Funding for Major Infrastructure Projects

Gareth Davies Excerpts

Wednesday 3rd May 2023 Westminster Hall

[The Exchequer Secretary to the Treasury (Gareth Davies)]

It is a great pleasure to see you in the Chair, Mr Sharma, particularly as this is my first outing as a Minister in Westminster Hall. What a great start!

There has been a really informed, detailed and, if I may say so, courteous display of speeches. The central core of every one of them was a deep care for our national infrastructure and a recognition of how important it is to all our constituencies. I congratulate the hon. Member for Bath (Wera Hobhouse) on securing the debate—at the last minute, I hear, although you would not know it—and thank hon. Members for all the other contributions. I will try to cover off some of the points raised in the time available.

Good infrastructure acts as a knot that ties our communities and our Union together. It is a vital part of how we protect our environment and helps us to unlock economic potential. The Government, right up to the Prime Minister and Chancellor, are absolutely committed to delivering the long-term economic benefits derived from capital investment and infrastructure schemes. We want to build infrastructure that is modern, efficient and accessible to everybody across our four nations.

During this Parliament there has been a step change in how we fund national infrastructure, underpinned by our national infrastructure strategy, which was referenced by my hon. Friend the Member for Wimbledon (Stephen Hammond). To achieve the aims of the strategy we are increasing funding; we have a strategy and we are matching it with funding. That was announced in the spending review of 2021. A multi-year settlement provided £100 billion of investment in economic infrastructure for this spending review period. That includes over £35 billion for rail investment—including, yes, HS2, which I will come to in a moment—and other rail enhancements to boost connectivity across our country. In the longer term, our integrated rail plan, published in November ’21, committed £96 billion for rail construction and upgrades, representing the biggest ever single investment into our rail network. It will deliver a modern network that will benefit small towns and big cities, boost productivity and bring our communities closer together.

The hon. Member for Bath referred to HS2, so let me address that head on. It is a key part of our rail strategy—a long-term investment that will improve connectivity across the country and provide a low-carbon alternative to cars and planes for many decades to come. It is already supporting tens of thousands of jobs. The Government remain absolutely committed to delivering HS2 from Euston to Manchester, and continue to push on with the sections in peak construction so that the first high-speed services—running from Old Oak Common in west London to Birmingham Curzon Street—can be delivered between 2029 and 2033.

[Wera Hobhouse]

I share the Minister’s wish for HS2, but it is just that because there are so many delays, we are losing the public. Is it not important that the Government really come clean and say, “We will deliver this, and it will be great for this, that and the other reason,” rather than putting doubt into people’s minds that it might not be delivered, might be only half-delivered, or whatever it is? Let us go out there and really sell this as a great improvement to our rail infrastructure. Does the Minister not agree?

[Gareth Davies]

I thank the hon. Lady, although I think we are selling it. She is absolutely right: it will boost productivity. It is creating jobs, as I have said, and it will boost connectivity. It is important that we all do go out and sell that. However, we have to be real: we have to balance the need for high-speed rail with sustainable public finances and respond to events as they happen around the globe. That is the reality of what we are doing with the recently announced rephasing. This is true for construction projects all over the country and, if I may say, in many parts of the world; we face significant inflation as a result of Putin’s war in Ukraine and supply shortages coming out of covid. We are reacting to that as hon. Members would expect any reasonable and responsible Government to do.

The hon. Member for Bath referenced the National Audit Office report—I can tell her that we are looking at that report very carefully and will respond in due course. However, the point I am trying to make is that on HS2 is that it is vital and we are committed to it, but we have had to make difficult decisions and choices in order to balance the need for both robust transport infrastructure and robust public finances, which we will always do for the British people.

More broadly, as has been mentioned by many speakers, we are improving rail connectivity and restoring our transport services across the country, but in particular to reverse the 1960 Beeching cuts. It is important that we expand the rail network as well as improving the existing rails.

In the interest of time, I will pick up some of the direct points raised by hon. Members. The hon. Member for Bath should be aware that I am briefed on the M4, which she mentioned—even though I am only a week in, I know about the M4 connection to Dorset. The hon. Lady will know that the DFT commissioned a study by National Highways on that route, and its outcomes are being carefully considered by the Government and wider stakeholders. It is a live discussion and we look to come back on that very soon.

The hon. Member for Bath and my hon. Friend the Member for Wimbledon also made some excellent points on rail electrification. The hon. Lady should be aware of the transport decarbonisation plan, which will deliver a net zero railway by 2050. She referenced some specific statistics, and I will respond with a couple of my own: since 2010, we have electrified 1,224 miles of track, of which 1,000 miles have been installed in the past five years alone—compared, by the way, with just 70 miles electrified in England and Wales between 1997 and 2010. I think we are doing a pretty good job, although there is more to do. I do not think anybody would deny that.

The right hon. Member for Orkney and Shetland (Mr Carmichael) made a very insightful and interesting speech about the challenges his constituents face. I will look into the issue he raised about Treasury responsibility for the pot and come back to him.

My hon. Friend the Member for Wimbledon said eloquently that these things do not all rest on Government finances; the Government cannot pick up the tab for all our infrastructure projects. The benefits of our national infrastructure strategy will be secured through Government and private funding, so we will win the prize by mobilising private capital investment. Almost half of the UK’s future infrastructure pipeline is forecast to be privately financed, and the Infrastructure and Projects Authority recently estimated that the total infrastructure investment for the next decade across the public and private sectors will be nearly £650 billion.

As my hon. Friend mentioned, we are building on a strong base. The UK is a great centre for private investment. We have a strong system of regulation, a strong legal framework that is replicated all around the world, and a leading financial and services sector that helps to mobilise private capital. He talked about the bond market, and as he knows we are one of the leading issuers of green gilts. We are doing a lot to help mobilise private capital, but critical to our financing will be the mechanisms and institutions that we have available to mobilise private capital. That is why, when I was a Back-Bench MP, I was delighted to join him in the debate on the UK Infrastructure Bank, which will play a massive role in funding the projects that people around the country rely on. It has been set one mission: to partner with the private sector and local government authorities to increase infrastructure investment in pursuit of two objectives. The first is to tackle climate change, and the second is to support regional and local economic growth through connectedness, opportunities for jobs and higher levels of productivity. As it stands, £22 billion of financial capability has been provided to the bank, and we expect it to crowd in private capital investment and support more than £40 billion of infrastructure investment. To date, it has already announced 15 deals worth more than £1.4 billion, covering clean energy, digital infrastructure and green transport. That will be transformational.

