Commercial Financial Dispute Resolution Platform

John Howell Excerpts

Thursday 15th December 2016 Commons Chamber

[John Howell (Henley) (Con)]

It is a great pleasure to follow the hon. Member for East Lothian (George Kerevan). I congratulate him and I congratulate the Backbench Business Committee on granting the debate. I rise to speak as chairman of the all-party group on alternative dispute resolution. We are about to embark, in tandem with the hon. Gentleman’s all-party group, on an inquiry into precisely what he has proposed in the debate. We will be looking at the sort of dispute resolution that could be put into place for these sort of disputes.

I want to concentrate on the part of the motion that refers to the creation of

“not ad hoc compensation schemes, but a long-term, effective and timely dispute resolution mechanism”

that can be used to help solve these sort of issues. The hon. Member for East Lothian has set out admirably the reason for doing that, but I would say that the dispute mechanism already exists in the form of the alternative dispute resolution regime. I shall say more about that.

Businesses, including small and medium-sized enterprises, are left with no option except prohibitively expensive appearances in court. One of the great advantages that the alternative dispute resolution system brings is the potential to reduce the costs involved. This is not something that is strange to the financial services sector. A large number of commercial sectors automatically include alternative dispute resolution clauses within their commercial contracts.

The all-party group held a meeting on this recently, where we went through subject by subject, looking at how ADR could be incorporated within the system and used more often. We looked at the commercial area in quite substantial detail. One of the great things we were able to do was to bring together quite a disparate body of people who operate in the ADR field to see whether there were some common threads between them in approaching disputes such as those the hon. Gentleman mentioned and taking them forward.

The good news is that there was quite a lot of agreement about what we were aiming for, even though some of the methods of getting there were slightly different. For us, ADR includes arbitration, mediation, adjudication, expert determination, dispute boards and online dispute resolution. We also looked at examples to see how those elements could be—some already are—incorporated by financial services sectors in their contracts. The good news is that these were already being incorporated into contracts, so what we needed to do was to put pressure on the sectors to include them as a matter of course in their contracts, because that would help to solve these disputes.

[Richard Arkless (Dumfries and Galloway) (SNP)]

Will the hon. Gentleman clarify which sectors of the financial services he is referring to? Is it the retail sector or the business-to-business sector that is incorporating ADR? I have not seen many commercial contracts with ADR clauses in them from the banks.

[John Howell]

From memory, I think it was the business-to-business sector primarily, but there is absolutely no reason why it cannot include the business-to-retail sector as well. There is a great deal of ability for individuals to bring quite complex cases in a way that does not involve going to the courts, as I shall explain.

We are running out of time, so I shall deal with the issue right now. We all know that trying to bring a case to court is a very expensive business. It requires extremely expensive lawyers. What the arbitration or mediation process holds out is the ability for an individual to sit in arbitration and mediation between people in order to bring the dispute to a much earlier resolution. It could be said that this does not take away the need for a court to be involved, which is absolutely true, because the awards of the arbitration panel or the mediator have to be enforced by the courts. However, that is a long-stop for the ADR process, and I think we will see it being brought into play more infrequently.

Of course, Lord Justice Briggs has commented that he would prefer to see “alternative dispute resolutions” not called that—he wants the “alternative” taken out so that they are called “dispute resolutions”. I think that fits well with our own view of things. The other side is the issue of time and stress involved in taking forward cases within this sort of framework. It is absolutely true that the arbitration and mediation process takes away a lot of the stress of appearing in court and allows these sort of issues to be settled in a much more friendly way.

I look forward to the work that our two all-party groups will do on this issue. I think that the framework is already there, and I think we need to encourage banks to include clauses within their commercial contracts so that we can get back to ADR becoming the standard mechanism for resolving disputes, rather than using the internal complaints procedures of the companies as the starting point and the ending point of much of the discussion that takes place on these issues. On that note, I am happy to allow another Member to continue the debate.

--- Later in debate ---

[Richard Arkless]

I entirely agree. My hon. Friend puts his point passionately and very well. It is time for mourning to stop and for solutions to be found.

