All 10 James Duddridge debates involving HM Treasury

Prime Minister’s Chief of Staff Appointment

James Duddridge Excerpts
Monday 7th February 2022

(4 months, 3 weeks ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Michael Ellis Portrait Michael Ellis
- Hansard - - - Excerpts

It is very peculiar to ask me, from the Dispatch Box, to predict the future, but if I were to predict the future, it certainly would not have Labour in it.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

Having worked with the new chief of staff when he was a Secretary of State and having seen his work when he was Chief Secretary to the Treasury, I urge the Minister to ask him to use this as an opportunity. Sometimes, fewer people in No. 10 can operate better than a large number. This is an opportunity to drive efficiencies across those two areas.

Michael Ellis Portrait Michael Ellis
- Hansard - - - Excerpts

I entirely agree with my hon. Friend. He knows that quality is often better than quantity. That is what we have with the Chancellor of the Duchy of Lancaster and the role that he will perform.

HMRC Estate Transformation

James Duddridge Excerpts
Tuesday 29th January 2019

(3 years, 5 months ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Mel Stride Portrait Mel Stride
- Hansard - - - Excerpts

I thank the hon. Lady for her response. I will pick up on some of the points that she has raised.

The hon. Lady asked why this statement is being delivered today. I think that she partly, at least, supplied the reason for that herself, in that she has shown a very keen interest in these matters, as have many other Members across the House, quite rightly. It is right, as we have always said, that we will be transparent in the roll-out of this transformation programme, and today is part of that process.

Towards the end of the hon. Lady’s remarks, she called for a review of our arrangements in the context of Brexit and the customs arrangements that our country may face. That is the second reason why it is important that we consider these matters. The debate this afternoon will rightly focus on preparedness, among other matters, and HMRC and its transformation programme lies at the heart of the issues that will be debated.

The hon. Lady asked for the locations of these sites. I believe they are all in the public domain, but I am happy to provide her with a list. She also made several observations about the NAO report and value for money. We are still confident that we will meet our roll-out end date of around 2025. In terms of value for money, there will be savings of some £300 million across the 10 years. I remind the hon. Lady that we will be getting out of a substantial number of private finance initiative contracts that the existing offices are engaged with—PFI contracts that were brought in under her party’s Government in 2001. One driver of additional value for money is that we will be able to unpick the unfavourable arrangements that her party’s Government got us into in the first place.

The hon. Lady asked about the cost of redundancy. I said in my opening remarks that some 90% of those who will be impacted by these moves will either conclude their career in their existing offices or relocate to the new regional hub. The overall thrust of these changes is to ensure that we are better equipped at getting in more tax. It is very much a Labour philosophy that every solution has to involve more money and more people, whereas our approach is adjusting with the times and getting offices in place that are fit for the 21st century, often using complicated data-based interrogation techniques, for which large regional hubs are the way forward.

Some of the 170 legacy offices that the hon. Lady seems so intent upon protecting had under 10 staff in them. Most of the processes carried out by those staff were manual in nature rather than technology-driven, so they were far less efficient. For example, over 80% of self-assessment returns are now done in a digital format, which is why it is important that we move to this model.

I turn to the hon. Lady’s remarks about the staff themselves, who have been at the heart of our considerations as we have rolled out this process. All staff are given at least one year’s notice of any proposed change. They are quite rightly given face-to-face meetings with their managers to discuss the changes and assistance that they may require. In determining the locations of the regional hubs, HMRC mapped out the journey to work of the staff who would be impacted, to ensure that that was one of the principles taken into account when assessing where the locations should be. Those who have extended travel arrangements as a consequence of any move may be given assistance with additional travel costs for between three and five years. Transitional offices, which the hon. Lady raised, will provide additional opportunities for continuity of HMRC’s work and the opportunity of employment for those within these arrangements.

