Financial Conduct Authority Redress Scheme
Martin Horwood Excerpts(9 years, 5 months ago)
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Guto Bebb
I agree. The scheme was described as one in which businesses would not need professional advice. Yet when a consequential loss claim is made, either by a business or by a business with the support of legal or professional advisers, banks time and again respond with the support of legal and accountancy firms. The process for consequential losses is therefore very unequal.
Martin Horwood
I am grateful to the hon. Gentleman for the campaign he has fought and for his support for the Bully-Banks campaign, which also deserves credit. One of my constituents, who thinks that his business has suffered hundreds of thousands of pounds of consequential losses, has told me that 90% of consequential loss claims have been rejected. Does the hon. Gentleman agree that that does not truly reflect the real situation?
Guto Bebb
I agree entirely, and that is why we need a review of the current redress scheme.
My final point, which the Government could respond to positively, concerns the decision by HMRC to tax redress received by businesses. HMRC has decided to treat any redress received as income generated in the year in question, which means that many small businesses will pay tax on that redress at their marginal tax rate. Has HMRC taken seriously the possibility of using extra statutory concession D33, paragraph 11, which states:
“A right of action may be acquired in a situation where it is not possible to identify a separate underlying asset. For example, where a professional adviser has given misleading advice on a tax or other financial matter, or in relation to private or domestic matters…Broadly, when we are looking at capital sums without an underlying asset which fall within paragraph 11 of ESC D33 we are looking at a financial loss, for example compensation for poor professional advice or for mis-selling of financial products.”?
In effect, that means that when the compensation is for bad financial advice or mis-selling a financial product, it should be treated not as income but as a gain for capital gains tax purposes, which would be a fairer resolution. Currently, banks are able to offset any redress paid for their tax purposes, although businesses end up paying tax on any redress they receive. It is unacceptable that the wrongdoers get tax relief while the wronged have to pay tax on their compensation, and I ask the Minister to consider that point.
I wanted to touch on businesses sold in embedded swaps. If the advice from the FCA is comprehensive, I appeal to it to make it public. Those businesses are in limbo. They believe they have a right to be in the redress scheme and are told that legal advice is clear. I call on the FCA to make that advice available so that those businesses know what possibilities they have when trying to resolve their situation. [Interruption.] The hon. Member for Wyre Forest (Mark Garnier) seems to want to intervene.
EU Budget (Surcharge)
Martin Horwood Excerpts(9 years, 6 months ago)
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Mr Osborne
I agree with the right hon. Gentleman that the European Union could spend the money far better than it does through reform—that is the reform we are seeking to achieve. Of course membership of the European Union does mean adjustments to the payments each year, and sometimes Britain has been a beneficiary of them—indeed, when the shadow Chancellor put the country into recession we received a tiny bit of money back from the EU. That is one of the regular features of membership but, as the right hon. Gentleman says, it demonstrates why we need further reform in Europe.
Martin Horwood (Cheltenham) (LD)
The last time the shadow Chancellor mentioned the EU rebate in this House appears to have been in 2005. Does the Chancellor agree that, if the shadow Chancellor really thought the bill we were being presented with by the Commission was £800 million out, it is curious that he did not find time to mention it before this week?
Mr Osborne
My hon. Friend is absolutely right about that. Of course the only involvement the shadow Chancellor has ever had with the rebate is giving away half of it.
Transparency and Public Trust in Business
Martin Horwood Excerpts(10 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)
I congratulate the hon. Member for Wigan (Lisa Nandy) on securing this very important debate. I completely agree with her about the importance of getting this issue right. As she said, it has very wide repercussions not just in the UK, but in communities across the world. British companies work in so many countries. It is critical to get it right here, because it may have such broad repercussions on thousands, ten of thousands or hundreds of thousands of people. This important subject is not debated enough in the House, so I congratulate her on securing the debate today.
Business should be, and often is, a force for good in society. However, as the hon. Lady highlighted, the financial crisis a few years ago revealed severe shortcomings in corporate governance and caused widespread and understandable loss of trust for many people in relation to not only the financial sector, but business more generally, and we need to tackle that. At the same time, there was a realisation that companies had grown so powerful that their activities could have an impact on even the largest economies. The development of such a situation was a real wake-up call to many Governments.
