Finance (No. 2) Bill

James Cartlidge Excerpts

Committee of the whole House
Wednesday 19th April 2023 Commons Chamber

[The Chairman]

With this it will be convenient to discuss the following:

Amendment 8, page 197, line 35, after “costs” insert “and relevant investment expenditure”.

This amendment is linked to Amendment 9.

Amendment 9, page 198, line 3, at end insert—

“Where the generating undertaking is a generator of renewable energy, determine the amount of relevant investment expenditure and also subtract that amount.”

This amendment, together with Amendments 8, 10 and 11 would allow generators of renewable energy to offset money re-invested in renewable projects against the levy.

Amendment 10, in clause 279, page 199, line 13, at end insert—

“a “generator of renewable energy” means—

(a) a company, other than a member of a group, that operates, or

(b) a group of companies that includes at least one member who operates a generating station generating electricity from a renewable source within the meaning of section 32M of the Energy Act 1989;

“relevant investment expenditure” means any profits of a generator of renewable energy that have been re-invested in renewable projects;”

This amendment is linked to Amendment 9.

Amendment 11, page 199, line 18, at end insert—

“a “renewable project” is any project involving the generation of electricity from a renewable source within the meaning of section 32M of the Energy Act 1989;”

This amendment is linked to Amendment 9.

Clauses 279 to 312 stand part.

New clause 11—Assessment of the impact of the electricity generator levy—

“(1) The Chancellor of the Exchequer must, within six months of this Act coming into force, publish an assessment of the impact of the electricity generator levy on investment in renewable energy in the UK.

(2) The assessment must include a comparative assessment of the impact of the energy (oil and gas) profits levy and the investment allowance on overall investment in UK upstream petroleum production.

(3) The assessment must include an evaluation of the impact of the electricity generator levy on the United Kingdom’s ability to meet its climate commitments, including—

(a) the target for 2050 set out in section 1 of the Climate Change Act 2008, and

(b) the duty under section 4 of the Climate Change Act 2008 to ensure that the net UK carbon account for a budgetary period does not exceed the carbon budget.”

This new clause would require the Government to conduct an assessment of the impact of the Electricity Generator Levy on investment in renewables and the delivery of the UK’s climate targets, including a comparative assessment of the impact of the Energy Profits Levy and the investment allowance, on investment in oil and gas production.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

It is always a pleasure to appear so early and unexpectedly. This grouping is about the electricity generator levy. Before I address the specific clauses, here is a reminder of why we are debating this ultimately exceptional new tax.

We have to remember that Putin’s weaponisation of gas supplies to Europe has pushed energy prices to record levels. In 2022, UK wholesale energy prices rose to eight times their historical level. Despite recent falls, gas prices, which currently drive the market price for electricity, remain at twice their pre-pandemic level, which means that the price achieved by some electricity generators has risen considerably, driven by natural gas prices.

The Government have absorbed a substantial portion of the price increase through our generous support for households and businesses, which is why we have chosen to capture the windfall profits of oil and gas extraction with the energy profits levy. The Government are now introducing an electricity generator levy. The EGL is designed to capture only the exceptional receipts that electricity generators make, by taxing only the amounts above their normal return while preserving the incentive to invest in the capacity we need.

Clauses 278 to 280 detail the calculation of the levy, which will be applied at a 45% rate on revenues above a benchmark price for UK generation activities. The benchmark price of £75 per megawatt-hour is set approximately 1.5 times higher than the pre-crisis average. The benchmark price will be indexed to inflation from April 2024. To ensure that the levy applies only to large commercial operations with the capacity to administer the tax, the EGL includes an annual generation output threshold of 50 GWh, which is equivalent to approximately 15,000 domestic rooftop solar panels. A £10 million allowance provides further protection for smaller businesses from undue administrative burden and reduces the impact of the levy for those in scope. The levy applies from 1 January 2023 and will end on 31 March 2028, although colleagues will appreciate that the design of the levy is such that, should prices return to normal, no tax will be due. To ensure that the tax does not have unintended consequences, clause 279 excludes certain technologies.

Clauses 281 to 285 provide definitions for in-scope generation and the calculation of exceptional receipts. As I have outlined, the benchmark price has been set so that the EGL applies only to revenues from the sale of electricity at prices higher than the pre-crisis expectations of generators and investors. The levy applies to receipts from power sold on to the grid from wind, solar, biomass, nuclear and energy-from-waste technology. It applies to revenues that generators actually receive, taking account of contracts which might involve selling power over a longer period for a stable price. Certain types of transaction are excluded, such as “private wire” not sold via the grid, as well as power sold under contracts for difference with the Low Carbon Contracts Company, which is the Government’s flagship scheme supporting investment in renewables. Clauses 283 to 285 set out provisions for the recognition of exceptional costs related to the acquisition of fuel and from revenue-sharing arrangements. These provisions reflect the fact that for some generators fuel acquisition costs will have increased as a result of the energy crisis.

Clauses 286 to 300 deal with detailed arrangements for various structures of business operating in electricity generation. Owing to the size and complexity of projects involved, there are a number of common structures for generation undertakings. Those often involve large group companies, sometimes with significant minority shareholders. Others involve a number of businesses forming a joint venture. For example, a company specialising in offshore wind might go into business with a finance provider to deliver a large and complex project, sharing the revenues and risk between them. There are rules to treat these so-called “joint ventures” as stand-alone generation undertakings for the purposes of the EGL. These clauses ensure that businesses with in-scope revenues pay an appropriate share of EGL liability.

Clauses 301 to 305 provide rules for the payment of EGL. The EGL is a temporary measure that has been carefully designed to minimise the administrative burden on businesses. Firms within scope of the levy will pay it as part of their corporation tax return, albeit that EGL is a separate and new tax. The provisions for paying corporation tax are therefore applied here, including in respect of the supply of information, the collection of tax due and the right of appeal.

I turn briefly to the final clauses on the EGL, clauses 306 to 312. Those provisions ensure that the EGL applies to in-scope revenues from generation activities regardless of company type. Appropriate anti-avoidance rules are also included. Clause 309 details the interaction between EGL and corporation tax for accounting purposes, including the fact that EGL is not deductible from profits for corporation tax purposes.

In conclusion, these provisions ensure that, where electricity generators are realising exceptional receipts as a result of the current crisis, they make a fair and proportionate contribution to the support that the Government have provided to households and businesses. Importantly, the levy is designed to apply only to the excess portion of those revenues, in order to maintain the incentive to produce low-carbon electricity. This is in addition to the Government’s extensive support for investment in UK electricity generation. I will of course respond to proposed amendments, assuming that we hear about them, in the debate. In the meantime, I ask that clauses 278 to 312 stand part of the Bill.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

It is a pleasure to speak for the Opposition on the clauses relating to the electricity generator levy, a policy that was first announced in the autumn statement of 2022. Clause 278 introduces a new 45% charge on businesses that generate electricity in the UK. Specifically, it will be charged on exceptional earnings related to soaring energy prices. Extraordinary profits are defined in the Bill as receipts from wholesale electricity sold at an average price in excess of a benchmark price of £75 per megawatt-hour over an accounting period. Clause 280 specifies that this benchmark will be adjusted in line with the consumer prices index from April 2024. Companies liable for the levy are those that produce more than 50 GWh annually, generate electricity in the UK from nuclear, renewable or biomass sources, and are connected to a local distribution network or to the national grid. The levy will apply only to exceptional receipts exceeding £10 million.

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[Caroline Lucas (Brighton, Pavilion) (Green)]

I am delighted to have the best part of an hour and a half to talk about the electricity generator levy—[Interruption.] No, not really.

I rise to speak in support of new clause 11, which would require the Government to conduct an assessment of the impact of the electricity generator levy on investment in renewable energy in the UK, exactly picking up on the point that was made by the Official Opposition just a moment ago.

In his speech in the spring Budget, just one month ago, the Chancellor proudly declared:

“We are world leaders in renewable energy”.—[Official Report, 15 March 2023; Vol. 729, c. 840.]

Since then, the Government have published their latest energy security plan, which points to “low-cost renewables” as being “central” to their goal of Britain having among the cheapest wholesale electricity prices in Europe. The strategy is absolutely right in that regard; the International Energy Agency’s “World Energy Outlook” makes clear that, in the context of the energy price crisis, countries with a higher share of renewables also had lower electricity prices. In the words of the IEA’s executive director, Dr Fatih Birol:

“The environmental case for clean energy needed no reinforcement, but the economic arguments in favour of cost-competitive and affordable clean technologies are now stronger—and so too is the energy security case.”

In light of all that, it seems extremely perverse—to put it mildly—that, rather than the Government doing everything they can to unleash our abundant renewables, their current policy is stifling the investment we desperately need. A recent report by Energy UK warns that the investment climate for renewables has deteriorated significantly in recent months due to a combination of factors, including what it describes as “poorly designed windfall taxes. The report also states that, without urgent action to address concerns and prevent investment from moving elsewhere, the UK risks losing out on £62 billion-worth of investment this decade, which could also lead to a shortfall of 54 GW of potential solar and wind capacity, which would be enough to power every single UK home.

RenewableUK has criticised the Government for continuing to develop policies that,

“increase uncertainty and dampen investment”,

with the electricity generator levy in particular damaging investor confidence and increasing costs. While it is right that companies are taxed fairly on their excess profits, hampering our vital renewable energy industry when a expansion is essential to deliver on our climate targets is reckless.

The Government’s own plans include increasing our offshore capacity by four times over current levels by 2030 and solar by five times by 2035. My amendment would therefore also require an assessment to cover the impact of the electricity generator levy on the delivery of those UK climate targets, including net zero by 2050, and on our legally binding carbon budgets.

Most egregious of the complaints laid at the door of the EGL is that it is more punitive than the tax and relief regime for oil and gas companies. The sector has highlighted three key differences between the regimes. First, the electricity generator levy is a tax on revenue rather than overall profit, as with the energy profits levy, which results in an above-the-line cost of doing business rather than a reduction in profit.

Secondly, the electricity generator levy is not deductible from corporation tax, whereas the energy profits levy is an extension of an existing scheme. That leads to higher effective tax rates for electricity generators than is currently the case for oil and gas companies.

Thirdly and most importantly, oil and gas companies are eligible for vast and frankly obscene subsidies through the investment allowance that renewables do not have access to. If we add to all that the decarbonisation allowance, which means that the taxpayer is paying oil and gas companies to decarbonise—even though, in their own words, the companies already have more cash than they know what to do with, thanks to their vast windfall profits—it seems to me that the Government’s approach is misguided.

The approach means that, in the case of a decarbonisation allowance, companies are eligible for more tax relief if they are putting a wind turbine on an oil platform than if they are installing a wind turbine to feed into the grid. Put simply, we should be incentivising investment in renewables to power homes, not rigs. The amount of power it takes to drill for oil and gas is comparable to the total amount of power generated by offshore wind, or enough power to generate electricity for every house in Wales.

That should be paid for by the very oil and gas companies that are reaping such huge profits, not by the taxpayer. Surely the Chancellor and Treasury team can see that, when we need to urgently get off fossil fuels to secure a liveable future, it is madness to subsidise oil and gas extraction at all, let alone at the expense of renewable energy, as the Government are doing.

My amendment would require a comparative assessment of the impact of the energy profits levy, including the investment allowance, on investment in oil and gas production versus the regime the Government are proposing for renewables. Renewable energy companies have rightly called for a level playing field with oil and gas, but, in the face of an escalating climate emergency, we should be going further than that and responding to the ambition of other countries. Biden’s Inflation Reduction Act, for example, offers $216 billion-worth of tax credits to companies investing in clean energy and transport.

Finally, I record my support for the amendments tabled by the hon. Member for Richmond Park (Sarah Olney), which would allow generators of renewable energy to offset money reinvested in renewable projects against the levy. Yet failing that, surely the Chancellor cannot object simply to having, at the very least, clarity on the impact of this policy. That is exactly what my new clause would do, and I very much hope that the Treasury team will consider it.

The Government are fond of pointing to the fact that almost 40% of our electricity is now generated from renewables, but if we are to fully decarbonise our electricity system, we need the right incentives, a supportive policy framework, an improved grid fit for the 21st century, and a planning system that does not hold renewables back. We simply cannot rely on what the Chancellor called a “clean energy miracle”. I very much hope that the Government will take new clause 11 seriously.

[James Cartlidge]

It is a pleasure to respond to the hon. Member for Brighton, Pavilion (Caroline Lucas). I hope that she will not take it as a lack of respect if I say that it is probably a good thing that she did not go for the full one-and-a-half hours, but she made important points to which I will respond. Both she and the Labour Front Bencher, the hon. Member for Erith and Thamesmead (Abena Oppong-Asare), asked about the impact on investment.

New clause 11, in the name of the hon. Member for Brighton, Pavilion, specifically proposes that the Government publish within six months an assessment of the impact of the EGL on investment in renewables, and a comparison with the impact of the energy profits levy. First, I am bound to say, in the immortal words of the Treasury, that we keep all policies under review. We will, in the course of normal tax policymaking, return to make an assessment of the EGL’s impact at a suitable time. On investment specifically, we have to appreciate that this country has led the way in securing investment in renewables. Bloomberg New Energy Finance data shows that the UK has secured nearly £200 billion of public and private investment into low-carbon industries since 2010. Generators have received to date almost £6 billion in price support from the contracts for difference scheme for low-carbon electricity generation. CfDs have contracted a total of 26 GW of low-carbon generation, including around 20 GW of offshore wind. I hope that we are all proud of the result, which is that we as a country now have the largest array of offshore wind in Europe. Going forward, we have committed £160 million for the floating offshore wind manufacturing investment scheme to support floating offshore wind, and up to £20 billion for early deployment of carbon capture, usage and storage.

Our record to date is also crucial. The hon. Member for Brighton, Pavilion spoke about the Inflation Reduction Act and the steps being taken in the US. Of course, that is important, and we watch what is happening there very carefully, but it is worth reflecting on the fact that, as she quite rightly said, about 40% of our electricity came from renewables last year, while in the US that figure was about 20%.

There are two key things about the EGL and investment. First, we have to remember that the levy does not apply to the contracts for difference, which have been hugely successful in securing renewable energy investment and will cover the mainstay of future deployment in this country in relation to renewables. Secondly, the threshold price of £75 per megawatt-hour is exceptional; it is about 50% higher than the average over the past decade. The extraordinary energy prices, driven by Putin’s invasion of Ukraine, would not have been foreseen by investors when they committed capital to the building of wind and solar farms—they would not have foreseen such a huge increase.

The hon. Lady, whom I respect, has made her key point about oil and gas consistently; in many ways, the Labour party’s criticism of our investment allowance, which it calls a loophole, is the same point. We differ in our view. In the world today, we face a most profound energy crisis. It is a strategic energy crisis. We look at Russia, which has weaponised energy, and we ask ourselves: “Is it the right moment to be turning our back on our own domestic supply of oil and gas?” We need it. Of course, we are on the path to net zero—this country has cut its emissions more than any other nation in the G7; we are making that difference—but the journey is a long one. In that time, we will need oil and gas, which make up about three quarters of our energy demand when all transport is included. Unless the hon. Lady and the Labour party think that we should stop using oil and gas tomorrow, what they are really arguing for is simply to use more imported oil and gas.

[Caroline Lucas]

I am so fed up with this argument from the Government, because nobody is talking about turning off oil and gas tomorrow. We are talking about whether the world can sustain more new oil and gas, particularly from a country such as the UK, which is so blessed with alternatives. We were also one of the first countries to industrialise, so we have a greater responsibility to take a real lead on this. That is why the Government should invest in alternatives, renewables and energy efficiency, and listen to the IEA, which says that there is no space for new oil and gas.

[James Cartlidge]

As I have said, I respect the hon. Lady’s position, but the point is that if we were to have no further investment, the North Sea Transition Authority estimates that we would lose about 1.5 billion barrels-worth of output. There is no realistic estimate that we would not use an equivalent amount. In other words, we would simply import it, and if we import gas, that means 50% more emissions. Most importantly—and I feel very strongly about this—we would undermine our energy security. Even yesterday, representatives of the Kremlin were still talking about weaponising energy. If we have learned one thing, surely it is that we have to be realistic and pragmatic. We want to support the UK economy. Above all, we have a balanced approach. We are on the journey to net zero. We have cut our emissions more than any other country in the G7, and we continue to back renewables.

[Caroline Lucas]

Will the Minister give way?

[James Cartlidge]

I will take one final point and then wrap up.

