HMRC Self-assessment Helpline

Lord Forsyth of Drumlean Excerpts

Tuesday 26th March 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

I do not fully recognise the picture that the noble Baroness paints. Over the course of this Parliament, the amount of funding provided to HMRC has increased from £4.3 billion in 2019-20 to £5.2 billion in 2024-25, and the overall customer satisfaction across phone, web chat and online is 79.2% versus a target of 80%. However, I recognise that there are certain elements within the HMRC offer where taxpayers need to get a better service. That includes answering correspondence for some of the more complex and hard-to-reach people: the vulnerable and the digitally excluded. That is exactly why, quite frankly, we need to move resources from taxpayers who can and should use online and ensure that those resources can be targeted at those areas where customer service is not as good as it should be. That is what we intend to do.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend accept that the large reduction in the number of people in this country who are self-employed is a direct consequence of the Government’s introduction of IR35 legislation, which has led to huge confusion among the self-employed? Many people are giving up—just ask any taxi driver in London. Does she really think that the Inland Revenue, or HMRC as it is now, can provide a proper service with so many of its people working from home?

[Baroness Vere of Norbiton (Con)]

Obviously, it is up to the individual to ensure that they pay the right tax at the right time. HMRC intends to make that as easy as possible, but for some more complex situations it is right that individuals get tax advice. People working for HMRC can work from home two days a week. They use the same systems as they do in the office, and they are held to the same standard that they would experience when they are in the office.

Self-employment: A1 Forms

Lord Forsyth of Drumlean Excerpts

Monday 12th February 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

The Beatles split up the year I was born so I do not have as long a memory as the noble Lord. However, the Government are very focused on developing our emerging artists and ensuring that they can get to new international markets, whether that be in the EU or beyond. The music export growth scheme has been tripled and will now spend £3.2 million over the next two years to support these emerging artists. When it comes to music, we are talking about not just the EU but the entire world.

[Lord Forsyth of Drumlean (Con)]

My Lords, does my noble friend the Minister agree that this is not a problem of Brexit but a problem of EU members not being co-operative?

[Noble Lords]

No!

HMRC: Tax Returns

Lord Forsyth of Drumlean Excerpts

Wednesday 10th January 2024 Lords Chamber

[Lord Forsyth of Drumlean (Con)]

My Lords, further to my noble friend’s first Answer, has she actually tried ringing the HMRC herself, and what was the outcome?

[Baroness Vere of Norbiton (Con)]

My noble friend will be very pleased to know that I phoned HMRC on Monday and eventually managed to speak to a person. I did not tell them who I was, and I do not have very complex tax affairs. It was something very simple, but it could be done only by a real person.

Financial Stability: Private Equity Firms

Lord Forsyth of Drumlean Excerpts

Wednesday 13th December 2023 Lords Chamber

[Baroness Vere of Norbiton (Con)]

The noble Lord mentions a situation I am not aware of, but I will say that all owners of UK companies must abide by the Companies Act and their obligations therein.

[Lord Forsyth of Drumlean (Con)]

My Lords, has my noble friend been following the speeches and articles written by the noble Lord, Lord King, the former Governor of the Bank of England, in which he suggests that it is so important for the Bank to concentrate on inflation and the price mechanism that it does not make sense to add to those responsibilities a green agenda, which will distract it and draw it into political activity?

[Baroness Vere of Norbiton (Con)]

I have not been following those interventions from the former governor, the noble Lord, Lord King, but I shall certainly look at them.

King’s Speech

Lord Forsyth of Drumlean Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Forsyth of Drumlean (Con)]

My Lords, it is a pleasure to follow the right reverend Prelate the Bishop of Durham. We all share his aspiration to ensure that children and families are supported, but in order to do so we need to create the wealth to achieve that. Governments do not create wealth, businesses do, and I am sorry that his speech had very little about that aspect.

I shall talk about how the contents of the gracious Speech are going to be delivered and about the accountability of the Executive to Parliament. In the last Session there were 30 Ministers and Whips in this House, and 14 of them were unpaid. I thought we ended the practice of having to have private means in order to be able to serve in government in 1911. In this Parliament, one extremely effective and senior Minister of State was forced to take demotion in order to receive a reduced salary. Another able Front-Bencher gave up altogether as he could not continue unpaid. All Ministers of State in this House are now expected to work for nothing. This includes senior Defence and Foreign Office Ministers, whose duties involve travel away, and therefore they are not even able to claim the daily £300-odd allowance that is meant to cover accommodation and other necessary costs.

Unsurprisingly, the result has been that Peers are unwilling to take up ministerial office as many simply cannot afford it, while others are resentful at being asked to do so. The less than satisfactory remedy has been to appoint new but inexperienced Peers with deeper pockets, some of whom disappear after a short time in office to the Cross Benches—no names, no pack-drill.