Among the lessons that we have learned from the financial crisis, I want to highlight three areas on which the Government are taking action, and which relate to the points emphasised by the hon. Lady—greater transparency, accountability to both shareholders and wider society, and businesses and shareholders taking responsibility for the impact of their actions.
Mandatory reporting requirements are the key lever that the Government use to increase transparency. At its best, the narrative section of a company’s annual report allows investors to make informed choices through a proper understanding of the company’s strategy, the risks that it faces and its long-term sustainability. There is also the wider public interest to consider. As I have said, companies can have a significant impact on communities and the natural environment in which they operate. Requiring businesses to report fully and openly is therefore the first essential step towards social responsibility and accountability.
As the hon. Lady highlighted, shareholders have responsibilities as well as rights. As owners of a company, they have a duty to understand its operations and hold the board accountable, which is a very important role for them to play in our economy. That is especially the case for investment companies that place funds on behalf of savers and pensioners who are not in a position to exercise their ownership rights directly. They can be incredibly powerful in their role in influencing the direction of the company and how it operates.
The Government are not just talking about transparency but have taken action to ensure that we see greater transparency. Last October, the Government’s new reporting reforms came into force, increasing the transparency and quality of disclosure by both listed and private companies. The new reporting framework requires companies to set out clearly in their new strategic report how they operate, where they are heading and how they are managing risk.
In addition, we introduced important new reporting requirements in three areas related to the issues that the hon. Lady highlighted. On the environment, companies are now required to report on their greenhouse gas emissions and other environmental impacts. On gender balance, they now need to state the number of men and women on their board, in their senior management team and in the work force as a whole. I know that she has an interest in that issue. Finally, they need to report on human rights issues, which were at the heart of some of the examples that she gave.
Martin Horwood (Cheltenham) (LD)
I commend my hon. Friend on the work that she and her team are doing in the Department. One point that the hon. Member for Wigan (Lisa Nandy) rightly made was that there are still voluntary arrangements in place on human rights and the environment in the supply chain. As the hon. Lady said, the risk of voluntary arrangements is that the best companies comply but those that we want to do better are allowed to get away with competing unfairly with those pursuing best practice.
Jenny Willott
I reassure my hon. Friend that the UK’s requirements already go beyond a lot of the voluntary principles that have been in place. We have agreed in the EU stronger mandatory reporting requirements for large companies to disclose their policies in a number of areas, including in their supply chain, which my hon. Friend highlighted and in which I know the hon. Member for Wigan is interested. That is a huge step in enhancing transparency, and for many member states of the EU it is the first time that they have had such broad requirements. The UK has traditionally been further ahead in mandatory requirements on businesses. I personally feel strongly about the issue, and it was one of the first that I raised in the Department when I took on my role. I will come in a minute, if my hon. Friend the Member for Cheltenham (Martin Horwood) will bear with me, to some of the reasons why I believe there is a driver in the UK economy for businesses to act voluntarily.
The requirement to report on human rights issues is in line with the Government’s implementation of the UN guiding principles on business and human rights, which the hon. Lady highlighted. The first annual reports under the new requirements are just being published, and early signs are encouraging. I am proud that, as I have just said, the UK is leading the way in high-quality company reporting, which will really make a difference. For example, the clothes retailer H&M now not only publishes a list of all its suppliers but sets out the standards and codes of practice that it expects them to meet. Marks and Spencer uses a social enterprise technology provider, Good World Solutions, to gather feedback directly from 22,500 workers in its clothing supply chain in India, Sri Lanka and Bangladesh, ensuring that they can raise concerns without fear of reprisals or discrimination. There are companies in the UK that are doing a significant amount to tackle some of the problems that exist.
As I highlighted to my hon. Friend, we have been negotiating with our EU partners on a related proposal to improve companies’ reporting in general. The EU non-financial reporting proposals have now largely been negotiated and broadly mirror our own regulations, and I hope that they will be adopted before the European parliamentary elections in May. They will start to drive behaviour change in the EU more generally, which will provide more of a common platform for companies operating in the EU. British domestic regulations led the way and have given our companies and shareholders a head start.
