Hot Takeaway Food (VAT)

Dan Rogerson Excerpts

Wednesday 23rd May 2012 Westminster Hall

[Dan Rogerson (North Cornwall) (LD)]

It is a pleasure to serve under your chairmanship, Mr Lee. I am delighted to follow the hon. Member for Bassetlaw (John Mann), who made a passionate speech in defence of the Bakewell pudding, which I hate to say I have not sampled, but I will remedy that. Hon. Members may be surprised when looking at me to learn that I enjoy the occasional baked goods from establishments—[Laughter.] I know that that is hard to believe, and that they expect me to go to salad bars, but now and again I like to support the baking industry.

In my maiden speech in the House, I took the opportunity to talk about the campaign for protected geographical indication status for the Cornish pasty, a battle that was fought and won. One can buy pasties with many interesting fillings throughout the country, but Cornish pasties can be bought only if they have been made in Cornwall, no matter where they were baked. That is a serious point, because it protects jobs, and the quality of the traditional recipe. In Cornwall, we are proud of the Cornish pasty, and if someone is eating one, we want them to eat a proper one. “Proper” is an important word in Cornwall, and that campaign successfully delivered the mark of quality.

Businesses in Cornwall that invested in making that hand-made product, which is now sent throughout the country and baked locally, have created a huge number of jobs. They have created permanent jobs, part-time jobs, particularly during peak times in the summer, and even jobs for students. I am aware of that because when I was a student, I spent a summer making proper Cornish pasties in Bodmin. I had the glamorous job of going in at 5 o’clock in the morning to peel onions until about 3 o’clock in the afternoon, and the pasties were ready for the next day. I am delighted that, the business having grown, the onions now come already peeled. That saves someone from having yellow hands, but the job provided valuable support for me when I was a student. As my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert) said, the industry now employs a huge number of people in Cornwall, as does the retail side elsewhere in the country.

I followed what the hon. Member for Bassetlaw said. I would be delighted to pop to a station in my constituency to talk through the issues he raised but, sadly, I do not have any stations in my constituency. It is a mere 500 square miles, and there is no room for one, but I hope that the Government, who, as the hon. Gentleman said, take a close interest in Cornish affairs, will remedy that situation which, sadly, was not remedied under the previous Government.

The importance of the matter in the Budget has been questioned, and even in Cornwall people have said that many issues need to be dealt with: the state of the economy; sorting out public services to ensure that they are the most efficient and best delivered; and the inequality in funding. Cornwall receives lower school funding, and so on. It is right to raise such matters, and I, with my hon. Friends throughout Cornwall, will do so.

An issue should not be put to one side and allowed to go through unexamined, untested and unreformed just because it affects a specific group of people. Although it might affect a smaller group of people than some broader problems, it is incredibly important to those it does affect in terms of the economic impact and, as the hon. Member for Bassetlaw said, traditional skills. I was only peeling onions, and I was not let loose on crimping pasties, but I am sure that my hon. Friend the Member for South East Cornwall (Sheryll Murray) is very experienced in that, and could give a demonstration if visual aids were allowed during debates.

The Budget measures that my hon. Friend the Member for St Austell and Newquay welcomed include the increase in the income tax threshold, the biggest pension increase, and the commitment to the pupil premium—on Friday, with the Deputy Prime Minister, I talked to the head teacher at a local school about how that is having an effect. Those are good news stories, and it is good to hear from people how they are benefiting from them. However, we must not ignore the smaller issues that are incredibly important to some people.

My hon. Friend the Member for St Austell and Newquay pointed out the wonderful anomaly whereby when the ambient temperature is below freezing, a frozen pasty would have to be sold, with VAT, as hot food. That sums up the huge problem and a further anomaly. I suppose the Treasury could create an arbitrary cut-off point, but we are not going to the heart of the problem, which is a sensible, cogent system. We come, therefore, to the proposal that my hon. Friend and others have advanced: if a hot cabinet is used to keep something warm, it falls into the same category as fish and chips and other foods that are kept warm to the point of sale. That is easily seen, and easily inspectable by the poor employees of HMRC who may have to do spot checks, and there would not be negotiation about the proportion of hot and cold food sold in every shop.