There is a purpose to this. It is not just about saving money, closing offices, suggesting that we are ready for the 21st century or making change for the sake of change. The purpose of these changes is to ensure that we continue the excellent work that HMRC is carrying out in clamping down on avoidance, evasion and non-compliance. The proof of the cake is in the eating: some £200 billion has been brought in or protected since 2010, and we have one of the lowest tax gaps in the world at 5.7%. That does not happen by magic; it happens by having an HMRC that is lean, efficient and up to the job. I commend this statement to the House.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

More than 1,000 people work for HMRC in Southend. I understand that Southend will not be a regional centre, but what does this mean for the people who work in HMRC in Southend? Do the words “eight transitional sites” offer them any short-term hope? Will the Financial Secretary work with me to ensure that the figure is 90%-plus in Southend?

Mel Stride Portrait Mel Stride
- Hansard - - - Excerpts

I thank my hon. Friend for his question. As he will be aware, we have announced that we will retain the Southend office until the end of 2022, but I am happy to meet him to discuss that matter.

EU Customs Union and Draft Withdrawal Agreement: Cost

James Duddridge Excerpts
Monday 22nd October 2018

(3 years, 8 months ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts

Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.

Each Urgent Question requires a Government Minister to give a response on the debate topic.

This information is provided by Parallel Parliament and does not comprise part of the offical record

John Glen Portrait John Glen
- Hansard - - - Excerpts

There are a range of assumptions around the implications of different scenarios. The Government seek to ensure that we minimise the downsides and maximise the upsides in the agreement that we come to. I recognise that significant industries in the north-east rely on certainty in that relationship, and that is why it is very important that we get it right.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

This modest extension that is only a plan is going to cost £15.6 billion. How will the Minister explain that in Southend, Salisbury and Stockport? Could we not use the money slightly better?

John Glen Portrait John Glen
- Hansard - - - Excerpts

I would be in a position to justify that if it were a firm outcome of the negotiations, but it is not. I have not been conducting the negotiations; the Prime Minister has, and I am sure that my hon. Friend will be able to ask her about that later.

Duties of Customs

James Duddridge Excerpts
Mel Stride Portrait Mel Stride
- Hansard - - - Excerpts

The hon. Gentleman makes it sound as though the fact that we do not have the Bill available right now is in some way inappropriate or not right, but he will know that this Bill is a finance Bill—a taxation Bill—and it is coming in under Ways and Means. I will introduce the Bill at the end of this debate, having the opportunity to walk the Floor accordingly and to be admired by many Members on both sides of the House when I do so. He will also be aware that HMRC is involved in our ongoing negotiations on the issues he has raised, and these things will come out of those discussions in the normal manner.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

Does the Minister agree that there is some faux misunderstanding of the situation going on here? There is a body of evidence of what life will be like outside the EU: our trade with the rest of the world. This is not a new thing we are doing; it is something we are replicating within the EU that exists in our trade with the rest of the world, which dwarfs what we do within the EU.

Mel Stride Portrait Mel Stride
- Hansard - - - Excerpts

My hon. Friend raises an important point: our nation is quite capable of ensuring that wherever the negotiation lands, we will be able to have the resources, talents and wherewithal to go out and make a success of Brexit, getting out and engaging in our future trading arrangements. The important thing is that this Bill does not presuppose any particular outcome, but facilitates whatever outcome we finally arrive at.

Tax Avoidance and Evasion

James Duddridge Excerpts
Tuesday 14th November 2017

(4 years, 7 months ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Margaret Hodge Portrait Dame Margaret Hodge
- Hansard - - - Excerpts

I want to make some progress, because a lot of people want to speak in what is a two-hour debate.

Last week, our papers were filled with scams and scandals concerning celebrities, from the self-appointed philanthropist Bono to the popular actors in “Mrs Brown’s Boys”: stories that tainted the reputation of our much-loved royal family; revelations about establishment figures in politics, such as Lord Ashcroft and Lord Sassoon; and further evidence that corporations such as Apple deliberately establish artificial financial structures that have no other purpose than to avoid tax. I want to focus, however, on the systemic issues that these stories illustrate. It is the systemic issues that we need to consider if we are to make progress.

