Farming and Inheritance Tax

John Hayes Excerpts

Wednesday 4th December 2024 Commons Chamber

[Victoria Atkins]

My right hon. Friend, who has a wonderful way with words, asks a question that many members of rural communities up and down the United Kingdom are asking themselves. In fact, when the Prime Minister did regional media a couple of weeks ago, Sean Dunderdale, the wonderful presenter on BBC Radio Lincolnshire, asked him what he had got against the people of Lincolnshire. I might ask: what have this Labour Government got against the countryside?

[Sir John Hayes (South Holland and The Deepings) (Con)]

rose—

[Victoria Atkins]

I will give way to my right hon. Friend and neighbour and then I will make some progress.

[Sir John Hayes]

As my right hon. Friend has said, the word “betrayal” is fitting because, long before the election, pledges were given, by both the Secretary of State and the Prime Minister, that these changes would not be made.

[Mr Speaker]

Order. The right hon. Member is a very experienced Member of this House, and he knows that he is meant to address the Chair, not the Front Bench.

[Sir John Hayes]

Mr Speaker, I know that you, as a man of integrity and honour, will be as disappointed as I am that the Government should promise one thing and then do the exact opposite.

[Victoria Atkins]

It is a great pleasure to have the right hon. Gentleman not just as a friend but as my Lincolnshire neighbour. He has put his finger on the point—genuinely, it is the next paragraph in my speech.

Some Labour MPs must be haunted by the phrasing from the Secretary of State during the general election campaign—because I suspect that they repeated it up and down the market towns and villages in their constituencies—when he described fears that Labour would impose this family farm tax as “desperate nonsense”. Labour candidates will have repeated that line and assured the farming families in their constituencies that Labour would never treat rural communities in that way, yet within weeks the Chancellor was planning to do exactly that.

Since then, families across the country have been trying to work out how to pick up the pieces after Labour’s family farm tax bomb. They will not forget. A farmer from Derbyshire emailed me this week to say:

“Our hard work and investment as a family has been wiped away in the stroke of a pen.”

They went on to say:

“My 60 year old husband had a bleed on the brain in June and thankfully has made a full recovery but I’ve never seen him so stressed. He doesn’t know what to do”.

Hon. Members representing seats in Derbyshire may wish to reflect on how they will respond to that. A farmer from Northumberland has written to me as follows:

“We had to talk about which one of my parents are going to die first, in front of them.”

He said that Labour is

“destroying people’s lives with this policy. Many of us are worried about the mental state of many within agriculture and are concerned that it may be the final straw for some.”

In fairness, the hon. Member for Hexham (Joe Morris), who is in his place, has voiced concerns about whether his Government are listening to ordinary people about this. Will he vote for his farmers or will he toe the party line?

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[The Exchequer Secretary to the Treasury (James Murray)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“thanks farmers for their immense contribution to the UK economy and the nation’s food security; welcomes the Government’s commitment of £5 billion to the farming budget over the next two years, the biggest budget for sustainable food production and nature recovery in UK history; acknowledges that the Government is having to make difficult decisions to protect farms and farmers in the context of the £22 billion fiscal blackhole left by the previous Government; recognises that the Government is seeking to target Agricultural Property Relief and Business Property Relief to make them fairer whilst also fixing the public services that everyone relies on; and notes that under the changes announced in the Budget around three quarters of claims for Agricultural Property Relief, including those that also claim Business Property Relief, are expected to not pay more Inheritance Tax.”

I welcome the chance to open the debate on behalf of the Government. The Government’s commitment to farmers is steadfast. As our amendment makes clear, farmers make an immense contribution to the UK economy and to the nation’s food security. We recognise and respect the crucial contribution that farmers make to our country’s way of life.

We must also recognise, however, the state of our public services and the mess in which we found the public finances when we came into power. There was no way we could have left things as they were. Unlike the Conservatives, there was never any question of Labour ignoring the £22 billion black hole that we uncovered in the public finances. We had to bring the previous Administration’s fiscal irresponsibility to an end. We had to ensure that our country lives within its means. We had to get public services back on their feet while meeting our tough new fiscal rules, which end borrowing for day-to-day spending. That is what we, as a responsible Government, had to do.

That is why, at the autumn Budget, the Chancellor set out a number of difficult but necessary decisions on tax, welfare and spending. These decisions were to restore economic stability, fix the public finances and rebuild our public services. One of the decisions we took was to reform agricultural and business property relief. We chose to do so in a way that maintains significant tax relief for family farms, while fixing the public finances as fairly as possible.

[Sir John Hayes]

The hon. Gentleman will want to explain this, Mr Speaker. The Government have argued that only 27% of farms will be affected by this measure, while the National Farmers Union says it is 75%. Will he at least give us an indication from the Dispatch Box, perhaps supported by a note in the Library of the House, showing the modelling that contradicts the NFU’s figures?

[James Murray]

I point the right hon. Gentleman to the letter the Chancellor recently sent to the Treasury Committee, which sets out some of these figures in detail. Some of the confusion that he and other hon. Members have encountered might come from the fact that there are different sets of data. The set of data he may be referring to relates to the total value of farms across the country, but if we are thinking about inheritance tax claims, it is right to look at His Majesty’s Revenue and Customs claims data on inheritance tax. Looking simply at the value of a farm does not tell us what the inheritance tax liability for that farm may be, given that we would have to look at the ownership structure—at who owns what—and at any liabilities, and so on. That might be where some of the right hon. Gentleman’s confusion is coming from.

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[Tim Farron]

There is something in that, and I will come to that in a moment when I talk about poverty in our countryside, when it just does not look the way people in urban communities think it ought to look.

There is no doubt that family farms are under attack, but this did not start on 4 July, and I want to go through why we have ended up where we are now. The botched transition from the old farm payment scheme to the new one is the principal source of hardship among our farmers. Let us start with the fact that the environmental land management scheme—ELMS—budget saw a £350 million underspend under the last Government, and that was not an accident. It was blindingly obvious that that was going to happen. One hill farmer I spoke to just last month told me that, as a consequence of the transition, he will lose £40,000 a year in basic payment. To replace it, he will gain £14,000 under the sustainable farming incentive. By the way, it cost him £6,000 to go through a land agent in order to get in in the first place.

[Sir John Hayes]

The hon. Gentleman is making a profoundly important point. Not for the first time he is speaking as a Liberal Democrat, but also in a way that belies the fact that he is a Liberal Democrat, because he is genuinely committed to the countryside. He has made a point about family farms; the important thing about them is not only the arguments that he has already advanced, but the sense that they represent a continuum—an investment for the future. The reason this policy is so detrimental is because it impacts on that sense that farmers are investing now for generations to come.

[Tim Farron]

I am going to get to that, but the right hon. Gentleman will have to tolerate me accurately pinning blame on his side before I do so.

We were told by the last Government that they would maintain the amount of funding that we used to spend when we were in the European Union. In England, that was £2.4 billion. In one sense, and one sense only, they kind of kept that promise because it was £2.4 billion throughout that five years. However, they did not spend it, because they phased out the old scheme very rapidly, causing a great hardship, particularly to small family farms, and they brought in the new schemes far too slowly and made it very difficult for people to get into them. By the way, the people who were able to get into the new schemes were the big farmers. They were the landowners who had land agents to help them get into the schemes. So the large landowners with the bigger estates managed to get into those schemes. They are all right, broadly speaking. It is the smaller family farms—the farmers who own their own farms and the tenants—who have struggled.

