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.

Customs and Borders

Mark Garnier Excerpts

Thursday 26th April 2018 Commons Chamber

[Nicky Morgan]

My hon. Friend is absolutely right. The cost to business, as identified already by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), must not be forgotten. This is not just about costs for the Government; it is about costs for business.

[Mark Garnier (Wyre Forest) (Con)]

rose—

[Nicky Morgan]

I give way to the former Trade Minister.

[Mark Garnier]

Just on a small technical point, my right hon. Friend is absolutely right that a trade deal takes a long time to complete and negotiate, but the plan is to transfer across the existing trade deals that we enjoy within the European Union at the early stage and then renegotiate at our leisure where we can improve them, so we will ensure continued business afterwards without deviation.

[Nicky Morgan]

I understand the point my hon. Friend has made; he is a former Minister and everything else. I will talk about this in a moment if I have time, but the trouble with it is that we have been saying, “The plan is—” for some time now. We had a speech last month from the Prime Minister and we had position papers last summer: “The plan is—”. Time is running out, as we heard from the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), the Chair of the Home Affairs Committee. The hon. Member for Dundee East (Stewart Hosie) is not in his place, but as he said, when we travelled to the United States with the Treasury Committee, the US was very clear: “Yes, you can have a free trade agreement. It’ll be on our terms.”

Let me talk about logistics. As I have said, part of today’s debate is about getting the evidence, and we took evidence in the Treasury Committee from Jim Harra, a senior official at Her Majesty’s Revenue and Customs, who said:

“The key challenge, for example, in ro-ro ports, in contrast with container ports, is that in a lot of them there are no port inventory systems in place.”

We have less than 12 months to go to March 2019 and not that much longer to December 2020, and no port inventory systems are in place. He also talked about ensuring that declarations can be linked

“to the vehicle that is carrying the goods,”

so that they can

“flow off the ferry and we know what…lorry we need to check.”

The British Irish Chamber of Commerce has come up with a proposal for a new customs arrangement. Have the Government been exploring it? Much mention has been made of Northern Ireland, and for me this is a critical issue. I had the pleasure in the 2010 to 2015 Parliament of being a Treasury Minister. I was the Duties Minister, and I visited the Northern Ireland border. Other hon. Members will know far more about it than I do, but it is over 300 miles long and incredibly porous. Had it not been for the policemen I was with, I would not have known which side of the border I was on. It was impossible to tell. Realistically, how on earth is such a border going to be policed? This is not just about the economy; it is about the political and cultural sensitivities of the border. We have already heard about the Northern Ireland Affairs Committee’s conclusion about the aspirational aspects of the technology that might be needed.

This is a debate of the Government’s own making, because as we have heard, time is running out and silence on these important issues is no longer an option. It is completely right that Members of Parliament and Select Committees should ask questions about these issues. What are the Government’s plans? How are things going to work? We have to listen not just to those in the country, but to individuals and business in our constituencies. The Treasury Committee and the Select Committee on International Trade had a joint evidence session this week. When asked about the free trade agreements and the free trade policy that we are apparently going to pursue, Professor Patrick Minford, who many Members on my side of the House will say is somebody we should listen to, said:

“We don’t have any precedents for this.”

This country is being asked to experiment, at other people’s pleasure, with a free trade policy when we do not know what the costs will be for constituents and businesses in this country. I say to my party: if we undermine and ignore the evidence, the peace in Northern Ireland and the business and financial security of people in this country, we will not be forgiven for a generation.

Taxation (Cross-border Trade) Bill

Mark Garnier Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Mr Leslie]

That is why I suspect that the other place will look at the truncated scrutiny. I tried to get this out of the Minister earlier—not the Minister before us, but the Financial Secretary to the Treasury. It was not a Cabinet Minister who came to the Chamber to introduce the Bill, by the way, but I am told that a reshuffle might be going on, so perhaps the Chief Secretary or even the Chancellor are in negotiations. The junior Minister acquitted himself reasonably well at the outset—as well as he possibly could, given the line that was scripted for him to take—but I think that a Cabinet Minister should have presented a Bill of such scale and importance. It deserves proper scrutiny in this place, with the right number of Committee sittings, because otherwise the other place will have to do that job for us.

[The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)]

I am happy to confirm that the Bill will have eight Committee sittings in the House of Commons.

[Mr Leslie]

I can only hope—fingers crossed—that I am selected for the Committee. I know that my hon. Friends on the Front Bench will be keen to have me on it. I try my best to be as constructive as possible at all times, so I hold out great hope for that.

Part 1 of the Bill is very wide-ranging. My hon. Friends have made speeches about trade remedies in respect of anti-dumping and subsidy provisions. Perhaps the Minister will use his winding-up speech to cast a little more light on what the UK’s policy will be on competitive trade and, in particular, on subsidy issues. I know that Government Members have an interest in many aspects of trade with places such as China and other non-market economies. The question about subsidies is important, so I would like to hear a little more from the Government about what their policy stance will be. Will we cut and paste the existing EU approach or not?

A number of big decisions have to be made. When our constituents find out that we will have the power to raise or lower a particular duty, the widget manufacturers or whatever in our constituencies who might be prone to it, or whose competitors might be prone to it, will take great interest in contacting Members of Parliament to say, “Will you push the Government to raise this duty?” or, “Will you push Ministers to lower that duty?” This has the potential to fill our inboxes for decades to come.

