(8 years, 5 months ago)
Commons ChamberLet me make a little progress before I give way again.
We will go on driving down the budget deficit. We are down from borrowing £1 in every £4 when I became Chancellor to borrowing just £1 in every £14 next year. We will then be on to the security and good times of a budget surplus—a country earning more than it spends, and a generation that does not pass its debts on to its children and grandchildren. That is what we committed to do in the manifesto and what we were elected to do, and it is what this Budget delivers.
Finally, let me turn to the measures in the Budget that back enterprise and business. Again, I completely refute Opposition Members who say there is a choice between backing business and promoting social justice. We cannot have social justice without a strong economy, and we cannot have a strong economy unless we have a tax system that backs business and enterprise.
We inherited an unprecedented budget deficit. It is not just about controlling spending—the country has to earn more. Is it not the case that the only way to do that is to cut corporation tax and capital gains tax so that our entrepreneurs can go out into the world, compete and earn this country the living it needs?
My hon. Friend is absolutely right. Without a strong economy, we cannot have social justice, and we cannot have a strong economy without successful, vibrant businesses.
The reason I refer back to fitness for office is because many of us know the distress that has been caused to so many people over the past week.
The hon. Gentleman makes a very personal point about fitness for office on the day of a major terrorist attack. Will he withdraw his previous support for terrorist organisations that have attacked this country?
Mr Speaker, you heard me share the sentiments of the whole House on the issue of Belgium. To bring that into the debate as a political point at this stage is unacceptable. [Interruption.]
(8 years, 6 months ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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I am grateful to the right hon. Gentleman for that expression of support. He, too, has campaigned strongly on this issue for many years. This is a more general case; it is not exclusively about the Docklands Victims Association. Obviously, those victims are in my constituency, but many others across the country are also involved, and what we want to see is justice for them all.
I was exploring the possible ways forward. The first way forward would have been for the British Government to join a class action with the US Government in their claim for compensation. I would like to quote Mr McCue again. He said in response to a question from the hon. Member for Ribble Valley (Mr Evans):
“There was no reason why the British Government could not have, first of all, petitioned for the British citizens to be in it. There is nothing in American law preventing them from espousing a claim, which is the technical term for it, with another state to bring compensation for a class action. The Americans could have done it.”
A Mr Jury, another witness at the Northern Ireland hearings who was also representing victims, said:
“Can I add to that that the Libya Claims Settlement Agreement is a court-accepted statement of liability towards the UK victims? Under US law, there has been an acceptance of liability, and under judicial international comity, the UK courts would accept that anyway.”
Therefore there is, or at least was, the possibility of an international legal route to compensation, but my main question to the Government is why is there not, or why can there not be, a UK domestic route?
There have been reports that the UK Government have frozen Gaddafi or Libyan assets in UK banks. I suspect that the Treasury was behind that, which is why I have targeted the question in this debate at Treasury Ministers. The amount of funds is not clear. Some commentators suggest £900 million; others suggest that it runs into billions of pounds. That raises a number of questions for the Minister, of which I gave his office notice last evening. I must congratulate the Minister’s private office, because it was still emailing me at half-past 8 last night to try to get to the bottom of some of this.
First, do such frozen accounts exist and, secondly, what are they worth if they do exist? More importantly, there are international legal precedents that enable frozen assets of a terrorist or dictator—in this case, Gaddafi—to be used to pay compensation to victims, so my third and most important question, to which I will return at the end of my remarks, is why do the UK Government not go down that route?
A third route is now apparently being explored. An article in The Daily Telegraph on 16 January quoted the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Bournemouth East (Mr Ellwood), who, to his credit, attended the memorial service in my constituency two weeks ago, on 9 February. He did not tell me that he was coming, but it was good to see him there anyway, and other parliamentary colleagues. The article stated:
“Tobias Ellwood, a Foreign Office minister, told The Telegraph that he had met new Prime Minister designate of Libya, Fayez el-Sarraj, and raised the case for compensation with him in person.”
The hon. Gentleman was quoted as saying:
“We will certainly make the case with the Libyan government in order to pursue this as best we can.
As soon as there is a government to work with I am planning to facilitate bringing the victims’ groups and the Libyan authorities together. It is for the Libyans themselves to say whether or not there would be a case for a request for compensation.”
There are, therefore, three possible ways to compensate victims: join a class action in the US, use interest from frozen assets in the UK or get the new Libyan Government to cough up.
I thank the hon. Gentleman for initiating this debate, because it enables me to raise the case of Charles Arbuthnot, who is a constituent of mine in Holbrook and whose sister Jane, a 22-year-old WPC, was murdered in the Harrods bombing. I have had extensive correspondence with the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), and it seems to me that there is still not explicit acceptance that American citizens were compensated by the Libyan Government. Previously, there would be reference only to direct compensation, for example for the Lockerbie bombing, and not to compensation for those cases in which the Semtex was supplied.
I am grateful to the hon. Gentleman for that intervention. I know that this is one of the key issues that the Northern Ireland Affairs Committee is looking at, because evidence was given about the way the Americans secured compensation. That is why I am raising with the Treasury the question whether the frozen assets and the interest on them could be used to compensate the docklands victims, as well as the Harrods bomb victims and others from Northern Ireland. It is a key question.
The Canary Wharf bombing victims do not care which is best. All they want is to secure the justice that they have been denied for more than 20 years for them and for other victims. Victims are represented by other colleagues, a number of whom are here today. Just yesterday I had two emails about this. One was from the office of the hon. Member for Battersea (Jane Ellison) on behalf of Felicity Prazak, whose husband died on flight LN1103. The other email was from my hon. Friend the Member for Feltham and Heston (Seema Malhotra), who raised the case of Mina Jadeja, a victim of the Harrods bomb.