My hon. Friend the Member for East Lothian made an incredibly important point about the link between low productivity levels in the UK and the threat and the pressure that small and medium-sized enterprises have been under, particularly since 2007-08. There is no smoke without fire. I am convinced, having listened to him, of the causal link between the problems that we are discussing and low productivity of SMEs.

I was particularly struck by my hon. Friend’s comments about arrangements between solicitors’ practices and large banks. I declare an interest of sorts, in that I was a practising solicitor who was seconded to a large financial services organisation. How it works is very peculiar. I was given to the bank for free by my firm, and the bank created a so-called value account. My salary was set into this value account, which triggered work for my firm. We can see the problem that SMEs have in trying to find highly reputable, highly skilled corporate lawyers; they are all working for firms that have these links with the banks. These firms do not bite the hand that feeds them; they need this work. That is another manifestation of the complete inequality of arms between SMEs and large financial services organisations. My hon. Friend was right to say that banks’ terms and conditions—the secret terms of the contract—have evolved over the years, further exacerbating the inequality of arms.

My colleague on the Justice Committee, the hon. Member for Henley (John Howell), made a very interesting point—I was grateful to him for taking my intervention—about alternative dispute resolution clauses in contracts. While I would clearly welcome ADR clauses in all these types of commercial contracts, I am slightly confused, because I have never seen them in the case of these hedging products. As to asking banks to incorporate these clauses voluntarily, it stands to reason that the commercial risk will drive whether they are included. We are talking about risky derivatives. Have we ever seen ADR clauses in hedging product contracts? If not, I have no idea how we could persuade the banks to incorporate them voluntarily, given the risk.

[John Howell]

The point that I was trying to make was that it is not just the commercial circumstances that will force the inclusion of ADR clauses, but the way in which we make ADR known as a group of activities that can help.

[Richard Arkless]

In that sense I completely agree. The hon. Gentleman is right to point out that ADR, as a concept, exists; we are asking not for a new beast to be created, but for an ADR forum to be specifically linked to the contracts and disputes under discussion. However, I am cynical about banks’ motivation in putting the clauses in particularly risky contracts.

The right hon. Member for Delyn (Mr Hanson), who is also a colleague of mine on the Justice Committee, made a typically powerful speech in which he drilled home the perverse fact that the banks under discussion are in public ownership. Essentially, public funds are being used to push businesses against the wall and asset-strip them, which has consequences. It is very hard to accept that that is being funded by our taxpayers’ money. The right hon. Gentleman made that point extremely well.

The hon. Member for Wycombe (Mr Baker) touched on a stark irony when he referred to the old banking system in Scotland and the rest of the UK. I wholeheartedly agree with him that strict joint and several liability incentivised a good culture and good practice, but the pendulum has swung entirely in the other direction. I will come on to discuss the crux of the issue, which is banking culture, but he made that point well.

Oral Answers to Questions

John Howell Excerpts

Thursday 9th June 2016 Commons Chamber

[Mr Vaizey]

That intervention reminds me that this is the 41st anniversary of the first radio transmission from the House of Commons, and quality interventions such as that keep the British public listening to and watching our proceedings. However, I do not think that the Brussels bureaucracy is stifling. In fact, 500 broadcast companies are based in Britain precisely because of European regulations.

[John Howell (Henley) (Con)]

8. What steps his Department is taking to support the protection of cultural heritage in conflict zones overseas.

[The Secretary of State for Culture, Media and Sport (Mr John Whittingdale)]

The protection of cultural heritage affected by acts of destruction is a priority for this Government. The Government are providing £30 million for a new cultural protection fund, and the Cultural Property (Armed Conflicts) Bill, which will enable the UK to ratify the 1954 Hague convention and accede to its two protocols, had its Second Reading in the House of Lords earlier this week.

[John Howell]

As one of the few archaeologists in this House, I feel that we as a country need to take a lead in protecting cultural heritage. Will the cultural protection fund and the Cultural Property (Armed Conflicts) Bill do that?

