Tackling Fraud and Preventing Government Waste

Jerome Mayhew Excerpts

Tuesday 1st February 2022 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

Like my hon. Friend the Member for Barrow and Furness (Simon Fell), I am rather surprised to be called so early. I am grateful to Her Majesty’s loyal Opposition for securing this debate, because fraud and the efficient use of public resources is a topic that we in this place should always be discussing and hold close to our hearts. I could have started with a mutual blame game, where we look back to the Blair years and point to fraud. A couple of my examples have already been drawn to the attention of the House, so I will not do that, save for one issue that is particularly close to my heart, because I remember feeling so angry about it at the time: the private finance initiative scheme, so beloved by Tony Blair and Gordon Brown.

The Centre for Health and the Public Interest has recently come out with a report that has calculated that, for the benefit of £12.4 billion of hospital assets, the taxpayer will now be paying £80 billion by the time those assets expire in 2050. If we are talking about waste of public money, Labour is late to the party, and I am not sure there are many lessons to be learned from that.

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I know the hon. Gentleman is giving a speech about a popular view of the private finance initiative, but I wish to make him aware of the Atkinson Morley wing at St George’s Hospital, which is a brilliant neurological centre that cost £50 million through PFI. It was built in the late 1990s, and it has saved hundreds and thousands of people. It is a building, and an opportunity to have a service, that was not coming any other way. I give thanks for that PFI deal, and I give thanks for those people who have been saved by it.

[Jerome Mayhew]

I am grateful for the hon. Lady’s intervention. I was not suggesting that the assets should not be built; it is about the way they were financed. Think how many more hospitals we could have built, and how many more people who could have been helped, if we had taken a more responsible approach to PFI.

Turning to the meat of today’s debate, we have heard a lot of speeches about the covid response and the fraud that has been associated with it, and it is right that we focus on fraud. However, there seems to be a case of partial amnesia about this, because if we cast our minds back to the early months of 2020—it was not that long ago—the conversation was expressly about the trade-off between speed and the level of security needed to protect the public purse from fraud. That was not an after-the-event discussion; that discussion was going on, certainly on the Government Benches, at the time of the innovative and brilliant polices brought in by the Chancellor and the Government to support our economy and the people working in it. This was a deliberate trade-off, but it was not “get the money out” with no defence against fraud. We have heard in a number of contributions that there were a significant number of effective protections against fraud, including for business bounce back loans, and more than £2 billion of applications were caught by that protection.

We must recognise, in the fullness of our hindsight, the urgency of need. I refer to my entry in the Register of Members’ Financial Interests, because I used to be the managing director and a significant shareholder of a company that employed about 1,200 people in a leisure centre. On 23 March 2020, it was ordered to close by the Government. That was its week of minimum cash flow for the entire year. It is substantially closed during the winter, and it employs another 750 to 800 people at the start of the season and trains them up ready for Easter. By ill chance, the lockdown, which started on 23 March, coincided with that planned dip in cash flow. Without quick public support, that business would have had a very high chance of going under. It did not, because it was able to take advantage of the Government’s coronavirus business interruption loan scheme, and also the furlough scheme, which was enormously important as well. As a result, on 4 July 2020, when the economy was substantially reopened and recreation and leisure was reopened, those jobs were saved. The business was still going, and it has gone on to thrive. That is just a simple example of how the speed at which the Government acted was effective in saving jobs.

We can expand that out to the national economy, because hon. and right hon. Members will recall that the economists were predicting an unemployment rate of 12% in response to the covid closure. We forget that now, because in fact the unemployment rate nationally today is 4.2%. That is millions of jobs and millions of families—hundreds of thousands of families, certainly—whose economies and lifestyles have been protected by the very speed at which the Government acted, but there was a partial cost to pay for that.

I accept, and it was accepted at the time, that with speed necessarily comes a reduced ability to follow up on every single aspect of fraud prevention. Given that, it is noteworthy that the estimated percentage fraud rate is about 7.5% for the bounce back loan scheme and much less for CBILS. That compares with a national average for Government contracts of about 5%. To my mind, given the necessary need for speed, the differential between those two rates is surprisingly small, and it is coming down month by month in estimates from such bodies as PwC. We have already heard reference to the reduction in the estimates of overall fraud.

What is more worrying to me is not the headline rate of 7.5%, but the ongoing long-term rate of 5% for estimated fraud in Government contracts. That is a scandal, and I strongly encourage my hon. Friend the Economic Secretary to the Treasury to take that enormously seriously, because we need to focus on the real costs to the economy and to society that Lord Agnew ably demonstrated in his resignation speech. He highlighted the economic costs as being about £29 billion a year, or 1% off the cost of income tax. That is enormously important. We could do a huge amount with that money should we not choose to return it to its rightful owner, the taxpayer.

Arguably the greater damage to our society is if we as a society and a Government accept that fraud is one of the costs of doing business. That should never be the case. The morality of our society and the realistic expectation of our constituents is that people who do right are stood by—that is terrible English, but I hope the House understands what I am trying to say there—that fraudsters are not tolerated, and that we go after them and there is an ongoing war against fraud.

I commend Lord Agnew for having highlighted the need for a renewed focus on this issue. I do not accept that there are huge lessons to be learned from Labour on this, but I look forward with interest to the Government’s renewed long-term focus on fraud throughout the economy. I also adopt the multiple pleas from my hon. Friend the Member for Barrow and Furness for an economic crimes Bill.

Cost of Living Increases

Jerome Mayhew Excerpts

Monday 24th January 2022 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

I am grateful to the SNP for calling this debate. As parliamentarians, it is absolutely right that we should debate in this Chamber the issues that are of most importance to our constituents when those issues are high on the political agenda, so I am grateful for the opportunity to talk about the cost of living and what we can do about it.

In the opening remarks of the Chief Secretary to the Treasury, we heard the long list of targeted assistance that the Government are providing. I will come back later in my speech to dwell on some of those. Overwhelmingly, however, the best solution for cost of living squeezes is high levels of employment and increased levels of pay when in employment. It is because of the Government intervention in response to the covid pandemic that we have an employment field that is so strong at the moment.