It is also worth bearing in mind that there has been a little bit of inflation since 2019. The cost of running a farm has gone through the roof when it comes to feed, energy, fuel and all sorts of input costs. So the fact that we are at just £2.4 billion now, as we were five and a bit years ago, is absolute nonsense. It is important also to recognise that the grants that were available under the last Government, and now, are in reality often only available to those who have the cash flow to be able to get them in the first place.

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[Maya Ellis]

If the hon. Lady will allow me, I will come to how we can help the farmers who will be affected by the measures.

To finish my point about devolution, as an MP in an area with huge extents of rural economy, it is critical to me that devolution reflects our rural areas as much as our metropolitan ones. I look forward to seeing how the upcoming devolution White Paper addresses that challenge. Town and parish councils really understand our rural communities and can play a bigger role in local democracy.

[Sir John Hayes]

The hon. Lady is making an interesting speech, and I am grateful for it. She is right that we should import less food and use Government procurement to help with that, and she is right about the inter-generational quality of family farms. Will she acknowledge that, in delivering the kind of food security that her speech implies, we cannot have the most productive farmland eaten up by large-scale solar developments and housing? We need to protect our grade 1, 2 and 3 land for the very reason she gave, because that allows us to deliver the food security that she and I both want.

[Maya Ellis]

As the Minister pointed out, many farms will not be affected by the measure and it will not have the impact that Opposition Members are leading people to believe.

We have an opportunity to support our farmers, as I touched on in my response to the hon. Member for Upper Bann (Carla Lockhart). I have sat down with farmers in my community and worked through the issues. They have taken their own tax advice. For example, there is a farm in my constituency that is worth around £3.6 million, so it will be liable for around £12,000 a year in inheritance tax over 10 years. However, if we are able to increase that farmer’s profits by £20,000 a year, by reducing energy prices, increasing British-supplied procurement so that 50% of public sector food comes from those farms, and providing a better health service that ensures all members of the family can be strong and well to work, that is the opportunity. Yes, we need to make our tax structures work better—that is fixing the foundations—but the real aim and prize is increasing the opportunity for farmers, so that they have the stability, investment and real sense of purpose and mission that allows them not just to survive, but to thrive.

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[Andrew Pakes (Peterborough) (Lab)]

That was quicker than I expected, Madam Deputy Speaker, so thank you. It is a privilege to speak in the debate.

Nothing goes to the heart of the health, wellbeing and prosperity of a nation more than being able to feed and look after ourselves. Britain’s farmers and our farming workforce are part of the essential infrastructure that keeps this country going. I am proud to represent a constituency with such a rich food and farming heritage. Farming is in our DNA.

I pay tribute to our farmers and farming workforce. When we talk about any other industry, we recognise the skilled workers that deliver for Britain: the steelworkers, the miners, the nurses and the doctors. We should start every debate on food and farming with the same recognition for farmers. Food security begins with the incredible work of our farmers, and I thank them. We talk about people going the extra mile to look out for each other and care for our communities; farmers do that every day. This should therefore be a welcome debate on the future of farming. It should mention farming profitability and allow the hon. Member for Mid Norfolk (George Freeman) to talk about agri-technology and how we increase profitability. I hope that he does so shortly. Instead, what do we get? It is political opportunism from a party that should know better. I am proud to be part of the largest contingent of rural Labour MPs in Britain’s history. Labour Members were elected to protect and support our rural communities, and we will do just that. After 14 years, it is a bit rich of Conservative Members now to claim that they are backing Britain’s farmers.

[Sir John Hayes]

I entirely endorse what the hon. Gentleman, my constituency neighbour, said about recognising and celebrating the work of farmers, and indeed farm workers, but does he understand—I am sure that most Conservative Members understand this well—that assets and income are entirely different things? Farmers’ assets are our landscape. Their wealth is our common wealth—something that the Government have seemingly failed to appreciate by imposing a tax on farmers that confuses their ability to make a living with the asset that is essential for them to feed the nation.

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[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I remind the House of my entry in the Register of Members’ Financial Interests.

It is a pleasure to follow the hon. Member for Peterborough (Andrew Pakes), who is a fellow member of the Select Committee, and the hon. Member for Ribble Valley (Maya Ellis). They both, in their own way, made an important contribution to the debate by giving a bit more context to it. I will vote for the motion in the name of the Leader of the Opposition, not because it is the most elegant piece of drafting that I have seen in 23 years in the House, but because there is nothing in it with which I really disagree. It does feel, though, like a bit of a missed opportunity to move the debate onwards. I say that not as any real criticism, because it is a response to a Government measure in the Budget, which was also a bit of a missed opportunity.

It is worth taking a minute or two to pause and reflect on how things might have been done differently. We could have gone through the process that multiple Governments and Departments have gone through over the years by starting with a Green Paper or a White Paper, and looking at the way in which inheritance tax has worked, and some of the unintended consequences that it has generated. We have all heard of the super-rich buying up land and inflating the price as some sort of tax avoidance measure. I have not met a single working farmer who wants to defend that, so there was a real opportunity to do things differently. We could have built a consensus about the proper value of land, and about some stuff that is not really being spoken about in this debate.

I speak as a former solicitor. Thankfully, I never did any executory practice, but some of those who are still in practice and with whom I am in contact tell me candidly that, because there was 100% relief on agricultural land, they did not really give a great deal of thought to the valuation that went into the application for confirmation. That is bound to have had an impact on the figures on which the Government rely. Had we done things in a proper and reflective way, we would have been able to build consensus on values and thresholds, for example, and do things very differently.

[Sir John Hayes]

I welcome the contribution of my former ministerial colleague. Had the tax been levied on exactly the people he describes—the super-rich, and non-working farmers—few would have complained, but it has been set at the wrong level. That is why I asked for detailed modelling to be made available to the House.

[Mr Carmichael]

I think I just said more or less exactly that. A debate of the sort that I am talking about would have allowed for a wider debate about farming finances. We have had 70 years of very direct Government intervention in the agricultural economy through farm subsidies. Taking a step back, critical though those farm subsidies are, their net effect has ultimately been to keep farmers poor. There is now such an enormous mismatch between the capital value of the assets being farmed and the derisory return on them. DEFRA tells us that there is a 0.5% return on capital. Farmers in my constituency tell me that a £3 million farm will give them an income of about £25,000 a year. That is pretty much in line with DEFRA’s figures.

We hear about farmers working into their 80s. It is a slightly patronising and very romantic view of doughty farmers working on into their 80s because they are seized with a sense of vocation. There absolutely is a sense of vocation among farmers, but let us not forget that a lot of them work into their 70s and 80s because they have been running businesses that have had no spare money to put into a pension so that they can look after themselves in their old age.

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[The Minister for Food Security and Rural Affairs (Daniel Zeichner)]

I am grateful for the opportunity to close this debate on the planned reforms to agricultural property relief. It has been important to hear from people on all sides of the debate and to outline the steps that the Government have taken to reach the decision on agricultural property relief. The reforms to APR are just one of the tough decisions that the Government had to take across the board on tax, welfare and spending to plug that £22 billion black hole that we inherited from the Conservatives and restore our public services.

