Equitable Life Policyholders: Compensation

John Pugh Excerpts

Thursday 23rd March 2017 Commons Chamber

[Bob Blackman]

I thank my hon. Friend for that lengthy intervention. The reality is that, as he suggests, there are more than 1 million victims. The former Chancellor, my right hon. Friend the Member for Tatton (Mr Osborne), accepted at the Dispatch Box that the total sum to be paid in compensation should be £4.1 billion, but 895,000 people have received only 22% of their losses. The payments process has been less than transparent, and policyholders have no way to check the calculations that have been made. That creates a difficulty for all who support the policyholders; at this point, I want to pay tribute to the Equitable Members Action Group, which has done such diligent work on their behalf.

[John Pugh (Southport) (LD)]

Given the failure of regulation and the Treasury’s knowledge of it, as the hon. Gentleman outlines, this is a matter of obligation for the Government, is it not? No individual can discard their obligations because they do not have enough cash, and the Government do have enough cash at the moment.

[Bob Blackman]

I believe that this is a debt of honour. I do not expect my hon. Friend the Economic Secretary to the Treasury to announce that he will open the Treasury chequebook and pay the full compensation today. I have sympathy with the suggestion that, because of the most recent decisions on national insurance, the Budget has not yet been brought into balance. As the motion states, however, I believe that in the long run, as the economy recovers, this debt of honour should be satisfied, and I think that there is a way to do so within the remit of the legislation and the capability of the Treasury.

Oral Answers to Questions

John Pugh Excerpts

Tuesday 25th October 2016 Commons Chamber

[Mr Gauke]

I understand my hon. Friend’s disappointment, and that of his constituents, that Todmorden was not successful in its application to the priority school building programme. We need to prioritise schools with blocks in the very worst condition. I understand that Todmorden’s buildings are now receiving some investment through the local authority, which will have competing priorities for capital resources, but I am sure my hon. Friend will continue to make the case for the school.

[John Pugh (Southport) (LD)]

Given the £180 million overrun on phase one, will the Government be tempted to backfill with second-rate private finance initiative buildings? What role will PFI have in the programme?

[Mr Gauke]

Let me address our record. We have spent £18 billion since 2010 on the school estate and we are committed to a further £23 billion so that pupils can be taught in facilities that are fit for the 21st century. We of course want to ensure that that is funded in the most appropriate, value for money and sustainable way.

Budget Resolutions and Economic Situation

John Pugh Excerpts

Wednesday 16th March 2016 Commons Chamber

[John Redwood (Wokingham) (Con)]

I remind the House that, in the Register of Members’ Financial Interests, I have declared that I advise an industrial and an investment company.

I support the main measures in the Budget, and the thrust of the Budget statement. I strongly welcome the tax reductions. I am very pleased that the Chancellor is making progress in implementing our promises to take more people out of income tax altogether, and to take people out of 40% tax when they are on relatively modest incomes in comparison with the costs of housing and living in many parts of the country. The more progress we can make in that regard, the better.

I am delighted that I, and others, made representations on behalf of the North sea oil industry, that those representations have been well heard, and that substantial changes have been made. It is important for us to do all that we can to give that industry, which has been hit by the very low oil price, some momentum and some hope for the future. I am also very pleased about the capital gains tax changes, because I have campaigned for them for some time. I think we will find that they bring in more revenue, not less.

It is interesting to read the forecast in the Red Book that, by 2019-20, there will be a substantial increase in revenues from CGT at the lower rate, but there will be a period of no increases for two or three years. I find that a surprising profile, and I think it draws attention to an underlying problem. I do not think that the economic models and the tax forecasting system used by the Office for Budget Responsibility are fit for purpose. The OBR was obviously very wrong about the impact of the reduction in the 50p rate to 45p: there was a big surge in revenues which was not in the original forecast figures.