The Government intervened right at the start of the pandemic to save jobs through the furlough scheme, which supported more than 1 million jobs in Scotland alone, and other schemes, from the self-employment income support scheme—I refer to my entry in the Register of Members’ Financial Interests—to the business bounce back loan scheme to CBILS, the coronavirus business interruption loan scheme. Those saved thousands of jobs, including in the business of which I formerly had the honour to be managing director. Without a CBIL, that company—which employs more than 1,000 people, including several hundred in Scotland—would likely have gone to the wall. It has not and is now growing again—probably because I am no longer directly involved in it—and it is creating many hundreds more jobs, here and in America.

The impact of all that is that we did not suffer from 12% unemployment, which was the estimate of economists at the time. Now, as we leave this dreadful pandemic behind us—I hope—we have 4.2% unemployment throughout the country. In my constituency, it is at about 3.2%. Instead of having a jobs crisis in which people need jobs, the crisis in Broadland is the lack of people to fill the jobs available as our businesses grow.

It is always better to have good jobs with rising wages —which I will come on to—than to rely on a statist solution of increased benefits under universal credit, with the exception of the taper rate. The reduction of the taper rate from 63% to 55% should make good tabloid headlines. All those involved in that part of the economy know the importance of that injection of about £2 billion into the pockets of those who are least well off, as they move from benefits into employment. That is incredibly important, and I am grateful to the Government for focusing their firepower on the taper rate, rather than on the attention-grabbing £20-a-week part of universal credit, because that is where it can do most good.

There is now more employment in this country than in pre-pandemic times—over 400,000 more jobs—and we should celebrate that, but employment is only the first issue. The second is the amount people are paid when they are employed. I have already referred to the universal credit taper rate, and we should not underestimate how hugely important it is, but the other factor is the hourly rate people receive for their work.

[Angus Brendan MacNeil]

The hon. Gentleman is right that it is not so much about jobs as about earnings. Does he think the average worker would be better off in the UK, or in one of the Nordic countries, such as Norway or Denmark?

[Jerome Mayhew]

There is a trade-off between earnings and taxation: what people get to take home. I do not have the data, and I confess I do not know the full tax rates in Nordic countries, but I can say that the hourly rate in this country has risen consistently under this Government because of the national living wage—a Conservative Government development. The most recent rise of 6.6%, to £9.50, well above the forecast average inflation rate of 4% for the rest of this year, is the latest in a long line of above-inflation hourly rate rises under the national living wage.

From my local experience, I see the localised wage pressures to attract new staff in my constituency. Numerous businesses I have spoken to have told me they are raising their hourly rates above minimum wage to attract good new staff. There is a whole swathe of businesses, like the one I had the honour previously to lead, where, although the hourly rate is not the national living wage, it is in some ways pegged to it. The national living wage has a positive effect on hourly rates right across the economy.

[Navendu Mishra (Stockport) (Lab)]

The Living Wage Foundation has classified a living wage as an hourly rate of £11.05 in London and £9.90 outside London. That is significantly higher than the minimum wage set by the Government—it was George Osborne as Chancellor in a former Conservative Government who changed the branding from national minimum wage to national living wage. Does the hon. Gentleman agree that the Government should support the Living Wage Foundation and the rates it independently sets?

--- Later in debate ---

[Jerome Mayhew]

I am grateful to the hon. Gentleman for that intervention. The Government are on a journey to get the national living wage to two thirds of the median income, and they are making good, above-inflation progress to get there. We have to balance the needs of the recipients of hourly rates against the viability of the businesses that pay them; they need to thrive as well.

The Chief Secretary to the Treasury mentioned a long list of assistance in his opening remarks. Particularly important, from my perspective, are the household support fund, with £500 million going directly towards utilities support; the warm homes discount, which reduces the price of heating by £140 per household, at a cost of £200 million to the taxpayer; and cold weather payments, which provide £25 per week to up to 4 million people in this country. The Government have taken proactive steps to support those most in need while supporting the entire economy of our country, in Scotland and elsewhere.

If the SNP was really worried, it would reduce its income tax, which costs £800 million more to taxpayers in Scotland than the rest of the United Kingdom—I was shocked to hear that it applied to taxpayers earning just over £27,000 a year and above—support continued access to North sea oil and gas reserves, and regret Nicola Sturgeon’s assertion that she would not give the go-ahead to the Cambo oil field. We need security of supply and we need to support domestic extraction during the period of transition between now and 2035. That supports our domestic prices and helps us in our transition to net zero. The Committee on Climate Change itself recognises that we need oil and gas resources between now and 2035

[Jamie Stone]

I rise to my feet as somebody who worked in the oil sector, but that is not what I want to address. The furlough scheme meant that the money paid out in my constituency was reinjected back into the local economy and the UK economy. It was not salted away in Zurich. In terms of supporting families through these hard times, the money does not go into a black hole. It is recycled. It can be clawed back by corporation tax on companies and so on. Perhaps it would be a good thing if all of us, including Her Majesty’s Government, looked at that as we tackle the problem of fuel poverty that lies before us.

[Jerome Mayhew]

I am grateful to the hon. Gentleman for his intervention. Treasury Ministers are attending this debate and I am sure they were listening very carefully to what he said.

In conclusion, there is a difference between grandstanding on these issues, which the SNP appears to be doing—there seems to be a certain amount of virtue signalling here—and what the Conservatives have been up to in government, taking practical steps to improve the lives of people right across the United Kingdom.

[Tommy Sheppard (Edinburgh East) (SNP)]

The last few years have been times of great adversity and challenge for people across the globe. In every country in the world, people’s ability to cope with those problems has relied on them having a sense of a common endeavour, a sense, to coin a phrase, that we are all in this together. The problem with Britain today is that there are many people who no longer believe that we are all in this together. The statistics, as we look around us, show that that is the case. This is a country where there is great poverty, but what is worse than the fact that millions of people are working themselves into an early grave through mental illness because they fear they cannot afford to feed their children, is that there are many people in this country for whom the story is the complete opposite.

Last year in Britain, a record number of billionaires were recorded. As I said in this House last week, the most alarming statistic to me is that 171 of the richest people in Britain could afford to cover every single penny the Government have spent in responding to covid—more than £400 billion. They alone could afford to cover that bill and still be the richest people in Britain. The stock exchange has never been higher and the people who own stocks and shares have never been wealthier. Because of the increase in property prices, those who own the biggest and the most properties have done far, far better than those who own a modest home. That is the dreadful story of unequal Britain that we have today—a story of poverty on the one hand and great wealth on the other.

