Housing and Planning Bill (First sitting)
Marcus Jones Excerpts(9 years, 1 month ago)
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Brandon Lewis
Q 24 Okay, I have two other areas that I want to touch on. I know my colleague wants to jump in as well. The current Mayor and your office have had some fairly ambitious targets around housing provision for London and have achieved some really good numbers. I know you have big ambitions going forward—on Second Reading we heard my hon. Friend the Member for Kingston and Surbiton (James Berry) outline some of his ambitions, which involved having more extra homes built in London for every home sold, which is the point you were making. With the brownfield registers, planning permission in principle, the compulsory purchase order changes, the section 106 changes and so on that are outlined in the Housing Bill, and the work that the London Land Commission is doing, what do you think that means for affordable housing provision in London and for the work of your office?
Richard Blakeway: I think it strengthens our ability to drive house building within the capital, and it helps us to achieve our target of seeing 49,000 homes completed each year—a level that has not been seen since the 1930s. Clearly, it gives a stronger role to the Mayor to build upon his existing strategic planning powers. It also enables new roles in relation to co-ordinating affordable products in the capital, particularly around low cost of ownership, and enabling surplus land to come forward and identifying brownfield opportunities. So I think the combination of those measures will help us to achieve our goal to double house building.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
Q 25 Good morning, Mr Blakeway. Much of the Bill is rightly predicated on supply, but using the existing stock we have to support people into housing is also extremely important. How do you think the Bill will support landlords in recovering properties that have been abandoned?
Richard Blakeway: It is clearly useful that the Bill seeks to enable landlords to do that. We need to undertake a full analysis of how it would work in the capital, but we think it is a useful measure that has been introduced.
Bankers’ Bonuses and the Banking Industry
Marcus Jones Excerpts(9 years, 9 months ago)
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Cathy Jamieson
No, I am going to finish this point because it answers a number of questions that hon. Members have put.
We will use the money generated to fund our compulsory jobs guarantee, creating a paid job for every 16 to 24-year-old who has been out of work for over a year, and for those over the age of 25 who have been out of work for more than two years. According to the latest labour force survey, youth unemployment was 740,000 in the three months to December 2014, which was an increase of 3,000 on the previous quarter. We know that being unemployed while young damages people’s prospects years into the future. Research shows that young people who have been unemployed for a year will, on average, be £125,000 worse off over their working lifetime, which means that a person on the average wage would have to work nearly six years longer to make up for the cost of being unemployed while young.
Cathy Jamieson
I am not going to give way because I am making important and serious points about the future of our young people. I have been very generous in giving way and I want to finish this point. Our bank bonus tax not only will offer a lifeline for thousands of young people, helping them to earn, learn, and get a foot on the career ladder, but will help the economy and mean that the banks give something back to society.
In addition to that and our wider programme of reform, we will extend the deferral and clawback period for bonuses, ensuring that rewards are paid out proportionately and can be recouped when evidence of reckless or inappropriate behaviour is revealed further down the line. As I said, the financial crisis and recent scandals have shown that risky decisions can take up to a decade to have an impact. The next Labour Government will therefore ensure that if bankers have been shown to have acted inappropriately or made reckless decisions, banks will be able to claw back any bonuses awarded. We will act on the recommendations of the Parliamentary Commission on Banking Standards by extending the period for the clawback of bank bonuses that have already been paid to at least 10 years. We will also extend deferral periods for senior managers to at least 10 years, which will help to deter the rash and short-sighted behaviour that we have seen in the past, and to encourage banks and their employers to have a view of the long term.
Andrea Leadsom
I will give way in a moment, but I want to be very clear at this point. In such debates, there is always a sense that somehow all bankers are terrible people. The truth is that the vast majority of the up to 2 million people employed in financial services do an honest day’s work and always have done. They would not seek to rip anybody off, or distort anything they do. They are honest, decent people. I want to pay tribute to the work of financial services not just in oiling the wheels of our economy, but in contributing so much to our economy as a whole. Notwithstanding the very real misconduct issues, which have disgusted all of us right across the country, it is true that only a small number of people are responsible for such wrongdoing. I will talk about what we have done to put that right after I have given way.
Andrea Leadsom
Philosophically, I agree entirely with my hon. Friend. Many people across the country will agree that the absolute level of remuneration in financial services needs to be clearly justified. Although the Conservative party truly believes that wealth creation, which creates jobs, tax revenue for the Exchequer and growth for our economy, should be properly remunerated, we want to give as much power as possible to shareholders to ensure that they can take decisions that make it absolutely clear that remuneration should reflect the contribution of the individual, and not just some norm in the industry.