This is the background against which we meet today. Many of the changes that the Chancellor has had to make are simply a result of the OBR changing its mind over the very short period between the autumn statement and today, and deciding that the economic outlook is not as good as it thought it was at the end of last year. We have to ask why it has reached that conclusion.

[John Pugh (Southport) (LD)]

Does the right hon. Gentleman think that the OBR has been any better at predicting the economy than the Treasury was before?

[John Redwood]

I do not think that there is very much difference. All economic forecasters experience difficulties in getting their forecasts right, but some of us are more humble about our expectations than these official forecasters. I think that the danger of having an official forecast is that too much credibility is given to it, and big decisions are then made on the back of it. When official forecasters are zinging the forecasts around every three or four months, it becomes difficult for any Chancellor to run a stable medium-term policy involving, for example, important spending items that matter a great deal to our constituents.

I urge the Chancellor to be a little more sceptical about the wisdom and virtue of the OBR forecasts. The one thing of which we can be sure is that, over the period during which we have had the OBR, it has always been wrong, but what is stunning is the degree of the error. The OBR itself kindly points that out to us on page 234 of its very readable book, saying that, on average, it has revised the underlying borrowing forecast by £46 billion for the review period in question on each occasion. Given that the figure is an average, it is clear that the forecast revision has been considerably higher. The OBR tends to make its biggest revisions in autumn statements, but it has given us quite a whopper on this occasion. When a Chancellor must face a £46 billion revision every time he has to do the sums, it makes the task of stable economic management much more difficult. This is one of those instances in which an idea that was intended to produce more stability has proved to be destabilising.

The same can be said, I am afraid, of the current Governor of the Bank of England. The Governor of the Bank of England is meant to provide stability and wisdom, but we have now heard four different mantras from this Governor about when interest rates are going to rise. That is a very important statistic, which informs the forecasts of the OBR.

First of all, the Governor said that interest rates would probably go up when unemployment fell below 7%. When it tumbled rapidly below 7%, the Governor changed his mind. I am glad that he did, but the fact remains that he changed his mind. He then said that when real wages started to go up, interest rates would probably go up as well, and I am pleased to say that almost as soon as he had said it, they started to go up. Then he changed his mind, in that he had apparently not meant what he said.

The Governor then said that the turn of the year, 2015-16, would be a witching hour, when interest rates might have to go up. Well, we roared through the end of the year and the beginning of the new year, and they did not go up. Again, I was pleased about that, because I think it might have been unhelpful if they had. However, that shows that people and institutions who should be good at providing stability can be very destabilising and very misleading, and it is all noise that the Chancellor has to deal with.

The one good thing about all this is that when these ridiculous forecasts are made by the OBR and the Governor of the Bank of England that we would be worse off if we left the European Union, we can completely ignore them. We know that those people are always wrong about the things in which they are meant to specialise, so why should we believe what they say about something that is more important?

Oral Answers to Questions

John Pugh Excerpts

Tuesday 1st March 2016 Commons Chamber

[Harriett Baldwin]

The Chancellor has done more than anyone else to tackle the regulatory failure of the 1990s with regard to Equitable Life. For example, with-profits annuitants will receive full compensation for the life of the annuity, pre-1992 annuitants have received ex gratia payments of up to £10,000, and £775 million has been paid out tax-free to others, despite the constrained public finances. Those on pensions credit got a doubling of their payment just before Christmas.

[John Pugh (Southport) (LD)]

Will the Minister clarify how much of the £1.5 billion promised by the Government has been delivered and handed over?

[Harriett Baldwin]

I regularly update Parliament on the precise figures. So far, we are at almost £1 billion. Of course, the payments for the annuitants will continue for the rest of their lives.

Oral Answers to Questions

John Pugh Excerpts

Tuesday 19th January 2016 Commons Chamber

[Mr Gauke]

Of course, my hon. Friend made his representations in a robust and forthright way in our meeting yesterday. I am sure that HMRC will be reflecting on that. Assuming that staff are relocated from Southend to Stratford, they will be compensated for their additional transport costs for up to three years and will benefit from London weighting, given that they will have moved to Stratford.