Members of the European Parliament—we have sort of outsourced much of this policy to the EU for 40 years—have a number of scrutiny powers in respect of customs and excise and trade agreements that we will not have when those matters are brought to the House of Commons. I worry very much about trade agreements. Members of the European Parliament have the right to comment on them and even to suggest amendments to them. Of course, they then give final consent to trade agreements, but that is not part of the current Administration’s package under the customs and trade Bills.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for International Trade (Mark Garnier)]

I thank hon. Members for their contributions to today’s debate. It is a great pleasure and an honour as a trade Minister to close the debate on the Taxation (Cross-border Trade) Bill, on which my colleagues in the Treasury lead. However, the fact that a trade Minister is closing the debate is not only indicative of the unity of purpose across our Government to deliver critical legislation, but demonstrates how important our future trading relationship will be after we leave the European Union. As a country, we need to create the structures and legislation that will form the framework of our new, home-grown, global trading relationships, which will embrace the entire world.

Before turning to the specifics, I remind the House of the context of our discussion today. As the Prime Minister and the Chancellor of the Exchequer have made clear, when Britain leaves the European Union in March 2019, it will also leave the customs union and the single market. Many hon. Members, particularly Opposition Members, have claimed that during the referendum campaign, people were not told that we would leave the customs union and the single market. However, I was proud to stand as a remainer with Opposition Members, and I certainly said that we would leave the customs union and the single market if we left the European Union. The British public were well informed about what was happening with Brexit.

The key issue now is what kind of relationship we will have with the European Union from 29 March 2019. On customs, the Government have been clear that they will be guided by what delivers the greatest economic advantage to the UK. They have set out their objectives for any future relationship: an independent trade policy; trade with the EU that is as frictionless as possible; and avoiding a hard border on the island of Ireland.

The progression of the negotiations to the next phase means that we can now look forward to discussing our future customs arrangements with the EU. In that context, the Bill is especially vital to the UK’s preparations for EU withdrawal. Just as it allows the Government to establish a stand-alone customs regime and ensure that VAT and excise legislation operates as required on EU exit, it also gives the UK the ability to respond to a range of outcomes to the EU negotiations.

Several issues have been raised, particularly on VAT. The hon. Members for Nottingham East (Mr Leslie), for Aberavon (Stephen Kinnock) and for Newcastle upon Tyne North (Catherine McKinnell) mentioned an impact assessment on the effect of the VAT regime. I make two points on that. First, we cannot do an impact assessment of any meaningful depth until we know exactly what deal has been achieved with the EU. Until we reach that point, any impact assessment will be merely a random guess. Secondly, the Chancellor in his autumn statement made the incredibly important point that he will do everything he can to mitigate the effects of the changes to the VAT regime as we change it under the Bill.

The hon. Member for Redcar (Anna Turley), supported by my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke), made an impassioned speech about free trade ports in her constituency. She asked a couple of important questions. The first was whether the Government were supportive of free trade zones. The simple answer is yes, but with a caveat that we need to understand them a great deal more. Her second question was whether the Government would advocate Teesport as a free trade port. She made a strong case for that—she speaks very well on behalf of her constituents. The Government will be very happy to engage with her and hear her case for that.

It is incredibly important that we understand how ports will work. My hon. Friends the Members for Morecambe and Lunesdale (David Morris), and for Folkestone and Hythe (Damian Collins) and the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) all appealed for the ability for ports to work efficiently. The Government well understand that roll-on roll-off ports working efficiently is one of the most important things we can achieve in the negotiations. We fully understand the problems that would arise if there were a hold-up in port.

The hon. Members for Aberdeen North (Kirsty Blackman), for Nottingham East and for Sedgefield (Phil Wilson) asked about the CDS. HMRC will start migrating traders to the CDS in August 2018 to allow a six-month period for transition to all users by 2019. To reduce the risk at the point of exit, HMRC will continue to operate the current CHIEF system in tandem.

I do not want to go on too long, but I will quickly make a point about trade remedies. The framework will provide UK industry with a safety net against injury caused by unfair trading practices and by unforeseen surges of imports. It will be a key part of ensuring an effective rules-based system for a fully functioning independent trade policy. It is important that the lesser duty rule provides for proportionate protections which remove injury to UK industry without unnecessary costs, and the economic interest test will provide a sensor check to ensure that measures are not imposed where they might have a disproportionate impact on the wider economy. The UK market is a relatively small but complex market, and the effect on competition and consumers of duties that are too high could be significant. Both the economic interest test and the lesser duty rule have been designed with that in mind.

In conclusion, the UK has set out our ideas for how future customs relationships with the EU can work. As our negotiations with the EU progress to the next phase, it is only right that the Government take whatever steps they can to ensure that they can effectively implement a new regime. On customs, VAT and excise, and indeed in relation to some aspects of our future trade policy, that is precisely what the Bill will do, by taking the sensible step of providing the Government with the ability to put in place responses to a range of possible outcomes from the negotiations. I hope that right hon. and hon. Members will support this crucial legislation, as the Government continue to put into action the decision of the British people to leave the European Union. I commend the Bill to the House.

Question put, That the amendment be made.

