Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill (Second sitting)

Matt Rodda Excerpts

Tuesday 15th June 2021 Public Bill Committees

[John Glen]

Out of courtesy, I am very happy to respond to my colleagues. The right hon. Member for Wolverhampton South East asked why the 80% figure was not 100%. As I have tried to explain through the submissions that I have made, the Government have been trying throughout to balance the interests of bondholders and the taxpayer to ensure that we have a fair level of compensation in respect of the financial losses incurred. The scheme is based on the FSCS level of compensation but, as he knows, it is 80% up to that cap of £68,000 to reflect the unregulated nature of the LCF product.

I emphasise that it is imperative to avoid creating the misconception that Government will stand behind bad investments in future, even where the FSCS does not apply. That would create a moral hazard for investors and potentially lead individuals to choose unsuitable investments thinking that the Government will provide compensation when things go wrong. To avoid creating that misconception, and to take into account the wide range of factors that contributed to the losses that the Government would not ordinarily compensate for, the Government will establish the scheme at the level of 80% of LCF bondholders’ initial investment up to the maximum of £68,000. With any investment, there is clearly a risk that sometimes investors will lose money, and the Government and taxpayer cannot and should not be expected to step in and compensate for every failure and every loss. It would not be right or fair for investors in non-regulated products to receive fuller compensation than those who have invested in regulated products, for which the maximum amount is capped at £85,000 under the FSCS.

On the remarks of the hon. Member for Glenrothes about the individuals involved in an ongoing serious fraud inquiry, I am not familiar with the detail, but obviously I am happy to receive any representations. I hope that brings satisfaction to the Committee.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Loans to the Board of the Pension Protection Fund

[Matt Rodda (Reading East) (Lab)]

I beg to move amendment 3, in clause 2, page 2, line 7, at end insert—

“(3) No loan shall be made under this section until the Secretary of State has laid before Parliament an impact assessment of the means of repaying the loan, including specifically the impact on pension schemes from the Fraud Compensation Fund levy.”

This amendment would prevent the Secretary of State from making a loan to the Board of the Pension Protection Fund for the purpose of compensating eligible pension schemes until he or she has laid before Parliament an impact assessment of the Fraud Compensation Fund levy on different pension sectors.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 5, in clause 2, page 2, line 7, at end insert—

“(3) Before making a loan under this section, the Secretary of State must lay before Parliament an assessment of the levels of fraud in the pensions system.”

This amendment would require the Secretary of State to publish a report on the levels of fraud in the pensions system before making any loan under new section 115A of the Pensions Act 2004.

Amendment 6, in clause 2, page 2, line 18, at end insert—

“(5) Within twelve months of this Act receiving Royal Assent, the Secretary of State must publish a report on the operation of the Fraud Compensation Fund in connection with any loan made under section 115A.”

This amendment would require the Secretary of State to publish a report, within twelve months of this Act being passed, on the operation of the Fraud Compensation Fund in connection with any loan made to the Board of the PPF under new section 115A of the Pensions Act 2004.

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[Matt Rodda]

We have tabled a number of amendments seeking to improve the Bill. Amendment 3 seeks to ensure that we have clarity and certainty before taking the step of asking key pension schemes to fund the majority of the bill for the Fraud Compensation Fund. It is perhaps worth reflecting on the evidence we heard this morning, which was so illustrative on this issue. One socially important pension scheme—the People’s Pension fund, which we heard about today—was asked to put forward a large amount of money to help support the compensation fund. The fund is known to take a large number of people—many of them women, on low incomes or self-employed—who have started to save for a pension through auto-enrolment. I am sure the whole Committee will agree that it is a worthwhile objective of Government policy to encourage pension savings by a wide range of people, not just the wealthier sector of the community.

Specifically, amendment 3 would prevent the Secretary of State from making a loan to the board of the Pension Protection Fund for the purpose of compensating eligible pension schemes until he or she has laid before Parliament an assessment of the impact of the Fraud Compensation Fund levy on different pension sectors, thereby allowing Parliament to consider the issues affecting them. That is essential because, as we have heard, the burden of compensating victims of fraud is falling disproportionately on certain groups. As we heard this morning, just two schemes—the People’s Pension and the National Employment Savings Trust, which are both not-for-profit operators—have historically ended up paying the lion’s share of the fraud compensation levy, despite their size and the fact that there is no tangible connection between those funds and the fraud that we are trying to address.

It is perhaps helpful to mention the figures again, for the sake of clarification. To recap, the PPF’s 2019 annual report and accounts reported that the FCF levy raised £6.9 million. What is truly surprising to casual onlookers, however, is that 37% of that was paid by the two pension schemes that I mentioned—NEST and the People’s Pension—even though they managed only £20 billion of the roughly £2 trillion of assets held in UK workplace pensions. They were managing just 1% of the total, which is a tiny amount, as I am sure everyone will agree. There is clearly a mismatch, and I am sure that the Minister, who has obviously followed this in great detail, will want to respond because something strange seems to be going on. With the figure now enlarged significantly to hundreds of millions of pounds, and with the potential repayment of the loan via an increased levy, it is understandable that the schemes are anxious about where the burden of repayment will fall. That is a fair point, and one that I am sure we would all want to consider thoroughly.

We have been promised a review of the levy later this year, and I appreciate that the Government are willing do that. However, it does not seem right that, given the significant sums involved for the loan, the legislation should proceed without pausing—all we are asking for is a pause—to consider its impact. Both of the pension schemes I have mentioned play a hugely important part in expanding pensions coverage, and I am sure that members of the Committee are aware of the national policy challenge of encouraging more people to save for their pensions. We all want a much larger proportion of the community—ideally, everybody—to have access to a pension scheme that they can save into as well as the state pension. The two organisations I have mentioned have many low-income savers who I am sure we want to support. It is crucial that we consider the long-term viability of those schemes as we consider the structure of the levy, and that the long-term viability of the two pension schemes is not jeopardised.

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[The Chair]

In case any Member did not quite understand what I said at the top, all of the proposed amendments to the clause are being debated now, including amendments 5 and 6. Mr Rodda, to confirm, are you aware of that, and do you wish to speak to amendments 5 and 6 now?

