Financial Services and Markets Bill

John Glen Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[John Glen (Salisbury) (Con)]

May I say what a great pleasure it is to speak in this debate? It will be of little surprise to the House that I support many of the measures in the Bill—20 separate measures, I think, over 335 pages. I would like to make a few comments on the process that led to the Bill, some observations on the policy content and, if I may, a few suggestions about some areas in which the Government might consider going further.

It has been the greatest privilege of my political career to have been Economic Secretary to the Treasury for four and a half years. When I started in the role in January 2018, there was considerable ambiguity about the direction of Government policy. It feels a little heretical to say it, but there was great uncertainty about how financial services would land after the Brexit decision. There was no consensus, and there were significant predictions of the demise of the City of London. Over those four and a half years, I was very pleased—I am not saying that it was all my doing—to see the resilience of the City of London. The global hub of financial services in London has proved itself phenomenally resilient over the past three years.

After a lot of discussion about dynamic alignments and thoughts about how things should be delivered, we had an election and we had clarity. We had a new, clear direction, eventually resulting in this Bill, which takes us back to the gold standard of the FSMA model. I welcome that. I also welcome the fact that the Bill has come about through deep dialogue with the City and the trade bodies that represent the financial services industry. As my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) says, it is a critical industry for our country: it generates 10% of our tax revenues. That is why the framework that we are setting out today is so important.

I pay tribute to Miles Celic at TheCityUK, to David Postings at UK Finance, to Catherine McGuinness and now Chris Hayward at the City of London Corporation, and to Huw Evans and now Hannah Gurga at the Association of British Insurers. They were instrumental in the constructive dialogue with Treasury officials to ensure that the policy that we arrived at met the needs of this complex industry. I thank them for their engagement during my tenure.

At the risk of being accused of Stockholm syndrome, I also pay tribute to officials at the Treasury. Over the summer, a lot has been said about Treasury orthodoxy and about regulators. I put it on record that my experience of working at the Treasury over the past four and a half years was that Treasury officials worked under the direction of politicians, as we would expect, but that they were also extremely eager to find creative solutions at a time when there was no template, no rulebook and no preordained way forward.

I pay tribute to the work of Sam Woods at the Prudential Regulation Authority. The PRA provides a distinct role from the one that we perform in this place, but the professionalism that it shows in dealing with complex regulatory matters is something that we should be very grateful for in this country. I also want to speak about the Financial Conduct Authority, because the Bill will give the FCA and the PRA a significant degree of responsibility. As we put aside the retained EU law that we spent so much time in Committee sorting out, we now rely on them, under the growth and competitiveness objective, to come forward with new rules. We are not seeking to deviate from norms in other jurisdictions; what we are trying to do is rightsize those rules for the UK.

I want to say that I recognise that the implementation of the future regulatory framework has not come about on a whim, but has taken a great deal of work over a couple of years, along with a great deal of consultation. I also want to say that the EU legacy is not all bad. We in the UK played a significant role in shaping that legislation, and during my interactions with my counterparts when I was a Minister they were very complimentary about the role that we played, but—as my right hon. Friend the Member for Richmond (Yorks) pointed out—that does not mean that we should not now be courageous in taking opportunities.

The wholesale market review presents a phenomenal opportunity to make changes to MiFID. It is one of 30 reviews that we have undertaken in the Treasury over the last year to ensure that we get this right. What we are doing with clearing—the middleman in trading—is also critically important, because the central clearing counterparties in London are instrumental across the globe and will continue to be so. They are efficient, they are world class, and no matter what the EU may wish to do to compete with our clearing environment, we can be certain that the Bill will ensure that those standards remain very high. We have needed to embrace innovation, and the sandbox for which the Bill provides is an important function enabling the FCA to do that.

As we look to the future, we must think about our relationships with other countries that have significant financial services industries. We will need to customise those relationships, and optimise them. I am therefore pleased about the mutual recognition agreement enablement provisions. I welcome the call-in power, although clear principles must be set out in respect of how it is applied; this is not about a random political intervention. I also endorse the moves to deal with packaged retail investment and insurance-based products and get rid of key information documents, and to introduce something that is appropriate in the UK.

I welcome the Bill, and I pay tribute to my successor. I wish him as long a tenure as I have had.

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[Stella Creasy (Walthamstow) (Lab/Co-op)]

I do not want to disappoint my colleagues on the Government Benches, but I think that they know the issue on which I wish to focus in the time that is available to me. Before I start, I want to put on record, as a Co-operative and Labour MP, my support for the comments of my Labour colleagues on the importance of access to credit unions and of access to cash, which reflects the issue that I want to raise, particularly with regard to high-cost credit regulation.

I also wish to put on record some scepticism about the idea that there are wonderful opportunities as a result of Brexit. To my mind, there are simply problems that we will need to address, and I note that the former Minister, the hon. Member for Salisbury (John Glen), talked about the unlikelihood of a derogation from the existing regulations. Some may wonder whether this is the best use of parliamentary time, but I am willing to look at the legislation.

There is a genuine philosophical disagreement here about the concept of consumer protection. It is the lesson of high-cost credit regulation in this country that I do not think this legislation learns and it is our constituents who will pay the price.

Let me start by highlighting the points of agreement. I agree with the right hon. Member for East Hampshire (Damian Hinds) when he talks about this as an industry that is shape shifting—that it evolves to meet the times that it faces. Let me also put on record my appreciation of the work of the former Minister, the hon. Member for Salisbury. He and I have had many discussions about this industry and how best to address the threat that it poses to our constituents. Although we may not have agreed all the time, I have certainly respected the fact that he has been listening and looking at the evidence.

I am here today as a Cassandra, a broken record, to warn again of these industries and the latest antics of the companies, particularly the buy now, pay later lenders. Two years ago, we started to say that those lenders must be regulated, and I would argue that that was probably 18 months too late from recognising the threat that they pose.

The lessons of payday lending, guarantor lending and hire purchase agreements show that we simply cannot wait until the harm is evident among our constituents, especially when the abuse that is coming is self-evident already. Now that we are in a cost of living crisis, such caution is frankly unforgiveable, because it is our constituents who are paying the price. I hope that we can return to this matter in Committee. I am sure that the Minister now dealing with this Bill will recognise that, especially as the £1.8 billion that this country owes in personal debt—a rise of £62 billion—has not come from nowhere. Credit card borrowing in this country has jumped at its fastest rate in the past 17 years as people deal with the cost of living crisis.

When a third of households with children are cutting back on food to be able to pay their bills, it does not take a rocket scientist to work out that too much month at the end of somebody’s money and mouths to feed mean that credit must be found, and our constituents are turning to the high-cost lenders in their droves. I would be surprised if Members do not know what buy now, pay later is, because it is on every single website in this country now as a result of the delay in action. It has massively exploded as a result of the pandemic and now the cost of living crisis. Those companies are offering the opportunity to spread the payments, but they do not do so out of the goodness of their hearts; they do so because consumers spend 30% to 40% more. Add that toxicity to the way in which people are borrowing now to make ends meet: we are seeing buy now, pay later companies offering to put people’s energy bills onto these processes. We are seeing them offering the loans not for fast fashion, which is where people originally thought this kind of regulation was needed, but for basic goods and essentials. Millions of people in this country are now using this form of credit and getting into a hole that they cannot get out of. Those are not my words; it is what the evidence is now showing us. The previous Minister well knows that the evidence of harm is there. Indeed, that is what the FCA told us more than two years ago.

The average buy now, pay later user is paying off £293 of buy now, pay later debt, but that is at current prices. With inflation rocketing in the way that it is, the only ones that will win from that are those that offer the ability to apparently spread the payments, but that simply gets people into further and further debt. Most of these companies will not be clear with their lenders about the consequences. Indeed, many people do not even realise that it is a form of credit; they just think that they are spreading the payments on the websites.

Shoppers were charged £39 million in late repayment fees on buy now, pay later loans last year. I dread to think what the figure is now. There is agreement across this House that we need to regulate these companies, but what there is not is the political will to make sure that it happens before the pressure points come. We have already been through one Christmas where one pound in every four spent was on buy now, pay later. There are millions of people still paying off those debts. On the regulatory timetable that the Government are talking about, we will not see action before some time late next year. Minister, some time late next year is far too late for our constituents.

[John Glen]

I cannot resist. I think there is great consensus in the House on this matter. It is not a question of a lack of political will; I can assure the hon. Lady that it is about the complexity of delivering that legislation. In fact, the intent’s having been stated will have a meaningful effect on market practices and will change, and is changing, behaviours in the marketplace.

[Stella Creasy]

I thank the former Minister for his intervention, but my question is what that means for consumers. The lack of regulation means that my constituents cannot go to the ombudsman to seek redress if they think they have been mis-sold this form of credit. As people are drowning in buy now, pay later lending, they cannot seek assistance except from the companies themselves. We now see mainstream banks moving into buy now, pay later—the very bank that looks at someone’s account to decide how much they can spread payments and how much more they can afford to borrow, because this is a form of borrowing.

The hon. Gentleman may argue that the market is moving, but constituents need help now, because it is now that they are getting into debts that they cannot get out of. The challenge for us all is that the pace of change is horrifically slow, and that is where the damage to our constituents will come. If we all agree that regulation matters, let us get on with it. Furthermore, let us ensure that some of those basic changes, such as the ability for the ombudsman to intervene, happen.