If the Government adopt that sensible position, we might find that those who represent the industry making hot cabinets call for a debate in this Chamber. We had lots of petitions last night on behalf of the caravan industry, and wherever the Government turn, employers will be affected. However, there is a simple cut-off point, and people who want to buy hot food, wherever it is sold, can have that option and accept that they will pay VAT on the takeaway.

Bakeries are different. As my hon. Friend pointed out, if people are asked whether they want another takeaway in their town centre, the answer will probably be no. Many already exist, and we have heard about different use classes, which are appropriate in many locations. Bakeries belong in the heart of town centres. Nearby shops would love to have a bakery there because it increases the footfall and the sense of local provenance of the goods on sale. Bakeries give a very different feel to a town centre or a village—we do still have, clinging on, a few villages that contain bakeries.

[Mrs Mary Glindon (North Tyneside) (Lab)]

Does the hon. Gentleman agree that the possible loss of 300 shops on our high streets as a result of this tax would be a severe blow, which would greatly affect high-street businesses and jobs across the country?

[Dan Rogerson]

I entirely agree with the hon. Lady.

In conclusion, I wish to add a little extra plea for the Cornish pasty. My hon. Friend the Member for St Austell and Newquay was generous, and hands have been stretched across the river Tamar between Cornwall and England as people have spoken about their respective products that they value and support. In Cornwall, however, there is a feeling that the Government are taxing something that people might eat instead of a sandwich or some other cold product that they would find elsewhere. There is a cultural element to that. People love a pasty; it is what they grew up with and what their mums, grannies or aunties made at home. Everyone has a favourite shop to go to, and that is part of what it means to grow up in Cornwall. Furthermore, we are a very low-income part of the country.

[Mr Matthew Offord (Hendon) (Con)]

rose—

[Dan Rogerson]

I will happily give way to the hon. Gentleman who has experience of this issue.

[Mr Offord]

The hon. Gentleman is making a good speech. Does he agree that the pasty was originally created for miners going to work? Nowadays, people around the country who are not able to have a plated meal often have a pasty or another baked product as a substitute. Does the hon. Gentleman feel that this tax discriminates against those people as it may not allow them to have a proper nourishing meal at midday?

[Dan Rogerson]

The hon. Gentleman is absolutely right, and having been educated in Cornwall, he knows all about the importance of the pasty. As he said, the pasty was designed for taking down the mine and has a crust that can be left behind after being held with a dirty hand. It would have been baked hot, taken down the mine and consumed cold, as it was unlikely to still be hot by the time the miners got to it. Many other people will buy something hot from a bakery and eat it later in the day, which is different from the cold fish and chips that we have been hearing about.

To return to the Cornish perspective, the feeling is that there is a lack of recognition of a strong sense of identity and of Cornishness. To mention another visual aid, when the last runner with the Olympic flame left Cornwall and set off across the Tamar bridge, he held in his hands a Cornish flag that was sadly confiscated by the police who were running alongside. To many in Cornwall, such things send out a signal that English, Welsh or Scottish identity is fine, but we do not really want to know about Cornish identity. I know, however, that that is not the case in the Treasury, which understands the issue. As a Scot, my right hon. Friend the Chief Secretary to the Treasury understands that sense of Celtic identity, and I know that the Treasury will listen sympathetically. Along with my hon. Friend the Member for St Austell and Newquay, and other hon. Members, I urge all Treasury Ministers to look at the sensible alternative that has been proposed. It has a clear cut-off point and is enforceable, and I hope that the Treasury will respond positively to the consultation.

--- Later in debate ---

[Nigel Mills]

I am grateful to my hon. Friend for that intervention. The point I was trying to make was about a craft baker on the high street who is not trying to be a takeaway in disguise for VAT planning, which is in contrast to what looks like something trying to be a takeaway, but is in fact something different. That is perhaps one of the things that has tipped the Treasury over the line. It would be interesting to know what mischief it is trying to fix. Which bad guys are we tackling? I honestly suspect that the bad guys are not the high street craft bakers who will be dragged into this. Their staff will be in a horrible situation.