I will start with two comments arising from what we have learnt from the Paradise papers—observations that help us to understand what is wrong with our system. Appleby, the firm of lawyers at the heart of the Paradise papers, is one of the few offshore law practices that belong to the “offshore magic circle” of service providers. Indeed, Appleby was named offshore firm of the year by “The Legal 500” in 2015. Yet the Paradise papers reveal that the firm was criticised no less than 12 times over a 10-year period in reports issued by regulators in UK tax havens: the British Virgin Islands, the Isle of Man, the Cayman Islands and Bermuda.

Appleby was criticised for its failure to comply with regulations designed to stop the funding of terrorism and prevent money laundering. The reports talked of “persistent failures and deficiencies”, “severe shortcomings” and

“a highly significant weakness in the adequacy of the organisation’s systems and controls and a deficiency in meeting its regulatory requirements.”

Further documents reveal that Appleby simply ignored these critical reports and failed to change its procedures, despite strong words from the regulatory bodies. Even the authorities on the British Virgin Islands found, after an inspection of Appleby, that the firm had

“contravened financial services legislation…the anti-money-laundering code of practice 2008 and the anti-money-laundering regulations 2008”

and had

“severe shortcomings with a majority of the legislation, with prudential standards and good practice requirements not being met.”

Our regulatory frameworks are so weak that law firms can ignore or break the law with complete impunity. It is hopeless having self-regulation, national and international codes of practice and regulatory bodies with legal powers, if in practice they fail to secure compliance and good behaviour. The lawyers clearly just did not give a damn, and nobody held them to account.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

The title of this debate is “Tax Avoidance and Evasion”. I thought I understood the distinction between the two, but I feel the line is being blurred. How does the right hon. Lady understand the distinction between avoidance and evasion?

Margaret Hodge Portrait Dame Margaret Hodge
- Hansard - - - Excerpts

I agree that the line is extremely blurred. Schemes put forward as legitimate tax avoidance are frequently found to be unlawful when HMRC finally catches up with them. It is difficult to make distinctions.

Worse than that, Appleby helped to co-ordinate a well-funded and comprehensive lobby by the International Financial Centres Forum before a G8 summit that David Cameron chaired in 2013. The then Prime Minister had intended to insist that the UK’s tax havens publish public registers of beneficial ownership in their jurisdiction. Had David Cameron had his way, we might not be here today, but the IFCF lobbied fiercely to maintain secrecy. It lobbied the right hon. Member for South West Hertfordshire (Mr Gauke), the then Exchequer Secretary, it lobbied the permanent secretary at the Department for Business, Innovation and Skills, it lobbied the senior official who was then director of the UK’s G8 presidency unit, and it succeeded in weakening David Cameron’s commitment to transparency.

--- Later in debate ---
Mel Stride Portrait Mel Stride
- Hansard - - - Excerpts

I want to make just a little more progress, as I am conscious of the time and the shortness of the debate.

In fact, we have brought in 75 measures since 2010 to clamp down on these practices. A further 35 will come in from 2015, raising £18.5 billion by 2020-21. One of the problems is that we have been so active in bringing in so many measures that, unfortunately, not all of them have been noticed. In last week’s debate, the right hon. Member for Barking raised the issue of taking action against those who promote tax avoidance schemes. Once again, she needs only to look at the Finance Bill—all 777 pages of it; it is very technical, and it will probably put her to sleep at night—in which she will find measures to deal with precisely what she was urging us to take action on last week. We have already done it!

James Duddridge Portrait James Duddridge
- Hansard - -

I congratulate the Government on the specific changes they have made, but does the Minister agree that the biggest change has been the general anti-abuse rule? That catches a number of these schemes and allows Governments to look not only at tax avoidance, through tax planning, but at what he describes as aggressive avoidance, which therefore becomes evasion, which is illegal.

