Draft Building Societies Act 1986 (Modifications) Order 2024

Mark Garnier Excerpts

Monday 9th December 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

This Committee may go on record as one of the swiftest yet!

It makes perfect sense to modify the Building Societies Act 1986 to bring it in line with the Companies Act 2006. We have no objection to the order. It is possible that it may only affect one building society, but none the less it would be fairly old-fashioned to have two separate sets of rules depending on which type of business we are discussing. We are behind the order, which makes a huge amount of sense. I will not take any more of the Committee’s time.

Question put and agreed to.

Draft Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2024

Mark Garnier Excerpts

Monday 9th December 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

I think this is the fourth or fifth time that the Minister and I have met across a Committee room, and yet again I do not think we are going to have any problems at all. At the last of our meetings in one of these rooms, I asked her a number of questions, and I am incredibly grateful to her and her office for getting back to me so quickly. I think that illustrates the very good working relationship between the Opposition and the Government in this respect.

The Opposition are delighted with all these measures. I was struggling to work out some complicated questions in order to make the Minister work for her office, but the only one I could come up with is on the timeline. She made reference to some further statutory instruments that will be introduced, and it would be very helpful if we had an idea of the timeline for when the process will be completed.

Aside from that, we are very happy to support the draft regulations and I thank the Minister very much for all those acronyms—I am learning more and more each time we meet.

Draft Financial Services and Markets Act 2000 (Ombudsman Scheme) (Fees) Regulations 2024

Mark Garnier Excerpts

Monday 25th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

I think the Minister and I are going to have an outbreak of unanimity in just about everything we do; we have yet to find something we disagree on. Members will be aware that this legislation was originally due to be implemented in May, but we got caught up in a bit of a general election, which unfortunately did not go quite so well for us. The Opposition therefore fully support the instrument, as Members would imagine.

The Minister made a good point about why the regulations are incredibly important: there are far too many people gaming the system. To support what she was saying, banks incur a great deal of costs as a result, and those costs are inevitably reflected on to consumers; so although it sounds in the first instance like the claims management companies are doing everybody a favour, they are actually increasing the cost of financial services for absolutely everybody. We are therefore wholly supportive of this instrument.

I have a couple of questions. To make sure the instrument does not affect some people badly, can the Minister set out how the Treasury proposes to monitor the changes to ensure that they go according to plan and that, where there is a two-tier system, vulnerable people do not unwittingly find themselves not represented if they use a claims management company?

My other question is on a technicality, and the Minister may not know the answer. The first 10 claims are free of charge for professional representatives. After that, claims cost £250, reduced to £75 if they are successful. Can claims management companies put in class actions—for example, a claim for 1,000 people 10 times—hoping to get a lot of people covered, and thereby potentially increasing the return they could get for each claim, since it is a class action rather than an individual claim, or is the intention that each claim will be an individual case, rather than a group of cases? If the Minister does not know the answer to that now, she should feel free to write to me.

We have absolutely no intention of opposing the instrument. It is a fantastic piece of legislation, brought in by the previous Government, and it is good to see that it has survived the general election, unlike the Minister who signed it off in the first place.

Draft Collective Investment Schemes (Temporary Recognition) and Central Counterparties (Transitional Provision) (Amendment) Regulations 2024 Draft Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Regulations 2024

Mark Garnier Excerpts

Tuesday 19th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

Thank you, Mr Efford, for chairing these proceedings.

I thank the Minister for going into quite a lot of detail on what is highly technical stuff. The Opposition welcome the changes. They continue the important work started by the previous Government to ensure that our legislative framework is fit for purpose after Brexit. Removing redundant EU references and aligning our investment fund regulations with UK priorities, we are streamlining oversight and maintaining stability in our financial markets. More of interest to the industry will be the clarity given in extending the temporary marketing permissions regime before the roll-out of the overseas funds regime.

As I said, we absolutely welcome the changes; but I do have a couple of questions, the first of which is on the application process for the funds. We are introducing landing slots for UCITS funds transitioning from the TMPR to the OFR. What steps are the Government taking to ensure that fund operators are fully prepared and supported to meet the deadlines to avoid any disruptions?