A lot of Members mentioned net zero, which is absolutely critical. What every party has in common is our commitment to the health of the planet. We are world leaders in fighting climate change and galvanising action on the global stage, as we saw at COP26, and we are right to do that at home with our net zero pledge. The UK already has a world-leading track record of delivering decarbonisation. We have reduced emissions faster than any G7 country since 1990. By the way, we have grown our economy by 75% over the same period.

The Government are committed to a total of £30 billion of domestic infrastructure for the green industrial strategy. Since March 2021, an additional £6 billion for energy efficiency was committed at the autumn statement, and £20 billion for carbon capture, utilisation and storage was announced at the spring Budget. We have in place a clear strategy to deliver on our net zero obligations, deliver energy security and drive economic growth.

To Members who question our ambition and ask whether it is achievable, I say look at what we have already done. Some 71% of all UK households have access to gigabit-capable broadband—an uplift of 8% since November 2021—and we are on track to reach a target of 85% coverage by 2025 and at least 99% by 2030. Some 92% of the UK has access to 4G mobile coverage, and we are on track to meet the Shared Rural Network target of 95%, which has a big impact on Scotland. We also had the opening of the Elizabeth line between Paddington and Abbey Wood. Those are all high-quality infrastructure priorities and projects, and other crucial projects will be announced for economic growth, boosting productivity and competitiveness.

We will go on. We will continue with our strategy, our funding and our prioritisation of national infrastructure. We will transform our railways, including HS2 to Manchester, East West Rail and the Northern Powerhouse Rail core network. We will secure the UK’s energy security through delivering new nuclear power, including Sizewell C, and the roll-out of cheap, clean renewables, including wind and solar.

Infrastructure offers us one of the most exciting and efficient direct ways of improving living standards, boosting our economy and supporting our communities, and I appreciate the opportunity to outline that today.

Financial Services and Markets Bill (Seventh sitting)

Gareth Davies Excerpts

Committee stage
Tuesday 1st November 2022 Public Bill Committees

[Siobhain McDonagh]

My amendments 16, 17 and 18, together with new clauses 10, 11 and 12, address access to free cash, which is indisputably important in our society. Ten per cent. of UK adults—5.4 million people—continue to rely on cash to a great or very great or extent in their daily lives. One in five people says that they would struggle to cope in a cashless society, and that struggle would disproportionately affect those on lower incomes, the elderly and people with physical or mental health difficulties.

Without Government intervention, we are losing free access to cash in our society. In my constituency, the number of free-to-use ATMs has declined by 36% in the last five years, while the number of pay-to-use ATMs has increased by an extraordinary 22%—there is money to be made somewhere. The problem is not confined to Mitcham and Morden: since 2015, the UK has lost more than half its branch network—5,003 branches—at a terrifying rate of 54 branches each and every month.

Through my amendments, I wish to draw the Committee’s attention to the notable decline in the provision of free-to-use ATMs. Since August 2018, the UK has lost 12,599 free-to-use ATMs—a decrease of nearly 24%. Meanwhile, almost a quarter of ATMs now charge people for access to their own cash. It is no wonder that more than half of consumers experienced one or more issues accessing cash at a bank branch in the past year.

Who are the losers in this cashless society? The access to cash review unsurprisingly revealed that those earning less than £10,000 per year were 14 times more likely to be dependent on cash than those earning more than £30,000 per year, and yet they are the residents of the areas where free access to cash is hard to come by.

Take Pollards Hill in my constituency, where a ridiculous clause in the lease prevents the new Co-op from opening a free-to-use ATM because of two paid-for cash machines further down the row of shops. Residents are taking out small sums of money in order to control their budgets, some of them at just £10 a time, but they are charged £2 to take that out—a 20% charge for every single payment. They literally have to pay for access to their cash. Surely the legislation must be tightened to avoid imposing additional costs such as that on the most hard-pressed.

I believe that the need for access to cash is growing. Age UK highlights that one in five older people still relies on cash for everyday spending. The cost of living crisis has seen households reliant on cash counting out the pennies to ensure that they can make ends meet—it is no wonder that in August, the Post Office handled its highest total of cash ever. The evidence is overwhelming and I believe that there should be a societal duty on the Government to ensure that the most vulnerable people in our society have free access to cash and are not left behind.

It is not just me who has such concerns. The hon. Member for Vale of Clwyd (Dr Davies), now the Under-Secretary of State for Wales, stated on Second Reading that he hoped the Government would commit to protecting free cash withdrawals and deposits, presumably in light of Prestatyn losing TSB, Barclays, HSBC, NatWest and Royal Bank of Scotland in recent years, initially leaving the town’s high street without a single bank or cash machine despite being a major regional shopping centre.

On 19 April, the hon. Member for Beaconsfield tweeted after the announcement of bank branch closures in her constituency that she would take up the issue in Westminster, describing crisis talks with the banks on access to cash on high streets everywhere as essential. I am sure she agrees that this is the moment to vote where her voice was.

The hon. Member for Havant has seen at first hand how damaging the removal of access-to-cash provision has been for his most vulnerable constituents, having launched campaigns against TSB, NatWest, Barclays and HSBC in recent years, and having raised his concerns with HSBC about the potential impact on the elderly, who might not be able to access online banking and are reliant on face-to-face services. The hon. Member for Orpington has seen Nationwide, Santander and Barclays close in Petts Wood. He pledged to hold the latter to account in support of those residents who do not use mobile or online banking. Well done to that Member!