This is not, and has never been, about the money. However, media accounts of payouts for IRA members—for example, the reports on 30 January that £1.6 million was paid to a republican kidnap gang—can only add to and intensify the sense of injustice and frustration for the victims of the Gaddafi Semtex. Successive UK Governments have failed victims. I was a Minister in both the Tony Blair and Gordon Brown Administrations, and evidence to the Northern Ireland Affairs Committee suggests that the Blair Government were more interested in the glory of bringing Libya in from the cold, closing down its support for and sponsorship of international terrorism, opening up economic ties and securing UK business contracts.
I will come to that. As for the financial sanctions that are in place, an asset freeze means that the assets of the individual or entity must be frozen where those assets are. The funds continue to belong to the individuals and entities listed under the sanctions regime and are not seized or held by the United Kingdom Government. The funds remain frozen in the bank account they were in at the time of designation and, for individuals and entities subject to a full asset freeze, interest may be credited to those accounts provided that the interest is also frozen. The sanctions prevent any person from dealing with those funds or making funds available to the individuals or entities listed under the sanctions regime without a licence from the competent authority—in the United Kingdom, as the hon. Gentleman rightly identified, the competent authority is Her Majesty’s Treasury.
Access to frozen funds can only be licensed in accordance with the grounds set out by the United Nations and the European Union, and there are seven licensing grounds applicable to this sanctions regime. To summarise, the grounds allow for payments in the following categories: first, for the basic needs of the designated person; secondly, for the legal fees of that person; thirdly, for fees for the routine maintenance of frozen assets; fourthly, for the extraordinary expenses of the designated person; fifthly, for the satisfaction of judicial or administrative orders enforceable in the EU; sixthly, for humanitarian purposes; and seventhly, for obligations arising under contracts prior to the imposition of sanctions.
To clarify further, a Treasury licence would not compel a payment to be made, but would simply provide that the payment would not be a breach of financial sanctions. It is clear that none of the licensing grounds would allow the Treasury to select a frozen account at will and require that funds be paid from it to a third party.
I am conscience of the time, so if all three hon. Members will allow me, I want to ensure that I get through what I need to say. If time allows, I will of course be happy to give way.
Although the entities designated under the Libyan financial sanctions are generally ultimately owned by the Libyan Government, they are entities in their own right and are governed by boards of directors who make decisions about the use of their assets. If the Libyan Government came to an agreement with victims to pay compensation, and came to an agreement with individuals or entities that their frozen funds should be used to pay that compensation, the Treasury would be in a position to consider such an application for a licence under the current framework. However, depending on the licensing ground that applies, approval for granting the licence would also need to be obtained from the United Nations.
Although I very much understand and share the concern of hon. Members for the victims of the docklands bombing and other Gaddafi-sponsored terrorism, I am afraid that the legal framework relating to financial sanctions is focused on preserving the funds for the benefit of the Libyan people and does not allow the UK Government to use them as we wish, no matter how worthy or how important to us and to all hon. Members a cause may be. Indeed, the UN Security Council has repeatedly made clear its determination that, when sanctions are lifted, frozen assets must be made available to, and for the benefit of, the people of Libya. The Security Council has held that position in a series of resolutions going back a number of years.
The hon. Member for Poplar and Limehouse asked about the 2008 US-Libya compensation settlement. In May 2008, it became clear that the US and Libya were proceeding on a bilateral agreement to settle outstanding claims. The then Government made representations to the US and Libyan authorities to include UK claimants on the list of recipients. Unfortunately that proved not to be possible, mainly because international and US law does not allow the US to espouse the claims of foreign nationals. Furthermore, the Libyans made it clear that they had answered questions about their support for the IRA in 1995 and that they considered the matter to be closed.
Important questions have also been raised about the similarities and differences between this case and the case of the Lockerbie bombing, in which victims were paid compensation. I stress that there are important differences between the two cases. First, the Lockerbie bombing was an act of terrorism directly committed by agents of the Libyan state, not indirectly through IRA terrorists with Libyan supply.
If my hon. Friend will forgive me, I will continue.
Secondly, in the case of Lockerbie, the Libyans approached the US Government tacitly acknowledging their guilt for the atrocity. Thirdly, Gaddafi wanted something in return from the United States, namely readmission to the international fold, from which his actions had excluded him. Finally, the Lockerbie claims were supported by a UN Security Council resolution. Above all—this is important—it is highly unlikely that a future Libyan Government would acknowledge themselves as guilty in the same way as Gaddafi, the individual. The Libyans see themselves as victims of Gaddafi, not the bearers of his legacy.
We believe that the best approach in these difficult cases is to support and facilitate contact between victims and the relevant Libyan authorities so that claims can ultimately be settled directly. Unfortunately, the current political and security situation in Libya makes it difficult for victims, their families and representatives to pursue their claims. The Foreign and Commonwealth Office already provides facilitation support to victims, their families, legal representatives and campaign groups where it has been requested and is appropriate. However, it is a long-standing decision for the Government not to espouse private claims, so we do not provide funding for victims’ campaigns. As the hon. Member for Poplar and Limehouse may be aware, there has recently been important progress towards the establishment of a new Libyan Government. The Presidency Council has announced a revised list of Government Ministers, and the next step is for the House of Representatives to endorse that list and the Government programme. We urge the House of Representatives to do that without delay.
The hon. Gentleman may also be interested to know that the Foreign and Commonwealth Office Minister with responsibility for the middle east, my hon. Friend the Member for Bournemouth East (Mr Ellwood), raised the issue of redress for UK victims when he met the Prime Minister-designate in November 2015. I assure the hon. Gentleman that the Minister will continue to raise that issue in our engagement with the new Libyan Government, and he will encourage the Libyan authorities to engage with UK victims, their families and representatives, including those seeking compensation, once stability returns and our embassy reopens. The Minister will also meet UK victims in March, and I know that he will also be happy to meet the hon. Gentleman to discuss the issue in greater detail, if the hon. Gentleman would like to do so.