The other thing that is important for the future of the City and the growth agenda of the City is reciprocal access. While this is all about allowing access for European operators to come into the UK post Brexit—this may be a wider point to do with the growth agenda—what measures will the Government be taking to try to get reciprocal access for UK products to be marketed in the European Union?

Aside from those two questions, we are very happy with this move and will be supporting these measures.

Financial Services: Mansion House Speech

Mark Garnier Excerpts

Monday 18th November 2024 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I thank the Minister for advance sight of her statement, and I congratulate the Chancellor, via the Economic Secretary, on her maiden speech to Mansion House. It has gone down broadly very well, and we are pleased that she recognises the City for what it is. The Minister rightly points out that the UK hosts a competitive and global financial centre, but changes to regulation must not be burdensome, and they must be worked through properly with the industry. When and where the Government take steps to enhance the performance of that sector, they can be guaranteed of our support. As the Chancellor mentioned in her Mansion House speech, in a generous tribute to her predecessor, much of the regulation reform discussed today was started under a Conservative Chancellor. I therefore wish to put on record recognition for my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt) and the work he did in that area.

Before I turn to the substance of the statement, inevitably I will talk about the Budget. It is worth reminding the House of the most pressing parts of the Chancellor’s Budget, which she left out of her Mansion House speech. In her speech she mentioned the word growth no fewer than 41 times, but we have to look at the facts. When the Conservatives left government, we had the fastest growing economy in the G7, but now growth has halved. The Chancellor’s increase in national insurance means that businesses are picking up the tab to pay for Labour’s open tap on spending. She will no doubt have read the letter sent to her by 200 hospitality businesses, highlighting job losses across their sector and a wider range of sectors. Despite all her talk about growth, business groups and economists agree that Labour’s approach to the Budget is choking the momentum of our economy. Britain deserves a Government who back growth, empower investment and deliver prosperity. I hope that the Minister today will admit to the British public that while she talks about growth, her party’s plans to grow the economy fall short of an economic growth agenda.

On the substance of the reforms that the Minster has outlined today, we believe that the objectives that the Chancellor is attempting to achieve with her Mansion House reforms are broadly the right ones. First, it goes without saying that delivery of the reforms that the Conservatives started in government is to be welcomed, including the focus on growth; my right hon. Friend the Member for Godalming and Ash (Jeremy Hunt) legislated to ensure that financial services and markets regulation has a secondary growth duty. It is regrettable that the Government could not publish the final version of the pension investment review or the pension Bill in time to accompany this statement.

As I turn to my questions, I should make it abundantly clear to the Minister and the House that these reforms must remain focused on delivering the best deal for pension savers. While additional investment is welcome, the pension market should not be treated as a Government cash cow for public investment if it loses sight of the paramount objective of delivering a secure return for savers. It is true that unlocking greater investment and delivering greater returns for pension savers can come together—both can happen at the same time—but I must push for the publication of the finer details of this policy. The emphasis must still be on pension savers. While greater investment and greater returns can come together, security in retirement is what the pension industry is all about.

Work to reconcile those two aims was furthered by my right hon. Friend the Member for Godalming and Ash when he announced reforms earlier this year, which included requiring pension funds to publicly disclose how much they invest in UK businesses compared with those overseas, and disallowing schemes that performed poorly for savers from taking on new business from employers. Can the Minister confirm that those reforms remain Government policy, and that nothing she is announcing today changes those policy strands?

Can the Minister set out a timeframe for the proposed mega-funds? Some 86 local authority pension funds will be consolidated into just eight. What are the criteria on which the Government have chosen eight? Why not one, 10 or 15? The Government note that the local government pension scheme in England and Wales has

“assets…split across 86 different administering authorities…with local government officials and councillors managing each fund.”

Can the Minister clarify whether each of the 86 local government pension funds will have a stake in each of the eight mega-funds, or will they each be allocated to just one mega-fund, thereby possibly distorting the risk profile of that pension fund?