The hon. Member for Grantham and Stamford, in advance of the closure of the HSBC branch in Bourne, shared concerns with his constituents about the impact on his elderly constituents whom he said relied on the bank as a vital service in the town centre.

[Gareth Davies (Grantham and Stamford) (Con)]

The hon. Lady is making a fantastic speech—let me say that straight out of the gate—but may I clarify that her proposed access-to-cash solution is for the Treasury to make an intervention on the regulator?

[Siobhain McDonagh]

I do not believe that the regulator, the FCA, will force through free access to cash unless we legislate for that. As Members, we are responsible for that. I suppose I am trying to say that hon. Members are doing their job excellently by highlighting concerns in their constituencies. Even though we have been through a very rough time in politics and a lot of our constituents are unhappy about the turbulent times we have entered, many of them still have faith in democracy, party politics and our system because Members do that sort of work. I believe that we need to follow through when we are given the power to do so.

I have more. The point was even more strongly expressed by the hon. Member for West Bromwich West, who made a powerful speech. Following HSBC’s decision to close its branch in Wednesbury, he gave this message to his constituents:

“The argument of go to West Brom is not good enough! I am determined to fight this”—

good on him!

The hon. Member for North Warwickshire described the impact on local residents as “obvious” when the Lloyds Bank branch closed, leaving Coleshill High Street without a bank branch. As an MP for a rural constituency, the hon. Member for Hastings and Rye detailed her concerns to our witnesses last week about her constituency being able to access cash free, and about the distance her residents would have to travel otherwise.

I do not doubt that my constituency neighbour, the hon. Member for Wimbledon, shares my concern about the loss of cash machines and bank branches in Morden town centre, which we share. One of the only remaining free-to-use ATMs is hidden in a Cashino—an arcade. That is extraordinary.

Government Members need not worry: the new Chancellor shares their view. He was pictured in the Alton Herald just last November celebrating the arrival of a new free-to-use cash machine in his constituency. I say to the Minister: do not worry. If these amendments pass, the Chancellor is right behind you.

Given what appears to be an overwhelming consensus on the issue, I hope Members on both sides of the Committee acknowledge that the Bill needs to be amended to ensure not only that there is access to cash but that there is free access to cash. They will be lauded in articles in their local newspapers and posts on Twitter and their social media for passing these amendments.

Financial Services and Markets Bill (First sitting)

Gareth Davies Excerpts

Committee stage
Wednesday 19th October 2022 Public Bill Committees

[Martin Docherty-Hughes (West Dunbartonshire) (SNP)]

I am chair of the all-party parliamentary group on blockchain.

[Gareth Davies (Grantham and Stamford) (Con)]

I am a vice-chair of the APPGs on environmental, social, and governance and on financial markets and services. I also spent 14 years in financial services and my wife works in financial services.

[Shaun Bailey (West Bromwich West) (Con)]

I am chair of the all-party parliamentary group on financial resilience.

--- Later in debate ---

[Emma Hardy]

Did you want to add anything, Victoria?

Victoria Saporta: No, I think Sheldon has covered it.

[Gareth Davies]

Q Good to see you again, Sheldon. Can you confirm whether you know of any country in the world that has a competitive objective for its regulators?

Sheldon Mills: I’m not aware of one. Vicky?

Victoria Saporta: Singapore has one. Its financial stability, however, is primary; it overrides the competitive objective, which is secondary. There is the Hong Kong Insurance Authority. Otherwise, it is not common, particularly for prudential authorities, which is what I know about.

[Gareth Davies]

Q Australia and Japan also have regulators with a competitive objective. Would you regard Singapore, Hong Kong, Japan and Australia as being robust regulatory financial centres?

Sheldon Mills: We do not like to comment on other financial centres, but, yes, I would consider them to be robust financial centres.

[Gareth Davies]

Q You consider them to be robust financial centres. Would you consider those financial centres of Japan, Australia, Singapore and Hong Kong to be competitive financial centres to the United Kingdom?

Sheldon Mills: Yes, in certain respects.

[Gareth Davies]

Which respects?

Sheldon Mills: I think they are competitors to the financial services system. The UK is extremely strong, varied, and has a multiplicity of financial services. Some of the competition that comes from some of those regions is quite specific in terms of what it seeks to compete with. We have a very broad-based financial services system.

[Gareth Davies]

Q Thank you. Sarah, how do you believe the secondary competitiveness objective might change your behaviour and your policy making?

Sarah Pritchard: From an FCA perspective, it is very much as Sheldon has said. It is important to say we support the Bill as it is currently framed. We think a secondary competitiveness objective can work alongside our primary statutory objectives. It will give us another lens through which to look at the policy work and the development of the regulatory agenda that we are taking forward. Back to the points raised previously on transparency and accountability, it will give us another method by which we will be reporting and considering our outcomes against. We will take that into account. We think it can work as a secondary objective.

On the various elements that make up competitiveness that have been touched on earlier, I think that innovation and ensuring that we can stay ahead of the game with the pace of development across the financial services markets is really important. You can see the financial markets infrastructure sandbox proposals contained within the Bill. There are proposals there on critical third parties as well, so you can already see on the face of the Bill in those particular areas a real desire to make sure that the UK can stay in lockstep or stay competitive as a country enabled through the way in which the financial services regulatory framework is developed going forward.

I think the agility is important. We often hear that regulators are too slow. Sometimes we hear that regulators are too fast in terms of putting out too many consultations. Clearly there is a balance there. We have shown ourselves able to act at speed through the Russia-Ukraine conflict and introduced new rules on side pockets to enable support in that context of war. We will need to maintain that flexibility to be agile when we need to, while retaining the checks and balances that are really important in terms of transparency and accountability.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

Q The FCA announced in June that you would be strengthening the protection of access to banking services. Some might say that this was closing the stable door after the horse has bolted, given that 50% of branches in town centres have now closed. What powers does the FCA currently have to protect banking services, and why were you not doing that before?