Mel Stride Portrait Mel Stride
- Hansard - - - Excerpts

My hon. Friend is absolutely right. The general anti-avoidance rule has had a significant impact. It was brought in under this Government and it has been very effective. The Opposition profess the importance of all these measures, some of which have already been brought into law while they are calling for them. There is a certain irony in the fact that, when it came to the Third Reading of the Finance Bill that brought these measures in, the Opposition voted against it.

--- Later in debate ---
Margaret Hodge Portrait Dame Margaret Hodge
- Hansard - - - Excerpts

I am grateful to you, Mr Speaker, for allowing this debate, and to all Members who have participated, particularly those who looked beyond narrow political party interest and more at the public interest.

We cannot allow the serious issues raised by the Paradise papers today simply to become the fish and chips wrappers of tomorrow. It is our responsibility as lawmakers to do all that we can, in the UK and with our international partners, to stamp out an injustice that is both unfair and offensive. The Government can take action that will make a difference, and it simply needs a strong political will to make that happen. I urge the Government to act in next week’s Budget.

Question put and agreed to.

Resolved,

That this House has considered the systemic issues enabling tax avoidance and evasion uncovered by the Paradise Papers.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

On a point of order, Mr Speaker. Have you heard from the Foreign Office of an intention for a Minister to come to the House to make a statement on what appears to be an ongoing coup in Zimbabwe?

John Bercow Portrait Mr Speaker
- Hansard - - - Excerpts

The short answer to the hon. Gentleman is that I have received no indication from any Minister from the Foreign Office or any other Department of an intention to make a statement on that matter. However, what the hon. Gentleman has said will have been of great interest to Members in all parts of the House, and, importantly, his remarks will have been heard by those on the Treasury Bench. Knowing him as I do, with his interest in and experience of this subject, I have a feeling that we will hear more about the matter before very long. Meanwhile, he has put his point very firmly on the record.

Paradise Papers

James Duddridge Excerpts
Monday 6th November 2017

(4 years, 7 months ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts

Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.

Each Urgent Question requires a Government Minister to give a response on the debate topic.

This information is provided by Parallel Parliament and does not comprise part of the offical record

Mel Stride Portrait Mel Stride
- Hansard - - - Excerpts

As I have already explained to the hon. Lady and the House, the register of beneficial ownership is now an element within these tax jurisdictions. It is accessible by HMRC, which is, after all, the authority that we rely on to bear down on tax avoidance. As to her comments about Russian money, I have no doubt that if HMRC can get the information that it has requested from the BBC, The Guardian and the group of journalists, it will be even better prepared to clamp down on such issues where activity is found to be inappropriate.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

When he looks at these issues with the overseas territories and Crown dependencies, may I urge the Minister to bear in mind the states in the US that have worse standards? Standards need to be raised globally, not just in some of these island paradise states.

Mel Stride Portrait Mel Stride
- Hansard - - - Excerpts

My hon. Friend is absolutely right. We need to work with our international partners, which is why, as I have said, we have been working closely with the OECD on the base erosion and profit shifting project. We are well ahead of the pack in implementing those recommendations.

Summer Adjournment

James Duddridge Excerpts
Thursday 20th July 2017

(4 years, 11 months ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

It is a pleasure to follow the pop and fizz of the soft drinks speech by the hon. Member for North Tyneside (Mary Glindon), although I do urge caution. As a type 2 diabetic, I am sympathetic to not having too many sugary drinks, but there are lots of evils in those soft drinks that do not have sugar in them. When walking around my local Asda or another supermarket, I note the paradox that it is still possible to buy fizzy drinks cheaply, despite what the hon. Lady said.

I want to thank not only the staff of the House but all the personal staff in our offices, who do so much work. I have been immensely fortunate in my nearly 13 years in the House to have recruited an exceptional individual, Lucy Paton-Brown, who is sadly leaving me in September. She has done a fabulous job for me. I am particularly conscious that for one year a few years ago I was either in hospital or in bed at home, unable to do my job properly. Usually when that happens, a neighbouring Member of Parliament takes over the constituency burden and casework while the Member recuperates. Lucy managed to do all that work for nearly a year on my behalf. She will be sorely missed.