[Caroline Lucas]

The Minister is very generous in giving way again. I simply want to make the very obvious point that simply because oil and gas are extracted from the North sea, there is no guarantee that they will be used by people in the UK. They get sold on global markets at the highest price, so the argument that this is the best way to reach energy security is flawed. The best way to reach energy security is through introducing a mass energy efficiency and home insulation upgrade system, which the Government have not done; through more on electrification of transport, which they have not done; and through investing in renewables, which they are not doing enough of, as we have been saying this afternoon.

[James Cartlidge]

This is entirely true, but of course selling on the international market means that, through our balance of trade, we have an economy where we can afford to import. It is about comparative advantage.

As I have described, the Government are providing extensive support for renewables in order to decarbonise our power system and meet our ambitious net zero commitments. The EGL has been carefully designed with those objectives in mind. I therefore urge the Committee to reject the amendments and to agree that clauses 278 to 312 stand part of the Bill.

Question put and agreed to.

Clause 278 accordingly ordered to stand part of the Bill.

Clauses 279 to 312 ordered to stand part of the Bill.

Clause 27

Power to clarify tax treatment of devolved social security benefits

Question proposed, That the clause stand part of the Bill.

[The Chairman of Ways and Means (Dame Eleanor Laing)]

With this it will be convenient to discuss the following:

Clause 47 stand part.

Amendment 25, in clause 48, page 39, line 32, at end insert—

“(aa) section (exemption: Scotch Whisky),”.

This is a paving amendment for NC9, which would exempt Scotch Whisky from the increase in duty on spirits.

Clause 48 stand part.

Amendment 7, in schedule 7, page 334, line 18, leave out “£31.64” and insert “£28.74”.

That schedule 7 be the Seventh schedule to the Bill.

Clause 50 stand part.

That schedule 8 be the Eighth schedule to the Bill.

Clauses 51 to 54 stand part.

That schedule 9 be the Ninth schedule to the Bill.

Clauses 55 to 60 stand part.

New clause 9—Exemption: Scotch Whisky—

“(1) The rate of duty on spirits shown in Schedule 7 shall not apply in respect of Scotch Whisky.

(2) The rate of duty in respect of Scotch Whisky shall continue to be the rate that applied before this Act came into force.

(3) For the purposes of this section, “Scotch Whisky” has the meaning given in regulation 3 of the Scotch Whisky Regulations 2009 (S.I. 2009, No. 2890).”

This new clause would exempt Scotch Whisky, as defined in the Scotch Whisky Regulations 2009, from the increase in duty on spirits

[James Cartlidge]

We have had pensions and energy, and we conclude with alcohol, and of course one other minor matter is covered. We are specifically debating clauses 27, 47, 48 and 50 to 60, and schedules 7 to 9, which cover powers to clarify the tax treatment of devolved social security benefits—that is the measure not relating to alcohol—as well as the change to alcohol duty and the introduction of two new reliefs for alcohol duty.

Clause 27 introduces a new power to enable the tax treatment of new payments or new top-up welfare payments introduced by the devolved Administrations to be confirmed as social security income by statutory instrument. The changes made by clause 27 will allow the UK Government to confirm the tax treatment of new payments or new top-up payments introduced by the devolved Administrations within the tax year, rather than their being subject to the UK parliamentary timetable.

I will now turn to the main issue of alcohol duty, and specifically clauses 47 and 48, which set out the charging of alcohol duty, and schedule 7. In line with our plan to manage the UK economy responsibly, we are reverting to the standard approach of uprating the previously published reformed rates and structures by the retail price index, while increasing the value of draught relief to ensure that the duty on an average pint of beer or lower-strength cider served on tap in a pub does not increase. Most importantly, these clauses introduce the Government’s historic alcohol duty reforms: the biggest overhaul of the alcohol duty system in over 140 years, made possible by our departure from the European Union.

The current alcohol duty system is complex and outdated. The Institute for Fiscal Studies has said that our system of alcohol taxation is “a mess”; the Institute of Economic Affairs has said that it “defies common sense”; and the World Health Organisation has said that countries such as the UK that follow the EU alcohol rules are

“unable to implement tax systems that are optimal from the perspective of public health.”

As such, at Budget 2020, the Government announced that they would take forward a review of alcohol duty. This legislation is the culmination of that review, and makes changes to the overall duty structure for alcohol. It moves us from individual, product-specific duties and bands to a single duty on all alcoholic products and a standardised series of tax bands based on alcoholic strength.

The clauses we are debating today repeal and replace, with variations, the Alcoholic Liquor Duties Act 1979 and sections 4 and 5 of the Finance Act 1995. Specifically, clause 47 provides for alcohol duty to be charged on alcoholic products, clause 48 explains where the rates of alcohol duty can be found—that is, in schedule 7—and schedule 7 itself provides the standard or full rates of alcohol duty to be applied to alcoholic products. This radical simplification of the alcohol duty system reduces the number of duty bands from 15 to six, and has only been made possible since leaving the EU. Now, thanks to the Windsor framework, I can confirm that these reforms can now also be implemented in Northern Ireland. The new alcohol duty structures, rates and reliefs will take effect from 1 August this year, which brings me to the new reliefs.

[Bob Stewart (Beckenham) (Con)]

As a member of the Campaign for Real Ale, may I ask the Minister whether that means beer that is not very strong will come down in price?

[James Cartlidge]

That is an excellent question from my right hon. Friend. As he will appreciate, there is obviously a difference between the duty and the price—we control the duty. As I am about to explain, we are doing everything possible, and I hope he will be interested, because I know that members of CAMRA have great fondness and support for our brilliant pubs up and down the country.

The first of the two new reliefs, which is our new draught relief, applies to alcoholic products under 8.5% alcohol by volume intended to be sold on draught. This draught relief is historic, because as Members will remember, in the EU, we had a thing called the EU structures directive. Under that directive, as a country, we could of course vary our alcohol duty—we could increase it, decrease it or whatever—but what we could not do was charge differential duty between the on trade, meaning pubs, and the off trade, meaning supermarkets, retail and so on. For the first time, we will have that differential draught relief, and I am pleased to confirm that in the Budget, we brought forward two very important measures in relation to that relief. It had been anticipated that we would set the draught relief at 5%, but the Chancellor confirmed in the Budget that it would be increased to 9.2%. I can therefore confirm to my right hon. Friend the Member for Beckenham (Bob Stewart) that as a result of that increase in the draught relief, when the new system comes in this August, the duty on the average pint of beer or lower-strength cider that people buy in pubs will still be frozen.

More importantly, we have issued our Brexit pubs guarantee. As I say, this change would not have been possible in the EU, and we are using this opportunity to send a very powerful message to our pubs: to guarantee that from August onwards, the duty on a pint in a pub will always be lower than the duty on the equivalent in a supermarket.

[Mark Jenkinson (Workington) (Con)]

I thank the Minister for giving way. I just wondered whether an impact assessment was done on the benefits of such a change to the on trade.

[James Cartlidge]

My hon. Friend asks an excellent question, and I will be more than happy to write to him setting out more detail on the benefits, but I hope he agrees that the key point is this: we in this House all know that pubs suffered terribly in the pandemic, if we are honest. We literally legislated to close them, obviously for a very good reason—to support public health and stop the spread of that terrible disease—but the fact is that doing so was costly to pubs, so we had to support them. In addition, since then they have seen their energy bills surge on the back of the invasion of Ukraine. We want to do what we can to support them.

[Sir David Evennett (Bexleyheath and Crayford) (Con)]

Pubs are so important in our communities. My constituents in Bexleyheath and Crayford find their pubs pivotal to the social environment. We have a very good micropub in Crayford, the Penny Farthing, which I occasionally go to at lunchtime. My hon. Friend makes an important point. We need these pubs. They are centre stage for our local communities. They do a good social job, and also they are a safe place for people to go to. What the Government are doing is commendable.

[James Cartlidge]

We have had strong support from public health groups for the differential duty, because the evidence shows that is healthier to drink in a social environment than privately. That is another significant benefit.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

rose—

[James Cartlidge]

This is a popular area of the debate. I give way.

[Mr Carmichael]

I think the Minister has a sound case in relation to what the Government have done on beer duty. What is less clear, however, is why they have chosen to treat spirits so differently. Spirits are also an important part of the on trade. What will the impact be on the spirits trade from the differential that the Minister has now baked into the duty system?

[James Cartlidge]

There are spirits that will benefit from the differential—not spirits served from what I think are called optics, but spirits served on tap. There are mixers served on tap that will benefit from a more generous differential duty. On spirits, I am more than happy to set out further detail when I respond to the relevant amendments, because I think they are specifically focused on Scotch whisky, and I understand the concerns there.

I just want to finish my point on our Brexit pubs guarantee. Just to underline what we are doing, we are giving pubs a new permanent competitive advantage. We are levelling the playing field against supermarkets. Following the difficult times that pubs have had with the pandemic and higher energy costs, that hopefully gives them a new narrative for their communities with more positive times to look forward to ahead. That is what we want for our pubs. As my right hon. Friend the Member for Bexleyheath and Crayford (Sir David Evennett) said, they are so important for our communities and our economy. We continue to do everything possible to back the great British pub.

[Bob Stewart]

It seems that we will finish early tonight, in which case I am going straight to the Jolly Woodman in my constituency. I hope I will be able to tell it that the price of its beer will come down. Is there any possibility that there can be a differentiation to encourage real ale, speaking as a member of the Campaign for Real Ale?

[James Cartlidge]

I hope my right hon. Friend is welcomed with open arms in the Jolly Woodman, having given it fulsome promotion. I might make do with Strangers Bar downstairs. Real ales will benefit from the differential duty, particularly those served on tap. There are lower rates for those with lower alcohol by volume, which will hopefully encourage innovation. I hope that will support our craft brewers, not least with the second relief, which replaces and extends small brewers relief with a small producer relief applying to alcoholic products under 8.5% ABV produced by those making less than 4,500 hectolitres of alcohol per year. That will be precisely those sorts of craft brewers.

Clauses 50 to 53 introduce the new draught relief and clauses 54 to 60 provide for the new small producer relief. Taking each clause in turn quickly—I will canter through them—clause 50 explains that alcohol duty is charged on qualifying draught products at the reduced rates shown in schedule 8. Clause 51 sets out the eligibility criteria for draught relief. Clause 52 defines repackaging for the purposes of draught relief and introduces a penalty for repackaging that is not authorised. Clause 53 provides assessment and penalty consequences for a person repackaging qualifying draught products in a way not allowed under clause 52. Clause 54 provides for discounted rates to be charged on all small producer alcoholic products and explains how the discounted rate is calculated. Clause 55 defines small producer alcoholic products.

Clause 56 introduces the criteria for determining whether premises used to produce alcoholic products are small production premises. Clause 57 explains the alcohol production amount used for the purposes of determining eligibility for the duty discount and calculating the duty discount for small producer alcoholic products. Clause 58 sets out the circumstances, other than not meeting the eligibility conditions, in which alcoholic products are not small producer alcoholic products. I hope hon. Members are all following. Clause 59 and schedule 9 set out how to calculate the duty discount used to determine the discounted rate for small producer alcoholic products, and clause 60 allows the commissioners to assess alcohol duty that is due in circumstances where the small producer rate has not been applied correctly. The remaining clauses concerning alcohol duty will be debated in the Public Bill Committee.

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[Daisy Cooper (St Albans) (LD)]

The Minister has talked about the Government’s ambition to simplify the tax system, but he will be aware that the most adversely affected businesses are the port and sherry traders, which will feel the force of a full £20 million increase, despite fortified wine being only 3% of the total wine trade. They have asked for this process to be simplified further by taxing fortified wine at the midpoint of 17.5% ABV. Is that something the Government might still consider?

[James Cartlidge]

It is a fair point from the hon. Lady. I do think this is a significant simplification. We are moving from 15 bands to six. I would love it to be 15 to one, but unfortunately “Fifteen to One” is going to remain the name of a quiz programme. If she looks carefully at the new rates—I am more than happy to share a copy of the bands with her—she will see that it is a significant simplification. It provides many benefits to the wine trade, particularly with our differential duty and the small producers relief.

To conclude, I will be happy to respond to the amendments on Scotch whisky at the end, but in the meantime I commend to the Committee clauses 27, 47, 48 and 50 to 60, and schedules 7 to 9.

[The Chairman of Ways and Means (Dame Eleanor Laing)]

I call Alistair Carmichael.

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[James Cartlidge]

Before I turn to the very good speeches that we have heard during the current debate, let me clarify a point relating to our earlier debate on the electricity generator levy. I mistakenly said that “private wire” was included in the levy, when of course I meant to say that it was excluded.

Let me begin by saying that I welcome the support expressed by the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) for the clause relating to devolved welfare payments. As for alcohol duty, the right hon. Member for Orkney and Shetland (Mr Carmichael) may not recall the debate that he initiated in Westminster Hall in October 2017, when I was a mere Back Bencher, but I was the first Member to intervene on his speech. All the others were Scottish. I intervened because a leading company in my constituency produces the bottle tops for the whisky trade. That, along with the East Anglian grain that is sent up to Scotland from time to time to help support the sector, underlines the fact that this is a UK industry, and a UK export. We are all proud of Scotch whisky and the role that it plays in our economy. However, I must say this to the right hon. Gentleman, and also to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone), who spoke with his usual eloquence and conjured up wonderful images. I understand the importance of the Scotch whisky sector, and we have supported it—in nine of the last 10 Budgets, we have either frozen or cut the tax—but the key point is that not introducing the RPI-linked increase would have a significant cost.

[Mr Carmichael]

The Minister is making our case himself, so presumably he will be joining us in the Lobby—as, indeed, the Secretary of State for Scotland should be doing—or else accepting my amendment.

[James Cartlidge]

I had never thought of the right hon. Gentleman as a cheeky chappie, but for that brief moment, he almost was. Let me now address his amendment 7. The Scottish National party Members have, very nobly, effectively withdrawn their amendments to ride on the back of it, which is perfectly fair: they seek, ultimately, to arrive at roughly the same point, which could be described as the protection of spirits, and Scotch whisky in particular, from the RPI-linked increase.

The proposal in amendment 7 would cost an amount between £1.7 billion and £2 billion. An overall RPI freeze would cost £5 billion across the scorecard. We have, of course, supported freezes in the past, and it was I who announced the freeze back in December. Members may recall the reason for that freeze: in view of the August reform, we did not want the sector to go through two separate alcohol tax increases. We supported the industry, but it is expensive, and with the public finances as they are, we feel that the responsible option is to introduce the RPI-linked increase—which, after all, is not a real-terms increase—but, nevertheless, to bring in the differential duty to support our pubs.

[Mr Carmichael]

rose—

[James Cartlidge]

I will give way to the right hon. Gentleman, for the last time.

[Mr Carmichael]

The Minister needs to look at the actual data relating to the revenue brought in over these years of cuts and freezes, because the story that it tells is very different from the forecasts on which he relies. He should remember that in 2015 the forecast was for a 2% reduction, but in fact there was a 4% increase. When will the Government become a bit more realistic about the effect of their own policies in this area?

[James Cartlidge]

I have to disagree with the right hon. Gentleman’s use of the word “realistic”. I have met representatives of the Scotch Whisky Association, whom I greatly respect, and they have said to me that if we freeze the tax we get the revenue. Unfortunately, however, the Government have what I believe is the very important and successful policy of using an independent body, the Office for Budget Responsibility, which makes forecasts independently for Governments on the effects of fiscal measures. [Interruption.] I hear voices behind me saying that they are wrong. The point is that the OBR is not a collection of soothsayers employed to predict, entirely accurately, exactly what will happen in the future. With the greatest respect to everyone, if that was the case, I suspect they would spend rather more of their time looking at accountancy of the turf-related kind rather than trying to forecast the national accounts. The point is that this enables us to ground fiscal events in a forecast of where we are at that time and the fiscal costs at the time, therefore adding credibility to the decisions we make and avoiding the easy situation where we do not have to make the difficult trade-offs that households and businesses know that, in reality, we have to face. If we want to cut one tax, we have to find the money from somewhere else. It is a good discipline.

[Jamie Stone]

Will the Minister give way?

[James Cartlidge]

I will take this very last soupçon: a final intervention from the hon. Gentleman.

[Jamie Stone]

The Minister is nothing if not courteous, but does he not accept that he would increase the revenue base by increasing industry and economic activity? What message does this send to—let me get the names right—Wolfburn in Dunnet or 8 Doors in John O’Groats? These are new distilleries, just starting out. From little acorns, mighty oaks can grow, and those mighty oaks can give the Government lots of acorns in tax revenue.

[James Cartlidge]

The hon. Gentleman is always courteous, and I send the message to him that for every single business, charity and household in the country, one thing that trumps all is wanting the Government to run the public finances in a stable way so that businesses can have confidence that the investments they make will be in a growing and stable economy. I totally understand where he is coming from, but he has not persuaded me that he has a way to find those billions of pounds. I hope that I have nevertheless offered the assurance needed for hon. Members to retract their proposed amendments, and that clauses 27, 47 to 48 and 50 to 60 will stand part of the Bill as we end our theme of alcohol for the evening.