We have had many contributions to the debate; I am sorry that I cannot respond in detail to all of them. On my side, we started with an excellent account from my hon. Friend the Member for Ribble Valley (Maya Ellis). My near neighbour, my hon. Friend the Member for Peterborough (Andrew Pakes), spoke eloquently about the workforce issues; it is astonishing how rarely they are raised from the Conservative Benches, although there are some noble exceptions. We heard from my hon. Friend the Member for Forest of Dean (Matt Bishop) and from my hon. Friend the Member for High Peak (Jon Pearce), who, along with a number of others, rightly raised issues of profitability in the sector. My hon. Friend the Member for Penrith and Solway (Markus Campbell-Savours) made the important point that we are not discussing the Finance Bill today.

My hon. Friend the Member for Hexham (Joe Morris) asked why it takes Labour Members to raise rural crime issues, because anyone who has been out talking to farmers will know that that is their top concern. From my hon. Friend the Member for North Northumberland (David Smith) we heard a powerful account of the value of rural life. My hon. Friend the Member for North East Derbyshire (Louise Jones) again talked about the national health service. These are the concerns of people in rural areas.

From my hon. Friend the Member for Bassetlaw (Jo White), we heard about rural crime again. We heard from my hon. Friend the Member for Rossendale and Darwen (Andy MacNae) and from my hon. Friend the Member for Rugby (John Slinger), who rightly outlined the Conservatives’ atrocious record over 14 years on public services. Finally, my hon. Friend the Member for Bishop Auckland (Sam Rushworth) rightly dismissed the Opposition motion as a load of tripe—although perhaps that is tough on tripe.

A huge range of figures and analysis have been quoted in the debate so far. I have to say that part of the problem with those figures is that they seem to be about different things. Only one set of figures actually gives guidance on this issue, and that is the Treasury figures showing that about 500 estates a year will be affected. That is based on the hard data of the actual claims. It includes the impact of APR but also takes into account business property relief. I urge some Opposition Members to look at the Chancellor’s letter to the Chair of the Treasury Committee, which outlines all the details, taking into account those personal circumstances, the nil-rated inheritance allowances and the other capital allowances. It is available to all Members. Those figures, of course, are endorsed by the independent Office for Budget Responsibility.

[Sir John Hayes]

rose—

[Sir Gavin Williamson]

rose—

Independent School Fees: VAT

John Hayes Excerpts

Wednesday 21st February 2024 Westminster Hall

[The Financial Secretary to the Treasury (Nigel Huddleston)]

It is a pleasure to serve under your chairmanship, Mr Henderson. Please allow me to start by congratulating my hon. Friend the Member for Northampton South (Andrew Lewer) on securing the debate. What a pity we have only 60 minutes, because there was so much more to say here. We heard some fascinating and thoughtful contributions on the matter of independent school fees and VAT.

It will not surprise anyone present to hear that I agree wholeheartedly with Government Members, and I am very pleased to hear from our Lib Dem and DUP colleagues, who support the Government’s policy to allow independent school fees to be exempt from VAT for the many valid and obvious reasons expressed by hon. Members and right hon. Members today. Those include the incredible impact that they have on communities, the partnering, their impact on so many people’s lives, and the fundamental principle of choice.

I am afraid that what we have heard from the Opposition is what we hear consistently. Perhaps we might all be sighing with relief soon when we get the inevitable flip-flopping on this policy—I do not believe for one minute that it is wholeheartedly supported by Opposition Members. It is just virtue signalling of the highest order. It is complete left-wing populist virtue signalling by the Opposition, but the British public see straight through it. This Government understand the vital role that education plays in all our lives. Just this year, school funding will total about £57.7 billion, and next year it will be £59.6 billion. I am very proud to say that that will be the highest ever real-terms spending per pupil under the Conservatives.

[Sir John Hayes (South Holland and The Deepings) (Con)]

I am grateful to the Minister for giving way; I learned as a shadow Minister and a Minister that it is better to be gracious. The Minister will understand that one of the best arguments for independent schools is that they often innovate. My right hon. and learned Friend the Member for Fareham (Suella Braverman) was involved in establishing a school that innovates and breaks new ground. From Steiner schools to Bedales to Summerhill, those schools could only exist in the independent sector. How does the Minister think that the Labour party perceives that, or does it not perceive it at all?

[Nigel Huddleston]

My right hon. Friend, as always, talks very sensibly about this. The independent sector is a major contributor to our ecosystem. Of course, many teachers flip flop between the different sectors; the innovation in the private sector can also help the state sector, which is one of the many benefits that we have heard about today. In terms of the broader performance in the education system, not only do the Opposition consistently talk down the economy, our constituencies and our businesses but they also talk down our teaching profession. Actually, it is incredibly successful and we should be proud of what teachers have achieved.

Our commitment to quality education has seen 89% of all schools achieve “good” or “outstanding” at their most recent inspection, an increase from 68% back in 2010 under Labour. In the programme for international student assessment, our rankings for reading and maths improved by 10 places from 2015 to 2022 to ninth and 10th across the Organisation for Economic Co-operation and Development countries. Within that mix, as we all know, England performed better than Labour-run Wales or SNP-run Scotland, despite their higher funding. If we want to see what would happen in education under Labour, all we need to do is look to Wales—it is not an impressive performance. In the latest paediatric adverse childhood experiences and related life-events screener assessment of reading for 10-year-old students across 57 education systems, England ranked fourth internationally. I think we can all accept that those are good things.

This Conservative Government believe that there is a broad public benefit in the provision of education. That is why many education and training services are exempt from VAT, which includes an exemption on independent school fees. Labour does not seem to recognise the public good, as my right hon. Friend the Member for South Holland and The Deepings just mentioned. It wants to charge VAT on school fees and end business rates relief for private schools, taxing aspiration and inevitably putting more pressure on state schools.

Commission on Race and Ethnic Disparities

John Hayes Excerpts

Tuesday 20th April 2021 Commons Chamber

[Kemi Badenoch]

I agree that we need to have a mature discussion, but I should let the hon. Gentleman know that the commission and its chair have been misrepresented on the comments about slavery. They have stated that any suggestion that they downplayed the history of slavery is “absurd” and deeply “offensive”:

“The report merely says that, in the face of the inhumanity of slavery, African people preserved their humanity and culture.”

The hon. Gentleman might be interested in the commission recommendation on new curriculum resources better to teach this complex history of the people of Britain.

[Sir John Hayes (South Holland and The Deepings) (Con)]

I wish to report to the House and to you, Mr Deputy Speaker, that 20 Members of the House, including my hon. Friends the Members for Ipswich (Tom Hunt), for Bassetlaw (Brendan Clarke-Smith) and for Broxtowe (Darren Henry), have written to the Charity Commission complaining about the Runnymede Trust’s treatment of the commissioners and its response to the report, which, frankly, reflects the outrage of those who have had their long-standing bourgeois liberal prejudices challenged. It is important that the Minister give me an assurance today that she will make representations across Government to stop the worthless work—often publicly funded—of organisations that are promulgating weird, woke ideas and that, in doing so, are seeding doubt and fear and, more than that, disharmony and disunity.

[Kemi Badenoch]

My right hon. Friend is right. It is important that we in Government do not inadvertently promote people who are pushing divisive narratives, and I will look into his request and see what we can do across the House and across Government.

It is interesting that my right hon. Friend, too, raises the Runnymede Trust. He might not be aware of this, but the Equality and Human Rights Commission has written an open letter to the Runnymede Trust. In its letter of 12 April, its chair states that the Runnymede Trust made “unsubstantiated allegations” about the EHRC, questioned its “impartiality and impact” and impugned its credibility. The letter also said that the Runnymede Trust showed “an apparent misunderstanding” about the EHRC’s

“mandate as set out in statute”.

