Leasehold Reform (Ground Rent) Bill [Lords]

Debate between Kevin Hollinrake and Robert Jenrick

2nd reading
Monday 29th November 2021 Commons Chamber

[Kevin Hollinrake]

The hon. Gentleman makes some good points and I am not saying that in certain circumstances commonhold cannot work. He pointed to the simple situation of a non-adopted road to which local residents have to contribute for the upkeep and it can certainly work in those situations, but I am just trying to point out that there are situations where it would prove difficult to make the system work.

Every jurisdiction—those in Australia or the US or Scotland—is different, and the UK is unique in various ways, one of which is in having a high proportion of absentee owners, such as in central London, where we all see blocks of flats that seem to be rarely occupied. Problems might arise in managing such blocks with for instance 100, 200 or 300 commonholders; there might be disputes and difficulties, such as in debt collection.

On the point about simple things to manage, the biggest issue is complex developments, as my right hon. Friend the Member for Chipping Barnet mentioned. Let us consider a block of 300 or 400 flats built above a tube station or adjoining a shopping mall; effectively there will be a common freehold in that development but would anybody here be keen to sit on a committee managing that entire block with, for example, joint M and E—mechanical and electrical—so joint electrical, heating, ventilation and broadband installations, managed not just between the 300 units but the other infrastructure in that development? There are concerns that that would be beyond the appetite of many commonholders who manage that kind of development.

[Robert Jenrick]

Yet it is done in every other country in the world—is that not the point? I share my hon. Friend’s reservations yet every other country in the world with equally complex cinemas and tube stations and infrastructure manages it in a way that is broadly commonhold.

[Kevin Hollinrake]

My right hon. Friend raises a good point and has an advantage over me as I do not know in depth how that would happen in, for instance, Manhattan, but I think we should understand that situation more before pushing ahead and ruling that commonhold will effectively become the default for every single development in the UK. The Government have done a great job in many things and one of them is in increasing the rate of development in the UK, and I have a concern that some developers might be inhibited in taking on a very complex project because of fears about selling the residential units or renting the commercial units. I just think we need to understand more before pushing ahead and rolling complex developments into the legislation, rather than exempting such developments from it as we on the Select Committee recommended and Lord Lytton recommended in his speech—he tabled an amendment.

I just think we should look at this area and make sure we get it right, because one law we constantly effect in this place is the law of unintended consequences and we must avoid that. So peppercorn leasehold and commonhold are fine, but we need to make sure we look at those complex situations. I personally think that if we do not find a simple solution and cannot demonstrate that it will work in the UK, because the UK clearly has some unique elements to the property market, then we should set a cap on the ground rent in exempted developments, for instance of £100 or 0.1% of value, whichever is the lowest, to make sure it is always affordable for leaseholders. I absolutely understand that this has been a problem, but we must make sure that developers do not avoid exploiting development opportunities—particularly brownfield development opportunities in city centres—because of complexities.

Aside from that, I am very happy to support what the Government are trying to do.

Planning Decisions: Local Involvement

Debate between Kevin Hollinrake and Robert Jenrick

Monday 21st June 2021 Commons Chamber

[Robert Jenrick]

I cannot, as I have only a few minutes left, but I appreciate that my right hon. Friend is at the vanguard of this issue.

Thirdly, everyone in this country wants to see more infrastructure built alongside the homes—the GP surgeries, the hospitals, the roads, the parks, the playgrounds. We will bring forward an infrastructure levy that gets more of the land value out of the landowners and the big developers and puts it at the service of local people. That will mean more affordable homes being built in this country than ever before.

We will also ensure that we tip the balance away from the big-volume house builders and towards the small builders, so that local entrepreneurs—the brickies, the plumbers and the builders in our constituencies—get a fair shot at the system.

[Kevin Hollinrake]

Will my right hon. Friend give way?

Affordable and Safe Housing for All

Debate between Kevin Hollinrake and Robert Jenrick

Tuesday 18th May 2021 Commons Chamber

[Robert Jenrick]

I will come to my hon. Friend in a moment.