Question put and agreed to.

Clause 27 accordingly ordered to stand part of the Bill.

Clauses 47 and 48 ordered to stand part of the Bill.

Amendment proposed: 7, in schedule 7, page 334, line 18, leave out “£31.64” and insert “£28.74”—(Mr. Carmichael.)

Question put, That the amendment be made.

Office of Financial Sanctions Implementation

James Cartlidge Excerpts

Tuesday 18th April 2023 Written Statements

[The Exchequer Secretary to the Treasury (James Cartlidge)]

My noble friend Baroness Penn, the Treasury Minister in the House of Lords, has today made the following written ministerial statement.

On 18 April, the UK announced a sanctions designation under the Counter Terrorism (Sanctions) (EU Exit) Regulations 2019. This regime is used to target those involved in terrorist financing on UK soil and is the first use of HM Treasury’s sanctions power.

Today’s designation imposes an asset freeze on an individual suspected of being associated with financing Hezbollah. This action demonstrates that the UK is prepared, and will continue to take action, to proactively defend the UK economy against terrorist financing threats, prevent terrorism in the UK and protect UK national security interests.

The specific designation is:

Nazem Ahmad—Suspected Hezbollah financier who has control over White Starr DMCC, Bexley Way General Trading LLC, Best Diamond House DMCC, Sierra Gem Diamonds Company NV, Park Ventures SAL and the Artual Gallery.

[HCWS724]

Office of Financial Sanctions Implementation

James Cartlidge Excerpts

Thursday 30th March 2023 Written Statements

[The Exchequer Secretary to the Treasury (James Cartlidge)]

My noble friend the Treasury Lords Minister, Baroness Penn, has today made the following written ministerial statement.

In January, Treasury Ministers commissioned an internal review to assess how legal fees licence applications are considered. Following this review, I am updating the House on its findings.

Since the unlawful invasion of Ukraine, we have taken decisive action to sanction Vladimir Putin and those who support his regime. With partners, we have implemented the strongest set of economic sanctions ever imposed on a major economy. We have designated over 1300 individuals and over 140 entities including over 130 oligarchs with global assets worth over £145 billion.

The sanctions regime is governed by the Sanctions and Anti-Money Laundering Act 2018 which was considered by Parliament between October 2017 and May 2018. It gained Royal Assent on 23 May 2018. The Act empowers HM Treasury to issue licences which permit activities otherwise prohibited by sanctions, including for payment of legal fees. In the case of legal fees, the law requires that the Office of Financial Sanctions Implementation’s decision-making must carefully balance between the right to legal representation—which is a fundamental one—with wider issues, including the aim and purpose of the sanctions. While some legal claims may be unfounded, it is for the courts to decide whether their claims should be permitted to succeed—not the Government. The review confirmed this position.

The Government are clear, however, that our courts and legal system must not be used by those seeking to silence investigations in the public interest. We are committed therefore to bringing forward legislation to tackling strategic lawsuits against public participation (SLAPPs). This will include a statutory definition of SLAPPs, an early dismissal process, and costs protection for SLAPPs cases. The Government have committed to primary legislation to make these reforms a reality as soon as parliamentary time allows. These changes will help to uphold our fundamental liberties of free speech and a free press, end the abuse of our courts, and defend those who bravely speak out in the public interest.

As a result of the review the Government are committed to further targeted changes to the process for issuing legal fees licences that safeguard the sanctions regime against the risk of manipulation and ensure that Ministers are accountable for OFSI decision-making.

Our approach to date reflects the fact that the right to legal representation is a fundamental one and it is therefore important that designated persons are still able to access legal representation. However, in this context, it is the Government’s view that in most cases, the use of frozen funds for payment of legal professional fees for defamation cases is not an appropriate use of funds, and in many cases will be against the public interest. While still reviewing each individual application on a case-by-case basis (for both appropriateness and compliance with the right to a fair hearing), OFSI will, in future, take a presumption that legal fees relating to defamation and similar cases will be rejected. The Russian and Belarussian legal services general licence will also be amended so that it no longer authorises legal fees for defamation and similar cases. Any person or entity that acts without a specific licence where the activity is not covered by the general licence, will be in breach of financial sanctions and liable for a monetary penalty or, if egregious enough, criminal prosecution.

To strengthen the decision-making framework for specific licence applications in these and other cases, the Government have further updated the delegation framework under which decisions are taken by OFSI rather than Ministers. This framework will support and reinforce scrutiny of licensing decisions by making clear when it is appropriate for Ministers to take these decisions personally, or where officials can take these decisions. A copy of the updated delegation framework will be placed in the Libraries of both Houses.

The UK remains committed to stopping Putin’s unlawful invasion of Ukraine. Sanctions have been, and continue to be, a critical tool to holding those who support Putin’s regime to account. We have taken decisive action to freeze the assets on 23 major Russian banks holding over £960 billion, and with partners immobilised over 60% of Russia’s foreign reserves. The changes I have announced today to the decisions the Government take to sanctions and licences, support our efforts to oppose this barbaric war.

[HCWS700]

Oil and Gas Decommissioning Relief Deeds

James Cartlidge Excerpts

Thursday 30th March 2023 Written Statements

[The Exchequer Secretary to the Treasury (James Cartlidge)]

The Government’s fiscal approach for oil and gas aims to balance encouraging investment with ensuring a fair return for the nation in exchange for the use of its resources. Following the introduction of the energy (oil and gas) profits levy in May last year, the UK currently has a headline tax rate of 75% on profits from oil and gas production, one of the highest tax rates for oil and gas across comparable countries around the world.

At Budget 2013, the Government announced they would begin signing decommissioning relief deeds. These deeds represented a new contractual approach to provide oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.

Since October 2013, the Government have entered into 105 decommissioning relief deeds. Offshore Energies UK estimates that these deeds have so far unlocked approximately £10 billion of capital, which can now be invested elsewhere.

The Government committed to report to Parliament annually on progress with the decommissioning relief deeds. The report for financial year 2021-22 is provided below.

Number of decommissioning relief agreements entered into: the Government entered into three decommissioning relief agreements in 2021-22.

Total number of decommissioning relief agreements in force at the end of that year: 101 decommissioning relief agreements were in force at the end of the year.

Number of payments made under any decommissioning relief agreements during that year, and the amount of each payment: two payments were made under a decommissioning relief agreement in 2021-22, for £46.6 million in total. These were made in relation to the provision recognised by HM Treasury in 2015, as a result of a company defaulting on its decommissioning obligations.

Total number of payments that have been made under any decommissioning relief agreements as at the end of that year, and the total amount of those payments: 10 payments have been made under any decommissioning relief agreement as at the end of the 2022-22 financial year, totalling £244.3 million.

Estimate of the maximum amount liable to be paid under any decommissioning relief agreements: the Government have not made any changes to the tax regime that would generate a liability to be paid under any decommissioning relief agreements. HM Treasury’s 2022-23 accounts will recognise a provision currently estimated to be £102.1 million in respect of decommissioning expenditure incurred as a result of a company defaulting on their decommissioning obligations¹. The majority of this is expected to be realised over the next two years.

¹ This figure takes into account payments made subsequent to the financial year covered by this written ministerial statement and may be updated to reflect newer information.

[HCWS699]

Finance (No. 2) Bill

James Cartlidge Excerpts

2nd reading
Wednesday 29th March 2023 Commons Chamber

[The Exchequer Secretary to the Treasury (James Cartlidge)]

I join the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) in paying tribute to Betty Boothroyd on the day of her funeral. I thank all colleagues who paid tribute to our great female Speaker, including in a fascinating anecdote from the hon. Member for Mitcham and Morden (Siobhain McDonagh).

It is a pleasure to respond to the many contributions from hon. and right hon. Members. I start with the Labour Front Benchers and the hon. Member for Richmond Park (Sarah Olney), who speaks for the Liberal Democrats. As at Treasury orals, they once again used the word “loophole” to describe our investment allowance for North sea oil and gas, which is an extraordinary thing to say. When we debated the autumn statement, the shadow Economic Secretary to the Treasury, the hon. Member for Hampstead and Kilburn (Tulip Siddiq), said that

“we need more oil and gas”.—[Official Report, 22 November 2022; Vol. 723, c. 180.]

That was what she said, but it is clear from Labour’s policy that it does not want that oil and gas to come from the United Kingdom. What an extraordinary position.

If we have learned anything from what has happened since Russia’s invasion of Ukraine, it is surely that we have to maximise our domestic energy production. The windfall tax is raising significant funding so that we can pay for all the energy support our constituents are getting, but we are balancing that with an allowance so that we continue to maximise investment in our energy security.

The hon. Member for Ealing North (James Murray) lamented the fact that the Bill does not cover business rates. Well, I have news for him: Finance Bills never cover business rates, which are local taxes. If he were to pick up the Order Paper, he would see that, before this debate, my right hon. Friend the Secretary of State for Levelling Up, Housing and Communities introduced the Non-Domestic Rating Bill.

The hon. Gentleman, along with many of his colleagues, including the Chairman of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), and the hon. Members for Brentford and Isleworth (Ruth Cadbury) and for West Lancashire (Ashley Dalton), continued the narrative that our abolition of the lifetime allowance is somehow a tax cut for the rich. They talk of the beneficiaries as if they were oligarchs, but we do not see it like that. These people have worked hard all their working life, doing the right thing and paying into a pension.

My hon. Friend the Member for Amber Valley (Nigel Mills), in an excellent speech, like my hon. Friend the Member for South Thanet (Craig Mackinlay), made an important point about the complexities and issues that would arise if we tried to have a scheme purely for one profession. I said last Thursday that we would have to consult on such a scheme, and then we would have to respond to the consultation. All those things would take months, but our tax cut will come in on 6 April because we need these doctors on our wards now, and we do not want them to retire early. We are backing all our professions because we want to get Britain growing again.

[Catherine McKinnell]

It is interesting that the hon. Gentleman speaks with such passion about moving fast to help these very high earners. Could he explain why the Government are incapable of moving any faster than a snail’s pace on providing childcare for some of the lowest earners in the country?

[James Cartlidge]

The hon. Lady knows why we need a staggered implementation, and I will return to that point.

At the beginning of his speech, the right hon. Member for Dundee East (Stewart Hosie) referred to our progress, or lack of progress as he sees it, on reducing debt, before setting out a load of spending requests and demands for more support. He wants more energy support and more support with the cost of living. He does not want alcohol duty to be uprated by RPI, and I understand why he makes that point, but it scores £5 billion. He cannot have it both ways.

Once again, the right hon. Gentleman spoke about our relative performance following Brexit. By definition, and we can have this debate, our growth compared with other nations must always be an estimate. This is not “Sliding Doors”—my hon. Friend the Member for South Thanet mentioned that film—and there is no parallel universe, but there is one area on which we can speak definitively, and that is the saving accrued by not paying our membership fee. I can confirm to the House that, net of the divorce settlement, £14.6 billion has been made available in the current spending review by not having to pay the membership fee. That is an absolute gain from Brexit that the Opposition would not have enjoyed.

My hon. Friends the Members for South Dorset (Richard Drax) and for South Thanet and my constituency near neighbour the former Home Secretary, my right hon. Friend the Member for Witham (Priti Patel), all spoke about corporation tax, and my right hon. Friend made the brilliant Conservative point that the Government do not create jobs—she also spoke very well about eastern region entrepreneurialism, which I obviously support her on.

On the corporation tax issue, I would make this key point: we legislated for the increase in 2021 when we were still in the pandemic, and one only has to look at the graph for borrowing that followed the pandemic, showing the most extraordinary surge, to realise that it is impossible to have such a surge in borrowing without fiscal consequences. So we had to take difficult decisions. Like my right hon. Friend, I ran a small business and I did not enjoy paying corporation tax. As Conservatives we do not want to put up taxes, but we also have a duty to run the public finances in a sound and stable fashion, so we have taken difficult decisions, but they have given us the platform to cut corporation tax in this Budget and Finance Bill for businesses that invest.

The right hon. Member for Dundee East asked about tidal stream energy. We recognise the opportunity of that, which is why we are allocating a ringfenced budget for the technology in allocation round 5. The hon. Member for Richmond Park complained about our performance on inflation relative to the EU; there are 12 countries in the EU with higher inflation than us.

My right hon. Friend the Member for Witham and my hon. Friends the Members for South Dorset and for South Thanet, and I think also my hon. Friend the Member for North East Bedfordshire (Richard Fuller), raised a point about pillar 2 and sovereignty, and I totally respect the points and arguments they make. I reassure them that pillar 2 is implemented through domestic legislation in each implementing nation, rather than as an international treaty. The UK has a primary right to impose any top-up tax due on UK-headquartered groups or on foreign groups’ UK operations. If the UK does not exercise that right, the same top-up tax can be imposed by other countries, and businesses would therefore incur the same level of top-up tax but the tax would be paid to that nation, not to the UK.

I said I would respond to the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on childcare. As she knows, we are increasing support for those on low incomes. We are increasing support for those on universal credit, not least by paying it up front. We will be phasing in the childcare support—from April 2024 working parents of two-year-olds can access 15 hours per week. From September 2024 all working parents of children aged between nine months and three years can access 15 hours per week. [Interruption.]

There seems to be a cold going round or something, as there is a lot of coughing, so I will conclude by referring to the point of the right hon. Member for East Antrim (Sammy Wilson). He is not in his place but he asked an important question, especially in light of our announcement in relation to the Windsor framework. I can confirm that the Government have today published secondary legislation that will extend full VAT relief for energy-saving materials to Northern Ireland. The Windsor framework now enables the relief to be expanded to Northern Ireland, with a single UK-wide relief set to take effect from 1 May 2023. The relief supports households across the UK to improve their energy efficiency. I hope the hon. Member for Strangford (Jim Shannon), who is always present, will relay that back to the right hon. Gentleman.

To conclude, the Prime Minister has three economic targets. We want to halve inflation; this year we are forecast to more than halve it, but we know times remain challenging for households. We want to get debt down; that is why we are running public finances in a prudent fashion. Above all, we want to get the economy growing; that is why I commend this Finance Bill to the House.

Question put, That the amendment be made.

Oral Answers to Questions

James Cartlidge Excerpts

Tuesday 21st March 2023 Commons Chamber

[Stephen Morgan (Portsmouth South) (Lab)]

22. What fiscal steps he is taking with Cabinet colleagues to support the economy in reaching net-zero carbon emissions.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

At the spending review 2021, we confirmed that since March 2021 the Government will have committed a total £30 billion of public investment for the green industrial revolution. Since then, the Government have made new announcements to provide long-term certainty on our investment plans, including £6 billion for energy efficiency from 2025 and up to £20 billion for carbon capture, usage and storage. The Government will set out further action shortly to support green industries in the UK and meet our net zero 2050 commitment.

[Catherine West]

Yesterday, the Intergovernmental Panel on Climate Change published its report on the latest data, warning that the world is fast approaching irreversible levels of global heating. Why is the Treasury still giving energy companies an easy ride through lucrative loopholes in the energy windfall tax? The Treasury should be prioritising investments in renewables so that over time, our bills can come down.

[James Cartlidge]

This country should be proud of our record, which has seen emissions fall faster in this country than in any country in the G7—down 44% since 1990—but we have to balance that against energy security. Surely, if there is one thing we have learned from what has happened with Ukraine’s invasion by Russia, it is that we need to maximise domestic energy production. The investment allowance in our windfall tax is not a loophole; it is there precisely to incentivise investment so that we maximise domestic energy production.

[Alex Cunningham]

While the sector would have liked more, I welcome the £20 billion over 20 years for carbon capture, use and storage in the Budget. Will the Minister now confirm that the Teesside-Humber project will go ahead and how additional clusters will be selected through the track-2 process?

[James Cartlidge]

I pay tribute to the hon. Gentleman for his consistency—he raised this with me on Thursday in my winding-up speech on the Budget debate. As I said then, we will announce further details soon, but I can confirm that I will be meeting the Carbon Capture and Storage Association tomorrow. I look forward to the meeting. This is an incredibly important step forward, because we must remember that carbon capture does not just give us clean energy, but enables heavy industry to decarbonise.

[Jeff Smith]

Why does the Chancellor not rewire local economies by taking inspiration from President Biden and backing Labour’s policy for a national wealth fund to support half a million new jobs this decade?

