Finance Bill

Jim Shannon Excerpts

2nd reading
Monday 28th November 2022 Commons Chamber

[Anthony Browne (South Cambridgeshire) (Con)]

It is a pleasure to speak at the back end of the debate following so many fascinating contributions from the Government and Opposition Benches. I particularly enjoyed the comments from the shadow Minister, the hon. Member for Ealing North (James Murray), positioning Labour as the party of small business. I have long believed that that is true—the best way to create small businesses is to start with a big business and then elect a Labour Government.

I support the Government overall and this well-crafted autumn statement. It balances the books in a way that bears down on inflation without harming growth, and it has been done in a fair way, as many hon. Members have said, helping households who are struggling. The energy price guarantee and the retention of the pensions triple lock are particularly welcome. I also welcome the extra money for health and education. Like my fellow Conservatives, I do not like the fact that taxes are going up to the highest level for 70 years, but I accept that that is necessary and that we must accept sound money before tax cuts.

The main focus of my comments will be on an issue raised by several hon. Members: research and development. I very much welcome the fact that the Government are committing to £20 billion a year of public money for research and development, but my concern is about the changes to the R&D tax relief system. The Government have made major changes, with the system becoming more generous to big firms to make them more internationally competitive, but the rate of relief for small and medium-sized businesses effectively being cut in half, from 33% to 18.6%. It is a bit more complex than that, but that is the gist. Why are the Government doing that? As the Chancellor said in his autumn statement, it is to tackle fraud. Indeed, fraud is a problem—I have looked into that as chair of the Conservative Back-Bench Treasury committee —and we do need to tackle it. However, the trouble with this way of tackling research and development fraud is that it punishes legitimate research companies as much as fraudsters and chancers, lumping them all in together. There are better ways of doing that.

I am talking about this because it is a particularly big issue in my constituency. South Cambridgeshire is the life sciences capital of Europe. I have literally hundreds of life science companies, from the global headquarters of AstraZeneca down to the newest start-ups. Almost every village has a science park packed full of life science companies. Those small start-ups are at the cutting edge of research and development in life sciences. More research and development in life sciences is now done in small businesses than by the big pharma companies. Without them, innovation would be very slow and the UK would lose its position as a life science superpower. We talk about becoming a life science superpower, but we are one already, and most of the rest of the world recognises that.

It is in the nature of those small companies that they are research-heavy, but clinical trials mean that it could take 10 to 15 years to bring a product to market before they make any revenues. They are funded not by revenues from global sales of blockbuster drugs, like big pharma companies, but by investors who fund research for a decade or more before they have any chance of a return. Their financial models depend on the research and development tax credit regime, which is fundamental to them in leveraging funds from investors from around the world. It has been successful in making the UK an attractive place to do research.

[Jim Shannon (Strangford) (DUP)]

It is important to have research and development. It is also important that those companies can do their research on Parkinson’s, diabetes and heart disease, and all those things must have research and development investment. Does the hon. Member feel that the Government need to enhance that to their betterment and find cures for Parkinson’s, pancreatic cancer, diabetes and heart disease?

[Anthony Browne]

Absolutely. Many companies in my constituency and publicly funded institutes are doing research on those diseases. That is critical to people living healthy lives as well as to the economy, and the Government are absolutely right to support it.

The sudden cutting in half of research and development tax relief is a major challenge to the life science companies in my constituency, which are shocked at what is proposed —seemingly out of the blue. Many, if not most of them, are suddenly having to rethink their research plans. They are in shock particularly because it was proposed at such short notice—it will come into effect next year—and without consultation. They are having to go to their investors now and say that they will no longer have the money they thought they would and that they will have to cut back research and jobs.

Let me give the House a few examples of real companies in my constituency that I have been working with. PhoreMost combines artificial intelligence with drug research. I went to the opening of its laboratories in the village of Sawston. Neil Torbett, the chief executive officer, said:

“The current R&D tax system has been instrumental in our growth as a Cambridge-based Biotech, which has grown to over 50 highly skilled staff, raised £45 million in investment and entered into multiple pharmaceutical industry partnerships. Receipts from R&D tax credits form a critical part of our funding equation, and the proposed SME R&D tax relief cut will materially adversely affect our future growth plans within the UK.”

I opened the offices of bit.bio, another company in my constituency, which does the most amazing genetics research—I have mentioned it before. Mark Kotter, the chief executive officer, said:

“The assistance at the current level is a cornerstone of our financial projections, which also help us to attract equity funding, and any reduction in the claimable amount will have a significant impact on our ability to invest and grow at the desired rate.

As part of our forecast, we will be looking to increase our current headcount of 175 by approximately 30% in the next year, but quite simply this will not be possible if the tax relief changes announced in the Autumn Statement become reality.”

I could give countless other examples. This is dramatically changing the prospects of life science research in Cambridge.

I know that the Government want to champion life sciences as part of their ambition to ensure that we are a life sciences superpower. I have worked with the Government on that. Indeed, I welcomed the life sciences Minister—the Minister of State, Department of Health and Social Care, my hon. Friend the Member for Colchester (Will Quince)—to my constituency just last week. I know that they want to tackle fraud in the R&D tax credits regime. As a taxpayer, I very much want us to do that; it is a duty of Government to ensure that the taxpayers’ money is well spent. We share those dual objectives, but there are better ways to tackle fraud without harming research. We can throw out the dirty bathwater without throwing out the baby.

Here are some suggestions. We can ban contingent fee—no-win, no-fee—tax agents. A whole industry of people are trying to make money out of encouraging other people to put in fraudulent tax credit claims. We could ban that. We should resource HMRC so that it can scrutinise the claims. Most claims are automated and there is no scrutiny of what is put in. That encourages and gives an easy ride to fraudsters.

We can also limit claims for soft innovation—that is, technical maintenance and updates that would have been made anyway and which people would not normally think of as research and development. They should not be getting research and development tax relief in the first place. Lastly, to distinguish between the life science companies that we all want to encourage and the fraudsters and chancers, the Government could create an R&D tax regime for knowledge-intensive companies, which are already recognised in the tax codes; there would be no definitional issue, because those companies are already in the tax code. I am talking about companies with under 500 employees carrying out work to create intellectual property and expecting the majority of their business to come from that work within 10 years, or companies where more than 20% of employees are doing research roles requiring a master’s degree, a PhD or beyond.

If the Government take those steps, they can promote research while tackling fraud. I urge them, on behalf of all the businesses in my constituency—dozens of which have been in contact—to delay the implementation of the change, consult the industry on it and to look at more specific ways to tackle fraud, so that we can distinguish between genuine research that we want to encourage and the fraudsters and chancers. Will the Financial Secretary or the Exchequer Secretary—I am not sure whether this applies to him or her—meet me and industry representatives urgently to talk about the impact of the changes in the regime on life sciences research in the UK? With that caveat—I realise that it is a big one for my constituency members—and assuming a positive answer, I support the Bill overall, and I commend it to the House.

