Oral Answers to Questions

Debate between Gareth Thomas and Greg Clark

Tuesday 16th July 2019 Commons Chamber

[Greg Clark]

I will indeed. I have been in touch with the owners of the site. My hon. Friend is absolutely right: the most important thing is that a new owner should be found for that historic site in Burton, so that it can continue its good track record of employment.

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

The chief executives of Coca-Cola, Unilever, Nestlé and PepsiCo are indirectly responsible for much of the 8 million tonnes of plastic waste that ends up in our seas. Will the Secretary of State meet those chief executives to encourage them to adopt more sustainable packaging?

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between Gareth Thomas and Greg Clark

2nd reading: House of Commons
Tuesday 6th March 2018 Commons Chamber

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

I beg to move, That the Bill be now read a Second time.

Virtually every household in the country depends on gas or electricity, or both. They are essential services on which we rely. On average, each household spends around £1,250 a year on energy at home—it is one of our biggest household bills—and for the poorest 10% of households, energy is 10% of their annual household expenditure.

Since the early 1980s, when the industry was privatised, consumers have benefited from a more reliable service. Power cuts are at half the level that they were before privatisation and prices have been among the lowest in Europe. Last year, household electricity prices were 13% below the EU average. In recent years, more than 60 new energy suppliers have entered the market, selling direct to consumers. One in five consumers are now with small and medium-sized suppliers and save significant sums.

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

Is not the problem with the Bill the fact that it locks the stable door after the horse has bolted? Energy companies have jacked up their prices ever since whispers of an energy cap surfaced, such that there is a nice cushion that they can continue to benefit from enormously over the coming months.

[Greg Clark]

I disagree with the hon. Gentleman. As I will go on to explain, part of the problem that we are addressing is that the competition authorities have for some time identified this tendency on the part of companies, and the Bill’s proposals will give Ofgem the power to correct that. He brings me to my next point: for all the progress that has been made since privatisation, it is clear that the market is not perfect. That is indeed why the coalition Government referred the industry to the Competition and Markets Authority to assess how competitive the retail market was.

In 2016, the CMA concluded, following a two-year investigation, that

“our view is that the overarching feature of weak customer response gives suppliers a position of unilateral market power concerning their inactive customer base and that suppliers have the ability to exploit such a position through their pricing policies…by pricing their standard variable tariffs materially above a level that can be justified by cost differences from their nonstandard tariffs; and/or by pricing above a level that is justified by the costs incurred in operating an efficient domestic retail supply business.”

The CMA identified the detriment to consumers—that is, how much consumers are overpaying compared with a fully competitive market—at an average of £1.4 billion a year. This comes from the approach to pricing that is practised by the biggest six energy companies, which for the most part, inherited their customers from previous monopolies. Their approach is to charge their customers on default tariffs much more than those who engage in the competitive part of the market. Currently, the differential for the big six stands at around £300 a year. Those paying the default tariff are much more likely to be in reduced circumstances; 80% of households with an income of less than £18,000 did not switch supplier in the past three years.

From the outset, the UK’s energy market has had a regulator whose responsibility is to act in the interests of consumers. Indeed, if we look back, we can see that Britain has long been a pioneer in not only the privatisation and liberalisation of industries but the regulation of these utility industries, too. Indeed, the British model of privatising state-owned monopolies is to liberalise the market to allow new competitors in and to protect consumers against the power of incumbents—from BT to British Gas—which enjoy an advantage of inertia and loyalty. That has always been recognised in our regulatory arrangements.

Local Government Finance (England)

Debate between Gareth Thomas and Greg Clark

Wednesday 10th February 2016 Commons Chamber

[Greg Clark]

I am pleased to open the debate on this year’s report on local government finance in England. I would like to start by thanking all colleagues in the House, and council leaders and officials, who contributed to the consultation after I made a provisional statement shortly before Christmas. Nearly 280 groups or individuals contributed to the consultation. All responses have been carefully considered, and sensible suggestions have been incorporated into the final settlement that is before the House today.

I have always been frank with local councils that they will need to continue to make savings. Local government accounts for nearly one quarter of public spending, so it is inevitable and appropriate that councils should play their part in helping to reduce the national deficit. Council tax payers are also national tax payers; they are the same people—our constituents—and everyone suffers if we run a permanent, untamed deficit.

Councils have accepted their part in this responsibility. During the last Parliament, all parts of local government delivered the savings that have helped to reduce the deficit by half. At the same time, satisfaction with the services provided by local councils has been maintained—a remarkable reflection on the professionalism and the resourcefulness of local government.

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

Does the Secretary of State understand the frustration of my constituents at the settlement for Harrow Council? We have one of the lowest per capita settlements in London. The council is having to make £80 million of cuts over four years, leading among other things to the closure of the popular Bridge mental health day centre.