[Matt Rodda]

I am very grateful, Ms Ghani. I would like to speak to amendments 5 and 6. Amendment 5 obviously covers a very different area. I sponsored it because I think that the central principle of this country’s pensions system—I am sure the Committee agrees—is that people who work hard all their lives and who contribute and save diligently are able to receive a decent pension in their retirement. I hope there is cross-party agreement on that. I am sure there is; historically, that has been the case.

In recent years, however, it has become clear that an increasing number of pensioners—and, indeed, people approaching retirement, who are also an important group and are in some ways quite vulnerable—have been set back significantly as a result of what are commonly called pension scams. As the Bill Committee, we have a duty to protect people and to help them prepare for their retirement. Amendment 5 therefore seeks to require the Secretary of State to publish a report on the levels of fraud in the pensions system before making any loan under new section 115A of the Pensions Act 2004. We believe that that is a crucial first step in tackling pension scams. Obviously, there are a whole series of ways to tackle them, and we appreciate that the Government are taking other steps. This is important because the consequences of the scams can be utterly devastating for those directly affected. They are also potentially expensive and damage trust in the pensions system as a whole and the operation of many businesses in the sector. It is critical that we have a system that is robust and protected against scams. The Bill highlights the consequences for everyone, including other scheme members, when fraud is allowed to spiral unchecked.

The pandemic has, sadly, given rise to an increase in fraud, as many criminals have taken advantage of the confusion and, in some cases, the isolation of vulnerable people to prey on those who, sadly, can fall victim to these dreadful crimes. However, pension scams were already on the rise. It is worth noting that, since George Osborne’s pension freedoms were introduced in 2015, fraudsters have taken advantage of confusion around what the rules precisely allow. We warned at the time that those reforms would significantly increase that risk. The Government must acknowledge, as I am sure they will, the failings of pension freedoms and their associated tax problems, as in the case of the NHS.

One of the most egregious abuses of pension freedoms has been a scam by sophisticated criminals who trick people into accessing their pensions before the legal age of 55, relying on confusion about the rules, and then abscond with the funds, leaving people in a desperate situation. In some cases, the victims suffer a double injustice: not only do they lose their entire pension pot in some cases; they are also aggressively pursued by HMRC for tax penalties, having broken the rules on money they no longer have. There are some truly heartbreaking cases of innocent people being misled and sadly losing their life savings, as well as being left with tax debts of tens of thousands of pounds.

We would like reassurance that the Department for Work and Pensions and the Treasury will look into tackling this problem in the wake of the Dalriada judgment last year. The Government could provide that reassurance by supporting amendment 5 as a crucial first step. They should also find a way for HMRC to work with the authorities to make sure that these crimes are properly investigated, targeting the promoters, not the victims, and recognising the dreadful circumstances in which those victims find themselves through little fault of their own.

The High Court judgment that is at the centre of the loan we are discussing today is linked to exactly that type of fraud. In its recent report on pension freedoms fraud, the Select Committee on Work and Pensions recommended that particular aspects of pension freedoms and the Pension Protection Fund be reviewed in further detail in that light.

We agree with the Select Committee. Our amendment, which calls for an assessment, could form an important part of tackling the issue. It is important that the Government publish the report the amendment seeks, in order to show the public that they are not simply looking at the symptoms of fraud, but tackling the causes. I am sure the Minister will want to consider that point. The Government should set out an action plan to protect pension savers and an assessment of the level of fraud in the system as part of that work.

I know the Minister campaigned to tackle cold-calling last year in the Pension Schemes Act 2021. The Bill quite rightly tackled telephone cold-calling, but people can be approached in a cold manner online. I ask the Government to consider that avenue for scams. There has been some mixed messaging, but I hope the Minister, who I know is in touch with the sector, will take the point on board. I have written to the Secretary of State for Digital, Culture, Media and Sport to ask that the Government act on this point and include it in the online harms Bill, which is an appropriate place to tackle these serious scams, alongside many others.

Pension savers are particularly vulnerable in the few years just before retirement, when savings have accumulated but before they have actually retired. Pension transfers, especially for those in defined-benefit pension schemes, can be targeted by criminals, alongside pensions liberation fraud, which we are talking about today. This is where the Money and Pensions Service should play a bigger part. As Members will know, the service is a Government-funded body that offers free pensions advice to people aged over 50, through its Pensions Wise service.

Is it possible for Pensions Wise to play a bigger role? I hope the Minister will consider that point. It could be helpful and supportive to individuals, as well as helping the operation of the sector—the businesses that are operating legitimately, as the vast majority are.

It was disappointing that the Government rejected a proposal in proceedings on the Pension Schemes Act that would have booked a default Pensions Wise appointment for everyone in the five years prior to their retirement. The amendment was put forward by the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Stephen Timms), and was supported by the Opposition. It would have meant that everybody would automatically get some basic knowledge about where they stood, better protecting them against scams.

Finally, I would like to share some research from the People’s Pension and the Police Foundation that demonstrates the scale of the problem and why we need to act urgently. The true level of pensions fraud in the UK, though large, is unknown, but could it be as high as £14.6 billion, based on the average pot size of £63,700.

I hope the points I have set out are helpful and that the Minister will consider them. We would like to see this area addressed by the Government. I urge the Minister to respond to my points.

Ms Ghani, should I speak to the other amendment now?

[The Chair]

The amendments are grouped, so they are all to be debated together. Do you have a contribution on amendment 6?

[Matt Rodda]

Yes. I will move straight on. I appreciate your tolerance.

Amendment 6 seeks to perform another important role—ensuring that the PPF and the Fraud Compensation Fund work effectively and efficiently for all parties, which I am sure everyone here would support. The amendment would require the Secretary of State to publish a report, within 12 months of the Act being passed, on the operation of the Fraud Compensation Fund in connection with any loan made to the board of the PPF under proposed new section 115A of the Pensions Act 2004.

In the debate on amendment 3, I set out why we needed a fuller understanding of the way the levy works and its impact—I mentioned the two not-for-profit organisations that are doing such valuable work—in order to improve the situation for savers and pensioners. I will not go into the detail of those arguments again, but they are applicable and equally important for this amendment.