Since 2010, we have delivered over half a million new affordable homes, including 365,000 affordable homes for rent, many of which—148,000—are going to social rent. The new affordable homes programme we have just brought forward has the largest contingent of social rented properties of any of its kind in recent years. Over 700,000 households, many first-time buyers, have now been able to take advantage of these schemes. We are committed to affordable homes of all tenures. That, of course, includes those that will be delivered through the £12 billion affordable homes programme, which, as well as building homes in its own right, is unlocking £38 billion- worth of private sector investment to drive affordable and market rent housing. That is the highest single funding commitment to affordable housing for at least a decade.

The truth, however, is that even those bold steps and record investment will only get us so far. To build the homes that I think we are agreed in this House we need and to level up truly, we have to face up to our generational duty and responsibility to increase the supply of homes at pace and at the volume that is required. That means taking decisive action to remove the barriers that for too long have held us back. My Department has a unique opportunity to achieve transformational change that will improve the lives of millions of people. We will be working on the most substantive reform of leasehold, property rights, building safety, renters’ rights and planning in a generation.

[Kevin Hollinrake]

On planning reform, as the Secretary of State knows, 30 years ago small and medium-sized enterprises built two thirds of new homes and today that figure is only 23%. The costs of planning have a disproportionate effect on small and medium-sized housebuilders. Does he believe that his reforms to the planning system will change that and improve the life of SMEs?

[Robert Jenrick]

My hon. Friend touches on the litmus test for our reforms. Each and every one of our reforms must help small and medium-sized builders to prosper, so that small builders in every one of our constituencies, local entrepreneurs and the people who depend on them, from plumbers to brickies, benefit from the reforms, creating a more diverse and competitive industry. Everyone can be assured that it is in their interests that we are working day and night in my Department, not for the big volume housebuilders. They have the money to navigate the current system; they hire the best QCs and consultants; they love the current planning system. It is the little guy whose side we are on and that is why we are committed to reforming the system.

Oral Answers to Questions

Debate between Kevin Hollinrake and Robert Jenrick

Monday 22nd February 2021 Commons Chamber

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

What steps he is taking to promote home ownership.

[The Secretary of State for Housing, Communities and Local Government (Robert Jenrick)]

Central to this Government’s mission is the promise of helping more people to achieve the dream of home ownership. That is why we have introduced a new shared ownership model cutting the minimum stake that someone needs to buy a home of their own to 10% and allowing them to increase in 1% steps. Thousands more people will benefit, as up to 50% of the homes delivered through our new affordable homes programme will be shared ownership, with those in rented homes being given the right to shared ownership. This all comes on top of our new Help to Buy scheme, which specifically targets first-time buyers, our First Homes policy, which discounts new homes by at least 30%, and our landmark leasehold reforms announced earlier in the year.

[Kevin Hollinrake [V]]

City of York Council is already the subject of written warnings by the Secretary of State’s Department for its failure to produce its first local plan since the 1950s, and has now again been reprimanded by inspectors for delays and errors in the production of that plan. Will he now step in and have this plan drafted for the council to send a clear message to it, and to any other council, that we will not tolerate those who seek to prevent the delivery of homes for rental and ownership?

Oral Answers to Questions

Debate between Kevin Hollinrake and Robert Jenrick

Monday 5th October 2020 Commons Chamber

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

Does my right hon. Friend agree that we need to address the inherent unfairness in the operation of the housing infrastructure fund, which allocates 80% of its budget to London and the south-east and only 20% of it to the rest of us?

[Robert Jenrick]

My hon. Friend and I have agreed on this point for some time. The housing infrastructure fund directs funding to those areas where there is the greatest affordability challenge. That is important, in some respects, but any Government who want to level up must also direct infrastructure investment for housing to other parts of the country as well. I will certainly bear that in mind as we design the successor to the housing infrastructure fund later this year.