I went to a couple of bakers in my constituency to see what the measure will mean. The sausage rolls are out of the oven and slowly cooling down in the very much non-heated—I was careful to check—displays in the shop. I guess that if they have been there for 20 minutes, they will still be hot, and therefore there might be VAT. If they have been there for 30 minutes, they might be on the border. If they have been there for 40 minutes, perhaps they are cold enough for no VAT. I have a horrible picture of the member of staff having to poke their finger into my sausage roll to check whether the one they are selling me is cool enough not to charge VAT on or still too hot.

There is a practical issue of how the shops will know day to day that the products sat cooling have cooled long enough for me to get a 20% discount, or have not cooled so the customer has to pay VAT. I suspect that such shops will put VAT on everything and put the prices up by 20%, and they will get a nice windfall for the bits that they can convince the Revenue are not VAT-able. In practice, they will not want to charge separate prices depending on whether someone buys a product marginally above or below the ambient temperature. That would be an unfeasible and rather strange situation for everyone to get into.

[Dan Rogerson]

With his expertise in the intricacies of tax law, the hon. Gentleman makes good points. I suspect that the windfall he mentions will be offset by any decline in trade due to the 20% increase in the cost of the product, set against cold products such as sandwiches.

[Nigel Mills]

I suspect that that is probably right. This will put people off buying some products entirely. I was trying to say that I suspect that the customer will end up with a 20% price rise on all products and it will be down to the baker to match that loss of sale with the income that they get to keep on non-VATable stuff.

The Government need to produce coherent, understandable and enforceable rules. The suggestion that a product would definitely be VATable if any effort was made to keep it warm, by putting it in a heat-retaining bag, under a hot lamp or on a heated rack, after it had been baked would lead to an understandable and clear situation. I am not sure that it would tackle all the mischief that the Government seek to tackle, which is why it would be helpful to understand exactly what problem they want to solve. It would not stop something that looks a lot like a takeaway pretending to be a bakery, which I suspect is something that they would like to deal with.

--- Later in debate ---

[Mr Gauke]

On that point, our proposal is that if food is sold at above ambient temperature, it is standard-rated, which is the same as takeaway food from Indian restaurants.

We have heard a number of arguments about why businesses will find it difficult to apply the test on ambient temperature. The test to determine whether takeaway food is hot is not new; it has been in place since 1984. However, I accept that, in many cases, suppliers do not need to ask themselves that question because they accept that their takeaway food is meant to be eaten hot and thus they pay tax even if, on a handful of occasions, the food may not actually be hot. They may make use of one of the other arguments about the purpose of the heating, and thus do not pay tax, even if the food is hot. However, the test is reasonably straightforward and will be policed in a pragmatic way.

Some hot food will have been kept hot or provided straight from the oven and will obviously be standard-rated under our proposals. In most other cases, people know when something is hotter than the air around it. A leading high street bakery chain, which has campaigned against these changes, said on its own website that customers who want a hot sausage roll should test whether the sausage roll is hot enough by feeling the temperature through the bag.

It is important to inject some common sense into this potentially trivial debate about food that at one moment is hot and at another is at ambient air temperature. We are not expecting staff to take detailed temperature readings every time they sell a pasty. HMRC will take a pragmatic approach and provide businesses with guidance, taking into account businesses’ responses on how to implement the change.

[Dan Rogerson]

I am grateful to the Minister for giving way as he sets out the Government’s thinking behind this matter. I hope there is room, following the consultation, for that thinking to develop. On the specific point of temperature, we have heard that many pasties are sold outside or through hatches and so on. Will the Minister tell us what would happen if the outside temperature is freezing or below freezing? That is the sort of issue that our constituents are raising with us.

[Mr Gauke]

I can assure my hon. Friend that we shall not start taxing food as hot if the outside temperature is 40°C and the item is warm only because of the air around it, or hot because the temperature is freezing. Existing simplification schemes are already available that allow businesses to calculate their VAT liability by reference to a fixed percentage of their turnover, without requiring staff to consider the temperature of every product sold. Pragmatic approaches to apportionment are, and have always been, a common feature in VAT.

