Currency in Scotland after 2014

Jim Shannon Excerpts

Wednesday 12th February 2014 Westminster Hall

[Mr McKenzie]

The hon. Gentleman makes some good points; but the main thing is that the Scottish Government believe they can do anything they want.

Losing the pound would mean a higher cost of living, with higher mortgage repayments, higher credit card and store card bills and more costly loans, because Scotland would start out as a separate state with no credit rating. There would also be an unnecessary threat to jobs: what would the exchange rate be? The cost of changing money every time Scottish firms were to buy from or sell to our biggest customer—the rest of the United Kingdom—would be an issue. There would be deeper cuts or higher taxes as the Scottish Government paid more to borrow money, leading to more debt and lower public spending. There would be risks to benefits and pensions as payments were converted into a different currency. Many people worry about what currency they will be paid in and what their savings will be worth.

There would also be risks to the economy. Without the back-up of the rest of the UK following the world banking crisis, Scottish banks would have gone under and families and businesses would have lost everything. Let us remember that billions were pumped into our banks following the world banking crisis. In my constituency alone, more than 400 jobs were saved. Time is running out for those who want a separate Scotland to give an answer and provide an assurance on currency. The Scottish people cannot be expected to go on any longer with “Don’t worry—it will be all right on the night.” It is not scaremongering to want a direct answer from the nationalists, incorporating a guarantee on currency in Scotland after 2014.

[Jim Shannon (Strangford) (DUP)]

Members representing constituencies in Northern Ireland, which borders another country with a different currency, can attest to the difficulties with prices and services. Does the hon. Gentleman agree that retention of the pound sterling is essential for the continuation of trade, but also for the continuation of the United Kingdom of Great Britain and Northern Ireland?

[Mr McKenzie]

I fully agree. What is scary is the attitude of the nationalists and the yes campaign—an attitude of casually and arrogantly waving off any challenge to their supposed plans. Those plans do not stand up to scrutiny—as we find now on the matter of currency; they would deliver not so much independence as isolation.

The question to the nationalists is simple, but the options are limited. Can they deliver a currency union? All the indications are that the answer is no. Will they go it alone and just use the pound, with the result that they will have no control over the economy? Will they go for a new currency, and will that be pegged or floating? The Scottish nationalists are keen to get closer to the Nordic regions, nations of a comparable size; they always cite Norway, Finland and Sweden, or anywhere in that supposed arc of success, as it fluctuates. In the past 10 years, Norway’s currency, which was pegged against the euro, has fluctuated, and there has been a high degree of movement, and cost implications, as a result. Alternatively, will the nationalists adopt the euro—if and when Scotland can gain entry to the EU?

Those questions are as yet unanswered. Scotland needs to know from the yes campaign what currency—guaranteed—would be used after 2014. We who want to remain part of the UK can guarantee Scotland’s currency after 2014; it will be the pound, and all that is necessary for that to happen is to vote no in September.

Fairness and Inequality

Jim Shannon Excerpts

Tuesday 11th February 2014 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I certainly understand the motion’s sentiments. When I looked through it, several things came to my attention—income inequality, the impact on low and middle income families, the number of workers on the minimum wage and zero-hours contracts, people in working poverty, the sharp rise in the number of people using food banks, and welfare cuts. I very much understand and would want to speak about all those points in the motion.

At the same time, I do not totally agree with my colleagues in Plaid Cymru and the Scottish National party about their wish to break up the Union. As a committed Unionist who sees the importance of the United Kingdom of Great Britain and Northern Ireland, I want the four regions of England, Wales, Scotland and Northern Ireland to be together as one nation—one nationhood together—under the Union flag. I cannot agree with them about that, but I honestly have real affection, as they know, for each and every one of them. I want to see them in this Chamber after the referendum in Scotland and the one, whenever it is—perhaps a decade or two away—in Wales.

[Mr MacNeil]

I want to make sure that the hon. Gentleman fully understands that the hand of friendship is there: whenever he wants to visit Scotland after independence, I will personally make sure that he is made very welcome.

[Jim Shannon]

I knew that there would always be a welcome for me in the hillsides. It is a real pleasure to know that the hon. Gentleman would do that.

Any hon. Member who works in their constituency will have come across the problems that people face, but I know that a lot is being done to combat those problems in many Departments, as should be noted. Perhaps full credit has not been given to the Government of the day for the economic turnaround that we have had. It is only fair to say that, and I want to put it on the record. I know that much blame passes from side to side in this Chamber about why we are where we are. My friends on the Government Benches point to the legacy left by the previous Government that is still being felt, and my friends on the Opposition Benches mention the austerity cuts and decisions that have been taken, but we in the middle are simply saying, “Let’s forget the blame, and focus on how we can make things better for our constituents and our country.”

I am conscious that the debate is about fairness and inequality, which of course relate to many spheres of life. It was only fair, because the best team won, when Ireland beat Scotland 28-6. As for inequality, we saw an example of it when Ireland, the better team, beat Wales 26-3, an indication of skill and experience. Fairness and inequality therefore go into many things, and that is just one of them.

[Ms Ritchie]

Irrespective of our political differences and affiliation, does the hon. Gentleman agree that it was Ireland as a united country that played in that rugby team?

[Jim Shannon]

I know that, of course, but it would not have been a team without the Ulstermen, and that—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. It may help the hon. Gentleman to know that if he mentions the Calcutta cup on Saturday, he will be in big trouble.

[Jim Shannon]

Who am I to get on the wrong side of you, Madam Deputy Speaker? Of course I will not mention it.

We are coming out of a recession, and times are tough for many people throughout the whole of the United Kingdom, but may I point to the fact that there have certainly been some successes? I am thinking of the recent contracts and job creation secured in Northern Ireland, thanks in no small part to the tremendous work done by the Minister of Enterprise, Trade and Investment. Yesterday, for example, she secured a contract in Singapore to supply defibrillators to the Singapore army, and she has secured a new contract through her “Going Dutch” campaign. Of course, everyone here knows that Northern Ireland has a strong relationship with Holland—something to do with the 16th and 17th centuries—but we have relationships across the whole of the United Kingdom and into Europe, where Northern Ireland can have influence and be better for it.