Planning for the Future

Debate between Kevin Hollinrake and Robert Jenrick

Thursday 12th March 2020 Commons Chamber

[Robert Jenrick]

We are committed to a green revolution in the housing industry. We are doing that in many different ways, most notably through the future homes standard, which we have just consulted on. We have received more than 3,000 responses and will bring forward our final proposals shortly. We have consulted on a substantial reduction in CO₂ emissions in new homes of between 75% and 80%. I do not want to pre-empt what we might choose to do, having listened to the views in the consultation. However, the evidence that we saw prior to the consultation was that that was the most credible reduction in CO₂ emissions that we could deliver across the whole of the country, although some parts could go further and faster if they chose to do so. We are listening to the responses, and I want to see the industry respond, change and have much higher levels of energy efficiency and to see new heating systems come in as quickly as possible.

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

I welcome my right hon. Friend’s statement. Supply alone will not solve all the affordability problems in the housing market. It will require intervention, such as his excellent First Homes initiative. Will he consider extending that initiative to directly commissioning first homes on public land and perhaps combining First Homes with Help to Buy to further improve the affordability of home purchase?

[Robert Jenrick]

That is a very interesting idea, and one that I will give careful thought to. My hon. Friend and I worked together on the creation of First Homes, and I am very grateful for his views on that. He is absolutely right that this will require both supply and demand-side reforms. That is why the planning system is so important in unlocking more land in the places where people want to live, but it is also important to have ways of getting people on to the housing ladder, and First Homes is just one of those options. It will enable people in their local area to get 30% discounts on new homes. I recently met the major house builders, who are fully supportive, and I hope that we will see those homes on the market in this country by the end of the year.

Grenfell Tower Inquiry: Phase 1 Report

Debate between Kevin Hollinrake and Robert Jenrick

Tuesday 21st January 2020 Commons Chamber

[Robert Jenrick]

The question at the heart of my hon. Friend’s remarks is what the judge will determine in the second phase of the inquiry. What went wrong that led to that cladding being on Grenfell Tower? Was it a failure of Government or of regulation of the construction industry, or a combination of those things? I do not think we can prejudge what the judge will determine over the course of the detailed second phase of the inquiry that is about to commence.

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

I have followed these matters over the past couple of years, and in my experience the Secretary of State has done more to try to resolve these problems than any of his predecessors, all of whom tried to tackle a thorny issue. He is right to say that ACM is probably the most dangerous cladding, and we should deal with that first. Advice Note 14 does not deal with ACM, but it does effectively say that other combustible materials should not be on the outside of high rise buildings. The official guidance was more equivocal than that, which leaves long leaseholders in a difficult situation with unsaleable properties—I draw the House’s attention to my entry in the Register of Members’ Financial Interests in that regard. We must consider this issue. Yesterday the Secretary of State said that he would look at doing more, and we will need to.

[Robert Jenrick]

I pay tribute to my hon. Friend who is a long-standing campaigner on this issue. Next month we will publish the final result of the testing process that my Department has been undertaking over many months with the Building Research Establishment. That will lay out for all to see evidence that I have already seen about the safety, or otherwise, of a range of different materials. I believe it will demonstrate that ACM is by far the most concerning material and should come off buildings as quickly as possible.

Building Safety

Debate between Kevin Hollinrake and Robert Jenrick

Monday 20th January 2020 Commons Chamber

[Robert Jenrick]

I am sorry to hear about the example that the hon. Lady raises, and I will look into that if she could give me the details after this statement. Since becoming Secretary of State, I have taken action to ensure that the remediation fund moves forward at pace. We now have a named contact working with every one of these buildings. I review the lists regularly, and we have made a great deal of progress. We have now reached the point, as I have said, where every building is within the system and is working with my Department. The only ones that are not are those that emerged only recently as having ACM cladding. I hope that we will now, finally, make rapid progress.

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

May I welcome my right hon. Friend’s statement and his proactivity on this issue? Advice note 14 states that only limited combustibility materials should be used on external surfaces, but our work on the Select Committee has shown that the actual guidance was much more ambiguous, which leaves many leaseholders in limbo. Will he consider extending the remediation fund to cover other types of combustible cladding?