Sheldon Mills: Thank you very much for the question. The first framing point to this question is to understand that banking services have and are changing, and there are many, many benefits of those changes. The move towards digitalisation of banking services provides a huge amount of support to many people who are vulnerable. My mother is deaf and the change to a digital means of banking services has transformed her life completely.

The starting point must be that we have to consider the variety of ways in which people can provide banking services. That said, we know that, locally, branches can be important for communities. It is not just branches. It is a point at which people can deposit money and take out money. You can have a variety of those. They can be branches or post offices. They can be what we are trying to encourage the industry to develop when they close branches.

--- Later in debate ---

[Emma Hardy]

Q Okay. So, in general, would you welcome anything that we can do to strengthen provisions against fraud?

David Postings: Yes.

[Gareth Davies]

Q I just want to pick up on one thing you said, David. Can you confirm that the removal of the share trading obligation will make the UK a more competitive and open market?

David Postings: Yes, it will.

[Gareth Davies]

Q Thank you. More broadly, concern has been expressed about the Bill in some quarters that a freer derivatives market will push up commodity prices. Do you have a view on that?

David Postings: I do not have a view on that, I am afraid.

[Gareth Davies]

Q Do you believe that derivatives in general and competitive trading markets push up commodity prices?

David Postings: They can change the volatility in the market. They do not necessarily push the price up, but they can change the volatility.

[Gareth Davies]

Q Thank you. Do you have a view on that, Emma?

Emma Reynolds: I defer to David.

[Peter Grant]

Q Clause 1 proposes to repeal around 250 pieces of European legislation, pretty much at the stoke of a pen. The rest of the Bill then expects the Treasury to replace all those bits of legislation by a process that will allow for very minimal parliamentary oversight. Do you have concerns either that there may be a period where parts of the market are inadequately regulated or, alternatively, that there is uncertainty as to what the regulations are, because of the process of repealing something before you know what is going to replace it?

Emma Reynolds: From what is in the Bill, I do not think that is the Government’s intention. As I understand it, the Bill gives the power to the Treasury to transfer—restate—EU legislation, and we have encouraged the Treasury to think of this as a sequence, because we do not want big regulatory change in one go, as the compliance costs are quite high. We absolutely see that there is an opportunity to tailor EU legislation to our markets, so I do not think it is the case that this legislation would not apply; I think this is going to be done in a phased way.

Financial Services and Markets Bill

Gareth Davies Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Gareth Davies (Grantham and Stamford) (Con)]

It is a great pleasure to speak in this debate on a Bill that is, frankly, the biggest reform of financial regulation in a generation. First, I pay tribute to the longest-serving Economic Secretary that we have known, my hon. Friend the Member for Salisbury (John Glen), who committed his work with great diligence and who is greatly respected in the industry to this day.

I care a lot about the financial services industry. I worked in it for many years, it taught me a lot about the world, and my wife works in it, so I personally want it to thrive, but given its significance to our economy and people, we all should. The Prime Minister was right when she said that it is the “jewel in the crown” of our economy. It is a direct benefit to businesses, savers and investors, and an indirect benefit to us all through jobs, growth and tax revenue. That is why it is important that we do everything we can to unleash its potential, as this Bill does.

I welcome the fact that the Bill takes advantage of our regulatory freedoms now that we are not in the European single market, gives more control to our domestic regulators and ensures that they are more focused on international competitiveness. All those who worry about that resulting in a decline in regulation should be assured that the primary objective remains intact, and that that mirrors established conventions in markets with highly regulated systems, such as Australia and Japan.

I welcome the moves to tighten the regulations on promotions by creating a new regulatory gateway for approvals. I also welcome the provisions to improve the co-ordination between the FCA and the PRA. As a member of the Treasury Committee, I welcome its enhanced role, but join others in saying that it is important that it has the resources and expertise to carry out that role effectively.

This is an excellent Bill that will help to drive the industry and our country forward. I have been struck that we all agree on one aspect, which I will talk about: the need to further democratise our capital markets. Despite the remarkable success in the finance industry, it genuinely bothers me that not enough of our people are directly participating in or benefiting from our capital markets. Although we are all stakeholders in UK plc, not enough of us are shareholders with a stake in our economic success.

We can do three things to address that. First, I am a huge advocate of extending auto-enrolment to those aged 18 to 22, so that they can get on the savings ladder earlier. That would create 900,000 new savers and £1 billion extra in savings for our economy, and it would do a great deal to encourage a better savings culture. Secondly, we should look at removing regulatory obstacles to people receiving investment advice, so that people do not just save, but invest. Thirdly, I want us to get on with reforming Solvency II, so that more pensioners can expand their investment universe into illiquids such as infrastructure. If we do those things, we can build on this excellent Bill and ensure that everyone shares in the success of our world-leading financial services sector.

Oral Answers to Questions

Gareth Davies Excerpts

Tuesday 28th June 2022 Commons Chamber

[John Glen]

Most mainstream understanding of how the economy works recognises that we need wealth creators, but we also need a Government who recognise the strains that the country is facing. That is why three quarters of the support will go to vulnerable households, including specific additional top-ups such as the £12 million going to Liverpool for the household support fund. This Government will stand by wealth creators and innovators, however, because we need growth in the economy and a more productive economy.

[Gareth Davies (Grantham and Stamford) (Con)]

One way to tackle regional economic inequality is to ensure that our regional businesses are able to attract investment. Will my hon. Friend outline what more we can do to ensure that we unlock more private investment into Britain’s firms of the future?

[John Glen]

The Government are constantly looking at new ideas. The regional angels programme and our reforms to financial services to make FinTech and banks more accessible to regional businesses are at the core of this Government’s agenda, and I will bring further measures to the House in the next few weeks.

Economy Update

Gareth Davies Excerpts

Thursday 26th May 2022 Commons Chamber

[Rishi Sunak]

Again, perhaps the hon. Gentleman did not hear what I said. We are extending the support to all those on means-tested benefits, not just those on universal credit, who account for less than half of all households on means-tested benefits. What we are doing is more comprehensive than what he is suggesting and, in fact, it is more generous, because £650 of support is more generous than uprating, which in aggregate, on average, would be worth only just over £500.