We have agreed with the recommendations of the Parliamentary Commission on Banking Standards and asked the financial services regulators to look into implementing them, in particular the extension of clawback to 10 years when an investigation into an individual is ongoing and the extension of deferral to seven years for senior managers, which is a significant increase from the current three years. The regulators are due to publish final rules in response to the consultation shortly. I am sure that hon. Members will agree that we want to keep our independent regulators independent, so that they act in the best interests of our economy and not in the interests of a political party.
Mr Marcus Jones
My hon. Friend has mentioned power for shareholders and political interference. Does she agree that it is not right for the Government to intervene in certain situations, such as in the financial crash, when the last Prime Minister effectively pushed Lloyds TSB and RBS into a shotgun marriage?
Andrea Leadsom
I agree with my hon. Friend in principle. We want to see the market working properly, shareholders taking the decisions on remuneration and businesses acting fairly in the interests of all their stakeholders. That is why we have been so determined to sort out transparency, fairness and the binding votes that boards have in regard to the actions of the banks.
Our desire to see a lack of political intervention is why we have opposed and continue to oppose the deeply flawed and politically motivated EU cap on bonuses. My right hon. Friend the Chancellor, the Governor of the Bank of England and the head of the Prudential Regulation Authority agree that it will not control bankers’ pay, but instead push up fixed pay, make it more difficult to claw back earnings when things go wrong, weaken financial stability and make it more likely that the taxpayer, rather than the banker, pays the cost of mistakes. We continue to believe that the cap is fundamentally flawed. Members will know that we have, however, withdrawn our legal challenge to the cap and are instead looking at how else we can build a system of pay in global banking that encourages responsibility, rather than undermines it.
Financial Conduct Authority Redress Scheme
Marcus Jones Excerpts(10 years ago)
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Guto Bebb
I am grateful for that intervention. The issue of consequential losses is of significant concern, because when the FCA redress scheme was established it clearly said that consequential losses would be dealt with on the basis of accepted legal principles, and yet of the £310 million-worth of consequential losses that have been paid out, £305 million relates only to interest at 8%. In other words, claims for other consequential losses have been derisory under the scheme thus far.
I want to highlight two other concerns. Tax treatment of redress payments is a real concern that can be dealt with by the Government and, as I have said, I will also touch on the exclusion of those businesses sold embedded swaps.
I will be quick, because I am aware that many hon. Members want to speak. I have a simple first example of the lack of consistency. When the scheme was established, it was decided that consequential losses and the redress would be paid in one instalment. Many businesses argued that that was unreasonable and unfair, and as a result of the second Backbench Business debate on this issue, nine of the 11 banks that are in the scheme agreed that they would split those payments. The FCA, however, despite saying that it wanted a consistent scheme, has allowed two banks to continue to insist on a single payment. That is a clear example of a lack of consistency.
The evidence I have gathered also shows that there is a lack of consistency on outcomes within individual banks, which clearly raises a question about how the work of independent reviewers is being overseen. If they are coming up with conclusions and recommendations for redress that are significantly different for businesses with very similar problems, there is a question as to whether the work of those independent reviewers is being monitored properly.
Mr Marcus Jones (Nuneaton) (Con)
My hon. Friend has been a stalwart campaigner on this issue and deserves great credit. On transparency, is there not a question about whether those reviewers, the review process and the reports they provide are truly independent? Constituents of mine who have been caught up in this have not received any of that information.
Guto Bebb
I am grateful to my hon. Friend for his intervention and agree with his rather depressing analysis, because my second point is that there is a concern about the significant lack of consistency on redress among the banks. We have to draw the attention of the House to the accusation published in The Times this morning that some banks have been putting pressure on their independent reviewers to make recommendations for redress that are acceptable to the banks rather than to the business in question. The allegation is made by a whistleblower who worked for KPMG on the independent review of RBS cases. It reflects anecdotal evidence from Bully-Banks, the campaigning organisation, that RBS customers have a 12% chance of getting a full tear-up, which is significantly less than the 65% at Barclays, 89% at Lloyds Banking Group and 64% at HSBC. If this is a consistent scheme, it is difficult to understand how the outcomes for individual businesses in one bank are so significantly different from those in other banks.