Finance (No. 2) Bill

Mark Garnier Excerpts

Carry-over motion: House of Commons
Monday 11th April 2016 Commons Chamber

[John Mann]

Nothing is wrong with hairdressing, but it is wrong to have 80,000 apprentices who do not go into that industry because there are no vacancies. Instead, we should be spending money in areas where we need apprenticeships, such as manufacturing, and craft or building skills. That is more complex and difficult, and so we and the Government ducked it. That is why productivity fails to grow.

The third area is home ownership. That was regarded—this is an accurate historical comment—as the thing most associated with Margaret Thatcher, and it was fundamental to winning over Labour voters who shifted for a period of time and began voting Tory, particularly in ’79 and ’83, thanks to the concept that the Tory party was the party of home ownership. That concept has been destroyed over the past six years, and we should be taking up that mantle. We are in favour of home ownership. Of course young people in my area want rented accommodation temporarily, but their vision and aspiration is to own their own home. I do not know any people who do not want that, and the Government have repeatedly made that vision harder and more distant. We should be hammering home that core Labour value.

Fourthly, this Government have repeatedly accused the previous Labour Government of mortgaging the future and loading debt on to future generations, but this Chancellor, more than any other in British peacetime history, has loaded up the national debt, with his Back Benchers happily confusing deficit and debt every time it is debated. Under him, the national debt keeps going up dramatically. This year it is up dramatically, and the projections are for it to do that for the next five years. That is a fundamental economic failure of an unprecedented level by this Government.

[Mark Garnier (Wyre Forest) (Con)]

Will the hon. Gentleman give way?

[John Mann]

I will certainly give way for confirmation of the facts from a member of the Treasury Committee.

[Mark Garnier]

I am grateful to represent Conservative Back Benchers and leap to the defence of the Chancellor. Does the hon. Gentleman agree that the rate of increase of the debt was £156 billion a year in 2010, and that the Chancellor has substantially reduced that? He cannot deny that the Chancellor has done a terrific job.

[John Mann]

So the losses are not as big as they were but they are still losses. Imagine if I had put that argument in 2009 or 2010—I do not have the references with me so I will not waste time by quoting from them, but they are in Hansard because the then shadow Chancellor and the Leader of the Opposition, and many Back Benchers, were happy to make precisely that point. That is a fundamental economic weakness, and it is putting this country at a huge, long-term economic disadvantage compared with our competitors.

My proposal about city regions and broadband was not a shopping list issue; it is fundamental to making this country economically competitive again. How can we have new growth industries in those areas when villages like mine cannot even get simple broadband most of the time and people struggle to get a mobile phone signal? This is not where the world is at any more, and this represents a fundamental economic failure for this country.

There is one more failure. I will end—this is a slightly long ending, Mr Speaker—on what I am sure all Members will agree is an incredibly important point, namely the failure of this Government to tackle tax avoidance and offshoring. We have heard a lot of the theory, but let me tell the House what the people who do the advising on tax avoidance say. They are the best source on this, rather than politicians of any party or persuasion. They are the ones competing for the business of the very people who want to minimise their taxes by offshoring because they are wealthy enough to do so.

Those tax advisers are eulogising the fact that the agreements reached with the Cayman Islands, the British Virgin Islands, Bermuda, Anguilla, the Turks and Caicos Islands and Montserrat are non-reciprocal. According to HSBC, that means that UK financial institutions will not have any reporting obligations under the terms of the agreements. That is a fundamental weakness in comparison with what the Americans have done. We are not the leaders in this; we are well behind what the United States has done to enforce transparency.

The British overseas territories that I have just mentioned rely on us for their defence. We pay for their defence, so we have proper leverage. Those territories might be anachronistic quirks of history, but if they wish to remain part of the United Kingdom, they will need to play by our rules and, if you like, speak our language. I am a strong supporter of defending those territories, be it the Falkland Islands, Bermuda or the Cayman Islands, but it is unacceptable to have non-reciprocal agreements for residents of the Caribbean tax havens. There is nothing to address that in the so-called advanced and world-leading proposals in this Government’s previous Budgets that have already been implemented, and there is nothing in this Budget or in today’s announcements that will deal with the matter.

I also want to talk about the Liechtenstein disclosure facility. What does that have to do with those territories and tax havens? I thought that it probably did not have a lot to do with them because someone would have to set up an interest in Liechtenstein in order to qualify for the disclosure facility, but then I read about where we are with financial compliance obligations. Those who advise people who want to avoid paying taxes are absolutely clear about this. Let me quote from an article on a website called taxation.co.uk:

“It may be better to come forward under the LDF now, and clients who could benefit need to be identified.”

Another article says:

“Although there are several ways to make voluntary disclosures to HMRC, the LDF continues to offer extremely beneficial terms, despite the new restrictions on eligibility, and remains one of the most direct routes of disclosing to HMRC”,

and that

“participants…will…achieve immunity from prosecution…There is no need to have held an offshore asset at all in order to access the LDF.”

The only people who cannot do so are those who have already been criminally investigated by HMRC.

There are many examples of this, and that article explained in huge detail how, for example, a self-employed person could theoretically go for a Liechtenstein disclosure facility and—this has been widely advertised across the Caribbean and in other tax havens—why people should shift to it, because for the last three years, until 5 April this year, people could minimise their tax cheaply and beneficially through early disclosure. That is what the tax experts say, what they have advised people to do and what has been going on for the last three years. When the figures finally come out, which they will, we will see the vast numbers who have used that loophole, which was deliberately set up and advertised as such.