[David Simpson (Upper Bann) (DUP)]

I agree with my hon. Friend that we are seeing some economic recovery and that is very important, but does he agree that we still have inequality and unfairness affecting the younger generation, who want to buy homes but cannot and will not be able to do so for the foreseeable future?

[Jim Shannon]

I thank my hon. Friend for making that point—not one of us here would disagree. Just this morning, we discussed VAT and tourism in Westminster Hall, in a debate led by the hon. Member for South Down (Ms Ritchie). We talked about opportunities for jobs in tourism, and most of those who benefit will be young people, so we would like to see that happen.

My hon. Friend is right: I cannot, in all fairness, paint a completely rosy picture. People are struggling, and we in this place are tasked with finding ways to help them and to help those who are trying to help others. As time has passed in this economic climate, we are seeing people who once had more than enough struggle to make ends meet. I can think of developers who, five years ago, were donating hundreds, sometimes thousands, of pounds to charity, but who are now seeking help with their benefits as a result not of losing the desire to work, but of losing the work to do. That is a fact facing many people in my area.

With more and more people struggling, one of the local churches took matters into its own hands and set up the first Trussell Trust food bank in Northern Ireland. Like the Minister, I see the benefits of the food bank in bringing people together, with people energised to help others in a clear, practical and physical demonstration of love for others. Thriving Life church in Newtownards realised that people simply needed help and was the first to do this, but there are now 12 food banks across the Province, all manned by people who volunteer to make a difference, all stocked by a community who understand that by donating a few groceries, they can help others who are struggling.

Since opening, the food bank in Newtownards has fed some 3,000 people and the number rises every day. Forty tonnes of food were donated by the local community. The food bank is staffed by a group of volunteers who collect, sift and sort through donations and make up the packs—they even have foodstuffs specifically for diabetic people donated by constituents. They keep a record of why people are referred to the food bank and they worked out four reasons, of which the first is low income. At the time the work was done, last summer, there were 604 referrals because of low income, almost 500 because of debt, just over 410 because of benefits changes and almost 400 because of benefit delays, so 65% to 70% of people were referred because of low income or debt and 30% to 35% because of benefit issues.

There are 86 regular donors to the food bank, including churches, businesses, schools and community organisations. Mash Direct and Willowbrook Foods—two major companies in my constituency—give regularly, and such donations are crucial to the Newtownards food bank. The sense of community has been expanded to supermarket stores such as Tesco and Asda, whose partnerships are crucial: not only do they allow store collections, but one store recently donated an additional 30% of food to what had been collected in a two-day drive. I have been pleased to be present and helping on the two occasions they did that. The big stores recognise the problem and try to help.

Not only does our food bank provide food in a crisis but, through the organisation Christians Against Poverty operating from the church, it also provides professional assistance with budgeting and debt issues and teaches people how to live on their income. Trained workers go through people’s debts to find a manageable payment scheme and do all the set-up work. That work is very important and must happen. Not only can people get food to feed their children, but they can get help to lift them out of the dark hole of despair that many are in.

This does not absolve the Government of doing all they can to ensure that no family in the UK goes to bed hungry. We have a role to play through ensuring that our welfare system runs smoothly, so that delays in benefits do not mean delays in provision. The Government have a massive role to play. They must begin by thanking the individuals and groups that work tirelessly to make a difference to people’s lives and to communities, and by asking how they can assist them.

In conclusion, tough decisions have been made. I have agreed with some and disagreed with many others. I oppose the implementation of the bedroom tax when no housing is available for people to move into. We have to work in this House to make savings. At the same time, we must work hard to ensure that we change lives for the better. Further, we must ensure that when the game of blame is finished, we are taking action to make those changes.

Tourism (VAT)

Jim Shannon Excerpts

Tuesday 11th February 2014 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Members for South Down (Ms Ritchie), and for Brighton, Pavilion (Caroline Lucas), on having joined me in securing this debate.

Members will not be surprised to hear that I am unashamedly vocal about the beauties of my constituency, and I truly believe that I represent the most breathtaking constituency in the whole United Kingdom. I have previously spoken of the potential for tourism in Northern Ireland that has yet to be explored, and if that potential were to be exposed to the rest of the world, the entire United Kingdom would benefit. The first part of my three-and-a-half minute contribution is on the question of how we go about that task.

The Northern Ireland issue is highlighted and exposed by the fact that we border the Republic of Ireland. The industry in Northern Ireland is linked to tourism in the Republic of Ireland, so the discrepancy in VAT rates is noticeable. VAT in the Republic of Ireland has been reduced for hotel accommodation since 1986. In 2011, the VAT reduction was extended to cover out-of-home meals. Take those two things together and Northern Ireland—and, indeed, the United Kingdom—is 11% behind the Republic of Ireland’s VAT rate. That puts the United Kingdom, and especially Northern Ireland, on an uneven keel.

The Northern Ireland Hotels Federation gives figures that justify a VAT reduction. The federation indicates that 14,900 jobs would be created by reducing VAT. Gross value added would increase by £155 million, and wages would increase by £64 million to £225 million by 2020. Those figures indicate a clear win-win-win, because as the hon. Member for Brighton, Pavilion, said, a VAT reduction would mean more jobs, more money in people’s pockets, and a reduction in benefits paid to the unemployed. That can clearly be done. The Republic of Ireland produced 6,500 new jobs and saved 31,000 jobs, which indicates the seriousness of our position. We are one of only four countries in Europe that are not availing themselves of a reduced VAT rate. The VAT rate on hotels is 7% in Germany and 10% in France, and that encourages UK and EU residents to holiday in those countries. It is time that we did something about that. Perhaps the Minister will indicate what he hopes to do.

The industry is anxious to find the best way to use a VAT cut for the benefit of the Treasury and the UK as a whole, for example by ensuring that at least half the cut is passed on in lower prices, with the rest used for increased staff wages, training, employment and increased investment; that would be similar to what the French Government did with their restaurant industry.