[Robert Jenrick]

The expert advice that we received said that ACM should be the priority of Government. That is why my predecessors announced the £600 million remediation fund for ACM on high-rise buildings. The testing results, which I will publish next month, confirm that decision and make it clear that ACM is significantly more dangerous than any other substance. That has rightly been the focus of taxpayers’ money in terms of grant, but there may be other ways forward to assist those leaseholders trapped in other types of buildings.

Education and Local Government

Debate between Kevin Hollinrake and Robert Jenrick

Tuesday 14th January 2020 Commons Chamber

[Robert Jenrick]

I would be happy to meet the hon. Lady—in fact, I have written to her council leader suggesting that we speak as soon as possible.

We will also invest more in affordable housing. We know that we cannot meet our objectives without more affordable homes. The Government have built 450,000 so far and we intend to go further. We will be replacing our affordable homes programme with a new one and we have lifted the housing revenue account borrowing cap so that councils across the country can build more homes. We want better designed, safer, more beautiful homes, rooted in communities, and we are creating a design code so that every community can have a right to demand good-quality, well-designed homes that work for them.

We are also going to boost home ownership, as a good in itself, because we believe that a home is more than four walls and a roof—it is about someone investing in their future and their family, and putting down roots in a community. As my hon. Friend the Member for Poole said, it is about building an ownership society. We will do that with our next step, on first homes, with a 30% discount for local people buying homes in their community, which was championed by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake).

We will also ensure that homes that we build in this country are safe. We have learnt a great deal following the tragedy of Grenfell Tower and we know that our building safety regime needs urgent reform. We have two Bills in the Queen’s Speech, one of which is a building safety Bill, which will be the biggest change to our building safety regime in this country for 40 years. That will be a complex piece of legislation that I hope—as the hon. Member for Sheffield South East (Mr Betts), the former Chair of the Housing, Communities and Local Government Committee said—will command cross-party support so that we can build a robust system that lasts into the future.

[Kevin Hollinrake]

On my right hon. Friend’s next step on homes—I appreciate his reference to me—it is an excellent policy that will make home ownership much more affordable for lots of local first-time buyers. Will he consider blending it with Help to Buy to make it even more affordable and therefore even easier for people to get on the housing ladder?

[Robert Jenrick]

I will consider that a Budget bid and pass it on to my right hon. Friend the Chancellor. We will certainly blend it with things such as shared ownership and reform that model to take out some abuses that we have seen in recent years.

In addition to the building safety Bill, we will bring forward another Bill on fire safety sooner than that to ensure that we act urgently on the recommendations of the judge in the Grenfell inquiry. Again, I hope that those Bills can command cross-party support. We will answer some of the questions raised by numerous Members on the position of leaseholders not only through publishing a draft Bill shortly to outlaw leasehold for new homes and to reduce ground rents to a peppercorn, but by listening to the recommendations of the Law Commission and the Competition and Markets Authority to ensure that leasehold works for everyone and is a fair and sustainable system into the future.

Grenfell Tower Inquiry

Debate between Kevin Hollinrake and Robert Jenrick

Wednesday 30th October 2019 Commons Chamber

[Kevin Hollinrake]

Will the Secretary of State give way?

[Robert Jenrick]

I am afraid I cannot give way; I have only a couple of moments left.

The right hon. Member for Wentworth and Dearne says, “Or else?” We have said—the Prime Minister reiterated this today—that those building owners who do not take action should face the full force of the law. Local authorities should use the enforcement powers they have, and my Department stands ready to support any local authority that wishes to do that. We will name those building owners that are not remediating ACM cladding at the pace that is required and take enforcement action against them. It is, as I have said previously, frankly shameful that £600 million of taxpayers’ money is now at their disposal to remove this dangerous cladding and yet some are prevaricating. We must and we will take action.

In the broader context, which we will learn about in the next phase, I want to see Dame Judith Hackitt’s independent review implemented in full. It will be through our building safety legislation that was announced in the Queen’s Speech. Building owners must now assess the safety of their buildings and take action if that is required.