There is going to be time, so I will happily give way to the hon. Member for Belfast East (Gavin Robinson).
(8 years, 6 months ago)
Commons ChamberI will come on to the recommendations for future action, which cover my right hon. Friend’s point.
In due course; let me press on a little further.
As last week wore on, there was a growing sense of outrage at the Google sweetheart deal. Many felt betrayed by the Chancellor. We supported the Chancellor on the introduction of the diverted profits tax legislation to tackle firms using complex profit-shifting schemes to avoid tax. It was referred to as “the Google tax”. We learned last week that Google will not be paying a penny under that legislation.
We also supported the Chancellor in seeking international agreements on tackling tax avoidance, but we discovered at the weekend that Conservative MEPs had been directed by the Chancellor on at least six occasions to vote against the very tax avoidance measures being introduced by the EU that the Chancellor told us he was supposedly promoting.
(8 years, 6 months ago)
Public Bill CommitteesI will push on. I have a few more of those chocolate sweets I might give away. If successful, the Government will be going back on their own legislation and closing the renewables obligation for onshore wind a year earlier on 1 April 2016, a date that will not be lost on any hon. Members here. If successful, the Government will have adversely singled out the most cost-effective, low-carbon technology available to us, at a time when the Secretary of State herself admits that the UK is on track to miss its legally blinding EU obligation on renewable energy by an estimated 50 TWh hours, a shortfall of almost 25%.
The Government’s answer is ever more reliance on the EU emissions trading scheme—a scheme, as we have already heard while discussing clause 80, we need less reliance on in coming years, if we are to attain the most cost-effective pathway to our carbon budget commitments. So why is there an almost obsessive compulsion to attack one of the country’s most successful renewable forms of energy?
The only answer I can glean from the debate so far is that it boils down to a few ambiguous lines in the Tory party manifesto which it is fair to question. It says:
“We will end any new public subsidy for onshore wind.”
First, these are not public subsidies. Strictly speaking, the payments come out of bills, not the public purse. While the word “new” is also open to a broad interpretation, let us not forget that this is an existing, not a new subsidy—a subsidy that was already closing as part of the Energy Act 2013.
The Minister will also be aware of the huge amount of consensus and engagement with industry, proper consultation and pre-legislative scrutiny, that arrived at the 2017 wind-up day for the renewables obligation.
Will the hon. Gentleman, my fellow East Anglian MP, give way?
Is the hon. Gentleman suggesting that billpayers are volunteering that extra per cent?
I will come to the point about the cost to billpayers later in my speech. Even with the retrospective grace period the Government have announced, many renewables companies will be adversely affected. Michael Rieley, senior policy manager for Scottish Renewables, said:
“However, many of our members will be bitterly disappointed that ministers are not going to allow projects which have submitted planning applications to be given a grace period.”
More importantly, as I have mentioned already, this retrospective chop-and-change approach by Government is damaging investor confidence in the wider energy sector.
I assure the hon. Gentleman that this is merely an attempt to clarify or articulate the position from a legislative perspective. It remains our firm intention that the decision remains, as per policy, with local authorities and local people.
Although statements from Ministers in the House of Lords have indicated that the Government intend for modified consents to remain eligible, clarity on this in the Bill would remove any doubt and allow investments to proceed. Amendment (l) provides for cases where a planning permission was granted on or before 18 June 2015, but where that planning permission has been varied under the provisions recorded in sub-paragraph (ii). Permissions under section 73 of the 1990 Act or section 42 of the 1997 Act are in law new permissions, and without this provision such further approvals based on permission granted before 18 June would be shut out from receiving a ROC. Deemed planning permission issued with section 36 consents can be varied under section 73 or 42, but there is a need to refer to section 90 of the 1990 Act and section 57 of the 1997 Act because they will be engaged on an application to vary section 36 consent under section 36C of the 1989 Act.
Amendment (m) ensures that applications to vary an existing 1990 Act or 1997 Act permission that was granted on or before 18 June, that may result in an increased capacity which takes the total generating capacity of the station above 50MW and must therefore be done by way of an application for a section 36 consent rather than by way of a variation of the 1990 Act or 1997 Act permission, will still qualify for the grace period. Amendment (n) ensures that a project is still eligible for the grace period where a planning permission granted on or before 18 June 2015 is superseded by a subsequent permission granted after 18 June 2015 for a generating station of the same or lower capacity on the same site.
Amendment (o) is a new amendment to cover judicial review and statutory challenges relating to planning permissions granted on or before 18 June 2015. It envisages that the planning permission which is ultimately granted or confirmed following court proceedings can be accredited under the RO. How much capacity may come through the door as a result of the amendment that can be easily quantified by reference to any proceedings now in the court.
It is common practice within the sector for grid agreements to be varied by parties after initial agreement. Amendment (p) will clarifies that, provided a grid connection agreement is in place by 18 June, eligibility for grace periods will not be affected by any subsequent variations of that agreement. So far, Ministers have been unable to provide sufficient clarity that subsequent alterations or replacement of agreements would be eligible for the grace period. If the Government intend projects in those circumstances to proceed with construction and be accredited under the RO, that should be made clear in the Bill, for the avoidance of any further doubt and further delays. Amendments (q) and (r) are intended to make it clear that deemed planning permission is included within the definition of permission in the 1990 Act and the 1997 Act, and thus fall within the definition of planning permission.