Let me turn now to the proposal by my hon. Friend the Member for St Austell and Newquay. I am aware of the strength of opinion on this question, and I hear the proposal that he has made. The consultation was genuine. As it is also complicated, it would be premature of me to make a knee-jerk response to it within a few days of it closing. However, we are considering his and other constructive suggestions closely, and we are aware of the difficulties in operating a test based on ambient temperatures. As I said earlier, such a test has been in place since 1984, and it is no more than a legal definition of “hot food”. At present, it is rarely applied because businesses that accept that their food is heated in order to be eaten hot accept that it is taxable hot food, and those that argue that their food is heated for other reasons can escape VAT, even if the food is hot.

There are problems with my hon. Friend’s proposal, which potentially risks bringing hot pizza into the zero rate—I suspect that is an unintended consequence. However, it is one of many suggestions that we are considering, and we hope to be able to respond in the near future.

It has been suggested that this change could lead to business closures in the baking industry, and would disproportionately affect businesses in Cornwall, and that it should be delayed until there is stronger growth. However, it does ensure that businesses of all sizes and in all locations receive the same tax treatment for similar products and that that preferential tax treatment does not go to those with the most ingenious arguments, or the best lawyers, to support zero rating.

I accept that all taxes have an effect on growth and jobs, but VAT as a whole is less damaging than many other taxes. I hope that my comments today have provided more information on why the Government have made this proposal. The changes are designed to introduce new sensible objective tests that are less open to abuse and provide a level playing field for all businesses supplying their customers with hot food. I also hope that I have explained that we have undertaken a genuine consultation and will respond as soon as possible, and that we are listening closely to all the arguments.

Finance (No. 4) Bill

Dan Rogerson Excerpts

Wednesday 18th April 2012 Commons Chamber

[Dan Rogerson (North Cornwall) (LD)]

Will the Minister give way?

[Mr Gauke]

No. As I said, I am not going to give way very often.

Those arguments have not always been successful, but they have resulted in some businesses being able to secure VAT-free treatment for a range of hot products, such as hot rotisserie chickens, meat pies, pasties and panini. Other businesses, however, have continued to apply VAT to the similar hot-food products that they sell. They have accepted or the courts have ruled that their intention is to heat their food products so that their customers can eat them hot. Under the current rules, a small independent fish and chip shop will have to charge VAT on its hot chicken, but a major supermarket will argue that its rotisserie chickens are zero-rated. One baker who keeps his sausage rolls in a hot cabinet to provide his customers with a hot snack will charge tax, but the baker next door who keeps them hot and argues that the purpose is to maintain an appealing aroma will claim that they are zero-rated. The current rules mean that many customers simply do not know whether they are being charged VAT on their hot food because the treatment depends on the particular supplier’s purpose in heating the food. The new rules will ensure a level playing field, and we are removing the subjective element.

[Dan Rogerson]

Will the Minister give way?

[Mr Gauke]

Let me make a point about the arguments surrounding ambient temperature. This test has been in place since 1984. We do not expect staff to take detailed temperature readings every time they sell a pasty. HMRC will take a pragmatic approach, and provide businesses with guidance, taking into account the responses of businesses on how to implement the change. I have to point out that existing simplification schemes are already available to allow businesses to calculate their VAT liability by reference to a fixed percentage of their turnover without requiring staff to consider the temperature of every product sold. This is a pragmatic approach, already in existence.

Finance Bill

Dan Rogerson Excerpts

Tuesday 28th June 2011 Commons Chamber

[Mr Jones]

I totally agree with my hon. Friend. I remember the debates on the minimum wage as a trade union official, as he will too, and we were told that it would wreck the economy, but in the north-east alone 110,000 people got a pay rise thanks to that change. It is interesting that we are now hearing proposals from Conservative Back-Benchers to change the system and that people who are disabled and others should perhaps be offered a lower rate of minimum wage.

[Dan Rogerson (North Cornwall) (LD)]

While the hon. Gentleman is patting himself on the back about the great successes of the previous Government, can he tell us which he thinks would have the best effect for working families with low incomes: scrapping the 10p rate or raising the income tax threshold, as this Government are doing?