One of my concerns about transparency is that the FCA is not making available figures that highlight the outcomes on a bank-by-bank basis. It is simply giving us global figures. I accept that my concerns are based on anecdotal evidence, but it does seem to match evidence from other sources, including that provided to me by an independent reviewer working for HSBC who claims that HSBC feels that RBS is taking advantage, and that from the whistleblower from KPMG who worked on the RBS redress scheme who claims that RBS is challenging any claim over £750,000. The evidence is stacking up that this is not a consistent scheme.
Mr Marcus Jones
I thank my hon. Friend for giving way again—he is being very generous. Does he agree that the FCA should look for consistency rather than simply come to us as constituency MPs when we raise issues and tell us, in effect, that it agrees with a bank’s independent reviewer without explaining why?
Mr Marcus Jones (Nuneaton) (Con)
I thank my hon. Friend the Member for Aberconwy (Guto Bebb) for the work and effort he has put into this issue not just on behalf of his constituents but on behalf of people who have been wronged by the banks up and down the country. He has done a fabulous job and we should all congratulate him on that.
I recall the initial debate in this Chamber on this important subject. I spoke about a business in my constituency that had been badly disadvantaged as a result of an interest-rate hedging product. The product in question was not just mis-sold by their bank; it was almost forced on my constituents by their bank. I was therefore extremely pleased when following that initial debate the FCA announced the redress scheme. The aims of the redress scheme suggested it would tick the boxes for my constituents—do the job and put my constituents back in the position they were in before the swap product was mis-sold to them.
It is important that we look at what the FCA scheme says in this regard. It states that the scheme provides for “fair and reasonable” redress, which
“means putting the customer back into the position they would have been in had the regulatory failings not occurred, including any consequential loss.”
So the FCA had in fact set a very high test, which in principle was the right and proper thing to do. It was a test that, if properly applied, would surely lead to a fair outcome for my constituents and many people similarly affected. In practice the FCA scheme has worked up to a point, but it has not gone anywhere near satisfying its original aims.
I shall deal with the issue of simple damages, which, on the whole, I believe has worked well. Most of the banks have agreed to pay simple damages and deal with the issue of consequential loss separately. There are two exceptions, however. One of those two banks is my constituent’s bank, Barclays, which has refused to do that. It has refused to deal with consequential loss separately. I will go into more detail in a moment about why that decision to link simple damages and consequential loss is so unfair, but first I would just like to touch on the mechanism that has been put in place for businesses to challenge the decisions of their banks regarding consequential loss. Again, I quote the relevant passage from the FCA scheme:
“All customers who receive a basic redress offer have the opportunity to make a claim for consequential loss…To facilitate this, banks are offering support for customers, for example, by providing guidance to help customers put their claims together.
Banks are also being pragmatic and customer-centric when customers ask for more time to put together their claims and will consider reasonable requests for extensions on a case by case basis…All claims are being assessed by independent reviewers. If claims are rejected, banks are providing constructive feedback so that…customers may be able to provide additional information to support their claims.”
My constituents, taking the FCA at its word, contacted their bank, Barclays, for information to help them ascertain their consequential loss. This information took the form of requesting a schedule to show what additional loan repayments and charges they had paid by taking the swap rather than staying on their original product. Initially there were positive noises from the bank, but the information never materialised, despite repeated requests for it. My constituents then decided that the best way to deal with this would be to have their case independently reviewed, as per the scheme. They were not told by Barclays that their case had already been reviewed, and to their dismay their review had been closed by Barclays. In essence, they were told by Barclays, “Take the simple redress, take the 8% or go to law.” I am not sure whether the review was independent—several right hon. and hon. Members have mentioned that issue. There was no report, no detail of who the review was carried out by and no detail of why my constituents were incorrect in their assertions. There was no transparency in this process whatsoever. I questioned this with the FCA, which did no more than back up the actions of Barclays—the whole arrangement between Barclays and the FCA seemed very cosy. At best I would say the FCA scheme was inadequate, but at worst I would say it was completely toothless.
This situation has, unfortunately, left my constituents having to pay the up-front cost to employ an expert to calculate consequential loss. They have also had no choice but to incur the up-front costs involved in considering whether litigation was economical or not. Now, 12 months from the initial offer made by Barclays, they are left with a choice: take on a David and Goliath fight with Barclays, without even the simple damages to help them facilitate it, or capitulate, taking the simple damages and the 8% for consequential loss and suffering the ongoing losses because they have not been put back into the position they were in originally. To a small business, such as the one I am talking about, that is Hobson’s choice: they have no choice whatsoever. Given what I have heard from right hon. and hon. colleagues, I am sure that this case is not unique; this is happening up and down the country, not just with Barclays, but with other banks.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
I have two companies in my constituency that I am particularly concerned about, Regal Fayre and Bennett Holdings. I very much hope that my hon. Friend will agree that Members of Parliament have come to take part in this debate, so the Minister and her team should take a specific interest in each of the cases.