Autumn Statement Resolutions

Jim Shannon Excerpts

Monday 21st November 2022 Commons Chamber

[John Glen]

My hon. Friend makes a very wise point about the interaction between effective care and a vibrant NHS workforce. We know about the significant changes to the character of the workforce, and we know about the patients who are not fully engaged. We need to get into that so that many of these people get back into work.

The 1.6 million employees who work in the social care sector are working extremely hard. Local authorities have rightly expressed concerns about their capacity to deliver the Dilnot reforms immediately, so we will delay their implementation for two years, allocating the funding to allow local authorities to provide more care packages. Members will recognise that only by expanding the capacity of the social care system will we free up some of the 13,500 hospital beds that are occupied by those who could and should be at home.

[Jim Shannon (Strangford) (DUP)]

rose—

[Karin Smyth (Bristol South) (Lab)]

rose—

[John Glen]

I will give way to the hon. Gentleman first and then to the hon. Lady.

[Jim Shannon]

The hon. Member for Bromley and Chislehurst (Sir Robert Neill) referred to the Minister’s pragmatic approach. On nurses’ pay, if nurses go to work as agency staff, they automatically have a better wage structure. I say respectfully that when it comes to paying nurses, surely there must come a stage at which we need to pay them what they can get elsewhere, and thereby keep them. There will not be a crisis if we can keep our nurses.

[John Glen]

I give way to the hon. Member for Bristol South (Karin Smyth).

--- Later in debate ---

[Jonathan Ashworth]

We want to grow the economy so that there is more money to spend on public services. I am sure that the hon. Gentleman, who always listens carefully, will have heard me say a few moments ago that if our growth had been similar to the OECD average, households would be £10,000 better off and the Government would have the proceeds of growth to spend on our public services. The reason our public services are in such a dire state is the 12 years of poor economic performance under the Conservatives—that is the reality.

Let me come to another element of universal credit that has been frozen: the childcare payment. The former Leader of the House, the right hon. Member for South Northamptonshire (Dame Andrea Leadsom), is no longer in her place, but she made a similar point. It looks as if that payment has been frozen again, at £746 per month for a household with one child. That means that the childcare element will cover just half the average cost of childcare for a household with one child, when two thirds of families pay more for their childcare than they spend on rent or mortgages.

We know that many people want to work increased hours—this is the point made by the former Leader of the House—but cannot do so because of the lack of childcare support. But instead of fixing childcare support, the Chancellor is asking 600,000 people, who often have caring responsibilities, to undertake extra job-searching requirements, with threats to cut their benefits if they do not comply, even though the reason why they cannot work extra hours is that they cannot afford the extra childcare and the Government have frozen the childcare allowance again.

[Jim Shannon]

rose—

[Jonathan Ashworth]

I will give way to my fellow Leicester City fan.

[Jim Shannon]

The childcare issue is very important for my constituents, particularly teachers and nurses, who tell me that when they come to the end of the month, they have nothing left after paying their childcare bill. They want the tax-free childcare allowance to be increased. Does the shadow Secretary of State feel that that is what we should do to encourage them to work while ensuring that their childcare is covered?

[Jonathan Ashworth]

As always, the hon. Gentleman makes his point with force. The consequence of freezing the childcare element is that more parents working limited hours—it should not affect women more than men but does so disproportionately as they tend to do the childcare—will not be able to work extra hours because they will not be able to afford the extra childcare associated with working those extra hours.

--- Later in debate ---

[Dame Andrea Leadsom (South Northamptonshire) (Con)]

It is a pleasure to speak in this very important debate at such a critical time for our country. There is no doubt that the headwinds that face us now are akin to, if not worse than, those in 2010 post the financial crisis. The Government should take full credit for a very well-balanced autumn statement; it ensures that those with the broadest shoulders pay the highest price for the cost of getting our economy back on track and, at the same time, that the vulnerable, the elderly and those on the lowest incomes will be able to get through the next few months as we face unprecedentedly high inflation.

I was a junior trader when sterling crashed out of the exchange rate mechanism. I was in my 20s at the time, and it seemed quite exciting to see the collapse of sterling, but within a few months interest rates peaked at 15% and suddenly it was no joke anymore. This takes me back to that time when, as a young person, initially it perhaps seemed like it was all good fun, but very quickly the reality sunk in. For far too many people that will be the case this winter, as they grapple with the rising cost of living and skyrocketing energy bills. Again, I thank the Government for what they have done to try and help.

I want to focus on what we are doing about energy. As some colleagues will know, we have a 1922 Back-Bench committee on business, energy and industrial strategy, made up of Back-Bench MPs. In April we had an inquiry into what the Government could do to help people with their energy bills this winter. Unfortunately, some of those things have been acted on but not by Government. I would like to go through them again because I think they bear repeating.

There are many things that could be done to help households and businesses reduce their energy costs this winter, such as getting energy suppliers on side to advise their customers, whether businesses or households, on some of the proactive ways that people can cut their energy costs. It might sound simplistic, but people should switch off radiators in unused rooms and take appliances off standby. I know for a fact that lots of constituents do not know how to do that, or indeed whether they would save electricity by taking appliances off standby, or whether it is better to leave them. These issues are quite simple to resolve but quite helpful to our constituents.

Reducing the radiator setting on gas boilers to between 55° and 65° would optimise the energy output. When gas boilers are installed, they are routinely set at a higher temperature; reducing that would save up to 10% or 15% on bills without any loss of output. We can reduce the temperature of hot water—we do not have to scald our hands under the hot water tap or when we get in the bath.

Better insulation of homes is just not trusted by enough people. Even people who could afford it and would like to insulate their homes have all seen stories where it went wrong—the insulation slid down inside the cavity walls, it did not work or people got mould. We need to ensure that the accreditation schemes that the Government give to providers are reliable and dependable, and that if things go wrong, people can go somewhere for help.

Vitally, there must be awareness campaigns on energy saving measures and the value of using a smart meter. I was an energy Minister in 2016 when some people were saying that smart meters were there to spy on people in their houses. To this day, some people think, “I don’t really like the idea of a smart meter,” but if they have one, they can sit there and watch the cost of their energy supply. That puts power into the hands of consumers and businesses, and would be a considerable help to them. It would be even better if the Government brought forward the move to half-hourly pricing, which is planned for within the next couple of years. That would enable people to use the dishwasher or washing machine, or to fill their hot water tank, safe in the knowledge that the price of electricity at that moment is much cheaper.

Delinking the price of renewables, and all our energy, from the price of gas has been talked about and is planned, but much more could be done to ensure that we move to that test. Now more than ever, that work should be done. We should also speed up planning for grid expansion. Recently, the National Grid came before our committee and said that there are such delays with whether we want the grid to be undergrounded or overgrounded. Those are vital decisions that have an impact on local people, but resolving them swiftly would empower the grid to speed up connections, particularly for renewables.