[Mr Jones]

The hon. Gentleman must be honest with my electorate in North Durham about the fact that although the Government have increased personal allowances they have taken away money in others ways, such as the increase in VAT and the £140 million of cuts that Durham county council will have to impose over the next three years. Those cuts will have a direct effect on many of those poor families. The Liberal Democrats can claim that they have had great success, but if that is their only claim they should be honest with people and tell them what they have lost, as well, through such vicious policies. The hon. Gentleman should remember that this Conservative Government would be doing nothing without the support of him and his Liberal Democrat colleagues.

--- Later in debate ---

[Jim Shannon]

I thank my hon. Friend for putting the issue into perspective. We have no apologies to make; we believe in the sanctity of marriage; we believe it is important. Long may this House subscribe to that belief; we need to provide help and assistance to support marriage. We urge Members to support new clause 5.

[Dan Rogerson]

This has been a fascinating debate. It has been broad in its coverage of issues relating to marriage and social policy—although I must say that at times it has been as long as it has been broad—and it has strayed back into recent centuries in examining the institution of marriage. One common factor has emerged from it: Members in all parts of the House recognise the hugely beneficial effect of marriage on wider society in keeping families together and improving the quality of life, although some evidence presented by Members has raised questions about the quality of life during marriage.

--- Later in debate ---

[Dan Rogerson]

The hon. Gentleman has raised a useful point. However, given the existing pressures on families I do not think that the new clause is sufficient to allow that to happen, although it may be a step in the right direction. The argument presented by, mainly, Members in a particular corner of the Chamber is that on one hand that this is about incentives and on the other hand that it would make a financial difference, and I think there is a weakness at the heart of that argument.

Members have produced evidence relating to what happened at the time of the change in the tax system. My own marriage took place in 1999 and was not related to tax considerations; I am pleased to say that other factors were operating. I suspect that, given the way in which tax has risen and fallen in every Budget, if such decisions were based on tax policy we would see a huge flux in the nature of relationships and marriage.

[Mr Leigh]

The hon. Gentleman is making a perfectly honourable speech and his party’s position is entirely consistent, but, as possibly the only Liberal Democrat speaking in the debate, will he confirm that, given the coalition agreement, he would be perfectly relaxed if our Government produced such a transferable allowance? Surely the Liberal Democrats could simply abstain.

[Dan Rogerson]

The hon. Gentleman knows that I am generally a relaxed person. We in Cornwall are famed for being laid back and not wanting the hectic pace of life that some other constituencies thrive on. I am focusing on the debate about the Government’s policy in the Bill and whether the Government will choose to accept the new clause that the hon. Gentleman proposed in such an able and distinguished manner. I hope that the Government will not at this juncture look to act on the proposal in the new clause.

I am happy to update the House that during the course of the debate news reached me that Julia Goldsworthy, the former Member for Falmouth and Camborne, has announced her engagement, which I am delighted to hear. Whether she and Chris have been watching the debate and decided that this was it is unclear. I think it is unlikely, but I am delighted that the institution of marriage is taking a step forward in terms of our political life in Cornwall.

Hon. Members’ speeches have made it clear that the new clause is an attempt to send a signal to a group of people in society, but I am not convinced that we should use the tax system to send a signal. There are other ways in which we could support marriage.

[Mr Stewart Jackson]

I concur that 1999 was a vintage year for nuptials, having been married myself that year. Surely there is a discrepancy in the hon. Gentleman’s argument. By increments, he is seeking to direct fiscal policy in terms of taking poorer people out of tax—it is his party’s policy, shared by many in my party, and it is in the coalition agreement. Surely he must recognise that there are perfectly good fiscal reasons for us to prevail on the Government to pursue the married tax allowance.

[Dan Rogerson]

There is certainly an important debate to be had, but it is not based on income or the tackling of poverty. It is a different argument, although of course an entirely legitimate one. It is just one that has failed to convince me at this juncture.