[Greg Clark]

What I would say to the hon. Gentleman is that London Councils welcomed many of the changes we have made in this settlement, including the provision of a four-year settlement. One of the concerns councils have had for many years is that, with annual funding, they were not able to plan ahead and reap some of the economies.

Cities and Local Government Devolution Bill [Lords]

Debate between Gareth Thomas and Greg Clark

Wednesday 14th October 2015 Commons Chamber

[Greg Clark]

I will indeed, and I would like to reciprocate the hon. Gentleman’s compliment. Both in his role as Select Committee Chair in the last Parliament and through his personal work in Nottingham, driving the regeneration of what he terms the outer estates in his city, the hon. Gentleman brings and personifies a degree of local knowledge of the problems and of the people, many of whom he has introduced me to on my visits to his city, which it would be impossible to replicate in Whitehall. That provides a good example of why we need to devolve in exactly the way that the hon. Gentleman said.

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

Let me take the right hon. Gentleman back to the subject raised by the right hon. Member for Wokingham (John Redwood)—the issue of where the money comes from to finance devolution. The Secretary of State will be aware of the work of the current Mayor championing full fiscal devolution for London—not just of business rates, but of a series of other local property taxes. Why has the Chancellor resisted devolving control of those additional property taxes?

[Greg Clark]

I think the hon. Gentleman is being a bit churlish. Part of the Mayor’s campaign was to have 100% retention of business rates. That has been secured, and the mayor was appropriately generous in his praise for the Chancellor for doing so. We are rightly responding to a long-standing campaign to make this devolution work, which is a very important step forward.

--- Later in debate ---

[Greg Clark]

I am going to make some progress. I have spoken for half an hour and a lot of Members want to speak.

The Bill is intended to honour our pledge to bring prosperity and opportunity to every part of the country. We must address the problem of recent years of how to prevent the strength of London—valuable and desirable though it is—from overshadowing the opportunity for other parts of the country to achieve their potential. It is very important that no one and no place shall be left behind. Talking of one nation, as Disraeli said,

“the greatest good you can do for another is not just to share your riches, but to reveal to him his own.”

Our local communities are aware of their riches and they want the opportunity to show them, to make use of them and to burnish them in a way that they have been prevented from doing in the past.

Let me say a few words about the progress that was made in the last Parliament.

[Mr Gareth Thomas]

rose—

[Greg Clark]

I want to make some progress and I will perhaps give way a little later.

During the last Parliament, the Government introduced the concept of city deals, pioneering the approach of having a conversation with cities, in the first instance, to see whether there was any common ground—something that might be in the local interest and the national interest, and where agreement could be reached. That was followed by 39 growth deals. My hon. Friend the Member for North West Hampshire (Kit Malthouse) foresaw my being carried shoulder high at LGA conferences, but my experience at those, having negotiated the city deals, was that the leaders of our districts and counties did not so much carry me shoulder high as pursue me down corridors demanding that they should be able to be part of this devolution, and they were right to do so. That is why we extended our devolution arrangements to the 39 growth deals. It is important that we now take this to the next level and be able to devolve powers that Ministers and public bodies have to local authorities, be they individual authorities, combined authorities or mayoral authorities.

The important point to recognise is that the Bill gives no ability to strip any powers from any existing authority. All their powers continue and all the Bill’s proposals are directed at allowing this House, if it gives its approval, to take powers from Ministers and from national bodies and vest them in local government and local leaders. All the devolution is one way; no change is made to the powers and responsibilities of the constituent councils.

Financial Services Bill

Debate between Gareth Thomas and Greg Clark

Monday 10th December 2012 Commons Chamber

[Greg Clark]

The amendments in this group relate to key considerations that have underpinned the design of the new conduct regulator. The Government have been clear that regulation should focus on making financial markets work well, and on securing better outcomes for consumers.

Access is critical. Without access to a bank account, for example, it is difficult for individuals to participate fully in the economy and even in society. To support access, Lords amendment 25 adds a new “have regard” to the Financial Conduct Authority’s competition objective. Therefore, when considering whether effective competition is in the interests of consumers, the FCA must have regard to

“the ease with which consumers…including consumers in areas affected by social or economic deprivation, can access”

the services they may wish to use.

That reflects discussions in the other place, and it is right to make it clear that the regulator’s duties embrace those affected by deprivation.

[Mr Thomas]

The Minister gave the example of access to a bank account, but may I draw his attention to the issue of access to a bank branch in order to access one’s bank account? Already, a series of communities no longer have bank branches. Will he say how the FCA will use this new power to consider communities that lack not access to a bank account but access to a bank branch in the first place?

[Greg Clark]

The hon. Gentleman makes a reasonable point. However, having set up the FCA to put supervision into practice and added this concern to its objectives, it would be unreasonable for me to tell it how to exercise its powers before it has even come formally into existence. It will consider the issue of access and come to a view. That will be open to scrutiny by the Treasury Committee and, I dare say, other Committees of the House.