When it comes to dealing with tax avoidance, the Government talk tough but play soft. They give the nod, officially, allowing people to circumvent the system. As long as people pay for the right lawyers in countries such as Panama, they get that advice, and because they are competing, it is one of the few things that is publicly available. My advice to the House is this: let us remove these potential and actual loopholes forever. That is why this Bill is wholly insufficient and why the Government are failing on debt and the deficit. The tax is there; people are avoiding it legally. We have a duty to turn that around—a duty to the British economy and the future innovators and entrepreneurs who are being squeezed by the recession. They are the biggest losers of all in this, because they are the ones with brilliant ideas who cannot compete with those using tax loopholes and squeezing them out.

I will end on this, Mr Speaker—[Hon. Members: “Hear, hear.”] I know that Tory Members don’t like it up ’em, but they are failing the British economy, failing innovators and failing entrepreneurs, crowding them out and allowing tax avoidance on a massive scale. They have been caught and had their fingers burnt. There is a minimising—[Interruption.] I hear advice from a sedentary position. The Government have not delivered on tax avoidance, and that is why this Bill must be opposed.

Oral Answers to Questions

Mark Garnier Excerpts

Tuesday 1st March 2016 Commons Chamber

[Mr Osborne]

Many employer organisations and businesses have welcomed the national living wage, and many studies suggest that having a higher floor for wages drives up productivity, which, as the hon. Lady will know, is one of Britain’s great economic challenges.

[Mark Garnier (Wyre Forest) (Con)]

4. What progress has been made on implementing the charter for budget responsibility.

[The Chief Secretary to the Treasury (Greg Hands)]

As part of our long-term economic plan, the Government’s charter for budget responsibility was approved by Parliament on 15 October 2015. The charter sets a path to this country’s long-term financial health and to a surplus. Unlike other parties in this House, we will be strong and consistent in our support for the charter. The Budget is on 16 March.

[Mark Garnier]

In 2010, the budget deficit stood at 11.1% of GDP. This year, it is set to be down by two thirds at 3.9% of GDP, which is a remarkable achievement given the economic headwinds coming from outside the UK. Will my right hon. Friend tell the House what discussions he is having with other parties, in particular those on the shadow Front Bench, about how to reduce the budget deficit and turn it into a surplus, and are they proving to be helpful?

[Greg Hands]

I thank my hon. Friend for his support for our budget reduction efforts. I have had no such discussions so far, nor any submissions from those on the Opposition Front Bench. I have, however, received a submission from Ed Balls’s former head of policy, Karim Palant, who said of the shadow Chancellor’s changing position on the charter:

“This kind of chaos less than a month into the job is the kind of blow even significant political figures struggle to recover from.”

Bank of England and Financial Services Bill [Lords]

Mark Garnier Excerpts

Monday 1st February 2016 Commons Chamber

[Harriett Baldwin]

The hon. Gentleman is right to highlight the fact that the FCA is set up completely differently. However, I stress that the similarity lies in the operational independence. When it comes to the FCA, the Treasury is obviously able to appoint the chief executive and the board, but the operational decisions are for the FCA board, as we have made clear in recent weeks.

Let me move on to the second element of the Bill, which will make changes to the senior managers and certification regime. As hon. Members will know, the Government are committed to driving up standards of conduct across the financial sector, and to tackling the abuses and unacceptable behaviour of the past. That is why the Government are replacing the discredited approved persons regime with a much more robust new system, the senior managers regime, legislated for by the previous Government in the Financial Services (Banking Reform) Act 2013.

I find it quite extraordinary that, in the amendment they have tabled, Opposition Members have seen fit to claim that

“the Bill reduces regulation of financial services”.

This Bill is a vital opportunity to remove what the Parliamentary Commission on Banking Standards described as the “complex and confused mess” of the approved persons regime for 60,000 financial services firms, all insurers, FCA-regulated investment firms and all consumer credit firms, and to replace it with the more targeted and robust senior managers and certification regime.

Let me set out the benefits of the new regime; perhaps the Opposition will then reconsider their position. The approved persons regime is a relatively broad, unfocused regime in which all individuals who were considered to hold significant influence functions in the firm, or who dealt with customers would be subject to the regulators’ pre-approval in a tick-box exercise. Crucially, clarity of responsibilities at the top of firms was woefully inadequate. Firms could pass the buck for ensuring the fitness and propriety of their staff to the regulators, and the regulators could take enforcement action only against the individuals they had pre-approved.

The senior managers and certification regime tackles those problems head on. First, it focuses regulatory pre-approval on senior managers, the key decision makers at the top of firms. It enhances the accountability of these individuals through statements of responsibilities, documents that give clarity on which senior manager is responsible for each area of the firm’s business, and through the proposed statutory duty of responsibility that requires senior managers to take reasonable steps to prevent breaches of regulations in their areas of responsibility.

[Mark Garnier (Wyre Forest) (Con)]

Does the Minister agree that the senior managers regime will cut through the accountability far more, as the Parliamentary Commission on Banking Standards discovered? The regulatory regime at the time had the effect of forcing senior managers to create ignorance of what was going on within their institutions. The Bill will now absolutely reverse that, so that senior managers must know what is going on within their institutions so that they can take responsibility for infringements of the rules.