Having served in government in the Commons for more than a decade, I am acutely aware of how much more demanding it is to be at the Dispatch Box in the House of Lords. Although politer, the questions are penetrating—even from your own side—and well-informed, and Ministers are expected to answer for the Government as a whole. Great rafts of legislation, bristling with Henry VIII clauses that have not even been discussed in the other place, surge up the Corridor for detailed consideration long after the other place has gone to bed. The House of Lords sits for longer hours than the elected House. In the last Session, 7,937 amendments to Bills were tabled and, unlike in the other place, each one is considered, with any of us free to speak with no restrictions on time—something that the Liberal Benches take full advantage of. Of those, 2,680 were government amendments accepted by the House, together with 277 opposition amendments. In contrast, as most Bills in the other place are timetabled, few if any amendments are considered and debated at all. The truth is that the other place is no longer doing its job of scrutinising legislation effectively and holding the Executive to account. There is much talk of reform of the House of Lords, but the Lords is working, working hard and doing a good job; it is the other place that is in need of reform.

Ministers in the Lords cannot be paid a ministerial salary because the Government have increased the numbers of Ministers in the Commons to 95, the maximum number allowed. I would like to think this profusion of Ministers had nothing to do with extending patronage and reducing parliamentary accountability. However, there is certainly little evidence that it leads to better government.

There has clearly been blatant ministerial inflation. I am indebted to my noble friend Lord Young of Cookham for pointing out that Baroness Thatcher’s first Administration had two Ministers in the Department of Transport in 1979—a formidable pair, in my noble friends Lord Fowler and Lord Clarke. This morning—or at least earlier this morning—there were five Ministers, even though much of what they were responsible for in 1979 has been privatised. The DHSS had five Ministers and is now replaced by two departments with a total of 12 Ministers, six in the DWP and six in the DHSC.

The Ministerial and other Salaries Act 1975 imposes a limit on the number of Ministers of 109, while the House of Commons Disqualification Act provides that there can be no more than 95 holders of ministerial office in the Commons entitled to vote. There is agreement on all sides of the House that the current position is outrageous and that the Prime Minister should either reduce the number of Ministers in the Commons today—he has an opportunity to do so—or introduce a Bill to increase the statutory limit to 123. Successive Cabinet Office Ministers have agreed that the position is unacceptable but then move on, having done nothing to change it. Rishi Sunak, our Prime Minister, has promised to take difficult decisions to ensure good government and the long-term interests of the country.

Personal wealth cannot be a qualification for ministerial office. I welcome the appointment of David Cameron as Foreign Secretary in this House, but it would be rather awkward if he was paid and his Minister of State was not.

--- Later in debate ---

[Baroness Penn (Con)]

I will be happy to write to the noble Baroness.

We have launched a nuclear revival. The Government invested to become a shareholder in Sizewell C in November 2022 and launched a capital raise process in September this year to bring in new project finance. We have launched Great British Nuclear to drive the delivery of new nuclear technologies beyond Sizewell and to develop the latest small modular reactor technologies, and last month we announced the shortlist of companies to build the new generation of small modular reactors. Beyond the initial focus on delivery, Great British Nuclear will be available to support further nuclear ambitions. It has the statutory backing and resources behind it to deliver against its long-term operational mandate.

Through the nuclear fuel fund we will invest over £35 million, match funded by industry, to develop new domestic fuel production capabilities and to supply gigawatt reactors, SMRs and AMRs. On siting, we are developing a nuclear national policy statement that will cover the policy framework for deploying new nuclear power stations beyond 2025. As an initial step, we plan to consult on our proposed approach for determining new nuclear sites by the end of this year, with our aim to finalise a consultation on the NPS next year and complete parliamentary scrutiny to enable its designation in 2025. We will launch our consultation on alternative routes to market next month and, following our review of responses, deliver a report in 2024. I hope that responds to the questions from both the noble Lord, Lord Ravensdale, and my noble friend Lady Bloomfield, who are both great advocates for the nuclear industry. Perhaps I can write to the noble Lord, Lord Jones, to respond to his specific questions about the two sites that he focused on in his contribution.

However, we also need to recognise that data published by the Climate Change Committee shows that the UK will continue to rely on oil and gas to meet its energy needs even after the UK reaches net zero in 2050. That will include the use of gas for power generation and carbon capture usage and storage. That is why we are investing in the range of domestic energy supplies that we have available, including taking steps to slow the decline in the domestic production of oil and gas, which will reduce our reliance on hostile states and back a thriving industry in the UK that supports 200,000 jobs. It is important to recognise that the UK is a rapidly declining producer of oil and gas, and new oil and gas licences will reduce the fall in UK supply to ensure vital energy security, rather than increasing it above current levels, so that the UK remains on track to meet its net-zero 2050 commitments.