The Government state that the consolidation into a handful of mega-funds will enable the funds to invest more in assets such as infrastructure. Can the Minster confirm whether the “infrastructure” that the Government mention in their press release refers to both public and private infrastructure projects? On the topic of infrastructure, what is the expected return on Government-owned infrastructure projects? Will pensioners ever be mandated to take lower returns to support the Government’s investment objectives? The Minister with responsibility for pensions, the hon. Member for Wycombe (Emma Reynolds), who is in her place, gave rise to some ambiguity about whether there will be mandating of pension fund investment in Government projects in her Financial Times article this morning. Furthermore, will the trustees overseeing these mega-funds be restricted by the Government as to what they can invest in, or will they be free to choose their investment and risk profiles?

The Government also state:

“A new independent review process will be established to ensure each of the 86 Administering Authorities is fit for purpose.”

Can the Minister give any further detail on that review? Who will be running it, for how long will it be running, and what is considered “fit for purpose”? How many of these funds would have to be considered not fit for purpose for the Government to reconsider the number of mega-funds?

To conclude, we support what the Government are trying to do with their reforms, many of which are ours, but questions remain about the detail of the policy. We will scrutinise the detail of the legislation when published. I finish as I started—by saying that the Government are talking about investment and growth, but have just delivered a Budget that downgrades growth and crowds out business investment. Those things are not compatible, and we urge the Government to put forward a workable plan for growth. They must not rely solely on the financial services sector to bail them out.

[Tulip Siddiq]

I thank the Opposition spokesperson for his comments. I think he welcomed the news, although I am not quite sure. He spoke a lot about the ex-Chancellor, the right hon. Member for Godalming and Ash (Jeremy Hunt), who did a lot of work in this space. I remind the House that the ex-Chancellor said that there was

“Much to welcome in the Chancellor’s Mansion House speech today.”

The Opposition have said that these are “broadly” good reforms; I thought I would remind the Opposition spokesperson of that. I also remind him that we are not interested in sticking-plaster politics. We have a long-term vision for the economy, which is why we are looking at using the national wealth fund and the industrial strategy to ensure that we grow the economy.

I will answer a few of the hon. Gentleman’s questions, but if I do not get to all his pension questions, the Minister with responsibility for pensions is happy to meet him. I point out that our public services are crumbling, and that we inherited a £22 billion fiscal black hole from the previous Government. We had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability in order to allow businesses to thrive. He pointed out that hospitality businesses were contacting him. More than half of employers will see either a cut to or no change in their national insurance bills. To support the hospitality industry, we are permanently cutting business rates for retail, hospitality and leisure from 2026. That comes alongside a 40% relief on business rate bills next year for thousands of premises.

We are committed to delivering economic growth by boosting investment and rebuilding Britain, which is exactly what our Budget did. The interim report of the pensions investment review, which the hon. Gentleman had a lot of questions about, put forward proposals to drive scale and consolidation in the defined contribution workplace market. The Local Government Pension Scheme is still consulting. The final version will come out in spring next year, but as I said, the Minister for pensions is happy to speak to him. There is international industry consensus that the scale and consolidation benefit investment and savers, and that these measures could unlock around £80 billion of productive investment.

On the hon. Gentleman’s questions about the reforms taking autonomy away from local authorities, under the proposals in the consultation, each administrating authority would retain control over the most impactful decisions by setting their investment objectives and strategic asset allocation. The consultation proposes that implementation of the chosen strategy be delegated to investment experts in the asset pool, who are best placed to execute the investment objectives to meet the desired investment outcomes. I hope that reassures him that we will not take autonomy away from the authorities.

The hon. Gentleman talked about the overall package of boosting UK economic growth and benefiting pension scheme members. The objectives are complementary. Driving consolidation and tackling waste in the pension system ensures that schemes can achieve the necessary economies of scale and efficiencies to pursue diversified investment strategies. I reassure him that assets such as infrastructure and private equity are seen as part of the balanced portfolio, and can enhance savers’ returns. They will boost economic growth, so he does not need to worry about that, and we will benefit the communities where pension savers live.