I was really shocked to read the commissioners’ letter and to learn that the Runnymede Trust had even asked—or certainly implied—that the EHRC should be defunded, which is surely the opposite of what a charity focused on improving race relations should want, and the complete opposite of its objectives, which goes to the point that my right hon. Friend made.

Ministerial and other Maternity Allowances Bill

John Hayes Excerpts

2nd reading & 2nd reading: House of Commons
Thursday 11th February 2021 Commons Chamber

[Sir John Hayes (South Holland and The Deepings) (Con) [V]]

Though it is a mission of Back-Bench parliamentarians to bring this Palace to life, the service and sacrifices made by Ministers in pursuit of the common good and shared endeavour should be recognised and celebrated. They are responsible for the actions, successes and failures of entire Departments, so it is perhaps inevitable that some will become overwhelmed by the sheer scale of that challenge. But it is easy, too, for ministerial office to consume the holder, defining their decisions, both privately and personally. That is precisely why this Bill is so important. In life, irrespective of how grand or important we are, what we do should never trump what we are, as individuals or as a people. When all is said and done, it is the metaphysical, the beautiful and the relational that cultivates grateful perspective and lasting joy.

Whether as mothers or fathers, sons or daughters, parenthood, as a fundamental feature of our humanity, matters. As such, it is right that we reflect on how we as a nation, as a Government and as a Parliament support parenthood, opportunity and, in particular, as this Bill does, support mothers. How do we recognise and reward the service and sacrifice required to raise a child from birth to maturity, to shape the intricacies of a human soul with kindness, commitment, discipline and restraint? This Bill is a welcome start. It provides an example. For if we in Parliament get this wrong, how can we expect others to get it right?

That a woman at any stage in her life must be supported emotionally and financially from the moment her baby is conceived is surely the right thing to say, but also the right thing to do. There is a communal societal duty to support children, and indeed adults at every stage of life, from the first heartbeat before birth to the final breath. By formalising the process by which Ministers can take paid maternity leave while remaining in Government, the Bill will go some way towards eliminating any subtle or subconscious pressure placed on women in public life to abandon their pregnancy, or indeed to compromise the care they give in the early stages of life.

I pay tribute to the work of my right hon. and learned Friend the Attorney General, who has taken the Bill from its conception to, we hope, its legislative adoption. By the way, this is this Attorney General who had the courage to give up her lucrative career as a lawyer in order to enter Parliament; the Attorney General who had the will to refer the case of PC Harper to the Appeal Court; the Attorney General who is reforming the practice on disclosure; the Attorney General who successfully argued recently to increase the sentences of a rapist in the Court of Appeal.

It must be noted, however—it is too often the case with Government—that artlessness or heartlessness has allowed the capture of a well-meaning and just Bill by civil servants who have clumsily excluded the word “women”. That can be put right in Committee and I will say more about that then.

The Bill can also be the beginning of a new focus on family. I recommend the work of another hon. Friend, my hon. Friend the Member for Congleton (Fiona Bruce), whose manifesto to strengthen families provides a blueprint that the Government can follow to do just that. Among that report’s recommendations, alongside sensible reforms to tax and benefits, is a suggestion that we should look again at the criminal justice system.

The Bill is an important step, but it is only a step on a long journey—a journey that affirms the role of women in public life and the role that women play in families and in wider society. It is also a Bill that is proud of motherhood and, my goodness, in the mother of Parliaments, should not we all share that pride?

Ministerial and other Maternal Allowances Bill

John Hayes Excerpts

Committee stage & 3rd reading & 3rd reading: House of Commons & Committee: 1st sitting & Committee: 1st sitting: House of Commons
Thursday 11th February 2021 Commons Chamber

[Stella Creasy]

I thank the hon. Gentleman for his comments. If he will forgive me, as somebody who has actually been through this process and actually understands what is available and what is not clear at present, I would gently encourage him to talk to his colleague the hon. Member for Stroud about her experiences.

It is really important that we are honest about the lack of clarity. As I have said, there is not a formal maternity leave scheme or formal maternity cover. Unless the hon. Gentleman is suggesting that if an MP disappears for six months, nobody would notice because they do not do anything, then there is work to be covered. The point about this legislation is that it recognises that. It is not about the pay—that is a red herring in this environment. It is about having somebody to cover the work we do outside of this room: the campaigns we run, the constituency events we attend, and the casework we do. For me, it was not acceptable to ask my staff to fill in everything that I did for six months, and expect my constituents to have a reduced service as a result, rather than to have somebody cover those roles.

I am very conscious of time and I do want to press on, but I would gently encourage the hon. Gentleman to look at what is actually being provided at the moment. It is not the same as what we are providing in this legislation, and that is my point: we want parity, because every woman should have six months’ paid cover so that they can actually take time off. Perhaps he might want to speak to my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq), who was back doing casework three days after a caesarean section because, although people thought she could take maternity leave, the reality was that she could not. I know that it is not a situation in which the hon. Gentleman has found himself, but I hope that he can understand, through listening to those of us who have, why we need change. Certainly, I hope that he will join me in supporting paid parental leave for our male colleagues because that is really important. I have talked to many colleagues who find that this place takes them away from their families when we want to bring them together.

I want to highlight the other amendments that I have tabled. I recognise the cross-party support for new clause 1—I think the Paymaster General does, too—and the call for change and for us not to be blind about the messages we send from this place about the importance of paid maternity cover and ensuring that everybody can access it.

Amendments 1 and 2 are probing amendments to recognise some of the questions the Bill raises about the practical technicalities and what would happen. The Bill seems to take account of the idea that somebody might be demoted while they are on maternity leave and I am sure that the Paymaster General will want to clarify that. Although the Bill provides that no Minister would be in a financially difficult position if they were removed from their ministerial post while they were on maternity leave, it does not make the same provision for the small number of Opposition office holders. Will the Paymaster General clarify what would happen in that case? We all want to ensure that when any woman takes maternity leave, she can do so with confidence and certainty about her financial and logistical position.

There are still battles to be won, but I want every pregnant woman in this country who is facing problems right now to know that there are voices in this place that are prepared to stand up to those who tell them not to worry and to be grateful for the fact that somebody might employ them at all; not to worry about going home and being stuck with their children, and that equality does not matter to our economy. I know that there are voices and champions for the importance of not discriminating against pregnant women and new mums across the House, but it is time that we saw ourselves as we are now, and we are looking through the wrong end of the telescope if we do not understand the impact of the Bill on the messages that we send.

I know that the Paymaster General realises that we need to do the research. She is honest about how small the number of women affected by the Bill is. If she will not accept the amendment, I am keen to hear from her—because I do not want to have to take the Government to court—a clear timetable for action, a clear commitment by the Government to make parliamentary time so that we can resolve the issues in this place and support women of child-bearing age and their partners in local government and across the Assemblies as appropriate, for public life if nothing else. Deeds not words.

[Sir John Hayes [V]]

In George Orwell’s novel “Nineteen Eighty-Four”, protagonist Syme explains the objective of Newspeak:

“Don’t you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thought-crime literally impossible, because there will be no words in which to express it.”