Of course, we know that we need to issue new exploration licences for oil and gas in the North sea basin to shore up energy security. At the same time, we must recognise and get the message out that transitioning to net zero as fast as we can requires a period of continued fossil fuel usage until we have sufficient, reliable zero-carbon energy sources. Many people feel that we have to just switch everything off, but that would absolutely fail our country—everything would switch off. We cannot possibly transition away from natural gas for several decades; we have to face up to that fact and inform people of it.

[Jim Shannon]

In my constituency, senior citizens regularly come to me and say that they are turning their whole heating system off, because they see that as a simple way not to spend any money. Does the right hon. Lady agree that the Government need to focus on and assist our elderly population in particular, so that they can do better?

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is always nice to speak in any debate in this House. Hopefully, being called last to speak does not mean that my speech is worth less than that of anybody else who has spoken.

First, I thank the Chancellor for his Budget update last Thursday. We are living in a world where, at 10.1%, inflation is at the highest it has been since 1981. Our economy is under pressure. Following the turbulent political events that occurred after the mini-Budget, I am hopeful that the Chancellor’s announcements last week will provide some of the stability that is needed for our local businesses, for people at work and for those households that are desperately in need of help.

I want to focus on some of the pluses that came out of the statement last week. First and foremost, I was pleased to hear that pensioners and the elderly are being looked after. An elderly lady came into my office a few weeks ago. She said that they had not been putting the heat on as they did not want to waste it for the next couple of months. The right hon. Member for South Northamptonshire (Dame Andrea Leadsom), who is no longer in her place, also referred to that. Elderly people of that generation have a very simple way of looking at these things; if they do not have the money, they will not spend it. If they do not have the money, they will not turn on the heat. If they do not have the money, they will not eat. I intervened on the right hon. Lady to suggest that the Government need to reach out to elderly people to see whether they can be helped through the process. In many cases, it may be pride, but sometimes it is simple mathematics: if they do not have the money, they will not spend it. What can be done to help those people?

The continuation of pensioner housing benefit will also decrease anxieties for the next few months. As pensioners, they are aware of what they owe and how the system works. Poverty rates have increased across the whole of the United Kingdom. The Department for Communities in Northern Ireland has said that 316,000 people were living in relative poverty in 2021. That is 17% of the population in Northern Ireland. And 12% of the population in Northern Ireland live in absolute poverty. They are at the very end of the queue.

Many Members have referred to the use of food banks. The Trussell Trust food bank in Newtownards, which was the first one in Northern Ireland, has told me that this past year has seen more people use the food bank than ever before. The food bank has stated in the local press that it perceives this year as being a very difficult one.

However, the Chancellor has stated that households on means-tested benefits will receive a £900 payment and that those on non-means-tested disability benefits will receive a £150 payment, so that is good news—there is some positivity in the process. The cost of living payment will help families on the poverty line to feed their children and make ends meet. The payment will be introduced in 2023-24. However, I look at the winter coming this year and wonder what we can do to help in the short term. I was also pleased to hear in the announcement that, through the Barnett formula and block grant adjustments, Northern Ireland will be in receipt of some £650 million.

I do not want to spend a lot of time on this matter, but I do need to put down a marker here, because this does have an impact on Northern Ireland. We cannot talk about poverty without discussing the impact that the Northern Ireland protocol is having on businesses in Northern Ireland. Small, family-run businesses are having to increase the price of their products, which in turn leads to a shortfall in consumer purchasing. We in the Democratic Unionist party, and Unionists across Northern Ireland, are very pleased that the Government introduced the Northern Ireland Protocol Bill and that it was pushed through the House with majorities of between 71 and 121 votes. We are hopeful that, when the Bill comes back from the House of Lords, the Government will be just as energetic in ensuring that it is in the same place as it was when it left here. If that is the case, the political process in Northern Ireland can move forward and the return of the Assembly will be one of those success stories.

Several announcements have been made on business rates, which should provide a range of relaxations on our local businesses. I welcome the fact that business properties will be revalued for business rates, that the business rates multiplier will be frozen, and that retail, hospitality and leisure relief will be extended and increased from 50% to 75%. This aims to take some of the pressure off businesses in my constituency. Cotters, for example, has been detrimentally impacted by inflation, the rise in the cost of living and the Northern Ireland protocol.

I have previously raised the issue of the lack of action for the working class. There are one-off payments for those on low incomes and for pensioners, but many constituents come to my office to make it clear that after their bills, mortgage, shopping and other necessities, they still cannot make the working wage work. I am keen to know what the Minister’s response is to the working classes who are struggling.

In addition, I am disappointed that childcare costs were not mentioned. I intervened on the shadow Secretary of State, the right hon. Member for Leicester South (Jonathan Ashworth), about this issue and he was clear about childcare in his response. I have heard from teachers and nurses who have little left after their childcare costs—they can hardly pay their bills—so the tax-free childcare allowance should have been increased. Again, perhaps the Minister can respond to that. We are trying to be positive in our comments and to see where we can move forward in a constructive and helpful way.

It is fair to say that there is universal concern about the state of our health service. The Chancellor announced £3.3 billion for NHS England in 2023-24 and 2024-25, and he has allocated Barnett consequentials for the devolved nations. I also briefly mention the increased amount that the DWP will spend on tackling benefit fraud and error. I seek an assurance that there will be no penalty for those who genuinely cannot work due to disability.

I am grateful for the Chancellor’s decisions; something had to be done. He talked about difficult decisions and I am sure that no hon. Member would desire to be in his position with the country’s livelihoods in his hands. Those choices, in some cases, needed to be taken to tackle rising inflation and interest rates, but again, I ask for help with childcare in particular.

The OBR forecast says that the UK is in recession and has been since the third quarter of 2022-23, and that it will last for more than a year. I hope that the action taken is enough to keep our heads above water and to support our constituents. I thank the Government for the action taken thus far and I look forward to some reassurance on the things that I have brought to the Minister’s attention.

Economic Responsibility and a Plan for Growth

Jim Shannon Excerpts

Wednesday 19th October 2022 Commons Chamber

[Rachel Reeves]

I agree that it is a shame that October’s Chancellor is not in his place today. This crisis has been co-written by every single member of the Cabinet and every single member of the Government. The Minister for the Armed Forces and Veterans was crystal clear yesterday in pointing out that all Cabinet Ministers had approved and are responsible for Government decisions, including the disastrous mini-Budget. There is no credibility or stability with this Government, just a shambles. All the time, businesses are looking at the state of the Government and deciding where and whether to invest. The Tories’ recklessness and enduring incompetence will cost jobs and investment here in Britain. The Conservatives should not be put in charge of a tombola, let alone the British economy.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for what she is saying. Let me back up her comments on economic growth. We need small and medium-sized enterprises to be able to survive and to get through this period. In my constituency, a business—a Japanese restaurant—opened some two months ago. It is doing really well and it employs staff, but its bills are going up from £900 to £3,000. It is clear that unless something happens soon for businesses that are productive and create jobs, they will no longer be there. Does the hon. Lady agree that we need to have a process that helps businesses?