[John Pugh (Southport) (LD)]

How exactly is any of this reorganisation going to do anything about the depressing call handling statistics of HMRC? Will the Minister guarantee an improvement?

[Mr Gauke]

At the moment, call handling is at a higher level than it has been for many years. It was certainly the case that in spring of last year call handling standards were not at an acceptable level, but HMRC has made significant improvements and I hope it will continue to make progress.

Oral Answers to Questions

John Pugh Excerpts

Tuesday 1st December 2015 Commons Chamber

[Mr Gauke]

My hon. Friend is, as ever, a doughty advocate for the interests of his constituents. The point I would make to him is that this is a regional centre for the whole of the Yorkshire and Humber area. To retain as many members of staff as possible and reduce redundancy costs, HMRC’s assessment is that Leeds is a better location for those working in York, Sheffield and Hull from where there is a direct train service to Leeds.

[John Pugh (Southport) (LD)]

rose—

[Mr Speaker]

Order. The hon. Gentleman is a very illustrious fellow and a distinguished philosopher, but for the purposes of this question he is on the wrong side of the Pennines.

Oral Answers to Questions

John Pugh Excerpts

Tuesday 27th October 2015 Commons Chamber

[Harriett Baldwin]

Of course, the Government remain as committed as ever to implementing a robust ring-fencing regime, as recommended by the Independent Commission on Banking. Obviously, I am not going to comment on speculation about how individual banks would like to implement their ring-fencing rules, because that is a commercial decision for banks, as long as they remain compliant with the considerable restrictions imposed by the legislation. Their deadline is the start of 2019.

[John Pugh (Southport) (LD)]

There is a lot of crying wolf and worried bleating from the banks on this subject of ring-fencing. Is the Minister aware of any banks that have decamped to foreign parts because of it?

[Harriett Baldwin]

The Government are delighted that the UK recently, once again, topped the poll as the No. 1 location for a global financial centre. We believe that our legal system, language, geographical location and brilliant skilled workforce, and many other factors, contribute to this being an excellent place to locate a global financial services firm.

Oral Answers to Questions

John Pugh Excerpts

Tuesday 21st July 2015 Commons Chamber

[Harriett Baldwin]

I am glad that the hon. Gentleman shares my view that it is very important for us to help British businesses to export more. We have some fantastic British businesses, and many of them have started to export. UKTI has doubled the number of companies that it has helped in the past five years. He is absolutely right that we should aim to be very ambitious in this area. I would like to point out that export volumes outside the EU have actually grown by 24% since the first quarter of 2008.

[John Pugh (Southport) (LD)]

14. What steps he is taking to rebalance the economy away from London and the south-east.

[The Economic Secretary to the Treasury (Harriett Baldwin)]

The Government are committed to rebalancing the economy and strengthening every part of the UK. The summer Budget announced new commitments to rebalance the economy, including devolving further powers to city regions, inviting a new round of bids for enterprise zones and launching an ambitious transport package for the north of England.

[John Pugh]

I thank the Minister for that response. Currently, northern cities with elected Mayors have below-average economic performance in their region, whereas northern cities with above-average performances do not yet have elected Mayors. Why are the Government making a fetish of elected Mayors?

[Harriett Baldwin]

I know the hon. Gentleman has a long-standing point of view in this regard. The important point is that we want to empower local economic areas to grow as fast as London and the south-east. Among the important measures in the Cities and Local Government Devolution Bill are the strong and accountable governance arrangements for, for example, Mayors.

Tourism Industry and VAT

John Pugh Excerpts

Tuesday 17th March 2015 Westminster Hall

[John Pugh (Southport) (LD)]

I congratulate my hon. Friend the Member for Ceredigion (Mr Williams) not only on securing this debate but on having campaigned vigorously for years on this theme.