Interest Rate Swap Derivatives
Martin Horwood Excerpts(10 years, 6 months ago)
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Mr Williams
I concur with my hon. Friend. Many of us have cases like the one that she raises that suggest that TBLs need to be brought into this review or another review of some kind.
The FSA famously stated in “Interest Rate Hedging Products—Pilot Findings” that
“poor disclosure of break costs”
was one of
“the most significant issues in assessing the compliance of a sale”.
How is it possible that poor disclosure of break costs can constitute a mis-sale when the customer is buying a stand-alone product, with all that that implies, and yet there is no mis-sale if the bank buys the interest rate swap allowance, conceals it from the customer and then holds the customer liable for its terms and conditions? That is unjust nonsense. If a feature is worthy of regulation when it is contained in one product, why is it not worthy of regulation when it is contained and concealed in another product?
Martin Horwood (Cheltenham) (LD)
My hon. Friend is right to highlight break costs, which have been a serious issue for some of my constituents. Is he aware of court evidence given by a former bank employee who said:
“When pitching to a customer the most the…Sales Team would try to say on the subject was that there could be break costs if the swap is broken early. Providing the customer didn’t ask, we never went into any detail as to the likely level of these costs.”
Does not that underline how much of this debate is not about complexity or understanding, but about straightforward mis-selling?
Mr Williams
That goes to the heart of the argument. The banks and the ironically named relationship managers were trusted by our constituents, and that trust has been breached.
I have asked the FCA for its legal advice that supports the view that it should not regulate fixed-rate commercial loans. The response stated that it is not normal for the FCA to disclose its legal advice because, by so doing, it could be said to have waived its legal privilege more generally, making it difficult to resist broader disclosure, and thereby setting a precedent that would make it harder for it to resist disclosure in other cases. I am sure that that is crystal clear to everyone in the House—so much for the commitment to transparency.
The interest rate swap scandal has cost many businesses dear. I recently drove down one of the approach roads to Aberystwyth, the largest town in my constituency, to see another boarded up shop. That shop was not boarded up three weeks ago; it is boarded up now because of the issues that we are discussing. Many people had no concept of the product that they were pressured to buy. That applies as much to embedded swaps as to stand-alone products. I implore the Minister to reflect and to put pressure on the FCA to consider tailored business loans as part of the review. They are an enormous problem.
amendment of the law
Martin Horwood Excerpts(11 years, 1 month ago)
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Fiona O'Donnell
No, thank you.
When people look back on this Government, they will see five wasted years. The two greatest evils that they have committed are the bedroom tax and the cut for millionaires. They still have time to make more mistakes, but this country will never forgive them for those measures because they go to the heart of this Government.
I want to make some pleas on behalf of my constituency.
Fiona O'Donnell
No, thank you.
I want a more joined-up approach to government. Iberdrola is currently investing £10 billion in this country, but it is sitting on £3 billion because of the mess that is this Government’s energy policy. The coal-powered power station at Cockenzie in my constituency has closed and Iberdrola is not willing to invest until it gets some clarity from the Government. Some 1,000 construction jobs are on hold in my constituency, as are apprenticeships in a year when youth unemployment has risen by more than 7%. Will the Treasury team get together with the Department of Energy and Climate Change and get this in order, so that Iberdrola can invest in my constituency and the UK?
I pay tribute to my right hon. Friend the Member for Barking (Margaret Hodge) for the work that her Public Accounts Committee has done to let some sunshine on the disgraceful practice of tax avoidance in this country. I also praise the Government for meeting their commitment to spend 0.7% of our gross national income on development aid. I welcome that, but I want them to go further in the Finance Bill. There was outrage in this House and across the country at the practices of some companies headquartered overseas, and people in developing countries have the same right to be outraged if British companies do not pay their fair share of tax there. Will the Government take the opportunity provided by the Finance Bill to ensure clarity and transparency and that developing countries have the right to money that has been earned at the expense of their natural resources—the labour of their people—to be invested in their countries so that they can make their own choices? I hope that such a commitment will eventually be made.
The judgment on this Government has been set not by hon. Members, but by the Office for Budget Responsibility, the 200,000 children who will be in poverty at the end of this Government’s time in office who were not in poverty before, and the people who will be worse off in 2015 than they were in 2010. I urge the Government’s Front-Bench team to listen to the Opposition and to the people of this country, and to get their act together.