Mr Jones
I thank my hon. Friend for his invention, and I will address that issue in a moment. I know that my hon. Friend the Economic Secretary takes a considerable interest in this and I am sure she will take that interest further as a result of what she has heard today. People such as his constituents and mine need action. One way in which they could get the redress would be if these people were properly protected under the umbrella of the ombudsman. My constituents qualify for the criteria of the ombudsman scheme, but the maximum award of damages the ombudsman can offer is completely inadequate. I have spoken to the Minister on a number of occasions and at some length about that. Many people are going to the ombudsman and finding that it is recommending damages above and beyond what it can impose. I am aware that some banks are willing to honour that, but I am also aware that in many situations banks are not willing to honour what the ombudsman is saying. That brings us back to the point about inconsistency raised right at the start of this debate by my hon. Friend the Member for Aberconwy.
At the moment, I would probably give the FCA five out of 10—some people may think I am being generous—in achieving its aims under the scheme. If the FCA and the Government want to get 10 out of 10 in the eyes of my constituents, the FCA needs to have more teeth—if it does not have the power to deal with these issues. They need to make sure that a number of things happen. First, they need to make sure that all banks decouple the payment of simple damages from the matter of consequential loss. They also need to compel banks properly to assist their customers to assess their loss.
Guto Bebb
Although the FCA scheme says there is no need to get professional advice to help with the consequential loss claims, the evidence seems to suggest that the people who have taken on such advice have a better outcome than those who have not. Is that not another example of inconsistencies?
Mr Jones
My hon. Friend is absolutely right about that. The issue of consequential loss is reasonably simple in some cases but extremely complex in others. Even in the most simple cases it is difficult for the people involved. We must not forget that they are “non-sophisticated customers” and it is difficult for them to assess their loss, so they should be helped in that.
Let me highlight a number of other things that must happen to make sure that people are satisfied that they have had a fair deal from this process. There needs to be far more transparency in the review process, for the reasons mentioned by right hon. and hon. Members. The banks need to be compelled to divulge the identity of the reviewer, and all the correspondence and other supporting documentation in relation to that review process. There also needs to be a review of the maximum level of compensation the FCA can award, to make sure that all small businesses are truly protected without having to go to law.
Finally, my hon. Friend raised an extremely important point about the tax treatment of people who get compensation. I know that the Government have already set a precedent in this regard; it may have been not for commercial loss suffered, but in relation to the Equitable Life scandal, which this Government have done their best to clear up. The payments made by my right hon. Friend the Chancellor to people affected by that scandal have not affected recipients’ tax positions. It is extremely important that we look carefully at this to make sure that the same applies in this regard.
This issue is about fairness; it is about fair redress for the loss that people have suffered. That redress can be fair only if the FCA scheme and the ombudsman can truly put people affected by this scandal back in the position they were in before they were mis-sold these awful interest rate hedging products.
Andrea Leadsom
I am sorry, but I will not give way.
Many Members have mentioned the financial ombudsman scheme’s money award limit that it is able to offer to customers. This level was deemed to be most appropriate. It does ensure that most complaints made by consumers and micro-enterprises can be addressed, but reflects the fact that cases involving very large sums of money may be more appropriately dealt with by the courts, rather than an informal process that has limited prospects of appeal.
In the event that the financial ombudsman scheme considers that fair compensation requires payment of a larger amount, it can make a recommendation that a firm pay the balance. That decision on the higher amount is not binding on the firm, but there is evidence that suggests that firms that subsequently go to the courts will find the courts take into account the recommendation of the FOS in determining what the outcome should be.
Mr Marcus Jones
Does my hon. Friend not accept, however, that many of these businesses are extremely small and are not in a position to go to law to see the ombudsman’s recommendation backed up, and that therefore the ombudsman’s remit in terms of the damages it can impose needs to be wider?
Andrea Leadsom
I agree with my hon. Friend in principle, but, as I have just set out, the intention has been that the sophistication test captures those who are not sophisticated as well as those businesses that are small and do not have the means to go to the courts. In addition, if they have been to the FOS, the intention is that that would cover the vast majority of cases. As I have said, I urge Members to write to me with any specific cases that they want me to look at.