Our amendments (s), (t) and (u) relate to new section 32LK of the Electricity Act 1989, inserted by Government new clause 2, which sets out the criteria for projects that would be eligible to meet the investment freezing condition. This condition is necessary—I thank the Minister for her stated intention of respect—because the way that the Government have chosen to close the RO a year earlier than planned through primary legislation has caused so much uncertainty that some investors cannot have stopped investment in onshore wind projects until the Energy Bill receives Royal Assent.
Amendment (s) addresses an illogicality within new section 32LK(4)(a)(i). The Government-drafted amendment envisages a developer requiring funding from a recognised lender, a term which is defined in subsection (5). However, it must have been intended that the only condition should be that the relevant developer required funding from any source, hence the proposed deletion of the reference to a recognised lender in this clause.
Amendment (t) deletes certain words as they unnecessarily narrow the definition of “recognised lender”. If the words proposed for deletion were included, they could exclude lenders who are new to the market and who have not previously given loans to onshore wind developers. Amendment (u) is consequential on amendment (t). The change proposed by amendment (t) removes the terms defined in subsection (6) from the definition of “recognised lender” so there is no longer any need to define those terms, making subsection (6) unnecessary.
I move on to new clause 3, and again I thank the Minister for her efforts and intents on new Northern Irish onshore wind. The new clause covers the development of wind generating stations in Northern Ireland. When the Energy Bill provisions were published, they related only to projects in Great Britain, because energy policy is devolved to Northern Ireland. Subsequently, Northern Ireland Ministers consulted on equivalent changes to the Northern Ireland renewables obligation, with cut-off dates for planning consent proportionate to this later consultation and notification date. Northern Ireland Ministers proposed setting two closure dates which related to different sizes of projects, and to the manner of connection to the Northern Ireland electricity market of these different project types. Smaller projects which connect at 33 kV to the Northern Ireland grid network would have to have been consented to by 30 September 2015. Larger projects which connect as clusters of projects would have to be consented to by 31 October 2015.
Northern Ireland Ministers have yet to announce their decision on Northern Ireland closure, as agreement between the Northern Ireland Executive and the UK Government has yet to be reached. This means that any subsequent Northern Ireland legislation cannot be enacted via the Northern Ireland Assembly until after the Bill is enacted. It is therefore necessary that the Bill is clear as to the limits of the application of the provision to Northern Ireland and that it respects timescales proportionate to the Northern Ireland generating stations. Failure to do this would mean that generating stations in Northern Ireland could be penalised because of a misalignment of timescales between reserved and devolved powers in the UK. I urge the Minister to seriously consider these amendments.
New clause 15 would,
“return to the Scottish Ministers the power to close the renewables obligation in relation to electricity generated by onshore wind generating stations in Scotland”.
Before the Energy Act 2013 was passed, Scottish Ministers had full control over renewables obligations in line with the Scotland Act 1998, which devolved powers to the Scottish Government regarding the supply of electricity from renewable sources. The Energy Act 2013 took back this control through a UK Government amendment tabled in the House of Lords that gave the Secretary of State the power to close the RO, including in Scotland. The justification for this change in the law was that it would facilitate a coherent and transparent closure across the UK and move toward the new contract for difference system. Those powers were taken back to Westminster under the previous Energy Act on the clear understanding and promise from the Government that there would be no policy implications; it was said to be just a technical change that would not affect any policy decisions.
At the time, the move was condemned by the Scottish Government’s Fergus Ewing, who said that the UK Government produced the amendment in the House of Lords with “no consultation or explanation”. He said:
“We are deeply concerned about this summary removal of the Scottish Government’s discretion in an area of such vital importance to our people and economy.”
Clearly, the original justification for stripping Scotland of a power devolved in 1998 no longer holds water. There has been a policy change by the UK Government, and it is one to which the Scottish Government dissent.
Is the hon. Gentleman suggesting that if the amendment were implemented, the Scottish Government would take over the expenditure associated with the RO?
We would be willing to discuss that, depending on the benefits. The RO was developed and evolved for good reason.
(8 years, 6 months ago)
Commons ChamberI do not agree with my hon. Friend on this occasion. Inevitably, some employees remained the same. It would have been extraordinary if all the regulators at the FSA had been fired and sent off to the great regulatory house in the sky. The powers and the responsibilities of the FCA were changed and, indeed, it has carried out an investigation.
The FCA has to be judicious and bear in mind that some people took out swaps knowing full well what they were doing. Not every swap that was sold was mis-sold. Interest rate swaps are a very important safeguard for people who are uncertain of the direction of interest rates. Indeed, with interest rates at their current lows, many people may feel that it is prudent to protect themselves by taking out an interest rate swap. It would be wrong to so overtighten regulation or to be so sensitive to what happened in the past to make beneficial financial instruments unavailable because of historical mis-selling. Each case needs to be looked at on its merits.
When I first took out a mortgage, I did so at a fixed rate because I knew I could afford to pay that rate but was uncertain about whether I could pay a higher rate. That is a prudent and sensible thing for people to do when engaging with the financial sector. The FCA had a big job of work to do in a quasi-judicial role. It could not just arbitrarily decide that all cases were mis-sellings and therefore they all had to be compensated for.
This House, too, needs to be judicious. The motion is really serious. It says that we have no confidence in an arm’s length independent regulator that this House established just three years ago. If we really mean that, we ought to be legislating to create a new one. We should not simply pass a motion; we should say that the body has failed, that it will be abolished as of 1 April and that a new one will be created.
This motion represents an intermediate step whereby the House faces one of two risks. One is that it is passed this evening and, like many other Backbench Business motions, absolutely nothing follows from it. This House would then look foolish. It would look as if whatever we say makes no difference and we would have no future power to bring our authority to bear on independent regulators when things may be more serious.