[Gareth Davies (Grantham and Stamford) (Con)]

Since 2011, the basic state pension has gone up by 35%. Today, pensioners across Grantham and Stamford are seeing additional support at this very difficult time. Does the Chancellor agree that, ultimately, we need to improve the culture of saving for a pension in this country, so that pensioners are well prepared for future challenges?

[Rishi Sunak]

My hon. Friend is thoughtful on that topic, and he is right. Previous Governments have reformed auto-enrolment to bring about that change in culture. The advantage that we are seeing now, with financial technology making it far easier for people to access and direct savings, means that we should only see that grow, and we will help to encourage it.

National Insurance Contributions (Increase of Thresholds) Bill

Gareth Davies Excerpts

2nd reading
Thursday 24th March 2022 Commons Chamber

[James Murray (Ealing North) (Lab/Co-op)]

As we debate the Bill, I cannot help but notice it is becoming a bad habit of this Chancellor to rush national insurance legislation through Parliament in a day. A little over six months ago, I stood here setting out the view of the Opposition on the Government’s Health and Social Care Levy Bill, which was similarly rushed through all its stages in just one day. As we know well, that Bill introduced a new levy that would be preceded by an equivalent increase in national insurance contributions for employees and employers of 1.25%. Since that national insurance increase was agreed, it has become ever clearer that it will be the worst possible tax rise at the worst possible time.

The Opposition will support today’s Bill, as any help for people facing the Chancellor’s national insurance tax hike in April is something we welcome. There are benefits to raising the threshold at which people begin to pay national insurance, but we should be conscious that the Bill has more to do with the Chancellor’s increasingly desperate desire to paint himself as a tax cutter than it does with a well-thought-through package of measures to help people with the struggles they face. Even after the Bill passes, the tax burden in our country will still be at its highest in 70 years, and we are still the only G7 country to be raising taxes on working people this year. The Chancellor is making sleights of hand his speciality. As the Office for Budget Responsibility has pointed out, for every £6 he has taken in tax since he took on that role, yesterday he gave back just £1.

The Chancellor has realised that his national insurance hike in April is wrong. Labour could have told him that six months ago. In fact, that is exactly what I told the Minister in September last year when we debated the Health and Social Care Levy Bill. We set out clearly our decision to vote against that Bill on Second Reading. We set out how it broke the Government’s promise not to increase national insurance, and instead raised taxes on employment that would disproportionately hit working families, young people, those on lower and middle incomes, and businesses trying to create more jobs in the wider economy, while leaving income from other sources untouched. We were not alone in criticising that tax rise. The British Chamber of Commerce warned:

“A rise in National Insurance Contributions would represent a hammer blow to jobs growth at this crucial point in the UK’s economic recovery.”

At the same time the TUC general secretary, Frances O’Grady, criticised the Prime Minister for

“raiding the pockets of low-paid workers, while leaving the wealthy barely touched.”

[Gareth Davies (Grantham and Stamford) (Con)]

Does the hon. Gentleman acknowledge that 14% of the highest earners in this country will pay 50% of the levy?

[James Murray]

As the hon. Gentleman knows, we have debated the increase in national insurance at length, and today we are debating the package of measures that the Chancellor brought forward. Overnight analysis by the Resolution Foundation, which he would do well to consult, recognises that seven in eight workers will pay more in tax and national insurance in 2024-25, as a result of decisions taken by this Chancellor and this Government.

--- Later in debate ---

[Jacob Young]

rose—

[Gareth Davies]

rose—

[James Murray]

I am going to make some progress. The record shows that the Chancellor likes putting up taxes. He has been busily defending his tax rise on working people, but when it comes to oil and gas profits he is suddenly nowhere to be seen.

--- Later in debate ---

[Paul Bristow]

Like my hon. Friend’s mother-in-law. I went to a “politics and a pint” pub surgery in the Oxcart pub in Bretton in my constituency to talk to my residents. I wrote to a large number of people living around the area and told them that I would be there between 6 and 8 o’clock and that I wanted to listen to what they felt about the spring statement, and any other issues that they wanted to talk to their MP about. The single most popular measure in the spring statement that came up was the rise in the national insurance threshold.

Peterborough is a city of hard-working people and hard-working families and they want to see work rewarded. That is what this measure does. It will mean that if they work those extra hours and have the dignity of a job, they will keep more of their own money, pay less tax to the Government and be able to spend it on what they perceive to be best for them and their family. That is the Conservative way, and that is why I welcome these measures. I think they will go a significant way towards relieving pressure on families in my constituency. One lady I spoke to told me exactly what this extra money might mean for her. For her and her family, it would mean help with school uniform costs and help with the weekly food shopping bill, and of course it would also mean help with rising energy prices.

That was not the only thing raised with me last night, and it would seem partisan if I did not mention that constituents raised elements of concern. One constituent told me that, although the spring statement will go some way towards addressing energy prices, people need the heating on during the winter, and they asked whether there will be more measures later down the line. I also spoke to pensioners, who raised a concern about what this might mean for people on a fixed income.

The landlord of the pub pulled me aside to explain that, typically, he was paying about £1,200 a month for energy but, due to the rising costs, some of the deals on offer are almost £4,000 a month, which is an eye-watering amount for a local community pub like the Oxcart. However, he told me how pleased he is with the continued cut in business rates.

Far be it from me, as a new MP elected in 2019, to say this to longer-serving colleagues, but a “politics and a pint” pub surgery is an excellent thing to do because it supports local businesses. If we do not use pubs, unfortunately we will lose them. A “politics and a pint” surgery is a fantastic way to meet our constituents.

Returning to my central point, the rise in the national insurance threshold will reward work. As my hon. Friend the Member for Redcar (Jacob Young) outlined, people who earn less than £12,500 a year will not pay any tax at all, which means more money in their back pocket to support themselves and their family.

A large number of people in my constituency are on universal credit while in work. One of the most popular things this Government have done in recent times is to alter the universal credit taper rate from 63p in the pound to 55p in the pound. That is an extra £1,000 in the back pocket of hard-working families in my constituency, which makes an incredible difference.