A number of hon. Members raised the rehousing of the victims and survivors of the Grenfell tragedy. I can report that 95% of the 201 households who lost their homes have been permanently rehoused. Today, nine households remain to be permanently rehoused. It would be wrong of me to set out their cases before the House, but I know each of their individual circumstances and my Department and I will continue to scrutinise and to challenge the Royal Borough of Kensington and Chelsea to ensure that action is taken and hat these individuals, when it is right for them, move into permanent housing of their choosing.

In the remaining seconds available to me, let me say in answer to my right hon. Friend the Member for Maidenhead that we will be taking forward the social housing White Paper. That is an important step in providing security and dignity to individuals who feel that they have not been listened to and that their views are not respected. We are working with Grenfell United, which represents some of the victims of the Grenfell tragedy, to ensure that that is done right and that we make the changes that are required for future generations.

Resolved,

That this House has considered the report from the Grenfell Tower Inquiry.

Northern Ireland Budget Bill: Business of the House

Ordered,

That the following provisions shall apply to the proceedings on the Northern Ireland Budget Bill:

Timetable

(1) (a) Proceedings on Second Reading and in Committee of the whole House, any proceedings on Consideration and proceedings up to and including Third Reading shall be taken at today’s sitting in accordance with this Order.

(b) Notices of Amendments, new Clauses or new Schedules to be moved in Committee of the whole House may be accepted by the Clerks at the Table before the Bill has been read a second time.

(c) Proceedings on Second Reading shall be brought to a conclusion (so far as not previously concluded) one and a half hours after the commencement of proceedings on the Motion for this Order.

(d) Proceedings in Committee of the whole House, any proceedings on Consideration and proceedings up to and including Third Reading shall be brought to a conclusion (so far as not previously concluded) three hours after the commencement of proceedings on the Motion for this Order.

Timing of proceedings and Questions to be put

(2) When the Bill has been read a second time:

(a) it shall, despite Standing Order No. 63 (Committal of bills not subject to a programme order), stand committed to a Committee of the whole House without any Question being put;

(b) the Speaker shall leave the Chair whether or not notice of an Instruction has been given.

(3) (a) On the conclusion of proceedings in Committee of the whole House, the Chairman shall report the Bill to the House without putting any Question.

(b) If the Bill is reported with amendments, the House shall proceed to consider the Bill as amended without any Question being put.

(4) If, following proceedings in Committee of the whole House and any proceedings on Consideration of the Bill, a legislative grand committee withholds consent to the Bill or any Clause or Schedule of the Bill or any amendment made to the Bill, the House shall proceed to Reconsideration of the Bill without any Question being put.

(5) If, following Reconsideration of the Bill:

(a) a legislative grand committee withholds consent to any Clause or Schedule of the Bill or any amendment made to the Bill (but does not withhold consent to the whole Bill and, accordingly, the Bill is amended in accordance with Standing Order No.83N(6)), and

(b) a Minister of the Crown indicates his or her intention to move a minor or technical amendment to the Bill, the House shall proceed to consequential Consideration of the Bill without any Question being put.

(6) For the purpose of bringing any proceedings to a conclusion in accordance with paragraph (1), the Chairman or Speaker shall forthwith put the following Questions in the same order as they would fall to be put if this Order did not apply:

(a) any Question already proposed from the Chair;

(b) any Question necessary to bring to a decision a Question so proposed;

(c) the Question on any amendment moved or Motion made by a Minister of the Crown;

(d) any other Question necessary for the disposal of the business to be concluded; and shall not put any other questions, other than the question on any motion described in paragraph (17)(a) of this Order.

(7) On a Motion so made for a new Clause or a new Schedule, the Chairman or Speaker shall put only the Question that the Clause or Schedule be added to the Bill.

(8) if two or more Questions would fall to be put under paragraph (6)(c) on successive amendments moved or Motions made by a Minister of the Crown, the Chairman or Speaker shall instead put a single Question in relation to those amendments or Motions.

(9) If two or more Questions would fall to be put under paragraph (6)(d) in relation to successive provisions of the Bill, the Chairman shall instead put a single Question in relation to those provisions, except that the Question shall be put separately on any Clause of or Schedule to the Bill which a Minister of the Crown has signified an intention to leave out. Consideration of Lords Amendments

(10) (a) Any Lords Amendments to the Bill may be considered forthwith without any Question being put; and any proceedings interrupted for that purpose shall be suspended accordingly.