The other risk is that the chairman of the FCA feels that he has to resign and take responsibility, because there is no chief executive of the moment, which makes this a very strange time to be holding this debate. If the chairman falls on his sword, what would we achieve? One person would go, but the organisation would remain intact because we have not legislated to replace it.
This House should be proud of its constitutional standing and recognise the extraordinary power it has. We can summon people to the Bar of the House if we are sufficiently annoyed with the way they conduct themselves. We can make them answer to Select Committees, and indeed we do. However, if we use that power without due consideration, without being certain and without having every fact at our fingertips that this body, not its predecessors, is the one in which we have no confidence, we undermine the standing of the House of Commons and its ability to do that in future when our case may be better founded.
My hon. Friend is making a typically powerful speech and I agree with much of his argument, but does he not accept that we are here primarily to represent our constituents and that the reason so many Members are upset with the FCA is that it is not giving redress? The time it is taking is so frustrating and the motion puts pressure on it to provide redress.
I am grateful to my hon. Friend for that intervention, because I think there is a difficulty with time. Reference has been made to the HBOS report, which took a long time to come forward. Again, it started under the FSA, and the failures were of the FSA, not of the FCA. For a body that has been going for only three years, such a timespan is perhaps not that unreasonable, given that for two of those years it was making a specific investigation.
We have made huge progress, thanks to my hon. Friend the Member for Aberconwy, in achieving redress of grievance. That is enormously important, and it is right to do that. However, a vote of no confidence is the nuclear weapon of Parliament. It is something that brings Governments down. If we pass the motion, it ought to lead to fundamental change at the FCA and resignations, but I fear that we are trying to fire this gun before we have loaded it with gunpowder, and that therefore it will misfire. In that respect, I hope that my hon. Friend will withdraw the motion, because I think it has had its effect through the debate.
I add my congratulations to my hon. Friend the Member for Aberconwy (Guto Bebb). He is a doughty fighter for financial justice not only for his constituents, but for all our constituents, and we owe him a great debt.
Like my hon. Friend the Member for North East Somerset (Mr Rees-Mogg), I wish to declare an interest in that I am the director of a small business regulated by the Financial Conduct Authority. Like him, I was also regulated by the Financial Services Authority, but unlike him, I do not go back as far as IMRO. I will come on to some of his points. Whereas most Members have focused on constituents’ cases, he, uniquely, has pushed the debate wider—to the overall role of the FCA. If I have the time, I will come on to that.
I, too, want to mention my constituents’ cases. The first case is that of Terence and Jean Gray of Holbrook in South Suffolk. They lost the £50,000 they invested in Connaught income fund series 3 plus the interest, as well as the interest on a further £50,000 in Connaught income fund series 1. Mr and Mrs Gray, who are now in their 70s, saved that money throughout their lives and planned to live off it following their retirement, but they fear they will never see the money again. Their primary concern is that the FCA is unable to provide a timeframe for when its investigations will be concluded. Several hon. Members have made that point, and I hope that the Minister, who I presume will speak soon, can give us an update on the timescale they face.
I have received correspondence not just from consumers, but from firms. In particular, I have heard from Steven Farrall of Chattisham in my constituency, who owns the Ipswich-based firm Williams Farrall Woodward, a financial planning and portfolio management business. His concern is about the retail distribution review and the new way in which we regulate commission and fee-charging on investments, although I do not want to go into the detail of it. He encapsulates the anger felt by many smaller businesses about the regulator. He specifically blames those rules for the loss of about 13,500 independent financial advisers. He says:
“My own opinion of the RDR is that at heart it is an assault on the property and employment rights of thousands of law abiding tax paying private citizens, effectively the employers of the FCA bureaucrats… It is an absolute disgrace in a free democratic society the bunch of self regarding and utterly unaccountable functionaries should have such power.”
That is perhaps a tad harsh, but it brings me to my own experience.
I started a mortgage brokerage in 2004. Of course, that did not come under the FCA, but my experience was that the FSA was always box-ticking, rather than looking at potential problems and doing something about them. I could give many examples of that. Every six months, we had to submit something called a capital adequacy return, despite being a relatively small business. We had a famous document called MCOB—the mortgage conduct of business rules—which was the size of a doorstep, and none of which made sense to anybody. I think it is the assumption of the regulator that small practitioners have armies of compliance officers, just like the banks. Of course, nothing could be further from the truth.
The most extreme example of the FSA being focused on bureaucracy, rather than dealing with the problems in the industry, came in 2010 at the height of the euro crisis, when many people doubted from day to day whether it would survive. On a day when the euro’s survival was the top item on the news, I received an email for the directors of regulated firms. I opened it, expecting advice about the possible calamity we faced, only to find that it was a diversity survey. It was an extraordinary diversity survey that wanted to know, across all levels of management in my business, which was a very small business employing a handful of people, not only what percentage of staff were from each ethnicity, but what percentage were transsexual and even intersexual—a word I had never even heard before. The regulator, on that day of financial crisis, wanted to know how many of my staff were intersexual. A bit like the word poppers, I suspect that word will be new to many people—possibly even to people who are in the Chamber today.
I use that example to illustrate how the FSA was a tick-box regulator. That is why, despite all its work, it never noticed the basic thing, which was that our financial system was heading for an almighty crash and crisis. What we can say in favour of the FCA is that we have not had a credit crunch under it. We have had the successes that my hon. Friend the Member for Wyre Forest (Mark Garnier) talked about. There is one in particular that I will finish on.
What the FCA has done on mortgage rules and on the property market has been for the good. We need prudential borrowing. I am a conservative on financial services and think that we were far too reckless in the build-up to the crunch. If we want fairness, we must recognise that asking first-time buyers to be so heavily regulated, while a buy-to-let applicant for a mortgage faces no regulation and can take out an interest-only mortgage for a huge amount of money, without a key facts illustration that has to be advised, regulated and so on, is deeply unfair.