[Harriett Baldwin]

My hon. Friend, who was a distinguished member of the Parliamentary Commission on Banking Standards, is right to say that the commission highlighted the fact that the approved persons regime made it very difficult to pin down responsibility. The new regime, with its duty of responsibility clearly articulated —every organisation will have that set out when managers are first appointed and on an annual basis thereafter—is a much stronger regime. It also delivers more flexibility in the regulators’ enforcement powers, enabling them to impose high standards of conduct through rules applying to individuals, including those whom they have not approved. The expansion of the new regime to all authorised financial services firms will enhance personal responsibility for senior managers, as well as providing a more effective and proportionate means of raising the standards of conduct of key staff more broadly.

Given the improvements that the senior managers and certification regime with the statutory duty of responsibility delivers in terms of senior accountability, the reverse burden of proof is simply not necessary. In extending the new regime to all authorised financial services firms, it is important to consider whether, under these new circumstances, the application of the reverse burden of proof to any or all firms is appropriate. Most of the firms to which the regime will now apply are small, and it simply would not be proportionate to apply it to those firms. By retaining it for the banking sector alone, we would raise serious questions of fairness and competition.

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[Richard Burgon]

It may be that others can explain to the Minister the real purpose of a reasoned amendment in these circumstances. I think our action is entirely right.

The presumption of responsibility is so reasonable and necessary that the policy was introduced with cross-party support. That should not be forgotten. It was originally proposed by the Parliamentary Commission on Banking Standards, led by the Conservative right hon. Member for Chichester (Mr Tyrie) and Labour’s Lord McFall of Alcluith, and it was the Liberal Democrat Lord Newby, a Minister in the Conservative-Liberal Democrat coalition, who moved its introduction into law. I have to echo a point previously made by the hon. Member for East Lothian (George Kerevan), sitting on the SNP Front Bench, that it was passed as recently as December 2013, and the presumption of responsibility has yet to come into effect. It was meant to come into effect in March this year, and it remains untested. We must remember that this was a safeguard brought in by the very same Chancellor who is now seeking to scrap it.

[Mark Garnier]

The presumption of responsibility has not gone. The senior managers regime absolutely includes the presumption of responsibility for everybody in these institutions. The hon. Gentleman may have had a number of conversations with some of the banks being affected by this, as I have, and I served on the banking commission that brought in the reverse burden of proof. What is interesting is that the banks are now complaining bitterly that the reverse burden of proof has now been reversed, because that managed to be a tick-box operation and they now have a much more onerous responsibility for management than they ever had before. This is a far stronger measure for ensuring probity for the managers of banks than the reverse burden of proof.

[Richard Burgon]

I thank the hon. Gentleman, who is experienced in these matters, for his intervention, but every time we have received correspondence from, and listened to, bankers on this matter, they seem desperate for the reverse burden of proof to be scrapped. They say how dreadful it would be, how it was totally unjustified and that business as usual is fine—that we can just return to things with no risk of a repeat of the financial crisis of 2008. Unfortunately, I believe they were wrong, but we need to remember that this presumption of responsibility, or the reverse burden of proof, was a safeguard brought in by the very same Chancellor who is now seeking to scrap it.

In 2013 the Chancellor said he had

“called for a thorough and intensive investigation into how to improve standards in the banking system and the PCBS has delivered. I am pleased to say that the government will implement its main recommendations.”

Of course one of its main recommendations was this presumption of responsibility.

On that occasion, the Chancellor was not alone. This was his Bill and Conservative Members backed it. Indeed, the right hon. Member for Tunbridge Wells (Greg Clark), then Financial Secretary to the Treasury, clearly explained that his Government were introducing new rules to promote higher standards for all bank staff and were reversing the burden of proof so that bank bosses are held accountable for breaches within their areas of responsibility.

The Conservative Member for Macclesfield (David Rutley) was briefly on the Treasury Committee, and he said:

“It is critical to bringing about the individual accountability that many of us want to see across our financial services sector, with the tough senior persons regime, reversing the burden of proof and criminal sanctions for reckless misconduct. All those steps are vital”.—[Official Report, 9 July 2013; Vol. 566, c. 261.]

His party colleague, the hon. Member for North East Cambridgeshire (Stephen Barclay), said:

“I do not think there can be any doubt about the merits of reversing the burden of proof…The Government’s announcement that they will reverse the burden of proof is extremely welcome.”—[Official Report, 8 July 2013; Vol. 566, c. 119.]

I could go on, but instead I ask this question: what has changed? What, or who, has so dramatically changed the mind of the Chancellor? At the Treasury Committee in October the hon. Member for Wyre Forest (Mark Garnier) put the question many of us are thinking when he asked the Chancellor whether the proposed scrapping of the presumption of responsibility was “largely as a result of lobbying by the banks, which has the flavour of getting stronger.”

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[Richard Burgon]

My hon. Friend hits upon an important point. The role of a City Minister, a shadow City Minister and of the Government is not to represent the interests of the City to the population, but to fulfil their democratic function. A Government are not there to take orders from the City of London. Yes, we must listen to the City of London and value its contribution, but we are not its political representatives on earth.

On the Chancellor’s change of mind, the Chair of the Treasury Committee put it well when he asked his Chancellor a very reasonable question: “Why did you not wait for the regime to come into force to enable an assessment of it, how it works, before implementing this further change?” That was an extremely serious question. The change is based on no evidence, which is the worst kind of change.

