Oral Answers to Questions

Debate between Harriett Baldwin and Jesse Norman

Tuesday 20th October 2020 Commons Chamber

[Harriett Baldwin (West Worcestershire) (Con)]

[The Financial Secretary to the Treasury (Jesse Norman)]

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[Harriett Baldwin]

[Jesse Norman]

Finance Bill (Ninth sitting)

Debate between Harriett Baldwin and Jesse Norman

Committee stage & Committee Debate: 9th sitting: House of Commons
Thursday 18th June 2020 Public Bill Committees

[Jesse Norman]

Clause 100 is a technical measure that makes changes to put it beyond doubt that tasks that are being done by an individual officer of Her Majesty’s Revenue and Customs may be carried out by HMRC using a computer or other means. It ensures that the intention of Parliament is appropriately reflected in the legislation and confirms that the rules work as they have been widely understood and applied over many years. No new charges or obligations for taxpayers will result. The changes merely clarify legislation.

If I may explain the context for the introduction of the clause, the Government announced by written ministerial statement on 31 October 2019 that it would legislate retrospectively and prospectively to confirm notices to file tax returns and penalty notices issued by HMRC through automated processes as valid. That long-standing practice has been challenged in the courts on the basis that the legislation states that some tasks are to be carried out by

“an officer of the Board.”

The relevant legislation in the Taxes Management Act 1970 is 50 years old and was designed to support a paper-based manual tax system.

The way in which HMRC administers the tax system has evolved over time, in line with taxpayers’ expectations for a modern and digital system. Decisions made by HMRC officers are often given effect by computer-driven processes, so that HMRC can assess and collect taxes in the most efficient and cost-effective way.

[Harriett Baldwin (West Worcestershire) (Con)]

As he expatiates on the value of digital technology to tax collection, will my right hon. Friend share with the Committee his thoughts on making tax digital and how the recent opportunity to make furlough payments has shown the value of a digital tax system?

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[Jesse Norman]

This is another small, technical measure. Clause 103 makes changes to ensure that Public Works Loan Board lending is available to local authorities in order to support worthy capital endeavours that benefit their residents. There is a statutory limit on the total amount that may be lent to local government through the PWLB, a limit that is governed by section 4 of the National Loans Act 1968. That Act allows for two future levels of that limit to be specified in advance through primary legislation and activated through secondary legislation.

The legislation would be exercised through HM Treasury. A date to exercise these powers has not been, and would not usually be, set in advance. The Treasury considers this clause to be a high priority because of the central role the PWLB plays in the capital finance system, supporting local authorities to deliver public services and, still more urgently, supporting communities through the pandemic as the need may arise.

The changes made by clause 103 will amend the predetermined legislated figures in the 1968 Act. The limit is currently £95 billion, and the clause resets the two future amounts to £115 billion and £135 billion. Clause 103 thus ensures the continuity of PWLB lending, which is a key stream of funding for local authorities across the country.

[Harriett Baldwin]

I know that Worcestershire County Council finds the Public Works Loan Board very useful. Can the Minister update the Committee on the interest rate charged on that facility?

[Jesse Norman]

That is a very helpful question. I cannot update the Committee at the moment, because, as my hon. Friend will know, that is a matter for consideration within the Treasury. However, she has usefully put the issue on the record, and I thank her for doing so.

House of Lords Reform Bill

Debate between Harriett Baldwin and Jesse Norman

Monday 9th July 2012 Commons Chamber

[Harriett Baldwin]

We could oppose Third Reading, therefore, if we felt we had not achieved consensus in this House.

There is also consensus in this House that anyone who has been convicted of a serious crime should be kicked out. The cost of the second Chamber must be reduced, too. I am not convinced on this point; I will need quite a lot of convincing in respect of the Deputy Prime Minister’s earlier assertion that this proposal would be cost-neutral.

[Jesse Norman]

The cost figures have reached their current level only by the entirely illegitimate manoeuvre of including costs—such as costs of the Commons associated with the Lords—that have not yet been recognised in legislation, let alone achieved, as well as by ignoring the £85.7 million cost of five-yearly elections.