This legislation shows that that matters, because it was the intervention of the ombudsman that made a difference with payday lending. The evidence is clear; the Financial Conduct Authority was overseeing Wonga while it continued to make loans that were unaffordable to its customers. It was only when the ombudsman intervened that Wonga was finally held to account for its behaviour, and as a result it went bust—and Wonga is not a one-off. Our constituents need proper consumer credit protection.

The Minister will know that it is my belief that there should be a proper credit capping process for all forms of credit, so that we do not have to play whack-a-mole. The right hon. Member for East Hampshire reflected that when he talked about shape-shifting: as one of these companies is regulated, another one comes up. In the intervening period, however, it would be perfectly possible to bring in the ombudsman. If we set out a separate regulatory regime for those companies, we are setting a precedent for other forms of credit to come and ask for separate and, frankly, special treatment.

What our constituents need is clarity about who to go to when they get into trouble. We all tell our constituents to go to a debt adviser, but if they have rights, those rights need to be transparent. At the moment, if people are borrowing on buy now, pay later, they have no rights, because it is not regulated. They only have the indulgence of those companies, and asking turkeys to tell us whether Christmas is a good idea rarely ends in a present for anybody.

It is right that we act as quickly as possible. I do not agree with the hon. Member for Salisbury when he says that the political will is there, because frankly this could have been done a while ago. The timetable that the Government have set out, which does not seek any form of actual intervention until some time in late 2023—and even then, it is about consulting on further measures—simply will not wash. Every Member of this House will have constituents coming to them for whom buy now, pay later debt will be part of their debt make-up, who may have put their mortgage on it, because there are companies offering the opportunity of spreading payments. Little wonder, when after all the Government are telling us they are going to spread our energy bills; the Government proposals to date are a form of buy now, pay later.

I wish I was wrong. I wish I had been wrong about payday lending, but we waited too long, and there are still millions of people in this country who are owed money through the compensation scheme from those payday lenders because we waited too long to intervene. We must not make the same mistake again.

I put the Minister on notice, and I ask for support from across the House, because I do not think this is a party political issue; it is about the pace of change. I will be proposing an amendment to this legislation that will give the Government the same time period of 28 days that the buy now, pay laters give our constituents to bring in that secondary legislation and give our constituents the protection of the ombudsman. It is a necessary and vital measure in a cost of living crisis to ensure that when people who cannot choose between eating or heating—because they cannot afford to do either—turn to buy now, pay later, they are not creating further problems for themselves down the road.

I know that hon. Members across the House agree that this kind of lending is a problem, but it is time for clarity, it is time for simplicity and it is time for that legislation. I hope that I will find supporters on the Government Benches, and I know that we will find supporters in the other place. Above all, I know that our constituents deserve better.

Oral Answers to Questions

John Glen Excerpts

Tuesday 28th June 2022 Commons Chamber

[Dan Carden (Liverpool, Walton) (Lab)]

7. What recent fiscal steps he has taken to help reduce economic inequality.

[The Economic Secretary to the Treasury (John Glen)]

The Government understand that millions of households across the UK are struggling to make their income stretch to cover the rising cost of living. As part of the £15 billion support package being provided by the Government, almost all the 8 million most vulnerable households across the UK will receive support of at least £1,200 this year, including a new, one-off £650 cost of living payment.

[Dan Carden]

The Economic Secretary will know that Her Majesty’s Revenue and Customs payroll data shows that the pay of the top 1% rose three-and-a-half times faster than the pay of those in the bottom 10%, whose meagre pay increases have already been wiped out by inflation and price rises. When we look at wealth, during one year of the pandemic each UK billionaire saw their wealth grow by £630 million on average. While the rich get richer, the working-class communities I represent get poorer. When will the Treasury look at raising taxes on the highest incomes and taxing the wealth of billionaires in order to invest in communities and UK infrastructure?

[John Glen]

Most mainstream understanding of how the economy works recognises that we need wealth creators, but we also need a Government who recognise the strains that the country is facing. That is why three quarters of the support will go to vulnerable households, including specific additional top-ups such as the £12 million going to Liverpool for the household support fund. This Government will stand by wealth creators and innovators, however, because we need growth in the economy and a more productive economy.

[Gareth Davies (Grantham and Stamford) (Con)]

One way to tackle regional economic inequality is to ensure that our regional businesses are able to attract investment. Will my hon. Friend outline what more we can do to ensure that we unlock more private investment into Britain’s firms of the future?

[John Glen]

The Government are constantly looking at new ideas. The regional angels programme and our reforms to financial services to make FinTech and banks more accessible to regional businesses are at the core of this Government’s agenda, and I will bring further measures to the House in the next few weeks.

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

As my hon. Friend the Member for Liverpool, Walton (Dan Carden) highlights, the handouts from the Government to support families are already being wiped out by the rise in inflation and cost of living. One in two children in my constituency live in poverty. From what the Minister just said, he believes in trickle-down from those billionaires to help those people, but they are on low wages and, for many of those who are working, universal credit has been cut. That is not doing enough to support them. What further steps will the Treasury take?

[John Glen]

What I believe in is a Government who make targeted support available to the most vulnerable. The Chancellor and this Government have on a number of occasions used fiscal events and bespoke interventions to support those vulnerable people. We have always been clear that we will not be able to ameliorate the full extent of the challenges facing the country, but we will continue to strive for greater growth and productivity that will bring us back to where we need to be.

[Sarah Atherton (Wrexham) (Con)]

8. What fiscal steps his Department is taking to encourage levelling up across the UK.

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[Simon Fell (Barrow and Furness) (Con)]

10. What fiscal steps his Department is taking to support the credit union sector.

[The Economic Secretary to the Treasury (John Glen)]

The Government support the credit union sector and recognise the contribution that they make to our financial services sector more broadly and to the communities that they serve. The Government have released £100 million of dormant assets funding to Fair4All Finance to support the financial wellbeing of people in vulnerable circumstances.

[Simon Fell]

I should declare an interest as a former chair of a credit union. Credit unions are some of the largest providers of low-cost credit and are more important than ever given the cost of living issues at the moment, but there are significant barriers hindering their growth, not least legal restrictions on the size of their common bond area. I know that my hon. Friend the Economic Secretary is amending the Credit Union Act 1979 soon, so what plans does he have to look at issues such as this to support credit union growth and to give as many people as possible an opportunity to stay away from doorstep lenders and loan sharks?

[John Glen]

I thank my hon. Friend for his question. He is an expert in this area, given his role in Barrow. We will be amending the Credit Union Act 1979 shortly, which will allow credit unions to offer more services such as hire purchase, conditional sale agreements and so on. With respect to the common bond—that being the link for all credit union members—we will need to see evidence that it supports the needs of the sector, but I have been working closely with the Association of British Credit Unions Limited, the trade body for 70% of credit unions, on its “Vision 2025” document. I visited its conference recently, and we will bring measures forward shortly in the financial services and markets Bill.

[Gareth Thomas (Harrow West) (Lab/Co-op)]

Further to the excellent question from the hon. Member for Barrow and Furness (Simon Fell), I say gently to the Minister that Ministers have always had warm words for credit unions, which I welcome, but have been somewhat slow to give them or other mutuals, such as friendly societies, the Whitehall and parliamentary support for the legal reforms to drive significant expansion. Will the Minister now back the private Member’s Bill of my hon. Friend the Member for Preston (Sir Mark Hendrick) and require all public bodies to promote credit unions going forward?

[John Glen]

Over the years, we have had considerable dialogue on many of these measures. As I said, the legislation that the sector is looking for will be introduced in the next few weeks. I am aware of the Bill of the hon. Member for Preston (Sir Mark Hendrick), and I am seeking to have a meeting with him imminently—in the next few days or next week—to discuss it and to see what we can support.

[Marsha De Cordova (Battersea) (Lab)]

11. What fiscal steps he is taking to help reduce the impact of inflation on households’ cost of living.

AML/CFT Regulatory and Supervisory Regime: Review

John Glen Excerpts

Monday 27th June 2022 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

On Friday 24 June, I published a review of the UK’s anti-money laundering and countering the financing of terrorism (AML/CFT) regulatory and supervisory regime. This included statutory post-implementation reviews for the Money Laundering, Terrorist Financing, and Transfer of Funds (Information of the Payer) Regulations 2017 (SI 2017/692) and the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 (SI 2017/1301) and the review of the UK’s AML/CFT regulatory and supervisory regime; a forward looking report which includes the Government’s response to the call for evidence launched last year.

Taken together, these three documents make a thorough assessment of the UK’s money laundering controls and outline areas of focus going forward, including commitment from the Government to consult on some key proposals for change.

Tackling economic crime and illicit finance remains a priority for this Government, to protect the UK economy and fight crime on a domestic and international level.

Alongside the review the Government have continued to deliver progress across their economic crime agenda, including the Economic Crime (Transparency and Enforcement) Act 2022, which introduces key reforms to beneficial ownership registers and enhances the unexplained wealth orders and sanctions regimes. On 15 June, HM Treasury also laid the Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 before Parliament under the draft affirmative procedure. This legislation makes some time-sensitive updates to the Money Laundering Regulations, which are required to ensure that the UK continues to meet international standards, while also strengthening and ensuring clarity on how the UK’s anti-money laundering regime operates.

The review published on Friday proposes further areas of possible reform, most notably in how firms are supervised for anti-money laundering purposes where, despite progress since 2017, there is further to go to ensure that supervision is effective and consistent across all regulated firms. The review also commits to consult on some smaller changes to the regulations, where black-and-white inherited EU rules prevent the UK from taking a more risk-based approach to prevention. This includes looking at the enhanced due diligence required for domestic politically exposed persons. If the risks around domestic PEPs are found to be sufficiently low, the Government will consider changing the MLRs such that EDD and the additional requirements in Regulation 35 are not automatically required on domestic PEPs, but instead only triggered when there are other high-risk factors also present.