I praise the raising of the national insurance threshold because it simplifies the tax system. It was an anomaly that people did not pay income tax until they earned £12,500 but they were still paying national insurance. This measure creates a simpler and clearer tax system, which is in everyone’s best interest. We do not want tax to be confusing, lacking sense or difficult to understand. People pay their tax, so it should be as easy as possible for them to understand, which is what this measure does.

Finally, I want to talk about what the rise in the national insurance threshold will mean for particular people in my constituency. As I said earlier, work is plentiful in my constituency. We have lots of vacancies in Peterborough—in fact, there are more vacancies than people on universal credit—and this rise sends a message that the Government are putting their arm around everyone in this country, and particularly hard-working families. If people want to go out and find a job, work hard and make a contribution, they should be rewarded. There are plenty of those people in Peterborough and across the country.

[Gareth Davies]

My hon. Friend and constituency neighbour is a great champion of everyone in Peterborough, and I pay tribute to him for all the work he has done since his election in 2019. How do his hard-working constituents feel about the 6.6% increase in the national living wage, which makes sure that having a job is a way out of poverty?

[Paul Bristow]

My hon. Friend and constituency neighbour makes an important point, and it is another example of how this Government are rewarding those in employment who work hard and make a contribution. That is what this Government are all about, and it is what any Government should be all about. This Bill is another example of rewarding people who make the right decisions.

--- Later in debate ---

[Wendy Chamberlain]

I accept the measure helps other people, but the reality is that we have seen an increase, on average, of 40p a litre. As other hon. Members have said, there has been a 5p a litre increase in the last week. A 5p reduction is helpful, but it does not go far enough to support those who really need it.

Frankly, lowering the basic rate of income tax is the biggest wheeze of all. Paul Johnson of the IFS said in The Times this morning that we are experiencing “fiscal drag.” The freezing of income tax, which the Chancellor previously announced, means that, even as people’s wages increase, they will pay more tax, and the reduction is not happening yet. All the Chancellor has said is that he will do it at an unspecified time before the next election.

The reduction will help those on low incomes the least. It is a tiny reduction and, overall, the tax cuts announced yesterday are worth only a quarter of what is being increased. Arguably, it is not workers who benefit from the cut but people, such as landlords, with unearned income from investments. People who are wealthy enough to get their income from savings and property will pay less tax, while the least well off continue to pay more and more. This is driving another wedge between unearned and earned incomes. I tabled a further amendment with my hon. Friend the Member for Bath to require reporting on the impact.

The Chancellor repeatedly spoke about hard-working families—that was his catchphrase of choice—but those hard-working families are not being helped. They are seeing their energy bills go up and the price of food to feed their children skyrocket, and working parents are being pushed into higher tax brackets by the choice to freeze the thresholds. They pay ever more tax. My final amendment addresses unearned income.

This spring statement is a huge missed opportunity. I would have liked to see a packed Chamber debating legislation that actually makes a difference to people, but I think we would all accept that this is not that Chamber and not that Bill. There are so many steps the Government could have taken today but did not. We had an Opposition day debate at the start of this week on pensioner poverty, which we know is increasing year on year. The Minister in that debate said he was sure the Chancellor would have been listening to Opposition Members calling for more support for pensioners and suggesting some of the ways in which that could be done—you were in the Chair at the time, Madam Deputy Speaker. Clearly, the Chancellor was not listening, because pensioners were not mentioned at all yesterday. There was very little for pensioners who do not drive or own their house—or for those who do own their house but are not planning any energy-efficient home improvements.

[Gareth Davies]

I point out to the hon. Lady that 200,000 fewer pensioners are in absolute poverty now than were in 2010. I just put that on the record.

[Wendy Chamberlain]

I thank the hon. Gentleman for putting that on the record, but we are looking at 1.3 million additional people, some of whom I am sure will be pensioners, going into absolute poverty in the next year. Our state pension is set to have a real-terms cut. Inflation is at 6.2% and is expected to go up to 8% in April, yet pensions are going up by only 3.1%. That was what the triple lock was designed to deal with; it was there to keep pensions in line with and up to the cost of living. As I have said many times in this Chamber, the state pension is not just about pensioners now; it is about ensuring that people in the longer term know that they have a state pension that they can look forward to, and that matters for younger generations, too.

This Government say that they oppose loneliness, but, as always, actions speak louder than words and the measures are leaving older people on their own, in the dark and the cold. There are very good reasons why some people cannot work. There is nothing at all for those receiving social security, who are also suffering the real-terms cut to incomes and are also struggling to pay their rent, because of the freeze to housing allowance—even the National Residential Landlords Association has called that out as being catastrophic. Frankly, it is more expensive to be poor. People on benefits are being unfairly punished by a system that is set up to make them fail. They are worrying about money, making ends meet and debts, and living in unsuitable housing that costs more to heat. These are not the conditions that set someone up to apply for jobs, to succeed in interviews or to move on to a better place in their lives. We know, as we have heard the evidence, that the benefits system can cause serious harm, damaging people’s mental health, sometimes to the extent that they take their own lives. This is not a system that helps people—often it harms them. We know that our economy is stronger when those who are able to work do so, but our system does not help people do that and it must be more compassionate. It must also receive sufficient funding so that those receiving benefits are not pushed further and further towards the edge.

Do the Government want this country to be one where destitution becomes normal? As I have said, the estimate is that 1.3 million people will move into absolute poverty as a result of the current cost of living crisis. The only support offered yesterday for those on the lowest incomes was the boost to the household support fund, via local authorities. That is no substitution for having a proper support system that stops people falling into poverty in the first place. As happens with pension credit, people do not always come forward for the support they need, so I echo the suggestion that anyone facing hardship contacts their local authority so that they can get support that may be available to them.