[James Cartlidge]

I am grateful to the hon. Gentleman for raising the Inflation Reduction Act; I hope we all welcome what the United States is doing, because the climate is a global phenomenon and, if we are to make progress, we need the United States and other countries to do their bit. Let me be clear: we should be proud of our record to date and confident in our future, because we have huge competitive advantages on green industry. We have a brilliant record to date, we have the shallow North sea, where we have developed the biggest coastal array of offshore wind in the whole of Europe, we have a brilliant scientific base and, with the City of London and our financial institutions, we should be confident about our green future.

[Stephen Morgan]

The Institute of Directors has warned that

“the UK will find itself left behind in the accelerating race to lead the green economy.”

After a lacklustre Budget, does the Minister agree?

[James Cartlidge]

To give just one example of why we should be confident, last year 40% of our electricity came from renewables. The figure in the United States was 20%. We have a very strong record, but we are going to keep building on it. That is why we announced the £20 billion for carbon capture and storage and why we announced Great British Nuclear, because we need that baseload power to go alongside renewables and give us energy security.

[Richard Fuller (North East Bedfordshire) (Con)]

The truth is that it is under this Conservative Government that the greatest strides have been accomplished in harnessing the British economy to achieve net zero, with the leadership of COP26, the establishment of the Glasgow Financial Alliance for Net Zero, and the introduction of corporate reporting on carbon emissions for our major corporations. Will my hon. Friend work with British business to continue that progress and ensure that we can all move forward successfully to achieve net zero?

[James Cartlidge]

My hon. Friend speaks with passion, experience and expertise, and he is absolutely right. Of course we work closely with investors and business—one key example is the contracts for difference regime. Last July, we had the largest ever allocation of contracts through the contracts for difference process, contracting about 11 GW of clean power, which is enough clean energy for 12 million homes. That is a huge step forward, and it shows that we are delivering on net zero. As a party, we will balance that with energy security so that we learn the lessons of the last 12 months.

[Virginia Crosbie (Ynys Môn) (Con)]

Ynys Môn is known as energy island. It has wind, wave, tidal and solar, and will have, I hope, new nuclear at Wylfa. For more than three years, I have campaigned for Anglesey to be a freeport, which would turbocharge the island’s economy and help the Government to deliver net zero. We are due to hear from the Welsh Government and the UK Government by early spring on whether our island’s bid has been successful. It feels like early spring in my Holyhead garden. Does it feel like early spring in the Chancellor’s garden?

[James Cartlidge]

My hon. Friend’s constituency is an island, and she is its rock—there is no doubt about that; she champions these issues consistently. I am assured that the Chief Secretary to the Treasury is giving careful consideration to her proposition, and that just underlines that she has been a champion for her constituency. By delivering on our green plans, we can generate green jobs and green investment in every part of the United Kingdom, including Wales.

[Mr Speaker]

I call the shadow Minister.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

As my hon. Friend the Member for Portsmouth South (Stephen Morgan) just said, the Institute of Directors has warned that

“the UK will find itself left behind in the accelerating race to lead the green economy.”

The Confederation of British Industry says that we are investing five times less in green industries than Germany—five times less. Meanwhile, the United Nations issues warnings of a climate disaster. Where is the urgency and action from the Conservatives to decarbonise our economy and win the global race for green jobs?

[James Cartlidge]

What the IOD actually said about the Budget was that it was “hugely encouraging”, and I strongly agree. We have an extraordinary track record—the fastest-falling emissions in the whole of the G7 and extraordinary success in offshore wind—but we want to go further. That is why we have announced £20 billion for carbon capture and storage, and we will soon announce many more positive measures.

[Yasmin Qureshi (Bolton South East) (Lab)]

12. If he will make an assessment with Cabinet colleagues of the potential economic impact of creating a regeneration fund to support the conversion of brownfield former industrial sites into mixed-use properties.

--- Later in debate ---

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Industry stakeholders have been clear that Ministers must now focus on long-term solutions to support people with ongoing high energy prices through improved home energy efficiency. What steps will Ministers take to support households with the rising costs of energy in the long term?

[The Exchequer Secretary to the Treasury (James Cartlidge)]

The hon. Lady makes an excellent point. We have put in place a huge amount of support to help people through this immediate challenge with their energy bills, but we do need to think long term. That is why the Chancellor has put in place the 15% target to reduce energy consumption in both domestic and non-domestic buildings, but alongside that, and crucially, we have to increase the supply of UK energy, both renewables and in the North sea.

[Saqib Bhatti (Meriden) (Con)]

Thanks to the quick thinking and quick moves by the Chancellor, the Prime Minister and the Treasury, the tech sector was saved from almost certain oblivion, and at no cost to the taxpayer. Can my right hon. Friend confirm that he is still ambitious for the tech sector, and can he confirm that the merger with HSBC will ensure that our fantastic tech sector, especially our start-ups, will have access to the funding they need?

Oral Answers to Questions

James Cartlidge Excerpts

Tuesday 7th February 2023 Commons Chamber

[Ms Anum Qaisar (Airdrie and Shotts) (SNP)]

5. What assessment he has made with Cabinet colleagues of the potential impact of changes in the Government’s energy support schemes on the economy.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

Inflation is our primary challenge, and I can confirm that the Office for Budget Responsibility estimated that the energy price guarantee has reduced the peak in inflation by 2.5 percentage points and that inflation is still nearly two percentage points lower than it otherwise would have been in Q2 this year, when the generosity of the scheme is reduced.

[Ms Qaisar]

The Government are clawing back from the already pitiful financial assistance offered to businesses. Under the new scheme, businesses will now save only a few pennies for each unit of energy they use. Small businesses in my constituency of Airdrie and Shotts are already struggling to stay afloat under the new scheme. The owner of a small family-run café described to me how they have had to dip into personal savings to meet payments. Will the Minister reconsider the Government’s plans to change the energy support scheme and instead expand support to better meet the needs of small businesses?

[James Cartlidge]

Of course it is important that we are cognisant of the challenges facing small businesses. The hon. Lady describes our support as “pitiful”. In the current period—the last six months—the available support for businesses with energy bills has been worth up to £18 billion. That is an extraordinary level of support, but we were absolutely transparent that that was not sustainable, that we would review it and that we would then have a less generous scheme but one that was still significant. To underline that, we will still have a scheme worth up to £5.5 billion. That remains a significant intervention and is worth, for example, up to £2,300 for a pub, or up to £400 for a small shop.

[Abena Oppong-Asare (Erith and Thamesmead) (Lab)]

Many will have heard the appalling stories of the forced installation of prepayment meters, which is precisely why Labour had called for a ban. But there is another scandal: the fact that those using prepayment meters pay more for their energy than those paying by direct debit. Why should those with the least pay the most? Labour will end this—will the Conservatives?

[James Cartlidge]

I am grateful to the hon. Lady, and I know this will be an important matter for the new Secretary of State for Energy Security and Net Zero. As for the Treasury position and our assistance in this matter, we should remember we have given the greatest support with energy bills to those with the greatest need. In the current financial year, we have given a cost of living payment of £650 for those on benefits, and in the next financial year there will be £900 of support. It is significant and it is comprehensive.

[Mr Speaker]

I call SNP spokesperson.

[Stewart Hosie (Dundee East) (SNP)]

I have a constituent with a number of shops. He has seen his four-weekly energy costs rise from £12,000 last October to £27,000 today. Moving on to lower tariffs, but with the reduced energy support, he will still see that £12,000 every four weeks doubled, to £24,000. What advice would the Minister give to my constituent? How would he find the £140,000 off the bottom line in a business already operating on tight margins?

[James Cartlidge]

With great respect to the right hon. Gentleman, he was there when I gave the statement about the new scheme. I was clear with him about the fiscal position overall. He is welcome to write to me on that specific case. Obviously, I cannot comment on the detail of that individual case. What I can say is that we continue to put in place up to £5.5 billion of support with the energy bills discount scheme. That is a significant intervention and it remains a universal scheme with targeted support for the most energy and trade-intensive sectors.

[Stewart Hosie]

Therein lies the problem: this will go to high energy users. The Federation of Small Businesses described the changes as “catastrophic” and

the beginning of the end for tens of thousands of small businesses”,

the British Chambers of Commerce said that

“an 85% drop in the financial envelope of support will fall short for thousands of UK businesses who are seriously struggling”,

and UKHospitality criticised the sudden and sharp drop in support, estimating the move would cost that sector £4.5 billion in the next 12 months. Why does the Minister think they were all wrong and he is right?

[James Cartlidge]

As I said to the hon. Member for Airdrie and Shotts (Ms Qaisar), we were clear when we created the scheme to support businesses with their energy bills that it had to be time limited because of the generosity of the support—£18 billion over six months. We were absolutely transparent about that. But we have maintained a universal scheme covering businesses, charities and the public sector. Yes, it is less generous, but it remains significant. As I said, he is welcome to write to me with the specific case he raised.

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

6. What recent discussions he has had with (a) Cabinet colleagues and (b) representatives of the motor industry on the level of value added tax for electric vehicle charging.

--- Later in debate ---

[Chris Clarkson (Heywood and Middleton) (Con)]

8. What fiscal steps he is taking with Cabinet colleagues to support households with energy bills.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

The Government have taken significant action to help households with rising energy prices. The energy price guarantee caps the unit price that households pay for electricity and gas and will save a typical household in Great Britain approximately £900 this winter, based on forecasts made at the time of the autumn statement. That is in addition to the £400 energy bills support scheme, paid in six instalments from October last year to March this year.

[Chris Clarkson]

The high price of energy disproportionately affects those who are on the lowest incomes. Will my hon. Friend outline what steps his Department is taking to ensure that those who earn the least are supported?

[James Cartlidge]

My hon. Friend is a consistent champion for his constituents, particularly for those who are on the lowest incomes. He is quite right: I think we all accept that they will have faced the toughest challenge in the face of the very high cost of living, given the global inflationary pressures. In addition to the £1,300 that a typical household will receive this winter—the £900 energy price guarantee saving and the £400 energy bills support scheme payment—I can confirm that those households will have had £650 in the current financial year, if they are on benefits, and will have £900 next year. That is very significant and comprehensive support.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Support for households is incredibly important, but in the past half-hour Willow Wood Hospice, which provides hospice services to my constituents, has emailed me to raise the plight of the UK hospice sector, which faces up to a fivefold increase in its energy bills even after the Government’s energy bill relief scheme, which is due to end in March. What more can the Minister do to ensure that Willow Wood Hospice and hospices around the country get the extra support that they need?

[James Cartlidge]

The hon. Gentleman raises a very important case; I am more than happy for him to me to write to me with the specifics. I obviously cannot comment on individual cases, but what I would say is that when we set up the energy bill relief scheme—the original scheme, which is currently providing up to £18 billion of support not only for businesses, but for hospices, charities and organisations in the public sector—we were very clear that it could not be sustained at that level. It is extremely expensive, although it is very important and generous. In setting it up, we had a number of choices; we chose to maintain a universal scheme. Yes, there is some targeting in energy and trade-intensive sectors, but it is a universal scheme, meaning that hospices continue to benefit.

[Dr Kieran Mullan (Crewe and Nantwich) (Con)]

9. What fiscal steps he is taking to support lower-income households.

--- Later in debate ---

[Caroline Ansell (Eastbourne) (Con)]

20. What fiscal steps his Department is taking to support hospices with energy costs.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

With your permission, Mr Speaker, I will answer Question 10 with what I believe to be Questions 11 and 20.

[Mr Speaker]

Correct!

[James Cartlidge]

Thank you, Mr Speaker. It is good when a Treasury Minister gets the numbers right.

I can confirm that the Government are supporting businesses with energy costs during the winter by means of the energy bill relief scheme. The scheme came into effect on 1 October 2022, and will run until 31 March this year. Following the review of the operation of the current scheme, we announced that we would launch a new energy bills discount scheme, which will provide eligible, non-domestic energy users—including eligible hospices—with a discount on their energy bills for a further 12 months from 1 April until 31 March next year.

[Sir David Evennett]

Businesses in my constituency are grateful for all the support that the Government have given them over the past few very difficult years—they appreciate that—but what steps are the Government taking to protect energy-intensive industries from high energy prices, about which they are concerned?

[James Cartlidge]

My right hon. Friend is right to highlight not only the generosity of the support but the issues facing specific sectors. The Treasury recognises that some businesses are highly exposed to both energy prices and international competition, which means that they are unable to pass on or absorb these higher costs. Following the review of the operation of the current energy bill relief scheme, we decided to target additional support beyond April this year at the most energy and trade-intensive sectors, which are primarily manufacturing businesses.

[Peter Aldous]

Metal finishing is a vital component of many strategic industries, including defence, aerospace and energy. Although the process is extremely energy-intensive, businesses such as MP Eastern in Lowestoft do not currently qualify for the additional support that is available, and are therefore losing business to overseas competitors. In order to stop that, strengthen our own supply chain and enhance national security, will my hon. Friend review the support that is available to metal-finishing businesses?

[James Cartlidge]

My hon. Friend and county colleague is always championing his local businesses in the Chamber—[Interruption.] I am glad that the hon. Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) agrees with me that my hon. Friend is a stalwart champion of his constituency businesses.

We have taken a consistent approach to identifying the most energy and trade-intensive sectors, with all sectors that meet agreed thresholds for energy and trade intensity eligible for ETII support. The firms eligible for the scheme are those operating within sectors that fall above the 80th percentile for energy intensity and the 60th percentile for trade intensity, and those operating within sectors that are eligible for the existing energy-intensive industries compensation exemption scheme. As ever, my hon. Friend is welcome to write to me about the specifics.

[Caroline Ansell]

St Wilfrid’s Hospice in Eastbourne has just celebrated its 40th anniversary. Some 70% of its running costs are met by the generous public, who love and appreciate all that it does at the end of life, and next month they are literally walking over hot coals in its support. The nature of the setting means that the hospice cannot readily change the thermostat. It has pursued renewables, and the building is efficient. In short, it is doing all it can. After May, its energy costs are predicted to soar by 285%. What support can my hon. Friend outline for St Wilfrid’s, so that energy hikes will not cost therapies, in-patient beds or nursing hours in the community?

[James Cartlidge]

I pay tribute to St Wilfrid’s Hospice, and to all those who fundraise to support it. My hon. Friend is absolutely right to raise this issue. As I said to the hon. Member for Denton and Reddish (Andrew Gwynne), we could have chosen to have a much more targeted scheme, which we said we would consider, but in fact we have continued with a universal scheme, covering not just businesses but charities and the public sector. That includes hospices. This new scheme will enable hospices locked into contracts signed before recent substantial falls in the wholesale price to manage their costs and provide others with reassurance against the risk of prices rising again.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

Arts organisations have been hit by rocketing energy bills at the same time as audience footfall remains depressed by the cost of living crisis and the residual effects of the covid pandemic. The current rates of cultural tax reliefs were introduced to help theatres, orchestras, museums and galleries to recover during the pandemic, but some orchestras are now saying they are unlikely to survive if the tapering of that 50% orchestral tax relief goes ahead. Will the Minister and the Chancellor look at this urgently and review the reduction from 31 March of this vital support to arts organisations?

[James Cartlidge]

If the hon. Lady provides me with the details, I will be more than happy to do that.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

On Friday I met representatives of the Federation of Small Businesses and of small businesses in my constituency, and the message from them is that they are extremely worried about their future, about their sustainability and about energy costs. One of the points they highlighted was their concern about what will happen to their energy costs after April. Will the Minister look at matching what the Labour party is proposing, which is cutting small business rates to enable small businesses to save up to £5,000 a year, to ensure that they can continue not just for this year but going into the future?

[James Cartlidge]

I have also met the FSB. The one crucial point I would make is that I understand why businesses are concerned in these very challenging times—I ran a small business myself before entering Parliament—but we have to balance out the costs of these schemes to the Exchequer. We have to run sound public finances, not least because that engenders a platform of stability and confidence, which is in the interest of every single business in this country.

[Peter Grant (Glenrothes) (SNP)]

I may have missed it, but I do not think the Minister even attempted to answer the question asked by my right hon. Friend the Member for Dundee East (Stewart Hosie) a wee while ago. How can a small retail business possibly be expected to survive if it is facing an increase of more than £100,000 a year on its overheads while at the same time its customers cannot afford to support it because they cannot afford their own electricity bills? Could it possibly be related to the news that BP shareholders are today celebrating the biggest profits in the company’s long history? Does that give the Minister an indication as to where he might look to find the tax revenue to support small businesses and householders?

[James Cartlidge]

The hon. Gentleman is aware that we have already introduced two new levies: the energy profits levy, which relates to North sea oil and gas; and the electricity generators levy, which relates to the exceptional returns that generators will have received because of the exceptional prices following the invasion of Ukraine. I said to the right hon. Member for Dundee East that he was more than welcome to write to me with the specifics of the case he mentioned, and I look forward to receiving that letter.