This review represents only part of the cross-cutting action that the Government are taking to progress the economic crime agenda, including the second public-private economic crime plan which is due to be published later this year and the upcoming Economic Crime and Corporate Transparency Bill, which will reform Companies House to further crack down on abuse of corporate structures.

The review is published on: https://www.gov.uk/government/publications/review-of-the-uks-amlcft-regulatory-and-supervisory-regime.

The post-implementation reviews will also be published alongside the regulations on Legislation.gov.uk.

[HCWS139]

Financial Services Update

John Glen Excerpts

Thursday 23rd June 2022 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

I can today inform the House that the Government have announced an extension to our existing trading plan to sell part of the Government’s shareholding in NatWest Group (NWG, formerly Royal Bank of Scotland, RBS) for a further 12 months from 12 August 2022. This is a further step forward in the Government’s plan to return NWG to the private sector.

Rationale

It is Government policy that where a Government asset no longer serves a public policy purpose, the Government may choose to sell that asset, subject to being able to achieve value for money. This frees up public resource which can be deployed to achieve other public policy objectives.

The Government are committed to returning NWG to full private ownership, given that the original policy objective for the intervention in NWG—to preserve financial and economic stability at a time of crisis—has long been achieved. At Budget 2021, the Chancellor set out the Government intention to fully dispose of our NWG shareholding by 2025-26

The Government only conduct sales of NWG shares when it represents value for money to do so and market conditions allow. This extension represents continued progress in exiting the assets acquired as a result of the 2007-08 financial crisis and returning NWG to private ownership.

Trading plan

A trading plan involves selling shares in the market through an appointed broker in an orderly way at market value over the duration of the plan. Trading plans are an established method of returning Government-owned shares to private ownership, while protecting value for the taxpayer. This method was used in the sell-down of the Government’s stake in Lloyds Banking Group, in that case, from a lower starting point in terms of the Government’s percentage ownership.

The trading plan for the Government’s NWG share- holding will be extended for 12 months, terminating no later than 11 August 2023. Shares will only be sold at a price that represents fair value and delivers value for money for the taxpayer. The final number of shares sold will depend on, amongst other factors, the share price and market conditions throughout the duration of the trading plan.

Since the trading plan was established, it has successfully sold approximately 703.5 million ordinary shares for total proceeds of approximately £1.6 billion as of 22 June 2022. The Government currently has a c. 48.5% shareholding in NWG.

UK Government Investments and HM Treasury will keep other disposal options open, including by way of further directed buybacks and/or accelerated bookbuilds. The decision to extend the trading plan does not preclude the Government from using other disposal options to execute future transactions that achieve value for money for taxpayers, including during the term of the trading plan.

I will update Parliament with a further statement at the end of the trading plan.

[HCWS133]

United Kingdom Debt Management Office: Business Plan

John Glen Excerpts

Thursday 16th June 2022 Written Statements

[The Economic Secretary to the Treasury (John Glen)]

The United Kingdom Debt Management Office (DMO) has today published its business plan for the financial year 2022-23. Copies have been deposited in the Libraries of both Houses and are available on the DMO’s website, www.dmo.gov.uk.

[HCWS108]

UK Gross Domestic Product

John Glen Excerpts

Monday 13th June 2022 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on today’s GDP figures.

[The Economic Secretary to the Treasury (John Glen)]

Like other advanced economies, the UK is affected by global economic challenges, including the unprovoked Russian invasion of Ukraine. As the Chancellor said a few weeks ago,

“A perfect storm of global supply shocks is rolling through our economy simultaneously.”

At the same time, the impact from the wind-down of the national covid testing scheme is dragging on UK GDP data. Overall, the figures for April, published by the Office for National Statistics this morning, show that output fell by 0.3% on the month, with the services sector falling by 0.2%, and production and construction declining by 0.6% and 0.4% respectively. As the ONS notes, the fall in GDP on the month is driven by the impact of the wind-down of the NHS covid testing programme. Testing volumes fell by 70% from March to April, which, alongside the impact from vaccines, detracted 0.5 percentage points from GDP growth in April. Looking through the impact of falling tests, we see that the rest of the economy actually grew by 0.1%. Importantly, GDP is still 0.9% above pre-pandemic levels, and support provided over the past two years has put the UK economy in a good position to deal with any economic headwinds, with record numbers of employees on payrolls and a strong economic recovery from the pandemic.

As the Chancellor has also said:

“The next few months will be tough. But where we can act, we will.”

The Government are taking significant action to support households this year, having announced an additional £15 billion of further support for households just over a fortnight ago, on top of the £22 billion announced at the spring statement. In the longer term, the Chancellor has set out his vision for a lower tax, higher growth, higher productivity economy based on the three pillars of capital, people and ideas. The plan for growth and the tax plan represent an ambitious strategy for boosting growth and productivity in the years ahead. The Government’s priority going forward is to put those into effect, including through significant investment in infrastructure, skills and innovation.

We will of course keep the data under close review, and that includes monitoring the economic impact of Russia’s illegal invasion of Ukraine, but our focus will continue to be on the best solution for all: a growing economy that supports high-wage, high-skilled jobs.

[Mr McFadden]

I am grateful to the Minister for his response. GDP down 0.3% in April. A fall of 0.1% in March. Services down 0.3%. Production down 0.6%. Construction down 0.4%. Inflation at 9%. Tax promises broken. The trade deficit at £24 billion. The pound falling against the dollar. The director general of the CBI saying business leaders are “in despair”. The OECD forecasting that, next year, the UK will have the lowest growth of any G20 economy, with the sole exception of—Russia.

That is what the Government are presiding over. Britain is going backwards under the Conservatives. Our businesses, universities and people are all great, but they do not have the partner they need in this Government. The chaos is affecting more and more areas of life: passports, driving licences, GP appointments, A&E waiting times, airports and delays in court trials. Time after time what we used to take for granted is now another feature of Boris Johnson’s backlog Britain.

Those on the Government Benches had a chance to change direction last week. They had a chance to install new leadership that might have given us some hope of a greater sense of grip on all this. But what did they do? They decided that the best person to turn the economy round, to sort out the chaos and the backlogs, and to bring the qualities of focus, attention to detail and sustained delivery to these matters was the current Prime Minister. That was the judgment they made.

The question for the Minister today is simple: after making that judgment—I do not know what he did, but that was the collective judgment—and choosing to continue with the leadership that brought us here, what will the Government do now to turn matters around, and why on earth should anyone believe that the result will be different from what went before?

[John Glen]

As ever, I am grateful to the right hon. Gentleman for his remarks. I do not accept his characterisation of the situation. What I said in my response to him was that today’s data point can be explained by the specific impact of the rapid fall-off in the testing programme. Mass testing ended on 1 April, and that constituted 0.5% of headline growth. We have also seen the impact of the Russian invasion and the impact on the supply chain across the economy. Many economies across the G7 are experiencing a significant impact on their economies and their level of growth.

The Chancellor has been clear in his long-term plan for growth and in his Mais lecture that the Government are committed to investing in research and development, investing in infrastructure and looking at how we can adjust the fiscal burden for business, in particular, to enable that growth to happen. Of course, in subsequent fiscal events, those options remain open to him.

[John Redwood (Wokingham) (Con)]

Why are the UK Government the only Government of an advanced country making a big increase in the tax burden this year and next, at exactly the same time as we are seeing very necessary monetary tightening to control inflation and a huge hit to net incomes from that inflation itself? Is that big tax rise not bound to make things worse and slow the economy too much?

[John Glen]

We always listen carefully to my right hon. Friend. As he will know, we cut taxes earlier this year for hundreds of thousands of businesses though an increase in the employment allowance. We have also slashed fuel duty and halved business rates for eligible high street firms. We will continue to support growth through tax incentives, including the annual investment allowance and the super deduction—the biggest two-year business cuts in modern British history.

As I said in my response to the right hon. Member for Wolverhampton South East (Mr McFadden) a few moments ago, we look forward to working closely with him and Back Benchers to construct the right agenda going into the future.

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[Alison Thewliss (Glasgow Central) (SNP)]

It is interesting that the Minister talks about the covid testing scheme. Is it perhaps the case that the covid testing scheme is artificially inflating GDP, rather than the opposite way around? The UK is lagging behind every single OECD country apart from Russia. Manufacturing, construction and services are all suffering. That has all been made worse by a Brexit that Scotland did not vote for.

British Chambers of Commerce research shows that input inflation is running at 17%. Businesses simply cannot afford to absorb those costs when faced with increased energy prices with no additional support, employee costs through the national insurance tax hike—a tax on jobs—and wage pressures, so will he provide extra support to businesses to protect them and their consumers through this period, or will he wait until these additional costs in the supply chain are further passed on to the already struggling consumer? How does he expect people to eat when food prices are soaring, and for manufacturers to make things in factories when they cannot afford to get the goods to produce them never mind get them out into the shops and have people buy them?

[John Glen]

Most people across the country will be very grateful to the Prime Minister for the judgments made on the vaccine roll-out and on the testing regime that followed. Quite obviously, given the scale of that intervention, it was going to have a significant impact on the economy and the growth figures overall. The Government have never been complacent about the impact of the inflation levels on the people of this country. That is why just two weeks ago the Chancellor introduced a significant package of interventions in a number of dimensions that focused on the most vulnerable—those who will not be able to earn more, particularly those on means-tested benefits, the disabled and universal additional support for pensioners. Respectfully, I do not accept the hon. Lady’s characterisation of how the Government have handled the situation, but those are the facts, as she well knows.