I say to the noble Baroness, Lady Blake of Leeds, that we recognise the unprecedented profits made by oil and gas producers after Russia’s invasion of Ukraine. These profits represent not a return on investment but a windfall as a result of unprovoked war. It is therefore right that we introduced the energy profits levy on those windfall profits, bringing the tax rate on the profits of North Sea oil and gas producers to 75%. By 2027 the levy is expected to raise almost £26 billion, having already generated around £5.9 billion, helping us—as I said earlier—to pay half the typical household’s energy bill between October and June.

We also want to take a fair approach to decarbonising how we heat our homes, which is why we are giving people more time to make the necessary transition to heat pumps. We have increased the boiler upgrade scheme cash grants by 50%, to £7,500, to support consumers who want to make the transition now. It is one of the most generous grants in Europe.

I reassure noble Lords that, in taking into account the changes to the boiler and electric vehicles mandate and the ongoing licensing of domestic oil and gas reserves, we are confident that we can deliver our carbon budgets and capitalise on the opportunities for green growth. So I say to the many noble Lords who raised concerns in this area that we remain completely committed to our existing targets and to meeting net zero by 2050, compatible with the Paris Agreement ambition to limit global warming to 1.5 degrees.

We will continue to listen to and engage with the expertise in this House on climate and nature. I say to my noble friend Lord Lilley that our approach will be informed by evidence, pragmatism and rational debate. Our package of proposals and policies will continue to evolve to adapt to changing circumstances, to utilise technological developments and to address emerging challenges.

But we are in no doubt about the real and present threat that climate change and biodiversity loss represent to our economy and society, and there is no change in our commitment to tackling this challenge. The UK overachieved against its first and second carbon budgets, and the latest projections show that we are on track to meet the third. We are able to quantify the vast majority of carbon savings in the late 2030s, more than a decade away.

Environment and nature are the other side of the coin when it comes to tackling climate change. I reassure the right reverend Prelate the Bishop of Norwich, who spoke so eloquently of his own work on ecology, that not only have this Government done more than any other on the environment and nature—including through the landmark Environment Act—but we remain committed to going further, through our commitment to end the net loss of biodiversity in the UK by 2030. I agree with the noble Baroness, Lady Hoey, that we need to put people and rural communities at the heart of this approach. We will not achieve this transition without the support and action of farmers and land managers.

My noble friend Lady McIntosh asked about the live animal export Bill and whether there is a means to restrict live animal imports from the EU. I say to her that there has never been a significant import trade for slaughter or fattening. For example, since 2019, only 91 cattle, 14 sheep and 20 pigs have been imported for slaughter from mainland Europe—so we do not see a pressing case to take action in this area. On my noble friend’s question about border control points, I reassure her that our new border control point at Sevington, covering the short straits, opens in April. Other border control points will open around the UK, securing our biosecurity with our new border targeting operating model.

A number of noble Lords, including the right reverend Prelate the Bishop of St Edmundsbury and Ipswich, raised concerns about the impact of recent flooding on farmers. The flood recovery framework provides funding for households and businesses affected by severe flooding, and it includes several grants and business rates relief.

I say to the noble Baroness, Lady Ritchie of Downpatrick, that I know that my noble friend Lord Caine spent several hours with her in communities affected by the recent floods. In the absence of the Executive, who could have acted swiftly, the UK Government are making money available to support those affected by floods, through the reallocation of existing funding.

I say to the noble Lord, Lord Whitty, and the noble Duke, the Duke of Wellington, who, among others, raised the reform of water regulation, that we are driving the largest infrastructure investment in water company history—an estimated £60 billion of water company capital investment by 2050—to meet storm overflow discharge reduction plan targets, which were recently expanded to cover all storm overflows in England, including those discharging to coastal and estuarine waters. But I will of course pass on to Defra the proposal from the noble Duke for the future of regulation in this area.

This brings us on to the theme of what is not in the King’s Speech, and to speak to the concerns raised by the noble Baronesses, Lady Sheehan and Lady Bakewell, around the ending of peat in horticulture. It remains our policy that we intend to legislate to restrict and ultimately ban the sale of peat and peat-containing products. We appreciate that there is good support for this from the public and from within Parliament.

I turn to the noble Baroness, Lady Sheehan, and the right reverend Prelate the Bishop of St Albans, who raised the subject of disposable vapes. The Government launched a consultation on smoking and the use of vaping earlier this month. As part of it, the UK Government and the devolved Administrations are considering restrictions on the sale and supply of disposable vapes, including prohibiting the sale of these products due to the environmental impacts that they have.