I have only one point to make. I was standing in Strangers yesterday holding up a placard about VAT and tourism while pointing at a screen. I chanced to ask the person who had asked me to do that, when he put his camera down, how long the campaign had been running for. He said that it had been running for about 18 years, to his knowledge. Hon. Members can imagine people from the industry trooping into the Treasury during those 18 years to speak to stony-faced mandarins, who find reasons for inaction. Ministers will have come and gone during that time, but the Treasury’s line will be familiar to the people lobbying it.

I am sure that, in those discussions, the Treasury will have heard good words, such as “growth”, “expansion”, “development” and “jobs”, and phrases it does not want to hear, such as “forfeit of revenue”, “loss of income” and so on. However, a counter-argument has always been put, which I could put in terms of a Laffer curve if I actually understood what a Laffer curve was. In simple terms, the counter-argument is that if there is development and growth, there will be more taxpayers, and more business will be done, so there will be more revenue and other gains, such as regeneration, which other Members have spoken about. The real choice, as far as the Treasury is concerned, is between getting more tax at a lower rate from more people, and getting more tax at a higher rate from fewer people.

That seems to be the hard choice the Treasury faces, and it is at best cost-neutral. I am not sure that it is cost-neutral in the short term—no one has suggested that, I think—but it certainly is in the long term, and it has other benefits, including regeneration and reviving areas such as the south-west and north-west.

[Sir Nick Harvey (North Devon) (LD)]

With five visits being made outwards from the UK for every two incoming visits, would there not be an additional benefit, of improving the balance of trade?

[John Pugh]

Indeed. Many persuasive arguments would suggest a net benefit to the Treasury from what we propose.

Treasury scepticism is not wholly unreasonable, but it can be allayed. I do not think that international comparisons console the Treasury especially; perhaps the thinking is that such comparisons relate to foreign places where the world functions differently, and tax regimes and people’s behaviour are different, and therefore the Treasury is not satisfied by ample international evidence. Certainly it will not be satisfied by research, however good, commissioned by the industry.

There is a way forward, however. The solution is not simply inaction. The Treasury could commission its own independent research, on a basis agreeable to the industry. That would be a huge step forward—some progress in relation to the past 18 or 19 years. It would be a step along the path of evidence-led policy—a good step to take. We would all be amazed if tomorrow the Chancellor said that he had decided to cut VAT for tourism. We would fall about and do more than wave our Order Papers—we would go into paroxysms. However, he could, if he wanted, do something that would cost nothing and might attract a great deal of good will: he could say, “We will have some independent research commissioned on this very difficult subject on which Parliament has occupied itself for some considerable time.” That would lay the ghost to rest and bottom out the issue.

Why should the Chancellor not do that? It would be an intelligent reaction to the plausible and effective argument that has been put by a crucial industry employing many more people than is ordinarily to be expected. If the Chancellor does not do that, he could be embarrassed later by someone moving an amendment to require the exact same thing. I have little doubt that it would be carried, as there is widespread support in the House for such research.

--- Later in debate ---

[Shabana Mahmood]

The hon. Gentleman will know that in the early part of this Parliament, we proposed an alternative package to the Government as an immediate measure to stimulate the economy. It envisaged a temporary VAT cut, which at the time could have made a difference across the whole economy and might have meant being in a different position today. I note, though, that the previous Labour Government, when lobbied on the issue, felt that targeting the cut in the way then envisaged would not necessarily have produced the effects anticipated by hon. Members.

That is why it would be helpful to hear more from the Minister about current Treasury thinking and analysis of the available evidence. An incoming Labour Treasury would certainly want to consider all that evidence and see the analysis at first hand. In particular, we would want to understand the relationship between different measures that could be taken, including a potential VAT tax cut compared with, for example—the Government have also cited this in defence of their position—the employment allowance, a £2,000 rebate on employer national insurance contributions introduced by the Government earlier in this Parliament. I would also want to be convinced that we would achieve as close to 100% pass-through of such a big change if we were to start considering seriously the case for making it.