Let us not pretend that we are all in this together, because the truth is that those people at the lower end of the scale, in particular those on fixed and low incomes, are the ones who will disproportionately pay the cost of this crisis. When prices rise, it is the people on fixed and low incomes who are hit disproportionately. When general taxes increase across the board, it is they who are hit. When benefits or state spending is withdrawn, it is those who are already suffering who are asked to suffer even more.

That is the state of Britain today and you would think, Mr Deputy Speaker, that any Government—not just a Tory Government, but any Government—would be concerned about those figures and would want to do something about them. Yet in every respect, the Government’s only response is to either do nothing or demonstrably make things even worse.

Let me illustrate that in two ways. First, we have had a big debate about rising energy prices. Probably the most bizarre thing, which was alluded to by my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown), is that when energy prices rise, Government income rises from taxes on the production and taxes on the consumption of that energy. The Government are facing a huge windfall in energy taxation and at the very least—the very least—we would expect them to say, “Let’s put this back into the pockets of the people we’re asking to pay these bills”.

[Jerome Mayhew]

rose—

[Tommy Sheppard]

If the hon. Member is going to confirm that that is the Government’s intention, I will gladly give way.

[Jerome Mayhew]

I am very grateful to the hon. Member for giving way, but did he hear the Chief Secretary to the Treasury say that VAT is charged at 5% on energy and, if households are not spending on other things that are taxed at 20%, the net income for the Treasury is likely to be negative?

[Tommy Sheppard]

Forgive me, but I think that most people will find that argument rather perverse: 5% on someone’s electricity bill is still 5%, and if it doubles or trebles, that is two or three times more than the Government were taking before.

[Jerome Mayhew]

rose—

[Tommy Sheppard]

If the hon. Member does not mind, I would like to continue.

What the Government ought to be doing is recognising that we are coming towards a crisis in the cost of living, particularly with the fuel bills coming in April. They ought to make sure that the energy cap remains in place and does not rise. They ought to provide support for energy supply companies to be able to deliver that. They ought to make sure that the people who have already faced an increase in their bills are given a one-off payment to enable them to get through the rest of this year. But instead of doing that, they do nothing. Tax is another example of where the Government go out of their way, it seems, to make things worse.

When I talk about tax, it is worth bearing in mind that benefits are also part of the tax system. If the Government choose to withdraw benefits from people, the effect is exactly the same as if they were to increase taxes on their wage bill. That is why the cut of £20 a week to the 6 million poorest households in Britain is so iniquitous and so immoral. It would be at any time, but to do it in the middle of a cost of living crisis is beyond imagination. Of course that ought to be reversed, and of course the Government ought to do more to try to help those who are on fixed and low incomes, particularly those living on meagre state benefits. The fact is that, if the Government do not uprate in the next 12 months the level of benefits paid to those people who desperately need them, with rampant inflation, the real value of those incomes is going to go down even further, and the people who can least afford it are going to be the ones who will pay the most.

Of course, the increase in tax that the Government are proposing—the national insurance increase—is a tax increase that everyone will pay, and the proportion they will pay is exactly the same, no matter how rich or how poor they are. I have heard Ministers on the radio talk about this as a progressive tax. It is the farthest we can get from a progressive tax. It is fundamentally regressive. The reason it is being brought in is that this Government, who have to increase revenues because of the economic crisis, do not want to ask the very richest or the very wealthiest in our society to pay a bit more. If they had any morality to them, in a situation where they knew they needed to raise income through taxation, they would first consider taxing those who have the most and taxing accumulated wealth, before they levied a tax on people on poor and fixed incomes.

I think there are many Government Members who can see that this is not a good situation and that the Government’s response is quite abysmal. By the way, I do not know how much of this is by design, or how much of it is turbocharged by the fact that the current Administration are in complete inertia and paralysis; they are unable to do something because they are so scandal-ridden at this point in time. I accept that the lockdown crisis the Government have makes it harder for them to govern, but either way this Government’s honeymoon is long over—the veneer is disappearing. Those people in the red wall seats in the north of England who were conned into believing that this Government—this Tory Government—would stand up for their interests are going to see over the next 12 months things laid out very clearly for them. That is why, of course, there are a lot of nervous people on the Government Back Benches, and there are going to be a lot of problems for the Government in the 12 months ahead.

Let me turn, in my final remarks, to the situation in Scotland. I was going to congratulate the hon. Member for Moray (Douglas Ross), but he is no longer in his place. He brought into the debate the question of Scottish independence. He introduced it—it is not an SNP obsession. If we look at the text of the motion, the words “referendum” and “independence” do not appear in it. That is not just because we are capable of talking about many other things: it is because this debate, by itself, makes the case for independence. We do not need to write it down—it is self-evident.

If people want to see how things might be done differently or a different set of instincts, aspirations, attitudes and character at work, they can look north of the border and at what the Scottish Government have tried to do within the competence that they have available. The discretionary housing payment is ameliorating the bedroom tax. The child payments, already introduced and doubling in April, will mitigate some of the attacks on the very poorest in our community. Income tax increases for those who can afford to pay more, which the Conservatives claim make Scotland the most taxed part of the United Kingdom, in fact make Scotland the fairest taxed part of the United Kingdom.

Conduct of the Right Hon. Member for Uxbridge and South Ruislip

Jerome Mayhew Excerpts

Tuesday 30th November 2021 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

It could have been so much better today. We had a precious chance to debate the issues that are most important to the people of Scotland, and SNP Members know what those issues are, because every opinion poll tells them that it is not independence. Fewer than 13% of Scots put it in their top three issues. In fact, the top three priorities for Scotland are healthcare, the economy and education, and it is just the same in England, Wales and Northern Ireland. We are together in this in our United Kingdom. But that is no good, because the job of the SNP is to sow division and to drive a wedge, because it has one issue—independence—irrespective of the views of the Scottish people.

If we look at healthcare, we can see why SNP Members are so silent on it. Any debate on the SNP’s health performance over the past 14 years would be a disaster for it. Even before covid, waiting times for referrals in England averaged 12 days—room for improvement—but in Scotland, waiting times for out-patients were 32 days and for in-patients 45 days. That is not an accident. That is the choice of the SNP. We have already heard about the drugs scandal. If we want to debate a scandal in this House today, we should debate the SNP’s drugs policy.