Time is against me, but others will join me in proving beyond reasonable doubt that a short-term investment in the tourism industry will yield long-term dividends, as has been proved in Europe and can be shown here, if the chance is taken. Some might ask, “How can we do that?” I would simply tell them to book a flight to Belfast and take the 20-minute journey to my constituency. They will see within seconds why I believe that, with a little bit of help and support, tourism can and will thrive. There is an opportunity for us all to take our place on the world tourism stage and to allow others to enjoy what we have: great lodgings, fantastic scenery, wonderful shopping, world-class golf, hotels, salons, historical journeys and, most importantly, our unique Northern Irish hospitality, which draws people and makes them feel part of the family. It is not for nothing that we are called the happiest people in the United Kingdom. A holiday in Northern Ireland will refresh and renew. The Minister has a chance to enhance that potential, and I hope that he will take it.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for South Down (Ms Ritchie) on securing the debate and putting her case so strongly and on the fact that the debate is so well attended. Her constituency is known as one of the most beautiful in the United Kingdom, but I appreciate the strong case made by several other hon. Members for their constituencies to be on that list. In the interest of time, I shall not attempt to comment on each of those areas, but I can reassure hon. Members that the Government appreciate the value and importance of the tourism sector. Ministers from the Treasury and the Department for Culture, Media and Sport have been working closely with the industry to increase inbound and domestic tourism.

VAT is governed by EU law, which strictly limits reliefs. However, as hon. Members have pointed out, VAT law allows member states to implement certain reduced rates of VAT, which are listed in annex III of the VAT directive, at the discretion of the member states. Two of the reliefs are

“accommodation provided in hotels and similar establishments, including the provision of holiday accommodation and the letting of places on camping or caravan sites;”

and restaurant and catering services, excluding alcoholic drinks. As several hon. Members have pointed out, when the list of optional reduced rates of VAT entered into force in 2006, the UK opted not to implement those two reliefs and has maintained that position since.

Several other member states have chosen to implement a reduced rate of VAT on tourism, but the Government have yet to find any evidence of a causal link between VAT rates and tourism activity. Comparisons with other countries tend not to take into account the significant VAT reliefs that the UK provides for cultural attractions and public transport, or the other tourist taxes that other member states choose to levy. In addition to the sector-specific reliefs, the UK’s VAT registration threshold is the highest in the EU. Therefore, many tourist attractions do not have to charge any VAT to their customers. It is interesting to note that France, which is often the country quoted as reducing the rate and reaping the rewards, put its VAT rate on restaurant services up from 7% to 10% in January. Also, many businesses in the tourism sector are small businesses and will benefit from the £2,000 cut in national insurance contributions—the employment allowance—that will come into effect in April.

As I mentioned, Treasury and DCMS Ministers have discussed the Cut Tourism VAT campaign, and I have met campaigners and engaged in correspondence with them about the report mentioned by the hon. Member for South Down, among other things. The campaign’s analysis assumes that the revenue shortfall associated with a VAT cut should be met by increasing Government borrowing, but the latest figures from the Office for National Statistics suggest that reducing VAT to 5% for all catering services provided by restaurants, pubs, cafes and canteens would cost the Exchequer between £9 billion and £10 billion a year. Cutting VAT to 5% for accommodation would cost the Exchequer an estimated £2 billion a year. I do not have to remind hon. Members that those costs would have to be met by increasing other taxes, which would be likely to affect growth and jobs adversely elsewhere in the economy, by reducing spending or by increases in borrowing. That would be contrary to the Government’s long-term economic plan and risk raising interest rates, undermining the recovery and adversely affecting families and small businesses.

[Jim Shannon]

Many hon. Members spoke in the debate about the jobs that could be created; the figure for Northern Ireland was almost 15,000. Those jobs would result in taxes being paid and people coming off benefits. What weight has the Minister given to that part of the equation, in the figures he has just outlined?

[Mr Gauke]

I reiterate that funding the cut by additional borrowing would be contrary to our long-term economic plan to get the deficit down and put our public finances in a credible position. It would entail a risk to the recovery. As all hon. Members know, the Government’s priority is to tackle the record budget deficit decisively but fairly and to restore confidence in the economy and support the economic recovery. The conclusion that we reached, therefore, which I announced in Parliament last year, is that a VAT cut would not produce sufficient economic growth to outweigh the revenue shortfall. I have not seen any new evidence since then that has led me to revisit that conclusion, so, at present, the Government have no plans to introduce a VAT cut for the sector.

Consumer Rights Bill

Jim Shannon Excerpts

Tuesday 28th January 2014 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I congratulate the shadow Minister on the points she made, which we fully endorse, underlining the need for tighter consumer protection. This subject involves myriad issues often arising out of constituency concerns.

I am pleased that the Bill is before the House. Like everyone in the Chamber, I am often contacted on the need for tighter legislation and greater rights for consumers and others. Staff in my advice centre regularly refer cases to the Consumer Council, and sometimes they have to contact the council themselves to ensure that it pushes a matter strongly. It does not always do that, so we have to underline what we are asking it to do. Sometimes it tells us that the legislation is not strong enough and it is important to address that.

[David Simpson (Upper Bann) (DUP)]

My hon. Friend mentions constituents and the Consumer Council. Like other hon. Members, I am sure, I often receive complaints about the process and bureaucracy of exchanging goods. I think, in particular, about older folk, who have a paper trail to keep, and who sometimes are not good at it. It would be good if that could be addressed.

[Jim Shannon]

I thank my hon. Friend for bringing that matter to the House’s attention. I think that every speaker has underlined that issue, and many have spoken on behalf of elderly constituents who find it difficult to return goods. I have had people in my office complaining about particular retailers, but in true British form, rather than complaining, they say, unlike Arnold Schwarzenegger, “I’ll not be back” to make a complaint. Someone might have lost £100 on a pair of shoes because the heel is too wobbly to walk on, but feel that there is no point in complaining. That underlines the crucial issue that my hon. Friend the Member for Upper Bann (David Simpson) mentioned.

I regularly hear complaints in my office about flights that have been cancelled, about the service and about the fact that prices quoted are often different from the actual prices. These are issues that regularly come to my attention. Many retailers get away with selling substandard merchandise. When somebody brings something back, they simply point to the sign that says, “No sale return”. That is not correct. It does not affect a consumer’s statutory rights. Why does the consumer sometimes have to push so hard to get their rights? Many people are not aware of their rights, and it is my hope that the Bill will clarify consumer rights and make them a little easier to understand and regulate.