In our long debate this evening we have explored the issues in some depth. Despite the excellent speech made by the hon. Member for Gainsborough, he has failed to convince me that the Government should act on his new clause.

[Kate Green]

This is an important debate and one that I am pleased to have the opportunity to speak in. The first thing to say is that it is important that we take great care with what the evidence tells us. That is in two respects.

Independent Financial Advisers (Regulation)

Dan Rogerson Excerpts

Monday 29th November 2010 Commons Chamber

[Mark Garnier]

The issue of commissions is complex and is surrounded by several other issues, one of the simplest of which is that the Office of Fair Trading has deemed it right that the providers of the products should be able to charge or incentivise IFAs and salespeople in a variety of ways. The difficulty with allowing different levels of remuneration to IFAs is that it creates some of the problems we have talked about, but the OFT will not allow a flat rate of commission, which is one solution that could have dealt with this issue.

The risk in being an IFA is a major issue. All professions carry an element of professional risk, which is covered by professional indemnity insurance. In pricing that risk, underwriters take into account the fact that there is a so-called long-stop of liability, which is usually about 15 years, but that is not the case for IFAs. It has been deemed fair for IFAs to have an unlimited period of liability, such that an 80-year-old retired sole trading IFA might be liable for a product sold half a century earlier. It might be that the claimant has a legitimate claim, but in our compensation culture it might be that he does not feel satisfied with what he has got and is just having a go.

In practical terms, for a limited liability company, as the business gets older it becomes less saleable as it accrues a large pool of risk on the products it has sold since it opened its door to trading. Is it fair that an IFA could be chased to the grave in a manner that no other profession allows? Will that indefinite level of risk be an incentive to newcomers coming into the profession? I think that the answer to both those questions is no.

The cost of implementing the RDR is high. Currently, a firm of IFAs with up to 25 advisers is required to put aside only £10,000 by way of regulatory capital. That minimum will double under the RDR, but there is a new element to come in. Under the new rules, firms may be required to put aside 90 days’ worth of operating costs. For the better-run firms with sophisticated systems and offices that could be a significant increase. It is not inconceivable that a firm employing 10 qualified IFAs supported by high-quality support staff could see its regulatory capital rise from £10,000 to £200,000, £300,000, £400,000 or even £500,000. That rule alone is an incentive for firms to go from providing a high-level service to a cut-price one.

But what does all this mean for the cost of the RDR to the consumer? The original estimates for the cost-benefit analysis of the RDR gave a net present value of £600 million for the first five years including one-off costs. That has now risen to a truly staggering £1.7 billion in order to address an unsubstantiated cost of mis-selling £250 million. Moreover, it is by no means the responsibility of the IFA community alone. In 2009, according to the financial ombudsman, just 2% of complaints in this area related to the activity of IFAs, while 61% related to banks, but 65% of the market share is held by IFAs.

[Dan Rogerson (North Cornwall) (LD)]

I congratulate the hon. Gentleman and the hon. Member for West Worcestershire (Harriett Baldwin) on securing this debate. Does the hon. Gentleman agree that in putting together the RDR, the FSA has throughout consistently ignored all the comment from the industry, this place and elsewhere and that the time has come for it to listen and to review the whole set-up?

[Mark Garnier]

The hon. Gentleman is absolutely right. The overriding message coming back from the IFA community is of being ignored by the regulator. It has been suggested that Adair Turner, as someone who comes from McKinsey, looks at the issue from a box-ticking perspective as opposed to considering the fundamental needs of the consumer, which is the important issue.

IFAs are going to bear the brunt of the changes, and especially those with small operations in rural communities.

Independent Financial Advisers

Dan Rogerson Excerpts

Wednesday 20th October 2010 Westminster Hall

[Dan Rogerson (North Cornwall) (LD)]

The Minister is clearly outlining that risks are involved in the advice given by independent financial advisers. Does he agree that a risk-based approach, which is responding to complaints and which might require longer-standing financial advisers to undergo retraining, could be a better way of tackling the issue?

[Mr Hoban]

That is an interesting point, but my hon. Friend should bear in mind that with some products, which might be long term, it can be some time before an issue emerges. If people buy a product in their 30s—a pension product, for example—they might only find out in their 60s that they had been mis-sold something. There is a real issue about looking at complaints records in that way.