Stamp Duty Land Tax
Marcus Jones Excerpts(10 years ago)
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Mr Marcus Jones (Nuneaton) (Con)
I warmly welcome the motion. I congratulate the Financial Secretary to the Treasury and the Chancellor on the help that they are giving to home buyers. I thank the Financial Secretary for listening, not just to the concerns of Members, particularly on the Government Benches, about stamp duty, but about how the Government may implement the policy. The Government have done absolutely the right thing to effect this policy immediately.
Back in the dark days of the great recession under Labour in 2009, when I was conveyancing residential property, the property market was on its knees. The Government of the day brought in a very welcome stamp duty holiday. That said, there were six or seven weeks between its announcement—at the Budget, I believe—and its implementation, depressing further an already very depressed property market. So I welcome what the Government have done and my hon. Friend’s taking on board those points.
The Government have taken the right approach to dealing with the problems associated with stamp duty. The major problem was the slab rate and the effect that it had, not just for people buying property who have to pay the stamp duty, but for people selling property. Those selling property at an asking price of £255,000, £265,000 or £275,000 have for some time been faced with the prospect of either having to do some dodgy deal involving carpets, curtains and other chattels, in which after the Finance Act 2004 and changes to stamp duty legislation most firms of solicitors were not willing to participate, or changing their price, often having to reduce it considerably, below the £250,000 mark, where 1% stamp duty would be payable and the buyer would have to pay £2,500 rather than £7,500. The reform will make a massive difference to people selling property.
Mr John Redwood (Wokingham) (Con)
One of the most persuasive points that we were able to make to the Chancellor when we lobbied him was that there were bands in the market where there were effectively no transactions at all because people could not get buyers to pay that little bit extra. That was distorting the value of their homes.
Sir Oliver Heald
Does my hon. Friend agree that one of the other aspects was that some property prices were pitched that little bit higher so that people were not right next to the line? That created a gap in the market pricing structure in both directions.
Mr Jones
Again, I agree. The old system created nothing but distortion in the property market. What will happen now—as I said, I am glad it is going to happen straight away—is that people buying at £250,000, although that is not a realistic price, will pay just 1%, the same £2,500 as before, and 5% only on any amount above that, which will make a massive difference.
Mr Jones
My hon. Friend is right and that was the fair thing to do. We must have sympathy, though, for people who completed transactions before yesterday. The new system cannot be made retrospective, which is a great shame for them, but it is a bonus for people in the process of buying property and for future buyers, especially as it will allow some people to free up some money so that they can go ahead and buy things that they will need for their new home or undertake improvements.
I have many buyers in my constituency who are buying at a price between £125,000 and £250,000, and the reform will make a massive difference to them too. They will not have to pay the full slab rate of 1% on the whole purchase price. The measure will have a major effect not just in the south-east, but in the midlands and the north of the country. Over the years many people, especially those selling and buying on, have added the stamp duty cost to their new mortgage, so they were paying the stamp duty to the Government at whatever rate, and paying that money back over 25 years or for however long their mortgage ran. On a large scale, that would cause a massive cost. The new system should reduce that burden too.
I draw the Minister’s attention to the way in which the stamp duty land tax is administered. From the Finance Act 2004 onwards, a very simple process became extremely time-consuming and convoluted, which increased the cost of conveyancing to many buyers. My hon. Friend the Minister may want to consider examining how Her Majesty’s Revenue and Customs deals with these matters, to see whether some simplification may reduce the administration costs for buyers.
I thank members of the Treasury team for the action that is being taken. It will be a great help for first-time buyers and for people who want to move on. It is a policy for people who work hard and have aspiration. I welcome it in its entirety.
The Economy
Marcus Jones Excerpts(10 years ago)
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Chris Leslie
I will give way to hon. Members in a few moments, but there are other facets of the Chancellor’s promise in that 2010 autumn statement we have to nail down and put on the record. In that statement, he also promised that he would cut the interest charges to service the national debt by £19 billion. Do hon. Members know where we are when it comes to the national debt’s servicing costs? This year, debt interest has hit £52 billion and is forecast to be £75 billion by 2018-19—a situation compounded, of course, by the Government’s failure to tackle the deficit. Each year that they add another £100 billion to the deficit, they have to fund and service the debt levies accrued.