The noble Lords, Lord Whitty and Lord Livermore, and many others raised the question of employment rights. I say to noble Lords that, over the past year, we have proven our commitment to supporting workers by introducing a number of new employment rights via government hand-out Bills, including a new day one right to request flexible working; a new legal right to request predictable working patterns; additional protections for pregnant women against redundancy; a right to paid leave for employees whose child is receiving neonatal care; and a right for unpaid carers to one week of additional unpaid leave. Action is being taken in that area.

Perhaps related is the question of unpaid Ministers in this House, as raised by my noble friend Lord Forsyth. I and my noble friend the Lord Privy Seal have heard my noble friend Lord Forsyth’s plea and impressed the point at the highest levels. However, as he is well aware, the number of Ministers who are paid is set out in legislation, and to improve the lot of our Ministers who are unpaid we would need to legislate. Unfortunately, there is not currently the appetite to do that.

I turn to the remarks by the noble Lord, Lord Snape, who questioned the inclusion of the Pedicabs (London) Bill in the King’s Speech—

[Lord Forsyth of Drumlean (Con)]

I am most grateful to my noble friend. I appreciate her courtesy in referring to what I said. As David Cameron is joining the House on a salary of £106,000, can we take it that his Minister of State will be paid?

[Baroness Penn (Con)]

My Lords, I could not possibly comment on that, but I join my noble friend in welcoming David Cameron to his new post. I think we will be very pleased to have someone of such talent and experience join your Lordships’ House.

To return to pedicabs, they are the only form of unregulated public transport on London’s roads. If we could deal with it through by-laws, that would be fantastic, but in fact it takes primary legislation to deal with that issue.

Many noble Lords, including the noble Lords, Lord Birt, Lord Grocott, and others, regretted the cancellation of High Speed 2 beyond Birmingham. We absolutely recognise the need better to support critical links between and within our cities and towns, but the reality is that High Speed 2 is crowding out investment to further these priorities elsewhere across the country. We have made the difficult decision not to extend High Speed 2 and, instead, to deliver the £36 billion of savings that we have allocated to Network North, an ambitious pipeline of alternative projects. The new plan will provide direct benefits to more people and more places and will do so more quickly than the previous plan for High Speed 2.

The noble Lord, Lord Birt, raised the need to upgrade the trans-Pennine rail route, which is absolutely a priority for this Government. The upgrade programme is expected to provide an extra two trains per hour and aims to reduce journey times between Manchester Victoria and Leeds from 55 to 41 minutes. The Government have committed £3 billion to date, and an announcement on future funding will be made later this year.

To the noble Lord, Lord Jones, I say that we are delivering a £1 billion upgrade to the north Wales main line, including electrification and improving journey times to better connect Wales with London and the north-west. We will now proceed with the steps necessary to implement this, including reflecting on the existing package of legislation before Parliament, necessary consultative steps, business case development, and our parliamentary and legal and fiscal duties.

Finally, the noble Baroness, Lady Bennett of Manor Castle, asked whether I stand behind the briefing that the first models of self-drive vehicles could be offered to market by 2026 if they are proved safe. The short answer, which at this time of the night will be appreciated by noble Lords, is yes.

So, this Government have a comprehensive plan to deliver a strong economy, secure energy supplies, a state-of-the-art transport sector and a safeguarded environment. From bringing down inflation and the national debt to growing the economy and tackling climate change, we are committed to making long-term decisions for the benefit of everyone across this United Kingdom. That is what the first King’s Speech in many a generation delivers, and I commend it to the House.

Bank Accounts

Lord Forsyth of Drumlean Excerpts

Wednesday 19th July 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, it is important to distinguish between any action that may have been taken on freedom of speech grounds, or on the grounds of people’s political views, and the PEP regulations, which are to do with people’s status as politically exposed persons. However, the noble Lord is right, and we have discussed this issue in the House many times: the banks have not always applied those regulations and guidance as they should. That is why we had two amendments to the Financial Services and Markets Act to take action in this area, both to amend the regulations and for the FCA to review its guidance and the banks’ adherence to it. My right honourable friend the Economic Secretary has written to the FCA again recently to reiterate the importance of that review and to say that, if any action can be taken during the conduct of that review, we will expect that to happen also.

[Lord Forsyth of Drumlean (Con)]

My Lords, I declare an interest as the chairman of a bank. I also have an account with Coutts Bank—although, by the way, I have nothing like the wealth that has been mentioned. I point out to my noble friend that Coutts Bank is owned by NatWest, and the largest shareholder in NatWest by a long way is the Government. Should the Government, as a shareholder, not say to NatWest that this kind of conduct is unacceptable? Also, what is the FCA doing? On the basis of what we read in the newspapers, Coutts Bank has been in breach of rule 4, which requires it to treat customers fairly.