Banks are having to put significant effort into identifying and establishing new procedures to meet the requirements of the 2013 Act, which received cross-party support in Parliament. The issues were already abundantly clear then, but now the Conservative Government have performed a dramatic U-turn and are not willing even to test the procedures that they initially supported. It is rare for an important measure to be abolished before it has even been introduced.

How will the public feel when they learn that the Chancellor is scrapping a duty on senior managers in banks—a duty that was welcomed as necessary on a cross-party basis—before it has even been implemented? The public’s deep concern about the behaviour of some senior bankers should extend to the Chancellor, who, it appears, is doing the bankers’ bidding, not the bidding of the British people. Do not the Chancellor and the Government understand the widespread anger of the public and their mistrust of the banking system? The public are right to remember that, because of the bankers’ behaviour, people whom this House is meant to represent lost their homes and their jobs. We should never forget that it was the bankers’ crisis that caused the deficit that this Government have relied upon as their justification for their political choice to cut our public services, cut funding to our local authorities, cut the incomes of working people and cut support for the most vulnerable people in our communities.

[Mark Garnier]

The hon. Gentleman is being generous with his time. I am sorry to be a pedant, but in 2005 there was a £43 billion budget deficit. There was a deficit long before the banking crisis, and there was a structural deficit that the banking crisis brought out.

[Richard Burgon]

I appreciate the hon. Gentleman’s pedantry. With respect, he makes a point that does not bear too much political scrutiny. The global financial crash caused the huge increase in the deficit and stalled the economy. It also gave the Government the opportunity to carry out their long-harboured ideological desire, decades old, to cut public services and wither away the state.

The Bill comes to us from the other place, where there was considerable debate at every stage. The Bill has changed, following a number of amendments proposed by the Government. In our reasoned amendment, we recognise those changes as improvements, and they are welcome, but the Bill has not changed significantly enough. As I mentioned, the Bill is in two parts, and on the first part—on the Bank of England’s structures—we recognise that the Government have made some positive movement, although it is insufficient. We recognise that they have moved on aspects of the oversight powers of the Bank’s court of directors, but the directors’ forum for discussion—the oversight committee—remains abolished.

We also recognise that the Government have moved on the proposed power of veto for the Bank’s court of directors over National Audit Office investigations, but the memorandum of understanding referred to in the Bill remains under negotiation and unpublished. On other aspects, in the House of Lords, there was no agreement. I wrote to the Chancellor asking that the memorandum of understanding be presented to this House during the passage of the Bill. I am glad to say that the Economic Secretary responded, explaining that it is not yet complete and is subject to ongoing discussions between the Bank and the National Audit Office. She explained that she will write to the Governor of the Bank of England and the Comptroller and Auditor General at the National Audit Office to see whether they will be in a position to share the draft memorandum of understanding during the passage of the Bill. In such an important matter, it can only be right for the House to have sight of that crucial memorandum of understanding. Any other approach would be a cause for concern.

The Bill replaces the Prudential Regulation Authority with a new Prudential Regulation Committee. Peers on both sides—including Government peers—expressed concern that that represented a downgrading and threatened a loss of independence.

As I have discussed at length, the Bill also replaces the presumption of responsibility with a duty of responsibility. Opposition peers challenged that on Report, and the Government’s measure scraped through by only 200 votes to 198. If I believe what I am told by the Minister, scrapping the presumption of responsibility is entirely uncontroversial and entirely reasonable. Unfortunately, that is not the case, and the issue gives us particular cause for concern in the wider context of the Chancellor’s new settlement with financial services.

We need a healthy and effective banking sector that is appropriately regulated, that serves the interests of the whole economy, that does not hurt ordinary people or small and medium-sized businesses, and that delivers the vital investment our country needs for long-term growth. The Conservative Government climbdown on the presumption of responsibility, which they previously supported, will hinder, not help, the fulfilment of those ambitions. Personal responsibility is vital for the operation of our regulatory systems. The Chancellor’s policy U-turn reduces exactly the personal responsibility that the Parliamentary Commission on Banking Standards recommended in its 500-page report. Scrapping a key measure before it has even had the chance to be tested makes no sense—unless, of course, the Chancellor is just following bankers’ orders. The startling and precipitous scrapping of a widely welcomed measure shows that there is a very real risk of failing to learn the lessons of the bankers’ crisis.

Our concerns go much wider than the presumption of responsibility, to the role of the Governor, the work of the FCA and the programme of selling off, for example, Royal Bank of Scotland shares at a loss to the taxpayer. The Chancellor’s whole approach says, “Let’s get back to business as usual.” However, it was the bankers’ business as usual that brought Britain to the brink; it was the bankers’ business as usual that caused the deficit. Returning to business as usual will make another financial crisis even more likely, with disastrous consequences for those we are meant to represent in this place, and that—to clear up any confusion on the part of the Minister—is why we are asking the Government in our reasoned amendment to think again today.

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[George Kerevan]

Absolutely.

As the right hon. Member for Chichester pointed out, time after time when there have been regulatory failures, the regulators have been implicated. I therefore do not want to return to a situation in which it is up to the regulators to prove that something has gone wrong in the new regulatory regime, when they are partly responsible for it. I want the onus to fall on the bankers themselves.