Mr Marcus Jones (Nuneaton) (Con)
What the hon. Gentleman says is all very sanctimonious, particularly given that his leader could not even mention the word “deficit” in the speech he made at Labour’s party conference. Furthermore, the hon. Gentleman’s party has set out £166 billion more in spending than the Government have, so how will he pay for that?
Chris Leslie
The hon. Gentleman is slightly deluded in his understanding of our position. We have made it absolutely clear that we will not have any manifesto commitments funded by additional borrowing, yet we have not heard the same promise from Conservative Ministers, so I invite the Exchequer Secretary to stand up and tell us how the Conservative Front-Bench team are intending to pay for the £7 billion-worth of pledges that the Prime Minister has made. Opposition Members have to conclude that the Government are going to add it to VAT. That is what they have done in the past; it is their track record. Ducks quack, the sun comes up in the morning and Tories increase VAT. It is what they always do.
Priti Patel
My hon. Friend is right: over 1 million apprenticeships have been created.
Mr Marcus Jones
While unemployment soared under the last Government, does my hon. Friend welcome the fact that youth unemployment is down 50% in my constituency in the past 12 months, and does she agree we should now work towards full employment, to make sure that none of our young people are out of work?
Priti Patel
My hon. Friend is absolutely right, and that is, of course, the objective of this Government: we want to support and give a helping hand to the young in particular, as they start out in their careers and professional lives.
Priti Patel
The answer is simple and straightforward: it is through sustainability in our economy. That means making hard choices, tackling the challenges of public spending and encouraging the economy to ensure that it grows more. It is about the creation of more jobs, not about higher taxes that penalise the wealth creators of this country.
Mr Marcus Jones
Is not what my hon. Friend saying confirmed by the fact that there are 670,000 fewer workless households in this country under this Government than there were under Labour, as a result of our following our long-term economic plan?
Priti Patel
My hon. Friend is absolutely right. The Labour Government consigned people to lifelong dependency, and it is our welfare reforms that have enabled us to ensure that work pays and that people are trained to get back into work. Britain would have been much better off, had we not had the mess of an economy on the brink of collapse, a banking system on its knees and a budget deficit in double figures. The only way to help people in this country is to grow the British economy. When we grow the economy, wages grow and living standards improve. The Governor of the Bank of England said last year that
“ultimately the growth in real wages is going to be determined by recovery in…this economy”.
Priti Patel
My hon. Friend is absolutely right. This Government made the right decisions. For a start, we do not vilify businesses; we work with them to help them grow, export, and expand overseas. We have also invested heavily in UKTI, which is working in partnership with businesses up and down the country.
Mr Marcus Jones
My hon. Friend is talking about exports. Does she agree that this Government have set out the right conditions for exports? That is proven by the fact that we are now exporting more cars than we have imported since the 1970s.
Priti Patel
My hon. Friend is absolutely right. In his constituency and his region, the motor manufacturing sector is doing incredibly well and demand is incredibly high. Long may that continue. That is all about creating the right economic conditions to allow that to happen.
EU Budget (Surcharge)
Marcus Jones Excerpts(10 years, 1 month ago)
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Mr Osborne
Let us get it on the record that the shadow Chancellor says that the budget deficit is going up. We will wait for the forecasts at the beginning of December and see who is right.
Mr Marcus Jones (Nuneaton) (Con)
I congratulate my right hon. Friend on this deal, but the situation adds to the frustration that many of my constituents have with the EU. Does that not show that we need to renegotiate such matters and then give people in my constituency, my right hon. Friend’s constituency and constituencies across the country an in/out referendum so that they can decide whether they want to stay in the EU?
Mr Osborne
My hon. Friend is absolutely right. People in Nuneaton and across the country will have their chance to vote on whether Britain stays in the European Union. I want to see reform in Europe and I want to put that reform to the British people. The only way the British people will have that say is if they vote for my hon. Friend and other Conservative Members.
Stamp Duty (Housing Market)
Marcus Jones Excerpts(10 years, 3 months ago)
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Mr Marcus Jones (Nuneaton) (Con)
Thank you, Mr Betts, for that latitude.
I congratulate my hon. Friend the Member for St Albans (Mrs Main) on securing an extremely important debate. I come to it as one of the many Members, particularly Conservative Members, who have worked in the real world before coming to the House; I used to act for people buying and selling residential properties. I have conducted thousands of residential conveyancing transactions, so I have seen at first hand the effect of stamp duty and some of the challenges that it can cause.