Hon. Members have referred to energy suppliers. We have a regulator that controls—or tries to control—prices, but more often than not prices rise faster than inflation. We feel that the regulator should have more power, so I hope the Bill will give us a regulator that can enforce the issue on energy prices. Every one of us, as elected representatives, will be aware how energy prices affect the households we represent.

I am also concerned about insurance premiums. The hon. Member for South Down (Ms Ritchie), who is not here, brought this issue to the Chamber a short time ago. I think every Member from Northern Ireland contributed to that debate. It frustrates and angers me, and it certainly angers my constituents, that people advertise insurance premiums on the television that are available anywhere in the UK—Scotland, Wales and England—except, according to the small print, Northern Ireland. I am as British as anyone in Edinburgh, Cardiff or London and I expect to be treated the same, as do my constituents.

The regulatory measure will reduce the effort both consumers and businesses have to make to resolve problems. Consumers will now have the right to get some money back after one failed repair of faulty goods or one faulty replacement, to demand that substandard services are redone or, failing that, to get a price reduction and a repair or replacement of a piece of faulty digital content such as a film or music download, online game or e-book. It is clear that the more we shop online, the more regulation there needs to be in place. After Christmas, the newspapers indicated that there were greater sales online than there have ever been in the past. In my constituency that is an issue as well; the trend is for online shopping.

In my constituency, there is a business called Excel which, to use its own word, is excelling in online sales. It is a prestigious clothes shop in Newtownards that moved into online sales a few years ago. That business has grown and it gives consumer protection. When it sells goods, it has a sale or return policy. That gives the consumer the opportunity to buy a good, which they are doing in increasing numbers. That business has grown greatly. It is now hoping to sell to the Republic of Ireland, another stage of that growing business in my constituency.

There are many sites online that help someone to stand up for their rights but the ordinary person would never think to look those up and would also not think that they were capable of fighting their corner. Many times people do not want to be involved in controversies or to have to complain. The Bill must be easily readable and understandable and I urge the Minister to ensure that anyone of any educational background is able to apply it to their own situation.

Some hon. Members today have spoken about the issue of those who use Google to get an idea of their rights but are then drawn down a road that takes them away from their real consumer rights. That is an issue about which we need to be concerned. We need to stop the exploitation of the vulnerable because most of the people who come to me are vulnerable people who have no knowledge of all the issues involved. I am concerned that those people are sucked into a process that they find difficult to get out of.

Hon. Members have mentioned credit card companies, banks and payday loans, where consumer protection is needed. Many companies now advertise a method to reclaim or redeem unfair charges. That also needs to be monitored because sometimes we wonder what it all means. If someone is phoned and told that they have a chance to claim back money, a financially vulnerable person might respond and disclose details that they should not disclose. We need a consumer rights Bill that protects people from those things.

The Bill proposes a set 30-day time period during which consumers can return faulty goods and get a full refund. At present, consumers can reject goods as faulty within a reasonable period; interpreted by some retailers as 14 days and by others as up to two months. There is diversity among retailers; let us get it correct for everyone so that everyone knows their rights.

In my constituency, a lady left her shoes to be re-heeled. When she came back to the same place to collect them a few days later, as she was told to do, the shoeman had disappeared and the shop was closed for two months. In such cases there should be a method by which the police or local authority has the right to be involved and to enter the shop; it is about consumer protection and consumer rights.

I hope that the Minister will tell us what attention she will pay to all of the issues raised today about the Bill and protecting consumers. All in all, I believe that the Bill seeks to enhance consumer rights. I support it in principle and look forward to the Minister’s response.

Money Transfer Accounts and Remittance Sector

Jim Shannon Excerpts

Wednesday 22nd January 2014 Westminster Hall

[Cathy Jamieson]

Indeed, and I am grateful to both Oxfam, which has provided me with a briefing, and the UKMTA, which has also provided me with that information. Of course, one of the dangers is that when we begin to investigate these matters, people start to find that there are problems and rather than finding solutions to those problems, the response is, “Well, we will just make sure that it is closed down and doesn’t happen.”

[Jim Shannon (Strangford) (DUP)]

I apologise for not being here earlier in the debate; I wished to be here, but I had other commitments. The hon. Lady has outlined her concerns, which this House shares, about the £15 billion of remittances that happen each year. Does she agree that it is not only a matter of making the right, legitimate channels available for these transactions to take place but one of restoring confidence in the system? If there is no confidence in the system, people will feel vulnerable, whatever transactions take place.

[Cathy Jamieson]

The hon. Gentleman makes a valuable point. At a point in time where even some of the larger financial institutions have seen confidence erode, it is of course important that people can have confidence in the system, every step of the way, and that that confidence is rebuilt.

I would like the Minister to answer the questions that have been put to him, particularly the very pertinent questions about what specific action has been taken since July. Also, will he now give a commitment that he will personally press for and oversee some of the work, and drive it forward across the different Departments, to ensure that there is no more dragging of heels or things getting lost between the different parts of Government, simply because of the Departments’ inertia? I am sure that he will want to take the opportunity to respond to those points.

Pub Companies

Jim Shannon Excerpts

Tuesday 21st January 2014 Commons Chamber

[Vince Cable]

I thank my hon. Friend, who remembers such things from his time in the House, for his reminder. We have, I think, had four Select Committee reports under different Governments. The matter has been actively debated for something in the order of eight years, and we have moved quickly on it in comparison with what went before.

[Jim Shannon (Strangford) (DUP)]

The failure of the pub companies to self-regulate underlines the need for an adjudicator, as does the fact that a number of pubs are closing. Does the Minister not feel that there is a sense of urgency in relation to bringing in legislation?

[Vince Cable]

As I will say later—we have covered the matter in earlier debates—we did try to encourage self-regulation. We drew the conclusion that the action had not been adequate, which is why we moved on to proposals for statutory regulation on which we are now consulting. We have been down that road; we have tried that.