[Mr Whittingdale]

We certainly benefit from my hon. Friend’s expertise in this area. He is absolutely right: this country has long been a strong advocate of cultural protection, but the perception of our commitment has perhaps been undermined by our failure until now to ratify the 1954 Hague convention. I am delighted that we will be doing so through the Cultural Property (Armed Conflicts) Bill, reinforcing our position as one of the leading voices in advocating the importance of cultural protection around the world.

Budget Resolutions and Economic Situation

John Howell Excerpts

Monday 21st March 2016 Commons Chamber

[John Howell (Henley) (Con)]

I want to pick up on what the Secretary of State said about local plans and particularly about the work of the local plans expert group, which is referred to in paragraphs 2.287 and 2.288 of the Red Book. I had the honour to serve on the local plans expert group throughout. The importance of local plans can be seen in the national planning policy framework, to which the Secretary of State referred. It says:

“Local Plans are the key to delivering sustainable development that reflects the vision and aspirations of local communities.”

That is what is missing when local plans are not produced. During the production of our report, we heard many reasons why local plans were not produced. These included green housing needs, difficulties with the duty to co-operate, a lack of local political will and commitment, a lack of clarity on key issues such as SHMAs—strategic housing markets assessments—and a lack of guidance.

On SHMAs, the lack of an agreed approach has become one of the most burdensome, complex and controversial elements of producing a local plan. What we have suggested is that there should be guidance on how to produce a SHMA, with the aim of taking away significant disagreement and uncertainty over housing numbers. Coupled with that, we need a proper identification of the housing market areas, particularly with local authorities.

The second element can be seen in what the national planning policy framework refers to as local plans being just the start of the process or rather identifying needs as being the start of the process. An environmental assessment of capacity within an area is necessary for councillors to be able to decide how the figures can be adjusted. There is no need for councils to provide for all the houses required where they can show that the difficulties of doing so would outweigh the benefits. Very few companies go along that line; very few provide that sort of information. It is essential to go down that route.

Another important point is the need for an early MOT in the plan process. When it comes to the production of local plans, it too often happens that mistakes are identified at the end of the process and the plan is found to be unsound. That is not a suitable way to carry out the process. There should be at least one or two intermediary MOT sessions where the parties could be told whether they were going in the right direction. They would not be provided with certainty over the figures, but they would be given an idea that progress was being made in the right direction.

Finally, on the five-year housing land supply, we think that it should be taken away completely from the local plans and dealt with through a separate document that is put in the local annual monitoring report of the local council. There it can be monitored and determined on an annual basis, so that figures can be produced against which there can be no argument while they are in that report, and this will determine the amount of housing need relevant to the area.

Oral Answers to Questions

John Howell Excerpts

Tuesday 27th October 2015 Commons Chamber

[Greg Hands]

It is worth noting that the Barnett formula will continue, but diminish in importance. For the first time, more than half the Scottish Government’s budget will come from Scottish taxpayers rather than a grant from the UK Government. That will add extra accountability to the Scottish Government.

[John Howell (Henley) (Con)]

6. What assessment he has made of recent trends in the level of employment.

[James Morris (Halesowen and Rowley Regis) (Con)]

7. What assessment he has made of recent trends in the level of employment.

[The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)]

We have a record number of people in work. Today’s GDP data show that Britain continues to outperform other western economies, but there are clear global risks and there is still much more to be done to fix our economy. In the autumn statement, we will take more steps to ensure the recovery is felt right across the country, make long-term investments for the future, and, crucially, continue to make the tough decisions required so that Britain lives within her means.

[John Howell]

The total number of unemployed in my constituency is 219, with youth unemployment at only 36. Will my right hon. Friend join me in praising institutions such as the Henley college, which is providing excellent apprenticeship training?