[Rachel Reeves]

I thank the hon. Gentleman for that intervention. Small businesses, such as the restaurant that he mentions in his constituency, are the backbone of all our constituencies and our economy more widely. An energy bill increase from £900 to £3,000 is not affordable for small businesses. The Government need to do more to help.

Economic Update

Jim Shannon Excerpts

Monday 17th October 2022 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call Jim Shannon. [Interruption.]

[Jim Shannon (Strangford) (DUP)]

Sorry, Madam Deputy Speaker, you threw me off there. I was looking round to see who it was. Thank you very much for calling me. Can I say how very pleased I am to see the Chancellor in his place? I wish him well, and I think this House wishes him well in the job he has to do.

Northern Ireland is a global leader in areas such as cyber-security and advanced manufacturing, and it is also the top location in the UK outside London for foreign direct investment. However, the rate of economic inactivity in Northern Ireland is higher than anywhere in Great Britain, which costs the economy some £16 billion annually. Can I ask the Chancellor if he can give any indication as to whether Northern Ireland will receive a fair proportion of the levelling-up funding under round 2, rather than in the first phase, when the 3% share target was missed?

Economic Situation

Jim Shannon Excerpts

Wednesday 12th October 2022 Commons Chamber

[Chris Philp]

If the hon. Gentleman thinks it was all so disastrous, perhaps he could explain why he voted for it last night. The real gamble is having taxes that are too high. The real gamble is not having a plan for growth. This Government have a plan for growth; the Labour party has no plan.

[Jim Shannon (Strangford) (DUP)]

Will the Minister outline the specific help that is available to the working poor? They face not simply energy increases but mortgage increases, and increases in the cost of diesel and petrol just to get to work to actually earn some money, and the price of groceries is 15% higher. While those people’s top-line income does not qualify them for universal credit, the present circumstances must surely call for assistance. Will the Minister tell me and the House where that help will come from?

[Chris Philp]

We certainly do stand with the working poor. That is why we have increased the thresholds to ensure that people on lower incomes pay very little income tax and national insurance. It is why we froze petrol duty, and, indeed, cut it by 5p earlier this year. It is why we have increased the national minimum wage by such a large amount, from just £5.93 an hour under the last Labour Government to £9.50 an hour today. So we do stand on the side of the working poor, and I will certainly continue to work with the hon. Gentleman to ensure that his constituents are looked after and protected in the years ahead.

Cryptoassets: Regulation

Jim Shannon Excerpts

Wednesday 7th September 2022 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to follow the hon. Member for Rother Valley (Alexander Stafford), and I thank him for his contribution. I particularly thank the hon. Member for West Dunbartonshire (Martin Docherty-Hughes) for raising this issue. He put forward a detailed but succinct presentation, and his knowledge of the subject is impressive. I thank him for sharing it in such a way that our understanding inside and outside the Chamber is a lot better.

As everyone will know, I am not great with technology. To be honest, I like to be able to feel my money in my inside pocket and to know what is in my wallet and in the bank, so crypto is not something that I will ever venture into, but there are a great many who do. I am aware that this is an evolving topic and has a lot of popularity, especially among young people, so it is great to be here to discuss how we can help people go about these things in the right way and, more importantly, safely and with the knowledge of what the gamble can mean—both success and failure.

It has been estimated that 2.6 million people across the UK use cryptocurrency, with around 100,000 people in Northern Ireland using it as a form of finance. Interestingly, from my studies, it seems that outside of London, Northern Irish people buy the most Bitcoin, with 15% of people admitting to purchasing it—I am one of the 85% who do not. The fact that 15% do tells me, first, that there is a great interest in it and, secondly, that many people have faith in it, and they wish to be reassured in that.

[Alexander Stafford]

Why does the hon. Gentleman believe that Northern Irish people like cryptocurrency more than Scottish, English and Welsh people do?

[Jim Shannon]

That is a question I cannot answer. I think that there are those who are prepared to take a gamble and those who are not. Perhaps people in Northern Ireland like the element of uncertainty, or perhaps investors like the certainty of the value of their investment. I will give an example of that, because it illustrates the situation very well.

Some 38% of people in Northern Ireland say that they have thought about purchasing cryptocurrency but have not yet done so. What some forget is that Bitcoin is a form of finance. Some bars and restaurants across the UK accept it as a form of payment, so it must be regulated. What I am seeking to do today, as someone who does not have any real knowledge of how the system works, and what I always look to do, is to consider how we can do things better and how we can regulate crypto and make it safe.

We have heard many stories of how accessible and worthwhile Bitcoin and cryptocurrency can be. I know the hon. Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron) has a great interest and knowledge in this subject matter. One of my constituents, who is only 28, invested £1,000 in Bitcoin when he was 23. The value of that today is £40,000. What an investment that young fella made! It was probably not a big amount for him, but at the same time he took the gamble. Knowing when to stop is one thing, but continuing the gamble and risk will not always work out well for everyone. People are making extortionate amounts, but it is important that the dangers and risks of addiction are highlighted. Those are some of the concerns I have on safety, and that is where regulation from the Government and the Minister would be most noticed.

Many have heard the story—I wonder how it could ever have happened—that in 2013 a British man accidentally threw away a laptop hard drive that contained what would be worth £280 million today, so cryptocurrency can be incredibly volatile and has been described as overhyped. The Bank of England has strongly highlighted the consumer risks of cryptocurrency and has tended to downplay the threat they may cause. In addition, the FCA has regulated some cryptocurrencies, which tend to function like shares or investments.

It is essential that cryptocurrency assets follow anti-money laundering guidelines. However, there is a link between cryptocurrencies and organised crime. Not every investor is involved in that, but clearly there is a link. In 2021, the National Crime Agency seized £27 million in cryptocurrency assets. The lack of regular oversight of cryptocurrency makes it attractive for criminals seeking to partake in illicit financial crime, not only in the UK, but all over the world. In addition, the largest seizure of that kind in the UK was undertaken by the Met police, when they seized £180 million-worth of cryptocurrency linked to international money laundering in London. That underlines the importance of regulation, and being able to follow the money and catch illegal money.

Although crypto can seem appealing to many, and a hobby for some to build their assets, the potential dangers must be brought to light. Government and FCA regulation is crucial to ensure that people are aware of what they could lose. There is always a risk with crypto, but it is about ensuring that people know the risks. The cryptocurrency market crashed twice—we, and investors, must be reminded of that—in 2018 and 2020, losing large sums of money for hundreds of people.

The Government have some regulations in place to address cryptoassets, but this debate is about doing that better. The hon. Member for West Dunbartonshire put that forward, as others have, in a concise and helpful way. I look to the Minister to share the Government’s thoughts about how that can happen. Finance is an essential component of our economy and one that needs rules, regulations and laws in place. We must get this right and protect people from economic crime, which is all too prevalent.