It is crucial to highlight the context in which we put forward the amendment. A very limited number of schemes are currently propping up the fraud compensation levy by paying disproportionate contributions, even though they do not have a meaningful connection to fraud at this time.

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[The Chair]

Let us try to ensure that we get through this portion of business before the Division. The Opposition spokesperson may of course respond, but let us keep it brief.

[Matt Rodda]

I am grateful to the Minister for his response. I feel that he is being somewhat generous in his description of the Government’s assessment of this problem and the level of response. I urge him to redouble his efforts and to focus on some of these points in further detail.

I think that the hon. Member for Glenrothes is right to draw attention to the subtle legal difference on the issue of the impact assessment. Surely, given the scale of what is going on, it would be wise to carry out an impact assessment. I appreciate the pressure of time, but perhaps with the considerable resources of DWP, which has the largest staff quota of any Department and a very able group of civil servants, it would be possible to carry out an impact assessment on a rapid turnaround, given the scale of what we are talking about and, indeed, the problems of the sector as a whole.

On the ongoing consultation and the possibility of reviews in this area, will the Minister agree to meet me and the not-for-profit providers to explore the particular issues affecting them?

[Guy Opperman]

I will, of course, agree to meet them. I already meet NEST and the People’s Pension regularly, and they have made a very good pitch for a reduced levy. It is already a reduced levy, as I am sure the hon. Gentleman is aware, and there is already a 0.75% cap, but of course I am looking forward to meeting them as part of the ongoing consultation.[Official Report, Vol. 697. 17 June 2021, c. 3MC.]

[Matt Rodda]

I am very grateful to the Minister and put on the record my thanks to him for offering that meeting. I look forward to seeing him and discussing the matter.

On amendment 5, the Minister mentioned the regulations in the Pension Schemes Act 2021, but will he write to me to discuss some of the ways in which the specific parts of the regulations relate to this issue? He has been reported in the media as suggesting that it might be wise to consider pension scams in the online harms Bill. Perhaps he will comment on that now or write to me separately, because we would like to work constructively with the Government on this matter. I appreciate that online harms are a huge and wide-ranging issue, and I have a constituency interest in violent crime in respect of a tragic incident in Reading.

[Guy Opperman]

I would be happy to write to the hon. Gentleman. He can read in detail what I said in The Times on both occasions, and that is pretty much all I can say on that matter.

[Matt Rodda]

I thank the Minister for his candour and for offering me a cutting from The Times, which is a fine newspaper.

Finally, on the PPF annual report, the issue is that while these documents are very worthy, and we should all read them, there is a delay. I urge the Minister to consider the need to reassure organisations in the sector, pension savers and pensioners themselves in the near term, rather than our having to wait well into 2022 before the 2021 annual report is available.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Bill to be reported, without amendment.

Compensation (London Capital & Finance plc and Fraud Compensation Fund) Bill (Second sitting)

Matt Rodda Excerpts

Committee stage
Tuesday 15th June 2021 Public Bill Committees

[John Glen]

[Matt Rodda (Reading East) (Lab)]

[The Chair]

[Matt Rodda]

A fundamental change is under way and it needs to be addressed. I hope that the Minister will reflect on that. First, the scope of who is compensated for fraud has been drastically expanded by the High Court judgment. Secondly, the industry structure has radically altered since the levy was first designed. Both of those points are important, and combined they will, potentially, have a huge impact on the rest of the sector. Careful consideration neds to be given to that. An impact assessment is necessary to give parliamentarians, sector experts and decision makers in the round a broader understanding of this complicated situation.

--- Later in debate ---

[The Chair]

[Matt Rodda]

[The Chair]

[Matt Rodda]

These are crucial funds that support large numbers of savers—indeed, increasingly so in this country, as we enjoy the success of auto-enrolment, which is a great step forward for pension savers, and indeed future pensions across the country, providing greater access to pensions. Millions of workers across the country, at different stages of their lives, pay into these schemes and rightly expect their pension pots to be given the best possible chance to grow. Yet because the levy is passed on to savers through charges, it is current Government policy to ask savers to do the right thing in order to pay for the damage caused by criminals. As we heard earlier, this is not happening on a small scale but on quite a large scale.

--- Later in debate ---

[The Chair]

[Matt Rodda]

[Guy Opperman]

[Matt Rodda]

[Guy Opperman]

[Matt Rodda]

Committee rose.

Finance (No. 2) Bill

Matt Rodda Excerpts

Committee stage & Committee of the Whole House (Day 1)
Monday 19th April 2021 Commons Chamber

[Sarah Olney (Richmond Park) (LD) [V]]

I wish to speak to clause 5 relating to the changes in personal income tax allowances and to clause 28 relating to the freezing of the lifetime allowance on pension pots.

There is no doubt that the last year has made unprecedented demands on the public purse, and it is right that the Government should be prepared to take difficult decisions on taxation as we move forward, as we all very much hope, out of the pandemic and into the changed world beyond. However, the Government made clear commitments in their 2019 manifesto that they would not raise income tax on working families and they have broken that commitment in this Bill. The freezing of the personal allowance and the higher tax bands means that more working people will pay tax and at higher rates than they would otherwise have expected.

Clearly the Government are banking on a consumer-led recovery and this tax burden on working families will reduce the amount of discretionary spend available to households, limiting their ability to spend on consumer goods. As housing costs increase to their highest ever levels, household budgets will continue to be squeezed, and piling additional tax charges on top will create an enormous burden for those who are already struggling to make ends meet. It is a particular insult to those in our NHS, who have sacrificed so much to keep us all safe this year and have been told to expect only a 1% pay increase for their trouble. Our nurses will have to give back more of that 1% in tax than previously despite all that they have already given. This is particularly galling when compared with the Government’s decision to delay a corporation tax increase. The Government have chosen to tax hard-pressed frontline workers first and large, profitable corporations later. Only those companies that have remained profitable throughout the pandemic would be paying corporation tax next year, which is why an immediate increase in corporation tax could have captured the windfalls or excess profits of those who found their revenues increased as a result of the unusual trading conditions of the last year. This would have been a far more equitable route to raising income than putting the burden on hard-working families.