In conclusion, I agree with my hon. Friend the Member for North East Somerset that it is too early to pass judgment on the substantive work of the FCA, but we all feel that it needs to do greater work on the basic injustices that our constituents face in cases such as Connaught. I hope that the Minister will have some news on when people who have been affected by such cases can expect to hear substantive news about their rights.
(8 years, 8 months ago)
Commons ChamberI will speak briefly to support the Government in rejecting the Lords amendment. It is not unusual to be patronised by the Scottish National party, but I notice that the right hon. Member for Gordon (Alex Salmond) is not in his place. I heard a rumour that he was unveiling a statue of himself made from chocolate so that he can first admire it and then eat it.
I am not opposing the amendment because I am against the substance of the debate. In fact, I am a floating voter on this issue, and over the past year or so I have begun to consider the experience of younger people. However, we need a proper debate and legislative framework, rather than have this tacked on to a Bill about an EU referendum.
I strongly agree with my hon. Friend. I support lowering the voting age in principle, but when we want to make major constitutional changes we do not just have a vote in the Commons, we consult the public. The same should apply to this issue. We should have a national consultation, with all the other stuff that goes with that.
I agree with my hon. Friend. At the moment we have a gold standard template for the franchise that we measure at the general election. Over the years we have made changes to that franchise, most recently in 1969 and before that in 1924 and 1928, when we rightly enfranchised women as a result of the campaign by the suffragettes, which we celebrated only a few years ago. We accept all that, but let us have a wide-ranging public debate, not just through the prism of the Scottish referendum but across the whole country, because people have differing views.
Not for the first time, the hon. Member for Vauxhall (Kate Hoey) put her finger on the nub of the issue: this measure must not be tacked on; it must be seen within the context of all the other age restrictions, and of whether young people are well-formed and ready to take big civic decisions when voting. I say to the hon. Member for Lewisham, Deptford (Vicky Foxcroft) that I find it inconceivable that turnout would rise from about 45% to 75% just because 16 and 17-year-olds were included. Those figures do not stack up.
(8 years, 9 months ago)
Commons ChamberFirst, I thank the hon. Gentleman for the support he has given to the measures we announced, including the Barnett consequentials for Northern Ireland. I also commend him and his party for the work they have done to reach the agreement with the other parties in Northern Ireland and with the UK Government on the Stormont House agreement, which of course unlocks further resources for Northern Ireland. In this specific spending review, there is an extra £600 million for capital investment in Northern Ireland. In the detail of the books we have produced there are also extra funds for regional air connectivity from Northern Ireland. I believe about 2,000 new flights a year will be able to be funded to and from Northern Ireland—this is a £7 million commitment. Above all, as I mentioned in my statement, if we can get the Northern Ireland Executive budget on a sustainable footing—I know how hard he is working to bring that about—we can achieve that goal of devolving corporation tax and having the 12.5% rate in Northern Ireland, which would make Northern Ireland super-competitive, not just on the island of Ireland but across Europe.
I congratulate the Chancellor on an excellent statement. In particular, may I assure him that schools in my constituency, which have been underfunded for too long by comparison with those in other areas, will be delighted by his commitment to a fairer funding formula? Does he agree that a one nation education policy needs one national funding formula?
My hon. Friend is right; this has long been a perverse and arbitrary formula in our education system, which many MPs, from all parties, have campaigned to have changed. A national funding formula is a big step forward in education, and my right hon. Friend the Education Secretary will set out the details. It cannot be right that children in one part of the country can in some cases receive £3,000 less per child than children in exactly the same circumstances—the same level of disadvantage—in some other part of the country. It is not always about shire counties, as some Labour Members have said. A child in Knowsley, for example, is receiving less money today through the funding formula than a child in exactly the same circumstances in Wandsworth, and that cannot be right.
(8 years, 9 months ago)
Commons ChamberThe fact that I do recognise is that, when we left office in 2010, debt as a percentage of GDP was 55%, and now it is 80%. The Labour party borrowed less in 13 years than the Conservatives have in five years. There has been a complete failure to invest in strategic growth, productivity, and wealth creation. Instead, debt has been used as a cover to attack the welfare state and public services, which are part of the public-private partnership on which Britain relies.
I do not know what planet the hon. Gentleman is on. I was a mortgage broker who was running a business leading up to the crunch. I can safely say that the Financial Services Authority, which was created by Gordon Brown in May 1997, completely and utterly failed to regulate the banks. He cannot just walk away from responsibility. Labour has massive culpability for the unsustainable nature of the boom that led up to the massive crash in 2008.
The Labour party’s spending plans were all agreed to by the Conservatives. We introduced regulation through the FSA and greater freedom for the Bank of England. The Conservatives opposed greater regulation, yet the lack of regulation led to the awful situation we are in now.
Returning to the current, ridiculous attempt to reduce the deficit and the debt by cutting tax credits, the fact is that, in simple terms, poor people spend all their money in the economy, whereas rich people tend to save it, often offshore. Robbing 3 million people of £1,300 to try to balance the books will therefore massively undermine regional economies, when we already have regional imbalances. Taking money from people who would spend it and giving it to those who will not, through changes to inheritance tax, is economically loopy and, in my view, quite wrong morally. Rather than lifting millions of people out of poverty, we are thrusting millions into poverty, in particular the extra 400,000 children who will be put into poverty.
Tax credits are an American instrument to encourage people to work. They are targeted at working families, so that people with children, who have greater needs, can afford to work. If you ran a business, Madam Deputy Speaker, and you could only afford to pay £10,000 to employ someone and make it viable, and if they needed £15,000 and the difference was made up by the Government, we would end up with a job and a viable business. If we withdraw tax credits, we destroy small businesses, destroy incomes, impoverish families and generate inter-generational poverty. It is disgraceful and quite wrong.