The hon. Gentleman spoke a lot about what the previous Government did. They talked a lot about pensions, but they actually never did anything. We have shown in the first few months of a new Labour Government that we mean business, and we have our action ready to go. By next spring, he will see the full details in the Bill.

Draft Local Loans (Increase of Limit) Order 2024

Mark Garnier Excerpts

Wednesday 13th November 2024 General Committees

[Mark Garnier (Wyre Forest) (Con)]

It is exciting—fantastic—for me to start my new job as a shadow Treasury Minister on something so utterly uncontroversial. Obviously, we will support this; there is no question about that. But I would like to make a couple of points.

It is interesting to see that the Public Works Loan Board amount, on a year-by-year basis, has now gone up to pre-pandemic levels, and that we have come back up quite quickly. It is also worth bearing in mind that that was around the time when the new rules were introduced about prudence; it will be interesting to see whether there is any explanation as to why that has happened now. It could be perfectly harmless, but it is important for monitoring.

I have three principal questions. First, the Minister mentioned the rules that were brought in. Can the Government confirm that they will remain committed to those new rules? That is very important. They were there to avoid speculative investment, and we want the money to be properly used to benefit local communities, albeit at a commercial rate of return. It is important to make sure that speculation does not come into this, so can he confirm that?

Will the Government also confirm that they intend to closely monitor how councils are borrowing? That is important because some well-meaning district councils may make some slightly unwise decisions. What metrics will the Government use to make sure that local authorities are borrowing prudently in accordance with the rules, so that we can understand how that is being monitored? Finally, what steps are being taken to manage debts effectively, ensuring that they do not hinder future potential borrowing requirements or place tighter strain on local authorities that may or may not be struggling with tight budgets for one reason or another?

We are keen to support the order; it is a perfectly reasonable thing and it is important for us to support our local authorities. Some are incredibly innovative and a lot of the money is used to support local communities at a commercial rate of return. We see nothing wrong with that, but I will be grateful if the Minister can help me with those questions. It looks as if we may be finished within five minutes.

Local Government Finance Act 1988 (Non-Domestic Rating Multipliers) (England) Order 2022

Mark Garnier Excerpts

Tuesday 17th January 2023 General Committees

[The Financial Secretary to the Treasury (Victoria Atkins)]

I beg to move,

That the Committee has considered the Local Government Finance Act 1988 (Non-Domestic Rating Multipliers) (England) Order 2022.

It is a pleasure to serve under your chairmanship, Sir Robert.

This legislation will deliver a tax cut of £9.3 billion over the next five years for businesses. We are protecting businesses, small and large, from inflation by freezing the business rates multiplier for the upcoming year. That means that all businesses will pay 6% less than they would have done had the Government not intervened. We have a duty to our businesses as a Government to ensure a fair and responsive business rates system, while of course raising sufficient revenue to support this country’s vital public services. We have sought to strike that balance each year, and this year will be no different.

From April this year, rateable values will be updated for all non-domestic properties using evidence from April 2021. That means that initial bills will reflect changes in market conditions since 2015. That in turn will ensure a fairer distribution of the tax burden between online and physical retail, something I know that colleagues are particularly concerned about. Large distribution warehouses will see an increase in bills and retail, hospitality and leisure businesses will see decreases. At the same time, we recognise that business rate payers may feel uncertain about the upcoming revaluation, given other pressures driven by the global challenges that the country is facing, including of course rising prices around the world and their impact on our businesses.

At the autumn statement, we announced the steps that we will take next year to provide support through these difficult times, with a package worth £13.6 billion over the next five years.

[Mark Garnier (Wyre Forest) (Con)]

My hon. Friend has announced very welcome proposals. One of the big arguments about the economy at the moment is that giveways will be inflationary, so creating more liquidity in the economy could create an inflationary pressure. Is my hon. Friend convinced that the money she has announced, rather than going into the wider economy, will be used to invest in businesses to make them more productive?

[Victoria Atkins]

We are, and what is more, because of how we have increased the multiplier and also the package we announced at the autumn statement, we have been focusing our efforts on those small businesses and the retail, hospitality and leisure industries, because we know that they are finding it very difficult at the moment. That also means that larger distribution warehouses will see an increase in bills, which is a fair response to the massive increase that we have seen in online trading in recent years.