It is worth looking more forensically at the reasons against the presumption of the reverse burden of proof. Andrew Bailey has argued that there is a worry that when the next crisis comes along, senior bankers will rush off to the European Court and claim that their rights under the European convention on human rights are being taken away because of the reverse burden of proof. That is rubbish.

The Parliamentary Commission was perhaps a little unwise to use the phrase “the reverse burden of proof”, even though we all use it and I use it. We are not talking about criminal law and making people guilty until proven innocent. We are talking about infractions in banking if, say, a banking crisis takes place. The legislation that the Government are trying to change would make it an infraction to be responsible for an activity in which wrongdoing took place, rather than for committing the wrongdoing itself. To give a flippant example, if it is a criminal offence to be in charge of a bawdy house, the prosecution needs to prove only that somebody was in charge of that house of ill repute, not that they were selling their own body. It would be no defence that they thought the bawdy house was a nunnery.

The reverse burden of proof regime makes managers responsible for the activity in their banks. When a disaster takes place, it is up to them to prove that they failed to stop it happening, rather than, as has always been the case, it being up to the regulators to find the solution and explain what happened, which means that everyone hides behind collective responsibility.

[Mark Garnier]

The hon. Gentleman is making an extraordinarily intelligent speech, but he has just hit on the key point. It is possible for bankers to provide a tick-box operation, which their lawyers have advised them on, to prove that they have undertaken every possible measure to prevent such action. It is therefore very easy for them to get around the reverse burden of proof legislation. The point behind reversing that legislation, which was given by Andrew Bailey and by the Governor of the Bank of England and some of the Bank’s lawyers, is that there cannot be a tick-box operation to show that they have complied with the rules because they involve a much more esoteric way of running the bank. It is therefore much more difficult for bankers to escape the rules if something does go wrong.

[George Kerevan]

I respect the logic of the hon. Gentleman’s argument. Sadly, we will never get a chance to see the legislation that he voted for in the last Parliament put into practice and to watch it fail. I look forward to his contribution—he will have time to make it if I hurry up—and to finding out why he has changed his mind.

I am interested in Mr Bailey’s tick-box argument, which is that if we reverse the burden of proof, senior bank officials will hold endless seminars with those on the trading floor, explaining to them why doing the sort of things that happened in the LIBOR scandal is wrong. When the inevitable crisis happens, they will come with list of who they spoke to—they told the traders that this should not happen, but it did.

It is not enough to have lots of meetings; we must change the culture of the banks. It is also important to remember—I hope the Minister remembers this—the title of the Parliamentary Commission’s report on banking standards: “Changing banking for good”. There are a lot of good things in the Bill, but it does not change banking for good. It is half a loaf, and I am afraid that another half loaf will lead us more quickly to yet another banking crisis for which nobody is responsible. Ultimately, we need responsibility.

In conclusion, we are being offered a duty of responsibility versus a presumption of responsibility. Once upon a time, there was a convention: when a ship sank, the captain went down with the ship, whether it was his fault or not. It was presumed that it was his fault no matter what happened, because he was in charge of the ship. What happens these days is that the ship goes down, the captain gets into the first lifeboat, and he turns up at the inquiry to say—to use a Scottish term—“It wisnae me; I did my best”. Once upon a time Ministers also resigned when something went wrong. We should return to a situation where if there is a banking crisis the captain goes down with the ship, and we assume that he will do that, whether it was his fault or not, because he or she was in charge and leading the bank. If we do not change that culture, we will go on having banking crises ad nauseam.

Financial Conduct Authority

Mark Garnier Excerpts

Monday 1st February 2016 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

It is always a great pleasure to follow the hon. Member for Bassetlaw (John Mann). Some of my most entertaining afternoons on the Treasury Committee have been following him when he has been quizzing the Chancellor. Who can possibly forget that wonderful moment when he asked the Chancellor whether he had ever visited a Greggs bakery, starting off what then became known as the “omnishambles Budget”? He works very hard.

It is a great pleasure to speak in yet another debate secured by my hon. Friend the Member for Aberconwy (Guto Bebb). He has been a truly extraordinary campaigner in this particular area. Without a shadow of a doubt, he certainly deserved the honour he received in Wales for being the Welsh MP of the year in 2013. He has devoted a huge amount of forensic energy to looking into this subject. I have certainly enjoyed very much the privilege of working with him on the huge area of interest rate hedging products and Connaught, and trying to hold the regulator to account. Without his forensic help, we would have had very dull Treasury Committee meetings. It was he who managed to get hold of the smoking gun about how the regulator has turned its focus possibly to being more supportive of banks than the consumer.

When we consider the content of the speeches in this debate, it is fair to say that the evidence presented to us illustrates that the regulator is not necessarily always entirely fair to the consumer. The evidence supports the perception that the regulator has a pro-bank stance. We heard about the GRG report. If one wants to know what a long-delayed report looks like, look at the HBOS report. We see the guillotine of the PPI claims coming through in the not-too-distant future. We have seen the reverse of the reverse burden of proof for senior managers—we spent a lot of time debating that in the previous debate—and we have seen a change in the terms of the thematic review. I argued that this was a wasted opportunity to change the banking culture.

I completely agree that this is all good evidence for how the regulator is not necessarily standing up for the consumer, but when we look at the motion of no confidence in the regulator, it is fair that we need to take a slightly more rounded view. Have we perhaps, on occasion, been guilty of what sports commentators do when a poor goalkeeper successfully saves many, many shots, but, when he lets through one crucial goal, is criticised by everybody for not being up to the job?