[Mr Osborne]

It is very good to hear about the success the people in my hon. Friend’s constituency have had in finding work over recent years and the clear business confidence that exists in Oxfordshire. The Henley college is doing an excellent job in making sure that young people have the skills they need to take the opportunities now out there in the jobs market. We will, of course, go on helping such institutions by increasing the number of apprentices we fund in this country, so that we deliver the 3 million apprenticeships mentioned in our election manifesto.

Oral Answers to Questions

John Howell Excerpts

Tuesday 10th March 2015 Commons Chamber

[Andrea Leadsom]

I am sure the hon. Lady shares my delight at the great news that the gender pay gap is lower than it has ever been, that there are more women in work than ever before and that 1.85 million people are in work who were not in work at the time of the last general election. That is cause for celebration. The Government have strived at every point to support women into work, whether through entrepreneurial allowances, support for women with child care or other measures.

[John Howell (Henley) (Con)]

19. Is my hon. Friend aware of the Institute for Fiscal Studies report on living standards showing that living standards are back to where they were before Labour’s great recession? Does this not help the very people she has mentioned?

[Andrea Leadsom]

Yes, my hon. Friend is exactly right. The IFS report also showed that 200,000 fewer people were in relative poverty in 2014-15 compared with 2009-10, including 100,000 children, and that since 2010 the number of children under 16 in workless households had fallen by about 390,000, taking it to the lowest level since records began. That is very good news.

amendment of the law

John Howell Excerpts

Monday 24th March 2014 Commons Chamber

[John Howell (Henley) (Con)]

I shall not follow the hon. Member for Stoke-on-Trent South (Robert Flello) in his comments about the Chancellor. Instead, I congratulate the Chancellor on a first-class Budget, for the reasons given and expounded on by my right hon. and hon. Friends in earlier debates. For reasons of time, I shall not repeat them.

I would like to comment on the new garden city planned for Ebbsfleet. That is not in my constituency, but it holds an attraction for all those who see a new garden city as a way of meeting expectations to provide the number of houses required by tomorrow’s inhabitants. It represents a good way of bridging the gap or squaring the circle between making planning and development local and providing for the future. As part of the Budget, as we have heard, the Chancellor set out an ambitious plan and up to £200 million of public investment for a major new development around the high-speed rail station in Ebbsfleet in Kent. That is only 19 minutes from central London, and the 15,000 new homes it will provide are to be welcomed.

The excellent transport links to London will make Ebbsfleet a very attractive commuter location, but development at Ebbsfleet will also provide tens of thousands of new jobs, many of which, it is expected, will be taken up by local residents. I make two points about this. The first is the involvement of local people. The Royal Town Planning Institute commented:

“The Government’s announcement of a ‘new Garden City’ in Ebbsfleet is a welcome, if limited initiative.”

The word “limited” is misguided. It fails to recognise the new localist age we are in. This is not a case of central Government imposing a solution. It must be driven by local councils.

In this context I was pleased to see the right hon. Member for Leeds Central (Hilary Benn) comment on neighbourhood plans, and particularly the neighbourhood plan in Thame in my constituency. The most important thing about that is that in the referendum that was held on the same day as the county council elections, one in 10 people went into the polling booth and voted for the neighbourhood plan, but did not vote for their county councillor. One in 10 people did that because the neighbourhood plan is a crucial way of determining the future of their town. The Government want local people to be involved in towns such as Ebbsfleet. That is crucial as part of the consultation, to make sure that it is going to be a good place for people to live, and for us to make the necessary investment to turn derelict sites that are currently local eyesores into green places to live.

The relevant local councils usually sit on the boards of development corporations. It is vital that urban development corporations are democratically accountable. It is therefore necessary to ensure that local councils are represented, including the county council, which will be crucial in providing much of the infrastructure.

Urban development corporations are designed to be time-limited local vehicles that drive major development forward, especially when the scale of change is significant. The experience since the 1980s suggests that UDCs work best when they channel their efforts into the development of specific major sites, where extensive capacity and resources are required. The Government are determined that this UDC will learn the lessons from previous ones. Therefore, it will have a clear focus on the accelerated delivery of large, strategic sites; there will be significant local buy-in, with members of the relevant local authorities playing an important role on its board; and there will be strong transparency about costs to ensure that taxpayers’ money is used effectively.