I want to talk about some campaigns in Southend. My hon. Friend the Member for Southend West (Sir David Amess) mentioned the very good news that clinicians have decided that, under the strategic transformation programme for the local hospital, blue-light ambulance services will continue to be directed to local hospitals in Southend, Chelmsford and Basildon to receive the best immediate care. The election came in the middle of a big consultation on the matter, but political campaigners who were more interested in garnering votes than the quality of our local health service used A&E scurrilously.

We were told locally that Southend hospital would close, then that A&E would close, then that A&E would be downgraded and then that there would be nothing more than a nurse with a first aid box. My hon. Friends the Members for Castle Point (Rebecca Harris) and for Southend West (Sir David Amess) and others reassured the public, but that message did not entirely get through and lies dominated the campaign.

Some key organisers in the campaign perpetuated the lies. I feel for Opposition Members who have to put up with some of the more disreputable elements of Momentum. Many decent, honest people were involved in the Save Southend A&E campaign, but it was misused by Momentum, which was aggressive and tried to intimidate. There was a public meeting outside my house, with someone using a loudhailer, to try to intimidate me—the tweets asking people to go there specified that—into backing down from saying that all decisions should be clinically led. The circumstances were appalling. I am sorry for Opposition Members because sometimes the wrath that leads to “red on red” is even fiercer than that which causes “red on blue”.

I want to talk about a train. I will not go all “Thomas the Tank Engine” on hon. Members, but all trains should be like the 7.18 from Shoeburyness to Fenchurch Street, travelling from the sea to the city in under 60 minutes. It gets in after 58 minutes. If it did not stop, the journey could be made in 32 minutes. That would transform the local economy.

When I was first elected in 2005, Southend airport covered one destination and had 40,000 passengers. It now has 30 destinations and 1.2 million passenger movements, which will increase to 2.5 million in 2018, with more than 40 destinations worldwide. That will regenerate the area. We need to do more to work with the surrounding community and business parks to get businesses around the airport.

Time is short, so I thank everybody for brevity in the debate and you, Madam Deputy Speaker, for your early days in the Chair.

Economy and Jobs

James Duddridge Excerpts
Thursday 29th June 2017

(5 years ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
John McDonnell Portrait John McDonnell
- Hansard - - - Excerpts

The housing situation in our country is in dire straits because of the lack of building. That is why in the popular Labour party manifesto, we promised to build 1 million new homes—half of those to be council houses—and to free up local governments to perform their traditional role of putting roofs over the heads of local people.

All this suffering by ordinary people under austerity, so as to protect the rich and the corporations, has been for what? By the Government’s own metrics it has significantly failed. The Government promised that the deficit would be eradicated in five years, but now it will be 15 years at best. They have added £700 billion to the national debt, leaving £1.7 trillion of debt for future generations. In the first quarter of this year growth fell to 0.2%, and inflation has now increased to 2.9%. Last year saw the slowest rate of business investment since 2009. Unsecured debt per household will reach a record high this year.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

During the election, Labour made more than £105 billion worth of promises. If the right hon. Gentleman were to be Chancellor of the Exchequer, when would he expect the deficit to be repaid?

--- Later in debate ---
Lord Hammond of Runnymede Portrait Mr Hammond
- Hansard - - - Excerpts

I am going to make a little progress.

The truth is that the shadow Chancellor sees failure everywhere, while I see a fundamentally robust economy rebuilt from the ruins of Labour’s great recession. It is an economy that now needs to navigate successful transition out of the EU and into a deep and special partnership with our EU neighbours, and to realise the great potential of a technological revolution ahead, in which British universities and British companies will play a leading role.