[Steve Brine (Winchester) (Con)]

The Minister will be acutely aware of the perfect storm of inflation and surging energy costs, which UKHospitality warned about just last week. Kate Nicholls warned that the sector is facing as big a crisis, if not bigger, than there was during the pandemic. One suggestion is for a temporary reduction in VAT on business energy bills from 20% to 5%. Is the Treasury is tempted by that idea to stave off what could otherwise be significant job losses in the sector?

[John Glen]

My hon. Friend always makes constructive suggestions. He will be aware of the interventions that have already been made, including the cut on VAT on energy efficiency measures, equivalent to £240 million, as well as the £6.7 billion of investment across this Parliament in energy efficiency measures. None the less, he makes a reasonable point and I am very happy to follow it up with him and discuss it further as we construct that set of interventions in the autumn.

[Sir Stephen Timms (East Ham) (Lab)]

It is, I think, clear that, as anticipated, we are starting to see an economic penalty from the new barriers to our trade with the European Union. Does the Minister agree that we need to work hard to improve relations with the EU with a view to reducing some of the barriers that are causing problems for us?

[John Glen]

Absolutely. We must always, with all our trading partners, seek to develop the best possible relationships. That has been my objective in conversations that I have had on visits to Berlin, Luxembourg, Madrid and the US over the past six months on financial services and as regards the work that the right hon. Gentleman is undertaking as we advance the conversation with the Swiss on the mutual recognition agreement. I was there last week to build on that. It is absolutely right that we build those trading relationships in goods and services across the globe in markets that are mature and in those that are yet to develop fully.

[Mike Wood (Dudley South) (Con)]

With the largest ever research and development budget, the Government are securing the UK’s status as a science superpower. Does my hon. Friend agree that when it comes to growth that status is vital in making sure that we attract high-skilled, high-paid jobs? Does he also agree that locating the Advanced Research and Invention Agency in the west midlands will allow the west midlands to lead the growth that the UK needs and deserves?

[John Glen]

My hon. Friend predictably, and reasonably, makes a plea for investment to be located in his constituency, but he also draws attention to the significant investment of £20 billion in R&D by 2024-25. He is right to stress that to get a high-productivity, faster-growing economy we need to make those sorts of strategic investments and build on what we have already done. I will look constructively at his suggestion about his constituency and region.

[Hilary Benn (Leeds Central) (Lab)]

Figures published recently by Her Majesty’s Revenue and Customs show that the number of UK businesses exporting goods to the European Union fell by an astonishing 33% between 2020 and 2021. Do the Government recognise that the cost, bureaucracy and paperwork that they have imposed on businesses, particularly small ones, are the principal cause of that loss of export opportunities for British firms?

[John Glen]

No, I do not. I accept that that was a challenging period for economies everywhere. There was a period of adjustment, and the Government will be working in a co-ordinated fashion to remove any frictions and to ease the passage of trade, particularly for smaller businesses.

[Bim Afolami (Hitchin and Harpenden) (Con)]

Much of the discussion in the House today has been about the fiscal aspects of inflation, but a huge part of the rise in inflation in this country and across the western world is the monetary system, in particular quantitative easing, which has continued long beyond the financial crisis, when it was put in place. We all know the Bank of England is independent in setting interest rates, but what is the Treasury’s view on working with the Bank of England to bring down inflation, bearing in mind the significant impact that quantitative easing has had on that? Will the Minister say a bit more about that?

--- Later in debate ---

[John Glen]

As hon. Members would expect, the Treasury has a strong and frequent dialogue with different members of the Bank of England and deputy governors. However, our main inflation tools for an independent monetary policy—fiscal responsibility and supply-side activism—will remain the best weaponry for dealing with the challenges we face, and we will work in a co-ordinated fashion with an independent Bank of England to address those pressures.

[Christine Jardine (Edinburgh West) (LD)]

Today’s figures should be a wake-up call to the Government. Instead of reciting a list of events that are affecting other countries across the world and being better dealt with by other Governments in the G7, do the Government not recognise that the time has come to change direction? They must get away from the massive tax hikes that are pulling the squeezed middle into debt and creating misery across this country—tax hikes that include the £11 billion national insurance hike, which was wiped out by the Government’s own incompetence in not insuring against the money created for quantitative easing. Will the Government recognise that they are getting it wrong and, instead of making excuses, act to change things?

[John Glen]

The Government will always look constructively at all the options. In light of the representations made across this House and across the country for more interventions to support those facing increases in the cost of energy at home, we made those interventions. The Chancellor has made clear that we will reform and cut taxes on investment in the autumn to spur that growth and productivity, and we are working closely with industry on the best possible way to make those interventions.

[Siobhan Baillie (Stroud) (Con)]

Like most MPs, in my constituency I have businesses that the Government spent billions of pounds supporting through the pandemic that are now incredibly stressed by the current conditions. Most understand that the state cannot fix everything; they are looking at wider options and not expecting hand-outs. UK hospitality businesses are asking the Government to look at pausing green levies for businesses to relieve energy cost pressures, as other countries are doing or are considering. Will my hon. Friend say more about what the Treasury are looking at in that regard and whether that is something they are seriously considering?

[John Glen]

In Gloucestershire, as across the country, we remain focused on the challenges facing both small and large businesses. As my hon. Friend mentions, during the pandemic we made a number of sector-specific interventions for retail, hospitality and leisure businesses, which will continue to benefit from the business rates holidays. We are keen to ensure, however, that we achieve better productivity, with more investment in capital, in ideas and in measures that will lift us to a new level of growth. That means interventions across the whole economy.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

In the past week or so I have been contacted by a number of community nurses at their wits’ end because it is costing them more to travel to see patients than they can claim back in mileage allowance, and they are not alone—taxi drivers, couriers and others, such as domiciliary care workers, are struggling because of the surge in fuel costs. The Government have already taken 5p off fuel duty, but given that they have raked in far more in increased VAT receipts since then, how much more has the Treasury recovered in VAT receipts this year?

[John Glen]

Perhaps unsurprisingly, I cannot give the hon. Gentleman that figure at the Dispatch Box at this point, but we have introduced timely, temporary and targeted interventions. We recognise with a real sense of empathy the fact that people will be struggling. We have been very clear from the time we made this series of announcements and over the past six months that we will not be able to ameliorate the impact of every single additional cost. The key intervention we need to make is to encourage that growth and productivity in the economy in the context of fiscal responsibility and the commitments we have made to intervene so far.

[Richard Fuller (North East Bedfordshire) (Con)]

My right hon. Friend has rightly spoken about the importance of growth in bringing together people, capital and ideas, but there is a fourth element, which is regulation. What Conservatives want to see is a comprehensive Government strategy for light-touch, pro-growth deregulation. Can he tell me what he is doing in his Department to set an example to other Departments of achieving better regulation that will support growth?

[John Glen]

Yes, I can. In a few weeks’ time I shall introduce to the House a financial services and markets Bill that will fundamentally reset the way that our financial services industry, which constitutes 10% of the economy, will be regulated into the future. That will be underpinned by strong, independent world-class regulators in the Prudential Regulation Authority and the Financial Conduct Authority, but with an obligation to look at competitiveness and global growth as a secondary objective. That is absolutely imperative. We must make sure that we have an economy that takes account of what is going on elsewhere and regulates accordingly.

[Dame Diana Johnson (Kingston upon Hull North) (Lab)]

In the coalition years, we heard from the Government about rebalancing the economy, and under Chancellor Osborne and the northern powerhouse, we were told that we were going to see the proceeds of growth fairly shared across the country. Will the Minister say something about the flagship levelling-up agenda, how it will be implemented when we face a no-growth economy, and whether the levelling-up agenda will really mean levelling down for everybody?

[John Glen]

No, it will not. It will involve targeted investments across the country in schemes that will give us a lift in productivity and address the fact that under previous Governments, despite all the rhetoric, there was not that reset in investment across other parts of the country and we did not see the level of growth that was anticipated.

[Fay Jones (Brecon and Radnorshire) (Con)]

I am grateful to the Treasury for the £77 billion package of support that will stand alongside hard-pressed families and drive the growth that we need to see. But as I drove into central London this morning I saw fuel prices cheaper than where I live in Brecon. Rural fuel costs are simply horrendous, and with next to no public transport, that is really hampering growth in rural areas. Can my right hon. Friend confirm that the Treasury will continue to monitor that aggressively?

[John Glen]

Absolutely we will. It is very concerning that we are not seeing the savings passed on and we will continue to look very carefully at what is happening.

[Clive Efford (Eltham) (Lab)]

The Minister has tried to explain away today’s disastrous figures by suggesting that it is mainly to do with the winding down of mass covid testing. That stretches credulity. Today the Office for National Statistics said:

“All main sectors contributed negatively to growth in April 2022”.

Does that not show that the problem is much more widespread than the Government are prepared to accept?

[John Glen]

No, I think there is a pretty clear consensus that the rapid wind-down of the testing had a significant effect—around 0.5% of GDP. If that had not happened, we would have seen very modest growth during this past month.

[Jack Brereton (Stoke-on-Trent South) (Con)]

A recent report shows that Stoke-on-Trent is set to grow jobs third-fastest, so does my hon. Friend agree that the record of this Government economically should be judged by our jobs miracle and in particular our efforts to level up our whole country with better skills and better paid employment right across it?