A key element of Ebbsfleet must be an emphasis on design. It is essential that it is an attractive place where people want to live. Design must play a key role because of the importance that the project will have in the minds of other people who are thinking about having a garden city. We do not just want rabbit hutches and boxes to be built. All eyes will be on this city in determining whether communities are willing to participate.

In my last few minutes, I will say a few words about the planning reforms. I encourage the Government to take a good look at the general permitted development order. The simplification of the planning system is essential, not just to support the case for development now, but for the future. It is not in anyone’s interests to have a complex system, except for the socialist antecedents of the planning system. I am glad that the Government have set out their three-tier approach to general permitted development, with permitted development for small-scale changes, prior approval rights for larger changes and planning permission when the scale is even larger. The changes that we have made to residential planning are being followed through with the proposals on warehouses and light industry. Such things are already happening in some places, which is very much to be welcomed. This is a great extension of the changes.

Oral Answers to Questions

John Howell Excerpts

Tuesday 11th March 2014 Commons Chamber

[Nicky Morgan]

The hon. Gentleman knows well that the Department for Business, Innovation and Skills has been reviewing that whole matter. It has had many thousands of responses to its consultation, and we await the response, which will be published in due course.

[John Howell (Henley) (Con)]

15. What recent steps he has taken to reform the banking sector.

[The Financial Secretary to the Treasury (Sajid Javid)]

Through the Financial Services (Banking Reform ) Act 2013, the Government have brought forward the most significant reform to the banking sector in a generation. We have ring-fenced vital everyday banking, including investment banking, and introduced depositor preference and bail-in to ensure that taxpayers are not on the hook when a bank fails.

[John Howell]

Does my hon. Friend agree that under the previous Government’s system of financial regulation, there were no clear channels of accountability, and that by putting the Bank of England back in charge, it will be better placed to take full responsibility for financial stability?

[Sajid Javid]

I agree with my hon. Friend. Under the previous Government’s system of financial regulation, there was a lack of clarity over who was responsible for financial stability, so when the alarm bells were ringing, no one was listening. We have reformed the system of financial regulation to address those failures by placing responsibility for financial stability firmly with the Bank of England and creating two newly focused financial regulators, the Prudential Regulation Authority and the Financial Conduct Authority.

Oral Answers to Questions

John Howell Excerpts

Tuesday 5th November 2013 Commons Chamber

[Danny Alexander]

The Government have set out various cost-benefit analyses of the project. With respect to the hon. Gentleman, what is needed in this project is not more procrastination, delay and extra reports, but a commitment in all parts of the House to get on with this north-south railway and allow economic growth in every part of the United Kingdom.

[John Howell (Henley) (Con)]

9. What recent fiscal steps he has taken to support small businesses.

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

The Government are very supportive of small businesses. We demonstrated this support again at Budget 2013 through the introduction of the new £2,000 employment allowance for small businesses and charities from April 2014.We have extended the small business rate relief from April 2013. We have increased the small business research and development tax credit to 225% and the lifetime limit on entrepreneurs relief to £10 million. In addition, we have launched a £1 billion British business bank to improve access to finance for small and medium-sized enterprises in the UK.

[John Howell]

I congratulate my hon. Friend on the fact that the new employment allowance will mean that 450,000 small businesses pay no national insurance contributions at all. Is this not a positive help to small businesses such as those in my constituency as they seek to take on more employees?

[Mr Gauke]

I entirely agree. That £2,000 for every business will feed through by helping businesses take on new staff, invest in their business or pay higher wages. It is a positive contribution, which contrasts with the proposals that we inherited for an increase in employer’s national insurance contributions.

Oral Answers to Questions

John Howell Excerpts

Tuesday 25th June 2013 Commons Chamber

[John Howell (Henley) (Con)]

4. What assessment he has made of the effect on living costs of changes to the personal allowance.

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

It was announced in Budget 2013 that the Government would increase the annual personal allowance by a further £560 to £10,000 in April 2014, thus meeting a key coalition commitment a year ahead of schedule. By that date, as a result of the combined effects of all personal allowance increases under this Government, a typical basic-rate taxpayer will have gained by more than £700 a year in cash terms.