Back in the ’90s, the stamp duty level was £30,000, although it was quickly doubled to £60,000 by the Conservative Government of the time. I remember, however, a long period under the Labour Government when the rate was held at £60,000, and right up until 2003 virtually every single transaction was subject to stamp duty. We are getting back to that point now, even in the type of area that I represent in the midlands, where house prices are below the average. When stamp duty was first introduced, it was not envisaged as catching people buying at the bottom end of the market, as it now seems to be. Stamp duty does not affect only the south-east and London. I understand why Members representing those areas, where it is an issue, are present, but it is something that affects the whole country.
I am going to make a few points about how stamp duty is calculated. First, there is the slab rate; as we all know, if people buy a property at £250,000, they have to pay £2,500 in stamp duty for the privilege of that transaction. If they purchase a property for £250,001, the stamp duty goes from £2,500 to £7,500—a massive leap. As my hon. Friend the Member for Esher and Walton (Mr Raab) said, that causes a huge market distortion, particularly for people who are selling properties valued by estate agents at £255,000, £265,000, £270,000 or even £275,000. In such cases, most buyers will say, “That’s fine, but I don’t want to pay £8,000 or £9,000 in stamp duty, so I do not want to pay £270,000 for your property. I want to buy it for £250,000, because the stamp duty is far lower.”
There is also a problem for many second-time movers. At one time, many of them would have been able to take mortgages with a loan-to-value ratio such that they could afford to finance the stamp duty out of the overall transaction, putting it into their mortgage. People might think that that is a good or a bad thing, to put a tax debt over 25 years or whatever the mortgage term is, but that is what a lot of people did to accommodate it. Over the past years, however, with the tightening of mortgage lending, lenders have decided that they no longer want to see that happen, which has made things difficult for second-time movers.
Another thing caused by stamp duty has been, traditionally, the move by some people to commit tax avoidance—on the part of some, even tax evasion. For obvious reasons, I always discouraged people from doing that; in some cases, I said that I would not act for those trying to commit tax evasion. I have heard of all sorts of ideas—carpets and curtains for a couple of thousand pounds being the obvious trick to avoid stamp duty.
I have even heard of someone saying, “This is the price, then x amount on top, and I will throw in a second-hand car.” That type of practice is what people talk about as a way to get around our slab rate system. I do not condone it and I would never do that for people; I hate to think that others have conducted such transactions. When people are buying property and paying stamp duty, we must always remember that it is their personal liability and not that of the adviser advising them.
Mrs Main
One of the worst cases that I have heard is of people selling properties with planning permission for a large extension, so that they do not then pay stamp duty on the builder building the extension, but simply on the property that they have bought. That is the most outrageous case that I have heard recently.
Mr Jones
That can also happen.
We need to look at the slab rate again and to consider the distorting effect that it has on the market and the difficulties that it causes people, whether buying or selling—for people who want to sell because they want to downsize, or people who want to sell because they want to move on. That is one of the reasons why some of the suggestions that I have heard over the years to charge stamp duty to the seller would also be completely inappropriate and unacceptable; it would place a massive burden on those trying to sell the investment that they have often worked for over many years.
I make a final plea to Ministers. If they are ever minded to make any changes to how stamp duty is charged or to its rates, will they be extremely careful about how they do it? Back in the dark days of the great Labour recession in 2008, following pressure from the Conservative party, the then Prime Minister and Chancellor decided to create a stamp duty holiday. They announced it with great fanfare in the press and on the media, but it was probably six or seven weeks before the policy was implemented.
I can tell hon. Members that a flat property market was depressed further, because people did not want to conduct transactions between when that announcement was made and when the measure came in, because that would not make financial sense and they could save money. I implore Ministers to make any changes carefully and to consider the implications for the overall housing market, which is extremely important to our economy. The housing market is now on the move, which is part of the reason why our services sector in this country is doing so well.
I ask Ministers to consider the issue extremely carefully. It affects not only the south-east or London, but all parts of the country in differing ways. It creates massive distortion, because of the slab rate. I ask the Minister to consider it carefully not only in reply to the debate, but in his work on our party manifesto.
Oral Answers to Questions
Marcus Jones Excerpts(10 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
We put the national economic interest first by fixing the mess that the shadow Chancellor left the British economy in. I have been doing some research on what he has been up to over the summer. I read an article in the Express & Star called, “Out and about with Labour’s Ed Balls”, about when he went canvassing last week. It says:
“as we walk down Essex Drive to another house (there’s no-one in), a group of boys on their bikes look over”.