[Wera Hobhouse (Bath) (LD)]

12. What fiscal steps he is taking with Cabinet colleagues to maximise short-term investment in wind and solar energy.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

The Government are committed to encouraging investment in the UK energy sector. The contracts for difference scheme has been hugely successful in driving the deployment of renewable energy while rapidly reducing costs. It is an established and successful mechanism that provides greater confidence to investors in renewable electricity projects, and to date CFD generators have received almost £6 billion net in price support through the scheme, enabling world-leading renewable deployment and lowering the cost of capital to investors.

[Wera Hobhouse]

Since 2016, the Government have handed out over £10 billion in oil and gas exploration and extraction subsidies. In contrast, major economies such as the US and the EU are putting together huge investment plans to accelerate the renewable energy transformation, and Britain is lagging behind. Is it not time that the UK phased down subsidies for new oil and gas exploration and invested that money in renewables to accelerate the transition? The Minister knows we are not transitioning fast enough and that we are missing many of our net zero targets.

[James Cartlidge]

I respect the hon. Lady’s consistency in asking these questions, but I beg to differ when she says we are lagging behind. We have reduced our emissions faster than any other G7 nation. Last year, 40% of our energy came from renewables and just 1.5% came from coal. We have seen huge investment in renewables. Our new Department is called the Department for Energy Security and Net Zero because it is about not just net zero but energy security. On the transition to net zero, we still need to invest in the North sea and our domestic energy sources.

[Virginia Crosbie (Ynys Môn) (Con)]

I am proud of this Government’s track record on renewable energy, and I welcome today’s announcement that there will be a new Department for Energy Security and Net Zero. Does the Minister agree that nuclear baseload is key if we are to decarbonise the transport and manufacturing sectors and deliver this Government’s net zero 2050 target?

[James Cartlidge]

I say it again but, if anyone is a champion of the nuclear sector, it is my hon. Friend, who has consistently championed it. She is right that renewables are crucial but that we need baseload energy. Surely, on both sides of the House, if we have learned anything from the past 12 months and what has happened following Putin’s invasion of Ukraine, it is that we need policy not only on renewables but on overall energy security, to which nuclear is crucial.

[Chloe Smith (Norwich North) (Con)]

15. If he will make an assessment of the potential contribution of payroll employees to supporting economic growth.

--- Later in debate ---

[Feryal Clark (Enfield North) (Lab)]

T4. It has been two weeks since it was revealed that the Treasury provided special dispensation for a sanctioned Russian warlord to use British lawyers to threaten a British citizen, Eliot Higgins. What has the Chancellor done in that time to get to the bottom of this outrageous scandal of the Treasury undermining sanctions and aiding our enemies to use aggressive lawfare tactics designed to intimidate those exposing the truth?

[The Exchequer Secretary to the Treasury (James Cartlidge)]

I answered the urgent question on this matter and said that we would consider what more can be done in these types of cases. That work is ongoing, but we will report in due course, when we have more to say.

[Kevin Foster (Torbay) (Con)]

T7. I only have to look at the Bench behind my right hon. Friend to know that the needs of Torbay will be at the centre of the Treasury’s thinking. What fiscal steps will he take in response to the “Communities on the Edge” report produced by the Coastal Communities Alliance?

--- Later in debate ---

[Andrew Selous (South West Bedfordshire) (Con)]

T9. Businesses that had to renegotiate their energy contracts in the second half of last year did so at the top of the market, so how can we prioritise those businesses in particular for energy efficiency measures?

[James Cartlidge]

My hon. Friend makes an important point. We have already discussed energy support, but efficiency is also key. Businesses can take advantage of the £315-million industrial energy transformation fund, which supports industrial sites to invest in energy efficiency and decarbonisation projects. There are several important capital allowances that may help businesses to make energy-efficient investments, such as the annual investment allowance, which has been set permanently at £1 million, the structures and buildings allowance, and, until 31 March, the super deduction—

[Mr Speaker]

I think we have got it, Minister.

--- Later in debate ---

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

As the hon. Member for South West Bedfordshire (Andrew Selous) said, some businesses have bought in energy at a very high rate because of when they sealed their contract. Many of my local pubs and hospitality businesses will go bust in the beginning of the next financial year because their bills are so out of kilter; they say they would have to charge £15 a pint to survive. Even in London—even in Shoreditch—that is just not feasible. What extra support is the Treasury even considering as we approach the financial statement next month?

[James Cartlidge]

I am grateful to the hon. Lady and, though I do not know the specifics of her cases, she is welcome to write to me. On the hospitality sector and pubs in particular, we have done two key things: we have kept the reduction in rates, increasing it to 75% relief in the following year, and we have renewed our support with energy bills, saving a typical pub up to £2,400.

[Mr Speaker]

I call the Chair of the Select Committee.

[James Cartlidge]

It is worth stressing that, when we reduced fuel duty at the last spring Budget by 5p on both petrol and diesel, it was only the second time in the past 20 years that both rates had been cut. Future changes will obviously be determined at the appropriate fiscal event.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Interest in purchasing electric vehicles has escalated significantly and is expected to escalate further in the next 12 to 18 months. Will the Minister undertake to ensure that greater provision of public-facing EV charging points is rolled out right across the United Kingdom?

Treasury

James Cartlidge Excerpts

Wednesday 1st February 2023 Ministerial Corrections

The following are extracts from a statement on non-domestic energy support on 9 January 2023:

[James Cartlidge]

Only a few days ago we heard from the BBC that in 2022 we had a record level of wind production in this country producing electricity: almost 27%, with just 1.5% from coal compared with 43% from coal in 2013.

[Official Report, 9 January 2023, Vol. 725, c. 320.]

Letter of correction from the Exchequer Secretary to the Treasury (James Cartlidge):

An error has been identified in my response to the hon. Member for Erith and Thamesmead (Abena Oppong-Asare) during the statement on Non-Domestic Energy Support on 9 January 2023.

The correct statement should have been:

[James Cartlidge]

Only a few days ago we heard from the BBC that in 2022 we had a record level of wind production in this country producing electricity: almost 27%, with just 1.5% from coal compared with 43% from coal in 2012.

[James Cartlidge]

It may be that, because of the huge amount of support that has been needed by our country, particularly since the pandemic—we have seen £400 billion-worth of support, and potentially close to £100 billion on energy—a figure such as £5.5 billion does not look as large.

[Official Report, 9 January 2023, Vol. 725, c. 322.]

Letter of Correction from the Exchequer Secretary to the Treasury (James Cartlidge):

An error has been identified in my response to the hon. Member for Dundee East (Stewart Hosie) during the statement on Non-Domestic Energy Support on 9 January 2023.

The correct statement should have been:

[James Cartlidge]

It may be that, because of the huge amount of support that has been needed by our country, particularly since the pandemic—we have seen £400 billion-worth of support, and potentially close to £100 billion on energy and cost of living—a figure such as £5.5 billion does not look as large.

IMF Economic Outlook

James Cartlidge Excerpts

Tuesday 31st January 2023 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on the International Monetary Fund world economic outlook.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

This Government have three economic priorities; our plan for this year is to halve inflation, grow the economy and get debt falling. It is a plan that will alleviate the pressure on businesses and families today, and equip us to become one of the most prosperous countries in Europe. As the International Monetary Fund said in its press conference today, it thinks that the UK is “on the right track'”. It also said that the UK had done well in the last year, with growth revised upwards to 4.1%, which is one of the highest growth rates in Europe for 2022. Since 2010, the UK has grown faster than France, Japan and Italy. Since the European Union referendum, we have grown at about the same rate as Germany. Our cumulative growth over the 2022 to 2024 period is predicted to be higher than that of Germany and Japan, and at a similar rate to that of the United States of America. The Governor of the Bank of England has said that any UK recession this year is likely to be shallower than previously predicted.

The actions we are taking, from unleashing innovation across artificial intelligence, financial services and a host of other sectors, to improving technical education and protecting infrastructure investment, will spur and fuel economic growth in the years to come, benefiting industry and communities alike. However, the figures from the IMF confirm that we are not immune to the pressures hitting nearly all advanced economies. We agree with the IMF’s focus on the high level of inflation in our country, which is why this is our first priority. Inflation is the most insidious tax rise there is, and so the best tax cut now is reducing inflation. That will help families across the country with the cost of living. As the Chancellor has said, short-term challenges, especially ones we are focused on tackling, should not obscure our long-term forecasts. If we stick to our plan to halve inflation, the UK is still predicted to grow faster than Germany and Japan over the coming years. That will help us deliver a stronger economy, one that is growing faster and where everywhere across our country people have opportunities for better-paying, good jobs. That is what the people in this country expect and what we are working tirelessly to deliver.

[Rachel Reeves]

Britain has huge potential, but 13 years of Tory failure has been a drag anchor on our prosperity. Today’s IMF assessment holds a mirror up to the wasted opportunities, and it is not a pretty sight: the UK is the only major economy forecast to shrink this year, with weaker growth compared with our competitors for both of the next two years. The world upgraded, but Britain downgraded, with growth even worse than sanctions-hit Russia. The IMF chief economist singles out higher mortgage rates as a reason for Britain’s poor performance. The Tory mortgage penalty is devastating family finances and holding back our economy. British businesses are paying the price for the gaping holes in the Tories’ Brexit deal. It will fall to Labour to clean up this mess.

If the Chancellor had ideas, answers or courage, he would be here today, but he is not. The question the people of our country are now asking is: are me and my family better off after 13 years of Conservative government? The answer is no and, as the IMF showed today, it does not have to be this way. I am sure the Minister will clutch at straws and say that everything is fine or that the IMF forecasts are just wrong, but can he explain why the UK is still the only G7 economy that is smaller now than it was before the pandemic? Why is the UK the only G7 economy with its growth forecast downgraded this year? Why are we at the bottom of the league table both this year and next year? Can the Minister answer this: why should anyone trust the Conservatives with the economy ever again?

[James Cartlidge]

The right hon. Lady talks about 13 years of failure. Let me just repeat the facts of the matter. Since 2010, the UK has grown faster than France, Japan and Italy. She talks about the next two years. As I have said, the forecast from the IMF says:

“Cumulative growth over the 2022-24 period is predicted to be higher—

in the UK—

“than in Germany and Japan, and at a similar rate to the US.”

I am grateful to the shadow Chancellor for quoting the IMF, because I, too, wish to quote the IMF. Let us go to the IMF press conference at about 3am this morning, which, Mr Speaker, I am sure you were eagerly watching, and quote the economic counsellor Pierre-Olivier Gourinchas who said:

“Let’s start with the good news: the UK economy has actually done relatively well in the last year. We’ve revised”—

growth—

“upwards to 4.1%...that’s one of the highest growth rates in Europe, in that region, for that year”—

2022.

The shadow Chancellor did make a passing reference to the pandemic, but it is usually Labour’s habit to airbrush out of history completely the fact that we as a Government have overseen two of the greatest challenges in the country’s history: a pandemic followed by the invasion of Ukraine. [Interruption.] I know why the shadow Chancellor does not want to talk about the pandemic. Back in December 2021, when the Labour Welsh Administration wanted to lock down in the face of omicron, we took the brave decision as a Government not to lock down in England. Let us remember what the shadow Health and Social Care Secretary said at the time. He said that plan B was “insufficient” and that there were additional measures that were “necessary”. Labour would have kept us locked down for longer. We took the decision to keep our country open. We did so because of the vaccine that we brought forward, which is something that Labour would not have done.

The crucial issue, as I said, is bearing down on inflation, which will give us the best chance of restoring sustainable growth. A key facet of dealing with inflation is fiscal discipline. We have heard from the shadow Chancellor recently that Labour is suddenly the party of sound money. Since the speech—I think it was two weeks ago—in which the leader of the Labour party promised to put away the great big Government cheque book, Labour has made £45 billion of unfunded spending commitments. We all know where that ends. Labour starts writing blank cheques, and it ends with a letter from its Chief Secretary to the Treasury to the rest of the country saying, “There’s no money left.”

[Mr Speaker]

I call the Chair of the Treasury Committee.

[Harriett Baldwin (West Worcestershire) (Con)]

Will the Minister take this opportunity to reflect on last year when, despite the headwinds of the coronavirus, the invasion of Ukraine, huge hikes in energy costs, rising interest rates and high inflation in this country, UK businesses managed to generate more than 4.1% of economic growth—twice that of the United States, 25% higher than China, and higher than the eurozone?

[James Cartlidge]

The Chair of the Select Committee is spot on. Instead of talking down our economy, she makes the key point that, despite all those challenges, we had strong growth last year because of British enterprise. That is why, on Friday, the Chancellor, himself a former entrepreneur—there are not many of those on the Opposition Benches—said that we will back advanced manufacturing in the high-growth sectors to ensure that we continue to live with that level of growth in the future.

[Mr Speaker]

I call the SNP spokesperson.

[Stewart Hosie (Dundee East) (SNP)]

I suppose that it is apposite that there is an urgent question on a potential recession on the third anniversary of Brexit.

The IMF has said that the economy of the UK—the only G7 country facing recession—would face a downgrade reflecting, it says, tighter fiscal and monetary policies and the still high energy retail prices weighing on household budgets. There is no getting away from it: with even sanctioned Russia forecast to grow, that is a gloomy prognosis. Given that the Government expect to meet their own new fiscal rule on public sector net debt by a paltry £9 billion in 2027-28, according to the Office for Budget Responsibility, the Government’s own strictures mean that there is no fiscal headroom to provide more support. Is this not the time, therefore, to reduce the energy companies’ investment allowance, which allows them to reduce the tax that they pay by 91p in the pound, to start to generate a meaningful windfall tax that is required to further support households and small and medium-sized enterprises—two of the main drivers of the IMF forecast for the economy—which will otherwise see their energy costs rocket this year?

[James Cartlidge]

The right hon. Gentleman talks about tight fiscal monetary policy. We are faced with inflation; it is higher in the UK than in 14 countries in the EU. Inflation is a global challenge, so he is right: we do need to have that stance. Obviously, we want to get inflation down. The cost of energy bills is precisely why, this winter, a typical household in the United Kingdom will have received £1,300 of support, £1,400 in cost of living payments, and the energy price guarantee, estimated by the OBR to be worth £900 for the typical household. That support is provided to every single part of the United Kingdom.

The right hon. Gentleman’s specific suggestion—to be fair, he is making a specific fiscal proposal in relation to the allowance—will hurt one particular sector: the North sea and investment in UK energy. Does he know what the long-term answer to this is? It is not supporting families—we are doing that very generously at the moment—but energy security, investing in nuclear and in the North sea as part of our transition to net zero.

[Sir Edward Leigh (Gainsborough) (Con)]

If the Minister is not able to share with the House the advice he has received from the Opposition on how they will reduce public spending and taxation if they ever form a Government, will he at least accept my advice that the message from successful enterprise economies is that we must have a credible plan to reduce corporation tax and regulation on business?

[James Cartlidge]

With great respect to my right hon. Friend, who is very consistent on such points, I am bound to point out that, even with the forecast increases, corporation tax will still be the lowest in the G7 headline rates, and, of course, roughly 70% of businesses do not pay that higher rate because of the small business rate that pertains. I have not received any representations from the Opposition, other than a pledge for sound money from a party, which, since promising to put away the great big Government cheque book, has announced almost £50 billion of unfunded spending commitments.

[Dame Angela Eagle (Wallasey) (Lab)]

Despite the Minister’s bluster, the Government Benches are empty. Conservative Members have not come to the Chamber in large numbers to defend the Government’s economic results, because the IMF forecast is devastating, as it lays bare the economic incompetence of this Government. Sanctioned Russia is still doing better than we are. This Government are unfit to run the economy, as unfit as those on the Treasury Bench are to be in the Treasury.

[James Cartlidge]

I am pleased to say that there is very colourful support on our Back Benches today. I am sure that there will further pertinent and brilliant questions to come. The hon. Lady quotes the IMF, but I simply reiterate what its economic counsellor said this morning about the UK. He said:

“Let’s start with the good news: the UK economy has actually done relatively well in the last year. We’ve revised”—

growth—

“upwards to 4.1%...that’s one of the highest growth rates in Europe”.

That is exactly what the IMF said.

[Sir Desmond Swayne (New Forest West) (Con)]

What should the IMF make of our burgeoning £65 billion trade surplus in financial services?