What about the economy? SNP Members do not want to talk about that either, because of the massive support from the United Kingdom Government for millions of people and businesses across Scotland, including the furlough schemes; the 99,000 Scottish businesses helped through business support; the billions invested in locally driven partnerships and projects from the shared prosperity fund, the levelling-up fund, the community ownership fund and the global Britain investment fund; and of course the Union dividend of £2,800 for every adult and child invested in Scotland every year. So we had better not talk about the economy.

That is before I have even mentioned the third issue: education. The SNP used to want to talk about that. In 2015, Nicola Sturgeon said:

“Let me be clear. I want to be judged on this. If you are not, as First Minister, prepared to put your neck on the line on the education of our young people, then what are you prepared to do? It really matters.”

She was right. It really does matter. But after a decade of devolved power, Scotland has fallen below England in the PISA standards for reading, maths and science. The SNP does not want to talk about that.

So what is left? An obsession with constitutional change and a debate on how much the Prime Minister should be paid. This matters. Just yesterday, the First Minister ordered the Scottish Government to divert resources to prepare for a referendum—

Finance (No. 2) Bill

Jerome Mayhew Excerpts

2nd reading
Tuesday 16th November 2021 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

In this place we often focus on things that can be measured. We talk about money and how it can change the quality of life of our constituents. All too often, however, we underestimate the value of the web of community ties that link us all together. After family, certainly in the communities I represent, it is the community bonds, the web of community ties linking us all together, that are so important in improving the quality of life of each and every one of us.

In Broadland, for example, the largely rural area I have the honour to represent—I know everyone here represents a different type of community—there are community ties such as the active village hall committee, the active church and other faith groups, and organisations such as gardening clubs and amateur dramatics societies. Very important among that list is also the local pub. Those organisations, taken together, are absolutely vital in bringing people together. It is how we create our support networks outside the house or flat in which we live. Covid presented really serious mental health challenges to societies and communities. In my communities, people supported each other, stepped up and got more involved. They got to know their neighbours and they came out of lockdown in a stronger place, not a weaker place.

I want to focus on those really meaningful ties that are not simply economic. I saw a very good example of that last Thursday night, when I was in the village of Rackheath. I had been to the community council meeting, which had finished—Members will be all too familiar with this—sometime after 9 o’clock. I had not had anything to eat, so I went into the Sole and Heel pub to see if I could be served a late supper. Unfortunately, the kitchen had closed at 9 o’clock—so, not a great example on that occasion—but what I noticed when I opened the door was that the pub was full. The pub was full of the local community, with neighbours talking to neighbours at the heart of their community, bringing people together. In Broadland, those kinds of pubs support 1,600 jobs and contribute £46 million to the local community.

It is in that context that I absolutely welcome the announcement in the Budget on draught relief. The proposal will reduce duty on draught beer by 5%. In cider terms, that would be the biggest reduction in duty since 1923. In terms of beer, I understand it is the biggest single reduction in duty for the past 50 years. What impact will that have? It will be a £100 million a year support per annum for our local pubs. For “local pubs”, I think we should read “our local communities”. That will go a long way towards helping to stop the really serious decline that we have seen over the past 20 years in the trade. Since 2000, there has been a 22% reduction in the number of pubs in this country. That is more than 14,000 establishments, and for that, I think of all the community interactions that no longer take place; of all the neighbours who are no longer being brought together in the convivial atmosphere of the village or town pub. That has resulted in real damage to the strength of our communities, and we are here to support our communities.

So without hesitation I welcome this Government’s support for communities in relation to pubs and to the other sectors that bring communities together, including museums and artistic establishments, which have already received some £850 million of support. That goes a long way towards supporting our communities and making them stronger for the future.

Carbon Emission Charges

Jerome Mayhew Excerpts

Monday 1st November 2021 Westminster Hall

[Jerome Mayhew (Broadland) (Con)]

It is a pleasure to serve under your chairmanship, Mr Robertson, and to follow the speech made by the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), the contents of which I very substantially agree with. One of the wonderful things about this debate is that it stretches across the divide that so often separates the views of people in this House.

However, I approach this matter from a slightly different perspective—albeit arriving at similar conclusions—because I see this as the role of the free market. As a former businessman and entrepreneur, I want to unleash the power of the free market to help solve some of the problems that its historical performance has helped create. Too often, the market has been seen as the villain. We talk about business profiteering at the expense of the environment, or businesses trashing the world’s resources, and that applies not just to carbon net zero but to biodiversity. As Professor Dasgupta noted in his report earlier this year, in terms of the biosphere our current practices are using the resources of 1.6 worlds.

It is true that historically, the market has been almost totally blind to the cost of carbon in its economic transactions. When I buy a product—such as this glass—I pay for the raw materials, the design process, the manufacturing, the marketing, the transport and the profit, but I do not pay for the cost of the carbon emission, because that is described as an externality: it dissipates into the atmosphere and there is no significant cost attached to it. The result of that misallocation of resources is that the transaction is incomplete. As a purchaser, I am not having a true economic exchange with the supplier, because I am paying for only part of the product, not all of it. As a result, there is no signal for consumers to look at two separate products and identify the differential cost between the manufacturing process of a high-carbon glass and that of a low-carbon glass. As consumers we are blind, so all those myriad consumer decisions that we take in our economy every day are ineffective in helping give a signal to manufacturers. The process does not provide a signal to consumers; and consumers, in turn, do not provide a clear market signal to entrepreneurs and businesses.

What are we left with? At governmental level, we all know that the climate change crisis is a huge problem, so we have plans from Government, who are picking technology winners by investing in hydrogen, for instance. I hope that hydrogen will be a key part of the solution in our progress towards net zero by 2050, but it might not be. The real problem is that we are currently relying on the Government to take those kinds of decisions because the market is substantially blind. We need to unleash its power through a price for carbon.

We know that markets are without question the most efficient decider that man has ever come up with for the use of resources. They do so not for moral but for wholly personal reasons: they wish to maximise profits, and the way to maximise profits is to minimise inputs. Properly directed by market signals, the market is the most efficient resource user we can come up with. It informs millions of decisions. Crucially, the market and its myriad transactions create the individual wealth that can go on to fund the additional Government action that the market alone is unable to provide. Although I am a free marketeer, I am not a free marketeer red in tooth and claw. There is absolutely a role for Government to set the structures and give the long-term signals for the free market, and to provide assistance and support for those left-behind parts of our community that otherwise would be disadvantaged by that process.