On clause 28, I urge the Chancellor to carefully consider the impact on NHS pensions of freezing the lifetime pension allowance. I have heard a few stories from constituents about how this measure interacts with their final salary scheme. While a figure of a little over £1 million would rightly strike most as more than sufficient as a tax-free pension pot, senior doctors in the NHS are finding it extremely difficult to assess whether or not their overtime will result in their yearly calculation of their lifetime allowance being tipped over the threshold and result in a current tax bill. The British Medical Association estimates that the number of GPs taking early retirement has tripled over the past decade and puts this down partly to the uncertainty about their tax bills.

It is worth noting that when the lifetime allowance was first introduced in 2006, it was set at £1.5 million, rising to £1.8 million in the financial year 2010-11. Since the Conservatives came to power, it has reduced every year to the current level of only just above £1 million. Like the freezing of the personal allowance, this has the impact of catching more ordinary people in the taxation net, and again we see that the Chancellor wants to raise money off the back of hard-working NHS frontline workers while protecting profitable corporations.

This issue has been a problem for doctors for the last few years, so the Government have no excuse for not knowing that the freezing of the pension lifetime allowance would make the situation worse. Have the Government carried out an impact assessment of the measure on NHS retention of senior staff? I am extremely concerned, at this time when our senior NHS staff are exhausted and facing a huge backlog of elective surgery, that skilled staff should not feel compelled to take early retirement because of an unintended and avoidable tax consequence.

The Finance Bill seeks to tax hard-working families and penalise those who have been working so hard to keep us all safe this year, and the Liberal Democrats cannot support these measures.

[Matt Rodda (Reading East) (Lab)]

I want to offer my support to the shadow Minister, my hon. Friend the Member for Ealing North (James Murray), who put his case very fairly. I want to illustrate what that means in my constituency of Reading East and perhaps develop some of the points he made.

I particularly want to raise the growth in the use of food banks, which has been very significant across the country, and our area is typical in so many ways, as indeed it is in many instances. The growth in the use of food banks illustrates why the Budget was such a complete failure, because the Government failed to offer real help to many families. In particular they offered very little to those in the greatest need, as we heard from the shadow Minister, and very little to those who are self-employed and have recently set up a small business. Indeed, the3million campaign group rightly pointed out that, although a small number will benefit from some measures offering further support for recently set-up small businesses, most will not, and that has been widely recognised in my constituency.

Before going into the detail of local food banks, I want to thank all the volunteers at our local council in Reading and many others, both businesses and individuals, who have helped support food banks by generously giving their time and putting the community and others first at what is a very difficult time for so many people. I have tried to keep in touch with the pressures by going to help myself and to receive regular briefings from food banks and other charities, and I want to describe to colleagues what this is like.

Finance Bill

Matt Rodda Excerpts

Report stage & Report: 2nd sitting & Report: 2nd sitting: House of Commons
Thursday 2nd July 2020 Commons Chamber

I turn to new clause 22, much loved by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who is not in his place. It modifies the current enterprise investment scheme and seed enterprise investment scheme so that individuals who made EIS and SEIS investments before a future fund investment in the same company will not lose relief on those previous investments when the future fund loan converts into shares or is repaid. As the House will know, those schemes were intended to encourage investment in smaller, higher-risk trading companies by offering tax reliefs to individual investors who subscribe for new shares in qualifying companies. The Government announced the future fund as part of its business package in response to covid-19. Current EIS and SEIS legislation means that some future fund investors who have used those schemes for previous investments in the same company might lose their reliefs, depending on how and when the loan converts. The new clause intends to ensure that those investors do not lose that relief as a result of investing in the future fund to support innovative UK companies that may have difficulty raising finance during this period.

[Matt Rodda (Reading East) (Lab)]

May I press the Minister on innovative companies getting a lack of support from HMRC? I have come across a case in my constituency where a very innovative British company appears to have had a lack of support from the agency. Would he look into that for me?

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[Wes Streeting (Ilford North) (Lab)]

I thank the Financial Secretary for making the case for the Government’s new clauses this afternoon. Throughout the coronavirus pandemic, the Labour party has made clear as the official Opposition that we seek to work constructively with the Government in response to this unprecedented public health crisis which, as we have seen, has brought about an economic crisis to follow it. In that spirit, and to ensure the smooth passage of legislation, we have helped to expedite the progressive measures taken by the Government, and this afternoon will be no exception.

I wish to speak to new clause 29, which has been tabled in the name of my hon. Friend the Member for Oxford East (Anneliese Dodds), the shadow Chancellor, and other hon. and right hon. colleagues. Yesterday afternoon, I addressed the Government’s poverty of ambition on climate change. This afternoon, I want to address their poverty of ambition on tackling poverty itself.

The Conservative party has now been in government either alone or in coalition for a decade. Over the past 10 years, their record on poverty in this country and on tackling poverty in this country has been absolutely lamentable. According to the Government’s own Social Mobility Commission, 600,000 more children are now living in relative poverty than in 2012, and that is projected to increase further due to benefit changes and the obvious economic impact of covid-19. As of 20 February this year, some 14 million people were in poverty, according to the Joseph Rowntree Foundation, including 2 million pensioners and 4 million children. We know that the impacts of poverty are felt disproportion- ately among different communities. Children from black and minority ethnic groups, for example, are more likely to be in poverty, with 45% of BAME children living in poverty, as compared with 26% of children in white British families.

We believe that the Government are failing on something that should be the most basic of priorities for any Government. That is not just our view as the Opposition party; the Government’s own Social Mobility Commission has said:

“The government should be more proactive in addressing poverty overall.”

It is worth bearing in mind that behind every statistic is a child, and 30 years ago I was one of those children in the child poverty statistics, growing up on a council estate in London’s east end, sandwiched between the bright lights of the City of London and the glistening lights of what was then the blossoming London Docklands Development Corporation land, which has become Canary Wharf. Today, they are two global financial centres at the centre of our global city. In between is a vista of poverty that was bad then and remains bad now.