[John Howell]

Does my hon. Friend agree that the best way of tackling this issue is to put cash into people’s pockets, and that taking 2.7 million people out of tax altogether is an excellent way in which to proceed?

[Mr Gauke]

I do agree. What we have done is quite a contrast with what was done by the last Government, who increased the amount of income tax that some low earners would have to pay by £232. Now the equivalents of those people have been taken out of income tax altogether.

Budget Resolutions and Economic Situation

John Howell Excerpts

Thursday 21st March 2013 Commons Chamber

[John Howell (Henley) (Con)]

One is tempted to start with the unemployment figure in one’s constituency—it is down by 25% since April 2010—but I wish to speak about housing. It is appropriate to raise that issue today because our reforms are as much about the supply of housing as about the demand for it and about the importance of that sector and of the construction sector as a whole.

The Localism Act 2011 turned us into a nation of planners. Neighbourhood plans are steaming ahead, and the reform of the planning system has ended one of the biggest blocks to development and taken away a large amount of red tape. I understand that the proportion of planning applications approved is at a 10-year high. As for local plans, 70% of councils now have something on paper. However, there is still much more to do to turn this nation of planners into a nation of builders. I was interested to read paragraph 1.115 in the Red Book, which said that yet more reforms to the planning system were proposed. We are to have reduced planning guidance, which will come forward in line with Lord Taylor’s recommendations, and

“pro-growth planning policies and delivery arrangements”

for local areas as part of local growth deals.

The importance of the supply side can be seen in a number of areas. The first such area is affordable housing, which is an important element for this Government and always has been. We have recently issued a prospectus to support affordable homes delivered through the guarantee programme, so I was pleased that an additional £225 million had been put into the Budget to support a further 15,000 affordable homes, which will be built by 2015.

[Sheila Gilmore]

Will the hon. Gentleman give way?

[John Howell]

No, I am not giving way. Those 15,000 homes will be new build homes. As for the build-to-rent sector, the Budget provides £1 billion to support the development of more homes—that is an awful lot of homes to be built. We also need certainty on social rents, which is left to the spending round in the Budget book. On the right to buy, a great Conservative measure, we are increasing the London cap to £100,000 and reducing the qualifying period to three years. Overall, this Budget introduces billions of pounds of financial support to tackle both the long-term housing market problems—the problems with the sector—and the problems faced by people wanting to get on to the housing ladder.

The Chancellor mentioned two schemes in that latter regard, the first of which is the “help to buy: equity loan” scheme. It applies to new builds only, and someone will need a minimum 5% deposit to qualify. The scheme will expand the existing FirstBuy scheme and is available to everyone; the Government will lend up to 20% of the value of the property through an equity loan. That provides extremely important assistance to first-time buyers and to those wanting to acquire a new build as part of their development. The second scheme is the mortgage guarantee scheme, under the same arrangement, where the intention is clearly not to provide a subsidy for second homes—the intention is to have a consultation to ensure that it precisely does not give subsidies to second homes.

All these measures illustrate the main point: the Government have understood that the link between the supply of mortgages and the supply of houses is an intimate one, and that these things cannot be tackled separately. They need to be looked at in the round and together.

We hope that by tackling the problem of access to mortgages we will help to stimulate the economy. That is certainly what the Federation of Small Businesses has suggested. It has said:

“The Help to Buy scheme is a bold move from the Chancellor to boost the industry and to get people onto the housing ladder.”

It continued:

“In addition the measure to build 15,000 new homes will give the sector a welcome boost.”

The Home Builders Federation has said:

“Building the homes the country desperately needs can be a key driver of economic activity. Government must be praised for its attempts to stimulate activity”.

I agree absolutely with that. A very bold attempt is being made to stimulate activity, both on the development of housing and on access to that housing.