[John Glen]

Absolutely. It is clear we are seeing the best unemployment figures for well over a generation. It is very pleasing to see the impact that is having on constituencies such as that of my hon. Friend. It is important that we build on that and look to increase that investment to get businesses investing in new capital and more productive jobs to increase productivity in the economy as a whole.

[Tony Lloyd (Rochdale) (Lab)]

The Minister has already conceded that the Treasury wants to reduce friction with our European trading partners—that is the right thing to do—but can he tell the House whether Treasury policy agrees that this is the right time to rip up the Northern Ireland protocol and risk a trade war with Europe?

[John Glen]

Clearly in different markets there will be different challenges. We must make sure that we have a deep dialogue and look to find consensus. Where we cannot, we must take action.

[Chris Bryant (Rhondda) (Lab)]

Does the Minister accept that one of the problems in lots of sectors is that they simply have not got enough staff to employ, let alone staff with the right skills? For instance, in the construction industry, there are projects on hold because they cannot get enough construction workers. We have farmers ploughing onions back into the fields, because they do not have enough people to harvest them. Last year, 25% of British strawberries did not get picked. We have bars, hotels and restaurants failing to open full-time because they do not have enough staff. How do we make sure that we have the staff—the workers—to be able to grow the economy?

[John Glen]

The hon. Gentleman will also know that the Government invested in a seasonal workers scheme for 30,000 across agriculture, which has made a significant impact. We will continue to work with industry to see what further interventions can be made and need to be made.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

Cuts to VAT on fuel duty are now beyond urgent. Some £46 of tax is paid on the average fuel tank, as fuel prices rocket to new highs. As households and businesses struggle, the Treasury is raking in additional billions in VAT on fuel, which is driving inflation across the whole economy. Finally, can we at last have a temporary 10% reduction in VAT on fuel to assist households, businesses and consumers and to help get inflation back under some kind of control, which will help everyone?

[John Glen]

The hon. Lady will know that just two weeks ago, the Chancellor came to this Dispatch Box and made a series of targeted interventions, in a greater way than many were calling for, to give assistance to the most vulnerable in our society—to pensioners, to those on means-tested benefits and to the disabled—with more support for pensioners on top of that. She will also know that as we approach the fiscal event, we will look at the state of the economy and the best possible interventions to assist not only that growth narrative, but the most vulnerable.

[Jonathan Gullis (Stoke-on-Trent North) (Con)]

It does not shock me that the Labour party uses any opportunity it has to come in here and bash Britain and sneer at places such as Stoke-on-Trent. It is thanks to this Conservative Government and a Conservative-led council that thousands of new jobs have been created through the successful Ceramics Valley enterprise zone. We also have the 500 new Home Office jobs and up to 1,700 new jobs thanks to the Kidsgrove town deal. Does the Minister agree that it is this Government who are putting places such as Stoke-on-Trent firmly on the map?

[John Glen]

I do not think Stoke-on-Trent could have a better advocate than my hon. Friend, with his passionate desire to highlight the successes going on in his constituency. I absolutely agree that it is that positivity, and focusing on interventions that make a real difference to people who live in his community, that people will remember as we move forward.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his answers. In Strangford, small and medium-sized businesses are the backbone of our society. Some of them are crumbling at present due to high transport costs, which are heightened in Northern Ireland due to the Northern Ireland protocol. Can he confirm whether the Chancellor and the Treasury will follow other nations in substantially reducing fuel duty to aid transport costs as well as disposable incomes for families, so that money can go back into the local economy and everyone will gain?

[John Glen]

The hon. Gentleman makes a reasonable point about the challenges facing the rural economy, of which I know that he has great personal experience and experience in his constituency. That is why, as we made clear, there will be an additional £500 million to supplement the household support fund and bring it to a total of £1.5 billion, so that local authorities can give additional money to those most affected where existing measures have not been helpful.

Funeral Plan Industry

John Glen Excerpts

Thursday 26th May 2022 Westminster Hall

[The Economic Secretary to the Treasury (John Glen)]

It is a pleasure to serve under your chairmanship, Mrs Cummins. I thank hon. Members who contributed to the debate: the hon. Members for Putney (Fleur Anderson) and for Gordon (Richard Thomson), the right hon. Member for North Durham (Mr Jones), and of course my hon. Friend the Member for Telford (Lucy Allan), who has professional experience in this domain and used her accountancy and forensic skills to examine some of the issues relating to Safe Hands. They are very relevant to some of the things we need to discuss this afternoon. I know she cares deeply about these matters, and I will try to attend to the points that have been made during the debate.

That people care so much about funerals is not particularly surprising. No one needs to explain to me the important role they play in celebrating the marking of a life and helping bereaved families and friends say goodbye to their loved ones. I have said previously that no one nearing the end of their life, or their families, should be consumed by money worries relating to the cost of their funeral. The hon. Member for Putney raised a number of issues about the broader nature of support for funeral provision. I will probably not be able to attend to them this afternoon, but I note those points and I will try to secure an answer for her.

Safe Hands’s going into administration will naturally be very upsetting for its customers and their families, and those consumers will, of course, be anxious to know who will look into the behaviour of the company and its directors. A number of points have been raised about that, particularly by the right hon. Member for North Durham. Within three months of any administration, the administrator must report to the Insolvency Service on the conduct of the directors prior to the company’s failure. In addition to the Adjournment debate and some of the points made during that debate two Thursdays ago, more points have today been made, helpfully putting on the record some of the concerns about those behaviours. When that administration process has concluded, those matters will obviously be there to be taken up. I understand that, where there is misconduct that shows people to be unfit to be a director, they may be disqualified from acting as a director for up to 15 years where that is in the public interest. Separate criminal investigations may also be undertaken in any administration where evidence of criminality is uncovered. However, it is only right that at this stage we await the outcome of the administration process.

As hon. Members will be aware, and as has been mentioned this afternoon, Dignity, one of the UK’s largest funeral plan providers, stepped in to provide funerals for Safe Hands customers, following the firm’s entering administration. I have met with Dignity myself, in the Treasury, and I know that my hon. Friend the Member for Telford has met with Dignity as well. I am very pleased that Dignity has now agreed to do that—at no additional cost to plan holders—for a further six months.

Although the Financial Conduct Authority does not yet regulate funeral plan providers, it is currently going above and beyond its legal duties by helping to support the industry and administrators as they look to find a longer-term solution for Safe Hands customers. I am hopeful that customers will not need to wait too much longer before they see further progress on a longer-term approach. The example of Safe Hands clearly demonstrated the need for a better-regulated funeral plan market, because although the sector provides a valuable service, we must ensure that the situation that has developed for Safe Hands customers is not repeated. That was the purpose of the work that has been done.

[Lucy Allan]

The Minister is making very important points, so I am grateful to him for giving way. He is talking about the Safe Hands plan holders and arrangements for them. A question that has come up today is what provision will be made for the plan holders who will be within unregulated products after 29 July, because it does appear likely that a significant number of plan holders will be holding a plan that is not backed by any form of compensation scheme or regulation.

[John Glen]

Going forward, people either are regulated—those who are going on the journey into regulation by the end of July go under FCA regulation, and it will be keeping an eye on their selling practices—or become an appointed representative of a bigger, regulated firm, which keeps an eye on them, and then the FCA keeps an eye on it. Many firms, most firms—I think it is in the order of 67 firms—are going through the journey into regulation. There will be smaller firms that decide not to go on that regulatory journey, and either they will become authorised under the appointed representative regime or they will wind down, and return the funds to their customers.

Those are the two options. The FCA is working with the industry to smooth that journey. The House passed a statutory instrument to ease that process of transition. But those are the options available. Of course, we are midway through that journey, but what this afternoon’s debate has shown is the imperative of the industry working to sort out some of the issues that have been laid bare by the Safe Hands experience. I think Safe Hands is an exception, but it is a pretty awful experience for those customers. My belief is that this process of regulation will give clarity to the situation, going forward, in terms of who is regulated, how they are regulated and what being under regulation, either as an appointed representative or directly from the FCA, means. The FCA will be responsible for communicating that.

[Mr Kevan Jones]

I thank the Minister for his explanation. My fear and, I think, that of the hon. Member for Telford (Lucy Allan) is that there may well be other companies like Safe Hands out there that will not go down either of those routes, so I am interested to know what the timescale will be on that. In relation to Safe Hands, he talked about the administrators. What powers does the FCA have if it finds, in those smaller companies, clear scams? I would use the word “scams”, because that is what I think Safe Hands clearly was. What powers does the FCA have then to force the closure of those schemes?

[John Glen]

As I said, it is difficult to be precise in all circumstances because every situation is different. The purpose of giving the FCA that authority is that it has the powers to fine, regulate and insist on certain levels of transparency. Ultimately, if firms that go into regulation do not align with those expectations, the FCA has the power to wind down those firms—in extremis. At this point we are at the start of the journey. The conversations I have had with Dignity—

[Mr Jones]

Will the Minister give way?

[John Glen]

I will certainly give way to the right hon. Gentleman in a moment. Dignity has set up processes to ensure that they continue to comply with those regulations. Those firms that do not choose to be regulated, or do not choose to go under the appointed representative regime, will be obligated to wind down those plans and return those funds. Forgive me; I cannot give absolute clarity on the detail of that process, but I am happy to engage with the right hon. Member for North Durham beyond this Chamber to give him more clarity.