Our biggest challenge in creating a price for carbon is that the United Kingdom economy is not self-contained; we are part of a global economy. If we increase the price of carbon in this country, which is really another name for increasing the price of energy, that will have a very direct and immediate risk to our domestic economy, particularly our manufacturing base. Increasing the price of energy in our domestic economy would result in an increase in the costs of our manufacturing base, which would then either go offshore and relocate to a lower-cost environment abroad, or it would stay and get undermined by the sucking in of lower-cost, higher-carbon imports. That would result in the worst of all worlds: the destruction of our own economic base and an actual increase in greenhouse gas emissions as transport costs are added to the costs of production.

As an economy, we have been very timid in our approach to applying a cost of carbon. We do apply it in some sectors—about a third of our manufacturing base is affected in some way by carbon pricing through the emissions trading scheme. But that is only a third: two thirds of our manufacturing base has no carbon pricing attached to it at all, and none of this country’s imports are assessed or priced for their carbon content.

How do we address this seemingly impossible conundrum? The answer is, in principle, quite simple: a carbon border adjustment mechanism. That means that, at the edge of the economy, when imports reach the border, we assess those products for their carbon content and take a similar approach to that taken in the domestic market by applying a tariff. That is not protectionist in principle, because it would apply the same price and create a level playing field, as opposed to disadvantaging exports in favour of domestic manufacturing. It must also be transparent and within the permissible exceptions of the World Trade Organisation, which allows for tariffs in environmental cases.

This approach allows, in principle, for the increasing of the price of carbon for the domestic market, safe in the knowledge that imports will have a similar price attached. A lot of work has been done by think-tanks and others—and, I hope, by the Treasury and the Department for Business, Energy and Industrial Strategy —on how we can start applying this approach in practice. Conceptually, it is a very simple process, but it has the potential to be fiendishly difficult to apply. If we can apply it, the benefits would be enormous. The market signals would incentivise the reduction in carbon manufacturing processes that this country seeks to achieve.

The benefits would also expand beyond our borders. If a manufacturer in a third country—let us say, for example, in China—exports its product to the United Kingdom, they will not want to receive a significant tariff addition to the price of the product. The Chinese Government—or any other third-party Government—have a choice. They can think to themselves, “Well, we can either have a tariff applied to our exports, which then gets paid to the UK Treasury, or we can apply a similar process ourselves and keep the money here in China.” The third option is that they reduce their 70% to 80% reliance on coal for their energy, and reduce the differential between their carbon production and our own. All these are very positive international signals that we can spread beyond our borders through the imposition of a CBAM.

There is evidence that this is already working. On 15 July the European Union published a draft Bill to implement a carbon border adjustment mechanism throughout the European Union. Even before that has come to fruition—it is just at draft stage—there is evidence that automobile manufacturers in South Africa are already seeking to decrease the carbon content of their manufacturing process, because they are concerned that they will be adversely affected by the imposition of a CBAM in the European Union. Even the publishing of a Bill—a draft Bill—is already having real-world positive impacts on the reduction of carbon.

Another advantage is the potential for reshoring manufacturing production to the United Kingdom. It removes one of the current disincentives for high-energy or relatively high-energy production in this country because we do have a price for carbon through the ETS. That is not sufficiently significant to change consumer behaviour on a more widespread basis, which we wanted to do, but it is enough to provide a minor disincentive to have manufacturing in this country. If we can remove that disincentive, it will encourage reshoring. Research undertaken, I think by Capital Economics, into the steel industry in the United Kingdom has concluded that steel manufacturing’s international competitiveness would actually be increased through the imposition of a carbon border adjustment mechanism by between £50 and £75 per tonne through the 2020s.

In my submission, we have a political opportunity now not just with the advent of COP26, but, more significantly perhaps, with the publication of a draft Bill by the European Union. This gives us an opportunity to address one of the key challenges to a CBAM, which is how we deal with the concern or disapproval of large exporting countries that have a high carbon input—for instance, China. We have an opportunity to join forces with the European Union and have a more internationalist approach to the introduction of a CBAM now. It would not hurt given that, dipping into another language, we have a certain froideur across the channel currently, and sticking to the same approach, what about a bit of rapprochement?

There is a joint objective here. With Brexit, we are allowed to be nimble of foot. We can come up with these policies ourselves, and we are not held back by a pan-European approach. Equally, it does not prevent us from agreeing and co-operating with the European Union when it is in our national interests. I think this is a great example of where our national interests and those of the European Union coincide very neatly, and it gives us an opportunity to build bridges should we wish to do so. It also helps us with the potential approach to China, in that it is the entire European market that is taking—or potentially taking—this approach, as well as with the United States of America, which has expressed an increasing interest in the concept of some form of carbon border adjustment mechanism.

I mentioned earlier that CBAMs are simple in principle and hard to apply in practice. I am agnostic as to how we do it, and many different approaches have been suggested. We could expand on the current ETS. We could, as Mr Carney has suggested, take the key products that are internationally traded—steel, cement, aluminium, chemicals and so forth—and start on that basis, but then build out into the wider economy as we gain confidence and competence in the process of a CBAM. We could apply it by sector assessment by country, which would be more of a purist approach, but much more complex to apply. I suspect that the answer is to start small and to grow as we learn; but the sooner we start, the better. I conclude my speech by challenging anyone to come up with a way in which we can impose a price for carbon without some form of carbon border adjustment mechanism.

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

It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate the petitioners on bringing forward the petition and the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on presenting the debate and making some key points. It is a worthwhile time to debate this subject, given that COP26 is taking place in Glasgow as we speak, and how we achieve net zero in the fairest way is something that needs serious discussion. It is a slight disappointment that there were not more Back-Bench contributions, but so be it.

I completely agree with the three key points made by the hon. Lady. Obviously, we need to generate the shift to low-carbon technologies, but it is critical that we protect the most vulnerable and stop carbon leakage. The hon. Member for Broadland (Jerome Mayhew) also made that point. He made an interesting contribution, and I will try to summarise it. I think he said that although he is a proud free marketeer, he is not really a free marketeer because interventions need to be taken. That is quite an interesting dynamic. He also seems very much to be a protectionist when it comes to imported goods—but again for the right reasons, because we are talking about carbon border adjustments.

[Jerome Mayhew]

I want to make it absolutely clear that I am not a protectionist. If a CBAM is to be successful, it is important that we ban the P-word. The tariff has to be applied at exactly the same level as that used in the domestic economy.