[Baroness Penn (Con)]

My Lords, as my noble friend has noted, the Government have a shareholding in NatWest Group, but it is managed at arm’s length and on a commercial basis by UK Government Investments and I do think that is the right approach. My noble friend also noted the role of the FCA. He is right that it is for the FCA and other relevant independent bodies to determine whether any breach of regulatory requirements has taken place—so I will not comment on that, but I would expect them to do so.

Bank of England: Interest Rate Policy

Lord Forsyth of Drumlean Excerpts

Wednesday 12th July 2023 Lords Chamber

Asked by

[Lord Forsyth of Drumlean]

To ask His Majesty’s Treasury what assessment they have made of the impact of the Bank of England’s interest rate policy.

[Lord Forsyth of Drumlean (Con)]

My Lords, I declare my interest, as in the register, as chairman of a bank.

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, we constantly monitor the UK economy’s performance and outlook, and we acknowledge the pain that rising interest rates are causing for many households. However, setting interest rates is the responsibility of the independent Monetary Policy Committee of the Bank of England. The Government do not comment on the conduct or effectiveness of monetary policy. We will continue to support the MPC as it takes action and focuses on making the tough decisions necessary to tackle inflation.

--- Later in debate ---

[Lord Forsyth of Drumlean (Con)]

My Lords, I fully understand the need to respect the independence of the Bank of England, but that it is not the same as denying it being subject to proper accountability. The Bank of England was responsible for a huge increase in the money supply through quantitative easing—which resulted in part in the inflation that we are now experiencing—despite warnings from Andy Haldane, its chief economist at that time, that that would result in inflation. Andy Haldane is now suggesting that there may be an overreaction and overcorrection in putting interest rates up to the extent that they are being. This will cause misery to millions of people. The Bank of England should surely be accountable for this.

[Baroness Penn (Con)]

My Lords, I agree with my noble friend that the Bank of England should be and, indeed, is accountable for the decisions that it makes, but it is not for government to comment on the conduct or effectiveness of monetary policy. He is right that high levels of inflation and, therefore, high interest rates, are causing pain. That is why the Government are taking action to support people at this difficult time, including the mortgage charter, agreed by my right honourable friend the Chancellor, that covers around 90% of the market and gives people options when they are facing higher mortgage rates to make sure that their payments continue to be affordable.

Inheritance Tax: Cohabiting Siblings

Lord Forsyth of Drumlean Excerpts

Tuesday 20th June 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, I do not think that I am not addressing the issue of principle; I am just disagreeing with some noble Lords on the conclusions of that question. The Government’s view is that marriage and civil partnership relationships necessarily entail particular legal and financial obligations to one another for the parties concerned. We think it is right that those obligations are reflected in our inheritance tax system. When it comes to the impact of inheritance tax, however, on people in the circumstances to which the noble Baroness referred, there are several measures in place to ensure that those impacts are minimised. Those include the existence of the nil-rate band, which means that the vast majority of people in this country—fewer than 6% of estates this year are due to fall subject to inheritance tax—do not pay inheritance tax. For those who are affected, there are measures in place to ensure the smoothing of those obligations when they find themselves in circumstances that we have heard about today.

[Lord Forsyth of Drumlean (Con)]

My Lords, following up on that last point, is not the problem that the only people who pay inheritance tax are the middle classes, or people whose only asset is the roof above their heads, whereas very rich people are able to buy farmland and make all kinds of arrangements to avoid inheritance tax? If the Treasury is keen on raising extra revenue, why not abolish inheritance tax and introduce capital gains tax on death, which would provide far more revenue and be far fairer to all concerned?

Financial Services and Markets Bill

Lord Forsyth of Drumlean Excerpts

Report stage
Tuesday 13th June 2023 Lords Chamber

I hope that, on the basis of the government amendments, noble Lords will feel that we have listened to and acted on their concerns, and that we are committed to ensuring that domestic PEPs are treated in an appropriate and proportionate manner, while effectively maintaining our anti-money laundering framework and remaining fully compliant with international best practice. I beg to move Amendment 96.

[Lord Forsyth of Drumlean (Con)]

My Lords, when I went home after the last time we discussed accountability of the regulators to Parliament, my wife said to me, “I was watching you speaking on TV and, very unusually, you were praising the Minister to the skies”. Here I am having to do it again. My noble friend Lady Penn, the Minister, has listened very carefully to all the points that have been made and has come forward in these amendments with a package that makes my Amendment 101 look rather feeble, for which I am extremely grateful.

I do not propose to spend much time talking about Amendment 101 but want to make just a couple of points. First, I declare my interest as a chairman of Secure Trust Bank. Secondly, it is not just the banks causing difficulty here; it is also credit card providers such as American Express, which seems to have been particularly heavy handed.

