancing the public finances has not worked, but in generating economic growth it absolutely has worked.

[Craig Tracey (North Warwickshire) (Con)]

I, too, congratulate my right hon. Friend on securing this debate. Will he join me in welcoming the fact that the reduction in corporation tax to 19% has brought in the highest yields ever, bringing another £11 billion into the economy? Does he have any thoughts on what increasing the rate to, say, 26% would have on jobs and, importantly, our ability to reduce the deficit?

[Mr Harper]

My hon. Friend, who makes a good point, tempts me to leap forward to the end of my remarks, but I will say only this about taxes: there is a big difference between rates of tax and how much money is raised. As Conservatives, we believe that the purpose of taxes is to raise money to pay for our public services. The Chancellor made it clear in the debate on the Queen’s Speech that by reducing the tax rate, thereby encouraging businesses to locate here and be more successful, we raised more money to pay for those public finances—I think the Chancellor said £18 billion more.

Looking at that performance, it seems to me likely that if we were to raise corporation tax two things would happen: first, we probably would not raise the money, so although we might pat ourselves on the back and pretend that we were raising taxes, we would not raise the money to pay for public services; and secondly, it is fairly obvious to everyone, or to everyone on the Government side of the House, that those taxes do not fall on businesses at all. When we raise taxes on business, there is no mystical “business” to pay them; those taxes fall either on workers, who will receive smaller pay rises, or on customers, who will see higher prices. Taxes all feed through, so everyone in the economy would pay the price of any corporation tax rises, which probably would not raise any more money to pay for our public services, so we would be shooting ourselves in the foot. My hon. Friend the Member for North Warwickshire (Craig Tracey) makes exactly the right point.

I also want to mention our record on jobs, which is what I am proudest of: 3 million more people are now in work than were when we first came into office. Let me give the specific example—I think this will be heartening—of the impact on young people. In 2010 the unemployment rate among young people in this country was about 20%, which is comparable with that of our neighbours in the European Union and in the eurozone. Since we came into office, to this point, in those countries the unemployment rate among young people has been broadly flat, up a little but still around 20%. In our country it is down six percentage points, to 13%. That is not just a statistic; it means that hundreds of thousands of young people have had the opportunity to get a job when they leave school, college or university.

Oral Answers to Questions

Craig Tracey Excerpts

Tuesday 17th January 2017 Commons Chamber

[Mr Gauke]

Up to this point, growth deals have been city growth deals and, by definition, have focused on cities. As I said earlier, we have made a lot of progress on all the Scottish cities. Of course, it is open to the Scottish Government to take forward projects to enable growth in the county of Ayrshire, if they wish to do so.

[Craig Tracey (North Warwickshire) (Con)]

2. What support the Government are providing to small businesses.

[Maria Caulfield (Lewes) (Con)]

12. What support the Government are providing to small businesses.

[The Financial Secretary to the Treasury (Jane Ellison)]

The Government absolutely recognise the key role that small businesses play in the economy, which is why, for example, at the autumn statement we announced an additional £400 million for the British Business Bank to help growing firms to access finance. Of course, we have taken a number of other steps, including introducing the seed enterprise investment scheme.

[Craig Tracey]

Does the Financial Secretary agree that independent retail stores, such as Chalk & Linen in my constituency, add greatly to the character and vitality of our towns and high streets, and that the Government should do all they can to support them?

[Jane Ellison]

As a former co-chair of the all-party parliamentary group on retail, I could not agree more that independent retail, and retail generally, is a vital sector. My hon. Friend is right that we want to support independent retailers on our high streets, which is why, from April, 600,000 of the smallest businesses—occupiers of a third of all properties—will not have to pay business rates as part of the £6.7 billion business rates package that will kick in over the next few years. I hope that he agrees that that is a helpful bit of support for key local businesses.