I see a country that has achieved great things together since the last time Labour had its hands on the levers of power. In Labour’s last year in office, our economy shrank by 4.3%. In 2016, it grew faster than any major advanced economy bar Germany. Back in 2009, millions feared for their jobs and their futures. At that time, the right hon. Member for Hayes and Harlington predicted that under our plan—[Interruption.] He should listen to this. He predicted that under our plan unemployment would rise by 1.2 million as we suffered a double-dip recession and a decade-long depression. Since then, 2.9 million net new jobs have been created, our employment rate is the highest on record and our unemployment rate is at a 40-year low. In 2009, our deficit was at a post-war high. Since then, we have got it down by three quarters, while also taking 4 million people out of income tax in the last Parliament and cutting income tax for 30 million taxpayers, with the typical basic rate taxpayer paying £1,000 a year less income tax as a result.

James Duddridge Portrait James Duddridge
- Hansard - -

May I echo my right hon. Friend’s comments and relate them to Southend? Business in Southend is booming. Businesses are being created, particularly alongside Southend airport in the new business park that the Government have part-funded. We have a success in Southend—this is working there. Would he like to come back to Southend, as he did a number of years ago, to see how business is booming and the impact of his positive policies?

Lord Hammond of Runnymede Portrait Mr Hammond
- Hansard - - - Excerpts

I am always happy to go to Southend, but the story that my hon. Friend tells is being repeated up and down the country in constituencies represented by Members on both sides of the House.

The shadow Chancellor complains that growth has not benefited the less well-off. That was at the core of his argument today, but he is wrong. The basic state pension is up by £1,250 a year. Under a Conservative Government, income inequality is at a 30-year low. The poorest households in the UK have seen their wages rise more since 2010 than in any other country in the G7 and, thanks to the Conservative national living wage, those in full-time work on the minimum wage have seen their pay boosted by £1,400 a year. He presents our economic success as a bubble that benefits only London and the south-east, but he is wrong again. Today the economy is growing fastest in the north-west, wages are rising fastest in the west midlands, productivity is growing fastest in Northern Ireland, and unemployment is falling fastest in Scotland. That is a good news story across the length and breadth of our United Kingdom, benefiting all the regions and all the nations.

Oral Answers to Questions

James Duddridge Excerpts
Tuesday 18th April 2017

(5 years, 2 months ago)

Commons Chamber
Read Full debate Read Hansard Text Read Debate Ministerial Extracts
Simon Kirby Portrait Simon Kirby
- Hansard - - - Excerpts

If only we could do that; we do not have the ability to do so. What I can say is that in March 2017 we published the draft money laundering regulations and announced plans for a new watchdog to ensure supervisors and law enforcement work together more effectively. Since 2010, law enforcement have seized £1.4 billion in illegal funds.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

The EU is to blame for many things, but it is not to blame for money laundering and, in fact, any solution that looks to the EU to solve money laundering is missing the point that it is an international problem. Therefore, will the Minister confirm that he will be engaging internationally and not through the parochial lens of the EU?

Simon Kirby Portrait Simon Kirby
- Hansard - - - Excerpts

We are of course a founding member of the Financial Action Task Force, which sets international standards for anti-money laundering and counter-terrorism financing. After exiting the EU, the UK will continue to lead in FATF and around the world.

London Stock Exchange

James Duddridge Excerpts
Tuesday 21st February 2017

(5 years, 4 months ago)

Westminster Hall
Read Full debate Read Hansard Text Read Debate Ministerial Extracts

Westminster 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.

This information is provided by Parallel Parliament and does not comprise part of the offical record

William Cash Portrait Sir William Cash
- Hansard - - - Excerpts

There is severe detriment to our national interest in allowing a merger of that kind when the London Stock Exchange and its group are the jewel in the crown of the City of London. Any merger raises matters of national interest such as, first, financial stability and UK taxpayer liability. The merger would create a new financial market infrastructure group controlling, inter alia, about 90% of European-listed and over-the-counter derivatives transactions, but operated for the benefit of shareholders, not users, with an unprecedented complexity of risk profile and significant uncertainty as to whether the UK taxpayer would pick up the bill were part of the combined infrastructure to fail. The uncertainty created by the lack right now of a clear Brexit deal adds considerably to the stability and taxpayer risks.