Where the FCA has identified a problem with access, the regulator will consider whether it could take action to close gaps in provision by promoting competition in the interests of consumers. It may also consider whether its own rules and requirements are imposing a burden on competition and restricting access.

--- Later in debate ---

[Greg Clark]

I do not believe there is a loophole. Firms are required to be regulated for those aspects of their business that provide credit to consumers. They therefore fall squarely under the FCA’s powers.

The Government tabled a number of amendments in the Lords to ensure a smooth transfer of consumer credit regulation from the OFT to the FCA, and to ensure that the FCA regime is proportionate and gives the right protection to consumers. We also introduced amendments in response to concerns raised by the House of Lords Select Committee on Delegated Powers and Regulatory Reform. For example, Lords amendment 136 requires the Treasury to have regard to the importance of securing an appropriate degree of protection for consumers and for the principle of proportionality.

Lords amendment 130 responds to the Committee’s concern about double jeopardy. It provides that when criminal sanctions under the Consumer Credit Act 1974 and regulatory sanctions under the Financial Services and Markets Act 2000 are available to the FCA in relation to the same act or omission, a person may not be convicted if he has already been subject to sanctions under FSMA.

Lords amendment 233 and associated technical amendments address a possible loophole that might otherwise emerge as a result of moving from a CCA-based regime to a FSMA-based regime. Under FSMA, it is an offence to carry on a regulated activity without authorisation, whereas under the CCA it is an offence to lend money or collect debts without the right category of licence. The Government tabled amendments in the Lords to make it a criminal offence to lend or collect money without the correct permission. That addresses the risk of sophisticated illegal money lenders seeking authorisation for a lower-risk activity, only to use that as cover to engage in lending or debt collection, to the potential detriment of consumers. Lords amendment 233 also ensures that any agreements entered into or being enforced by a person without the necessary permission become unenforceable, meaning that important protections in the CCA for victims of illegal money lenders or debt collectors are replicated in the new regime.

Lords amendments 63 and 232 make changes to how the appointed representatives regime under FSMA will operate when firms carry out a credit-related activity—for example, by acting as ancillary credit brokers. The amendments create a limited carve-out from the provision in FSMA that firms cannot be both an appointed representative and authorised at the same time. They provide that if a firm is authorised for a particular category of consumer credit activity, it would also be able to become an appointed representative.

Consistent with CCA provisions, the Bill allows the Treasury to enable trading standards to prosecute offences under FSMA. Government amendments enable the Treasury to confer similar powers on the Department of Enterprise, Trade and Investment in Northern Ireland. They enable the Treasury to confer powers on trading standards and DETI to investigate offences under FSMA.

The amendments to which I have spoken so far have been concerned with the new regime, but the transfer to the FCA will not take place until April 2014, and it is clear that there are problems in the sector that the OFT needs to address in the meantime. The findings of the recent OFT report into compliance standards in the payday lending market show that compliance levels are low and that a number of practices that clearly cause consumer detriment are rife in the sector. To empower the OFT to operate as effectively as possible in the interim period, Lords amendments 138 and 147 give the OFT a new power to suspend consumer credit licences with immediate effect if it considers that necessary urgently to protect consumers.

Finally, on social investment, the Government tabled Lords amendments 24 and 41 to ensure that the particular needs of different sectors and the consumers that use them are taken into account—they are not specific to social investment but apply to alternative and innovative business models more generally. Lords amendment 24 requires that, when the FCA is considering its consumer protection objective in future, it will be required to have regard to the different expectations of consumers in relation to different types of financial service. In other words, if people with their eyes open go into a social investment model, it will be entirely appropriate for advisers to advise on such products.

Lords amendment 41 adds a new regulatory principle to clause 3B—the principle applies to both the Prudential Regulation Authority and the FCA. The measure requires them to have regard to the different nature and objectives of different financial services businesses. It is intended to make clear that there should not be a one-size-fits-all approach to regulation, because sectors such as social investment have an important part to play.

[Mr Thomas]

I apologise for interrupting the Minister’s strand of thinking on the social investment measures, but may I take him back to payday lenders? The noble Lord in the other place introduced a series of Government amendments designed to deal with the problem. Will the Minister offer the House a definition of payday lenders, so that we have a sense of who the Government seek to tackle with the amendments?

[Greg Clark]

I will not do that for much the same reasons I gave in response to the previous intervention. The Lords amendment clarifies that across all regulated lenders the FCA has broad and powerful powers, if I can put it that way, to intervene to protect consumers, including on the price or rates of interest they are charged, according to its assessment of the detriment faced by consumers. It is right to frame it in that way, and to empower the regulator to pursue sometimes even novel forms of credit that might be operating to the detriment of consumers, rather than to risk specifying in the Bill detail that might be overtaken by time or the ingenuity of people seeking to cause damage to our constituents.