Although there are those who do not understand or will not recognise this truth, language matters. It is through language that we understand, express, consider, challenge, think and articulate. Through language, we breathe life into sentiment. So we must ask ourselves a question. How did we get to a place where a Conservative Government bring a Bill before us that seeks in effect to abolish two beautiful words that have been used for centuries and embody goodness and truth: “mother” and “woman”? The Bill as drafted does just that. It rules those words out of law.

Is it now considered embarrassing to be described as a woman and to admit to being a mother? That seems to contradict the whole purpose of the Bill. After all, the Bill is about recognising the significance of motherhood and extending that recognition to those in the service of the Crown. Are we now acknowledging as a Parliament that the concepts of motherhood and womanhood are so radical that they must be censored?

You know as well as anyone, Dame Eleanor, that when tabling amendments, one is often seeking to make small, sometimes complicated technical changes to legislation. Today, with my hon. Friend the Member for Thurrock (Jackie Doyle-Price), my motivation is much more straightforward: to affirm the existence, worth and eternal value of womanhood and motherhood. By the way, if the need arose, I would do the same for men and fatherhood. By saying the words and including them in the Bill, we will cement the virtues that the Bill embodies in law.

As drafted, the Bill, in effect, extinguishes the ordained particular characteristics of human types. I do not know whether that is as a result of artlessness or heartlessness, but whichever it is, it anonymises and dehumanises. That is why I have introduced the two amendments that stand in my name, and I am grateful to Members from across the House for supporting them.

My speech will be uncharacteristically short but characteristically straightforward, because this is a matter of common sense—the common sense that prevails beyond this place and, clearly, beyond the wit or will of the people who drafted this legislation. Never underestimate the power of language, for there are those—those who are extreme and immoderate—who understand its power very well and those, as the hon. and learned Member for Edinburgh South West (Joanna Cherry) said, who seek to obscure the biological differences, which are, frankly, the very reason all of us are able to contribute to this debate, because we would not be here without them.

It is sad to see the attempts that have been made to blur the picture, muddy the waters and cloak this matter in denial. It is sad to see the descriptions of “drafting difficulties” and “legislative complications”, which were described to me today by one parliamentary lawyer, a distinguished one too, as entirely “clueless” and “baseless”. This is a matter not of drafting procedure, but of principle. Electors of all political persuasions and none, across our kingdom, from Caithness to Caerphilly to Cornwall, from Antrim to Arundel, from Kent to Kendal, expect us to do what they would anticipate is that common sense—to affirm womanhood and motherhood in this legislation, which is, after all, about maternity.

As Orwell understood, semantics matter, because through them, via meaning, we find truth. In the pursuit of truth, and in solidarity with every woman and mother in South Holland and The Deepings and beyond, I am proud to put forward the amendments that stand in my name, and I shall be seeking to divide the House on them at the end of this Committee stage, with your indulgence, Dame Eleanor.

[Cherilyn Mackrory [V]]

I thank my right hon. Friend the Paymaster General for bringing this Bill before us today. It is highly unlikely to affect me personally, as my daughter is six and I have a very supportive family, but even with a six-year-old being a full-time working mum is a huge juggling act. I have massive admiration for mums in general, for all working mums and absolutely for any colleague who has a baby while doing this job. But why do I feel like that? Why do I not have the same feeling for my male colleagues who welcome a newborn? There have been a few of those this year.

I am sorry to say that despite how far we have come and despite how much more hands-on dads and partners are these days, the majority of the domestic load around babies and small children is still being carried by women. I will quickly caveat that by saying that all families are different and there are many families where that is not the case, but by and large women are still in charge of this mental load. We must explore in this House, and in debate more widely, the evolving role of fathers and partners, and how we can possibly improve the equality of pregnant women without looking at families as a whole. Looking into the debate on maternity leave as a whole means looking at the impact on our work and family life. Do we value family life at the expense of work? Do we look at work at the expense of family life? At the moment, I do not think we have that balance right, and covid has emphasised that. Society is starting to look at this a lot more, and Government will be well placed to encourage a society that promotes family life. Stable families, whatever shape they take, are good for society and improve life chances. We should promote best practice by companies, and ensure by doing it in this place that we lead by example. It starts with maternity leave, but goes on to much more.

Black History Month

John Hayes Excerpts

Tuesday 20th October 2020 Commons Chamber

[Sir John Hayes (South Holland and The Deepings) (Con)]

According to the philosopher Michael Oakeshott, civilisation

“begun in the primeval forests and extended and made more articulate in the course of centuries…is a conversation which goes on both in public and within each of ourselves.”

Conversation, of course, implies a discourse in which no one voice dominates, no one is shouted down and contrasting perspectives are heard and respected, even when agreement is unlikely and compromise unexplored. Yet, we now live in an age where many have no interest in a real conversation and where delight is taken in silencing dissenting voices. We live in an age where some talk of the importance of history, but really mean propaganda—when someone is suggesting, in essence, that people educate themselves, know the doctrine, learn the mantra and toe the line. In our brave new world, activist groups vie for attention by shouting ever louder in what can best be described as a competition of victimhood.

[Anne McLaughlin]

Will the right hon. Gentleman give way?

[Sir John Hayes]

I will not at the moment, but I will a little later.

Each group claims a spurious moral authority founded on its own sense of oppressed marginalisation. The historical truth is dismissed, in cultural Marxist terms, as a construct of persecutors: only they really understand the past and the present, and they now assert that others must be forced to be cleansed by acknowledging their guilt and by recognising their unconscious bias. The notion that we are defined by our race or sexuality is now so ubiquitous that we have become numb to just how disturbingly stultifying it really is. To confine and condense the identity of a unique individual made in the image of God to things over which they have no choice—their gender or their race—is sorrowfully lacking in perspective and ambition.

Some of my colleagues may be reluctant to engage in this debate, but that is not true of the Minister for Equalities, any more than it is true of the Home Secretary or the Attorney General. They are in the vanguard of the battle against this kind of dogmatic, doctrinal cultural Marxism, because they know that politics is palpably about values, not just about dull, mechanistic, economic minutiae. We should celebrate the contribution of everyone to our country, whatever their background, their colour or creed, and of course, in that spirit I welcome Black History Month, but history is very rarely a simple case of black and white, literally or metaphorically. A proper appreciation of history is dependent on understanding that the past is as complex as the present, and that humanity is both flawed and capable of greatness. Let us take the British empire, for example. Though of course it is true that empires begin in the interests of their colonial founders, the crass assumption that all that is subsequently done in their imperial names is exclusively wicked is as stupid as it is simplistic. In the words of the former chairman of the Equality and Human Rights Commission, Trevor Phillips:

“The woke ultras who want to wipe away all symbols of British imperialism don’t speak for families who lived under the Empire”.

[Anne McLaughlin]

I will not go back to what the right hon. Gentleman said earlier because I have forgotten his exact words, but does he not accept that there are different perspectives when it comes to the empire and our role in it? Should those different perspectives be discussed in education and should we be told about them, or should we just have the one perspective that we have now?

[Sir John Hayes]

Yes, of course I accept that. I am a trained history teacher, so of course I understand that there are differing interpretations of history. The problem I was describing earlier—the hon. Lady clearly bristled when I was doing so—is that there are those who want to sanitise and reinvent history. The truth is that all we are now is a product of all that came before, good, bad and ugly, and we cannot simply wipe away the past. This is not year zero, and to believe otherwise is, frankly, Orwellian.