Secondly, there is loss of control of a key UK asset post-Brexit. The London Stock Exchange is a major centre of global financial markets: more than 500 foreign companies are listed in London, which is 20% of global foreign listings; and it has the highest equity market capitalisation, 170%, in relation to the GDP of all the largest economies. Majority control of that vital business will pass to Deutsche Börse shareholders, who will own 54% of the new group post-merger. Passing control of the London Stock Exchange to Deutsche Börse in the context of Brexit is not in the national interest and might undermine our negotiations with the 27 member states as we leave the EU.

The issue is not where the headquarters of the new company is located technically. I am told that formally moving the HQ to Germany, as the state of Hesse has insisted, is not likely given the need for a significant shareholder vote, but that is beside the point. The real issue is who calls the shots and in whose interests critical decisions are made. It is no answer to say that the HQ will remain in the UK if the reality is that the people really in charge are flying in for the day from Germany. Decisions must be taken in the UK and in the interests of the UK.

My third point is about competition concerns. The only substantial remedy offered by the parties to the EU Commission to allay concerns about significantly impeding effective competition is the sale of the central counterparty, Clearnet SA, based in Paris, and part of the LSEG. No disposals have been offered by Deutsche Börse, which owns trading platforms, central counterparties and settlement systems that have been integrated into a single vertical silo in Frankfurt. That is not sufficient, and I am concerned that the outcome of the European Commission’s review of the proposed merger will be determined by the EU’s political priority to ensure that Germany has control over London’s capital market infrastructure, instead of by genuine market concentration and anti-trust concerns.

Fourthly, there has been a lack of public scrutiny and industry comment; there has been little proactive support for, or indeed criticism of, the merger from the main UK financial institutions. That is not surprising, since the parties have given 12 major investment banks a role in the deal and they are destined to share about £353 million in fees if the deal succeeds. There has also been little comment by the UK Government so far on a deal concerning a major UK asset, although they still have a public interest role to play under the Enterprise Act 2002. We need to know why it was, and who decided not to refer the merger when it first came before the Secretary of State. Vast profits and sums of money are involved, and some stand to gain financially on a grand scale. All of that can be ascertained, but the national interest must prevail.

Precious little has been put into the public domain to suggest that the deal is remotely in the public interest. On what possible basis can it be argued, in particular post-23 June and the passage through the House of Commons of the European Union (Notification of Withdrawal) Bill, that the merger is in the national interest? Furthermore, under section 1JA of the Financial Services and Markets Act 2000, the Treasury

“may at any time by notice in writing to the FCA make recommendations to the FCA about aspects of the economic policy of…Government”,

including how to ensure compatibility with the FCA’s “strategic objective”, to ensure that the London Stock Exchange functions well, and how to advance the FCA’s objective to ensure the soundness, stability and resilience of the UK’s financial system, which is defined as including the London Stock Exchange and the London Clearing House.

James Duddridge Portrait James Duddridge (Rochford and Southend East) (Con)
- Hansard - -

Has my hon. Friend thought about what would happen, were the merger to go ahead, if the eurozone collapsed, given some of its fundamental difficulties? Having extricated ourselves from involvement in the euro and, on Brexit, from the European Union, would the merger not lock in some of the potential downsides to the UK equity and capital markets without gaining us any of the upsides?

William Cash Portrait Sir William Cash
- Hansard - - - Excerpts

As I have said, the withdrawal Bill is quite clear. We will leave. That means that we will be insulated from the catastrophe that could occur if the eurozone collapsed. I could enlarge that point, but I will not for the time being.

There is another statutory requirement to ensure the principle of the desirability of sustainable growth in the UK’s economy in the medium or long term. Those are all statutory functions, and I strongly suggest that Her Majesty’s Treasury should decide—in fact, I urge it to—that it is not in the UK’s interests to allow a deal where there is a clear intention to take action that would cause systemic risks in the UK and be detrimental to UK tax revenues.