One of the things I find most frustrating about the experience I had growing up in a council flat in the east end in the 1980s is that I look back, and I think about the conditions of the council flat I lived in and the embarrassment of not wanting to bring friends home from school because the conditions were not ones that we were proud of. It was a source of shame and embarrassment. I think about the experience of relying on free school meals, and the stigma that arises from having to collect a dinner ticket while other children go and pay for their food quickly—and get the best food, I hasten to add, while handing over their cash. I think about the difficulties my mum had as a single mum, balancing the challenge of bringing up a child while relying on the benefits system, and having to make compromises in choosing how she spent the family budget: the choice between putting food in the fridge or some extra money in the electricity meter.

One of the things that makes me most angry is that, when I think about my experience, which I thought was bad in the 1980s, and compare it with that of children growing up in the same circumstances today, as seen in my own constituency casework, things have got worse for children in the decades following my childhood, when things ought to be getting better. Whereas I had the stability of a council flat—albeit not a nice one—and a roof over my head, children in my constituency today, and no doubt in those of so many others across the Chamber, are growing up in temporary bed-and-breakfast accommodation, being moved from pillar to post and living in substandard accommodation, with disruptive consequences for their education and their schooling, and the inability for them to form lasting friendships and for their families to build supportive networks and family relationships.

When I think about the enormous strides that were made, particularly by the last Labour Government, in tackling educational disadvantage, I think it is outrageous that, in this country in the 21st century, children still today arrive at school at the age of five with their life chances already limited and in many cases predetermined, because we failed to get early years right. Sure Start centres have closed, and the support for families is no longer there. As a result, children arrive at school, at five, less prepared than their peers from more affluent backgrounds. It makes me angry that, for all the difference made to my education through programmes under the last Labour Government and the impact they have had on children since—the London Challenge and Excellence in Cities—today children are leaving school at 16 at a time when the attainment gap between children from the most advantaged backgrounds and the least advantaged backgrounds is actually widening, and where the further education system in which many working-class young people go on to study has been described by the Government’s own Social Mobility Commission as “undervalued and underfunded”. This is at a time when the changing nature of our economy and the changing nature of the world of work make post-16 adult education delivered in further education settings more important, not less. We should be making progress, but we are in reverse gear.

[Matt Rodda]

My hon. Friend is making an extremely powerful speech, which focuses us, as we should be, on this vital issue. Does he agree with me that a central part of the problem many families face is that the costs of food and of rent have risen so dramatically, with the impossibility of being able to afford a home? In my constituency in Reading, it is very difficult for many people to get on to the housing ladder. Many young professionals and young families are crammed into flats, which are hugely expensive. They are also suffering huge problems with the high cost of food. Does he agree with me that this is a very significant part of the problem?

[Wes Streeting]

I strongly agree with my hon. Friend, and that brings me neatly on to the next point I was about to make about employment conditions in our country. For my mum, as a single mum, it was difficult to hold down a steady, stable job and often she was reliant on temporary, casual, low-paid work to help make ends meet. Looking at the picture in the labour market—and this was pre-pandemic—even in households where one or both parents are working, children are still growing up in poverty. As my hon. Friend said, over the last decade we have seen the bills going up, but the wages failing to follow.

We have also seen labour market conditions that mean that, even when people are doing the right thing, as the vast majority of people want to do—going out to work, often with two, three or even four jobs in a week, and working all the hours God sends to try to make ends meet—they are still unable to make ends meet. It should never be the case, especially in a country with the wealth and opportunity available here, that when someone goes to work and puts in a full week’s work, at the end of the day they still do not have enough to make ends meet. Things are likely to become even more challenging in the wake of the economic fallout from coronavirus. Unemployment statistics from recent months have been not only jaw dropping but unprecedented, and the pace at which our economy has collapsed as a result of the necessary shutdown has been astonishing. I welcome and recognise the steps that the Chancellor has taken to try to protect people’s incomes, but unless he goes further than he has already announced, many people will face greater poverty and hardship later this year.

Finance Bill

Matt Rodda Excerpts

Report stage & Report stage: House of Commons & Report: 1st sitting & Report: 1st sitting: House of Commons
Wednesday 1st July 2020 Commons Chamber

People point out that they declared what they were doing on their self-assessment form. Even the tax code was okayed by Her Majesty’s Revenue and Customs. They were told that this was a less burdensome way of doing things than starting their own plc. As soon as the first sniff of a discrepancy appeared, they paid the shortfall. The retrospective aspect is worrying; people are now being told that all these other things will be reopened. In the case of my constituent, HMRC mixed this up with a student loan from years ago, which had been was paid off. There are aggressive letters, maladministration, and, for this constituent, health issues. That is just one example from a three-figure number of examples that I could give.

[Matt Rodda (Reading East) (Lab)]

Does my hon. Friend agree that the common characteristic of the people who have contacted many of us is that they are very hardworking? They have tried to play by the rules. They have possibly been sold a scheme that they did not fully understand, and may have been manipulated by unscrupulous advisers, and now they face threatening behaviour from HMRC. It is truly difficult for these people, many of whom work in IT in the Thames valley, and in creative industries. Does she agree that the Government need to show these people some understanding?

[Dr Huq]

My hon. Friend is completely right. HMRC needs to show some humanity in these cases. The scheme was obviously badly implemented, with inadequate impact assessment. The word “scandal” is frequently used and often misapplied, but in this case, all the elements needed are there. People have been pushed into bankruptcy; families have been fractured; people are facing financial ruin and losing their homes. As we have heard, there have been seven suicides. The all-party parliamentary loan charge group, which is very active—I am sure it is in everyone’s inbox all the time—has sent round a letter from the daughter of one of the people who sadly took their own life about the impact that has had on everyone involved.

The Morse review is a start, although the APPG feels that it could do better and go much further. All of us have seen these cases; my hon. Friend the Member for Liverpool, Wavertree (Paula Barker) described the situation movingly.

--- Later in debate ---

[Taiwo Owatemi]

I have been contacted by many residents who are extremely worried about the changes to the furlough scheme and their potential impact on unemployment. One of my constituents, James, recently got in touch with me to say that the company that his partner works for has already announced that it will be letting almost 40 employees go. The reason the company gave, I am told, was that the Government have asked employers to share the load of the furlough scheme from August. As can be imagined, staff at the company have been left heartbroken and have said that they feel this is completely wrong and runs contrary to the much repeated idea that a furlough scheme was a job retention scheme. James has said to me that while he understands that companies must ensure that they can continue to operate on a sustainable financial footing, it seems very unethical of the company to make the decision to reduce its numbers two months before that would start to become a significant financial burden on it.