[James Sunderland]

rose—

[Sir John Hayes]

No, I will not give way because I know that many more contributors want to get in.

In years gone by, children were taught about figures who unite us, regardless of background or circumstances, in a shared love of the country: from Alfred the Great to Florence Nightingale and from Nelson to Winston Churchill and Edith Cavell.

[James Sunderland]

rose—

[Sir John Hayes]

I will give way briefly, because I gave way to the hon. Member for Glasgow North East (Anne McLaughlin).

[James Sunderland]

What does my right hon. Friend think about recent attempts to discredit these national heroes?

[Sir John Hayes]

My hon. Friend has, among other colleagues, played a noble role in challenging some of the institutions that have bought exactly the cultural Marxist agenda that I describe. I am thinking in particular of the work that he, I and others have done in ensuring that the good names of Sir Winston Churchill and Horatio Nelson are not besmirched. In doing that, we are of course not arguing that all that came before us was good and pure, but to take the view that those individuals should be judged by the standards of today and not seen in the context of their time is ahistorical rather than an interpretation of history, as the hon. Member for Glasgow North East was advocating.

The stories of these figures are not based on the advancement of the interests of a few—of a small subsection of society—but are stories of dedication and duty, service and sacrifice for the common good, for the many. So compelling is their heroism that many migrants to Britain, notably from Africa and the West Indies, chose to name their children Nelson, Winston and Gordon after men who are among the empire’s greatest sons. Yet now culture warriors are determined, by reinventing the past, to dictate the future. Under their heel, history must be rewritten and the very concept of heroism obliterated. It is time for patriots in this country—black and white, regardless of their origins—to fight back and to reclaim heroism, patriotism and history from those who seek to distort and demean all that has gone by in the pursuit of political ideology.

The overwhelming majority of the British public, and in particular the working classes—the class that I come from, in stark contrast to the right hon. Member for Islington North (Jeremy Corbyn), who spoke earlier—take a view different from that of the bourgeois metropolitan elite. Most people in this country are deeply proud of their country and its history. Earlier this summer, polling for Policy Exchange’s history project found that 69% of people rightly believed that UK history as a whole was something to be proud of; just 17% thought it was something of which to be ashamed.

While it is right to celebrate the historic contribution of black, white and Asian Britons, let us first and foremost celebrate what we share. Let us celebrate all of our yesterdays, for unless we do, all our tomorrows will be poorer and poisoned. As I said earlier, I want others to contribute, so I shall conclude. As one of the few qualified history teachers in this place, let me offer this lesson: ours is a land of hope and glory—a proud Union with a past to be proud of.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. I just want to point out that I am trying to get everybody in and if people who have spoken intervene again, that prevents others from getting in.

Economic Update

John Hayes Excerpts

Tuesday 17th March 2020 Commons Chamber

[Rishi Sunak]

It is because of what was announced yesterday and the particular impact on the hospitality sector that today we have announced a series of steps of considerable support for that sector. As I have already said, when it comes to renting, the Secretary of State for Housing, Communities and Local Government will shortly be announcing measures to protect renters in these circumstances, and we have strengthened the safety net, the security, for people to fall back on.

[Sir John Hayes (South Holland and The Deepings) (Con)]

In amplifying the point made by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), will the Chancellor specifically say whether the charitable sector will be eligible for both the rate holiday and the grant funding? It is critical that we help those whose aim, purpose and mission is to help others.

[Rishi Sunak]

Most charities are already eligible for 80% charitable rate relief, but they will benefit from the new enhanced retail rate relief at 100%.

Draft Environment, Food and Rural Affairs (Amendment) (EU Exit) Regulations 2019

John Hayes Excerpts

Wednesday 13th March 2019 General Committees

[David Rutley]

No, it was a glare. Yesterday we had an SI Committee and were able to set out clearly what the costs were—very minimal, in that situation—regarding veterinary medicines. In this situation, these changes are minimal.

On food labelling, there will be changes, but through representation and our engagement with the food and drink sector it was clear that we needed to find a sensible transition to the new arrangements, where there would be at least 21 months and, with GI, three years to transition. As a result, the costs involved are very minor.

Based on guidelines, there was no need to conduct a formal impact assessments, but once again I can assure the hon. Gentleman that there was maximum engagement with those bodies. Indeed, I meet the Food and Drink Federation, the British Retail Consortium, UKHospitality and the National Farmers Union every week to ensure that I am fully aware of their concerns about issues such as this and many others.

[Sir John Hayes (South Holland and The Deepings) (Con)]

I have been listening to the Minister with interest and concentration, but the truth is that cathartic change always brings about challenge, and it is a cathartic change that we are going through. He is right to say that in the particular case of this SI, the change is minimal, and the future will look much like the past. On the issue of cost, however, it may be that the reconcentration on what we do allows us to think through the cost-effectiveness of that. Over time, we may be able to do all kinds of things, in my hon. Friend’s Department and others, that will be more cost-effective and efficient and will save money. All this discussion about costing money must be balanced against the advantage of that re-examination of how to do things best and most efficiently.

[David Rutley]

I completely agree that there are opportunities to see how we can do things better and in a more cost-effective way. We will have that opportunity once we leave the EU. At the moment, this is very much about continuity; we can look forward to those opportunities, but I wanted to reassure colleagues that for now, this is about continuity and keeping things as they are. In future there will be opportunities to review, obviously with parliamentary scrutiny.

A number of concerns were raised about GM crops, but again, all we are talking about here is transferring powers. No GM crops are grown in the UK, as I said in my remarks at the beginning. I want to ensure my words are on record clearly: no GM crops are grown in the UK at the moment and none is anticipated. Decisions to approve the commercial cultivation of GM crops are based on a robust and independent science-based assessment, with the planting of GM crops agreed to only when it is clear that people and the environment will not be harmed. We do not have any intention to relax the regulations after we have left the EU. As I said before, no future GM crop is anticipated in the UK. I hope the hon. Member for Stroud is reassured on that. The good news is that we have the scientific expertise to ensure that all the required analysis can be conducted.

With regard to border inspection posts and the concerns raised by the British Veterinary Association, with whom the hon. Member for Stroud has a clear and trusted relationship, we are working closely with BVA, seeking its feedback, input and support to ensure it is ready for the extra volume of export health certificates and preparations for the border inspection posts. There will be no import controls or checks at the border for live animals and animal products directly from the EU on the day the UK leaves the EU. The exception to that rule is animals, animal products and high-risk food and feed not of animal origin coming from third countries that travel through the EU before arrival in the UK.

Clearly, we will continue to monitor the situation, but on day one the risks do not change because we trust the EU regime. We have been part of it for many years, which is why I believe we are in good shape. By transferring these powers, we will be in the right position come EU exit day. Overall, the six regimes will continue to function in a similar way to before and, for the reasons I have set out, I trust the Committee will support the regulations.

Communities: Charities and Volunteers

John Hayes Excerpts

Wednesday 13th February 2019 Commons Chamber

[Mims Davies]

In my new role in this Department, I have found nothing but complete expertise to absolutely make this work. If the hon. Gentleman would like to raise a particular issue relating to his experience, I would be happy to hear from him directly.