[Mr Jones]

I appreciate that the Minister has been very helpful with what he has described. However, my fear is that some of those small companies may keep trading and taking money off people when we know that they are not being regulated. Are we going to get to a date beyond which, to sell a funeral plan, a company has to either be covered by the FCA or go down the route just described? That will then give assurance to customers that at least there is some protection. I am not going to ask the Minister what that date is, but we do need some indication.

[John Glen]

My understanding is that the intention is for that process to commence at the end of July. In terms of the transition and the guidance to customers, I would need to refer to the FCA on that. I shall write to the FCA and make that letter available to the House of Commons, so that people can be clear about what the situation is.

Among the questions that the hon. Member for Erith and Thamesmead asked me was one about the Government’s actions to this point. We have taken action and we did legislate to bring providers and intermediaries within the regulatory remit of the FCA. That means that from 29 July, funeral plan providers will be subject to robust and enforceable standards on the sale of their plans. In future, consumers will have greater clarity and understanding of what is covered by their funeral plans, and will not be exposed to misleading or high-pressure sales tactics—an issue raised by the right hon. Member for North Durham. For the first time, funeral plan customers will also be able to take advantage of a redress scheme provided by the Financial Ombudsman Service, and benefit from the protection of the financial services compensation scheme. That reflects the point about this being a financial services product, raised by the hon. Member for Gordon. Indeed, we have seen a massive growth in that over the period between 2016 to 2019—a growth of, I think, 175%.

That is why we are doing it. We want to ensure that there is proper regulation that is meaningful and give consumers real assurance around what protections exist. It is also about proportionate regulation. Across my brief as Economic Secretary, I want to be able to boost competition and protect consumers. That is exactly as it should be. That is what drives me in the other areas of regulation that I am looking at, such as buy now, pay later. At the same time, the Government very much recognise the impact of the change that regulation represents for providers. That is why we introduced a transition period before the new rules came into effect—to give businesses the chance to prepare and adapt.

A key priority has been to minimise any disruption to customers resulting from the transition to regulation. The FCA has therefore said that providers who decide not to obtain authorisation, or cannot obtain it, should either wind down before the regulation comes into force or transfer their plans to a provider that will operate under the new rules. The Government recently laid a supplementary statutory instrument to make such transfers easier. That is in line with my responses to earlier interventions—I am glad my speech is in line with my head.

We are aware, of course, that when we bring a sector into regulation for the first time, some providers may be unable to meet the authorisation threshold. That point has been raised with me in representations from my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) and representatives of the industry. The inability to meet those new standards due to issues with conduct, business models or trust arrangements does not mean that the regulation is at fault. Rather, the regulation is acting as a cleansing agent, weeding out unsustainable practices and preventing future consumer detriment.

Some Members have asked whether the Government are likely to compensate Safe Hands’s customers. I do not think it would be appropriate for us to set the precedent or expectation that the Government will use taxpayers’ money to compensate consumers for the misconduct of unregulated firms. The Government’s role is instead to ensure that appropriate regulation is in place to guard against such failures. However, the action of Dignity to take a lead as one of the biggest industry players, to make provision for an initial six months and develop a transition option for those who unfortunately are victims of the Safe Hands situation, is very welcome, and I call on others in the industry to follow Dignity’s example. We do not anticipate that there is something else on the scale of Safe Hands out there; we can never be sure—I do not have a crystal ball. Nevertheless, it is incumbent on the industry to continue to work with the regulator to find enduring solutions for as many people as possible.

There is no doubt in my mind that, by acting to protect consumers through a robust regulatory framework, we are doing the right thing. There was a consensus across the House: it was not just this Government, but Members from the Scottish National party and the official Opposition, who called for this action three or four years ago. A well-regulated market will also promote effective competition and do the right thing by consumers over the long term. As I have said, Safe Hands customers have been assured that they will be covered for at least another six months, and I implore others in the industry—other market participants—to take further action to protect consumers of firms that will not become authorised. Taking such action is good for consumers, but also for the reputation of the funeral plans sector. To that end, the Government and the FCA will continue to work closely with each other and the sector to ensure that the shift to regulation is as smooth as possible. That is what funeral customers deserve, and it is what they have a right to expect.

I will reflect on this debate, and if there are any matters that I feel I have not adequately dealt with, I will write to Members and publish a copy of that letter for the House to see.

[Lucy Allan]

I am very grateful to all Members who have attended today’s debate. I know we are competing with the platinum jubilee address to Her Majesty; in fact, the Member who has just sat down in the main Chamber, the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier), is the Member who secured the Adjournment debate on this topic two weeks ago. There are many Members from across this House who would have wanted to be here, making some of the points that have been so ably made by other colleagues.

I am particularly grateful to the right hon. Member for North Durham (Mr Jones). He spoke about the abuse of trust, and a day of reckoning coming for those people who engage in these types of activities. He is absolutely right: financial misconduct is something we cannot tolerate when it targets the most vulnerable in our society.

I also pay tribute to the hon. Member for Putney (Fleur Anderson), because I met somebody the other day who told me that she is almost as good as her predecessor. [Laughter.] That is a very fine compliment to her, because I worked closely with her predecessor for many years. The hon. Lady was absolutely right to talk about dignified funerals: that is a vital issue, and I am pleased that she has also highlighted the issues of anxiety, worry, stress, and all the other things that happen in this market where these selling techniques are used. Both the hon. Member for Putney and the right hon. Member for North Durham talked about people wanting to do the right thing, and we as parliamentarians are here to promote that, support those people and ensure that those who do the right thing do not get penalised by people seeking to exploit them. That is why this debate has been so important.

I am grateful that the hon. Member for Gordon (Richard Thomson) talked about people who are selling peace of mind, because that is exactly where things have been going wrong. We all crave peace of mind, and if somebody is going to sell it to me in a bottle, I am going to pay for it. Taking money from people by creating fears and then not delivering on promises is a disgraceful abuse.

I am grateful to the Minister for everything he has said today, and have absolute confidence that this is something that will stay in his in-tray—somewhere in the middle of his in-tray, perhaps—and continue to have his close attention. The FCA is doing a great job, although it needs to recognise that it was maybe a bit slow to the party. These things have happened on the FCA’s watch.

[John Glen]

I would respectfully say that in the end, this has to be the responsibility of Government, because we mandated the FCA to do this. The Government must take responsibility, not the FCA, but my hon. Friend is absolutely right that it is now incumbent on the FCA to get this right, and I believe it will.

[Lucy Allan]

I thank the Minister for that point. The FCA always talks about things being within or without its perimeter, and I sometimes wonder how a savings product targeted at the most vulnerable could ever have been without its perimeter. I agree that it was the Government—and, in fact, the Minister—who made sure that this issue came within the FCA’s auspices, and it is now working constructively with industry players and Members of Parliament, which is extremely important. I will continue to champion the interests of vulnerable people whose vulnerabilities have been exploited, and I know many others will join me in doing so. Mrs Cummins, thank you very much.

Question put and agreed to.

Resolved,

That this House has considered the funeral plan industry.

Oral Answers to Questions

John Glen Excerpts

Tuesday 17th May 2022 Commons Chamber

[Giles Watling (Clacton) (Con)]

3. What steps he is taking to encourage cryptocurrency companies to operate in the UK.

[The Economic Secretary to the Treasury (John Glen)]

At Fintech Week on 4 April, I set out our firm ambition to make Britain a global hub for cryptoasset technology, and I announced a number of actions that will support that. That includes committing to consult on a future regulatory regime for cryptoassets later this year; legislating to bring stablecoins into payments regulation; and exploring ways of enhancing the competitiveness of the UK tax system to encourage further development in this sphere.

[Giles Watling]

I thank my hon. Friend for his answer. Will he commit to working with the cryptocurrency sector and the UK Cryptoasset Business Council to make sure that the UK’s future regulatory parameter can instil a global advantage, ensuring that our economy remains ahead of the curve?

[John Glen]

Yes, absolutely, and my officials are meeting the Cryptoasset Business Council later this week. We want to take a dynamic approach to industry engagement. Lots of similar organisations have spawned over the last few months, and I and my officials will work very closely with them as we lead this global leadership aspiration.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The cryptocurrency market is expanding rapidly, but what are the Government doing to ensure that the wider public are aware of the wild swings that exist in the market? Yes, profits can be made, but so can significant losses, as the past few months have demonstrated.

[John Glen]

We watch these things very carefully. That is why, in January this year, we announced that certain cryptoassets will be brought within the scope of financial promotions regulation. I am very aware of the Financial Conduct Authority’s advice, which shows that only one in 10 cryptoholders are aware that they can lose all their money. We need to get that number up.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

4. What steps his Department is taking to tackle economic crime.

[The Economic Secretary to the Treasury (John Glen)]

Money obtained through corruption or criminality is not welcome in the UK. The Government are taking concerted action to combat that threat by investing £400 million over this spending review period, with the kleptocracy cell in the National Crime Agency targeting sanctions evasion and corrupt Russian assets hidden in the UK. The Government have taken far-reaching steps to improve corporate transparency, including through recent and forthcoming primary legislation announced in the Queen’s Speech last week.

[Kevin Hollinrake]

I thank the Minister for that answer. NatWest and HSBC have been hit with big fines for facilitating money laundering, and Danske Bank will probably see a fine of £2 billion for £200 billion of money laundering. This is seen not as a deterrent, but as a cost of doing business for these big banks. Does he agree that the only way that we will tackle this is through criminal prosecutions both at a corporate level and of senior managers? Does he support the calls to that effect in the economic crime manifesto by the all-party groups on fair business banking and on anti-corruption and responsible tax, and will he support such measures in the economic crime Bill?