The Prime Minister has repeatedly said that companies should not use the scheme just to keep employees on their books, only to get rid of them later, but should use it as a scheme to retain jobs. This compounds my view that the furlough scheme masks the true extent of the crisis in our jobs market. Since the start of the crisis, the Government have been too slow to take these threats seriously. We have seen very little from the Government around preventing unemployment since their economic package was created. If we do not take action now, we could see even more people lose their jobs.

This crisis requires a regional response, so that places such as the west midlands are not left behind. The Government’s one-size-fits-all approach fails to understand how our economy works. My own city has seen a devastating impact, with mass redundancies coming at Coventry College. Last week, I spoke about the impact on the aviation industry, with job losses at Rolls-Royce Ansty and in the arts and small businesses such as Exhibit 3Sixty. We need to protect our industries in the west midlands. That is why we need decisive rapid action to boost the economy, to provide small and medium-sized firms with the support they need, and to give businesses the strongest incentive to start creating jobs again.

My office has already started this work. Working alongside Coventry City Council, we are getting ahead of the response. I will not sit idly by while people in my community lose their jobs and vital skills. I have been holding a series of meetings with employment and skills agencies, as well as with Coventry and Warwickshire chamber of commerce and other business groups, to discuss supporting businesses during this time and upskilling people so that they can secure jobs for the future and find new work now. As part of its employment and skills priority for Coventry, the city council has been working with partners to host a series of virtual jobs fairs, with thousands of views and impressions to give people a head start. But this effort cannot be left up to us. The Government must do everything in their power to create support systems for those who become unemployed as well as new opportunities. We need to see the Government working with employers, unions and local government, with a joint approach across government to maximise job creation and comprehensive support to tackle unemployment.

[Matt Rodda]

Does my hon. Friend agree that there is a role for private sector landlords in this, working with the Government and local authorities? I have been quite taken aback by the approach of a number of commercial landlords who put extreme pressure on tenants at this time, which I believe is quite wrong.

[Taiwo Owatemi]

I agree with my hon. Friend; that is completely wrong.

No business or individual should be left behind. Every livelihood deserves the chance to survive this crisis. Otherwise, who knows what impact it will cause? Where there are job losses, will the Government commit to retraining those workers, whether old or young, through a future jobs fund so that they can harness the jobs that will come out of the crisis? Those jobs should be part of a new, prosperous economy, and they should be green, well-paid and sustainable. We do not need a race to the bottom, the slashing of safety regulations or the austere measures that we have seen in the past 10 years. The Chancellor said that he would do “whatever it takes” and frankly that is the least that my constituents in Coventry North West deserve. We have seen 18 years of growth and millions of jobs lost in two short months. To restore dignity, to save jobs and create new ones and to stimulate this much-needed recovery, bold progressive action is required. Nothing less will do.

Loan Charge 2019: Sir Amyas Morse Review

Matt Rodda Excerpts

Thursday 19th March 2020 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to speak in this important debate. I will be brief and focus my remarks on two or three key areas that have been partially mentioned by some colleagues earlier. I thank the right hon. Member for Haltemprice and Howden (Mr Davis) for securing this debate and commend the work of the all-party parliamentary group and the cross-party nature of the debate today, which is helpful.

First and foremost, I put on record my fundamental support for a fair tax system. We obviously need to raise taxes to pay for vital public services, but that system clearly has to be fair. I think that the points made by a number of colleagues across the House on the matter are absolutely right, and I am grateful for the emerging consensus on the issue.

Secondly, I highlight the importance of the issue of the loan charge. The fact that this debate is taking place today in a period of sustained national crisis—indeed, it is a crisis for the whole world—is interesting, and it does underline the importance of this issue. I was approached about it a number of times during the general election, like many Members here today, and I have had constituents contact me about it. There is deep unease in the community, certainly in the constituency I represent, which is made up of Reading itself and the neighbouring town of Woodley, about the problem, which affects many people. I noted the figure of 50,000 people across the country. It certainly seems to be higher than that, given the proportion of people in my community who seem to be affected.

I draw Members’ attention to the effects on a typical town of its type, as Reading is, and specific industries where I believe there may be a particular likelihood of the problem arising. In the area I represent, a very large number of people are self-employed and have microbusinesses or work as consultants in one form or another. That is spread across a huge range of sectors, from traditional small businesses through to people with trades or IT skills and public servants. It is a vast range of people.

I want to add to the point made by my hon. Friend the Member for Ealing Central and Acton (Dr Huq) about locums in public services affected by the issue. I know of cases where a number of people in public services have to set up as a company and work on that basis, perhaps as a supply teacher or in some other interim role in public services. I should declare an interest, as I have certainly operated in that way in the past as an interim public servant. In the more distant past, I was a full-time civil servant. Locums are a well-known type of employment and a subset of those people—not all of them—are affected by the loan charge.

As well as my area, many other nearby parts of the country have similarly high levels of employment in IT. There is a particular prevalence of self-employment among IT professionals. If we think of the great IT businesses in this country—companies such as Microsoft, Oracle or Vodafone—many of them are headquartered in the Thames valley or west London. Many of those large businesses rely heavily on subcontractors who have often no choice but to set up a limited company that then serves the much larger organisation.

In my area, many people who are affected by the loan charge are in the IT industry. There are whole WhatsApp groups of people in parts of the IT industry that are buzzing with concern about the matter. As has been said, the issue ranges back over many years and there is deep uncertainty and pressure on these workers and their small businesses and, indeed, their families, because of this whole problem. As I said earlier, we are debating this issue at a time of national crisis. Imagine how that concern overlays itself on top of the existing pressures that we talked about earlier today and yesterday. Quite rightly, we in this House have discussed and raised with the Government the importance of supporting small businesses at this time of national crisis.