I will not go into detail on the range of measures we intend, but, as I said, we have measures to help the retail, leisure and hospitality sector, which will extend and increase their relief scheme up to a cash cap of £110,000 per business. That means that the typical pub, for example, will see a fall in their rateable value, receiving more than £10,000-worth of support from the business rates package. We have also announced transitional relief in response to many trade representatives, which will help businesses with a fall in their bills next year. And we are providing more than £500 million of support over the next three years through a new “supporting small business” scheme.

The order marks an important step in the Government’s efforts to support businesses, particularly those on our high streets and our retail, hospitality and leisure sector as well. It is an important step in the package of help to ensure that we are supporting those businesses over the next five years with the £9.3 billion tax cut.

Financial Services and Markets Bill

Mark Garnier Excerpts

2nd reading
Wednesday 7th September 2022 Commons Chamber

[Richard Fuller]

As the hon. Gentleman will know, there will be plenty of opportunities for him to review each of the 200 measures in Committee, should he so wish, and to make recommendations. He will also be aware that the Government have already undertaken significant consultations with industry and others, and that there are ongoing reviews of a number of measures that are in place, some of which are contained in schedule 2. I do not feel that what he fears will actually be the case. There will be a process of consultation on a number of these measures, and there will be ample time for questions to be asked in the House as those consultation proceed.

As I have said, we have already undertaken fundamental reviews in some areas to ensure that we are seizing the opportunities of leaving the European Union, and this Bill delivers their outcomes. Let me touch on these briefly.

The Bill gives the Treasury the powers to implement reforms to Solvency II, the legislation governing prudential regulation for insurance. The Government are carefully considering all responses to their recent consultation and will set out their next steps shortly. The Bill also allows the Government to deliver on the outcomes of the UK’s prospectus regime review, taking forward key recommendations from Lord Hill’s UK listings review. These reforms will ensure that investors receive the best possible information, help to widen participation in the ownership of public companies and simplify the capital raising process for companies on UK markets. This can help to boost the UK as a destination for initial public offerings and optimise its capital raising processes.

The Bill also delivers, through schedule 2, the most urgent reforms to the markets in financial instruments directive—MIFID—framework, as identified through the wholesale markets review. It will do away with poorly designed and burdensome rules, such as the double volume cap and the share trading obligation, which will allow firms to access the most liquid markets and reduce costs for end investors. We intend to bring this into effect shortly after Royal Assent.

In reforming our regulatory framework, it is right to think about the regulators’ objectives so that they reflect the sector’s critical role in supporting the UK economy. For the first time, the Prudential Regulatory Authority and the Financial Conduct Authority will be given new secondary objectives, as set out in clause 24, to facilitate growth and international competitiveness. The FCA and the PRA will do this within an unambiguous hierarchy that does not detract from their existing objectives.

It is critical that these new responsibilities for regulators are balanced with clear accountability both to the Government and to Parliament. This is addressed in clauses 27 to 42, alongside clause 46 and schedule 7. The Bill includes new requirements for the regulators to notify the relevant parliamentary Committee of a consultation and to respond in writing to formal responses to statutory consultations from parliamentary Committees. The regulators are ultimately accountable to Parliament for how they further their statutory objectives, so these measures recognise the importance of the Committee structure for holding the regulators to account. While I welcome the new Treasury Select Committee Sub-Committee, it is ultimately for Parliament to determine the best structure for its ongoing scrutiny of the financial services regulators.

[Mark Garnier (Wyre Forest) (Con)]

I was on the Treasury Committee a number of years ago when we were looking at the Financial Services Act 2012, when competitiveness was not properly addressed. Is my hon. Friend convinced that the Treasury Committee will be able to instil a sense of urgency in the regulators and convince them that competitiveness is incredibly important? It is one thing to hold the regulators to account, but another to be able to drive them to implement the will of Parliament.