The retail distribution review aims to address the structural problems in the distribution of retail financial products, such as conflicts of interest, transparency and professional standards. Although the RDR is the responsibility of the FSA, I fully support its aims—all colleagues should support those objectives. I hope that the RDR will lead to increased confidence, simplicity and clarity in the financial advice sector.

On professionalism, hon. Members are familiar with the fact that the rules seek to ensure that all financial advisers adhere to common professional standards, including an increased minimum qualification level, effective maintenance of knowledge and subscription to a code of ethics. The current minimum financial adviser qualification is at the same level as a diploma in shift management offered by McDonald’s. We should all reflect on that for a moment: the products being sold by IFAs are infinitely more complex and more long-lasting in their effect than a Big Mac.

The rules aim to improve trust and the service offered to consumers. Consumers will have confidence that their financial adviser is up to the job. Investment advice will be seen as a professional activity, financial advisers will have a new status and fresh talent will be attracted to the industry. The FSA reports that, rather than being put off by studying, many financial advisers are going on to obtain more advanced qualifications than those required by the RDR. One of my constituents, who is an IFA, has said that when the FSA raised the minimum bar he wanted to go even further, to demonstrate that his qualifications, knowledge and technical expertise went beyond those of his peers. The FSA also noted that take-up for financial planning degree courses has increased.

I know that many financial advisers have concerns about meeting the increased qualification standards required by the RDR, but almost half of advisers already meet the required level, with two years to go before the RDR is introduced.

Many financial advisers feel that the new rules should be “grandfathered,” so that those advisers with experience are exempt. However, how do we know how good those advisers are? Someone might have been in the industry for some time, but is that necessarily a guarantee of the technical expertise and quality of advice?

Equitable Life

Dan Rogerson Excerpts

Tuesday 20th July 2010 Westminster Hall

[Mr Hoban]

My views have not changed in that period. An option one gets as a Minister is to drive the process forward further and faster, and to change the approach. What hon. Members will have seen over the past eight weeks, which will become clearer when Sir John’s report is published, is that we have adopted a much more transparent and open approach to the resolution of the problem.

As part of that transparency, I will publish with Sir John’s report the advice provided by his actuaries as well as correspondence he has received on the matter. In the light of the sensitivity of the issue, we must know how he developed his methodology and what has informed his thinking. To restore trust in the process, I want to be as open and transparent as possible about our approach and the losses suffered by policyholders. I believe that that is the best way to tackle the distrust that my hon. Friend the Member for Oxford West and Abingdon referred to in her speech.

[Dan Rogerson (North Cornwall) (LD)]

I am sure that people listening to this debate will be reassured by the approach that the coalition Government are taking, in contrast with that taken by the previous Government. Can the Minister confirm that, in taking into account what the Chadwick report says about the scale of the losses suffered by Equitable members, the coalition Government’s approach to how payments will be judged is new and not built on any of the previous Government’s work?

[Mr Hoban]

I will come on to the commission shortly, if Members will bear with me.

As I said, I want the process to be as open and transparent as possible. I have said to the House that when we publish Sir John’s report, I will provide a substantive update on the next steps in the process. We have already set out the important steps in how we will take the work forward, and some points about how the scheme will work.

My hon. Friend the Member for High Peak (Andrew Bingham) raised a couple of points in his intervention. I wish to make it clear that there should be no means-testing, and that the estates of deceased policyholders should be included in the scheme. We felt it important to clarify those two issues early on in order to settle some policyholders’ worries, and I am happy to reiterate those commitments today.

I will establish an independent commission that will advise on how best to allocate funds to policyholders and to help develop the scheme design. One of the key aspects of the ombudsman’s recommendations was that any scheme should be independent of Government, and I agree with the thinking behind that recommendation. The commission will be given a remit that will allow it truly to add value to the process.

The process will be time-consuming, and there is the potential that payments will be delayed if we ask the commission to start the process of determining relative loss from scratch. However, we want it to play a role in developing a fair outcome for all policyholders.