I am aware that this issue will be referenced in the upcoming Financial Services and Markets Bill, and maybe the regulations could be strengthened to offer us some reassurance. We must look UK-wide when addressing the issue. It is not just an England issue, but a Scotland, Wales and Northern Ireland issue; it is for all of us together. I urge the FCA and Her Majesty’s Treasury to engage with local Administrations in Scotland, Wales and Northern Ireland to ensure the regulations are knitted together administratively in all regions, and to ascertain what more the House and the Minister can do to regulate the use of cryptoassets and currencies. Again, I thank the hon. Member for West Dunbartonshire for securing this important debate. I very much look forward to what the Minister has to say.

Financial Services and Markets Bill

Jim Shannon Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Tulip Siddiq]

I agree with my hon. Friend, and I have seen examples of that in my constituency, especially the parts where people are from lower socioeconomic backgrounds.

[Jim Shannon (Strangford) (DUP)]

The hon. Lady is outlining the case on behalf of those who live in rural communities, who comprise about 50% of my constituents. A number of banks have closed in our constituency—I believe there have been 10 or 11. Each of those banks—Danske Bank, Ulster Bank and all the others—has made exorbitant profits. I am not saying that they should not make a profit, because they should, but their profits are so high that they could well keep their branches open to ensure that people who live in a rural area can have access. Does she agree with me on that?

[Tulip Siddiq]

I agree with the hon. Gentleman’s point, especially as regards constituents in rural areas. I hope the Minister will take on board the comments that are being made.

I was delighted to hear the announcement from the Cash Action Group this week that the sector will be launching additional banking hubs on a voluntary basis, but these services must be protected by legislation. Will the Minister kindly set out in his summing up when the Treasury will be publishing its cash access policy statement, and whether it will ensure that in-person services are protected under the legislation?

It is also disappointing that the Bill fails to address the growing problem of financial fraud. Labour fully supports clause 62, which enhances protection for victims of authorised push payment scams, but the Bill does nothing to strengthen fraud prevention. Under this Government, the amount of money stolen directly from the bank accounts of hard-working people and businesses through scams and frauds has reached an all-time high of £1.3 billion. That would be bad in a normal time, in the best of times, but it is especially bad when we are in the middle of a deepening cost of living crisis. This Government have completely failed to get to grips with modern fraud and scams, such as identify theft and online scams, which have seen people’s lives stolen and their economic stability put at risk.

The former Business Secretary, who is now the Chancellor of our country, was asked about fraud earlier this year. He dismissed it, saying that fraud and scams are not a part of most people’s everyday lives. That is breathtakingly out of touch. Why does he think that? It is shocking. Martin Lewis, the money saving expert, said at the time that

“denigrating the experience that people in this country have with scams, and the lives that have been lost or destroyed because of scams, is an outrage. And he must and needs to apologise if he has any shred of decency in him.”

We still have not received an apology from the Chancellor, but he can put things right by taking immediate action to rectify the amount of fraud and scams that people are facing. I ask the Minister to explain in his closing statement why his Government continue to fail to take fraud seriously and push responsibility solely on to the banks. The Bill ignores the fact that digitally savvy criminals are increasingly exploiting a range of financial institutions, such as payment system operators, electric money institutions and crypto asset firms, to scam the public. In his summing, can he also please explain why the Bill would only provide for the reimbursement of fraud victims who send money using the faster payment system, and why other payment systems have not been included? That seems baffling.

Another area in which I feel the Bill lacks ambition is support for the mutual and co-operative sector. While clause 63 contains some welcome and long-overdue provisions, such as enabling credit unions to offer a wider range of products, the Bill does little to address the outdated regulatory regime faced by credit unions, building societies and co-operative banks. We have seen numerous building societies threatened with demutualisation in recent years, while the number of mutual credit unions has plummeted by more than 20% since 2016. Unlike the USA and many other European countries, the UK is uniquely lacking in mutually or co-operatively owned regional banks. That lack of diversity in the financial services sector has had devastating consequences for financial inclusion and resilience, with many desperate families forced into the arms of unethical lenders. I have seen that first hand in my constituency, especially in Kilburn.

A clear first step in addressing this issue would be to require the Financial Conduct Authority and the Prudential Regulation Authority to have an explicit remit to report on how they have considered specific business models, including credit unions, building societies and mutual and co-operative regional banks, to ensure they are given parity of esteem with other providers. I would be grateful if the Minister addressed that in his closing remarks—I recognise that I have asked many questions that I want him to answer.

Turning briefly to food speculation, Global Justice Now has brought to my attention concerns that the Government’s proposed reform to the position limits regulations under MiFID II have not been adequately assessed for commodity market speculation risks. I ask the Minister to provide some reassurance that these reforms will not adversely impact commodity prices, such as energy and food prices, in the midst of a cost of living crisis, and to explain what role the regulators will play in monitoring this.

Finally, turning to the points that have come from the Opposition Benches, it is striking how little the Bill has to say about green finance. We of course welcome clause 25, which formalises the responsibilities of the FCA and PRA under the Climate Change Act 2008—introduced, I remind the House, by the last Labour Government—but the Government promised much more radical action. Indeed, we were promised that the UK would become the world’s first net zero financial centre, but instead, we are falling behind global competitors.

A recent report from the financial services think tank New Financial revealed that the UK is a long way behind the EU in both share and penetration of green finance in capital markets. It is possible that the Minister has not read that report; I am happy to send him a copy. If he reads it, he will see that it says in black and white that the UK is behind the EU. It found that green finance penetration in the UK was at half the level of the EU, and roughly where the EU was four years ago. When the Minister closes, if he does not agree with me, will he please explain why nothing in this Bill commits the Government to introduce sustainability disclosure requirements, a green taxonomy plan, or a green finance strategy for the sector? If he does not agree with the report I have quoted, could he tell me whether it is wrong?

I look forward to debating and, hopefully, addressing these issues with the Bill when it is in Committee. Once again, I thank the Minister in advance for his closing remarks, which I am sure will give detailed answers to all the points I have raised today.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a pleasure to speak in the debate. The Bill is substantial and weighty, and rightly so. Our financial services sector is vital—perhaps never more so than today, given the cost of living, for people at the mercy of the financial institutions to lend them money to carry their businesses through this period, for families looking for a low-interest loan to fix their cars, and perhaps even for the housewife trying to buy a second-hand washing machine. Those are the ordinary things that people have to face.

The regulation of financial services is essential. We must get it right and rectify the remnants of regulation where Europe was unsuccessful in fostering businesses and protecting individuals. I am keen to support clauses 8 to 23, which will grant additional powers to regulators, allowing for greater regulation of financial promotions. This morning in Westminster Hall we spoke about cryptocurrency and cryptoassets. The Minister answered some of our questions, but that is a really important subject. It is estimated that some 2.6 million people across the UK, and 100,000 people in Northern Ireland, use cryptocurrency. Some 15% of people in Northern Ireland use it, and 38% say they have thought about using it but have not yet done so. The regulation of this up-and-coming form of investment and spending is necessary.

Clauses 24 to 46 seek to ensure appropriate democratic accountability for the regulators, given that the Bill gives the FCA and the PRA new secondary objectives to advance the international competitiveness and medium to long-term growth of the UK economy. I have spoken about this a number of times in the House, but I am not entirely convinced that the new regulations for the FCA are strong enough to make a difference, or that the Bill goes far enough in this respect.