--- Later in debate ---

[Vince Cable]

As I said earlier, there were more than 1,000 individual responses to the consultation. Many described very similar stories to the one that my hon. Friend has just mentioned.

[Jim Shannon]

Will the Secretary of State give way?

[Vince Cable]

May I move on, as the hon. Gentleman has intervened once already?

Just as this is not primarily an issue about the rate of closures, I think we would all agree that it is not fundamentally an issue of consumer choice. Otherwise, the competition authorities would have been engaged a long time ago. It has already been shown that the share of microbreweries has increased over the period for which many pubs have been under a great deal of stress. The number of breweries now tops 1,000, the highest figure since the 1930s.

The conclusion that I think we have all reached is that there are issues with the beer tie, but that is not the fundamental problem in itself. The Business, Innovation and Skills Committee argued that it does not want to see the tie model disappear. Under proper conditions, it is a business model that can be used and it has been around in various forms since the 18th century. The abuses are a different matter and are due in part to the lack of transparency in the relationship between the pub-owning companies and their tenants, which is what I want to turn to.

--- Later in debate ---

[Paul Murphy]

Of course I accept that Labour could have done more when we were in government, but after three debates in the House of Commons during the last three years, and when the Government have already said that they want to take these matters into legislation, they are now using the excuse of a consultation being too burdensome to allow them to make up their mind. If we were at the beginning of a parliamentary Session, that would not be too bad, but we are not. We are 15 months away from a general election. We are possibly just months away from a Queen’s Speech. When my hon. Friend the Member for Chesterfield referred to the fact that this had been kicked into touch, perhaps he had a point. Unless the Government make up their mind relatively soon, time will run out and nothing will happen between now and the general election.

[Jim Shannon]

The right hon. Gentleman makes a very good case. With some 50% of pubco licensees reporting earnings of less than £10,000 and 26 pubs a week closing—a different figure from that mentioned by the Secretary of State—time is not on our side. Urgency is needed. We need to have the legislation in place before the next election.

[Paul Murphy]

The hon. Gentleman is absolutely right. The purpose of this debate is not to argue for or against the proposals, because last year the Secretary of State said that he agreed with them. He said that he did not believe in the voluntary system and that a proper system of regulation was needed, and I believe he genuinely believes that. He represents moderation in the Cabinet and, some might argue, social democracy.

National Minimum Wage

Jim Shannon Excerpts

Wednesday 15th January 2014 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I congratulate the Opposition on bringing this matter before the House for consideration—we all have an interest in it. Does the hon. Lady share my concern about those in long-term apprenticeships who are not receiving the minimum wage? That has been brought to my attention on a number of occasions. They are glad to have the experience and a vocation at the end of it, but in my opinion they also deserve the minimum wage, which many of them do not receive.

[Rachel Reeves]

There is an apprentice rate for the minimum wage, which is important, but we need to ensure that more people are doing good-quality apprenticeships so that at the end of them they can get jobs not only at the minimum wage, but above it. My worry is that too many of the current apprenticeships do not offer the decent training that will enable people to get a good-quality job.

Annuities for Pensioners

Jim Shannon Excerpts

Tuesday 7th January 2014 Westminster Hall

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

It is a great pleasure to serve under your chairmanship, Mr Dobbin. I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on securing this debate and opening it so well. He brings to the matter his professional experience before entering the House, his experience as chairman of the all-party parliamentary group on pensions and his experience of discussing these matters in Gloucester pubs, all of which have helped our deliberations. I thank my hon. Friend the Member for Fareham (Mr Hoban), who served with such distinction as a Treasury Minister dealing with such matters for more than two years and made a substantial contribution to the Government’s achievements in the area. I also thank my hon. Friend the Member for Warrington South (David Mowat), who spoke with great passion and demonstrated his determination to ensure that consumers—our constituents—are served well by the annuities market.

It is a priority for all of us that the annuities market should work in consumers’ best interests. When people have saved hard for a pension, it is right that they should get the best out of their savings on retirement. The decision that people make about their savings on retirement can determine what income they receive for the rest of their lives. Undoubtedly, it is one of the most important financial decisions that a person can make. As we have heard, more than 400,000 people purchase annuities each year, and studies show that there can be more than a 30% difference in the incomes offered by providers, highlighting the importance of making the right decision.

The Government want to ensure that the annuities market works in favour of the consumer and that consumers can make well-informed decisions to secure the best rates and exert effective competitive pressure on the market. The Government have been working with industry and consumer groups to make effective changes in the market, including work carried out by the open market option review group, which has introduced a number of measures aimed at encouraging consumers to shop around on the open market when buying an annuity.

For example, as my hon. Friend the Member for Gloucester pointed out—as did my hon. Friend the Member for Fareham, who worked so hard on the matter—the Association of British Insurers has introduced a code of conduct for retirement choices, which came into effect on 1 March last year. The code is binding on all ABI members that sell annuities, covering almost all the market. In addition, tailored advice and tools have been developed by the Money Advice Service and the Pensions Advisory Service to help consumers understand their choices and promote the benefits of shopping around.

The ABI code has brought about an important change in how annuity providers communicate with their customers, a point raised by my hon. Friend the Member for Fareham and my hon. Friend the Member for South Derbyshire (Heather Wheeler). The removal of application forms from pre-retirement packs actively encourages consumers to engage with the important process of choosing their annuity type and provider, ensuring that they do not automatically settle for the default. Through requirements on providers to provide better information to retirees in their wake-up packs, and new and improved tools such as the Money Advice Service’s comparison tables and the Pensions Advisory Service’s online planners, we can ensure that consumers have the resources that they need to make informed decisions.

The ABI will evaluate the impact of its code in March this year, one year after its implementation. The OMO review group will also evaluate its wider package of measures and their effectiveness.

[Jim Shannon (Strangford) (DUP)]

I apologise for not being here in time, Mr Dobbin. My plane was an hour late, so I could not be here. I also apologise to the Minister and to the hon. Member for Gloucester (Richard Graham). I wanted to speak in this debate, but I did not have the chance. Does the Minister agree that the language used in the selling of annuities, especially to elderly people, must be such that they can understand what they are getting themselves into? I believe that they do not.