[Richard Fuller]

My hon. Friend opens up what was an area of particular personal interest to me when I was a Back Bencher, and I therefore feel tempted to stray, during what might be my rather temporary position on the Front Bench—[Hon. Members: “No!”] That was a cheap attempt for a laugh, but if I may just say this without straying too far, I think it is recognised across the House that the role of Parliament in holding regulators to account needs further investigation. The Bill is quite remarkable because we are building on a structure from the year 2000 that put tremendous power in the hands of the regulators. We think that is right. We do not think that we should have the same prescriptive statute-based approach as the European Union, because we feel that is too rigid, does not promote competition and does not help growth. But we must recognise, as we take the Bill through the House, that we have a responsibility carefully to ensure that those structures of parliamentary oversight are appropriate.

Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 2nd July 2019 Commons Chamber

[Jesse Norman]

The hon. Lady will understand that a range of schemes is available for some parts of the charitable sector. We recognise the concern that the hon. Lady is expressing; I cannot deal with individual cases, but obviously if she wants to write to me on the wider issue I will be happy to take it up with HMRC.

[Mark Garnier (Wyre Forest) (Con)]

A much loved local provider of employment for my constituents with learning disabilities has been forced to consider closure after a change in interpretation of the VAT rules regarding the provision of services under the personal payments arrangements; the retrospective VAT bill of around £150,000 means that Spokes, the trading arm of the charity the Emily Jordan Foundation, faces closure with the subsequent loss of a very important local resource. Will my hon. Friend consider meeting with Chris Jordan on behalf of the charity in order to discuss a way forward that can save this incredibly important local business?

[Jesse Norman]

Again, I absolutely recognise the concern, although of course I am not familiar with the details. I cannot get involved in a specific case, but my hon. Friend is welcome to write to me and I will refer the matter to HMRC.

Draft EEA Passport Rights (amendment, Etc., and Transitional Provisions) (EU Exit) Regulations 2018

Mark Garnier Excerpts

Wednesday 24th October 2018 General Committees

[John Glen]

No—I acknowledge that this is a significant event. What we are doing today is wholly necessary, and I cannot at the moment envisage anything of comparable significance.

Many of my esteemed colleagues will be familiar with the passporting system, which allows a firm in a European economic area state, such as a bank or an insurer, to offer services in any other EEA state on the basis of the authorisation granted by its home state regulator. That system relies on a set of reciprocal agreements between EEA member states, which are implemented in domestic legislation, in this case under schedules 3 and 4 to the Financial Services and Markets Act 2000. My Department had to make a key decision about how to deal with those existing EEA passport rights in UK law in the event of no deal.

In such a scenario, the UK would be a third country, outside the EU financial services framework and therefore outside the passporting system. The provisions agreed between EEA states would cease to apply in the UK, meaning any references to EEA passport rights in UK legislation would become deficient at the point of exit. As a result, the Government will need to repeal provisions in the 2000 Act implementing the EEA financial services passport, meaning that any EEA firms currently operating in the UK via a passport would lose their permissions to do so on exit day, just as UK firms would lose their permissions to passport into other EEA states. Instead, firms would need to obtain authorisation from the UK’s regulatory authorities—the Prudential Regulation Authority and the Financial Conduct Authority—by exit day if they wished to continue doing business in the UK.

[Mark Garnier (Wyre Forest) (Con)]

Has the Minister done an analysis of what that would mean in terms of income for regulators and the extra requirement for them to be the direct regulators as opposed to just having oversight?

[John Glen]

I cannot give my hon. Friend a precise figure, but it would be a considerable change in the way that the regulators operate and would need a considerable reconfiguration of resources in an ideal scenario. Having had conversations with Sam Woods and Andrew Bailey at the PRA this morning, it is a scenario for which they have made contingency provisions.

The volume of applications received by the UK regulators is expected to increase significantly, as many hundreds—perhaps thousands—of EEA firms submit applications for UK authorisation. That will include applications from large and complex businesses with a substantial UK presence. To minimise the disruption faced by EEA firms and UK businesses and consumers due to the loss of EEA passporting rights in a no-deal scenario, the draft regulations fulfil the Government’s commitment, made on 20 December last year, to introduce legislation to establish a temporary permissions regime.