I think regularly of one of my constituents, whose case I know exceptionally well. The episode of Panorama broadcast on 16 August, titled “The Billion-Pound Savings Scandal”, detailed a scheme in which some £47 million of life savings was taken from consumers. The initial figure was £16 million, yet although it seems the FCA had ample evidence of wrongdoing and the powers necessary to act, nothing was done. That constituent and a number of others have lost money through that scheme. I am not sure that the Bill goes far enough in that respect.

An essential component of the Bill must be the protection of access to cash. I am old-fashioned, Mr Deputy Speaker; I use cheques all the time, and I use cash. I have the jingle of cash in my inside pocket, and I have the pound notes—sorry, I am going back too far; I have the £20 notes here in my wallet. I heard the right hon. Member for South Northamptonshire (Dame Andrea Leadsom) refer to her daughter getting a cheque. I get them every day, and I write them every day—that is who I am.

Access to cash and its use is essential, particularly for the small business with a small profit margin. The Post Office announced that just last month it handled more than £800 million in personal withdrawals, the most since records began five years ago. That tells me that cash is still king and we should not disregard it.

I am old enough to remember the ’60s and the early ’70s, when my mum and others, on a tight budget, used envelopes to set aside money for the gas, the electric, food and the rent. That meant that the management of the moneys for all the bills was done right. I believe that history will repeat itself and we will see that happening once again. Cash will be more important than ever.

The right hon. Member for East Hampshire (Damian Hinds) referred to the growth of credit unions. In Northern Ireland, credit unions have been an incredible success. They can do better for everyone. In some cases, they have replaced banks where those have closed. Will the Minister say what can be done to ensure greater use of credit unions?

I am concerned that, as we approach the autumn and winter, many will suffer from malnourishment, freezing homes and depression in the coming crisis. I believe that the Bill will do more than just regulate the financial regime; it will ensure that we can support the people we are privileged to represent and keep them protected this winter.

Independent Brewers: Small Brewers Relief

Jim Shannon Excerpts

Tuesday 6th September 2022 Commons Chamber

[Owen Thompson]

The hon. Lady makes an excellent point. I will speak later about some of the issues that businesses currently face with regard to energy costs.

[Jim Shannon (Strangford) (DUP)]

In my constituency, as in the hon. Lady’s, we have breweries. I am reminded of Bullhouse Brewery in Greengraves Road in Newtonards, a local family business. It produces an incredible product that sells well, but it is a small brewery. It really is in that category. Without the assistance of small brewers relief, there is no guarantee that our independent brewers would be able to survive. Does the hon. Gentleman agree that to ensure that our local brewers are able to reman comfortably on their feet, there must be greater relief on their beer duty to ensure that they are not penalised by crippling tax in years to come? The very fact of what local brewers do means that they are intensive users of electricity so the costs for them are multiplied to a place where they may not be able to survive.

[Owen Thompson]

I agree with the hon. Gentleman. Many small family brewers are so much a part of their local communities. It is not just about the business, it is what they do for their local communities.

Each proposal that the Government have brought forward so far has been a step up from the last, but has missed the mark in crucial ways. So let us look at the most recent reform package that the Treasury has put on the table—what it gets right, which it does, and where we still have some way to go. I welcome last year’s announcement that the 50% rate would be reduced to 2,500 hectolitres. This came off the back of a great deal of lobbying from campaign groups and Members across the House, and demonstrates the cross-party willpower to get this right for our brewers. That is not to mention a public petition of more than 50,000 signatures. But issues remain.

Brewers cannot wait any longer for another half-right, half-wrong proposal. This time, the Treasury must listen to brewers’ calls, act decisively, and implement that decision. No more leaving brewers in the lurch. They have a right to know the final details of what the Government are planning and when it will be introduced so that they can be prepared for the changes. So, having spoken to SIBA and to local brewers in Midlothian, I am asking the Treasury to address the following problems in its most recent proposals with transparency and urgency. I and many small brewers have serious concerns about the ways in which these reforms could turn small brewers relief into big global brewers relief. Time and again, the current proposals open the door to benefiting the big players, and it is almost starting to look as if that is a feature, not a bug. For one, the Treasury needs to scrap its plan to set the start and end point of relief depending on the UK’s average alcohol by volume. This nationwide average is heavily skewed towards global brewers, and it needs to be the average of small brewers instead. Then we have the fact that the reduced rate of SBR will be widened from 2.8% to 3.4% ABV, at £8.42 instead of £19.08.

SIBA has told me that it is concerned that this allows large brewers to undercut smaller ones—they could easily cash in on the benefits by altering their recipes to a lower ABV. Not only would that cost the Treasury an estimated £200 million a year in lost revenue, but it would fundamentally go against the spirit of SBR. On top of that, we have the Treasury’s decision to maintain the Farmgate exemption, which exempts 80% of cider makers from paying any duty. Small cider producers absolutely deserve parity of support, but there is no getting round the fact that the cider sector has a very different landscape. Global producers account for 87% of the cider sold in pubs, so it is global producers again that disproportionally benefit from the Farmgate exemption.

According to SIBA, taxing cider at the same rate as beer could raise £360 million a year for the Treasury, so why is it not happening? Are the Government scared of upsetting big business yet again? Using SBR reform as a means of opening the door to advantaging global brewers just does not make sense, yet it seems to be the direction of the Treasury. At best, this is an honest oversight. At worst, it is as if the Treasury is trying to stick to these plans no matter what. I think that questions need to be asked about what communications and hospitality the Treasury might have received from some of these large global brewing companies. I urge the Minister to ensure that that is not the case and that small brewers relief is genuinely to support small brewers and not be that in name only.

Aspects of the latest proposals for SBR reform also undo some of SBR’s spirit of innovation and growth. When calculating a producer’s average ABV, the proposed new small producer relief will include everything the producer makes—beer or otherwise. I am sure that it has not escaped the notice of the Minister or others in the Chamber that many small brewers are branching out and not simply making beer but also spirits such as gin or whisky, and this innovation should be welcomed. However, under the current plans, producing spirits will send a brewer’s average ABV skyrocketing. Small producer relief will act as a roadblock to innovation. Instead, the average ABV calculations should only include products of up to 8.5%—the same amount that actually qualifies for relief.

The Treasury also needs to urgently clarify some issues around its simplification of ABV bands surrounding SBR. It is welcome that SBR will now apply to beer below 2.8%. That can only encourage a trend of lower alcohol beer to aid in healthier drinking habits. However, will this affect brewers that currently receive up to 50% relief on beer between 2.9% and 3.4%. There is zero clarity on this and brewers need an answer. I urge the Minister to address this in his response.