[Mr Gauke]

The hon. Gentleman raises an important point. It must be right that we should do all that we can to ensure as much transparency for consumers as possible. That includes a number of aspects, some of which I have mentioned. Let me go further.

The code and other measures will only be as successful as the outcomes that they prompt. We want clear evidence that more people are making active, better choices about their retirement income as a result of the changes. If we do not, we will not hesitate to consider further action. In addition to the ongoing work to help consumers make better choices, the FCA is currently conducting a thematic review of the annuities market and how well it is working to serve consumers’ interests, a pricing survey of all annuity providers and a comparison of the rates available to consumers through a range of distribution channels. The review will consider whether firms create barriers that can restrict consumers from shopping around, and what risks and potential for detriment those barriers may present for consumers. I look forward to the report’s initial findings, which will be published next month.

Although it is imperative that the annuity market works in the consumer’s interests as an effective option for retirement income, it is important to consider the retirement income market as a whole to ensure that consumers have income flexibility in retirement. To increase flexibility, the Government have removed both the default retirement age and the effective requirement to purchase an annuity by age 75. Whether they annuitise or not, individuals are permitted to take 25% of their accumulated pension savings as a tax-free lump sum before going on to secure an income with the remaining savings. To ensure that that income can best serve retirees’ needs, the Government have reformed the capped draw-down rules and raised the annual withdrawal limit from 100% to 120% of the value of an equivalent annuity. That can help to raise the retirement incomes of individuals in draw-down arrangements who may recently have experienced reductions in income due to wider economic conditions.

There is additional flexibility for those with a guaranteed income of at least £20,000 a year. With income already secured, they have the option of a flexible draw-down arrangement, in which they can withdraw any amount from their pension pot. Those coming to retirement will benefit from having more flexibility in deciding how to provide an income for themselves in retirement, and for those with small pension pots, the Government have taken steps to reform the trivial commutation pensions tax rules. An individual who is aged 60 or over with total pension savings of less than £18,000 can withdraw the entirety of their savings as a lump sum. The first 25% of that lump sum is normally tax-free, with the remainder taxable as income. In addition, small occupational pension pots under £2,000, and up to two small personal pension pots under £2,000, can be taken as a lump sum for those aged 60 or over, even when people have savings in excess of the aggregate limit. All those options add flexibility.

Having a decent retirement income is driven by two factors: saving enough for retirement through working life, and making good choices at retirement to secure a reliable and maintainable income throughout retirement. It is important to remember that the biggest determinant of how much income someone receives in retirement is how much they have saved during their working life. With the introduction of auto-enrolment, the Government have taken a huge step forward towards ensuring that consumers start to save for their retirement and carry on saving throughout their working life. Auto-enrolment is the most important pensions change for a century—around 6 million to 9 million people will make new savings and increase savings for their retirement. It is estimated that that will generate around £11 billion in extra pension saving by 2020, which will mean an extra £11 billion coming to the retirement income market within the next six years and a new wave of retirees with robust defined contribution pension pots, making it all the more important that we ensure that the retirement income market is working effectively.

The Government are also acting to protect those valuable savings. We recently consulted on proposals to cap pension charges and introduce a range of transparency measures as a means of ensuring that savings are not eroded by charges. We are currently assessing the responses to the consultation and an announcement will be made when that work is completed.

Newry HMRC Centre

Jim Shannon Excerpts

Tuesday 3rd December 2013 Commons Chamber

[Ms Ritchie]

I thank my hon. Friend for his useful intervention. I agree wholeheartedly that there is a need for this service, particularly in regard to cross-border working, as there is a considerable interchange of population between the north and the south. In his case, it is between Derry and Donegal; in my case, it is between Newry and Dundalk. In my area, there is a memorandum of understanding between both councils, north and south, to deal with economic issues in order to pump-prime the local economy.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady feel that the closure of the office with the loss of 134 jobs will affect the ability of the Treasury to bring in the revenue that this country needs?

[Ms Ritchie]

The face-to-face services provided by HMRC in Newry are vital to my constituency, because of the lack of access to broadband and the need to deal on a cross-border basis with matters such as tax avoidance. Newry’s strategic location means that it is vital to have those services there.

The programme of voluntary exits for staff cannot be euphemistically explained away by the normal rhetoric of “modernisation and streamlining”. It represents the wholesale removal of vital face-to-face and personal tax services, and a distinct refashioning of the link between people and revenue collection. My hon. Friend the Member for Foyle (Mark Durkan) has just made that point as well. Time and again it has been reported that consumers and businesses prefer face-to-face transactions when dealing with tax and revenue issues. The new strategy will have severe limitations, particularly when complex matters are being discussed.

The decision will drastically alter the link between the community and a vital public service. That point has been made by my hon. Friend the Member for Foyle, as well as by the hon. Members for North Down (Lady Hermon) and for Strangford (Jim Shannon). That is already a problem, and I know that many local people and businesses already struggle to access services from HMRC. People can feel disconnected from the system, especially in Northern Ireland, and that will be further exacerbated by the changes.

It might seem more efficient for the Treasury to implement these changes, but it will almost certainly not be more efficient for those people forced to rely on telephone lines, with all the long delays involved, or for those who lack access to the internet or find it difficult to use modern technology. This could leave many people isolated from access to vital services, particularly at a time of widespread changes to the tax and benefits system.

South Down and the region supported by the Newry HMRC centre are predominantly rural areas and as such they face all the problems associated with that, including limited broadband access and people living in remote and isolated locations. Those people cannot simply be expected to adopt online and phone services, especially when complex personal tax issues are under discussion. Recent immigrants, the poor, the elderly and the disabled will all be made more vulnerable by the removal of these services. Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, has warned that this action is being carried out too rapidly and without due consideration.

The Treasury has claimed, through statements to the media and in written answers here, that it is not closing down these centres, but the voluntary exits that are being offered surely amount to a de facto closure. These exit offers are a clear statement of intent, and the closure of the sites, which the Treasury has seemingly made inevitable, will almost certainly increase the pressure on staff to accept the terms on offer. I am deeply concerned about this tactic of offering exit packages before proper, full consultations and impact assessments have been carried out on the closures. It is deeply cynical to hang this uncertainty over the heads of the staff at the same time as offering a redundancy package.