I have had an American Express card since 1979 and yet, only recently, I got an email which I assumed was a spoof that said I had to provide copies of my passport and bank statements, details of my investments and income, and my payslips—such as they are—to American Express within a certain number of days. I assumed this was some fraudster. Then I got another email telling me that my card had been suspended because I had failed to produce this material. When I rang American Express and said: “What is going on here?”, they said: “Unless you produce it, your card will remain suspended”. Of course, there were a number of payments on my card, which caused me some embarrassment.

That is a completely disproportionate use of the regulations. I am not even sure that some of the financial institutions are even looking at this work themselves. They may be contracting it out to other people who are simply involved in box ticking.

I will give another example from some years ago. My daughter had an account at the same bank as me, Coutts, and the manager said to her: “Is there any chance that you could move to another bank because you are such a pain to look after because your dad is a politically exposed person?”. In my view, that is an absolute disgrace. Our children find it difficult to get mortgages. People find it difficult on probate. What my noble friend is proposing today goes further than my amendment and I hope it will result in change.

There is a problem, however, in that the regulator is judge and jury in their own court on this matter, although I appreciate the measures which my noble friend has put in place to hold them to account. Of course, if we set up a committee of this House or a Joint Committee, I think this will be very high on the agenda if they have not actually dealt with it.

I have one slight niggle with Amendment 97 in my noble friend’s name, which is that she gives the FCA 12 months to publish. That seems an inordinate length of time. In the previous amendment we discussed today, my noble friend reduced the time to six months from 12 months. Perhaps she might reflect on whether it really needs 12 months to carry this out. At first, I thought it might be a move in the hope that perhaps there might be a general election and it might get lost in that and there might be a change of government and it might not happen. But one thing is clear: everyone on all sides of this House feels very strongly about this issue and I commend my noble friend for having taken this action, which I know has not been easy, and for the care with which she has listened to colleagues in coming forward with these proposed changes.

[Lord Moylan (Con)]

My Lords, I shall speak to my Amendment 105 in this group. I express enormous gratitude to my noble friend the Minister for all the effort she has put in to resolving this problem in the last couple of years and now in this Bill. I have had a number of meetings with her, for which I am grateful. I have learnt much from her in the course of those meetings and in Committee. I think this is also an appropriate occasion for me to apologise for the fact that in Committee I insisted on one particular point of detail that I was right and, of course, it turned out on closer inspection afterwards that she was 100% right and I had got it wrong, so I apologise for that.

She has made sterling efforts, and what she is proposing today is welcome. None the less, those efforts—at least until we came to this debate today—have not been successful in scrapping a system which is cruel, capricious and unjust. In part, that is because of resistance in parts of the Civil Service. While I accept her proposal today, it worries me—I am wary—that 12 months is being sought in which to come forward with proposals which will resolve it definitively.

I would prefer, in principle, my Amendment 105. I am grateful for the support given to it by the noble Baroness, Lady Hayter of Kentish Town, the noble Lord, Lord Sharkey, and my noble friend Lord Forsyth of Drumlean—which I think pretty well represents most sides of the House.

The legal background, which my noble friend explained to some extent, is that this all originates with the Financial Action Task Force—an international group in which British officials play an important part. It is not binding. It is not law, but it is like a standard of good behaviour, if you like. I can understand why my noble friend and the Government at large wish to continue to adhere to those standards. I have no problem with that.

However, it is clear that the FATF—I am afraid that is the expression I am going to use for the Financial Action Task Force—recommendations make a distinction between domestic and foreign PEPs. It is difficult for the European Union to make such a distinction internally— I think the noble Baroness, Lady Bowles, who was involved with the European Union at the time, will confirm this—so when the FATF recommendations were incorporated into a European Union directive, that distinction between domestic and foreign PEPs was lost. So, as it was then transposed into UK law through the money laundering regulations, that distinction no longer appeared. However, it is clearly there in the FATF recommendations.

Since we are no longer obliged to adhere to the European Union directive, it is entirely possible for us, and entirely consistent with any sense of international obligation we have, to restore that original distinction. That is what my amendment would do in law straightaway. The FATF recommendation is that domestic PEPs should not be subject to the money laundering regulations unless they are in what is described as a “higher risk business relationship”. I have stuck very closely to that wording in my amendment.

It is also my view that when the Government come back in a year’s time, or maybe sooner—I hope it will be sooner; it does not have to be a year—they will end up more or less with my amendment. If they want to stick to the FATF recommendations and yet alleviate some of the burden on domestic PEPs, this is more or less where they will have to be. That is what I would prefer, but I am clearly not going to see it today.