Small Charitable Donations Bill
Martin Horwood Excerpts(11 years, 5 months ago)
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Martin Horwood (Cheltenham) (LD)
Is it the hon. Lady’s understanding that Government amendment 31, which seems to allow some flexibility for subsequent changes of the rules, nevertheless—according to the explanatory statement in the notes—insists that previous gift aid claims have to have been made, which of course may well preclude large numbers of the very small charities that the Minister presumably wants to help? Therefore it will still work against the interests of some of the smallest charities, and I am personally very disappointed that an amendment with more flexibility has not been tabled.
Cathy Jamieson
I thank the hon. Gentleman for making that powerful point, and we will come back to it later when we discuss other amendments. Whatever happens, I would hope that the Minister sees the point that the hon. Gentleman raises as a reason for ensuring that, at the very least, a review clause is built into the Bill. We would want to know whether a continuing number of small charities continued to be unable to access the scheme and gain benefits. Indeed, at some stage we will discuss the whole question of charities set up in response to particular circumstances—for very worthy causes—that may not be able to benefit at all from the scheme because the need will have been met and they will have moved on by the point at which they become eligible even to apply.
The idea behind the scheme is to boost the income of small groups that rely on bucket donations, and the hon. Gentleman has pointed out very succinctly that there are many such groups which simply will not be able to take advantage of the scheme, including those which do not have the resources to apply for gift aid or are just starting out. Our amendments seek to help those charities by removing the requirement for the start-up period and instead introducing a qualification period. We had some debate on this in Committee and our amendment would allow charities—new or established —without that claims history of gift aid to claim for a reduced amount of £2,000 after one year of claims history and then to claim for the full £5,000 once they had built up a three-year history.
As we have already heard, there are concerns that the Government’s requirements will be a significant barrier to participation for many charities that have not previously registered. They will also exclude organisations to which even an additional £500 would make a huge difference in income. Instead, it would tend to favour the bigger, more established organisations that may have the finance and fundraising departments to make gift aid claims. Many of the smaller, ineligible charities will already have been registered with the official regulator for three years. They will have had to submit accounts and pass the fit and proper person test, which is pretty robust. For some charities, their major fundraising may be from non-eligible sources, such as donations from trusts, events and charity shops, and they will not have been able to claim gift aid for the required three years even if they have significant income from small donations through collections which would be eligible for this scheme. For trustworthy established charities to be forced to wait a number of years before making claims reduces the incentives for registering.
The sector gave us a couple of examples. I will not go into all the detail, but one example was Wansbeck CVS, which has just set up a small grants fund in memory of a community development worker. It is designed to give small grants to local charities, but it had not been previously registered for gift aid. Under the current proposals, only donations received years after it registers for gift aid will be eligible. That is one of the examples of possible problems we were given.
We suggested that introducing a qualification period would go some way towards allowing charities that stand to benefit most from the scheme to be able to claim a reduced amount of £2,000 after only one year. That would at least allow them to cover their administration costs for claiming, while giving them an incentive to fundraise further and claim for standard gift aid. We tabled the amendments to try to provide a way forward that would balance the risk of fraud, identified by the Minister in Committee, with the ability to give a boost to the scheme for charities that need all the help they can get in tough times.
Amendments 17, 18, 19 and 20 relate to community buildings, on which points have been raised consistently during this process. The Minister will recall that in Committee we tabled a number of amendments to try to change the community buildings provisions substantially. We believe that they are seriously flawed and unfair to charities that would find themselves disadvantaged and unable to benefit. Many in the sector were disappointed that the Government did not give any ground, and I am disappointed that they have not used the opportunity of the Report stage to reconsider, as the Minister has done on other matters.
I suspect that the Minister will not move on these provisions, but if we cannot have a wholesale change to the Bill at this stage, I hope that the Government will at least be persuaded to look again at one particular aspect of the community buildings provisions. Clause 6(3) defines the community building amount as
“the sum of the small donations that are made to the charity in the community building in the tax year by group members while it is running charitable activities in the building”.