The Government could have cut VAT to 17.25%, which is what my party would propose to do. That measure would help everyone. Cutting VAT will shield our constituents from the worst of the increased costs, put money back in their pocket, and help those on middle and low incomes the most. With an economy that is struggling, because of a variety of factors, we need people to be out in our economy; we need people on our high streets, buying things that are made in our factories and marketed on our streets. A cut to VAT would give an immediate boost to every household, but it also helps us in the long term. That is what a meaningful policy would look like.

--- Later in debate ---

[Alexander Stafford]

I completely agree with my hon. Friend’s point. This is a Bill that really helps people because it will reduce the amount of taxation and put more money in people’s pockets.

We need to make sure that work pays. That is vital. I mentioned the £400 billion that the Government have spent; they have kept jobs going throughout the pandemic. That is vital. It is why unemployment in Rother Valley is only 3.6%, which is below the national average. Of course, that still means that 2,000 people in my seat are actively looking for jobs, which is why last Friday I held the first ever Rother Valley jobs fair. It was a great success: there were more than 30 employers and hundreds of people turned up, and I am told that dozens of people have already got jobs out of it. That is the Conservative view on the ground in a constituency, helping with jobs, and the Government are doing that nationally.

[Gareth Davies]

My hon. Friend is making a fantastic and eloquent speech. Is he aware that last year unemployment fell every single month, thanks to the Chancellor’s plan for jobs?

[Alexander Stafford]

I was not aware of that exact point, but it does not surprise me because that is generally what happens under Conservative Governments: we try to promote people and work.

The measures on national insurance that we are discussing will encourage more people into work, but we must also look at the wider context. It is not just about working people; the Government recently changed the universal credit tax taper, thereby helping people on universal credit. The simplification of that system will not only make a huge difference to everyday lives but, hopefully, reduce some of the accounting costs and make it easier for business. That will be a double help for business.

Fundamentally, I believe this is a great measure, in the sense that it will put more money into people’s pockets but also pay for the important health and social care levy. We all need that great NHS that protected us throughout the pandemic. This will fund the NHS, put more tax in people’s pockets and clearly shows the way for us to lower taxes in the years to come.

--- Later in debate ---

[Rachel Hopkins]

I am really pleased that the hon. Member is able to remember that figure; I hope he is also able to remind the House of the more than £100 million that has been taken away from Luton council over a decade of Tory austerity, which is why so many of the families in my constituency are living in poverty and are in fuel poverty.

[Gareth Davies]

Will the hon. Lady give way?

[James Daly]

Will the hon. Lady give way?

--- Later in debate ---

[Lucy Frazer]

As we know, there is energy price volatility in that the price of oil and gas will be going up and down, which is why the Chancellor has put in the measure for a 12-month period, but I should point out that that builds on the 12th consecutive year of fuel duty freezes.

[Gareth Davies]

Will the Minister give way?

[Lucy Frazer]

I am going to carry on, because there are a lot of points to which I would like to respond and I have limited time.

My hon. Friend the Member for South Dorset (Richard Drax) made a very powerful speech about freedom, recognising the impact of global challenges. He mentioned the armed forces, and I would like to reassure him that last year’s integrated review was accompanied by the largest cash increase in the defence budget since the cold war, with an additional £24 billion.

The hon. Member for Gordon (Richard Thomson) asked why the Chancellor is not using his £30 billion headroom. I would like to point out that the OBR has said that there is “unusually high uncertainty” in relation to the outlook, and the OBR has also said that the headroom the Chancellor has kept is the same as, or indeed less, than that of previous Chancellors. That is important because, if there is a 1.3% increase in interest rates, that will totally wipe out the headroom the Chancellor has given himself. We are already looking at £83 billion being paid in interest next year. Those of us on the Government Benches think we need to be fiscally responsible in the way we deal with our taxpayers’ money.

The hon. Member also said that to increase the national insurance contributions threshold as we are doing was not the right way to go. I would like to point out that Martin Lewis has said on Twitter:

“This is the big one. Increasing the National Insurance threshold so it now matches Income tax from July.”

He said various other things, and then he said, “Good call”.

My hon. Friend the Member for Redcar (Jacob Young) recognised that there are no easy choices. He reminded us of Labour’s record on the economy, which reminded me that the shadow Chancellor had put forward a total of £170 billion of uncosted spending proposals just by September last year, and she has refused to rule out hiking up income taxes.

Financial Statement

Gareth Davies Excerpts

Wednesday 23rd March 2022 Commons Chamber

[Rishi Sunak]

The way that benefits and indeed pensions are uprated is the same every year, and it has been done in the same way for more than a decade. We are making sure that we support people from welfare into work, which is the most sustainable way to help them. Someone moving from UC into full-time work at the national living wage is £6,000 better off. That is why I am pleased that because of our management of the economy there are now record numbers of job vacancies and the support to help people get those jobs.

[Gareth Davies (Grantham and Stamford) (Con)]

Thousands of people across my constituency will welcome the targeted measures announced by the Chancellor today. Will he reconfirm for the House that he agrees that the best way to tackle the cost of living issues that people face is through the dignity of a job and the security of a regular pay cheque? That is why it is so important that unemployment—[Interruption.] I ask Opposition Members to listen. It is why it is so important that unemployment has fallen every month for the past year, and they should welcome that.

[Rishi Sunak]

My hon. Friend is absolutely right and puts the point eloquently: the best way to help people is to get them into work. That is why we are creating record numbers of jobs and then making sure that not only are those jobs well paid, but people keep more of the money they earn. That is the approach of this Conservative Government.

Cost of Living Increases

Gareth Davies Excerpts

Wednesday 16th March 2022 Commons Chamber

[Ian Murray]

We do not want to see council tax bills rising anywhere across the country, but my own council, the City of Edinburgh Council, has had £1 billion ripped out of its budget over the last 10 years by decisions to take Conversative austerity, times it by four and pass it on to local authorities. [Interruption.] I hear the cries of “What?” behind me, but these figures can all be checked. The 3% of Conversative austerity is multiplied by four and passed on to our local authorities who are delivering these services. Councils are forced to make decisions that they do not want to make. [Interruption.] All those figures can be checked, Madam Deputy Speaker, despite the SNP Members chuntering from the back.