I will add a few other points. As I say, I think my amendment is the standard against which within a year we will be judging what the Government come back with. There are a few other points not captured in the amendment that I think the Government have to address in the course of the review. First, at the moment, banks claim that the tipping-off provisions in the money laundering regulations mean that they cannot tell us when they are investigating us as PEPs. So, one gets these bizarre requests, as described by my noble friend Lord Forsyth, but if you try to have an intelligent conversation with them about what is going on, you are completely blanked and no explanation whatever is forthcoming. They claim that this is mandated upon them. I think that is possibly a misinterpretation, but in either event, it has to go. We have to be able to talk sensibly to people who are trying to make such inquiries if we are indeed within scope of them at the end of this process.

Secondly, it must be made clear to the banks that the closing or freezing of accounts should be very much a last-resort action, and only if there is already evidence of a suspicious transaction. It cannot be resorted to in the way that some banks have been doing. It is simply unconscionable that perfectly ordinary people who are family members—not necessarily Members of this House—are having their accounts closed down or frozen while investigations take place, when there is no evidential basis for doing so. It is simply, “Your turn has come round on the agenda to be inquired into”. Can my noble friend say whether we can look forward to any alleviation in practice during the next 12 months while we are waiting for this to happen, or is the full rigour of this unjust system to be persisted with while we are waiting?

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Moved by

[Lord Forsyth of Drumlean]

103: After Clause 71, insert the following new Clause—
“Bank of England digital currency: legislation
The Bank of England may not issue digital currency unless authority to do so is granted by an Act of Parliament which is passed after this Act.”

[Lord Forsyth of Drumlean (Con)]

My Lords, I will speak to Amendment 103 in my name. It is supported by my noble friend Lord Bridges of Headley, who is currently chairing the Economic Affairs Committee, where the Governor of the Bank of England is before the committee. I hope he is giving him a good roasting on the issue of central bank digital currencies, which is the subject of this amendment.

I shall not bore the House by explaining what central bank digital currencies are and why they represent a threat as well as an opportunity, because all that was well set out in the Economic Affairs Committee’s report Central Bank Digital Currencies: A Solution in Search of a Problem? which was published in January 2022. The report was debated in the House in February this year. In the report’s recommendations was a simple suggestion that the Government give a clear indication that, should they decide to go forward with introducing a digital currency, it would be subject to primary legislation. To the astonishment of the committee, the Government have consistently refused to do so. They are arguing that they have not yet decided whether they think a central bank digital currency would be appropriate.

More recently, the Chancellor wrote a letter addressed to the chairman of the Treasury Select Committee and my noble friend Lord Bridges, addressing him as “Dear James” rather than “Dear George”. Ah—my noble friend is now in his place, so I do not need to elaborate too much. My noble friend Lord Bridges has been a vigorous champion of the need to have parliamentary accountability concerning this matter.

A main theme in Committee and throughout consideration of the Bill has been accountability. I have on several occasions now paid tribute to the Minister for responding to that. There are real issues about having a central bank digital currency. The first point is it is not a currency; it is simply a means of having digital banknotes. However, the fact that people are able to have an account in which their money is in digital form through a clearing bank with the central bank has huge implications for financial stability, depending on how much can be held in a digital account. The ability to move money from a conventional bank account to a digital wallet instantly would mean people would be able to react to financial events almost instantaneously. The fact that people could move their money to a central bank digital wallet would mean there would be less money—I should declare my interest as chairman of Secure Trust Bank—available to be lent, which would have huge implications for credit and, if taken to the extreme, would amount to the nationalisation of credit in our country, although no one is suggesting that.

There are also huge implications for privacy. If a digital currency is to operate effectively and not be prey to crooks and organised crime, it is essential that it is organised in a way that will monitor people’s transactions, and that, plus the ability to limit transactions, has big implications for civil liberties. For the first time in my life, I have had left-wing libertarian organisations writing to me saying how much they appreciate what I have been saying on this subject.

I will not take up the time of the House—and by the way, this Report stage is the very model of how Report on a Bill should be conducted. I will simply say to my noble friend that the notion that the Treasury and the Bank of England could get together and introduce a central bank digital currency without having proper parliamentary scrutiny and debate about these issues is utterly ridiculous in my view and I do not understand why the Government have been resisting doing so.

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Another question was asked by my noble friend Lord Bridges and the noble Baroness, Lady Kramer, on why the commitment is not in the Bill. There could be unintended consequences, such as inadvertently preventing the Bank carrying out its existing day-to-day duties. For example, the term “digital currency” is not defined in the clause or elsewhere. However, in practice, the Bank already issues some forms of digital money other than cash which could be considered digital currency without further definitional clarity—for example, in the form of reserves it issues to financial institutions, which are used in wholesale settlement. I reassure all noble Lords that, while we cannot support the amendment placing the commitment in the Bill, it does not change in any way the Government’s commitment, made very publicly to both Houses, to the intention to introduce primary legislation should a decision be taken to go forward with the digital plan.

[Lord Forsyth of Drumlean (Con)]

My noble friend has made valid arguments for not putting the amendment, as drafted, in the Bill. However, she and her very clever officials could get around this by tabling an amendment at Third Reading to that effect.