I would therefore like the Minister to clarify the terms on which these exits are being carried out. I would also like clarification on the future of the Newry centre, which dealt with 500,000 queries and cases over the past year. Such clarification will include a time scale for the future strategy for staffing and operations in Northern Ireland. The Minister needs to address why there has been no equality impact assessment, as required under section 75 of the Northern Ireland Act 1998 and as produced for the initial proposal in 1998. Why has there been no consultation with staff, unions or, apparently, the Northern Ireland Executive? Did the First Minister and Deputy First Minister in Northern Ireland make any representations as far back as March or April, when there were some intimations that this might happen? Have they received a response to such representations?

In similar circumstances in the past, the Treasury has sought ministerial approval from the Northern Ireland Executive, as well as a full equality impact assessment and stakeholder consultation. This new approach of offering voluntary exits before this process has begun is deeply worrying, particularly given the devastating impact this closure could have on the local community and economy. There are very real equality issues relating to the closure of this centre, as it is mostly the lower paid, disabled and part-time staff and women who will be most vulnerable and will find it the hardest to get new work; a higher proportion of women will be affected. I also have to point out that the three centres being closed are all in predominantly nationalist constituencies, which could bring its own equality implications.

Before following through with these measures in Northern Ireland, I would also be grateful if the Minister could include more information on the pilot study carried out in the north of England on the introduction of the reformed service. Critical questions are outstanding on the capacity of non-face-to-face and reduced personal tax services to deal with the range of queries that these centres deal with daily. How long will people have to wait on hold to have their inquiry heard? How many cases took more than one call to resolve? How many required a subsequent face-to-face meeting? What was the experience of people and businesses using the new system, and how much will it cost them? There is a clear onus on the Treasury to provide this information before coming to any decision on removing the existing centres. Instead we get the impression of a Department that has made its decision and will find the appropriate reasons from there.

More broadly, we know that tax evasion and avoidance cost the public purse an astronomical amount every year, and that is surely only likely to rise with the closure of local compliance centres. With tax evasion and avoidance costing our economy more than £100 billion a year, HMRC should be expanding rather than cutting offices and staff. Surely the Treasury should be looking at how local tax centres can be adequately resourced and given the scope to take on some of these functions. Indeed, initially we were led to believe the Newry centre would be retained and would assume further responsibility for some cross-border issues, including compliance and tax co-operation with Irish authorities—where better to locate a cross-border taxation co-operation centre than Newry in the context of the development of north-south business links? I am disappointed that that no longer seems to be the case. I would like the Minster to explain what consideration he has given to this. Will he take a more constructive approach?

This Government never tire of telling us of their desire to rebuild and rebalance the economy in Northern Ireland. The message sent out by the decision to remove jobs from the Newry HMRC centre sharply contradicts that, as there are simply not jobs available for these people to move into. Instead, this decision will remove money from the local economy, hitting not just those families directly involved, but businesses across the whole area. I ask the Minister, who has been generous with his time on previous occasions, to hold further meetings with local politicians, the Public and Commercial Services Union and representatives in Newry to look at a constructive solution. I am sure that my hon. Friend the Member for Foyle would join us at such a meeting to discuss Derry. There is an urgent need for the Treasury to review this decision and make a full assessment of the impact of it on the local economy and community.

I am absolutely certain that a viable, economically sound centre can be retained that protects local jobs, perhaps through a centre that also considers aspects related to cross-border tax issues and wider anti tax avoidance and evasion measures. What is absolutely not acceptable is the degree of uncertainty that has been created while staff are being offered exit deals.

Cost of Living

Jim Shannon Excerpts

Wednesday 27th November 2013 Commons Chamber

[Roberta Blackman-Woods]

I am sorry, but I will run out of time if I give way. I apologise to the hon. Gentleman.

The north-east has the highest proportion of people paid below the living wage—32% of workers are paid less—and research published by the Resolution Foundation has further confirmed that the north-east was the region where workers were most likely to be trapped in low earnings. The Office for National Statistics said:

“In April 2012, median gross weekly earnings for full-time adult employees in the North East were £455, joint lowest with Wales and lower than the UK median of £506.”

So people in the area that I represent are having to contend with lower wages, but they are also having to deal with rising prices. They are being burdened with not only increasing energy costs, but increasing costs for child care, for example. Energy prices have angered people throughout the country and all we have heard from the Government is excuses for the actions of the big six. When npower recently announced an eye-watering rise in electricity costs of 9.3% and in gas of 11.1%, The Journal, our local newspaper, reported that Dorothy Bowman, a campaigner for elderly people from County Durham, said that the price hike would leave householders with a stark choice. She said:

“They will have to choose food or heat, it will be too expensive for both. This is at the wrong time for people”.

She went on to say that npower did not care at all

“about their customers and the dire misery they are subjecting them to, they just care about their profits. If they were going to do this why not do it in spring, now people have no choice.”

She said the elderly would suffer, but so would young families living on a tight budget. I think she makes the point very strongly indeed.

In addition, The Journal reported on 25 October that an official at thinkmoney said:

“Regionally, problems with utility bills appear most severe in Northern Ireland, London and the North East.”

That is why we need Labour’s energy price freeze and long-term reforms to the energy market.

[Jim Shannon (Strangford) (DUP)]

Will the hon. Lady give way?

[Roberta Blackman-Woods]

If the hon. Gentleman is very brief.

--- Later in debate ---

[Jim Shannon]

As an example of how dire things are in the high street and the household, Citizens Advice reported that 92,000 people had made inquiries about fuel debt, 81,000 people had made inquiries about water debt, and that there had been a 77% increase in child care costs over 10 years and a 78% increase in the use of food banks. Surely that is the reality of the high street and what is happening at present.

[Roberta Blackman-Woods]

The hon. Gentleman makes an excellent point and I hope to be able to come to some of those issues myself.