[Alan Brown]

It is possible that I was being slightly flippant when I used the word “protectionist”. I take his point that if we are going to do this correctly, it will have to be in collaboration with other countries. I agree with that.

If we believe in the basic principle that the polluter pays, a carbon tax makes sense. If we are serious about achieving net zero, we need to give serious consideration to carbon taxes. However, as has already been said, any such taxation needs to be fair. It cannot be structured in such a way that companies feel obliged or rewarded for relocating to other countries, therefore defeating the purpose. Critically, it must also not lead to the poorer in society paying a bigger burden, especially if a tax is levied on gas bills. The reality is that the more affluent will be able to switch to heat pumps, but those struggling to pay their energy bills will have no chance of doing so. We cannot leave the most vulnerable to pick up the carbon tab for others as the energy sector transitions to net zero.

The recent Government policy of £5,000 grants for heat pumps is still insufficient for most people to be able to afford the installation of a heat pump. The unit cost of a heat pump is still in the price range of £6,000 to £10,000. A £5,000 grant goes only part of the way, but it does not make up for all the additional work that is also required. We need to have proper energy efficiency measures, which are welcome but cost money, such as a new water tank, possibly new radiators, decommissioning boilers, and then there is decoration works that need to be done to a property once all that work is completed. That £5,000 grant is clearly not the pathway to increasing the number of heat pump installations from current figures of 30,000 per year to the Government target of 600,000 a year. Going forward, we need to look at that in the mix. Before a carbon tax is introduced, we need to ensure that it does not create more people who are fuel poor, and also look at how we use the revenues from the carbon tax to help get heat pumps and energy efficiency measures for those who need them most.

At the moment, decarbonisation of the power sector is being paid for by levies from our electricity bills. The UK Government have acknowledged that that is unsustainable, because roughly a quarter of electricity bills are made up of those levies. That needs to change; there needs to be a fairer system. That is where carbon taxes could be looked at, but—I am repeating myself—it is important that the most vulnerable are protected.

In wider industry, cost-effective decarbonisation solutions need to be available to industry when a carbon tax is introduced, and taxation must be structured so that it is fair and equitable across the UK. Recently, the UK Government opted to fast-track two carbon capture and storage clusters in the north of England but, disgracefully, they have made the Scottish cluster a reserve cluster. That means that, despite the Scottish cluster being the most advanced in project development and deliverability, it is estimated that the two other clusters will proceed at a faster rate.

It would be inherently unfair for the Government to support, either via direct taxation or consumer levies, some industries in some areas of the country while potentially slapping a carbon tax on another area just because they have not been progressed at the same rate. These things have to be looked at in the round. The Scottish cluster takes in the two biggest carbon dioxide emitters in Scotland—Peterhead gas station and the INEOS facilities at Grangemouth. As the biggest polluters, they have to pay to remedy that—that is where we are right—but will they make that investment? They need that assistance, and they must not be disadvantaged when others are getting support.

Revenues from a carbon tax must be reinvested in green initiatives targeted at the most vulnerable and the hardest sectors to decarbonise. They must also be completely transparent. We have had a carbon tax in the airline industry for years: air passenger duty, which is supposed to follow that basic principle of polluter pays, in relation to aircraft emissions. The actual reality is that, over the years, APD has become nothing more than a Government revenue stream. It is not ring-fenced or reinvested; it becomes part of the “money in” column and is added to the mix of Government expenditure.

It is outrageous that over the years, so-called environmental taxes have been levied and never ring-fenced and reinvested in the way they should have been to reduce emissions. Last week, the Chancellor made the crazy announcement of lowering APD on domestic legs of return journeys. We need a serious debate about support for the airline industry and the wider travel industry, but a reduction in air passenger duty should apply only to airlines that use sustainable aviation fuel, which costs more money. At least companies would be incentivised to lower their emissions, with the offset reward of reduced APD. It makes no sense in the current climate to do a blanket APD cut.

In the aviation industry as a whole, for years consecutive Governments of different colours have maintained a policy that aviation fuel is duty free. We pay our petrol duties at the petrol pump for domestic use in our cars, but all these years, aviation fuel has been duty free. That makes no sense. It needs to be looked at in the round. I do not want to kick the airline industry when they are down and make it harder for them, but we need a system that is fair for everyone on carbon taxes, emissions and incentivising behaviour to drive change. The Government need to look at that.

In the oil and gas sector, £350 billion of revenue has come from Scotland over the years. Those were carbon taxes, but that money has never been ring-fenced or reinvested. A sovereign wealth fund has never been created. Most countries across the world have created sovereign wealth funds, which they are using now, in these tough times, either to help their economy, stimulate their economy, or do green initiatives on the path to net zero. But the UK Government have never done that. It is to their shame that we do not have that money, as a legacy, to go forward.

Today, I actually managed to attend a COP26 panel event before I got on the train to come down to Westminster. There was a representative at the event from Louisiana; he was explaining how for years it has used its offshore revenues to pay for climate adaptation measures along its coastline. Obviously, Louisiana is one of the areas most affected by coastal erosion. That shows us what can be done with long-term thinking, but it needs the initiative to look at revenues that are coming in and how to use them wisely. That is what I am calling for. If there is carbon taxation coming in, it must be transparent and it must be available to be reused to fight climate change.

In a similar vein, I represent a former coalfield area. Carbon taxes had been applied to the extraction of coal over the years, but a few years ago, when the open-cast coal industry collapsed in my constituency, it left massive craters that needed reinstatement work at a cost of millions of pounds. Carbon taxes came from my constituency to the Treasury, but they just went into the black hole. When we asked for assistance for restoration work on those abandoned coalmines, the answer that came was, “No. Too bad. That money came in and it has been used. There is no money coming back to your constituency. It doesn’t work that way.” That shows the folly of not ring-fencing a tax for the purpose that it should be ring-fenced for. Again, transparency is utterly critical if we are to go forward.

I would also say on transparency that the Treasury will have to develop these taxes following open consultation with industry, non-governmental organisations and charities. I also suggest that it would be worth the UK Government’s following the lead of the Scottish Government and having a just transition commission that is able to advise the Government on fairness, look at policies across the board and advise the Government accordingly. Equally, the Treasury cannot be left with the power to introduce exemptions from carbon taxes without robust and transparent procedures, or else it is a lobbying exercise and it becomes open season for donors and cronies to lobby the Government and possibly get exemptions. Again, anything that comes forward needs to be transparent.