[John Glen]

I thank my hon. Friend for his question. I think he is the House’s foremost observer of banks’ behaviour, but he also knows that this is an extremely complex area of law. The Government have asked the Law Commission to undertake an in-depth review of laws around corporate criminal liability for economic crime and to make recommendations. My understanding is that the Law Commission will make an announcement on this subject imminently, and we will look at that very carefully.

[Chris Elmore (Ogmore) (Lab)]

One of the key complaints from any of my constituents who are victims of economic crime is about the inability to reach out to Action Fraud, and if they do, they get no response. I urge the Minister—plead with him, in fact—to reform the work of Action Fraud and perhaps even bring about a new body in any new legislation to ensure that constituents get some sort of answer and, importantly, some form of support from the authorities of the UK state.

[John Glen]

This is a criticism that I hear. I am very happy to meet the hon. Gentleman to discuss it further, examine the experience of his constituents and look at what we can do constructively to move things further in the right direction.

[Kelly Tolhurst (Rochester and Strood) (Con)]

Following clarity from my hon. Friend to UK Finance on how banks should interpret the money laundering regulations, a number of banks continue to close existing pooled client accounts of long-established, reputable boat-broking businesses. That is now stopping those businesses trading. What further assurance can he give to banks regarding these low-risk businesses?

[John Glen]

I thank my hon. Friend for her question. As she will know from the letter that I sent her this morning and from our conversation with industry representatives together a few months ago, this is quite a challenging issue to resolve. I cannot direct the banks to open, and keep open, these accounts, but I will continue to engage with her and with UK Finance to see whether more progress can be made in the coming weeks.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

The Government have lost £4.3 billion of taxpayers’ money through fraudulent covid schemes. Now we learn that a large chunk of that money is going into the hands of terrorists, organised crime gangs and drug dealers. Will the Minister reassure me that he is taking the reports seriously and update the House on the total number of investigations the Government are undertaking that relate to covid fraud?

[John Glen]

I can absolutely reassure the hon. Lady that the Government take the issue very seriously. That is why at previous fiscal events the Chancellor has invested £100 million in a taskforce to deal with it. When we designed a number of the interventions, protecting taxpayers was a real consideration. It is also the case that we needed to act swiftly to assist those businesses and if we had not made some of those interventions at the time, many businesses would have gone under. We continue to engage carefully on the matter.

[Alison Thewliss (Glasgow Central) (SNP)]

We on the SNP Benches welcome the economic crime and corporate transparency Bill, and given the scale of the problem that the Tories have presided over, it is long overdue. What discussions has the Minister had with colleagues in the Department for Business, Energy and Industrial Strategy about making Companies House an anti-money-laundering supervisor in its own right finally to lock out the fraudsters, the kleptocrats and their dirty money from Companies House once and for all?

[John Glen]

The hon. Lady is absolutely right to highlight Companies House reform as a major area that we are working on. The Government forwarded more than £60 million to start that work, which has now been accelerated. Alongside the register of overseas entities and beneficial ownership, the increased transparency of those assets will be very welcome.

[John Penrose (Weston-super-Mare) (Con)]

5. What assessment he has made of the effects of high marginal deduction rates on work incentives for people who are (a) key workers, (b) on below average incomes and (c) on above average incomes.

--- Later in debate ---

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

8. What recent steps he has taken to progress the Government’s access to cash strategy.

[The Economic Secretary to the Treasury (John Glen)]

The Government recognise the importance of access to cash in the daily lives of millions of people across the UK. In the Queen’s Speech, the Government announced that we will legislate to protect access to cash in the financial services and markets Bill, which will be brought forward soon, when parliamentary time allows. We consulted on legislative approaches last year and will publish a summary of responses to the consultation this week.

[Margaret Ferrier]

If we look at the demographic of people who are most likely to be reliant on access to cash, we see that in large part it is those who are vulnerable or on low incomes. If someone is down to their last £10, they cannot afford a withdrawal fee at an ATM. Will the Government look to make all ATMs free to use for the customer by working with banks and ATM providers to reform the interchange fee, so that the system accounts for varying demographics, geography and demand in a way that it currently does not?

[John Glen]

As I said, the Government’s response will be revealed in the legislation. When I visited the hon. Member’s constituency not so long ago, I saw that the use of hubs—banks working together to provide access to cash—is key. There are 72,000 cash access points and 430,000 cashback locations across the UK. A coherent response that addresses the hon. Member’s points will be made in the legislation.

[Anna Firth (Southend West) (Con)]

9. What fiscal steps he has taken to support investment in UK infrastructure.

--- Later in debate ---

[Stephen Hammond (Wimbledon) (Con)]

There was widespread welcome for last week’s announcement that the Government will introduce a financial services and markets Bill. Can my right hon. Friend confirm that the intention of that Bill will be to ensure that future regulation is proportionate, that the regulator is publicly accountable and that we intend to maintain the international competitiveness of this great industry?

[The Economic Secretary to the Treasury (John Glen)]

Absolutely I can. I note the observations of some economists yesterday; we will have an obligation on regulators to take account of competitiveness and of where we are in the global context.

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

T5. Compared with April 2020, our energy bills are now 75% more expensive and petrol is 50% more expensive. If the Chancellor thought an extra £20 a week was needed for universal credit two years ago, surely he agrees it must be reinstated as a matter of urgency?

--- Later in debate ---

[Stella Creasy (Walthamstow) (Lab/Co-op)]

One group of companies doing well out of the cost of living crisis is the buy now, pay later lenders, with Klarna now valued higher than Barclays or Lloyds. One in 12 of their customers are using buy now, pay later credit to pay for toiletries and basic food products. Will the Chancellor, who was boasting about our consumer credit profile earlier, name the date when our constituents can finally make good on the promise that was made in this House over 18 months ago to give people protection from these legal loan sharks and access to the Financial Ombudsman Service?

[John Glen]

I cannot give the date, but it will be very soon.

[Dan Jarvis (Barnsley Central) (Lab)]

My experience over the past four years or so has proved without doubt that truly levelling up South Yorkshire and the wider north will require transformative levels of investment. Does the Chief Secretary agree, and if so, does he truly believe that the investment is there to meet the huge challenge that we undoubtedly face?

DRAFT ALTERNATIVE FINANCE (INCOME TAX, CAPITAL GAINS TAX AND CORPORATION TAX) ORDER 2022

John Glen Excerpts

Tuesday 17th May 2022 General Committees

[The Economic Secretary to the Treasury (John Glen)]

I beg to move,

That the Committee has considered the draft Alternative Finance (Income Tax, Capital Gains Tax and Corporation Tax) Order 2022.

May I say what a pleasure it is to serve under your chairmanship, Sir Edward? The draft order before the Committee widens the scope of the alternative finance arrangements provisions so that certain alternative finance arrangements can receive equal tax treatment to conventional arrangements of the same kind. The United Kingdom has established itself as a leading centre for Islamic finance, and the Government took steps to further build on this last year when we issued our second sukuk, the Islamic equivalent of a bond, at more than double the size of the first. The development of Islamic finance products in the United Kingdom is a welcome sign and demonstrates our position as a world leader in this regard.

It is important that our tax rules are reviewed and updated to reflect market developments and ensure a level playing field for alternative and conventional finance products. We already have alternative finance tax provisions that set out rules on the tax treatment of Sharia-compliant financial arrangements, which allow finance to be provided without payment of interest. The provisions allow for returns made by the finance provider to be treated as if they were interest for tax purposes when certain conditions have been met. However, home purchase plans provided by firms that do not fall within the existing statutory definition of a financial institution, and alternative finance arrangements facilitated by peer-to-peer platforms, are not currently within scope of the provisions. Home purchase plans are a Sharia-compliant method of obtaining property finance in a way that ensures no interest is charged. Currently, Financial Conduct Authority-regulated providers of such products are not defined as financial institutions, and their customers are not able to access the alternative finance rules. They therefore face less favourable tax treatment for the purposes of income tax, capital gains tax and corporation tax than providers that are already defined as financial institutions.

Lenders and borrowers entering certain finance arrangements through Sharia-compliant peer-to-peer platforms also face less favourable tax treatment, which means that home purchase plans provided by FCA-regulated providers, and certain alternative finance arrangements facilitated by an FCA-regulated peer-to-peer platform, are on an unequal tax footing with similar products provided by financial institutions and conventional peer-to-peer lending. The changes made by the draft order will allow both of those types of firms to access the alternative finance arrangements provisions for the purposes of income tax, capital gains tax and corporation tax.

Amending the rules to allow home purchase plans from FCA-regulated providers to fall within the alternative finance provisions will bring parity between conventional financial institutions and non-bank providers, and bringing Sharia-compliant peer-to-peer arrangements within the scope of the rules will encourage investors and operators to enter the Islamic finance market, allowing the Islamic community, especially small businesses, to benefit. It will also contribute towards offering a level playing field for Islamic finance and conventional finance.

When consulting on the draft order, further issues arising from the developing market have been brought to the attention of the Government. They relate to stamp duty land tax rules for Sharia-compliant peer-to-peer lending, and to the individual savings account regulations that may exclude certain arrangements from innovative finance ISAs. I am always grateful to those who bring such matters to the Government’s attention, and those points are being assessed.

These changes reflect developments within the Sharia-compliant market and will allow the industry to continue to thrive and grow, maintaining the UK’s position as a global hub for Islamic finance. I hope colleagues will join me in supporting this order, and I commend it to the Committee.