On child care, the cost of nursery places has risen by 30%—five times faster than pay for people on average wages. I opened a new nursery in my constituency a couple of weeks ago—Do Re Mi nursery—but without action from the Government many families will not able to take up places there. It is not good enough for Government Members to say that there is help for people and that there is universal credit. No one is on that at present and many are not getting any help with child care.

As the hon. Member for Strangford (Jim Shannon) said, there are huge problems with debt. The charity StepChange in my constituency said that almost 2,000 people in the Durham area had been referred to it with debt problems from January to June this year. R3, the insolvency trade body in the north-east, found that almost a quarter of survey respondents were extremely worried or very worried about their debts, while 56% were worried about their credit card payments.

For some time, Labour Members have been raising issues about payday lenders and the extortionate rates of interest they have been charging. We obviously welcome the Government’s announcement on this, but as yet there has been absolutely no information about what will be in place to help people who have already taken out loans that they are unable to pay back. That situation is seriously compounding the problems that many families are facing.

Moreover, food poverty is increasing in Durham. The website of Durham food bank states:

“Durham foodbank has now completed two years of distributing food to local people in crisis. In our first year we fed 3686 people, our second year total is now in excess of 10,600.”

It thanks the army of volunteers who are helping it to meet this need, but makes the point, as I do, that that demonstrates a huge increase in the number of people requiring food banks. Indeed, the local citizens advice bureau has reported a 78% increase in the number of inquiries about the use of food banks. This flies in the face of the Government’s claims that they are turning the corner. Lots and lots of families in my constituency have a genuine cost of living crisis, and things are getting worse for them because of increasing prices and, at best, flatlining wages. They simply cannot afford to make ends meet.

Labour is calling for the Government to take real action to make a difference to families in Durham and across the country. We want a list of measures to be included in the autumn statement, including an energy price freeze, an extension of free child care, action to boost long-term housing supply, and a compulsory jobs guarantee—real action that would help people who are struggling out there in our communities. The Government are standing by and doing nothing to tackle the serious pressures on families right across the country, and we cannot let them go on and on doing the same thing. We need real action from the Government to support hard-pressed families. I support the motion.

--- Later in debate ---

[Mr Iain McKenzie (Inverclyde) (Lab)]

It has become evident from today’s debate that the Government are incapable of making any real changes to improve the cost of living for our hard-pressed families up and down the country. Nothing seems to be changing for those people who, as they have told me, see the Government putting the wrong people first. The only growth people have seen on the high street has been in prices and in pawnbrokers, payday loans, cash-for-gold companies and betting shops.

As has been said, prices are still going up faster than wages. That has been compounded by the fact that many of my constituents have experienced wage freezes over the past couple of years and/or have been moved to reduced hours or part-time working.

[Jim Shannon]

The hon. Gentleman mentioned payday loans, which are a scourge if ever there was one. Some 33% of people borrowing payday loans do so just to pay their basic household bills—just to live and get through the day—while 44% are borrowing to pay for their gas and electricity. Is that an indication of our society?

[Mr McKenzie]

Absolutely. The hon. Gentleman is spot on about that indicator of what is happening in society. I will develop that theme further.

Last April’s increase in the personal allowance does not make up for what families have already lost through tax and benefit changes. The cost of living is rising four times faster than earnings, on the back of a fall in real wages since this Chancellor took office. People are getting worse off, and the cost of living crisis is hitting hard-working families up and down this country. Families in Britain have taken a pay cut of £1,200 a year.

What do families face week in, week out as they struggle to overcome the cost of living crisis? I will give some examples to highlight the severity of the squeeze on living standards. On the basic weekly shop for food and clothing at the supermarket, families are seeing less go into the shopping trolley and more go into the till. Some families no longer do such a one-stop shop, but flit from supermarket to supermarket to cash in on the bargains and stretch their pound even further. There are growing crowds around the mark-down shelves, buying food that must be consumed that day. That is surely an indication that people are living from hand to mouth. Citizens Advice has also produced evidence on food shopping:

“On average UK households purchased 4.2 per cent less food in 2011 than in 2007 while spending 12 per cent more.”

Families are facing record energy bills, while energy companies are enjoying huge profits. Only Labour is committed to freezing prices, not freezing families. At my surgery last week, many constituents came to me with their power bills, concerned about how they would pay them. That is at the start of winter. Goodness only knows how they will pay their bills at the end of winter. Again, I will quote Citizens Advice:

“Over the last three years the average domestic dual fuel energy bill has increased by 37 per cent.”

That is a massive hit on family budgets.

Fuel prices are about 5p or 6p higher in Inverclyde than just 20 miles away. The pricing in my neck of the woods is unbelievable. There are different prices even within the boundaries of the town. The prices for one company vary from one end of the town to the other. The higher prices are predominantly in the areas where people can least manage the rising price of fuel.

A big indicator of the cost of living crisis is the increase in the number of people who are turning up at the doors of food banks. It is a national disgrace that there is food poverty in one of the world’s largest economies. In Britain today, some 13 million people live below the poverty line. The number of Scottish families that attend food banks has risen by 100%. In my constituency of Inverclyde, the number of people using food banks has increased dramatically and shows no sign of falling. The fact that 50% of those who go to food banks are in work is shocking.

What can I say about the impact of the welfare changes on my community? They have taken some £2 million out of the local economy. That money was spent on essentials such as food and clothing. That is having an impact not only on the families affected, but on high streets and shops because it threatens the survival of small businesses.

Where will the squeeze on living standards lead? It leads either in the direction of debt or towards desperate acts, of which I see more and more. In Inverclyde, one recent act—a metal theft, which we see up and down the country—sums up the desperation of families to get money to subsidise their income. Some copper cabling, worth a mere £30, was stolen from a substation in my constituency, plunging dozens of homes into darkness, leaving many people without heating and causing one home to burn to the ground—all that for £30! It was a senseless act, but for what reason? Struggling—that is why I believe that crime took place and put in danger not only the lives of those who perpetrated it, but those of the people living on that estate. Only the kind-heartedness and community spirit of the people of Inverclyde will ensure that the family who have lost their home and possessions will have a Christmas and a roof over their heads.

I know that many other Members wish to contribute to the debate, so I will conclude by saying that times are hard, living standards are definitely falling, and the Government’s economics are failing.