I have just one further warning about the money not becoming a Treasury income, because that nearly happened post Brexit. The Department for Business, Energy and Industrial Strategy had devised an emissions trading scheme, which was agreed with all the devolved nations, but at the eleventh hour the Treasury wanted to throw away all that work and replace it with the introduction of a carbon tax. That was clearly just because the Treasury saw it as an income stream. That cannot be allowed to happen; the Treasury cannot have carte blanche to do what it wants. It also shows us that carbon taxes have to be developed in conjunction and consultation with the devolved nations.

In Scotland, we have our own net zero by 2045 target. We have, as I said, the Just Transition Commission. We are working with our own policies, so it is only right that carbon taxes be introduced in such a way that they do not adversely impact our direction of travel.

I am getting near my conclusion, Mr Robertson. I have some concerns about a carbon tax, but largely I do favour the concept. I pay tribute to the work done by the Zero Carbon campaign, which has illustrated and highlighted the fact that surveys prove that such a tax is generally popular with the wider public. They understand the need for net zero; they understand the benefits of a carbon tax being introduced, but again, the critical question is whether that is being done fairly. Scotland’s Climate Assembly has had similar findings with the delegates who have participated in the assembly.

Things can be done to resolve the concerns. Again, that is about transparency. It is about targeted reinvestment. Ireland is already doing that: it targets top-up social welfare payments. That is something that this Government could look at, especially with the cost of living and the fuel and energy cost crisis at the moment. They could put more money into supporting electric vehicles as we try to transfer away from the internal combustion engine.

Something that the Scottish Government are doing is interest-free loans. They have extended interest-free loans to the second-hand market to try to extend affordability, but the UK Government are cutting the grants available. If we are going to have carbon taxes, we need to further stimulate the electric vehicle market and ensure that some people are not left behind.

The decarbonisation of our heating systems is absolutely critical. It would be good to step up energy efficiency installations, treat energy efficiency as a capital infrastructure programme and speed up the upgrading of all properties to EPC––energy performance certificate––band C. That would reduce emissions and fuel costs. What could be a fairer way of using the carbon taxes that are levied?

I agree with the two contributions so far about introducing a broader carbon adjustment to minimise leakage or offshoring. We know that carbon taxes can be successful in changing behaviour. We know that they seem to have wider support if they are introduced fairly and transparently, so let us continue with this serious discussion. Let us find a way to introduce them but ensure that it is done in a way that helps us get to net zero and is part of a just transition.

--- Later in debate ---

[Lucy Frazer]

I thank the hon. Member for her intervention. The two schemes that we already have in place are obviously ones through which the polluter pays; they are about industry recognising that when it pollutes, it must pay for that.

The hon. Lady, as well as the hon. Member for Kilmarnock and Loudoun (Alan Brown), talked about what the Government could do to support individuals. The issue of heat pumps, and the importance of such measures not being too burdensome on those who need to implement them, has been raised on two occasions. A number of Ministers have made this point clearly, but I reiterate that we are not forcing people to take measures such as installing heat pumps: we are saying that if they wish to do so, a grant is available to them. Regarding heat pumps in particular, I would like to make it clear that we expect the price to come down. I suspect that that will happen when we have a requirement for all new homes to be net zero by 2025. When there is the volume of supply of heat pumps that we need, I suspect that their price will come down, as we have seen in relation to electric cars, for example.

[Jerome Mayhew]

My understanding is that it is not the price of the product that will go down, because France is already installing 400,000 heat pumps, so there is volume in product. Interestingly, it is about the mechanism of installation: when the big electricity suppliers begin to install heat pumps, rather like British Gas does with boilers today, that is when the prices will really come down.

[Lucy Frazer]

I am grateful to my hon. Friend for that interesting intervention. I hope that the prices of installation will fall as well.

Ministerial Code/Register of Ministers’ Interests

Jerome Mayhew Excerpts

Tuesday 18th May 2021 Commons Chamber

[Penny Mordaunt]

We have seen all sorts of innovations over the last year given what technology now enables, and the hon. Gentleman makes a very sensible suggestion. It is for Lord Geidt to take these matters forward, and I am sure he will have heard what the hon. Gentleman has said today.

[Jerome Mayhew (Broadland) (Con)]

Given that the NAO has found “no evidence” that Ministers were involved in any decisions around emergency PPE procurement, does my right hon. Friend agree that throwing unsubstantiated mud like this for party political advantage damages not just the Government but our political processes and is deeply irresponsible?

[Penny Mordaunt]

I agree with my hon. Friend—and it also damages business. Without the efforts of the private sector, whether it be pharma companies or production lines changing to produce what the country needs, we would have been in a really sorry state. Let us be frank, part of this agenda is to discredit the private sector.

Government's Management of the Economy

Jerome Mayhew Excerpts

Tuesday 23rd February 2021 Commons Chamber

[Jerome Mayhew (Broadland) (Con) [V]]

The last 10 years did not weaken the foundations of the economy; they did the exact opposite. We took the painful decisions to repair public finances during a decade in which the Government also managed to provide uninterrupted economic growth.

I am not the first person in this debate to mention the fact that the Government fixed the roof of public finances. They reduced Labour’s deficit by more than 80%. Why? So that we would be able to respond with hugely increased funding in a real crisis. Labour never fixes the roof. It is because of the responsible decisions of Conservative Governments that the UK has the financial firepower to support the whole economy—the economy in Scotland, Wales, Northern Ireland and England—throughout the pandemic, by spending more than £280 billion in support, and counting.

Conservatives fix the roof of public finances while at the same time reducing inequality in our society. Labour’s claims to the contrary are wrong. All measures of inequality, whether they measure original, gross or disposable income, have narrowed under the Conservative stewardship of the economy. Labour talk the talk, but the Conservative party has delivered for the low-paid. In fact, the Conservative stewardship of the economy has led to the lowest-paid people being up to £5,200 better off, in real terms, than they were in 2010—and that came after 13 years of Labour Government.

The approach to fairness that I have outlined needs to continue. The motion calls for a further pay rise for public sector workers—the heartland of Labour’s union bosses—and we would all love to be in a position to deliver that, but we need to recognise that as a result of the pandemic, private sector wages have fallen by almost 1%, while at the same time last year public sector wages rose by almost 4%. Unlike the private sector, wherein people have lost jobs, been furloughed and had insecure employment and reduced working hours, the public sector has been largely protected.