The situation with housing benefit is also ridiculous. Seventy per cent of the growth in housing benefit has been paid into private sector rents. Why? It is because the Government have not built enough social housing. Instead of building more social housing, they are basically selling it off to give the right to buy in housing associations. That is not the way forward.
As for procurement, with HS2 construction we are giving something like a £50 billion contract to the Chinese. If a British consortium had, for example, a £55 billion contract, it would pay corporation tax, income tax and national insurance and would have local supply chains and build capacity in Britain—our steel would be going into the construction, rather than Chinese steel. Why have the Government failed to demand carbon tariffs on the cheap steel coming from China, which is produced more cheaply because China does not have the environmental controls that we demand in Britain?
We need more investment in city regions such as Swansea Bay city region, where the local authorities, industry and universities are working together. If we are going to have a national tax hub for Wales, which I am against, why is it being put in Cardiff, which can look after itself? It should be in Swansea Bay city region, a more deprived area. In terms of the trade deficit—[Interruption.] The point is that, as with the Driver and Vehicle Licensing Agency put in Swansea, if the Government can use the investment as an instrument of economic power, they should do so to help relatively deprived areas, not just London and the south-east.
The trade deficit is a massive 5%. We need to think more about emerging massive markets, such as China and India, whose middle classes are approaching 20%. Why are we not actively engaging to unite the creative and manufacturing industries to provide high-value products that we can sell in those markets, rather than moaning that we cannot produce spoons any more?
We also need to have an eye towards the Transatlantic Trade and Investment Partnership—obviously people will have heard of the free trade agreement with America—as well as the Comprehensive Economic and Trade Agreement with Canada, CETA, which is coming immediately. People are barricading the front door because of TTIP, while CETA is going through the back door—and will give companies powers to fine democratically elected Governments if we pass laws that impact on their future profits. We need to sort that out, but we also need to ensure that TTIP works towards a sustainable future for the world. My hon. Friend the Member for Islwyn (Chris Evans) mentioned global warming, and unless we embrace the need to ensure human rights, workers’ rights and sustainable development within the constraints of TTIP, which will be the blueprint for global trading, we will not have a sustainable world or a sustainable economy.
We need to think more clearly about growth in a focused way, rather than always looking to cut things. As a constituent in Swansea said to me, if a company is making a loss, it has two options: sack the workers and sell the tools, or invest in growth, productivity and products. That is the focus of the Labour party.
Ultimately, my hon. Friend is talking about the importance of investment. It is necessary to reduce the deficit, and therefore eventually the long-term debt, in order to build an economic policy that is credible to outside investors and gives them the confidence to invest in this country. That is the key reason.
I thank my hon. Friend, who is absolutely right. He is not the only wise person to make such remarks; the head of the CBI did so only recently. That fiscal rule gives companies the confidence they need that they can invest in this country and will continue to see long-term progress being delivered by this country.
The hon. Member for Dundee East (Stewart Hosie) talked about the need to have export-led growth. One of the problems we have with our balance of trade—I mentioned it in an intervention on the hon. Member for Hayes and Harlington—is that we are growing while our major markets are shrinking or teetering on the edge of recession. That is the sad aspect of the position we are in. While I am delighted that we have one of the best rates of growth of any country in the G7, it would be a lot easier if the whole of Europe were growing at the same pace. Whereas other countries are taking strong dividends out of this country from the investments they have made—dividends have gone up by 30% in the UK economy since 2010—we are not getting the same capital returns from the investments that we are making overseas. Nor are they in a position to buy the goods that we are manufacturing. There are many good stories to be told about our export business, particularly in the automotive sector, but if our customers cannot afford to buy our goods, that will inevitably come through in the statistics.
The answer is that we should be investing more and expending more effort on the growth markets of the world. I have to say to the hon. Member for Dundee East, and to other hon. Members, that we see the growth in China and in India, and we know how important they are. One would have needed the sleeping prowess of a Rip Van Winkle not to have noticed the efforts that the Government are making in India and in China to ensure that we are opening up those markets for our exports in future. I oppose the motion.
(8 years, 10 months ago)
Commons ChamberMay I say gently to the hon. Gentleman, whom I genuinely like, that we voted against the fiscal charter on 13 January? Whether he liked it or not, it was his party that voted with the Tories. I am pleased that it has changed its position, but I think on balance it might be better to focus on this matter, where the Chancellor and his party are on rather weak ground, rather than on some internecine struggle.
Before I move on to the fiscal charter, I want briefly to ask the Chancellor about the consequences for Scotland. He knows that under the Scotland Act 2012 Scottish Ministers now have limited borrowing powers, so can he confirm that there is nothing in the charter that will limit the exercise of those statutory powers and that, irrespective of whether or not the UK is borrowing, Scottish Ministers will remain free to borrow up to the agreed limits?
What the Chancellor has done, of course, is insist that the economy not only breaks even, but runs a current account surplus that will hit £40 billion by 2019-20. He announced in July that, in order to do that, additional welfare cuts would total £33 billion in this Parliament. Cuts to essential capital expenditure would total another £5 billion in this Parliament. Essentially, he is cutting £40 billion more than is necessary to run a balanced current budget, and almost all of it will be paid for by punishing the poor and stripping the capital budget of another £5 billion.
I will happily give way to the hon. Gentleman if he can tell me why he is going to support the economics of the mad house.
I will tell the hon. Gentleman very clearly. He talks about punishing the poor, but last week the Office for National Statistics showed that the number of workless households is at the lowest level on record. Does that not show that our strong economy is delivering not only stability, but social justice?