[James Cartlidge]

The IMF always stresses the importance of sustainable growth. It is sustainable growth that matters, and, of course, my right hon. Friend is absolutely right: exports are crucial to that. The City and financial services are a massive UK success story. We want to build on that, which is why we have announced the Edinburgh reforms and further measures to strengthen UK financial services. We are quite clear that the future for this country is optimistic and we will get there by backing brilliant British business.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

The Minister talks about covid as if we were the only country to experience the pandemic. He talks about the Ukraine crisis as if the fuel costs are affecting only this country, but he fails to mention that the former Prime Minister and her Chancellor crashed the economy, and that that came on top of the uncertainties of the previous years, including the failure to get a decent deal after Brexit, which led to a 4% hit on UK output. That is £55 billion of fiscal consolidation because of the failure of his Government. When will he admit to that and face up to reality instead of misleading the British people?

[James Cartlidge]

On the contrary, the whole point of why we mention the pandemic is not to say that we are the only country affected, but to explain the global headwinds that we face as a country. The hon. Lady talks about energy costs, but the Office for Budget Responsibility’s forecast is that the energy price guarantee will reduce the peak of inflation in this country by 2.5%. Inflation is an issue and it is global, but we are taking strong measures to ensure we deliver the Prime Minister’s target of halving it.

[Anna Firth (Southend West) (Con)]

Is it not right that the IMF welcomed the autumn statement and said it struck

“the right balance between fiscal responsibility and protecting growth and vulnerable households”?

Given that the IMF has also said that cumulative UK growth over 2022 to 2024 is predicted to be higher than in Germany and Japan and similar to the USA, is that not exactly why we should stick to the measures set out in the autumn statement?

[James Cartlidge]

My hon. Friend makes a brilliant point and reminds us that not only did the IMF talk this morning about our strong performance in 2022, but at the autumn statement it welcomed those measures and recognised that a balance must be struck between fiscal consolidation and supporting the most vulnerable. The best example I can give is that from April, far from support with high energy costs being withdrawn, there will be a new £900 payment for families on benefits. That shows we are getting the balance right between the fiscal discipline necessary to work with the Bank of England to reduce inflation and ensuring that families are supported through these challenging times.

[Emma Hardy (Kingston upon Hull West and Hessle) (Lab)]

Today the Government’s response to the IMF forecast has been simply to say that forecast is wrong. If the Government will not look at the forecast, let us look at the facts. The UK is the only G7 economy smaller now than it was at the start of the pandemic, and growth has been lower under the Conservatives than it was under the last Labour Government. Can the Minister tell us whether the Government have any respect for our international economic institutions?

[James Cartlidge]

I did not question the IMF forecast—that is not correct. I simply quoted what the IMF said, that cumulative growth over the 2022 to 2024 period is predicted to be higher than in Germany and Japan and at a similar rate to the US.

[Greg Clark (Tunbridge Wells) (Con)]

I remind the Minister and the shadow Chancellor that forecasts are just that. They are subject to substantial revision. I remember in 2012 the IMF downgraded the forecast, only substantially to upgrade it the following year. The key thing is to have a long-term approach. Will the Minister confirm that the Government will build on the Prime Minister’s Mais lecture and the Chancellor’s excellent speech on Friday and complement that with a clear industrial strategy so that investors can have a clear view of the Government’s business policy, as countries such as the US, Japan and South Korea are doing?

[James Cartlidge]

My right hon. Friend speaks with great expertise as both a former Secretary of State and a Select Committee Chair, and he is absolutely right. Whatever forecasts say, we have a clear strategy for long-term growth in this country that comes from supporting high-growth sectors. I am glad he mentioned the Chancellor’s speech on Friday, which spoke about the fact that we are only the third economy in the world with $1 trillion tech sector—I know the shadow Chancellor does not like that fact, but we are—and we should be proud of that. Of course we want to build further on that. That is how we will deliver strong, sustainable growth in every part of the United Kingdom.

[Sarah Olney (Richmond Park) (LD)]

The UK economy has faced a triple whammy in recent days: the IMF forecast saying that the UK is the only major economy that will slide into recession this year, an Office for National Statistics survey setting out the true horror of this winter of discontent, and insolvency figures out today showing that more companies are going bust than at any point since the 2009 crisis. Can the Minister tell me when and where the Brexit benefits will begin?

[James Cartlidge]

I am grateful to the hon. Lady, as ever. Of course she misses out the fact that we have the lowest unemployment for the best part of 50 years. We should all be very proud of that. We know the scars caused by high unemployment and we know that when the pandemic started, unemployment was predicted to finish 2 million higher than it ended up because of the measures taken by this Government and by the Prime Minister when he was Chancellor, with furlough and so on. We will continue to support households. The hon. Lady talks about a winter of discontent, but, as I said, we are providing £1,300 of support for a typical family with their energy bills this winter. That shows we are on their side, but we need to go further, and we do that by delivering on the target to halve inflation.

[Michael Fabricant (Lichfield) (Con)]

The shadow Chancellor mentions that our growth rate is not as great as Russia’s. What she does not mention is that the IMF said that of Germany too, because both Germany and the United Kingdom are dependent on gas. My question to my hon. Friend the Minister is this: how many times over the last 10 years has the IMF had to revise its economic forecast? If he does not know the answer, will he please write to me?

[James Cartlidge]

It would be a pleasure, as ever, to write to my hon. Friend. He mentions countries dependent on gas, but we should be very proud that last year more than 40% of our electricity was generated from renewables and just 1.5% from coal. We have had the fastest-falling emissions in the G7, and a recent report in The Times confirmed that we can get those lower emissions with higher growth. The report said that jobs in net zero sectors pay £10,000 more than the national average, and that south Yorkshire, north Derbyshire, Tyneside and Teesside are all hotspots for net zero jobs. That shows we can deliver on net zero and economic growth.

[Mohammad Yasin (Bedford) (Lab)]

Does the Minister think that Tory austerity, Tory Brexit or the Tory Truss Budget is responsible for the unique mess our economy is in? Or is it all of the above?

[James Cartlidge]

It is very far from a unique mess when 14 European Union countries have a higher rate of inflation than we do. That is why we are focused on reducing inflation, which, to be clear, will take some difficult decisions. It would help in that regard if Labour Members, instead of living in a parallel universe where their leadership and their shadow Chancellor talk about sound money but not a single one of them even ventures to understand it, started showing what difficult decisions they would actually take. That is how you run the country.

[Mrs Flick Drummond (Meon Valley) (Con)]

Getting the economy moving forward more quickly will depend on supporting investment in research and development. Will my hon. Friend look at ensuring that R&D continues to be incentivised as a means to boosting our growth?

[James Cartlidge]

My hon. Friend is absolutely right. I spoke about high-growth sectors; one of the ways those sectors drive up sustainable growth is through R&D. That is incredibly important. The Government are on track to spend £20 billion in public expenditure by 2024-25. We are also committed to a competitive regime of R&D tax credits to ensure that the private sector does its part to enable the highest possible level of R&D so that we can deliver investment and research into the industries of the future.

[Carla Lockhart (Upper Bann) (DUP)]

The forecast is concerning for every corner of the United Kingdom. However, in Northern Ireland, there is an added uncertainty owing to the protocol and the internal barriers to trade that it places within the United Kingdom. Investment to drive growth is now being stalled as we await a new agreement. Do the Government recognise the need to urgently restore the integrity of the UK’s internal market to assist economic growth in Northern Ireland, and does the Minister commit to doing that?

[James Cartlidge]

We must deliver growth in every part of the United Kingdom. The hon. Lady knows the work that is happening across Departments on the protocol. I have already mentioned energy support; she knows that there are specific conditions that pertain to the Northern Ireland energy market, but we have still put huge support in place, including the recent £600 payment. That shows that we are on the side of families in every part of the United Kingdom, including Northern Ireland.

[Scott Benton (Blackpool South) (Con)]

I am pleased the Minister is focusing on the facts rather than the forecasts, which have proven time and again to be incorrect. The fact of the matter is that, according to the IMF, last year we had the highest rate of growth of any nation in the G7, nearly double that of the US and higher than that of the whole eurozone—a pretty good record, would he not agree?

[James Cartlidge]

My hon. Friend is an absolute champion. He talks up this country and he is right: the facts back that up and show that we should be optimistic. Of course there are challenges, and we want to get on top of them, which is why we must work hard to support our independent Bank of England in getting inflation down. But, like him, I am optimistic that if we do that, we can see the sort of growth we had last year. That is what the IMF shows; its cumulative forecast is that over 2022 to 2024 we are predicted to have higher growth than Germany and Japan and at a similar rate to the US.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

The Minister seems to be walking away from the question of what role Brexit has played in this economic outlook. I can understand why, since half his own constituents think Brexit was a mistake. The benefits of Brexit seem to be like a toddler’s imaginary friend—Ministers keep talking about them, but only they can see them. The Prime Minister’s spokesman today told us we are now seeing “significant benefits from Brexit.” Will the Minister set the record straight? Can he explain to the small businesses in our constituencies, which used to be able to export with ease to the European Union, a single market where they now face a better deal than they did before?

[James Cartlidge]

I am happy to stress, for example, the hugely important Solvency II reforms that we will undertake, which will free up enormous amounts of investment in infrastructure. Of course, infrastructure is crucial to future growth. As the Minister with responsibility for alcohol duty, I am pleased to say that we will have reform in August, meaning that we could have a duty differential between pubs and supermarkets. That is only possible because of Brexit. I think the most important thing by far is that when we faced the pandemic—the greatest challenge outside war time—this country was able to move fast with an amazing vaccine programme because of its independence, which reduced deaths, freed up our economy and allowed us to reopen and get growing again.

[Hywel Williams (Arfon) (PC)]

Today, the Bloomberg UK scorecard reports that, relative to London, life has got worse in areas that voted to leave the EU. That includes Ynys Môn, where the 2 Sisters factory has announced that it is closing in March, with 730 people losing their jobs—many of them from my Arfon constituency. There is no point in the Minister blustering with excuses about covid and Russia; that company says plainly that Brexit is partly to blame. No more excuses and apologies; what is the Minister going to do about it?

[James Cartlidge]

I am sorry to hear that. I do not know the specific circumstances. Obviously, we want to see strong investment and growth in this country, particularly in manufacturing. I can tell the hon. Gentleman that, as he is aware, unemployment is about the lowest it has been for decades in this country—we are very proud of that fact. But where there are challenges, we want to look at them, and if he writes to me with the details of that case I will happily look into it.

--- Later in debate ---

[Mr Speaker]

Order. The hon. Gentleman is an elder statesman of this House. I am sure he can be pleasant if he really tries. I do not think that kind of question does this Chamber any good.

[James Cartlidge]

The hon. Gentleman mentions defence, but he might want to explain to his constituents why, at the last general election, he backed the right hon. Member for Islington North (Jeremy Corbyn), whose policy would have had us leave NATO and undermine the nuclear deterrent.

We have stood by the people of Ukraine in the face of a real war. We have not deployed into the theatre, but we have done everything possible short of that, including training the Ukrainian army since 2015. So yes, I will tell the hon. Gentleman’s constituents the truth: they should be proud of what this country is doing for the people of Ukraine.

[Clive Efford (Eltham) (Lab)]

I wonder whether the Minister thinks that the sanctions against Russia are having the desired effect. If he thinks that they are, as I suspect he does, can he explain why the IMF predicts that Russia will fare much better than us?

[James Cartlidge]

I am happy, once again, to refer to what the IMF said. At this morning’s press conference, Pierre-Olivier Gourinchas, the IMF’s economic counsellor, confirmed

“the good news: the UK economy has actually done relatively well in the last year. We’ve revised”

growth

“upwards to 4.1%...that’s one of the highest growth rates in Europe”.

[Alison Thewliss (Glasgow Central) (SNP)]

The Minister talks about other countries, but the reason why things are so bad in the UK is squarely down to the impact that Brexit is having on the economy—a Brexit that Scotland did not vote for. Can he tell me how piling austerity on top of the austerity that has already taken place over the past decade will help us out of this economic crisis that the Tories have created?

[James Cartlidge]

It is astonishing that the hon. Lady would say that all our problems are solely down the Brexit. We have record energy bills. In the last year, as a country, we have had to find an additional £150 billion to fund energy because of the invasion of an independent sovereign country by Russia. That was not our fault, and nor was the pandemic—[Interruption.] She talks about austerity. We put in place £400 billion of support during the pandemic, and almost £100 billion of cost of living support and help with energy bills. That is not austerity. I will tell the House what it is: the United Kingdom Treasury backing every single part of the United Kingdom.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Wages in the north-east are 3% lower than when Labour left office, and households have lost £11,000 in wage growth under the Conservatives. Now, according to the IMF forecast, we will get poorer still, as prices rise and the economy contracts because the Conservatives have crashed it. Did the Minister come into politics to make people poorer? If not, is it not time for a Labour Government to deliver prosperity for the British people?

[James Cartlidge]

I am not sure whether the hon. Lady was here for my maiden speech—I entirely recognise that she may not have been—but I said:

“I am a one nation Conservative,”

because I believe in

“not going back to dark and divisive days of high unemployment.”—[Official Report, 3 June 2015; Vol. 596, c. 636.]

And here we are, with the lowest unemployment in almost 50 years.

On regional earnings specifically, I can confirm that pay has grown faster in every region outside London since 2010. That shows that we are succeeding in our levelling-up agenda.

[Ellie Reeves (Lewisham West and Penge) (Lab)]

The IMF chief economist highlighted rising mortgage costs as a central issue facing the UK economy. I have heard from countless constituents who are fearful of losing their homes when their fixed rates come to an end, and others whose dreams of getting on the property ladder have been snatched away. What guarantees can the Minister provide that interest rates will get back to the levels seen before the disastrous mini-Budget?

[James Cartlidge]

The hon. Lady is an experienced colleague. She is well aware that we have an independent Bank of England, and interest rates are its responsibility. The crucial thing is that we need to work in partnership with the Bank, and we do that by ensuring that fiscal policy does everything possible to support a stable framework in which inflation falls. That is why we have set a target to halve inflation, and if we do that, interest rates will be lower than they would otherwise have been.

[Ruth Jones (Newport West) (Lab)]

The news from the IMF this morning is deeply concerning. Small businesses are at the heart of the local economy in my constituency. Why does the Minister think the Federation of Small Businesses is reporting that confidence of small business is at its third lowest level since the federation started tracking it?

[James Cartlidge]

The hon. Lady is right to mention small businesses, which make such an important contribution to our economy. My message to small businesses is that we have put in an enormous amount of support to help them with energy costs, including the £18 billion energy bill relief scheme over the past six months, and we will continue to support them from April onwards. Of course, the best way to support them is to provide a stable platform for growth, and that means keeping inflation under control. That is the great challenge that we face, and it is why, as the Chancellor said on Friday, the greatest tax cut we can provide is reducing inflation. That is what we are committed to doing.

[Claire Hanna (Belfast South) (SDLP)]

The UK’s economic decline, which was started by Brexit but exacerbated by the mini-Budget, is genuinely sad, and it hurts millions of ordinary, blameless people. At the moment in Northern Ireland, we have some protection through the protocol, which, although imperfect, has economic benefits, including dual market access, offering the potential to transform our traditionally sluggish economy. Many businesses are already benefiting from that, and more investment will follow if the UK Government commit to supporting the protocol and that is accompanied by a responsible devolved Government focused on skills and infrastructure.

Will the Minister commit to advocating in Cabinet for a pragmatic EU-UK deal? If not, will he acknowledge that if the protection of the protocol is removed, more and more people in the centre ground in Northern Ireland will ask, “When can we leave this Brexit madness through an agreed, dynamic and inclusive new Ireland?”

[James Cartlidge]

Of course, the hon. Lady knows about the work that is happening across Government in respect of the protocol. She talks about our “economic decline”, but let me be absolutely clear: since 2010, the UK has grown faster than France, Japan and Italy. She knows that, as I said earlier, 14 EU countries have higher inflation than we face at the moment. These are global challenges that we face, but we have the strengths to get through them. One example, as the Chancellor pointed out on Friday, is that there are only three economies in the world with a £1 trillion tech sector. Tech is a huge part of our future economic growth. One of those countries is China, one is the United States, and the other, I am pleased to say, is the United Kingdom.

[Patrick Grady (Glasgow North) (SNP)]

There is a popular café not far from here on Regency Street. This morning, a sign in the window said: “Breakfast only today. Sorry, we are badly understaffed”. That seems to chime with the findings of UK in a Changing Europe that there is a shortfall of 300,000 workers as a result of Brexit and the end of freedom of movement. It seems that Brexit really does mean breakfast. Will the Government admit that their Brexit has taken the UK economy out of the frying pan and into the fire?