(b) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement; and any proceedings suspended under sub-paragraph (a) shall thereupon be resumed.

(11) Paragraphs (2) to (11) of Standing Order No. 83F (Programme orders: conclusion of proceedings on consideration of Lords amendments) apply for the purposes of bringing any proceedings to a conclusion in accordance with paragraph (10) of this Order.

Subsequent stages

(12) (a) Any further Message from the Lords on the Bill may be considered forthwith without any Question being put; and any proceedings interrupted for that purpose shall be suspended accordingly.

(b) Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement; and any proceedings suspended under sub-paragraph (a) shall thereupon be resumed.

(13) Paragraphs (2) to (9) of Standing Order No. 83G (Programme orders: conclusion of proceedings on further messages from the Lords) apply for the purposes of bringing any proceedings to a conclusion in accordance with paragraph (12) of this Order.

Reasons Committee

(14) Paragraphs (2) to (6) of Standing Order No. 83H (Programme orders: reasons committee) apply in relation to any committee to be appointed to draw up reasons after proceedings have been brought to a conclusion in accordance with this Order.

Miscellaneous

(15) Standing Order No. 15(1) (Exempted business) shall apply to proceedings on the Bill.

(16) Standing Order No. 82 (Business Committee) shall not apply in relation to any proceedings to which this Order applies.

(17) (a) No Motion shall be made, except by a Minister of the Crown, to alter the order in which any proceedings on the Bill are taken, to recommit the Bill or to vary or supplement the provisions of this Order.

(b) No notice shall be required of such a Motion.

(c) Such a motion may be considered forthwith without any Question being put; and any proceedings interrupted for that purpose shall be suspended accordingly.

(d) The Question on such a Motion shall be put forthwith; and any proceedings suspended under sub-paragraph (c) shall thereupon be resumed.

(e) Standing Order No. 15(1) (Exempted business) shall apply to proceedings on such a Motion.

(18) (a) No dilatory Motion shall be made in relation to proceedings to which this Order applies except by a Minister of the Crown.

(b) The Question on any such Motion shall be put forthwith.

(19) No debate shall be held in accordance with Standing Order No. 24 (Emergency debates) at today’s sitting after this Order has been agreed.

(20) Proceedings to which this Order applies shall not be interrupted under any Standing Order relating to the sittings of the House.

(21) No private business may be considered at today’s sitting after this Order has been agreed.—(Julian Smith.)

Oral Answers to Questions

Debate between Kevin Hollinrake and Robert Jenrick

Tuesday 29th January 2019 Commons Chamber

[Robert Jenrick]

Through our productivity plan, we are investing more in the skills base in all parts of the country, whether that be through apprenticeships, the national retraining scheme or raising standards in our schools. We are also investing more in our infrastructure. Over the last four years, there has been a 50% increase in public investment in infrastructure in Yorkshire and the Humber compared with the last four years of the Labour Government. The hon. Lady and I met recently to discuss her plans in York for the high street and improving the city centre, which we wish to support.

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

Does my hon. Friend agree that well-run city regions are the key drivers of productivity and prosperity and that Yorkshire’s economy is best served by devolution to the city regions of Sheffield, Leeds, Hull and York?

[Robert Jenrick]

We are seeing mayors across the country driving their regions’ economic strategy, including great mayors like Ben Houchen in the Tees Valley and Andy Street in the West Midlands. We want to see more mayors, but we have to be mindful of the original purpose of devolution, which, as my hon. Friend said, is the role of cities and their immediate hinterland in driving productivity and economic growth.

Oral Answers to Questions

Debate between Kevin Hollinrake and Robert Jenrick

Tuesday 11th September 2018 Commons Chamber

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

The Chancellor has been an outspoken advocate of a fairer distribution of regional spending. Has he read the letter that we sent him in late July? Will he commit to the Transport for the North strategic investment priorities in his forthcoming Budget?