--- Later in debate ---

[John Glen]

I very much welcome the support of the hon. Members for Hampstead and Kilburn and for Glenrothes. They raised three issues: the treatment of ISAs, student loans—notwithstanding your injunction not to address that point too explicitly, Sir Edward, I will refer to it briefly—and stamp duty land tax with respect to fintech.

First, I pay tribute to the hon. Member for Bradford West, who engaged with the consultation as chair of the all-party parliamentary group on Islamic finance. She was very supportive of this order and the changes. There were respondents to the consultation who requested an extension to the stamp duty land tax exemptions for regulated entities in the Islamic fintech industry, such as peer-to-peer platforms. Officials did not consider it feasible to implement those changes in this statutory instrument, and they and I are exploring the issue further through alternative means.

The Government want to ensure that higher education remains accessible to those with the desire and ability to benefit from it. We are currently considering whether alternative student finance could be delivered as we take forward the lifelong loan entitlement. The consultation on the detail and scope of the LLE closed on Friday 6 May, and the Government are currently considering the responses. A further update on alternative student finance will be provided when the Government issue their response to the LLE consultation.

I think that I have mentioned the non-inclusion of the stamp duty land tax. The issue of ISAs, which was raised by the hon. Member for Glenrothes, has also been brought to the attention of my officials. It is likely that the ISA regulations will require some minor amendments to ensure that alternative finance arrangements can qualify for inclusion in innovative finance ISAs. The changes required will be included in the forthcoming technical changes to the ISA regulations. I think that deals with the substantive points that have been raised. As I said, I welcome Opposition Members’ support.

This alternative finance order will enable home purchase plans provided by regulated firms that do not fall within the existing statutory definition of that financial institution, and alternative finance arrangements facilitated by regulated peer-to-peer platforms, to receive equal tax treatment for the purposes of income tax, capital gains tax and corporation tax. I sincerely believe that this order will help to level the playing field for those products and will aid the Islamic finance industry to move forward in the UK, and continue to develop, to cement our reputation as global leaders in this area. I hope that the Committee has found this afternoon’s session informative and will now be able to support it.

Question put and agreed to.

Safe Hands Funeral Plans

John Glen Excerpts

Thursday 12th May 2022 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

I thank the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) for securing this important and timely debate on an incredibly emotive subject. I thank colleagues on both sides of the House for their contributions, including the hon. Members for Glenrothes (Peter Grant) and for Llanelli (Nia Griffith). I will specifically address the points raised by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), and I thank my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) for raising his constituent’s case.

I take this opportunity to remember our former colleague Sir David Amess. He was a friend to many of us here today, and he cared very much about helping people manage the financial impact of funerals. I thank hon. Members who have campaigned over the past few years in support of regulation. I recall conversations with Neil Gray, the former hon. Member for Airdrie and Shotts, who first tabled a private Member’s Bill to this effect in 2016.

Finally, I am grateful to hon. Members here today for the points they have raised. I think I will be able to address many of those points, and I will write to them on anything that I do not address.

As has been said, funerals are painful experiences, but they can also provide people with a degree of mental closure, because they help us to adjust to the reality of the loss of a loved one. We are all very much agreed that at such a moment mourners should be able to focus on their memories of their loved one and on their own emotions; no one should be consumed by money worries. Clearly, therefore, Safe Hands’ entering administration, as the hon. Lady accurately set out, is very distressing for its customers and their families. Obviously, she mentions eloquently the case of Mr Hughes and what he has experienced in recent weeks. Our thoughts should be with those who have recently lost someone close to them and now find themselves affected by Safe Hands’ failure. As has been mentioned, Dignity, one of the UK’s largest funeral plan providers, has stepped in to provide funerals on behalf of Safe Hands’ customers in the immediate period after the firm entered into administration. I echo the hon. Lady’s words in expressing gratitude that it has stepped up to the mark and agreed to do that for a further six months. I regret the fact that her constituent does not have clarity on exactly where that leaves him, but of course Safe Hands will be entering the administration process and that will need to be concluded before wider issues can be looked at. I met people from Dignity yesterday, along with my Treasury officials, and they reiterated their commitment for the next six months. It has been very welcome to see a funeral plan provider taking that responsibility for protecting the sector’s customers and upholding the industry’s reputation.

I had the privilege of meeting my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes), and members of the all-party group and of the industry a few weeks ago to discuss what was happening with this difficult case. Although the Financial Conduct Authority does not yet regulate funeral plan providers, it is supporting the industry and administrators as they look to find a longer-term solution for Safe Hands’ customers. I am very hopeful that customers will not need to wait too much longer before they see further progress on this longer-term approach. However, I strongly believe that what has happened to Safe Hands is clear evidence of the pressing need for a better-regulated funeral plan market that will provide customers with the stability they need at such a difficult time and will allow us, as Members of Parliament with constituents who have been affected by Safe Hands’ demise, the reassurance and confidence that we can see them not worry in future.

Although the sector provides a valuable service, there is still some distance to travel when it comes to ensuring that all funeral plan customers are shielded from harm. Indeed, major reports and work carried out by the Treasury and the FCA revealed examples of consumer detriment in the sector. As a result, last year, we legislated to bring providers and intermediaries within the regulatory remit of the FCA. That change means that from 29 July funeral plan providers will be subject to robust and enforceable standards for the first time. These standards will benefit consumers in a number of ways, for instance, by giving them clarity about what is covered by their plans, and ending high-pressure and misleading sales tactics. In addition, for the first time funeral plan customers will be able to access a redress scheme, which will be provided by the Financial Ombudsman Service. Ultimately, we believe a well-regulated market will promote effective competition and drive better long-term consumer outcomes. I recognise that this industry does have an important role to play; the demise of Safe Hands will be dealt with through the administration process and there may well then be further examination of what happened, but my determination is that we will get this regulation right and provide security to the industry. The vast majority of firms in the industry are doing the right thing at the moment and I am clear that once they have adjusted to that new regime, we will have confidence going forward.

The Government recognise that the new regulation presents a major change for providers, which is why we introduced an 18-month transition period before the new rules came into effect. That has given businesses time to take the right steps to familiarise themselves with the new requirements and prepare to adopt them.

We of course recognise that it is paramount that we minimise any disruption to customers as a result of the changes, which is why the FCA has said that providers that decide not to or cannot obtain authorisation should transfer their plans to a provider that will operate under the new rules. Alternatively, businesses should wind down in an orderly way before the regulation comes into force.

On that note, Members may be aware that last month the Government made a supplementary statutory instrument that will make it easier for funeral plan providers that seek to exit the market to transfer their existing funeral plan to a regulated funeral plan provider. I discussed that change with Dignity yesterday, and it welcomed it. It should ease the process for the relatively small number of people who find themselves subject to a plan the provider of which will not go into regulation: they will be able to port their plan to one of the bigger industry providers.

When we bring a sector into regulation for the first time, there is clearly a possibility that some providers will be unable to meet the authorisation threshold. In addition, the process may reveal that some businesses are unable to deliver on promises they have made to their customers.

[Peter Grant]

The Minister is understandably focusing on the new regulatory regime—I think he is aware of some of my concerns about the adequacy of the FCA as currently set up—but there should have been other regulation. Who should have been regulating the activities of the trust? Who should have prevented it from engaging in wildly speculative, insecure investments, directly against the promises that were made? Safe Hands Plans Ltd’s first two years of accounts contained demonstrably and obviously false statements, which were never picked up on by Companies House. Who should have been regulating that? Does the Minister accept that regardless of the changes to the regulation of funeral plan companies, there appear to have been serious regulatory failures elsewhere, again?

[John Glen]

The hon. Gentleman makes his points somewhat speculatively, but expresses some valid specific concerns about the journey that Safe Hands went on. Other investigations cannot take place until the administration process is concluded. The driver for the regulations that we are to introduce was the fear among Members from all parties a few years ago. The important thing is to give reassurance going forward. There will be a day of reckoning for the directors of Safe Hands, who will have to account for what happened, but the administration process must happen first. I cannot say any more on that, but the hon. Gentleman’s relevant points are noted.

I must stress that an inability to meet the new standards of regulation—because of issues with conduct, business models or trust arrangements—does not mean that the regulation is at fault; rather, by bringing the sector into regulation, we expose unsustainable practices that, left unchecked, could ultimately worsen and impact more consumers. As the famous adage says, sunlight is the best disinfectant. In this instance, by regulating we will turn the spotlight on businesses that operate with unworkable models, and will prevent consumer harm.

My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) asked about the low-interest loan scheme that we have been piloting with South Manchester Credit Union. I hope to visit Manchester in the week after next. My hon. Friend is absolutely right that there is a wider agenda in terms of affordable credit, and I am still very much committed to developing that instrument and making it widely available, alongside making other interventions in respect of credit unions that we can talk about when the financial services and markets Bill comes to the House shortly.

It is right that the Government act to protect consumers, many of whom will be elderly or vulnerable, with a robust, proportionate regulatory framework. In addition, a well-regulated market will promote effective competition and drive better long-term outcomes for consumers. As I have said, Safe Hands customers can be assured that they will be covered for at least another six months. I encourage other providers and market participants to take further action, as Dignity has done, to protect consumers of firms that will not become authorised.

I assure the House that the Government and the Financial Conduct Authority continue to work closely with each other and with the sector—I have mentioned those two meetings that I have personally held, and meetings that my officials have held, with industry representatives—to ensure that that shift to regulation is as smooth as possible. I take account of the several valid points raised this afternoon. We all have a moral obligation to ensure that funeral plan customers and their loved ones receive the certainty that they need and deserve.

Question put and agreed to.