[Anna Turley (Redcar) (Lab/Co-op)]

I share the hon. Gentleman’s concern about honing in only on the bad news, but that is cold comfort to the many constituents of ours facing these difficult problems. My constituent Mr Lilley and his family own a small glass and DIY business in the village Marske. They were mis-sold an interest rate hedging product by HSBC and are still owed thousands of pounds because of the difference in the premium. Is that not a perfect example of how the FCA is failing to investigate? This issue is of huge personal significance to our constituents—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

[Mark Garnier]

The hon. Lady speaks well, and should take as long as she can to make her point.

[Mr Deputy Speaker]

Order. I will make that decision. I do not want us mentioning football either, as I watch Bolton Wanderers. I also ask the hon. Gentleman to talk to the Chair, not the Chamber.

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[Mark Garnier]

I apologise, Mr Deputy Speaker. I have been here for five years, so I should know to take this much more seriously.

The hon. Member for Redcar (Anna Turley) is absolutely right. Huge numbers of people have been badly let down by the redress scheme.

[Guto Bebb]

I am an Everton football supporter, and we have been patient with Tim Howard. It is not that he made one mistake and allowed one goal to be scored; he has conceded half a dozen such goals this season. It is the same with the regulator. It is not the one mistake that we complain about; it is a pattern of behaviour.

[Mark Garnier]

I am regretting using the footballing analogy. I am not actually a huge football fan myself.

We have to look across the piece. The FCA has undoubtedly got it completely wrong in many cases—on interest rate hedging products and other things—and it is right that Parliament holds it to account, including through bodies such as the Treasury Select Committee, as a member of which I have a different point of view. I do not share the frustrations of those needing these debates or trying to get appointments upheld by the regulator; I can go along and get stuck in, along with other Committee members. That is the right way to do it.

It is also important to consider the successes. The FCA has managed to bring substantial fines for foreign exchange and LIBOR rigging. It even managed to bring a case through the Serious Fraud Office that sadly resulted in no convictions last week, when six foreign exchangers, who allegedly tried to fiddle the fixings, were acquitted. None the less, to get it to court was quite a success. The FCA has taken over responsibility for consumer credit and debt management from the Office of Fair Trading. It has protected consumers by banning retail sales of contingent convertibles—a technical thing to do with the resolution of failing banks.

Last February, the regulator published a paper aimed at providing help for firms that wanted to look after vulnerable consumers. On encouraging competition in the banking industry, the regulator, along with the PRA, created a challenger bank unit in January to help challenger bank entrants by providing the best regulation and thereby encouraging competition in the banking market. It has also provided an innovation hub, specifically aimed at the “fin tech” area, to help new entrants into the financial services sector to navigate the authorisation process. The regulator is, therefore, trying to do a number of things, and we need to be careful not to throw the baby out with the bathwater.

People worry about several issues. There is a big question about whether the Government are interfering with the regulator. Have they been interfering directly and explicitly? Are they taking it easy on the banks? I suspect that the cancellation of the thematic review might be a red herring. Most banks, given the 8% increase on their corporation tax rate, would argue that the Government are not being lenient on them. The Government are levying a bank levy that will help to repay taxpayers for all the money used to bail out the banks.

The reverse burden of proof has been reversed, but the implementation of ring fencing by 2019 will come at a fantastic cost to the banks of several billion pounds, in order to make sure that when the next financial crisis hits—there will definitely be another one—the collapsing banks do not take down other banks with them.

[Graham Stuart (Beverley and Holderness) (Con)]

My hon. Friend is making a strong case for the role of the FCA in terms of systemic, high-level regulation, but does he think it is fit for purpose in protecting consumers, entrepreneurs and individuals who, from that high level, might not look so important?

[Mark Garnier]

That is obviously the whole point of the debate. The answer, overall, is yes, but I think the regulator gets it wrong on occasions, which is why we have the Treasury Committee and debates such as this—to hold its feet to the fire on specific issues, such as those raised by my hon. Friend the Member for Aberconwy.

It is important to remember that this is a conduct regulator for a global business. It is worth bearing it in mind that 2.2 million people work in the industry. It represents about 12% of our GDP and generates about £65 billion a year in tax receipts. This industry is a global industry, and we should be careful about criticising it so vehemently by agreeing on a motion of no confidence. What message would it send to the rest of the world about our ability to regulate the huge amounts of international capital—running into trillions of pounds—that comes and finds a safe haven here in the UK with a regulator it can trust? If we say that the regulator is not fit for purpose, it will send a profound message to a significant part of our economy.

We need to cast an eye to the new chief executive. Andrew Bailey, who is coming from the PRA, has been in front of the Treasury Committee and the Banking Commission many times. I for one have found no reason not to think him an extraordinarily pragmatic, intelligent and wise regulator. Time will tell, and we will have to see how he gets on at the FCA, but it is important that he starts his career at the FCA with our good will, not with the feeling that the FCA is a problem to deal with.

Finally, I want to confront the big question about the possible interference of the Treasury. No matter how many times I ask people—either explicitly or by trying to get them drunk—I can find no evidence of any interference from the Treasury in the work of the regulator. There is possibly an implied interference, however, and one solution could be to give the Treasury Committee a power of veto over the hiring of the next chief executive.