Imagine how it would feel to be a small business person or an IT subcontractor who was the breadwinner in their family. Their source of income could dry up because of this crisis, which is not of their making and that they have not anticipated. At the same time, they face the long-standing problem of the loan charge looming over them, with the very grave measures that other colleagues have mentioned today. Some of the examples that have been mentioned are truly dreadful. Imagine that pressure. That is what we need to do today—to think about what it feels like for somebody who is a small business person or self-employed. I know the Minister is dutiful and well-read and, as was said earlier, he has written a biography of Adam Smith. I hope that he will look again at the evidence clearly and thoroughly and in the context of the current situation affecting small businesses.

Tax Avoidance and Evasion

Matt Rodda Excerpts

Tuesday 25th February 2020 Commons Chamber

[Matt Western]

My right hon. Friend makes a very good point. With just those four businesses, they absolutely dominate the sector. I do fear that there is a cartel operating, and the sector should be broken up. I think that would be in everyone’s interests. Those firms—or certainly their UK arms—account, according to an HMRC report, for half of all known avoidance schemes. That is the scale of the problem.

This is coming at a massive cost—a loss to UK plc —that is estimated at between £35 billion and £90 billion. There is understandable public anger out there, because that money could be buying significant investments in our communities, whatever people may want to invest it in. That could be 40 new hospitals, two new aircraft carriers or 40 Typhoon jets—all for £35 billion, with some cash to spare. If the £90 billion takes their fancy, we could electrify the Chiltern line serving Warwick and Leamington, and then put money into free school meals for all. Instead, we have an attitude where we increasingly see flat regressive taxes, such as the rise in VAT in 2010 from 17.5% to 20% and the growing expansion of council tax, again hurting hard-pressed households.

[Matt Rodda (Reading East) (Lab)]

My hon. Friend is making some excellent points about the inequities in the system. I feel that is particularly relevant given that only recently did average incomes catch up with those before the great crash of 2008. Does he agree that there has been a total and utter lack of leadership from the Government on this matter?

[Matt Western]

Yes, there has. As I have said, the former Chancellor showed the wrong sort of leadership when he basically said about taxes, “It is almost entirely down to you whether you choose to pay it or not.” Tax really is the responsibility of us all: it is a corporate responsibility and it is a personal responsibility.

Decades ago, when I was working in the corporate world, I remember the introduction of a thing called corporate social responsibility. It was a real buzz term, and we started making donations to charities, volunteering and so on. Of course, that is important and it is wonderful that big business does that, but we are seeing this almost replace tax responsibility. Rather than paying their way and supporting education, infrastructure and healthcare for society, we are seeing organisations perhaps decorate a community centre or go out on litter picks and the like.

Turning to personal tax avoidance, I have mentioned the former Chancellor, and there are schemes such as the film production scheme. Businesses have increasingly paid out dividends, substituting them for actual salary, because of course there is lower tax to be paid on dividends and it is advantageous to employees or directors to get a much larger proportion of their income through dividends. All we need to do is go to some of the ports around Europe, and see that the yachts in the berths there are all flying flags of convenience—and they are all UK flags or those of UK overseas territories and Crown dependencies. There are no German flags, dare I say it, or Dutch flags or French flags. Either we are renowned for our sailing, or a lot of Germans or those of other nationalities like flying the British flag because— I do not know—they sail better or something like that. The same could be said about personal jets and where they are domiciled.

Let me just say that tax is good: it is a contribution to a better society, and we must think about what that society looks like. We should look at the words of Elizabeth Warren. Let me just paraphrase her; I will not do her justice. She basically said, “Why is it that people should simply want to avoid paying tax and then be able to afford to buy a Ferrari? There is no point in owning a Ferrari, if they have not got a good road to drive it on.” People should pay their tax and get a Jaguar Land Rover or Aston Martin—obviously, because they are much better products anyway—and drive on a beautiful smooth road that has been paid for out of their taxes. That is the sort of society we should be looking for, not people avoiding tax, living behind gated communities, owning Lamborghinis, Ferraris or it whatever may be, and having roads full of potholes.

The Government need to turn up on this issue: they need to go Davos and places like that, and make the case for why international intervention and regulation need to be introduced. I agree with what the hon. Member for Amber Valley (Nigel Mills) said earlier about full disclosure. We need to see that across the entire business sector, whether for small businesses or large businesses. When we talk about consumers being given an informed choice, I think the consumer should know whether Caffè Nero is not paying any tax at all, or whether Costa or one of the others is paying tax, and they can then make an informed decision. They can choose, saying, “Well, maybe I want to buy my coffee from that place”, or whatever the product or service may be.

I want to close on the issue of the tech titans. I say this to them: Amazon, you have your warehouses, and your warehouses need security. They need protection from fire; who is going to show up? Warwickshire fire and rescue service has had significant cuts, and it needs the money out of taxation to pay and provide for the fire and rescue services.

Economy and Jobs

Matt Rodda Excerpts

Monday 20th January 2020 Commons Chamber

[Ruth Jones (Newport West) (Lab)]

I commend the hon. Member for Dover (Mrs Elphicke) on her maiden speech and thank her for the measured and thought-provoking way she delivered it. I also thank her for explaining to us the familial links between Members for her constituency—that was very helpful.

I am delighted to be able to speak in this important debate on jobs and the economy. It is my privilege to represent Newport West, my home and birthplace. I am grateful for the opportunity to serve all the people who live there, and I will work hard in the many days, months and years ahead to ensure that their voices are heard in the House.

Over my life to date, the nature of employment has changed fundamentally, as has the type, scope and size of industry in my constituency. The closure of the coal mines and steel works saw a massive and destructive loss of jobs in south Wales, but Newport West is now home to groundbreaking companies such as Airbus, the Rutherford Cancer Centre and the Catapult compound semiconductor cluster, which is the only one of its kind in the UK. As such, I welcome the Government’s commitment to making the UK a global science superpower and investing in research and development. I encourage any relevant Minister to come to Newport West: I will take them to visit those businesses so that Members can see the industry-leading work taking place in my constituency. Importantly, it will give Ministers the chance to learn about these success stories and inspire them to replicate Newport West’s success throughout the UK.

Furthermore, I welcome the Government’s move to ensure that investment in industries such as computing are prioritised. Additionally, if investment in hubs in world-leading universities is promised, I recommend that the Minister visit the University of South Wales campus in my constituency to see the fantastic work being done in the field of cyber-security. It is a hub where businesses and university students learn from each other, providing cyber-security services to companies worldwide.