They say, “Oh look, it’s Gordon Brown.” Even they can spot more borrowing and more debt—it is Gordon Brown all over again.
Mr Marcus Jones (Nuneaton) (Con)
T2. Some Members of the House predicted that the Government’s deficit reduction strategy would result in the number of jobs lost in the public sector far outweighing the number of jobs created in the private sector. Will my right hon. Friend tell us who was right and whether that prediction was accurate?
Mr Osborne
That prediction, like all the Opposition’s predictions, was completely wrong. For every job that has been lost in the public sector because of the necessary and difficult decisions that we have had to take to reduce the 11% budget deficit, more than five jobs have been created in the private sector. That is testimony not only to the strength of the Government’s economic plan, but to the ingenuity of British business in creating such opportunities.
Office for Budget Responsibility (Manifesto Audits)
Marcus Jones Excerpts(10 years, 5 months ago)
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Nicky Morgan
A lot less than the Labour party would have done had it been in government—[Interruption.] I thank the shadow Chancellor for the applause; that is very kind.
The creation of the OBR has meant that for the first time we have a truly independent assessment of the state of the nation’s finances. As the Chancellor noted in his Budget this March, it is to its credit that
“we now take it for granted that the figures presented at this Dispatch Box are not fiddled but fair and independent.”—[Official Report, 19 March 2014; Vol. 577, c. 781.]
By giving the OBR power to produce the official forecast, we have managed to remove many of the risks of the past and put the UK’s fiscal policy at the cutting edge of international best practice. The IMF said that
“strong fiscal institutions can enhance the credibility of consolidation plans”
and the shadow Chancellor wrote to Robert Chote affirming:
“Over the last three years, the Office for Budget Responsibility has become an established part of the framework of British economic policy with broad-based and cross-party support.”
I am sure that—it is not often I say this—we all agree wholeheartedly with the shadow Chancellor. It is also worth reminding right hon. and hon. Members that when the OBR was set up four years ago, it was deliberately designed to ensure that it would be independent and could steer clear of political wrangling. That independence and impartiality is crucial.
Mr Marcus Jones (Nuneaton) (Con)
My right hon. Friend is talking about the credibility that the OBR is building. Bearing in mind the political knockabout we have had today, the bogus calls from the shadow Chancellor, and the clear party politics being played, does she think that it would damage the OBR’s credibility if we entered into the plan that the shadow Chancellor is offering?
Nicky Morgan
My hon. Friend is absolutely right. One big issue that the Opposition have not addressed is that if this change were to be brought in without proper consideration, it would mean changes to the way civil servants work. That is something we value greatly in this country, and we would have to consider that issue when scrutinising any legislation.
Nicky Morgan
I entirely agree with my hon. Friend, who, as usual, talks complete economic sense, unlike the Labour party.
As academic evidence noted at the time of the OBR’s creation, it is vital that there should not
“even be a scintilla of doubt…about the OBR’s independence and impartiality, as negative perceptions may undermine the OBR’s reputation, requiring a major effort at changing such perceptions”.
Unfortunately, the Opposition’s proposal not only presents a risk to that impartiality, but raises several difficult practical questions, which I shall go through briefly.
Oral Answers to Questions
Marcus Jones Excerpts(10 years, 5 months ago)
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Mr Osborne
I will make a general point, which is that the internet has provided an enormous opportunity for many small businesses, because it has dramatically cut distribution and start-up costs and created all sorts of opportunities that did not previously exist for small businesses in Britain. If we believe in free markets and technological change, we should believe in the innovation that that brings. Specifically on the tax issue, we are working internationally—this cannot be done in one country—to ensure that the international corporate tax system reflects the digital economy and international business of today. We are helping to fund that OECD work, and we are expecting the first conclusions this autumn.
Mr Marcus Jones (Nuneaton) (Con)
Employment is up substantially in my constituency of Nuneaton, and unemployment has dropped 20% in the past year. Does my right hon. Friend agree that it would be absolute suicide to increase employers’ national insurance contributions, and can he rule that out as part of our long-term economic plan?
Mr Osborne
My hon. Friend has done some fantastic work with local businesses to increase jobs in Nuneaton and to ensure that small businesses expand. He is absolutely right that the Opposition’s plans for an increase in corporation tax, which they talk about openly, and for a jobs tax, which they talk about secretly, would be a double whammy that would put people out of work in his constituency.