Even before Second Reading, that point was raised consistently as one that had the potential to cause difficulty for some organisations. In an attempt to solve the problem in relation to churches—the Minister rightly and understandably wanted to find a solution—we have a scenario in which it will be very difficult for other charities to take advantage of this part of the scheme, and that will potentially cause more problems than it solves. As we have heard previously—it is worth reiterating the point—clause 6(6) goes on to define a group member as:
“a member of the group of people with whom the charity is carrying out the activity”.
We heard a number of examples relating to that point, most vividly from my hon. Friend the Member for Leeds East (Mr Mudie), who spoke about a potential scenario with regard to a charitable group involving Alzheimer’s patients and asked whether it would only be those within the group who were able to make donations.
We have an issue with the principle here. We are concerned that for a great number of charities the beneficiary and the donor groups are likely to be two separate constituencies of people, and we do not want that to become a discriminating factor in whether charities can access the scheme. Indeed, it seems to us to be the exception rather than the rule that funds would be raised during the course of charitable activities by those benefiting from them. If we set aside churches and the collection plate, there are many scenarios where it would be entirely inappropriate for the bucket to be passed around the 10 or more members sitting there while the charitable activity was being undertaken. For example, during counselling work or work that provides activities for young people, or in which young people are involved, that would simply not be sensible.
The nature of fundraising is highly dependent on the type of activity and an organisation’s beneficiary group. The requirement in question would disadvantage the types of charities in respect of which it would not be appropriate or possible to raise funds in this way. Notwithstanding the debates we had in Committee, we still have concerns about whether such provision will go against the benefit principle of gift aid where gift aid is not available and where a donor receives personal benefit. In Committee, the Minister was at pains to say that that was not the case. However, we still have some concerns about the wording in the Bill, so this is another area where it would be important to have some review and some consideration about whether the Bill will work as it is intended to.
I will not repeat what was said in all the debates, but in Committee we heard that it would be difficult for such charities as Victim Support and the Alzheimer’s Society to benefit from these schemes, which is why we have tabled these amendments. Once again, the charitable sector—most recently the Charity Finance Group, the National Council for Voluntary Organisations, the Institute of Fundraising and the Charities Aid Foundation—has stressed that point. Such organisations are concerned that the only donations that will count will be those made within a community building. Although some changes have been made, there are concerns about whom the provision would actually apply to, because the people participating, not including staff or volunteers, might be vulnerable people.
I appreciate that I am speaking at some length, but we have a number of important and significant amendments. In my notes, my shorthand for amendment 21 is that it is a review amendment. It may seem that all Opposition Members talk about is review, review, review, but I hope that I have begun to lay out exactly why we feel that the provision to review is important. Although we have tabled an amendment that focuses on the part of the community building provisions I have just been talking about, however, I do not want the Minister to think that we have given up on all the concerns we had on other aspects of the community building provisions.
From our debates in Committee, the Minister will recall our concerns about clause 7. The clause states that charities must run their charitable activities “in a community building” for them to be eligible for top-up payments. We had a wide-ranging discussion about whether charitable activities could be run from community buildings, whether they had to be in community buildings and the relationship between the organisation setting up and those participating. The Bromsgrove scouts became a touchstone—how the provision would effect the Bromsgrove scouts became the main discussion point. We also heard from charities such as the Royal National Lifeboat Institution, which runs its charitable activities—this has been mentioned on a number of occasions—at sea, and a large number of charities that run their activities in the community, such as Victim Support and the Alzheimer’s Society. They often hold their counselling sessions or work in homes or in other community spaces, and we heard concerns that those organisations should not lose out.
We also raised concerns in Committee about clause 8, which specifically excludes from the scheme properties used for residential purposes, limiting the ability of care homes and hospices to access it. In Committee, the Minister stated that patients in hospices would still be registered at their homes, as he understood it, for the purposes of the Bill. People go to a hospice at a sad stage in their life, but to all intents and purposes their home is elsewhere and therefore a hospice should not count as a residence. He gave us some assurances on the care home sector, but there are still some concerns.
I gave the example of organisations providing residential provision for young people possibly for 52 weeks of the year. To all intents and purposes, such provision might form young people’s home for a time. There remain concerns in that area. The sector is also concerned that this approach might be a bit short-sighted, failing to take into account not only the ageing population and possible changes in hospices’ and care homes’ functions but the possibility, notwithstanding the best will of the Minister, that the legislation might exclude people from benefiting.