I am absolutely delighted when workless households get one or more people into a job and have the opportunity to better themselves, but what I am not prepared to tolerate is people who work harder than us having £1,300 a year cut from their tax credits, which stops making work pay.
Essentially, the Chancellor is cutting £40 billion more than is necessary to run a balanced budget, by cutting £30-odd billion from welfare and £5 billion from essential capital expenditure. As ever, these plans are dressed up in the argument that there is no choice. These are always political choices, and he has made the wrong one.
What we need more than anything is growth, and Governments cannot cut their way to growth. To get growth we must narrow the inequality gap. The UK lost 9% of GDP growth between 1990 and 2010 as a result of rising inequality, so it is irrational and counterproductive for the UK Government to be making the same mistakes all over again. To do that at the same time as raising inheritance tax thresholds and cutting tax credits is to take from the poor and give to the rich.
We campaigned against austerity during the election, and we did rather well on that basis. We will continue to hold to our position. Indeed, a modest real-terms increase in Government expenditure would have protected the poorest from the cuts, protected the Scottish budget and ensured that capital spending across the UK was not subject to more cuts while essentially still seeing the deficit fall and debt come down as a share of GDP. That is the option for the UK fiscal mandate suggested by the Scottish Government. It is credible, responsible and fiscally sustainable, and above all it is fair.
(8 years, 11 months ago)
Commons ChamberMy hon. Friend is correct. In the summer Budget, the Chancellor announced a consultation on behalf of the Office of Tax Simplification. It is currently undertaking its work. I expect my right hon. Friend to take its recommendations into account in due course.
Turning to the detail of this five-clause Bill, it provides that the rate of class 1 national insurance contributions paid by employees and employers must not exceed existing rates.
On a point of clarification—this may be a bit cheeky—I take it that we could reduce national insurance if we wanted to. The Bill would not stop us doing that.
That is not a cheeky question; that is a very sensible question. It is indeed the case that we will still be able to reduce levels of national insurance. This is only a ceiling, as is noted in the Bill’s title.
It has been the convention that the level of the upper earnings limit for national insurance is aligned with the level of the higher rate threshold for income tax. The Bill formally limits increases to the upper earnings limit, so that its annual equivalent amount cannot exceed the level of the higher rate threshold for income tax. Both the restriction on national insurance rate rises and changes to the upper earnings limit come into force on Royal Assent and apply until the start of the tax year following the date of the first parliamentary general election to take place after Royal Assent.
The Bill provides certainty for employers and for employees that the national insurance rates that affect millions of employees and employers across the UK will not rise for the duration of this Parliament, and that the upper earnings limit will not exceed the higher rate threshold. The Bill demonstrates the Government’s commitment to provide certainty on tax rates for the duration of this Parliament. I commend it to the House.
We are not signalling any change of position. It is amusing to hear this from Conservative Members, after a tax-raising Budget that is taking £8 billion from British people through the insurance premium tax, and after they put VAT up to 20%—when they promised not to do it. The absolute gall of Conservative Members in raising these points is amazing.
No, I will not.
The tax lock restricts the Government’s ability to respond to unexpected economic events. That is why this Bill is seen, both outside and inside this place, as a gimmick. If we have learned anything in the last decade, it is that such flexibility is absolutely essential. Indeed, it was this flexibility at the time the Labour Government left office in 2010 that meant we had an economy recovering and growing once again. Above all, this tax lock provides no protection to millions of hard-working families, who, if the statutory instrument on tax credits is voted through by Conservative Members later today—
I am pleased to take part in this debate, even though it is on a gimmick, and we are not so used to debating gimmicks in the Chamber. The Chancellor is a paradox. He constantly wants legislation that prevents him from doing things—measures in the Finance Bill to avoid taking further decisions on income tax or VAT, today’s legislation on not making any changes to NICs, and legislation at some point in the future on the fiscal stance and his proposals to have a permanent budget surplus.
I am afraid that this Bill is completely unnecessary. As the hon. Member for Dundee East (Stewart Hosie) said, the truth of the matter is that if there were a crisis and the Chancellor suddenly needed to raise more money, he could repeal this Bill. It does not give us the stability and certainty that the Government claim.
If we reach that point and the provisions have to be repealed, that will be a public act. This is an open and transparent Government. If we make this promise and then legislate, it is extremely difficult to repeal it on the sly. The Labour Government broke promises on the sly, hoping that we would not notice. It is impossible to do that with this type of approach.
I am afraid that I do not accept that. This is purely weak willed on the part of the Chancellor. I thought that the Economic Secretary to the Treasury did not give us nearly as good a defence of the Bill as the hon. Member for North West Hampshire (Kit Malthouse). He managed to situate it within the needs of the business community and give some rationale for it. The more the Minister spoke, the clearer it became that this is indeed a gimmick. I find that odd, because I thought that the Chancellor of the Exchequer wanted to be the Chancellor of the Exchequer and to take decisions, but clearly he does not. He just wants to tie his hands behind his back at every verse end.
I think it would be a good idea to vote against the Bill, and I am slightly disappointed that we are not opposing it. [Hon. Members: “Ah!”] It is not for me to say what the official Front-Bench position is, unfortunately. I want to point out to Conservative Members that we live in a world where the Chancellor has a desire to bring the deficit down very quickly. That is a difficult thing to do, as we saw when he failed comprehensively to achieve his target during the last Parliament. He is now having to go through some very choppy waters to get this done. He made a promise to introduce this legislation to fix VAT, income tax and national insurance because he thought that that would make him a low-tax Chancellor in the eyes of the British public. The fact is, however, that since then he has increased VAT to 20%, increased vehicle excise duty and increased the insurance premium tax, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) pointed out. He is not a low-tax Chancellor.