Furthermore, under the current proposals, the Treasury is planning to introduce a reduced rate of about 5% for draught products below 8.5% ABV in large containers of at least 40 litres. This is a positive step forward, but why stop there? The Minister will be aware of SIBA’s “make it 20” campaign. Small brewers and community pubs often use 20 or 30 litre containers to keep the beer fresh. Even some of the larger pub chains are using that size of containers because of the freshness of the product. Will the Minister commit to expanding the reduced rate to include containers of that size? Go on, prove that the Treasury does actually care about the wee guys after all. Crucially, the Minister needs to guarantee that this is full SBR, by ensuring that relief fully applies in cash terms to the lower rate, main, higher and the draught products rate so that small brewers can continue to compete.

On top of this, the way in which the small producer relief is calculated is a completely untested system. Rather than using a simple percentage, brewers will have to consider different cash reliefs at different alcohol bands, based on hectolitres of pure alcohol. It is unnecessarily complex and could act as a cash cap, once again discouraging brewers from innovating.

Brewers do not just need solutions to those issues; they need them to happen now. Frustratingly, however, delay and confusion have been the name of the game so far. First, brewers were promised an announcement on the final details of SBR reform before the summer, but it would appear that the Government have been a bit too busy over the summer to have got around to it, so it never happened. I hope the Minister will take today as an opportunity to give a long-awaited update and maybe even a date of publication for it. Secondly, SBR reform has been rolled into the wider alcohol duty review. Small brewers simply cannot wait for that review’s findings, so I hope the Minister will listen to calls for the reform to be progressed on its original timetable for February 2023.

This is not good enough. The urgency of supporting the brewing sector is possibly more serious now than ever before. Under this Government, the mass closure of pubs and breweries is more likely than it has ever been. The industry is facing a multi-faceted crisis of covid recovery, energy price hikes, Brexit and climate issues.

The brewing industry was one of the pandemic’s worst-hit sectors, with pub closures locking it out of 80% of its sales. Production fell by 40% in 2020 and remained 16% below 2019 levels in 2021. On average, each small brewer came out of the pandemic with £30,000 of debt. The Scottish Government’s brewers support fund provided millions of pounds of direct support for the sector, but there was no equivalent from the Westminster Government, whose wider package of hospitality support failed to include hundreds of brewers. As a result, the UK lost 160 active brewers during the pandemic and has lost between 40 and 60 more this year.

Yet there is a growing consensus in the sector that the current crisis is far more worrying than even at the height of the pandemic. Skyrocketing energy bills are putting brewers’ futures at risk. One Midlothian brewer told me that their electricity bill was currently triple what it had been a year ago, at an unimaginable £90,000 a year. They estimated that by next year it would reach £180,000. Another local brewer is paying £21,600 more on energy this year than it did last year, almost enough to hire yet another a new employee.

The energy crisis also has indirect effects on the supply chain, as the energy cost of producing certain materials skyrockets. For example, I have been told that the price of buying cans to put beer in has risen from 9p to 14p, leading to massive increases in costs.

Then we have Brexit, which has created not only product movement issues, but a change of attitudes among buyers on the continent. At a time when the cost of living crisis could mean people spending less money in pubs, the last thing brewers need is a complicated export processing system, but that is exactly what Brexit has given them. A brewery in Kent that was chosen by the Department for International Trade as a Brexit export champion recently revealed that it only has one EU customer left. When EU buyers look at the paperwork needed to trade with UK brewers, it seems the conclusion they come to is, “Why bother?”.

The climate crisis is also wreaking havoc on the industry. With the recent high temperatures and drought, hop harvests in Europe are expected to be down 20% to 40% on last year, which means higher prices yet again in the coming months. As if that picture was not worrying enough, there is yet another shortage of CO₂, a key part of the brewing process, again partly due to energy prices.

There are glimmers of hope that I have seen when speaking to local businesses throughout the summer. Many are responding to energy prices and CO₂ shortages by installing green technology to help with renewable energy generation, storage, electrolysis and CO₂ recovery. The Government might not be engaging with long-term planning to adapt to this crisis, but local businesses in Midlothian certainly are. They are turning up the dial on the green revolution in the place that matters most: their own back yards.

However, that kind of long-term investment is exactly that—long term. The up-front costs can be prohibitive for many, while Government funds such as the industrial energy transformation fund are again aimed at larger businesses. Distilleries benefited from £11 million to help them to go green, so I would be grateful if the Minister would consider further steps to help small and medium-sized enterprises such as small brewers to cover the up-front costs of some of those innovations.

I am here because of Midlothian, to fight the corner of its residents and businesses. That is why I have been talking to local businesses over the summer to understand the issues they are facing in the midst of this crisis, and it is why I am standing here today to communicate those messages to the Government. That is how the system is meant to work. It would be a huge failure of the system if the Treasury were to shrug its shoulders and plough on with these poorly thought-out plans regardless.

Midlothian is blessed with many independent brewers, which are a huge asset to the local economy, the community and its culture, but the Treasury’s current proposals for SBR reform seem to put global producers first. They undermine the incentive to grow and do not go nearly far enough to support these valued businesses through the energy crisis, which is existential for many. The back and forth of four years of fiddling with SBR reform simply has to end. We need the Government to act today to give brewers clarity on what reform will look like, to address the concerns about SBR reform benefiting global companies and discouraging innovation, and to deliver urgent support for energy bills and switching to green energy production. That way, I hope that we can continue to raise a glass to our independent brewers for years to come, because they give so much to all our communities.

[Robin Millar (Aberconwy) (Con)]

I congratulate the hon. Member for Midlothian (Owen Thompson) on securing the debate on this important issue. I know that brewing generally is of great interest to many colleagues.

My constituency of Aberconwy is home to some of the finest—I might say the finest—local food and drink producers anywhere in the UK. I am proud to support that industry and sector in my constituency. I welcome the bold reforms to alcohol duty, and the support for pubs and brewers, in the last Budget. I am also proud to SIBA, the Society of Independent Brewers, in its “Make it 20” campaign, which seeks to apply a 5% reduction in beer duty to 20 and 30-litre kegs. I will briefly outline why the campaign is important to small breweries by using the example of the Wild Horse Brewing Co in Llandudno.

The company is in my constituency and sells more than 70% of its annual production in 20 and 30-litre kegs. As it has grown, it has made a significant investment in 600 30-litre kegs. Most of its beer is sold to small independent bars, pubs and restaurants, which rely on smaller containers in order to offer variety and keep the beer fresh. Given that most of the brewery’s beer is sold in 20 and 30-litre kegs, it will not benefit from the 5% reduction in beer duty, and because none of its beers is under 3.5%, it will not benefit from the widening of the lower duty bracket. This is a business that, with support from the UK Government, has overcome the challenges of the pandemic, and has invested in its future and in the town of Llandudno in my constituency. Over the last 18 months, Dave Faragher, the managing director and founder, has increased his team from seven to 10 employees, two of whom originally started with the UK Government’s kickstart scheme.