Banking Union and Economic and Monetary Union
Martin Horwood Excerpts(11 years, 6 months ago)
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Mr James Clappison (Hertsmere) (Con)
I warmly welcome the approach taken by my right hon. Friend the Minister for Europe and the words that he used to describe the situation. However, I support the amendment tabled by my hon. Friend the Member for Stone (Mr Cash). It is an important amendment, which complements the Government’s motion. It questions the legality of the arrangements and, in particular, the voting arrangements, which I drew attention to in an intervention.
My right hon. Friend spoke entirely correctly—with great conviction and accuracy—about the lawfulness of the delegation of powers. The only comment that I make in addition to what my hon. Friend the Member for Stone said is that it is important, given that the EU is governed by a legal framework and is a treaty organisation, that we should have certainty when it comes to the legal provisions of those treaty arrangements. All too often we have seen not certainty but legal terms and conditions being overridden by political will. The situation that we are discussing looks very much like another case of that type, and in such cases one simply cannot trust the legal arrangements.
On the voting arrangements set out in the regulation on the European Central Bank and their implications for the European Banking Authority, while the single supervisory mechanism in the ECB concerns the eurozone, the European Banking Authority concerns all members of the European Union and the whole single market. It sets the rulebook for the single market and has important supervisory responsibilities. The arrangements in the ECB regulation are breathtaking. It is not just a question of having the political will for nations to cohere together; it is a condition of the EU’s law—a regulation—that the member states of the eurozone work together, co-ordinate their actions and take a common position when it comes to the European Banking Authority. That means that in the European Banking Authority’s arrangements for voting, the eurozone bloc will have the whip hand in each of the decisions taken. They will be determined in advance.
The situation is a bit like those council meetings that we sometimes see in this country in which political groups with a majority decide everything in advance in a caucus. They then go into the council to debate a decision, but everybody knows what it is going to be. The same is happening here—the European Banking Authority is being turned into a sham. All the decisions will have been taken elsewhere and in advance and we will be deprived of our say.
Mr Clappison
I shall give way to the hon. Gentleman if he is able to put a different complexion on the matter.
Martin Horwood
The hon. Gentleman is making an important point, but it surely only emphasises the importance of carefully negotiating the voting rights of the United Kingdom and non-eurozone members within the European Banking Authority. Does not the process advocated by the amendment—a veto and then Court adjudication, effectively—blow that negotiation out of the water and risk damaging this country’s rights within Europe?
Mr Clappison
The proposals are here in black and white. I hope very much that the hon. Gentleman will join us in supporting the Government to take every measure, up to and including a veto if necessary, to preserve our position and to stand up for our interests in the European Banking Authority. We simply cannot have a sham.
It is no use pretending that by talking nicely, going into the room, being at the top table and all the rest of it is going to be the solution. We have heard those warm sentiments so many times in the past. We are discussing a matter of negotiation to protect our interests, and we have to be prepared to take decisions that are unpalatable.
Martin Horwood
Just to put the record straight for the benefit of Hansard, I do not love everything that comes out of the European Union. I simply regard it as another level of authority with which we must negotiate gently and carefully, rather than necessarily taking the rather Gaullist approach that the hon. Gentleman and his colleagues are taking today.
Jacob Rees-Mogg
I am enormously grateful to my hon. Friend, who gives me an extra minute every time.
This is an important and good opportunity for the Government to get back powers that should never have been given away. It was a great folly to give away financial regulation to the power of the European Union, because as my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) so wisely said, we have much more financial services in this country—I think she gave the figure of 36% for wholesale financial markets in the whole of the European Union that are in the UK. Therefore, we ought to regulate our own affairs and we ought not have delegated that to the European Union. We need to be careful about what is being proposed when it comes to the regulation of what are substantial international banks based in the United Kingdom in their business—which may be subsidiary business—with eurozone countries, because there is obviously a risk that they will find themselves under the auspices of a European regulator when they ought more appropriately to be under the auspices of a British regulator.
I think the Government’s position is quite strong, and I think the amendment is extremely sensible. It is interesting that we learn only through the Financial Times that the proposals that have come forth from the Commission are illegal. We do not learn it from the Government or the Commission; we learn it from an underhand leak, which comes via a newspaper to inform our debates, which is a pity. It would be nice if we could get such information directly to a sovereign Parliament, so that we knew what was or was not legal. Perhaps the Government will consider releasing the legal advice that will guide them—or perhaps ought to guide them—in their approach to this debate.