[Robert Jenrick]

I know that my right hon. Friend the Chancellor has my hon. Friend’s letter. Over this Parliament, we will spend more central Government funding per capita on transport in the north than in, for example, London or the south-east. We will consider carefully the business case for Northern Powerhouse Rail when we receive it from Transport for the North later in the year.

Independent Financial Advisers: Regulation

Debate between Kevin Hollinrake and Robert Jenrick

Tuesday 24th April 2018 Westminster Hall

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

I begin by thanking my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for securing this important debate. I also thank you, Mr Gray, for chairing it.

I am aware that this debate has been prompted by the constituency cases that my hon. Friend has highlighted today—those of Helen and Mr Mohun-Smith. As my hon. Friend will no doubt appreciate, I cannot comment on the specifics of the cases, although it has been extremely useful to listen to and learn from them. I was very concerned to hear the evidence he brought before us today and laid out so clearly and painfully.

Successive Governments have sought to put in place a policy framework for the regulation of the financial advice market, and they have provided the independent Financial Conduct Authority with the powers that it needs to set out the rules for this market and to enforce them to ensure that consumers are treated fairly. It is troubling to hear the issues that my hon. Friend’s constituents have experienced, which suggest either that the framework itself has not been able to give them the protection they deserve or that the FCA has not acted to enforce the rules in the way we would have hoped it would.

Consumers depend on good advice from honest and reliable individuals to manage their life savings properly, to help them make life-changing decisions and to ensure their security in retirement, especially following the implementation of pension freedoms. We want people to access help to make those important decisions, from simple guidance and information to regulated financial advice.

To ensure that the market for financial advice functions effectively, we have to protect people from unscrupulous advisers, and we also have to protect the majority of reputable advisers from those who would do down their industry and their jobs. The independent FCA has set out the rules for the market, and it has been tasked by us to enforce those rules robustly to ensure that consumers are always treated fairly.

Firms and advisers have to be authorised by the FCA, they have to be qualified to provide advice and they have to ensure that such advice is suitable for an individual’s personal circumstances. As in any walk of life, there will always be individuals and firms out there who try to bend the rules or even to commit fraud and other forms of criminal activity. The FCA has the ability to take swift enforcement action to ban individuals firms from providing financial advice, although that does not appear to have happened in the cases that my hon. Friend has mentioned, and I will give thought to the point he made about ongoing re-approval. More action may be required in that regard.

In other cases, advisers might not provide suitable advice, leading to financial loss for consumers. In those cases, consumers can refer to the Financial Ombudsman Service for compensation, which is usually up to a maximum of £150,000 per individual. The advisory firm is then legally required to provide that compensation. Sadly, it is often the case that firms go into liquidation and cannot provide the compensation that individuals deserve. There is then a second tier of protection through the Financial Services Compensation Scheme, which is mainly funded by an annual levy on the financial services industry. Since it was founded, the FSCS has helped millions of people and paid billions of pounds in compensation.

As my hon. Friend mentioned, the current limit for compensation from the FSCS for people who have received bad advice is £50,000 per person. Hon. Members will be pleased to know that the FCA has recently consulted on raising that compensation limit to £85,000, with an intention to introduce the new limit from 1 April 2019. We would strongly support such an increase. A limit of £85,000 would mean that—based on historical data, at least—only 2.5% of claims relating to investments and only 3.8% of claims relating to pensions advice would not have been fully compensated. Clearly, there will be individuals who have invested and lost far greater sums, perhaps including my hon. Friend’s constituents, but the vast majority of consumers would be protected.

Of course, when setting a compensation limit for the FSCS, the FCA has to strike a balance, providing an appropriate level of compensation to enough claimants, without placing an undue burden on the reputable financial advisers and firms that pay the levies—of course, those costs would be passed on in the end to consumers.

That is why it is mandatory for firms to be covered by professional indemnity insurance, which brings us on to another point raised by my hon. Friend. Such insurance should cover many claims, reducing pressure on the FSCS. The FCA published its consultation paper on the FSCS in October 2017, and it is considering whether to go further, to prevent firms from buying professional indemnity insurance that does not allow claims when the policyholder or a related party is insolvent. The FCA will issue a paper on this matter shortly, and we will welcome the decision that it makes.