There is more that we can do to help vulnerable people across the country. We are working with the banks and the building societies to unlock millions of pounds from dormant accounts. Instead of gathering dust, that money is being invested in helping our young people into employment and in tackling problem debt. In 2018 alone, £330 million of dormant assets funding was announced, and by 2020, the total distribution from dormant accounts will reach more than half a billion pounds. We will expand that scheme further to help more vulnerable people to benefit. This funding is changing lives for the better, with £90 million helping the most disadvantaged young people into employment and £55 million tackling problem debt. These initiatives are led by two independent organisations.

The Government want an economy that works for everyone in every part of their life. We are building a strong foundation for social impact investing, which is bringing more capital funding to social enterprises and charities in the UK, alongside traditional forms of funding for these organisations. I am mindful that lots of people want to speak, so I shall try to commute my remarks, but I want to get these key messages out. This works in practice. Since its launch in 2012, Big Society Capital has committed more than £520 million and leveraged more than £1.2 billion of additional co-investment into this space.

The Government are building on these successes and will be using a further £135 million from dormant accounts to help further charities and social enterprises. In addition, the Government have commissioned an advisory group, and the Prime Minister has personally asked for an industry-led implementation taskforce to deliver its recommendations. We also have an inclusive economy partnership, where we work with businesses such as O2, Landsec and Accenture and with social innovators to find practical solutions and to unlock the issues on the ground. We also have the This is Me programme, an inclusive workplace programme that focuses on mental health issues, and it is working with Landsec. This is an area in which we are working with business and the community to ensure that we can deliver on the ground.

[Sir John Hayes (South Holland and The Deepings) (Con)]

My hon. Friend is keen to speed on, but I should just like to say that she has already made a great impression on the House and on the sectors for which she is responsible in the time that she has been a Minister. In that spirit, will she take account of the rural areas such as the one I represent with regard to the things that she has said? They sometimes miss out, and it would be great if we found some means by which we could get her to come to places such as Lincolnshire to evangelise the case that she has made so powerfully today.

[Mims Davies]

My right hon. Friend is absolutely right to say that we should not forget our rural communities. We should work on this through the loneliness fund and the building connections fund, and I have more to say on that. I absolutely must speed on, but we need to make sure that we can cater for everyone across the land.

Moving on to youth opportunities, we need to harness the energy of young people and ensure that they have the opportunity to contribute to their local area. Volunteering provides young people with many of the skills that they will need later in life, and we are reaching out to the next generation to give them more opportunities to get involved.

--- Later in debate ---

[Mr Reed]

I agree. It is outrageous that the Government are actively penalising people for volunteering when we need to be encouraging volunteering. In particular, it helps people who are looking for work to develop the skills that they need to gain employment. I hope the Minister will take that away and look at it.

People are connecting in neighbourhoods and on social media to collaborate and bring about the change that we desperately need in this country. The digital revolution has opened up data, information and connectivity in the most extraordinary ways. It offers the potential to renew our democracy, making it more open, responsive and participative. This is the new civil society. It is a force for change of the most incredible potential, if only we had a Government with the vision and ambition to support it, like the very best Labour councils already do.

Barking and Dagenham’s Every One Every Day initiative has launched spaces and projects across the borough that bring people together in their neighbourhoods to solve the problems they face. It has dramatically increased participation, with projects as diverse as shared cooking, community composting, play streets and even a listening barber. It is a great example of asset-based community development—a model that is proving its power in communities across the country.

In my borough of Croydon, the Parchmore medical centre in Thornton Heath has spawned a network of more than 100 community-led projects that keep people healthier, and it has dramatically reduced the number of people who need to see a GP. There are sessions on healthy cooking for young families, mobility classes for older people and coffee mornings in the local pub, before it opens for customers, for people isolated in their homes. All of it is free, and all of it is run in and by the community. It has had an extraordinary impact on people’s wellbeing simply by getting neighbours to know each other better and to speak to each other.

Plymouth has set up the country’s biggest network of community energy co-ops to generate energy sustainably and plough the profits back into the local community. Stevenage is pioneering community budgeting, involving local community groups. Preston is leading on community wealth building by focusing council procurement on community organisations. In Lambeth, the council has set up, with the community, Black Thrive, a new social enterprise that gives the black community greater oversight of the mental health services that the community uses. In all these cases, existing or new community groups, charities and social enterprises have shown they have the power to transform lives. They open up decision making to the creativity and innovation that lies untapped in too many of our communities.

[Sir John Hayes]

I wonder whether the hon. Gentleman would consider the dichotomy at the heart of his argument—I used the word “argument” in the most generous spirit. The dichotomy is that he is arguing that this increase in digital communication is beneficial to community, but he must know that online shopping is destroying local shops, online media is destroying local newspapers and the virtual relationships he has described are not comparable with real relationships. Clearly, he is doubtful about his own relationships in Croydon, because he has already told us that people do not like politicians. Perhaps he should get out into the real world and leave the virtual world for a few minutes.

[Mr Reed]

What is destroying our high streets are the right hon. Gentleman’s Government’s business rate hikes.

The community and voluntary groups that are part of all of this innovation are pointing the way forward, not only to a better society, but to a new politics—not the centralised state or the marketised state, but the collaborative state, enabling an open, participative and hopeful approach. This new people-powered politics will help us find a way to tackle the great social ills of our time, one of which the Minister referred to; loneliness in this country has now reached epidemic proportions. Loneliness is the product of the breakdown of the family, the fragmentation of communities and the cuts that have taken away support services. The Local Government Association now points to an £8 billion funding shortfall in social care services, but we also see long working hours, low pay, investment and jobs deserts and the hollowing out of communities. All of that has contributed to this situation, but, sadly, no single piece of legislation can put a problem that complex right. The answers lie in our communities, in strengthening the bonds between people instead of atomising them, and in building up community assets instead of closing them down as the Government have done. Communities are already doing much, but if we had the courage to open up power and resources to them, they could do so much more.

Our country is at a crossroads. The Brexit debate has crystallised the deep divisions that separate us from each other and the anger that has driven it. We need to come back together, but that will not happen from the top down. We need a new, more open politics, one that is more participative, embracing the collaboration and kindness that all of us, as MPs, see in our constituencies. For that we need a Government who recognise and celebrate the central role of civil society and communities, and are ready to invest in them, not cut them to the bone. That is how we can genuinely let people take back control, so they can build the compassionate country we have the potential to become.

Draft Solvency 2 and Insurance (Amendment, Etc.) (EU Exit) Regulations 2019 Draft INSURANCE DISTRIBUTION (Amendment) (EU EXIT) Regulations 2019 DRAFT FINANCIAL CONGLOMERATES and Other Financial Groups (Amendment Etc.) (EU Exit) Regulations 2019

John Hayes Excerpts

Monday 4th February 2019 General Committees

[John Glen]

It is a pleasure to serve under your chairmanship, Sir Henry.

As the Committee will be only too aware, the Treasury has been undertaking a programme of legislation to ensure that if the United Kingdom leaves the European Union without a deal or an implementation period, there will continue to be a functioning legislative and regulatory regime for financial services in the UK. The Treasury is laying statutory instruments under the European Union (Withdrawal) Act 2018 to deliver that. Debates on such SIs have already taken place in this place and in the House of Lords, and the SIs we are debating are part of that programme. We have at least 13 more to come.

The draft SIs before us will fix deficiencies in UK law on the prudential regulation of insurance firms, insurance distribution and financial conglomerates to ensure that they continue to operate effectively post exit. The approach taken in the legislation aligns with that of other SIs being laid under the EU (Withdrawal) Act, providing continuity by maintaining existing legislation at the point of exit but amending it, where necessary, to ensure that it works effectively in a no-deal context.