Independent Financial Advisers

Debate between Harriett Baldwin and Jesse Norman

Wednesday 20th October 2010 Westminster Hall

[Harriett Baldwin]

I thank my hon. Friend for that interesting intervention. I shall come to precisely that point in a moment.

The market for financial advice suffers from comparatively low consumer trust. Consumers find it difficult to engage with the financial services industry—banks are not exactly the most popular institutions in the country at the moment. Economists would describe buying financial products as a transaction in which consumers have asymmetric information; in plain English, the buyer knows a lot less about the product than the seller. There is therefore a need for proper independent advice.

Along with banks, IFAs have been guilty of selling certain products because they give a better commission. Like banks, IFAs have been found to have mis-sold private pensions to public sector workers. Like banks, they have mis-sold high-income precipice bonds. Often, they have sold products that simply performed badly or carried high charges. There is no doubt that the industry’s reputation could be improved.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

My hon. Friend mentioned the Treasury Committee, and it may be of interest to note that I was in the Committee yesterday when it talked about this issue. Interestingly, the response from the Association of Independent Financial Advisers and the Association of Private Client Investment Managers and Stockbrokers was that the retail distribution review, having started with high ambitions and high principles, not only ran four times over cost, but conducted a somewhat ineffective consultation. I put the question whether, in that aspect at least, it had become a bit of a fiasco, and the witnesses concurred, very much to my surprise. My hon. Friend might want to bear that in mind in future discussions.

[Harriett Baldwin]

I thank my hon. Friend and neighbour. He is a distinguished practitioner and member of the Treasury Committee. I am very interested to hear about the evidence yesterday.

We should not underestimate the costs of mis-sales to consumers. The FSA’s cost-benefit analysis assesses the cost to consumers of the pensions mis-selling scandal at £45 million per annum. In reaction to such circumstances, the FSA has spent the past several years consulting on how to address the issues involved. I share its goal of improving consumers’ perception of the industry and access to high-quality investment advice.

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[Harriett Baldwin]

There is an important point to be made about how some of the larger organisations, and indeed some banks and bancassurers, will most readily be able to have their staff trained for the exams. However, that raises the question whether the exams will really test the skills needed by a good financial adviser. In the investment world, experience is valued and the FSA is imposing on the market a one-size-fits-all, prescriptive approach to education, at great cost to consumers, in return for a modest benefit.

I have written to the chief executive of the FSA and to date have received a letter, beginning, “Dear Mr Baldwin”, simply reiterating the FSA’s consultation paper conclusions. I would like to ask the Minister to answer a few questions. The FSA is the independent statutory regulator. However, it is answerable ultimately to the Treasury. Does the Minister believe that it is proportionate in the present case to impose a regulatory burden of £1.7 billion on consumers? Is the Minister concerned that up to 25% of smaller advisers are likely to leave the industry, handing a competitive advantage to banks and bancassurers? Is he convinced that the banks will not be able to find a way to reward employees for pushing certain products? Does he share my concern that the FSA’s own impact assessment suggests that those who get reduced access to advice are likely to be the smaller, poorer consumers in more remote areas?

Does the Minister think that there might be a more proportionate way for the FSA to achieve its objectives? For example, IFAs who have passed exams could add the letters of qualification to their business cards. Consumers could then be educated and could choose an unqualified adviser if they preferred, but would come to know over time that there was a brand to the qualification.

[Jesse Norman]

There is also a simple solution for firms of more than one person, which is that the senior member can sign off on the work or qualification of the person who has not received formal accreditation. That allows for the sharing of liability, the preservation of standards within the firm and the guarantee of good quality to the customer.

[Harriett Baldwin]

I thank my hon. Friend for that helpful suggestion.

I would also like to ask the Minister how changing from commissions, which are currently exempt from VAT, to advice, which will attract VAT, will not add a further cost for consumers.