I would encourage the Government to accept the amendment tabled by my hon. Friend the Member for Stone. I listened very carefully to the Minister—I always do: he is a great Minister, who is much admired on this side of the House, and I imagine in other parts too. There was nothing he said which in essence contradicted my hon. Friend’s amendment, so I ended up thinking that what we were really debating was which way up an egg should be eaten—whether it should be the big side or the little side up. We are united as egg eaters in this context, and we think it would be “egg-cellent”—if I may carry on with this theme—to support my hon. Friend’s amendment, to which I was pleased to add my name, because it provides us with a solution in our negotiations in Europe and a clear way forward.
Multiannual Financial Framework
Martin Horwood Excerpts(11 years, 6 months ago)
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Mr Edward Leigh (Gainsborough) (Con)
The figures we are talking about are truly enormous. In the three options—the EU proposal, a real-terms freeze and a cash freeze—we are talking about commitments of £990 billion, £885 billion and £771 billion, so these are very important matters, affecting every man and woman in this country. I have to say to my hon. Friend the Member for Banbury (Sir Tony Baldry), with whom I have spent 29 years in this House, that his speech was quite inflammatory. His main line of attack appears to be that those of us who are going to support the amendment are somehow putting our Government at risk by joining with the Labour party. I have heard the argument before; it was actually the argument put by Neville Chamberlain in the Norway debate, when he said that he could rely on his friends. Over the years we have been here, many Members of Parliament have taken the view that principle is sometimes more important than partisanship. We have consistently argued about these matters through difficult times and it is quite wrong to blame us—those who have taken an entirely consistent position— for putting the Government’s political position at risk.
Martin Horwood (Cheltenham) (LD)
Given his experience in this House, does the hon. Gentleman not think that nailing one’s colours to a wholly unrealistic negotiating position will weaken the position of the British Government going into this financial negotiation and result in a worse outcome for this country, for his constituents and for Europe? He needs not to lecture us about principle but to consider the genuine reality of the situation.
Mr Leigh
Let me first make one more comment to my hon. Friend the Member for Banbury, who made a very important point. He represents the Anglican tendency in this House and I represent the Catholic tendency. If someone goes to confession and repents, we should accept them into our fold. We should not turn them away. If the Labour party has changed its mind, it has repented.
Small Charitable Donations Bill
Martin Horwood Excerpts(11 years, 8 months ago)
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Miss Smith
If the hon. Gentleman will allow me to set out the purpose of the scheme, I shall be happy to engage in further debate as we proceed.
The purpose of the scheme is to enable charities and community amateur sports clubs to claim a gift aid-style payment on small cash donations of up to £20 in cases where it is often difficult to obtain a gift aid declaration. In general terms, eligible charities and CASCs will be able to claim top-up payments on up to £5,000 of small donations each year. As I said, the crucial point is that the Bill provides for top-up payments to be made to eligible charities that find it difficult to claim gift aid on donations, such as those from street buckets and church plates—when donors might be reluctant to stop to fill in gift aid declarations. In such situations, charities are currently missing out on income.
Martin Horwood (Cheltenham) (LD)
I declare a non-pecuniary interest as a member of the Institute of Fundraising. Are Ministers aware of the institute’s response? It has welcomed the Bill as an important measure for small charities that might have difficulty claiming gift aid, but pointed out that there are so many conditions and complexities in the scheme that it will actually undermine its accessibility to those very charities. Will she agree to meet the institute and discuss some of its suggestions for improving this important Bill?
Miss Smith
I am aware of that point of view, and if my hon. Friend will allow me, I will deal it and some others. I think he will know that the Bill has been subject to a pilot of a particular type of scrutiny over the summer, so there have been many opportunities to start that kind of discourse, and I look forward to continuing that in this debate.
Miss Smith
I have already said that the Bill will channel up to £100 million to charities over the years in which the scheme gears up. That is to be welcomed. I think that the hon. Gentleman will also understand that the clue is in the title, in relation to transitional relief. This is a new scheme that ought to be welcomed in its own right.