The FCA has to remain vigilant in cases where firms go into liquidation to avoid paying compensation to consumers before re-forming as “new” firms. Andrew Bailey, the chief executive of the FCA, whom my hon. Friend referred to, has recently said that this practice, which is often called phoenixing, is actively being examined by the FCA and that the FCA is also considering whether the existing rules are sufficient or the creation of new rules is required.

For example, the FCA placed asset sale restrictions on eight advice firms last year in an effort to clamp down on phoenixing. That was done to prevent the common practice of transferring assets that belong to the collapsed firm, including from the client bank, to its former directors, who of course go on to set up a new firm.

[Kevin Hollinrake]

I am grateful to my hon. Friend for addressing so accurately and so well the points that I made. Is he surprised, as I am, that what he referred to as professional indemnity insurance beyond an insolvency, which is commonly known as run-off cover, is required in many other sectors but not currently in this sector? Is he also surprised that the FCA countenances a situation whereby an adviser it licences as an approved person is able to carry on activities with professional indemnity insurance even though that insurance does not cover the activities they are advising people about?

[Robert Jenrick]

I am surprised by both the points that my hon. Friend has just raised. He and I both worked in professions before coming to this House—I worked as a lawyer, and he worked as an estate agent—and it is surprising that, in the profession of financial adviser, those practices are permitted. I hope that answering such questions will be part of the scope of the FCA’s inquiry and the work that it will subsequently do.

To return to phoenixing, we will work with the FCA to ensure that appropriate rules are in place. I intend to ensure that action is taken in this area. Phoenixing in these circumstances is wrong. It leaves consumers and taxpayers out of pocket and tarnishes the reputation of the industry. Just as with phoenixing in other businesses, these practices can be deeply corrosive to public confidence and to trust in the system, and the effects are, in time, passed on to the whole economy. We want an economy and a society that understand that entrepreneurs and businesspeople can fail—and often do so on the road to later success, wealth, job creation and flourishing new businesses—but those who fail deliberately or recklessly damage our economy and public faith in capitalism, and they must be stopped.

I would like to use this opportunity to raise some additional critical points. The Government have been implementing other policy areas to ensure that we have a better-functioning market for financial advice that benefits consumers. The first of these is the retail distribution review launched in 2006, which drastically altered the current charging market for independent financial advisers, encouraging them to charge set fees and prohibiting them from receiving commission from product providers. That was an important step forward, reducing incentives for advisers to recommend investments in which they had a financial interest, and improving the overall quality of financial advice. It has been welcomed by the sector and those who rely on it.

More recently, under this Government, the Treasury and the FCA launched the financial advice market review in 2015, with the goal of improving the accessibility and affordability of financial advice. Research we have done shows that those with high incomes generally—although not always—have access to quality advice, but those with moderate or low incomes, who arguably have the greatest need, have found decent advice far less accessible. The final report, which we published in March 2016, set out a package of 28 recommendations, which the Government and the FCA have now implemented. Although the recommendations of that review will take time to take effect, we have had encouraging feedback from market participants that the work we have done, which the FCA must now take forward, will make a real difference to consumers, and we are already seeing some tangible results in that respect.

I thank my hon. Friend for bringing this discussion on a very important topic here today. I will raise the points he made with Andrew Bailey at the Financial Conduct Authority again—I appreciate that my hon. Friend has already been to see him. I will highlight the cases he has brought to my attention and will ask for further explanations. He does not bring cases to this place lightly. He has a great deal of experience in business. He and the constituents he has talked about deserve answers and actions, and others in his constituency and across the country deserve to be protected.

The issue is not static; the Government and the FCA are committed to ensuring that it remains under constant review. I will urge the FCA to step up its efforts, particularly in respect of phoenixing, which is a wider problem and a challenge for all of us who believe in a free economy and who want to see its reputation protected. Like all Members of this House, I want to see consumers and members of the public protected, and the reputations of those who choose to pursue careers as financial advisers protected, not tarnished by the actions of the few.

Question put and agreed to.