[Baroness Penn (Con)]

I am afraid that I am not in a position to commit to my noble friend’s suggestion. I hope that the reassurance he has heard from all Front-Benchers on this issue will persuade him not to press his amendment at this time.

[Lord Forsyth of Drumlean (Con)]

My Lords, once again, my noble friend has gone beyond what we might expect in responding to the debate, so it is a pleasure to beg leave to withdraw my amendment.

Amendment 103 withdrawn.

Financial Services and Markets Bill

Lord Forsyth of Drumlean Excerpts

Report stage
Thursday 8th June 2023 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in the second day of Report. I declare my financial services interests as set out in the register. I thank my noble friend the Minister and all the Treasury officials for their engagement during and particularly after Committee with the issues in this group of amendments.

I will speak to Amendments 12, 19, 40, 41 and 92 in my name. Noble Lords with an eagle eye on the Marshalled List will note that there is more than a similarity between the amendments I tabled in Committee and in this group, and the government amendments. I thank the Government sincerely for taking on board not just the issues but also my wording.

Ultimately, as the Minister said, this is one of the most significant changes to financial services regulation in a generation. It is important that, in structuring the role of the regulator, we have at this stage the right level of scrutiny and the right requirements for the regulators to provide the information required at the right time to undertake that scrutiny.

The arrival of the international competitiveness objective is a positive thing within the Bill. These amendments give scrutiny the right opportunity to see how that objective is operationalised. Does the Minister agree that it is important to look at every element of information and the timeliness of all the elements being given to both financial services regulators to enable the right level of scrutiny to take place? To that extent, I ask her to comment particularly on Amendment 92, alongside my other amendments, because this seems like no more than the base level of detail that one would want to be able to form that crucial scrutiny function.

Having said that, I am incredibly grateful to the Minister, the Government and all the officials for taking on board so many of the issues and the wording from Committee, and bringing them forward in this group.

[Lord Forsyth of Drumlean (Con)]

My Lords, I find myself in the very odd position of having to say that the Government have handled Committee stage consideration of the Bill brilliantly. The Minister listened to a lot of quite robust criticism of the Bill, some of it from me, on the issue of accountability. It is fair to say that, across all sides of the Committee, there was a feeling that it was essential that there be proper accountability and scrutiny, given that we are, in effect, giving the regulators all our financial services legislation. She spent a great deal of time talking to all noble Lords in Committee and listening to those concerns. I therefore support the government amendments and thank her and her colleagues for the brilliant way in which they responded to what was a very robust Committee.

[Lord Eatwell (Lab)]

My Lords, there is a certain amount of confusion about the competitiveness objective and it is important to clarify it in discussion on Report. To illustrate this point, we have to understand that London is a rather peculiar financial centre, because it has a very limited hinterland of domestic savings. It is unlike the United States, where New York has a huge hinterland of domestic savings. It is therefore necessary for London to attract savings and funding from around the world, and it does that brilliantly well.

An important component of that is that London is seen as a well-regulated and efficiently regulated centre. The primary objectives set out in FSMA of maintaining market confidence, financial stability, public awareness, protection of consumers and the reduction of financial crimes are competitiveness goals in and of themselves. They make London more competitive and are a crucial component of the success of London at attracting funds from around the world.

The competitiveness objective that was introduced as a subsidiary objective is rather different, because there competitiveness means being allowed to take more risk. As everyone knows, in financial affairs the balance of risk and return is one of the key elements in making sensible decisions. This is true as much in regulation as it is in the operation of financial services business. It is particularly true in regulation when it applies to systemic risks, which only the regulator can understand and deal with.

It is therefore important that we do not overegg the competitiveness objective. It is important—it has introduced an important element in discussing the relationship between risk and return—but we should recognise that the primary objectives are the key to London’s competitiveness as a financial centre.

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[Lord Forsyth of Drumlean (Con)]

My Lords, I realise that we are on Report, but I should have declared my interest as chairman of Secure Trust Bank. I understand that it is not enough to have done so in Committee; it needs to be done at each stage.

[Lord Livermore (Lab)]

My Lords, I will be very brief so as not to detain the House further. Much of the substance of these issues was debated in the previous group on Tuesday evening, when I said that we strongly support the inclusion in the Bill of the new secondary objective for the regulators of international competitiveness and economic growth.

While the introduction of this secondary objective is a positive step, it is also important to ensure that it is meaningfully considered in the regulators’ decision-making. One of the main ways of doing this is by introducing some proven accountability measures to require the regulators to report on their performance against the objective. We therefore welcome the government amendments in this group, which will provide for initial reports on implementation of the competitiveness and growth objective, as well as other provisions that seek to improve regulatory accountability.