The second principle behind the proposal relates to protection against fraud. We have designed the scheme so that for a charity or CASC to be eligible to claim, it must have a minimum three-year track record of successfully claiming tax relief under gift aid. It will also have to continue making gift aid claims while it is claiming under the new scheme. I know that the three-year rule and the requirement to match claims with gift aid claims have raised some concerns among charities, but I must be frank and say that the generous nature of charitable tax reliefs means that they are vulnerable to exploitation, with a small minority looking to take advantage of the arrangements.
Martin Horwood
The Minister has just mentioned two conditions: the requirements already to have claimed gift aid for three years and to match existing gift aid claims. The Institute of Fundraising has pointed out that charities that find gift aid hard to come by will be unlikely to be able to meet either of those conditions. May I repeat my request for her to meet representatives of the institute, which represents the fundraising sector, to discuss its amendments to this important Bill, which it otherwise supports?
Miss Smith
I should make it clear that I am in no way refusing to have such a meeting. I would be happy to take up that point. The scheme will be complementary to the gift aid scheme. Some charities have struggled to claim gift aid on certain types of donation—for example, cash donations whose donors it might be hard to persuade to stop and fill out a form. However, that is a different type of problem from the one to which my hon. Friend has just referred. I shall be happy to take up his point in greater detail.
I shall explain why we have had to put in place the three-year matching rule. There is an understandable reason behind it, and I think that charities will find it reasonable to work with. I am keen to avoid a situation in which the new scheme might become vulnerable to exploitation. None of us would wish to see funds that have been directed towards charities and the good causes they support being diverted or lost to fraud. I certainly hope that all Members cleave to that principle.
As I have said, HMRC pays around £1 billion a year in gift aid to charities, and such large sums inevitably attract fraudsters. Fraudsters scrutinise any payment system for weaknesses, and we have to be aware of that in designing any new scheme. As the new scheme is based on cash donations, records of the donor will, by their very nature, be limited. It could be said that this makes it even more attractive to fraudsters, so the very qualities of the scheme that are designed to make it work for charities—in other words, the ease of putting some money in a bucket—also help fraudsters. We have needed to find ways to protect the scheme from abuse, without adding to the paperwork that it might be feared would sit along small donations. One way we have tried to do this is by retaining the link to the gift aid scheme, which has tried-and-tested methods to protect against fraud. This also fits in with the desire, as I have said, for this scheme to be complementary to gift aid, not to replace it.
You will be able to appreciate, Mr Speaker, the idea I am developing of the need for charities to have a compliance record that will give HMRC a little more reassurance that the scheme is well protected against fraud. I am confident that every Member supports that. Charities with a good compliance record will be able to access the quite generous top-up payments available. Linking the scheme to claims made through gift aid gives not only HMRC, but all of us in this House, vital reassurance that checks and balances are in place.
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Chris Leslie (Nottingham East) (Lab/Co-op)
I congratulate the hon. Member for Nuneaton (Mr Jones) on the speech he just gave. We have heard some fine speeches from Members from across the Chamber, but I wish to pay tribute to the hon. Member for Aberconwy (Guto Bebb) for his speech, for which he definitely deserved the applause he received. This is one of those cross-party issues that shows that from time to time the House of Commons can come together to try its best to send a strong message to the Government and the regulators to try to get some action, in particular from the banks.
My hon. Friend the Member for Chesterfield (Toby Perkins) and I met people from more than 50 small and medium-sized enterprises a couple of weeks ago. We heard harrowing stories and felt that sense of injustice that so many hon. Members have expressed in their contributions. We heard about bankruptcies and the job losses that can follow, and about the human cost and the misery that have ensued. We are dealing with incredibly serious questions, and we deserve nothing less than a swift and serious response from the Government and from the financial services authorities.
Martin Horwood (Cheltenham) (LD)
I very much welcome the hon. Gentleman’s remarks and echo the sentiments of many hon. Members. I just wish to say that there may be more Members, like me, who have been prevented from speaking in detail by the sub judice rule today and that concern about this issue may be even more widespread than this debate has revealed so far.
Chris Leslie
That is a very good point, and, reading between the lines, we can see exactly the strength of feeling that the hon. Gentleman expresses.