However, we return to the fact that if we cut VAT in that way, the most recent Office for National Statistics data from 2012 suggest an annual cost to the Exchequer of £11 billion to £12 billion. Those sums would have to be found elsewhere, and we as an incoming Labour Government would not be in a position to make that choice. So I cannot commit to a VAT cut of the nature called for by the campaign, although I can of course commit, if I become a Treasury Minister after the election in May, to assessing the analysis and all available evidence. I will also work with colleagues in the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport to examine what else can be done to assist the tourism sector and ensure that it plays its full part in encouraging sustained and balanced economic growth. I am sure that the Cut Tourism VAT campaign will continue to make its case in full heart in the life of the next Parliament; it is certainly made up of doughty parliamentary campaigners. I look forward to engaging with them in much the same way that I know the Minister has engaged with them thus far in this Parliament.

Tourism is a hugely important sector to the UK. It is our fourth largest service industry; it employs 9.6% of the UK work force, or 3.1 million people; it generates 9% of the UK’s entire GDP; and in 2013 it contributed £127 billion to the economy. So, it is in everybody’s interests to ensure that the sector grows, thrives and continues to provide the jobs necessary for UK plc.

As I highlighted in our debate on tourism last year, there are other policy levers that can be pulled, without the cost implications that a VAT cut on tourism would entail, which would still be of real benefit to the sector. One of the most effective of those levers could be around immigration policy, particularly given the complexity around fees, visa applications and the monitoring required to make sure that people do not overstay their visa. The Government have made particular changes with respect to some countries, such as China. However, it is the case that other countries are deemed to be a high risk for potential overstaying but whose genuine visitors are often locked out. I see that in my own constituency with visitors who want to come from the Indian subcontinent, but the immigration officials almost take a first view that those people are more likely to overstay than not. Often, that is not the case. People want to come to the UK to see the land that their forefathers left their countries of origin for, and they wish to come and celebrate family events such as weddings. They will spend money here, and their British citizen relatives will spend money showing them a good time and showing them what Britain is all about. We should assist that process and not hold it back.

Therefore, although I cannot agree for the cut that has been called for, I commend the work of the Cut Tourism VAT campaign and the work of its supporters in the House. We will continue to work closely with the tourism sector and we look forward to hearing more from the campaigners in the future.

[John Pugh]

I hope the hon. Lady will indulge me. She says that she does not agree to the cut, but would she agree to the concept of having independent research commissioned by the Treasury? Has she any fundamental objection to that, which would be a lesser commitment?

[Shabana Mahmood]

I am grateful for that intervention. I do not have a fundamental objection, in principle, to that idea, but I am not in a position to commit to a formal review of some kind. Nevertheless, as I have said, if I was in the Treasury I would happily look at any additional evidence and at the Treasury’s analysis of the data at first hand, rather than hearing it from the Minister.

--- Later in debate ---

[Mr Gauke]

As I say, a comparison of the Republic of Ireland with the UK as a whole suggests that there is not a big difference. Indeed, I understand that there has been a pretty positive increase in the number of tourists to Northern Ireland specifically in recent years.

All hon. Members will be aware that this Government’s priority is to tackle our budget deficit decisively but fairly and to restore confidence in our economy. The Government have concluded that a VAT cut would not produce sufficient economic growth to outweigh the revenue shortfall. I have not seen any new conclusive evidence that has led me to revisit that conclusion. So at present the Government have no plans to introduce a VAT cut for this sector.

I reassure hon. Members that the Government recognise the importance of the tourism industry and we remain committed to a wide range of other measures to support the sector. For example, to date we have invested more than £129 million through VisitBritain and VisitEngland, to market great British holiday destinations at home and abroad. This has already leveraged significant private sector investment of more than £84 million. We have announced a £10 million tourism in the north fund in the next financial year. We have announced £2 million in the next financial year, to help promote our cities and regions overseas as part of the GREAT campaign, through VisitEngland.