[James Cartlidge]

I do not know the specific circumstances of why the café the hon. Gentleman refers to is struggling to recruit; I have no specific knowledge of it. I am sure it offers a wonderful breakfast when it is able to do so. What I can say is, talking in aggregate, and as is our slogan, we are proud to have almost the lowest unemployment for the best part of 50 years. It does present challenges when we have a tight labour market. That is why we think the best way forward is to ensure that we have the apprenticeships, skills and training to deliver the workforce to meet our growth ambitions.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

The Minister continues the Tory playbook of excuses—global headwinds, global challenges, other countries having high inflation, Putin’s illegal war and the pandemic—but the reality is that the UK is the only G7 country facing a recession this year. Is that due to Tory incompetence, or is it the Brexit dividend?

--- Later in debate ---

[James Cartlidge]

I was clear about the challenges this year in respect of inflation, which is why we need to have fiscal discipline. That is not something the Scottish National party has the slightest understanding of, because I only ever hear SNP Members ask for more spending and more tax cuts—all unfunded. Meanwhile, their fundamental policy, were they to be independent, is to have a currency without a lender of last resort. That is an extraordinary proposition for economic instability, so we take no lectures from them. We have done everything possible to support people in every part of the United Kingdom, including Scotland.

[Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)]

I suspect there is not much hope of significantly boosting overall productivity unless we deal with the huge geographical wealth imbalances across the UK. What consideration has been given to using the so-called Brexit freedoms? In the case of Wales, that could involve devolving VAT and corporation tax to empower the Welsh Government to get on with the job of boosting the Welsh economy. If these powers—the so-called Brexit freedoms—are not going to be used, is the Welsh economy not far better off back in the European single market and the customs union?

[James Cartlidge]

The hon. Gentleman knows there is enormous benefit to Wales from being part of the United Kingdom. I have set out the many ways that we are boosting this country, and I gave the example of the changes to Solvency II regulations. They will hopefully see a significant increase in infrastructure investment, which will be of massive benefit to every part of the United Kingdom, including Wales.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Often it is the retail and hospitality sectors that are hit the hardest during economic slowdown, particularly companies trading in non-essential goods and services. What specific support is being considered for such businesses to ensure that redundancies are minimised and jobs are protected?

[James Cartlidge]

The hon. Lady makes a very good substantive economic point, which is that when inflationary pressures are higher, as they are at the moment, it is discretionary consumption that comes under pressure—and that means, for example, demand in pubs and shops and so on. I can confirm that we have taken huge steps to support hospitality, as we did in the pandemic. We recently announced that the 50% reduction in business rates would be extended by another year and go up to 75%. I announced in December a six-month extension to the freeze in alcohol duty, but hospitality is an important sector that is creating jobs, and we want to see what more we can do to support it.

[Mr Speaker]

To complete the urgent question, I call Jim Shannon.

--- Later in debate ---

[James Cartlidge]

As ever, the best is saved for last. The hon. Gentleman is absolutely right to continue to be a stalwart champion of SMEs and small businesses in his constituency and, indeed, in Northern Ireland. That is why we are focused on growth in the whole United Kingdom. Underpinning that, however, has to be fiscal stability and, ultimately, falling inflation. That is why the Prime Minister has set the target to halve inflation. To get that down would be the best thing for consumers, for small businesses and for our whole country.

Wagner Group: Sanctions Regime

James Cartlidge Excerpts

Wednesday 25th January 2023 Commons Chamber

[Mr David Lammy (Tottenham) (Lab)]

(Urgent Question): To ask the Secretary of State for Foreign, Commonwealth and Development Affairs if he will make a statement on reports that the UK Government assisted Wagner Group head Yevgeny Prigozhin in circumventing the UK sanctions regime.

[The Exchequer Secretary to the Treasury (James Cartlidge)]

The war in Ukraine, as we all agree, is a barbaric, illegal incursion into a sovereign nation by another. It has resulted in tens of thousands of deaths, mass displacement and an ongoing humanitarian catastrophe.

We will always stand up for our friends and allies, and we are proud to have led the world’s response, in partnership with our allies, in supporting Ukraine in its fight against Putin’s aggression. We will deliver tanks to roll back any Russian advance, we continue providing aid to help Ukrainians as they defend their homeland, and we have unveiled the most stringent sanctions on any country at any time in our history. We want to use economic sanctions to starve Putin’s war machine and put direct pressure on every individual involved in the decision to go to war and continue to make war on Ukraine.

In response to the question that has been asked today, I should say that it is a long-standing custom that the Government do not comment publicly on individual cases. It would not be appropriate to break that custom, even in a case as serious as this one, in which there is obviously public interest. However, I want to outline the general approach taken to date by the Treasury’s Office of Financial Sanctions Implementation in cases in which persons designated under sanctions seek licences for legal fees, and how that has been followed, and the strong constitutional reasons for that.

Within the sanctions regime broadly, because everyone has a right to legal representation, it is possible for frozen assets to be used to pay for that legal representation. OFSI grants licences to allow sanctioned people to cover their own legal fees, provided that the costs are reasonable. To be absolutely clear, decisions on the issuance of licences for legal fees are largely taken by OFSI officials in line with standard practice. The principles and guidance for assessing these applications are long-standing and have been published for a number of years. Applications are assessed solely on a costs basis.

As the UK is a country with checks and balances, it is right that the relevant court, rather than the Government, should decide the outcome of a case on the substantive merits. However, I can confirm that in the light of recent cases, and related to this question, the Treasury is now considering whether this approach is the right one and whether changes can be made without the Treasury assuming unacceptable legal risk, while ensuring that we adhere to the rule of law. In advance of that, I know that the entire House shares the same goal: to support Ukraine and see all those behind the invasion punished for their complicity. The Government will continue to take a hard line on all those responsible.

[Mr Lammy]

I think the whole House will be shocked at the evasiveness that we have just seen from the Minister, given the seriousness of this case.

For years, the Labour party has been calling for the Government to clean up the London laundromat effectively and stop London homes being used as bitcoins for kleptocrats. For months, the Opposition have stood shoulder to shoulder with the Foreign Office in co-ordinating sanctions against Putin and his inner circle. But yesterday we found out that the Treasury, which was then under the leadership of the current Prime Minister, issued special licences that allowed Yevgeny Prigozhin to circumvent sanctions issued before Putin’s illegal invasion of Ukraine.

The Government appear to have granted a waiver for a warlord that enabled him to launch a legal attack on a British journalist. This is a perfect example of a SLAPP—a strategic lawsuit against public participation, designed to silence critics through financial intimidation.

Prigozhin is one of the most dangerous and notorious members of Putin’s inner circle. The Wagner Group, which he leads, is responsible for appalling atrocities in Ukraine and around the world. If the now Prime Minister’s Treasury had any hand in alleviating pressure on Prigozhin, I am sure every hon. Member would agree that that would be absolutely unconscionable. I ask the Minister to answer these questions for the benefit of the whole House. Did a Minister authorise the granting of a licence or exemption to Prigozhin? When did Ministers become aware of this incident and what actions have they taken? Will the Minister commit today to an independent investigation of this controversy? Will he commit to urgently review the law regarding SLAPP suits so that oligarchs and warmongers cannot bully and harass journalists and critics? When will the Government introduce restrictions on the provision of legal services to Russia, as the European Union already has?

[James Cartlidge]

I am grateful to the right hon. Gentleman: he takes us back to when I stood opposite him in our Ministry of Justice days.

I am not being evasive: I am standing in front of the House of Commons to answer the question. The right hon. Gentleman mentioned the Prime Minister, and he is right that my right hon. Friend was Chancellor of the Exchequer at the time. I shall explain the process. I am not going to comment on the individual case, but without prejudice to it and talking about the general situation that pertains to how OFSI considers such cases, there is a delegated framework whereby decisions on legal fees for persons designated under all the sanctions regimes are routinely taken by senior civil servants. I want to be clear on that. We are not aware of any case of legal fee decisions under any of the sanctions regimes being taken by a Minister. I want to be clear with the House on that.

The point about SLAPPs is really important. I was at the Ministry of Justice when it was a live issue. It was first raised in a Backbench Business Committee debate by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), in conjunction with the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), and I responded to that debate for the Ministry of Justice. Let me set out what we are doing. We have been clear as a Government that SLAPPs represent a clear abuse of the legal system, as they rely on threatening tactics to silence free speech advocates who act in the public interest. That is why it is often called lawfare. We ran a call for evidence on strategic lawsuits against public participation and libel reform from March to May 2022 in light of reports that Russia and its allies might be funding litigation against free speech in the UK. We published our response to the call for evidence on 20 July 2022, having closely analysed 120 responses from media, legal and civil society professionals, and we are committed to tackling SLAPPs.

I can confirm that targeted anti-SLAPP reforms will include a statutory definition of SLAPPs, an early dismissal process and costs protection for SLAPPs cases. The Government have committed to primary legislation to make those reforms a reality as soon as parliamentary time allows.

[Alicia Kearns (Rutland and Melton) (Con)]

I understand that the decision was made by civil servants. Will my hon. Friend commit to considering whether we need to introduce ministerial oversight and how quickly that should be done? It is gravely concerning that no civil servant thought that this might need political oversight or some sort of political intervention. Will my hon. Friend also consider the proscription of the Wagner Group, which is a state terrorist organisation responsible for war crimes around the world?

Finally, I have been disappointed by the Government’s response to my multiple written questions about the Wagner Group and the new centre it has set up in Serbia—it is an enormous installation. We are seeing heinous activities in the Balkans, especially around the illegal Republika Srpska day that took place. So my asks are introducing ministerial oversight; looking at the Wagner group in Serbia and putting pressure on the Serbian Government; and finally proscribing that organisation.

[James Cartlidge]

My hon. Friend the Chair of the Foreign Affairs Committee speaks with great expertise on these matters. She makes some points that are for other Departments to consider, but I will ensure that they are fed back. On the point about the specific process in relation to OFSI, I will not comment on the individual case, but there is a general point about seeking clarification. I can confirm that we will undertake an internal review to see how such cases are considered in the future, and we will say more on that in due course.

[Mr Speaker]

I call the Scottish National party spokesman.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Despite the Minister’s gymnastics on this issue, it is clear that there are still serious and systemic links between the UK Government and Russian political elites. In 2021 the operations, tactics and human rights abuses of the Wagner Group were well known, and the EU and the UK imposed sanctions on Yevgeny Prigozhin, as the Wagner Group leader, for that reason. These revelations present a serious and immoral disregard for human rights obligations and due process at the heart of the Minister’s Government, and all this took place on the current Prime Minister’s watch, as he was Chancellor at the time.

Will the Minister tell us what advice, legal or otherwise, prompted the Treasury to make Prigozhin’s activities possible? It is not beyond his capability—legal or otherwise—to tell us who made the decision to override that. What actions will his Government now take to ensure, as a result of these revelations, that the Prime Minister’s promised

“integrity, professionalism and accountability at every level”

will be followed through?

[James Cartlidge]

I think that the hon. Gentleman submitted a similarly worded urgent question this morning, and obviously I respect that point, but there are no gymnastics here; I am merely setting out the position.

The hon. Gentleman asked about legal advice and so on. Within the sanctions regime broadly, because we are a country with the rule of law and everyone has a right to legal representation, it is possible for frozen assets to be used to pay for that legal representation. This is about sanctioned individuals. The Office of Financial Sanctions Implementation grants licences to allow sanctioned people to cover their own legal fees provided that the costs are reasonable. I should make it clear that decisions on the issuance of licences for legal fees are not, and should not be, political, and are largely taken by officials in line with standard practice. As I said a few moments ago, we are not aware of a case relating to legal fees under any of the sanctions regimes in which a Minister took the decision.

[Mr David Davis (Haltemprice and Howden) (Con)]

I welcome the Minister’s assertion that there is to be a review of this approach, but I ask him to make it quick. Even the Treasury’s press release today indicates a level of misunderstanding on the part of the officials, claiming a fundamental or absolute right to legal representation. Of course you have a right to representation if you are defending yourself in court, but there is no fundamental right to use legal representation to destroy someone else and shut down free speech.

[James Cartlidge]

As my right hon. Friend knows, I responded to his Backbench Business debate. He has been incredibly consistent in calling for actions on these points, and I respect that very much. However, I do think that the right to legal representation is a fundamental tenet of our democracy, which can mean—I am not commenting on the specific case—that individuals whom we find distasteful have a right to legal representation. Let us not forget that even at the Nuremberg trials, people who had committed the most heinous crimes in the history of the western world were legally represented.

[Dame Margaret Hodge (Barking) (Lab)]

I have to say that I had never seen such a case of lack of professionalism, lack of integrity and lack of accountability as this one. It absolutely astounded me: I thought it was unbelievable.

Let me say to the Minister that in terms of the way in which such matters are decided, this is not an isolated case. Petr Aven, for instance, has been given a licence, and according to the press it is thought that he will be able to spend up to £600,000 a year on so-called household expenses which include buying and selling Bentley cars and other luxuries. That is just outrageous. By the time the sanctions stop, the resources—the sanctioned assets—will have disappeared.

Let me also say to the Minister that this issue of individual confidentiality does not play here. The Foreign Office publishes a list of the names of the individuals concerned. I therefore think that we have the right to know what went wrong in this particular case, and that the Minister should report to Parliament. I welcome the fact that a review of the OFSI regime is taking place, but that too should be reported to Parliament.

Finally, may I ask the Minister for a commitment that the legal fees general licence will not be rolled over beyond its expiration date of 27 April 2023?

[James Cartlidge]

I have previously answered an urgent question, tabled by the right hon. Lady, on a matter relating to dividends in Russia, and—again—I respect her consistency in respect of a range of points that relate to this issue in one way or another. However, as she knows, I cannot go into the details of the specific case that she has mentioned. There are all kinds of reasons for that, and I think it important that we preserve it. I may be wrong, but I suspect that it would continue under any future Government, because there is very good reason for it. That is why we talk about the sanctions regime in aggregate rather than discussing individual confidential cases.

If we take the overview, we see that this country is doing everything possible. Our position on Ukraine is that we are not directly deploying our armed forces into the theatre, so we have to use every other lever at our disposal, including sanctioning more than 1,200 individuals and 120 entities and freezing assets worth £18 billion. It is a very ambitious sanctions regime, and we should be proud of what we are doing as a country to support Ukraine. We have played a key role in helping it to withstand the Russian invasion, although of course we recognise there is more to do.

[Bob Seely (Isle of Wight) (Con)]

I am not going to talk about any individual case. I know that the Government are doing very good work on the Economic Crime and Corporate Transparency Bill and the Bill of Rights, and—certainly on this side of the House—we all support that and recognise its importance.

I want to talk specifically about the SLAPPs primary legislation and where it will be. If it is to be in the Bill of Rights—as has now been indicated to me—rather than being a separate law, that may limit the scope of what we can do about SLAPPs. It may not cover all the stuff that is needed to cover the SLAPPs and the lawyers who engage in this practice, the SLAPPers. We need separate primary legislation, a SLAPPs Bill like the ten-minute rule Bill that I introduced yesterday. A gold-standard, best-practice SLAPPs Bill has been written for me, which the Government can take on or allow me to introduce. It covers a little bit of privilege, it covers the private investigator market, and it is broad enough to cover all the abusive SLAPP practices that will not be covered in the Bill of Rights. Will the Government please consider this course of action, as the most sensible course to ensure freedom of speech and a free media ?

[James Cartlidge]

My hon. Friend speaks with huge passion about these matters. Only yesterday, as he said, he presented a ten-minute rule Bill relating to this issue. He will appreciate that there are issues relating to parliamentary time, and that this is above my pay grade. I feel very strongly that we have done as much as we can on SLAPPs, but we want to go further, because we need legislation. I said at the end of the Backbench Business debate—my hon. Friend, of course, spoke in it—that I had heard what was said, and that we would now act. The Ministry of Justice took that forward; we had the call for evidence, and we have responded to it. At present, however, our position is, I am afraid, that we will commit ourselves to primary legislation as soon as parliamentary time allows. I cannot say more than that at this moment, but I am aware of how strongly my hon. Friend feels about the issue.

[Sir Chris Bryant (Rhondda) (Lab)]

I am sorry, but this is so complacent, and the Government have been systematically complacent about the issue of sanctioning individuals for the last three years. The Foreign Office was not prepared: it did not have a proper sanctions regime in place. We are sectioning only 20% of the people who have been sanctioned by the United States of America, although I have no idea why. Then we allow people to sidestep sanctioning. What the Minister is saying today is basically endorsing what the Treasury did in relation to this particular case, which gives a green light to those people to do it again and again and again. Alisher Usmanov, for instance, is sidestepping sanctioning by a completely different process.

It is time the Government decided as a whole that we are going to do this, and we are going to do it properly. I actually think that we should listen much more to our Back Benchers, because the whole House is united around this and the Government are too complacent.