The Government propose in the Queen’s Speech to bring forward an employment Bill, and claim that they will protect and enhance workers’ rights.

[Matt Rodda (Reading East) (Lab)]

My hon. Friend is making an outstanding speech about the importance of so many things. Over the weekend, the Chancellor made some controversial comments about the possible lack of alignment between Britain and the rest of the EU after Brexit. Does my hon. Friend—like me, the Confederation of British Industry and many major British trade unions—have deep concerns about the Chancellor’s rather rash statement?

[Ruth Jones]

Absolutely. I thank my hon. Friend for intervening because he made an excellent point. We well know that workers’ rights are not a priority for the Government. In fact, from what has been outlined so far, it seems they will attempt to proceed with no input at all from the trade union movement. I regret that and urge the Government to think again. I hope Ministers will remember that those people whose job is in a workplace that is represented by a trade union work in a safer, better-paid workplace. I encourage the Government to keep the trade unions involved in any plans they may make to change the current settlement on workers’ rights. It would be beneficial not only to the Government but to people in Scotland, Wales, Northern Ireland and England if the Tories worked with the trade union movement rather than against it.

The Government cannot be trusted to improve the settlement for workers on their own. They celebrate high employment rates at every opportunity, but in reality the figures mask high levels of people in insecure work, under- employed and on low pay. In other words, there are thousands of people on zero-hours contracts working a few hours a week, unable to make ends meet and often having to get a second or even a third job. As in-work poverty soars, the reliance on food banks continues to increase. At the same time, many people are losing their homes. In-work poverty is the moral disgrace of our age. Around one in five people in working households now live in poverty. That is the legacy of 10 years of Tory austerity.

We now live in an increasingly unequal society. In my constituency of Newport West, the average household wage in Marshfield is double the average household wage in Pill—and those areas are only six miles apart. We must make every effort to level up wages and create a more equal society. The Government can improve the working lives of millions of people in the UK if they take sustainable and effective action on the living wage, and they must take enforcement action against those businesses that refuse to pay it.

Just days ago, a number of my constituents lost their jobs at Liberty Steel in Newport. Many others in Stocksbridge, Rotherham and Brinsworth had the same devastating news. Only a few weeks before that, the Orb steelworks in Newport was mothballed. It was the only plant producing electrical steel in the whole UK. This is madness. I know that the thoughts and sympathies of the whole House will be with the people who find themselves out of work and facing an uncertain future. There is never a good time for someone to lose their job, but the situation is particularly hard coming so soon after Christmas. With those job losses in mind, I urge the Government finally to take real action to protect and defend the UK steel industry. Steel remains vital to the ongoing security and independence of the UK manufacturing sector, while providing good jobs for thousands throughout the country. I welcome the Government’s commitment to the jobs of the future, but I encourage those on the Treasury Bench to remember the jobs of today.

This is the second Queen’s Speech debate in my time in the House—and I have been here for only nine months. As I approach the first anniversary of my time in the House, I pledge to hold the Government to account for the promises they made to my constituents and people right across the country. I accept that the Government have won a majority, but they must now deliver on their pre-election promises. I will be here day in, day out to ensure that they do.

The Economy

Matt Rodda Excerpts

Thursday 24th October 2019 Commons Chamber

[Geraint Davies]

rose—

[Matt Rodda (Reading East) (Lab)]

rose—

[Sajid Javid]

I will give way when I have made some progress.

We have turned the economy and the public finances around, and I am not prepared at all to throw away that hard work. The Queen’s Speech puts fiscal responsibility at the heart of our plans, with a clear commitment to ensuring that we keep control of borrowing and debt. I will set out our detailed plans in the Budget.

--- Later in debate ---

[Sajid Javid]

I will make some progress and then I will give way.

I want to contrast our approach with that of Labour Front Benchers, who have demanded higher borrowing and higher taxes at every Budget and Queen’s Speech for the past 40-odd years. Their tax rises would hit hard-working families, and they will not be clear on that. Their tax avoidance plans contain a £2.5 billion mistake, and that is according to the Institute for Fiscal Studies. Their spending promises would cost far more than they say. Their manifesto contained £1 trillion of spending commitments. For the shadow Chancellor’s benefit, let me say that that is £1,000 billion of spending commitments. They have not costed expensive promises such as renationalisation, and they have made dozens of unfunded promises since the last election. And you know what is even worse than that? The shadow Chancellor has admitted that the huge borrowing plans that he has are just “the first step”—he means the first step back to the road of ruin.

[Matt Rodda]

I wonder whether the Chancellor remembers the following statement, which is from his own website; it is still there today:

“The only thing leaving the EU guarantees is a lost decade for British business”.

Perhaps he would like to comment on that.

[Sajid Javid]

I will comment on that because, probably like the hon. Gentleman, I campaigned for remain, and I lost the argument; but I am a democrat, unlike the hon. Gentleman.

HMRC Impact Analysis: Customs

Matt Rodda Excerpts

Tuesday 8th October 2019 Commons Chamber

[Jesse Norman]

The hon. Lady is absolutely right that any job losses are deeply regrettable, and I am sure she will be delighted that, in aggregate, this country has proven to be astonishingly adept at creating good new jobs over the past 10 years. With this impact assessment, I think I am right in saying that the detail is not available that allows for a constituency-by-constituency or even regional assessment, which is why it has been done in aggregate, based on the number of declarations that are expected and the cost per declaration. Of course, it may be possible for other entities to take the number of businesses that were expected to fill out declarations and produce impact assessments for the specific areas that they are concerned about.

[Matt Rodda (Reading East) (Lab)]

It is quite clear from the Minister’s answers that the Government are willing to place enormous additional burdens on business. Given everything that he has written and said in the past, how can he possibly justify that approach?

[Jesse Norman]

I gently remind the hon. Gentleman that the burdens that he claims will be placed by this can not only be mitigated by voting for a deal but will be as nothing compared with the burdens that will be imposed on the UK economy by a Labour Government dedicated to nationalising, without full compensation, a swathe of industries and expropriating a large number of people by transferring property into the hands of employees. I think those things will impose much greater costs on the economy than anything that has been contemplated today.