The tourist industry has benefited from other policies introduced by this Government. I thank my hon. Friend the Member for Aberconwy (Guto Bebb) for making this point. For example, capping business rates and doubling business rates relief benefits the retail and hospitality sector by a considerable sum. Those sectors have benefited from the introduction of the employment allowance and will benefit from the abolition of employer's national insurance contributions for under-21s and for apprentices under 25.

[John Pugh]

I hope that this intervention will help. The Minister is saying clearly to the industry and to hon. Members that he has seen no conclusive evidence. If that is not to be a fob-off, should not he sketch out what conclusive evidence would look like to the Treasury? What is the Treasury actually looking for in evidence that would convince it that this case was valid? If he cannot say that, it will simply look like a stalling move.

[Mr Gauke]

A considerable amount of evidence has been produced. The essence of the case is that we would want to see evidence suggesting that the benefits to the economy outweigh the costs. The costs to the Exchequer are, as I have outlined, considerable. The Cut Tourism VAT campaign acknowledges in the numbers that it has produced—I can go into a little bit more detail on issues that we have with its methodology—that there would be an immediate shortfall. Its argument is that, over time, much if not all of that shortfall would be recovered. However, that immediate shortfall has to be dealt with. There is not the opportunity for us to say, “We can borrow extra billions of pounds to fund this, in the hope that that money will be recovered in future years.” If we undertook such a measure, we would need to replace that shortfall with additional taxes or reduced spending, and that in itself would have an impact upon the economy.

The actions we have taken in support of VisitBritain and VisitEngland and the tax reforms that I outlined, are delivering positive results for the UK tourist sector. Provisional figures for 2014 show that the UK welcomed 6% more visitors than in 2013: a total of 34.8 million. In total, UK tourist spend is also up by 3%, which is a total of some £21.73 billion. Provisional figures for tourism in Wales for 2014—the hon. Member for Ceredigion will be interested—show that more people are holidaying in Wales than ever before, with Wales now accounting for over 12% of holidays in Great Britain, leading to an increase on holiday spend in Wales. I am certain that, on top of the increase in numbers, all the successful events that the UK hosts year on year will only serve to make more people aware of the UK’s desirability as a tourist location.

Wherever we can, the Government will of course continue to invest in tourism and provide support for tourism across the UK. Although the hon. Gentleman, and other hon. Members who spoke in this debate, may be disappointed with my answer on VAT, I hope he and other hon. Members will be reassured that we support the sector; that, wherever we can, we will continue to support it; and that we are confident that both inbound and domestic tourism numbers will continue to rise.

Oral Answers to Questions

John Pugh Excerpts

Tuesday 4th November 2014 Commons Chamber

[Mr Gauke]

As we heard earlier, the yield for 2013-14 was £24 billion. HMRC anticipates that that will be broken and that the yield will be higher for this financial year—the details are to come, but that is encouraging. On the tax gap, the small increase is largely due to the VAT tax gap being higher in 2012-13 than the previous year, but we already know that for 2013-14 it will fall.

[John Pugh (Southport) (LD)]

8. What recent steps he has taken to rebalance regional economies.

[The Exchequer Secretary to the Treasury (Priti Patel)]

This Government are committed to rebalancing the economy in order to strengthen every part of the UK. In July this year local growth deals were agreed with all 39 local enterprise partnerships across England. Each deal reflects the particular needs and capabilities of the local area. Growth deals are just one of several ongoing investment programmes aimed at helping every region in the United Kingdom achieve economic success.

[John Pugh]

May I explore the link with governance? What is the concrete evidence outside London of the slightest connection between economic growth and elected mayors?

[Priti Patel]

It is fair to say, as we have heard today, that devolving power to more local areas enables the regions to take responsibility for the decisions that affect their areas, which in the long run will create good, solid, strong local long-term economic plans.