Breweries and pubs are businesses that are vital to jobs and communities throughout the UK, especially in constituencies such as mine. Llandudno is known as the queen of resorts and is one of the largest resort areas in Wales. It is important that such businesses are supported and their contribution to the economy recognised, yet there can be no doubt that these same breweries and pubs have faced unprecedented challenges over the last three years. The sector bore the brunt of the economic consequences of the lockdowns and the trading restrictions of the pandemic. It now faces the challenge of rising costs of ingredients and energy—issues of huge concern for such an energy-intensive industry.

Just this weekend, small breweries learned of a threefold increase in CO₂ prices and a likely supply crunch at the end of September. Production of CO₂ in Billingham—one of the largest producers, which is responsible for about 60% of UK production—will end and Ensus will stop its production for three weeks. As we know, CO₂ is vital not just for breweries, but for the entire food and agricultural sector, which falls within the purview of the Department for Environment, Food and Rural Affairs. I therefore must take this opportunity to call on DEFRA to take urgent action, as happened last year—it has shown itself able and willing to do so—to secure CO₂ production and supplies, and to reduce costs.

[Jim Shannon]

The crucial factor is that either the small brewers relief scheme is enabled to help small businesses, or there will be closures and job losses, with no money from those wages going into the economy. The Government and the Minister need to enable the small brewers relief scheme in a way that helps those businesses now, as energy rises. It is a straightforward decision—one way or the other.

[Robin Millar]

I thank the hon. Gentleman for his intervention. I think it is fair to say that businesses, and I count breweries among them, are not looking for charity. They recognise that the Government are not here to give recompense for loss of profits and the like. They are looking for the help they need to get through these tough times.

I am deeply sympathetic to businesses that are facing challenges and working to overcome them, day in, day out. I believe that most are not looking for charity or a hand-out. They just want help to get through another set of challenges. I urge the Government to review the arbitrary nature of small brewers relief and to make 20-litre and 30-litre kegs eligible for the 5% reduction in duty. Small brewers and hard-working small businesses at the heart of our communities, such as the Wild Horse brewery in Llandudno, deserve that consideration.

NHS Pensions and Staffing

Jim Shannon Excerpts

Wednesday 13th July 2022 Commons Chamber

[Dr Poulter]

The hon. Lady is absolutely right. There were some further unintended consequences of the Finance Act 2004, which I will come to in a moment, but doctors, nurses and healthcare professionals cannot chose the rate at which they contribute to their pensions—they have to contribute at a fixed rate. There is no choice, so unintentionally, we find ourselves in a situation where senior healthcare professionals are facing punitive, eye-watering annual charges on their pensions worth tens of thousands of pounds. That cannot be right.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on all he does in his position as a doctor, and on securing this debate on a really important issue that affects many of my constituents and those of many other Democratic Unionist party Members. During April this year, 8,902 pension awards were made, compared with 6,932 in April 2021—a year-on-year increase of 28%. Does the hon. Member agree that that is indicative of an increase in staff who simply cannot take the long hours, the lack of support and the soul-destroying pressure that our NHS is fast becoming renowned for, and that it is critical that changes are made urgently to keep staff in place rather than have them bolt through the door at the first possible opportunity? I look forward to hearing the Minister’s response.

[Dr Poulter]

I thank the hon. Gentleman.

Alcohol Taxation

Jim Shannon Excerpts

Thursday 7th July 2022 Commons Chamber

[Alun Cairns (Vale of Glamorgan) (Con)]

I beg to move,

“That this House has considered Alcohol Duty and tax on alcohol.”

I am grateful to the hon. Member for Gateshead (Ian Mearns) and the Backbench Business Committee for selecting this important topic for consideration, and to all Members across the House who supported the case that it should be considered. This debate is hugely important to a large number of businesses across the country—the hospitality sector in general, brewers, vineyards, distillers and retailers, employing hundreds of thousands of people. A disproportionate amount of them will be small businesses with younger employees, so getting this policy right really matters.

I start by paying tribute to the Government for recognising this Brexit opportunity. Taxation and alcohol duty has been needlessly complicated for too long, yet the UK was tied to EU restrictions preventing change. The Government set out their intentions to review the structures in March 2020, followed by a consultation on their proposals in October last year. The Government’s stated aims are to make the system simpler, more economically rational and less distortive, and to reduce the administrative burden. It is fair to say that these positive intentions are included in the thrust of the proposals. The consultation is welcome because it creates the opportunity for hon. and right hon. Members, and the industry, to respond and to further develop the plans. My comments are aimed at encouraging the Minister to refine the proposals further now that the industry, consumers and officials have considered how they would work in practice.

On beer duty, there has rightly been a warm welcome for the lower duty on draught beer. There has also been a recognition that the proposed 5% reduction should also apply to kegs and casks of 20 litres rather than the 40 litres set out. There has been a strong indication from the Treasury that this may happen, and I ask the Minister to confirm her intentions. I would also press for a greater reduction than 5% a pint in order to further support the industry, and pubs in particular. New research published this week highlighted that England and Wales have 7,000 fewer pubs than just 10 years ago. We all recognise the important role pubs play in our community and society at large, and also in providing a watching influence on people who enjoy having a drink rather than their being encouraged by the cost incentive to drink at home.

The plan to widen the reduced rate from 2.8% to 3.4% ABV is also a positive move, but a minor adjustment to 3.5% would resonate much better, and enable the industry to innovate further. To help to protect smaller brewers from the larger operators who may simply adjust their recipes to take advantage, it is important that the relief that they currently receive under the small brewers relief fully applies at this level. It would also make this element competitive with EU directives, and provide further support to small businesses within the industry.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Member on bringing forward this debate on an important issue. The past few years have impacted greatly on local pubs, bars and restaurants—they are the ones who have suffered. At the same time, Tesco and Asda, to take just two examples, can sell exorbitant amounts of alcohol with low tax while others are left suffering. Does he feel that with the Government’s proposed steps, which he will speak about later—lowering alcohol taxation and encouraging people to support local—pubs can pick up the business they once had and have lost? Does he agree that that is a positive way forward?

[Alun Cairns]

The hon. Member makes an extremely important point. As I said, some people are encouraged to drink more at home by the discounted prices offered by the large retailers. I would add that in Scotland and Wales—I am not so familiar with the position in Northern Ireland—the retailers receive the extra differential with minimum alcohol pricing, in comparison with what is available in England. That gives some room for the Treasury to react positively to support the pubs and brewers, as he and I seek to underline.

The small brewers relief has been proven to deliver major benefits. It enables small brewers to compete with larger operators and to innovate and generate new options for consumers. It will be replaced by the small producers relief to offer similar or common benefits to the wider sector and to prevent the current cliff edge. Again, the Government’s objectives are positive, but I am concerned that the proposed changes introduce significant complexity to the process. Moving from 5,000 hectolitres at a 50% discount, to a maximum of 2,500 hectolitres at a 50% discount, tapering up to a 100,000 hectolitre maximum at up to 8.5% ABV, along with a cash limit and an average ABV measure, is much more complex than it needs to be. It is hard enough to say, let alone follow the process. It also makes it much more unpredictable for the businesses we are seeking to encourage to innovate, to invest and to create wealth at the smaller end of the scale.