I move to the powers of the Bank of England, which is under a judicially reviewable statutory duty in respect of the test of approval for any acquisition of the London Clearing House. Under the European market infrastructure regulation, the test for approval in general terms for the purpose of ensuring the sound and prudent management of the London Clearing House raises questions of the suitability of the proposed acquirer and the soundness of the proposed acquisition, including the person who will direct the business of the London Clearing House. It also includes questions relating to whether the Bank of England would be able effectively to supervise, and several other factors. All those are in question in this instance.

I turn to the powers of the Financial Conduct Authority, which is required to approve the acquisition of the London Stock Exchange because it involves the acquisition of the “control” over the LSE by the new holding company. In those circumstances, the FCA has to consider the suitability of the new group holding company and the financial soundness of the acquisition to ensure sound and prudent management, and have regard to the key influence that the new group holding company will have on the London Stock Exchange. There are grave concerns about all those matters that pose a threat to the sound and prudent management of the London Stock Exchange, including questions relating to moving euro clearing out of London. The removal of euro clearing to Germany would undermine UK economic growth, because it may lead to the movement of other currency clearing out of the UK and undermine the City’s success. Moving the new holding company to Frankfurt would also be against the UK national interest.

--- Later in debate ---
Kirsty Blackman Portrait Kirsty Blackman (Aberdeen North) (SNP)
- Hansard - - - Excerpts

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Stone (Sir William Cash) for bringing this debate before us. However, the context and tone in which it has been undertaken is a bit unfortunate. To me, it seems that this is not a political issue, but it is being made to feel like one.

To give some context, there have increasingly been mergers in stock exchanges. There were 18 stock exchanges internationally in 1999, but that had decreased to five by 2012—those numbers were given in a Library briefing paper.

James Duddridge Portrait James Duddridge
- Hansard - -

There are more stock exchanges than that in Africa, so that is wrong.

Kirsty Blackman Portrait Kirsty Blackman
- Hansard - - - Excerpts

Those are the numbers that were given in a Library briefing paper, so I assumed they were correct.

There has been a move towards stock exchange mergers in recent years. Therefore, the merger is in the context of the London Stock Exchange Group looking to compete with bigger stock exchanges and needing to be a bigger stock exchange in order to do that.

I want to make it clear that the merger is not an anti-Britain move. As has been said, it was conceived a long time before the Brexit vote happened. It is not about trying to write Britain out, and the deal was not set up to try to move things to Frankfurt. In fact, as the hon. Member for Stone stated, the headquarters of the new organisation will be in London and—I do not think he mentioned this—the board will be 50:50 from the LSE and Deutsche Börse. There is therefore a lot of protection built in.

The London Stock Exchange Group has a good story to tell, and I want to talk about that briefly and about protections. The group has done a huge amount to support high-growth small and medium-sized enterprises through its ELITE and AIM programmes, both of which have been immensely successful. In fact, the group will come to Aberdeen next month to speak to companies about accessing finance.

I have asked the UK Government on a number of occasions for assistance for oil and gas companies in accessing finance and have felt like I was banging my head against a brick wall and not getting much of a response. However, the LSE Group has offered to come and talk to companies about ways in which they can access finance, which is hugely important. Those companies are not big enough to be involved in the stock exchange but the group is looking to grow them. It has also been successful in the horizontal model it uses for clearing. Again, protections are written in that will ensure that such things continue.

I have talked about the 50:50 board and the HQ in the UK. No one seriously thinks that Frankfurt will become the centre for European banking. That is just not the case. Anyone who has heard about the situation on the ground in Frankfurt knows that it does not have the infrastructure to support that. It is not going to happen. Companies will not move wholescale to Frankfurt. If I was a Frankfurt politician, I would want people to come and I would be making positive statements about that happening, but it is not going to happen. London will continue to be a big financial centre, and the link between the London Stock Exchange Group and Deutsche Börse will serve to bolster that rather than to weaken it.