The Chancellor’s measly council tax rebate scheme, while welcome at £150, will distribute more money to the Scottish Government, but the SNP response is just to reflect that entire policy. The Minister mentioned this. To put that into context, there will be £150 off council tax in bands A to D in Scotland, which means I will get £150 off my council tax. How is that fair? Of course, I will be donating it to local charities, but that policy is money wasted that should be directed to those who need it the most.

What of this one-off windfall tax on the unexpected cash bonanza for the oil and gas sector? The SNP group here in Westminster has been more interested in standing up for Shell than standing up for Scottish taxpayers. [Interruption.] Again, Hansard has all of this documented. When my colleagues and I put down a motion in this House for a vote on a windfall tax on the enormous excess profits of the oil and gas companies, the SNP sided with the Conservatives and failed to back it. In fact, the SNP BEIS spokesperson, the hon. Member for Aberdeen South, who is sitting not yards from me and who moved this motion, defended that position vociferously in this House. The deputy leader of the SNP did not back our motion on BBC “Politics Scotland”, live on television, and the hon. Member for Gordon (Richard Thomson) said:

“I am sorry to say that I have not heard anything to persuade me why a one-off smash and grab on the North sea industry is the best way to deal with this crisis.”—[Official Report, 1 February 2022; Vol. 708, c. 239.]

Let us see what this crisis is doing. Shell’s profits have quadrupled, in what its CEO has described as a “momentous” year, to an unexpected $19 billion. That is $600 a second in profit, driven primarily by the huge increases in energy prices. While Scottish families face the heartbreaking choice between eating and heating, the CEO of BP is describing the energy sector as a “cash machine” for his business. Under our proposals, he would be popping his corporate credit card in the cash machine, and giving a little bit of that money back to struggling families. Before both Governments—the Scottish Government and the UK Government—trot out the usual defence of harming investment, most of that unexpected profit is going to additional bonuses for shareholders in dividends and buybacks of shares, so such businesses will not be using that money for investment.

Now we see that the SNP, after weeks of defending not backing a one-off windfall tax to help Scottish people pay their bills, has its own proposal with one line in the motion about

“a windfall tax on companies which are benefitting from…impacts associated with the…pandemic or the…international situation”.

Surely that means oil and gas. Does it mean oil and gas? Does the BEIS spokesperson want to intervene and tell us if it means oil and gas? [Interruption.] Nobody on the SNP Benches is saying it means oil and gas, so what on earth does it include? Will it not affect investment, if that is the defence for oil and gas, in other industries? Do they have any detail on how much that would raise, how it would be implemented or who would be impacted?

Does this include every business that has turned a profit during covid? What about small businesses such as the micro-breweries that turned their hand to making hand sanitiser during the pandemic—should they pay? What about Pets at Home, because of the boom in people buying pets during the pandemic? The critical argument is that these businesses’ profits are not driven by the increases in energy costs that are hitting family finances directly. It is the oil and gas companies’ profits that are driven by the crisis, and it is they that should pay a little more. It is their additional, excess and unforeseen profits that are directly linked to the rise in bills paid by millions of families, and I have yet to receive an intervention to find out whether the SNP motion includes oil and gas—nothing. Quite obviously, we can come to our own conclusion that it wants to tax Irn-Bru, but not tax oil and gas.

[Gareth Davies (Grantham and Stamford) (Con)]

Not that I am going to make a habit of trying to defend SNP Members, but one of the reasons why they may not include oil and gas in their windfall tax plans is perhaps that they watched the Treasury Committee hearing with a panel of independent experts specifically on the windfall tax, who said that it would be ineffective and would damage investment. It would be ineffective because BP and other oil companies actually make their profits elsewhere, not in the North sea, and as a result, the costings the hon. Member describes are not up to scrutiny or robust. Could he explain to the House how he has got to the figures he is putting forward as fully costed?

[Ian Murray]

Yes, if we increase the additional rate on the oil and gas sector from 40% to 50%—10 percentage points extra—that will generate the money towards our fully costed plan for raising energy prices, but very well done for defending the Scottish National party, and both the Conservatives and the SNP knocked back the oil and gas sector’s windfall tax when it was brought to this House.

To go back to the central question of this debate on the cost of living crisis, many families are worried about the email dropping into their inbox telling them that a direct debit will treble, or the bill landing on the mat saying their energy bill will become unaffordable, yet both Governments refuse to ask the companies making the money, directly driven by the energy crisis and the energy prices that are generating those extra direct debits or those extra bills, to put a little bit more into the pot to help. With the SNP’s current policy in the motion, and SNP Members still will not tell us if it includes the oil and gas companies, AG Barr, a successful Scottish business that made more profit last year than pre-pandemic, would pay a windfall tax, but the oil and gas companies would not—taxing ginger, not taxing gas.

Oral Answers to Questions

Gareth Davies Excerpts

Tuesday 7th December 2021 Commons Chamber

[Rishi Sunak]

My right hon. Friend has rightly campaigned on this issue and she raises an excellent point. The good news on business rates is that, next year, thanks to the tax cut that we announced in the Budget, 90% of retail, hospitality and leisure businesses will see at least a 50% cut in their business rates bill. That is worth £1.7 billion; it is the biggest business rates tax cut since the system was created, other than during coronavirus. On her point about offline and online, she will know that we have helped to bring in an international tax treaty to tax large multinational digital companies, and we continue to consult on the pros and cons of an online sales tax.

[Gareth Davies (Grantham and Stamford) (Con)]

Does my right hon. Friend agree that one of the best ways in which we can reduce inequality is by ensuring that young people are equipped with the skills that they need to succeed, wherever they live? That is why the additional £126 million of funding for work placements and training is so important for young people in Grantham and Stamford.

[Rishi Sunak]

My hon. Friend is absolutely right; I know that he is a staunch supporter of skills and getting young people into work in his constituency. He mentions traineeships, which are fantastic initiatives with a 75% success rate in helping young people and a great example of our plan for jobs in action, spreading opportunity right across the country.