Three SIs are being debated today: draft amendments to the Solvency 2 regulations, the financial conglomerates and other financial groups regulations, and the insurance distribution regulations. The Solvency 2 regulations set out the prudential framework for insurance and reinsurance firms in the EU. Prudential regulation is aimed at ensuring that financial services firms are well managed and able to withstand financial shocks, so that the services that they provide to businesses and consumers are safe and reliable. Solvency 2 is designed to provide a high level of policyholder protection by requiring insurance and reinsurance firms to provide a market-consistent valuation of their assets and liabilities, to understand the risks that they are exposed to, and to hold capital that is sufficient to absorb shocks. Solvency 2 is a risk-sensitive regime in that the capital that a firm must hold is dependent on the nature and level of risk that a firm is exposed to.

The insurance distribution regulations set standards for insurance distributors as regards insurance product oversight and governance, and set information and conduct of business rules for the distribution of insurance-based investment products. The financial conglomerates and other financial groups regulations set prudential requirements for financial conglomerates, or groups, with activities in more than one financial sector.

The three draft SIs that we are debating amend those regulations so that they function properly in a no-deal scenario. The amendments to be made by the draft Solvency 2 regulations, first, remove references to the European Union and EU legislation, and replace them with references to the UK and UK legislation. It is important to stress that the high prudential standards of Solvency 2 are not being altered. Changes are being made to ensure that the Solvency 2 regime continues to operate as originally intended once the UK is outside the EU.

Secondly, the draft statutory instrument alters the arrangements for the regulation of cross-border European economic area groups of insurance and reinsurance firms that provide services in the UK. As in other areas of EU regulation, insurers and reinsurers are subject to the EU’s joint supervisory framework. That enables the requirements of Solvency 2 for a cross-border EEA insurance or reinsurance group to be applied to the group, with one EEA supervisor allocated lead responsibility for supervision of the group, in addition to supervision of solo firms by their respective EEA supervisors. Supervisory co-operation takes place through a college of supervisors in which all the interested EEA supervisors take part.

After exit, however, in a no-deal scenario, the EU has confirmed that it will treat the UK as a third country and that the UK will be outside the joint supervisory mechanisms that are the basis for the current treatment of groups in the EEA. Cross-border EEA groups may therefore become subject to group supervision by both UK and EEA supervisory authorities in the absence of equivalence decisions.

The statutory instrument will transfer responsibility for making equivalence decisions in relation to third-country regimes. Currently, a third country’s regulatory or supervisory regime may be deemed by the European Commission to be equivalent to the approach set out in Solvency 2. After the UK leaves the EU, Her Majesty’s Treasury will make equivalence decisions for third-country regimes.

The statutory instrument will transfer responsibility for a number of important technical functions from the EU authorities to the UK. Most significantly, the risk-free rate—the rate that insurance and reinsurance firms must use to value their liabilities—will be transferred from the European Insurance and Occupational Pensions Authority to the Prudential Regulation Authority. The PRA is the most suitable UK body to undertake the technical function of compiling the risk-free rate. It will also take on the responsibility of publishing the risk-free rate. In addition, responsibility for making binding technical standards, which are currently developed and drafted by the EU supervisory agencies, will be transferred to the PRA, in a manner consistent with the approach taken in the other statutory instruments that we are laying under the withdrawal Act.

The statutory instrument removes obligations for EU competent authorities to share information with each other. If the UK leaves the EU without a deal, it will no longer be appropriate to require UK regulators to share information with EU regulators. UK regulators will continue, however, to be able to use their discretionary powers to share information when doing so might be necessary to ensure that supervisory responsibilities are carried out effectively.

Preferential risk charges for certain assets and exposures that originate from within the EEA, and which are held by UK insurance and reinsurance firms, will be removed. A UK firm’s exposures from the EEA will now be treated in the same way as exposures from any other third country. The EU has confirmed that it will treat UK exposures as third-country exposures if we leave the EU without an agreement.

I will now turn to the draft Insurance Distribution (Amendment) (EU Exit) Regulations 2019. This instrument fixes deficiencies in the regulations and relates mostly to removing inappropriate cross-references to EU bodies and legislation. The instrument transfers to the Financial Conduct Authority the power to make technical standards for a template presenting information about general insurance policies—a standardised document to help customers compare policies and make informed decisions. That power is important as it enables the Financial Conduct Authority to update the document in the future, to ensure it continues to deliver useful information for consumers.

The instrument also transfers relevant legislative functions to the Treasury. Those functions give the Treasury the powers to make regulations about conflicts of interest, inducements, assessments of suitability, appropriateness and reporting to customers, and specifying principles for product oversight and governance.

Finally, I will address the draft Financial Conglomerates and Other Financial Groups (Amendment etc.) (EU Exit) Regulations 2019. This statutory instrument makes changes to the definition of “financial conglomerate”. Under the EU financial conglomerates directive, a financial conglomerate is defined as a group with at least one entity in

“the insurance sector and at least one…within the banking or investment services sector”.

One of those must be located within the EEA. The others can be located anywhere in the world. This statutory instrument will amend the geographical scope of the definition, so that one entity must be located within the UK, rather than the EEA, to be subject to the UK regime.

This statutory instrument amends the definition of “competent authority” so that it no longer includes regulators based in the EEA. It transfers a number of functions from the EU authorities to the UK regulators. The European financial conglomerates directive requires EU authorities to publish and maintain a list of financial conglomerates, for example. That function will now be carried out by the FCA and the PRA. In addition, as with other financial services files, the responsibility for developing binding technical standards will pass from the European supervisory authorities to the appropriate UK regulator.

Finally, as is the case for the statutory instrument that amends the Solvency 2 regulations, this statutory instrument removes obligations for EU competent authorities to share information. If the UK leaves the EU without a deal, it will no longer be appropriate to require UK regulators to share information with the EU. However, the UK regulators will continue to be able to use their discretionary powers to share information where this might be necessary to ensure that supervisory responsibilities are carried out effectively.

The Treasury has been working closely with the PRA and FCA in the drafting of these instruments. It has also engaged the financial services industry on these statutory instruments and will continue to do so going forward. The Committee will have heard from the Association of British Insurers, in a letter of 1 February, how meaningful that engagement has been. In late 2018, the Treasury published these instruments in draft, along with explanatory policy notes, to maximise transparency to Parliament and industry.

[Sir John Hayes (South Holland and The Deepings) (Con)]

On the issue of familiarisation costs, which are dealt with in the SI and are specified more precisely in the explanatory memorandum, it is clear that business is impacted and will endure what are said to be one-off costs in the notes. Will the Minister say a word about that to assuage any doubts?

[John Glen]

My right hon. Friend is right to draw attention to the impact assessment, which covers two of the three statutory instruments. One of them, of course, did not require one because of the de minimis impact. We have done our very best to be as transparent as possible and to quantify those. In the vast majority of cases, it has been about one-off familiarisation costs rather than an enduring burden. I thank my right hon. Friend for giving me the opportunity to clarify that.

In summary, the Government believe that the proposed legislation is necessary to ensure that insurance and reinsurance firms, insurance distributors and financial conglomerates continue to operate effectively in the UK, and that the legislation will continue to function appropriately if the UK leaves the EU without a deal or an implementation period. I hope colleagues will join me in supporting the regulations. I commend them to the Committee.