In the circumstances, is it fair to tax the private sector even more to pay for further public sector pay increases? It might be popular, but it would not be fair or in the long-term interests of the country. Let us get the economy growing, with private sector pay increasing, so that we can afford to pay the public sector more as well. The Conservative Government can be trusted to steward the economy for the long term; Labour simply cannot.

Taxation (Post-transition Period) Bill

Jerome Mayhew Excerpts

2nd reading & 2nd reading: House of Commons
Wednesday 9th December 2020 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

This time yesterday we, frankly, would all have celebrated seeing what is in this Bill; today, I want to celebrate what is not in it. It is great that we do not have to consider the inclusion of additional measures to take account of the failure of the Joint Committee to come to an agreement on the proper interpretation of the Northern Irish protocol; I am delighted to learn that we have now come to the pragmatic and proportionate way found by the Joint Committee for the interpretation and enforcement of its provisions. Just a few days ago the European Union asserted that all goods travelling from GB to Northern Ireland were to be considered as being “at risk” of onward transport to the EU, a patently absurd and obstructionist position, so I heartily welcome this last-minute change of heart.

TD Simon Coveney, the Fine Gael Minister for Foreign Affairs, has said that

“Practical cooperation and flexibility has been agreed to make it as manageable as possible for people and businesses.”

Amen to that, and may the same spirit suffuse the continuing negotiations elsewhere in Europe.



Clauses 2, 3 and 4 put in place the practical requirements to allow for the charging of customs duties and VAT away from the geographical border with the Republic of Ireland while continuing to protect the ability of Northern Irish products to travel without restrictions to the rest of the United Kingdom. This respects the Government’s commitment that goods from Northern Ireland will continue to have unfettered access to the rest of the United Kingdom.

Clause 7 proposes that VAT collection for goods sold in the UK by overseas sellers will move away from the border either directly to the overseas seller or, importantly, where the sale has been facilitated by an online marketplace, to that marketplace. This is a very important step that marks, I hope, the beginning of a much wider reassessment of the role of online marketplaces and the responsibility that they should properly have for the goods of international origin that they sell. All goods sold on our high streets pay the appropriate level of VAT, yet high street shops are being unfairly undercut by online international competitors that have avoided VAT. This clause allows the first step to be taken in recognising that the online marketplace has come of age, and with that coming of age it needs to accept the responsibilities of its powerful market-making position.

I hope that the link between the facilitation of sale and wider responsibilities will be a theme that the Government expand on in the coming months. As I mentioned in the debate yesterday, the same argument can be applied to areas of environmental legislation, such as the extended producer responsibility, as well as the collection of electronic waste for recycling.

I welcome Her Majesty’s Government’s approach. It is no longer credible for the hugely powerful and commercially dominant online marketplaces to wash their hands of what actually passes through their platforms.

Taxation (Post-transition Period) (Ways and Means)

Jerome Mayhew Excerpts

Ways and Means resolution & Ways and Means resolution: House of Commons
Tuesday 8th December 2020 Commons Chamber

[Kevin Hollinrake]

No, I do not. The UK Government have to take a number of matters into consideration. They have a collective position. Clearly, we cannot always get exactly what we want in terms of negotiation. My point is that we could have done better in these negotiations and there could have been less drama around them. The fact that these negotiations are concluding so close to the deadline for businesses has been brought about partly because of the divided nature of this Parliament. The hon. Lady and the Opposition should take responsibility for that position.

My point about a fair and level playing field is about the fact that many of our small businesses in the UK compete with online platforms—online marketplaces, as they are called—such as Amazon and eBay. How can it be right that for so long many of those small businesses have been competing at a 20% disadvantage? Many retailers selling into the UK are not paying VAT on those sales. I am pleased that the Government have acted on this and closed the loophole. They have closed a number of loopholes in recent years through measures such as the digital services tax and the diverted profits tax. This creates the fairer and more level playing field for the rest that I very much welcome. There is one more loophole that we could close, not in this legislation, but in the Financial Services Bill, which is going through Parliament at the same time.

Country-by-country reporting would also have a profound effect in closing loopholes that some companies are using to divert profits out of this country.

[Jerome Mayhew (Broadland) (Con)]

The Government are making an important point in this Bill in starting to look at online retailers facilitating the sale and that is making a difference, particularly with international trade. Does my hon. Friend agree that this should be expanded beyond just VAT into things like the extent of producer responsibility and other aspects of international trade?

[Kevin Hollinrake]

Yes, I do. We all know that the best way of driving down prices and driving service for our consumers—our citizens—is through a free, competitive marketplace. Our job, wherever we can, is to let that marketplace do its work. Our job is also to make sure that it sits on a fair and level playing field. My hon. Friend, in talking about regulation for some of the retailers—some of the UK businesses but not businesses abroad—makes a very sound point that the Government should consider.

Going back to country-by-country reporting, let me give an example. Google’s turnover in the UK is about £10 billion. We can work that out by extrapolating certain figures from a couple of years ago. Internationally, it declared a 22% profit margin, which means a £2.2 billion profit in the UK. Based on corporation tax at 19%, it should pay £420 million in tax on that. Last year it actually paid £67 million in tax. That cannot be a fair and level playing field for other UK retailers or other UK companies that compete against Google, particularly in terms of advertising space—many of our regional papers, for example. I would like the Government to bring forward legislation, in some vehicle or other, to tackle that issue.

I am very pleased that this loophole is being closed and I very much commend the principles and the outline of the legislation that we will see tomorrow.

UK-EU Future Relationship Negotiations and Transition Period

Jerome Mayhew Excerpts

Monday 7th December 2020 Commons Chamber

[Jerome Mayhew (Broadland) (Con)]

Is my right hon. Friend aware of the strength of solid support from the Conservative Benches for the Government’s negotiating position? Does she agree that a deal can be done, with all the necessary compromises that will entail on both sides, only if it starts from a point of fundamental acceptance of the United Kingdom as a sovereign, independent third country?

[Penny Mordaunt]

I agree entirely with my hon. Friend. I thank him for his support and I thank all Members in this House who are getting behind the negotiating team and sending that clear message to the EU negotiating team this afternoon. There is huge support not only on these Benches but in our constituencies. Whichever way people voted in the referendum, they know that this is the way forward. They want to get these final issues resolved swiftly so that we can all get on with it in the new year.