[James Cartlidge]

The hon. Gentleman is wrong to say that I am endorsing any particular action. I have made it very clear that I am not commenting on a specific case. What I have said relates to the general regime that pertains, and is without prejudice in respect of any specific case. The hon. Gentleman also said that we were not prepared. He may not be aware of Operation Orbital, but we have been training Ukrainian soldiers since 2015: 22,000 Ukrainian soldiers.

[Sir Chris Bryant]

We are talking about sanctions.

[James Cartlidge]

Well, I am talking about Ukraine, because I think that that is the key issue here. It shows we were preparing for what happened, although, obviously, the situation was unprecedented when Ukraine was invaded. We are clear about the fact that our officials and Departments worked as fast as possible to bring forward an ambitious range of sanctions—which of course happened in March last year when the Prime Minister was Chancellor—and they are having a significant impact on Russia and its economy.

[Harriett Baldwin (West Worcestershire) (Con)]

Although we cannot discuss a specific case, “Wagner Group” is written on the Annunciator and I wanted to add a further question about the regime that we are operating within the Treasury. I urge the Minister to go further than he committed to doing in response to my hon. Friend the Member for Rutland and Melton (Alicia Kearns), the Chair of the Foreign Affairs Committee, because the Wagner Group is clearly such an evil organisation and what it is doing in Ukraine and across north Africa is so evil. Will the Minister today, from the Dispatch Box, ask OFSI officials to have a red flag system whereby anything related to the Wagner Group is flagged up individually to the Minister responsible?

--- Later in debate ---

[James Cartlidge]

My hon. Friend speaks with the expertise of her position as Chair of the Treasury Committee, and I hear what she is saying. I have said that the internal review will take place. She is more than welcome to write to me in her capacity as Chair about that, and I will reply in due course.

My hon. Friend makes the point that this question is about the Wagner Group but that we are saying that we are not commenting on the cases of specific individuals. As a Government, we are absolutely clear:

“The Wagner Group is a Russia-based private military company”.

It has organised the recruitment, co-ordination and planned operations of mercenaries participating in military operations in Ukraine. It is responsible for engaging in and providing support for actions that destabilise Ukraine and undermine or threaten the territorial integrity, sovereignty or independence of Ukraine.

That is why the most important question is: what are we doing to support Ukraine? Opposition Members have mentioned the Prime Minister, so let us talk about what he did as Chancellor. He was the one who put in place £2.3 billion of military support for Ukraine, which helped the Ukrainians to defend themselves against Russia so that the fight is still being fought to this day.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

This is outrageous. The Minister has just confessed to the House that sanctions implementation is out of ministerial control. The result is that a waiver was issued for a warlord to sue an English journalist in an English court.

Let us just be clear about the sanctions indictment that this Government issued on 31 December 2020. We sanctioned Prigozhin because he was operating

“a deniable military capability for the Russian State.”

Ten months later, civil servants under the Minister’s control signed off £3,500 for business-class flights, £320 for luxury accommodation at the Belmond Grand Hotel Europe, £150 for subsistence and more. Let us be clear about what the leaked emails from that conversation show. They show that Prigozhin’s lawyers wanted to sue Eliot Higgins and Bellingcat because

“public rebuttal of the article…is one of the reasons for his sanction designation”.

The Minister signed off money for a warlord to prosecute an English journalist in an English court, to undermine the sanctions regime that he is responsible for. This is outrageous and it has to change now.

[James Cartlidge]

The right hon. Gentleman knows perfectly well that I did not, in any way, confess that Ministers have no control over the sanctions regime. What I stated very clearly is that in respect of OFSI consideration of legal fees under the sanctions regimes, these decisions are routinely taken by senior civil servants under a delegated framework. That is simply a statement of fact. On the claims for travel and other expenses, let us be clear: under the legal expenses derogation, OFSI is only permitted to issue a licence where the costs, including those relating to disbursements, have been deemed to be reasonable. OFSI therefore scrutinises the hourly fees charged by fee earners, the hours incurred and any other associated costs. It is the responsibility of the applicant to demonstrate to OFSI’s satisfaction that this statutory reasonableness test is met. If it is not satisfied, OFSI will not be able to issue a licence.

[Sir John Whittingdale (Maldon) (Con)]

Does my hon. Friend agree that this is just the latest example of a dodgy Russian oligarch or similar using legal action to attempt to shut down legitimate journalism? I strongly welcome what he has said about the Government’s intention to act against SLAPPs, but will he commit to publishing the detail of that legislation as soon as possible? Will he look for a means by which it can be introduced, as my hon. Friend the Member for Isle of Wight (Bob Seely) said, as a stand-alone Bill, which would be preferable? If that is not possible, will he look to use other vehicles, possibly relating to human rights? The media Bill might well provide a vehicle for acting to protect journalism. We need this legislation as fast as possible.

[James Cartlidge]

I absolutely hear what my right hon. Friend is saying. He is another colleague who has spoken consistently on these points. He knows that when I was at the Ministry of Justice we acted quickly to bring forward measures on SLAPPs; first, we had the call for evidence and then we gave our response. He will appreciate that the parliamentary timetable is above my pay grade, but I hear what he says and I will ensure that, in considering the passage of that legislation, the appropriate stakeholders will respond to him. In the meantime, I want to be clear that SLAPPs are something on which we want to see progress.

[Layla Moran (Oxford West and Abingdon) (LD)]

Let us remind ourselves who we are talking about here: the head of the Wagner Group, which is responsible for egregious human rights abuses not just in Ukraine, but in Mali, Sudan and Syria. Absolutely it should be proscribed, and quickly; today is President Zelensky’s birthday and what better gift could we give him? This review is going to take time, so will the Minister assure the House that in the interim a Minister will look at every case until the regime is cleared up? Will the results of this review come to this House so that parliamentarians can scrutinise it? Clearly, the Treasury and the Ministers have not been getting this right, have they?

[James Cartlidge]

I say to the hon. Lady that she has many ways at her disposal to scrutinise the Government: as she knows, we have Treasury questions coming up; there are Foreign, Commonwealth and Development Office questions; we have recently held debates on Russia, including the one on Russia’s strategy; and a number of statutory instruments have been passed in relation to the sanctions regime. I am sure there will be many other opportunities to scrutinise the Government. As I say, we have only recently taken the decision to hold this internal review, but I will say more on it in due course.

[Mr Philip Hollobone (Kettering) (Con)]

I am sure that all my constituents would regard the Wagner Group as an evil organisation, and its activities in Ukraine, the middle east and Africa are abhorrent. I am sure that my constituents would also support its proscription. In the meantime, will the Minister tell my constituents how many Russian individuals and entities have been sanctioned, what is the value of those sanctions, and what is the value of the economic sanctions that have been imposed against Russia?

[James Cartlidge]

I totally agree with my hon. Friend, as we all do, about the nature of the Wagner Group. That is not the point. We do have to have due process, because of the right to legal representation. I believe that, to date, we have sanctioned about 1,200 individuals and 120 entities, and the latest figures show that more than £18 billion of Russian assets have been frozen by our sanctions and that three quarters of foreign companies have reduced operations in Russia. Of course we have no quarrel with the Russian people, although this will have an economic impact. As I said, we are not taking a direct military posture in Ukraine, but we are doing everything else we can, which is why we have to use every tool at our disposal, including a strong economic sanctions package.

[Holly Lynch (Halifax) (Lab)]

The Minister has said that it is officials who would routinely take these types of decision, but I hope he will agree that we cannot ever allow it to become routine for us to allow some of the very worst sanctioned individuals to weaponise British laws to go after British journalists. He said that we are going to have a review

“in the light of recent cases”.

Will he confirm whether he is looking into others?

[James Cartlidge]

Although I cannot comment on individual cases, I absolutely agree with the hon. Lady that we should be looking at lawfare. We will be bringing forward that legislation. I do think we have acted quickly on that, but of course it is a complex area of law that we need to get right. She reinforces the point that many colleagues in all parts of the House want to see that legislation come forward, and I have very much noted it.

[Rehman Chishti (Gillingham and Rainham) (Con)]

As a former Minister for sanctions, I agree with the Minister that the UK had led the world in taking a firm, decisive, co-ordinated sanctions approach with our international partners to bring individuals to account for what is going on in Ukraine. This case highlights an issue relating to the granting of licences for legal fees, so how many such cases are there overall? We have sanctioned more than 1,000 individuals, but how many legal licences has the UK granted overall? We co-ordinate our sanctions approach with the United States and the European Union, so how many licences have they given? In this case, was there any co-ordination input from our counterparts in the US? I agree with the Chair of the Foreign Affairs Committee that things should be referred back to the Minister for decision, rather than having it delegated to an official. What exact date are we looking at for the review?

[James Cartlidge]

My hon. Friend has expertise as a former sanctions Minister. Obviously, I cannot speak for the United States Government but only for ours. I do not have the exact figures, but I will look into it and write to him. To be absolutely clear, I stated a fact when I said that decisions specifically on legal fees under the sanctions regimes are routinely taken by senior civil servants. I said that I was not aware of any case where the Minister had taken a decision. But under our constitution, I am standing here because, ultimately, Ministers are responsible for Department and Government policy. Nevertheless, it is entirely right to make a point about how these things work operationally. As I said, that is correct. It is a delegated framework for decision making.

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

It seems that the Wagner Group is yet another example of the litany of disaster that sustains what seems to be Londongrad. On the back of this appalling situation, can the Minister update the House on when the British Government will not only introduce legislation on limited partnerships but bring about the review that he talks about?

[James Cartlidge]

The hon. Gentleman talks about Londongrad; he knows that we are taking extensive measures on economic crime. Let me say to the Members of the Scottish National party who come every time and lecture us on the sanctions regime and so on that the greatest gift we could give to Putin would be for this country to engage in unilateral nuclear disarmament. It is the most extraordinary position to be lectured by the SNP on standing up to Russia, because if we took its advice and adopted its policy, we would undermine NATO and all our efforts to defend ourselves.

[Sir James Duddridge (Rochford and Southend East) (Con)]

Unfortunately, the Government’s response to the Wagner Group has been inadequate, in part because the matter falls between the FCDO and the Treasury. A number of colleagues, including the Chair of the Foreign Affairs Committee, my hon. Friend the Member for Rutland and Melton (Alicia Kearns), have called for that organisation to be proscribed. Others, including me, have done so for different reasons, whether it be Serbia, Africa or another conflict area. Will the Minister bring together the two Departments, and look at proscribing the organisation and at the impact that will have on the efficiency of the sanctions regime?

[James Cartlidge]

My hon. Friend has considerable experience as a Foreign Office Minister. He will be aware of how these things work. I am happy to give that reply. I believe that the decision would be for the Foreign Office, but he is right that we must work across Government, and I will write to him on that point.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

As well as the Wagner Group’s murderous activities in Ukraine, I am aware, as chair of the all-party parliamentary group for Africa, of its activities across that continent. It has mercenaries in Mali, the Central African Republic, the Republic of Mozambique and Libya. It is targeting civilians, actively spreading disinformation and propping up autocratic regimes, all to defend Putin’s footprint and ambitions in the continent. Is the Minister saying that it is acceptable for someone to make money from those evil activities, be sanctioned and then get a licence from the British Government to evade those sanctions in order to defend themselves legally? Regardless of what he is saying, what message does that send to our allies across the world?

[James Cartlidge]

Of course we are not saying that. We are saying that, whether we like it or not, there is a principle under democracy and the rule of law of the right to a defence. Therefore, we have a system in place under the sanctions regime to consider applications for legal fees to be paid from frozen assets. That is a statement of fact on how the system works.

[Anna McMorrin (Cardiff North) (Lab)]

We are continuing to sidestep sanctions. It is disgraceful that the Minister continues to defend that at the Dispatch Box. What message does it send to Ukraine and our allies that our own Treasury is helping one of Putin’s notorious warmongers evade sanctions? If he cannot tell us the number of exemptions and waivers that have been given to individuals, can he find out and commit to come to this House and publish those numbers?

[James Cartlidge]

The message to Ukraine is that this is a country that believes in the rule of law and democracy. That is why we support Ukraine. That is why the Prime Minister was in Ukraine recently, confirming that we will do everything possible to support them. That is why this country has made a greater contribution to support the brave people of Ukraine than any other country, bar the United States.

[Alison Thewliss (Glasgow Central) (SNP)]

I do not know if the Minister has had the chance to read Oliver Bullough’s book “Butler to the World”. There is a copy in the Library if he has not. I recommend it to him because it lays clear Britain’s role in facilitating this kind of lawfare. Oliver Bullough has asked:

“What chance have British journalists got when even our own government is prepared to roll the pitch for oligarchs keen to sue us?”

[James Cartlidge]

I repeat my earlier point about the actions we are taking on SLAPPs. We have already had the call for evidence and we will bring forward primary legislation.

[Andy Slaughter (Hammersmith) (Lab)]

Are the Government serious about tackling the use of SLAPPs? Threats of libel action by the Conservative party chairman over his tax affairs, use of the non-disclosure agreement by the Justice Secretary to silence journalists, and the Home Secretary’s attempt to stop the BBC reporting serious domestic violence by an agent of the security services when she was Attorney General, suggest that they prefer concealment over transparency.

[James Cartlidge]

Yes.

[Clive Efford (Eltham) (Lab)]

The approach the Government are taking, case by case they will not deal with specifics, is just an excuse not to answer questions on specific examples that we raise in this House. I know that the bar is very high, but there can be few of Putin’s allies more notorious than Yevgeny Prigozhin. How can the Minister come to the Dispatch Box and say that the decisions were made by a civil servant? How can there be no red flag on the file of someone of such notoriety to say, “Speak to a Minister”? When are you going to get on and do the job you were put there for?

[James Cartlidge]

The reason that we do not comment on individual cases is well-established. I expect that it would be exactly the same under any other Government. To be clear, the UK sanctions regulations do not exclude payments for any particular legal services from that permission. Excluding such payments can give rise to issues about access to justice. OFSI does not consider it appropriate for HM Treasury to effectively decide whether a case has sufficient merit to be permitted to proceed by deciding whether to issue a licence permitting legal fees to be paid. Such an approach would raise considerable legal concerns.

[Wayne David (Caerphilly) (Lab)]

The Minister has been asked on a number of occasions how many exceptions and waivers there have been over the last two years. The House is united. This is not a party political issue. We just demand that he answer that question. If he cannot do it now, can he provide the House with details in writing?

[James Cartlidge]

I said to the former sanctions Minister, my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti), that I would write to him. I will be happy to share that with other colleagues who have asked what information we are able to publish. I will look into that and write to colleagues who have raised that point.

[Dave Doogan (Angus) (SNP)]

It is very difficult to believe that a regime exists now where civil servants can make this decision, especially in the case of Yevgeny Prigozhin. Anyone with a passing relationship with a newspaper would have realised that enabling that to happen would compromise their Ministers, yet they did not have such discussions. Can the Minister assure us that he will review that? I do not want to hang a civil servant out to dry, but somebody needs to take responsibility for the decision. Does he find it a coincidence that, when one of the worst commercial war criminals went to find access to justice, he turned up in London?

[James Cartlidge]

I have merely stated the fact, and it is the case, that these decisions are routinely taken by senior civil servants. I also said that we are ultimately responsible. We, as Ministers, are accountable to Parliament. That is why we will conduct the internal review.

[Owen Thompson (Midlothian) (SNP)]

I would be grateful if the Minister could outline to us what it is about billionaire Russians such as Yevgeny Prigozhin and others that make this Government feel that they need special licences so much that they are able to dodge sanctions.

[James Cartlidge]

To be clear, we do not make any of these decisions with prejudice to the legal case that the individual is pursuing. They have a right under our law to have legal representation. What we have here is a process for considering applications to use frozen assets to fund legal fees in specific cases.

[Jim Shannon (Strangford) (DUP)]

I recognise that the Minister has responded and tried to address the questions. We recognise that the Government have at least made some efforts to do so. But in this urgent question the House has identified an anomaly concerning the Wagner Group, which, as everyone has said, is responsible for some of the most brutal crimes across the middle east and Africa. The House wants urgency—that is what we are all asking for. Can the Minister indicate the timescale for that to happen? When will the Wagner Group find that the loophole that it has identified can be closed?

--- Later in debate ---

[James Cartlidge]

This is not a loophole in relation to the Wagner Group. We are clear on all the issues about the Wagner Group. We have acted against it in so much as it is part of the military effort in Ukraine and we have supported Ukraine as far as we are able to, in supporting that military effort. What we are talking about here is a specific point, which is that there is a right to legal representation, so we have a process in place under the sanctions regime to consider applications to use frozen assets to fund legal fees, but as I have said, we will be reflecting on that and reviewing that process.

[Mr Speaker]

That completes that urgent question. Those who need to leave, please do so before I start the next one.